• 5 Ways Fed Rate Hikes May Squeeze Your Wallet

    The Federal Reserve nudged up interest rates another .25 points last week. Of course, nobody was surprise by the central bank’s move. It was widely expected. Nevertheless, the Fed’s latest policy move has everybody bullish on increasing rates into the future
    Of course, nothing has fundamentally changed. As Paul Singer said earlier this month, the financial system is no more sound than it was in 2008. All of this talk about rate hikes will vanish like a vapor if actual economic data continues to point toward a slowdown.
    But since everybody is talking rate hikes right now, this is probably a good time to consider just how rising interest rates will effect your wallet.
    We tend to think about Federal Reserve policy in macro-economic terms. How will it effect the stock market? What kind of bubbles will it blow up? How will it impact the price of gold? But Fed policy also has a direct effect on the average American. In simplest terms, rising rates mean it will cost you more to pay off credit cards and other loans. That’s not good news for an economy buried in debt.
    Here are five ways rising interest rates can put the squeeze on your pocketbook.

    This post was published at Schiffgold on JUNE 21, 2017.


  • “Brexit Is A Lose-Lose” – George Soros Slams Brits’ “False Hopes” As UK Economy Nears “Tipping Point”

    A day after Brexit negotiations officially began, and seemingly unable to get over the result of democracy, George Soros is once again rattling his op-ed sabre, proclaiming the ignorance of British ‘brexit’ voters is about to get its come-uppance…
    Economic reality is beginning to catch up with the false hopes of many Britons.
    One year ago, when a slim majority voted for the United Kingdom’s withdrawal from the European Union, they believed the promises of the popular press, and of the politicians who backed the Leave campaign, that Brexit would not reduce their living standards. Indeed, in the year since, they have managed to maintain those standards by running up household debt.
    This worked for a while, because the increase in household consumption stimulated the economy. But the moment of truth for the UK economy is fast approaching.

    This post was published at Zero Hedge on Jun 21, 2017.


  • Could Recent FANG Weakness Be Signaling the End of the Bull Run?

    As we survey the financial markets and global economic backdrop, it appears that a change in the wind could be slowly taking place. Across the tides of global capital markets, a chillier wind may be starting to blow, ushering in what could soon be some sweeping changes in the major trends for primary capital markets. In China, the air of debt deleveraging seems to be taking root, with tightness in the money markets, bond market collapses, bond market closures, and inverted yield curves. In addition, there are also widespread rumors surrounding the viability of an assortment of wealth management products that have embedded duration mismatch problems baked into the cake.
    Here at home in the USA, boom times remain in full swing with stock market averages busting out to new highs seemingly day-after-day. Yet, behind the bullish headlines, there seems to be developing a clear pattern of parabolic (terminal) excess within the technology space, a pattern familiar to those market watchers who recall 1999 and 2008.
    Sure enough, for the most part, today’s current valuation metrics for technology stocks are nothing close to the fantasy price-to-eyeball ratios that seemed to capture the imagination of so many when the first internet boom developed in the late 1990s and peaked in March 2000. Yet, today’s market harkens back to a blend of the pre-tech wreck mania vertical blow off patterns and the famous Nifty 50 market of the early 1970s.

    This post was published at FinancialSense on 06/21/2017.


  • Oil, Gold and Bitcoin

    The falling price of oil did not garner any mainstream financial media attention until today, when U. S. market participants woke up to see oil (both WTI and Brent) down nearly $2. WTI briefly dropped below $43. The falling price of oil reflects both supply and demand dynamics. Demand at the margin is declining, reflecting a contraction in global economic activity which, I believe the data shows, is accelerating. Supply, on the other hand, is rising quickly as U. S. oil producers – specifically distressed shale oil companies – crank out supply in order to generate the cash flow required to service the massive energy sector debt load.
    I am quite surprised by the rapid fall of oil (WTI basis) from the $50 level, because I concluded earlier this year that the Fed was attempting to ‘pin’ the price of oil to $50:
    The graph above is a 5-yr weekly of the WTI continuous futures contract. Oil bottomed out in early 2016 and had been trending laterally between the mid-$40’s and $55. I read an analysis in early 2016 that concluded that junk-rated shale oil companies would implode if oil remained in the low $40’s or lower for an extended period of time. Note that some of the TBTF banks who underwrote shale junk debt were stuck with unsyndicated senior bank debt (i.e. they were unable to find enough investors to relieve the banks of this financial nuclear waste). Thus, the Fed has been working to keep the price of oil levitating in the high $40’s/low $50’s, in part, to prevent financial damage to the big banks who have big exposure to shale oil debt.

    This post was published at Investment Research Dynamics on June 21, 2017.


  • China ‘Rescues’ Bond Market In Symbolic Move But Yield Curve Remains Inverted

    For the 10th day in a row, China’s bond yield curve remains inverted (the longest in history).

    With yields at 3-year highs, corporate bond issuance is evaporating, and has now emerged as the latest major, and most imminent, threat facing China’s financial sector and $10 trillion corporate debt market.
    However, it appears Chinese authorities have reached their max pain point.

    This post was published at Zero Hedge on Jun 20, 2017.


  • The Metals Market Is Out Of Room And Time

    Now that we have moved beyond the Fed-event, many have become quite bearish the metals once again. Many are again expecting the December 2016 lows to be tested, with just as many thinking it will be broken.
    But, what I find quite comical are those that maintain a linear perspective on the market. Each of the Fed interest raises recently has seen the metals rally right after. So, there were many coming into the Fed day expecting the same. So, this is simply yet another reminder that markets do not react linearly, and that the substance of news events or Fed actions do not predict market direction.
    As for us, our expectations have not changed no matter what the Fed did or did not do. For weeks, I had been suggesting that the GDX can rally up towards the 24 region, and then provide us with a pullback. Nothing the Fed has done or not done has moved the market at all outside of our expectations. And, thus far, the market has been playing out almost perfectly, based upon the pattern we have been outlining, which you can see based upon the attached chart we had been using this week to direct us in our expectations for the GDX.

    This post was published at GoldSeek on Wednesday, 21 June 2017.


  • Your Future Wealth Depends on what You Decide to Keep and Invest in Now

    Millienials look for instant gratification Spend half of their income on leisure Instant gratification doesn’t work if need to save for the future Savings rates falling, few have retirement funds Important to understand marginal difference between spending and pleasure Future wealth depends on what you decide to keep and invest in now This week the festival of all festivals begins, Glastonbury 2017. Ed Sheeran, Foo Fighters and Barry Gibb will each be singing to the 250,000 revellers who are currently on their way to Somerset. To those unfamiliar with Glastonbury it is a glorious few days in the countryside with camping and music. Every year there is far too much mud, lots of tears, alcohol, dodgy substances, hippies and great bands. Not to mention the fancy dress outfits and the toilets with questionable sanitary conditions. It is brilliant fun which everyone should try at least once.

    This post was published at Gold Core on June 21, 2017.


  • Gold Price Slips vs. Falling Dollar as Oil Bounces, Bank of England Split Boosts ‘Brexit-Hit’ Pound

    Gold prices held near 5-week lows against a falling US Dollar on Wednesday, trading at $1243 per ounce as commodities rallied but world stock markets extended Tuesday’s retreat in New York.
    As Brent crude oil rallied $1 per barrel from yesterday’s 7-month lows near $45, that pulled the EuroStoxx 50 index of major European shares more than 1% lower.
    The British Pound meantime rallied after a split emerged amongst senior Bank of England policymakers over holding or raising UK interest rates from the current all-time record low of 0.25% with 435 billion ($550bn) of quantitative easing bond purchases.
    Check out Global Liquidity Reaching a Tipping Point
    The Euro currency also rallied against the Dollar but held 1 cent below last week’s peak, the highest level since Donald Trump won the US presidential election last November.
    The gold price for Eurozone investors fell below 1115 per ounce, near its lowest level since January.

    This post was published at FinancialSense on 06/21/2017.


  • Leading The Multipolar Revolution: How Russia And China Are Creating A New World Order

    The last thirty days have shown another kind of world that is engaging in cooperation, dialogue and diplomatic efforts to resolve important issues. The meeting of the members of the Belt and Road Initiative laid the foundations for a physical and electronic connectivity among Eurasian countries, making it the backbone of sustainable and renewable trade development based on mutual cooperation. A few weeks later, the Shanghai Cooperation Organization meeting in Astana outlined the necessary conditions for the success of the Chinese project, such as securing large areas of the Eurasian block and improving dialogue and trust among member states. The following AIIB (Asian Infrastructure Investment Bank) meeting in ROK will layout the economical necessities to finance and sustain the BRI projects.
    The Shanghai Cooperation Organization (SCO) and the Chinese Belt and Road Initiative (BRI) have many common features, and in many ways seem complementary. The SCO is an organization that focuses heavily on economic, political and security issues in the region, while the BRI is a collection of infrastructure projects that incorporates three-fifths of the globe and is driven by Beijing’s economic might. In this context, the Eurasian block continues to develop the following initiatives to support both the BRI and SCO mega-projects. The Collective Security Treaty Organization (CTSO) is a Moscow-based organization focusing mainly on the fight against terrorism, while the Asian Infrastructure Investment Bank (AIIB) is a Beijing-based investment bank that is responsible for generating important funding for Beijing’s long-term initiatives along its maritime routes (ports and canals) and overland routes (road, bridges, railways, pipelines, industries, airports). The synergies between these initiatives find yet another point of convergence in the Eurasian Economic Union (EEU). Together, the SCO, BRI, CTSO, AIIB, and EEU provide a compelling indication of the direction in which humanity is headed, which is to say towards integration, cooperation and peaceful development through diplomacy.
    On the other side we have the old world order made up of the IMF, the World Bank, the European Union, the UN, NATO, the WTO, with Washington being the ringmaster at the center of this vision of a world order. It is therefore not surprising that Washington should look askance at these Eurasian initiatives that threaten to deny its central and commanding role in the global order in favor of a greater say by Moscow, Beijing, New Delhi and even Tehran.

    This post was published at Zero Hedge on Jun 21, 2017.


  • US Treasury Secretary Mnuchin Still Interested In Ultralong (High Duration) Sovereign Debt As Argentina Sees strong demand for surprise 100-year bond

    This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
    US Treasury Secretary Steve ‘The Munchkin’ Mnuchin said on Bloomberg News today that Treasury is still considering issuing ultra-long sovereign debt. This comes on the news that Argentina is issuing a 100 year sovereign bond that is in hot demand. Reuters – Argentina sold $2.75 billion of a hotly demanded 100-year bond in U. S. dollars on Monday, just over a year after emerging from its latest default, according to the government.
    The South American country received $9.75 billion in orders for the bond, as investors eyed a yield of 7.9 percent in an otherwise low yielding fixed income market where pension funds need to lock in long-term returns.
    Thanks to a stronger-than-expected peso currency, the government has increased its overall 2017 foreign currency bond issuance target to $12.75 billion from its previous plan of issuing $10 billion in international bonds, Finance Minister Luis Caputo told reporters in Buenos Aires.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ June 20, 2017.


  • Now China’s Curve

    This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
    Suddenly central banks are mesmerized by yield curves. One of the jokes around this place is that economists just don’t get the bond market. If it was only a joke. Alan Greenspan’s ‘conundrum’ more than a decade ago wasn’t the end of the matter but merely the beginning. After spending almost the entire time in between then and now on monetary ‘stimulus’ of the traditional variety, only now are authorities paying close attention. Last September the Bank of Japan initiated QQE with YCC (yield curve control). The ECB in December altered its QE parameters to allow for what looks suspiciously like a yield curve steepening bias. And the Fed in its last policy statement declared its upcoming intent to think about balance sheet runoff that, as my colleague Joe Calhoun likes to point out, is almost surely going to be favored in the same way.
    Central bankers spent years saying low interest rates were stimulus. They have yet to explicitly correct their interpretation, preferring the more subtle approach of instead altering their operations as noted above. As I wrote back in December.

    This post was published at Wall Street Examiner by Jeffrey P. Snider ‘ June 20, 2017.


  • Ted Butler Quote of the Day 06-21-17

    But I still sense this thing is headed for a climax. One way or another, there will come a time when JP Morgan won’t add to short positions on a coming silver rally and that rally will be like no other. I just can’t know if it will be McDonald taking the high road and ordering JP Morgan to no longer add manipulative silver shorts…or if the most crooked bank in the U.S. will do so on its own.

    A small excerpt from Ted Butler’s subscription letter on 17 June 2017.

    More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.
     


  • Remember When Ford ‘Cancelled’ That Plant In Mexico? Well, They’ve Just Moved It To China

    Back in January, Trump took a very public victory lap when Ford decided to scrap plans to build a $1.6 billion manufacturing facility in Mexico and invest in its Michigan facilities instead (we discussed it here: Trump Takes Victory Lap After Ford Cancels $1.6 Billion Mexican Expansion Plan As “Vote Of Confidence” In President-Elect).
    "@DanScavino: Ford to scrap Mexico plant, invest in Michigan due to Trump policies"— Donald J. Trump (@realDonaldTrump) January 3, 2017

    This post was published at Zero Hedge on Jun 20, 2017.


  • Coming Apart: The Imperial City At The Brink

    David Stockman routinely refers to President Trump as the ‘Great Disrupter’. But this is not a bad quality, he insists. Rather, it is a necessary one: Stockman argues (my paraphrasing) that Trump represents the outside force, the externality, that tips a ‘world system’ over the brink: It has to tip over the brink, because systems become too ossified, too far out on their ‘branch’ to be able to reform themselves. It does not really matter so much, whether the agency of this tipping process (President Trump in this instance), fully comprehends his pivotal role, or plays it out in an intelligent and subtle way, or in a heavy-handed, and unsubtle manner. Either serve the purpose. And that purpose is to disrupt.
    Why should disruption be somehow a ‘quality’? It is because, during a period when ‘a system’ is coming apart, (history tells us), one can reach a point at which there is no possibility of revival within the old, but still prevailing, system. An externality of some sort – maybe war, or some other calamity or a Trump – is necessary to tip the congealed system ‘over’: thus, the external intrusion can be the catalyst for (often traumatic) transformational change.
    Stockman puts it starkly: ‘the single most important thing to know about the present risk environment [he is pointing here to both the political risk as well as financial risk environment], is that it is extreme, and unprecedented. In essence, the ruling elites and their mainstream media megaphones have arrogantly decided that the 2016 [US Presidential] election was a correctible error’.
    But complacency simply is endemic: ‘The utter fragility of the latest and greatest Fed bubble could not be better proxied than in this astounding fact. To wit, during the last 5,000 trading days (20 years), the VIX (a measure of market volatility) has closed below 10 on just 11 occasions. And 7 of those have been during the last month! … That’s complacency begging to be monkey-hammered’, Stockman says.

    This post was published at Zero Hedge on Jun 20, 2017.


  • 69 Percent Of Americans Do Not Have An Adequate Emergency Fund

    Do you have an emergency fund? If you even have one penny in emergency savings, you are already ahead of about one-fourth of the country. I write about this stuff all the time, but it always astounds me how many Americans are literally living on the edge financially. Back in 2008 when the economy tanked and millions of people lost their jobs, large numbers of Americans suddenly couldn’t pay their bills because they were living paycheck to paycheck. Now the stage is set for it to happen again. Another major recession is going to happen at some point, and when it does millions of people are going to get blindsided by it.
    Despite all of our emphasis on education, we never seem to teach our young people how to handle money. But this is one of the most basic skills that everyone needs. Personally, I went through high school, college and law school without ever being taught about the dangers of going into debt or the importance of saving money.
    If you are ever going to build any wealth, you have got to spend less than you earn. That is just basic common sense. Unfortunately, nearly one out of every four Americans does not have even a single penny in emergency savings…
    Bankrate’s newly released June Financial Security Index survey indicates that 24 percent of Americans have not saved any money at all for their emergency funds.
    This is despite experts recommending that people strive for a savings cushion equivalent to the amount needed to cover three to six months’ worth of expenses.

    This post was published at The Economic Collapse Blog on June 20th, 2017.


  • Beer ATMs Threaten America’s “Waiter & Bartender” Recovery

    For 87 straight months, America’s recovery has been dominated by one ‘job’…
    Well over 5 years ago, we first dubbed the economy under Barack Obama as the “Waiter and Bartender recovery”, because while most other job categories had grown at a moderate pace at best, the growth in the category defined by the BLS as “Food Service and Drinking Workers” has been nothing short of spectacular.
    How spectacular? As the chart below shows, starting in March of 2010 and continuing through April of 2017, there have been 87 consecutive month of payroll gains for America’s waiters and bartenders, an unprecedented feat and an all time record for any job category. Putting this number in context, total job gains for the sector over the past 7 years have amounted to 2.378 million or just under 15% of the total 16.4 million in new jobs created by the US over the past 87 months.

    This post was published at Zero Hedge on Jun 20, 2017.


  • 100 Million Dead In US

    Go ahead folks, read this one.
    Accordingly, I must communicate to you at this time the full extent of our dire fiscal straits and the potential disruptions that we face in addressing even our most critical core responsibilities going forward into the new fiscal year. My Office has very serious concerns that, in the coming weeks, the State of Illinois will no longer be able to guarantee timely and predictable payments in a number of areas that we have to date managed (albeit with extreme difficulty) despite an unpaid bill backlog in excess of $15 billion and growing rapidly.
    We are effectively hemorrhaging money as the state’s spending obligations have exceeded receipts by an average of over $600 million per month over the past year. (ed: That’s $7.2 billion/year)
    My cause for alarm is rooted in the increasing deficit spending combined with new and ongoing cash management demands stemming from decisions from state and federal courts, the latest being the class action lawsuit filed by advocates representing the Medicaid service population served by the state’s Managed Care Organizations (MCOs). As of June 15, the MCOs, and their provider networks, are owed a total of more than $2.8 billion in overdue bills at the Comptroller’s Office. There is no question that these obligations should be paid in a more timely manner and that the payment delays caused by the state’s financial condition negatively impact the state’s healthcare infrastructure. We are currently in court directed discussions to reach a workable and responsive payment schedule going forward, but any acceleration of the timing of those payments under the current circumstances will almost certainly affect the scheduling of other payments, regardless of other competing court orders and Illinois statutory mandates.

    This post was published at Market-Ticker on 2017-06-21.