• Category Archives Economy
  • While Markets Get Pricey, Cracks Starting to Appear

    Financial Sense recently spoke with Caroline Miller, Senior Vice President and Global Strategist at BCA Research, one of the world’s leading providers of investment analysis and forecasts, to discuss the details of her recent webcast, Global Reflation: Where Next for Policy, Profits, and Prices?
    As Caroline explained to FS Insider last week, given the current trends underway, BCA believes that the US business cycle has another year left before a possible recession around the 2019 timeframe, preceded by a potential market peak next year, as monetary conditions edge into ‘overly restrictive’ territory from their presently accommodative levels. Caroline also outlined their current investment strategy and weightings on global equities, bonds, and other asset classes, while also commenting on signs of froth in commercial real estate and the dangerous levels of corporate debt.
    Here are some key sections and charts from that conversation.
    Ultra-Easy Money No Longer Required

    This post was published at FinancialSense on 07/26/2017.


  • Housing Bubble 2.0: Making America More Unstable, Again

    With low inflation and continuing stagnation in median wages another housing bubble is just what the doctor ordered as a cure for the last financial crisis, caused in part by the rampant financial fraud associated with Housing Bubble 1.0.
    And it looks like we have yet another tech stock bubble well underway.
    Meanwhile the public is distracted by the corporate media’s endless coverage of clown car antics and foreign plots to pollute our precious bodily fluids.
    Well done, elites, well done.
    And no one could have seen it coming, again.

    This post was published at Jesses Crossroads Cafe on 26 JULY 2017.


  • Demand for Physical Gold Up, Supply Down in First Half of 2017

    It’s easy to get caught up in what the Fed will do next, or the latest political brouhaha in Washington D. C. And of course, this stuff matters. But when it comes to gold, you should never lose sight of fundamentals.
    Nothing is more fundamental than supply and demand. Based on the GFMS Gold Survey 2017 H1 Update Outlook, the fundamentals for gold are trending in a positive direction. Demand is pushing upward, while supply is falling.
    Demand for physical gold rose to 1,895 tons in the first half of 2017, a 17% increase over the same period last year.
    Comparing the first and second quarter of this year also reveals an upward trend. Demand climbed in Q2 2017 to 957 tons. That was up from 938 tons in Q1, a 2% increase.
    Meanwhile, total supply dropped 5% in the first half of the year. Mine output was stagnant, falling by 0.2%. Production dropped precipitously in China and Australia, the world’s number one and number two producers. The amount of scrap gold also fell, helping to drive the decline in supply.
    In many ways, the demand increase signals a return to normalcy after a tumultuous 2016.
    After the rollercoaster ride of events for the gold market in 2016, from a jewelers’ strike to Brexit to Trump to demonetization, 2017 has avoided similar dramatic events in the first half, at least from a gold perspective with far right candidates seeing little success in a range of European countries. Indeed the first half of this year has arguably been more of a reversion to normality across much of the gold market, with neither the highs (of ETF demand) or lows (of truly pitiful Asian demand) that were recorded in the first half of 2016 being repeated.’

    This post was published at Schiffgold on JULY 27, 2017.


  • Bill Blain: “Are We In A Bubble About To Burst, Or Are We Facing Massive Equity Upside?”

    Are We In A Bubble About To Burst, Or Are We Facing Massive Equity Upside?
    ‘A liberal is a conservative who has been arrested.’
    No surprises from the Fed last night. Unchanged rate talk and hints about reducing the balance sheet ‘relatively soon’. We can go figure what ‘relatively’ means when inflation picks up. The stock market soared and VIX tumbled to a record low. Was that a warning about complacency? Since the 2008 crisis we’ve been here many times before – worrying about signals the economy is strengthening when suddenly its dived weaker.
    But, those us with longer memories can recall when the US economy has turned dramatically stronger – and in 1994, (yes, I remember it well), when the Fed acted prematurely, spiked the recovery and triggered what we’d now call a massive Treasury market TanTrum. This time it feels very different. I suspect we are very much still on course towards normalisation – a new kind of new normal: low rates, low inflation and steady state low growth.
    Stuff to watch today: Dovish Fed boosts stocks (record Dow) and dollar crashes. Lots of corporate results to wonder and worry about! Stuff the think about: Deutsche Bank results show it’s taken yet another thumping – difficult to see how it plays catch up and regains market relevance when it’s still swinging the headcount axe. Where is the US economy when inflation remains so low? What are the risks to Europe of the low dollar?

    This post was published at Zero Hedge on Jul 27, 2017.


  • ‘Low Inflation’ In Not ‘Good’ – It’s Pure Propaganda

    Analysts who advocate a monetary policy that targets ‘low inflation’ are the equivalent of chickens in the barnyard rooting for Colonel Sanders to succeed. This idea that a low level of inflation being good for the economy is beyond moronic.
    The fiat currency money system era was accompanied by the erroneous notion that a general increase in the price of goods and services is ‘inflation.’ But technically this definition is wrong. ‘Inflation’ is the ‘decline in the purchasing power of currency.’ This decline occurs from actions that devalue a currency. Rising prices are the visible evidence of ongoing currency devaluation.
    Currency devaluation occurs when the rate of growth in a country’s money supply exceeds the rate of growth in real wealth output. Simply stated, it’s when the amount of money created exceeds the amount of ‘widgets’ created, where ‘widgets’ is the real wealth output of an economic system.

    This post was published at Investment Research Dynamics on July 26, 2017.


  • World Stock Markets, Gold, Boosted By Dovish FOMC Statement Wed. PM

    (Kitco News) – Global stock markets were mostly firmer overnight in the wake of a U. S. Federal Reserve meeting that produced a statement most of the markets deemed as leaning to the dovish side of U. S. monetary policy. Recent corporate earnings reports have also been mostly upbeat. U. S. stock indexes are pointed toward higher and record high openings when the New York day session begins.
    Gold is posting solid gains Thursday in the wake of the dovish Fed statement that pushed the U. S. dollar index to a 13-month low. Reports overnight said India is moving to make ‘paper’ gold (such as sovereign gold bonds) more attractive to its domestic investors, in order to reduce demand for actual gold bullion.

    This post was published at Wall Street Examiner on July 27, 2017.


  • Are Silver Prices Going Up in 2017?

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    Silver prices today (Wednesday, July 26) are off 0.4% from the one-month highs seen yesterday, but they won’t stay down for long…
    Silver currently trades at $16.43 an ounce, down 0.4% from yesterday’s $16.50 close. That was the highest settlement since June 30, when the metal closed at $16.57, according to data from FactSet.
    The silver price has been volatile in July, with the metal falling 7.2% from $16.57 on July 1 to a 15-month low of $15.37 on July 7. It has since rebounded 6.5% to today’s price of $16.43.
    With volatile price swings this month, our readers want to know if silver prices will keep going higher in 2017. That’s why Money Morning Resource Specialist Peter Krauth – a 20-year veteran of the precious metals markets – is going to share with you his silver price prediction for the rest of the year.

    This post was published at Wall Street Examiner by Alex McGuire ‘ July 26, 2017.


  • The Best-Paid U.S. Jobs Requiring No Bachelor’s Degree

    If you’re looking for a well-paid job but you don’t have the money, time and sheer patience required to complete a four-year bachelor degree, do not fear!
    ***
    As Statista’s Nial McCarthy points out, according to Bureau of Labor Statistics data, plenty of U. S. jobs require an associate degree (usually taking two years), a postsecondary nondegree certificate or a high-school diploma.
    Air-traffic controller offers the highest wages without a bachelor degree with the median annual salary coming to $122,410. Prospective applicants should keep in mind that the job still requires an associate degree.

    This post was published at Zero Hedge on Jul 26, 2017.


  • Gold A Good Store Of Value – Protect From $217 Trillion Global Debt Bubble

    – ‘Mother of all debt bubbles’ keeps gold in focus
    – Global debt alert: At all time high of astronomical $217 T
    – India imports ‘phenomenal’ 525 tons in first half of 2017
    – Record investment demand – ETPs record $245B in H1, 17
    – Investors, savers should diversify into ‘safe haven’ gold
    – Gold good ‘store of value’ in coming economic contraction
    by Frank Holmes, U. S. Global Investors

    Gold’s medium- to long-term investment case, I believe, looks even brighter. Many unsettling risks loom on the horizon – not least of which is a record amount of global debt – that could potentially spell trouble for the investor who hasn’t adequately prepared with some allocation in a ‘safe haven.’
    According to the highly-respected Institute of International Finance (IIF), global debt levels reached an astronomical $217 trillion in the first quarter of 2017 – that’s 327 percent of world gross domestic product (GDP). Notice that before the financial crisis, global debt was ‘only’ around $150 trillion, meaning we’ve added close to $120 trillion in as little as a decade. Much of the leveraging occurred in emerging markets, specifically China, which is spending big on international infrastructure projects.

    This post was published at Gold Core on July 27, 2017.


  • Wall Street Icon Warns The Fed’s Balance Sheet Unwind “Is Very Dangerous For Markets”

    Authored by Christoph Gisiger via Finanz und Wirtschaft,
    Blackstone’s market maven Byron Wien warns that stocks are in danger of suffering a setback. But he also explains why investors should keep their calm and weather the impending storm.
    To expect the unexpected is the key to success in investing. That’s exactly what Byron Wien has built himself a unique reputation on: For more than thirty years the living Wall Street legend publishes a yearly list with ten surprises that will have a meaningful impact on the global financial markets. People all over the world are aware of it and identify me with it, says the Vice Chairman in the private wealth group of Blackstone. What they seem to like about it is that I put myself at risk by going on record and hold myself accountable at the year end, he adds.
    So how accurate are Wien’s predictions for 2017 so far? Which developments could surprise investors during the rest of the year? And first and foremost: Where does the experienced market maven see the biggest risks and opportunities right now?
    Mr. Wien, everybody on Wall Street knows you for your yearly prediction of ten surprises. What is for you personally the most astonishing development so far this year?
    I would say I’m having an average year where I get five or six surprises right. Everybody calls them forecasts or predictions but they really are surprises. To me, a surprise is an event that the average investor would only assign a one out of three chance of taking place but which I believe has a better than 50% likelihood of happening. I never get them all right but I don’t do it for score. I do it to get people thinking.

    This post was published at Zero Hedge on Jul 26, 2017.


  • The Toxic Fruit of Financialization: Risk Is for Those at the Bottom

    Those who have pushed the risk down the wealth-power pyramid are confident the Federal Reserve will continue to limit the risks of speculative financialization.
    One of the most pernicious consequences of financialization is the shifting of risk from the top of the wealth-power pyramid to the bottom: those who benefit the most from financialization’s leveraged, speculative credit bubbles protect themselves from losses while those at the bottom of the pyramid (the bottom 99.5%) face the full fury of financialization’s formidable risk. Longtime correspondent Chad D. and I recently exchanged emails exploring how the higher debt loads and higher interest payments of financialization inhibits people at the bottom of the wealth-power pyramid (i.e. debt-serfs) from taking risks such as starting a small business.
    But this is only one serving of financialization’s toxic banquet of risk-related consequences. Chad summarized how those at the apex of the wealth-power pyramid protect themselves from risk and losses.
    At the top levels of the pyramid, members in those groups collect way more interest than they pay out and at the very top, they get a ton of interest and pay little to none. The people at the top can take all sorts of risk, because of this dynamic and further, they also usually have a heavy influence on the financial/political machinery, so they get bailed out by taxpayers when their investments go bad. In addition, because their influence extends to the criminal justice system, they are able to commit fraud and at the same time neutralize regulators and prosecutors, thereby escaping any ramifications from their excessive risk taking and in many cases massive fraud.

    This post was published at Charles Hugh Smith on WEDNESDAY, JULY 26, 2017.


  • Stocks and Precious Metals Charts – Nocturne

    “A horse walks into a bar, the bartender says, ‘Why the long face?’”
    And so we had both an FOMC and a precious metals option expiration on the Comex today.
    Stocks are continuing to edge higher, although with a big less verve than previously.
    Pundits are now saying that a crash is probably at least two months away, so now is a good time to buy more stocks.
    You cannot make this stuff up.
    I think that the theory is that when the Fed starts unwinding their balance sheet in September, that the air of liquidity, which is one of key components of these bubbles, is going to start coming out of the markets much faster than it went in.
    And the result may be terrific – not with a bang, but a whimper.

    This post was published at Jesses Crossroads Cafe on 26 JULY 2017.


  • Meet Tally: The Grocery Stocking Robot About To Eradicate 1,000’s Of Minimum Wage Jobs

    Amazon wiped out billions of dollars worth of grocery store market cap last month when they announced plans to purchase Whole Foods. The announcement sent shares of Kroger, Wal-Mart, Sprouts, and Target, among others, plunging… (WMT -4%, TGT -5.5%, SFM -7.6%, KR -12%).
    But, as we pointed out back in May, well before Amazon’s decision to buy Whole Foods, Amazon’s success in penetrating the traditional grocery market was always a matter of when, not if. Concept stores, like Amazon Go, already exist that virtually eliminate the need for dozens of in-store employees which will allow them to generate higher returns at lower price points than traditional grocers. And, with grocery margins averaging around 1-2% at best, if Amazon, or anyone for that matter, can truly create smart stores with no check outs and cut employees in half they can effectively destroy the traditional supermarket business model.
    And while the demise of the traditional grocery store will undoubtedly take time (recall that people were calling for the demise of Blockbuster for nearly a decade before it finally happened), make no mistake that the retail grocery market 10-15 years from now will not look anything like the stores you visit today.

    This post was published at Zero Hedge on Jul 26, 2017.


  • Is The Fed Poised To Ignite A Violent Dollar Rally?

    As ther world waits with bated breath for Janet Yellen’s statement this afternoon – whiche is uniformly expected to be a nothing-burger, some are wondering if the recent flip-floppery by Yellen, Draghi (and even Kuroda with his ‘actual’ tapering while lowering inflation expectations) does not leave today open to another modst shift back in The Fed’s ‘hawkishness’. As Bloomberg’s macro strategist warns, this sets the market up for a surprise and as he warns: “Dollar risks are starting to seem skewed all one way: toward an immediate rally.”
    There’s extremely bearish positioning, that’s failed to adapt to changing circumstances, into event risk that’s structured to surprise in the opposite direction. That’s an explosive mix.
    When something seems so obvious, your immediate instinct should be to ask, “what’s the catch?” My problem is that this time, I just can’t see one.

    This post was published at Zero Hedge on Jul 26, 2017.


  • Strong Demand For “Stopping Through” 5Y Paper, As Fed Looms

    While yesterday’s unexpectedly strong 2Y auction left many scratching their heads (recall 2Y net specs are the shortest on record, betting on ever higher short-end rates), today’s sale of $34 billion in 5Y paper was just as strong, if not quite as perplexing as neither technical positioning, nor a hawkish Fed announcement in less than an hour would have as negative an impact on the price of the tenor. This was the highest yield for a 5Y auction since the 1.95% yield in March.

    This post was published at Zero Hedge on Jul 26, 2017.


  • 22 Troublesome Facts

    Below are 22 troublesome facts explaining why the herd may, in fact, have it wrong.
    Equity/Bond Valuations
    The S&P 500 Cyclically Adjusted Price to Earnings (CAPE) valuation has only been greater on one occasion, the late 1990s. It is currently on par with levels preceding the Great Depression. CAPE valuation, when adjusted for the prevailing economic growth trend, is more overvalued than during the late 1920’s and the late 1990’s. (LINK) S&P 500 Price to Sales Ratio is at an all-time high Total domestic corporate profits (w/o IVA/CCAdj) have grown at an annualized rate of .097% over the last five years. Prior to this period and since 2000, five year annualized profit growth was 7.95%. (note- period included two recessions) (LINK) Over the last ten years, S&P 500 corporations have returned more money to shareholders via share buybacks and dividends than they have earned. The top 200 S&P 500 companies have pension shortfalls totaling $382 billion and corporations like GE spent more on share buybacks ($45b) than the size of their entire pension shortfall ($31b) which ranks as the largest in the S&P 500. (LINK)

    This post was published at Zero Hedge on Jul 26, 2017.


  • Five Years Ago Today…

    ime flies when you are printing money.
    As Citi’s FX desk is kind enough to remind us, it was five years ago today that Donald Trump was a businessman and TV personality, and ECB President Mario Draghi vowed that:
    ‘The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.’
    He then compared the common currency to an insect:
    ‘The euro is like a bumblebee. This is a mystery of nature because it shouldn’t fly but instead it does. So the euro was a bumblebee that flew very well for several years. And now — and I think people ask ‘how come?’– probably there was something in the atmosphere, in the air, that made the bumblebee fly. Now something must have changed in the air, and we know what after the financial crisis.’

    This post was published at Zero Hedge on Jul 26, 2017.


  • The Mother of All Bubbles

    We live in a world full of bubbles just waiting to pop.
    We have reported extensively on the stock market bubble, the student loan bubble, and the auto bubble. We even told you about a shoe bubble. But there is one bubble that is bigger and potentially more threatening than any of these.
    The massive debt bubble.
    In a recent piece published by Business Insider, US Global Investors CEO Frank Holmes calls it ‘the mother of all bubbles.’
    According to the Institute of International Finance (IIF), global debt levels reached a staggering $217 trillion in the first quarter of 2017. That represents 327% of global GDP. To put that into perspective, before the 2008 meltdown, global debt was a mere $150 trillion.

    This post was published at Schiffgold on JULY 26, 2017.


  • Ahead Of The Fed: Strongest Demand For 2Y Paper Since 2015

    With the FOMC members currently huddling deep inside the bowels of the Marriner Eccles building, perhaps scheming how to spook markets by announcing a surprise rate hike tomorrow, one would have assumed demand for 2 Year paper in today’s auction would be less than stellar. One would be wrong, because moments ago the Treasury sold $26bn in 2 year paper to what was clearly an overabundance of demand: the high yield of 1.395% stopped through the When Issued 1.401% by 0.6 bps, and was the highest yield going back to October 2008.
    The bid-to-cover rose to 3.06 from 3.03 in June, and was above the six previous auction average of 2.84. It was also the highest Bid to Cover since November 2015.
    The internals were also rather impressive, with Indirects taking down 58.5%, above the 56.6% in June, and above the 6MMA of 54.1%. Directs were awarded 16.9%, down slightly from 18.4% last month and above the 6 month average of 13.7%. Combined these two meant record buyside interest, leaving Dealers with just 24.6% of the auction, down from 25.0% and below the 32.1% 6month average. This was the lowest Dealer award on record.
    In other words, if anyone was worried about a surprise announcement by the Fed tomorrow, one which would send 2Y yields spiking, it wasn’t to be found among the bidders for today’s auction.

    This post was published at Zero Hedge on Jul 25, 2017.