• Tag Archives GDP
  • 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.


  • 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.


  • Markets On Hold Ahead Of FOMC Meeting Conclusion This P.M.

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    (Kitco News) – World stock markets were mostly firmer in subdued trading overnight, as the marketplace awaits today’s FOMC meeting conclusion. U. S. stock indexes are slightly higher just ahead of the New York day session.
    Gold prices are moderately lower today on more profit-taking from the shorter-term futures traders, after recent price gains.
    Traders and investors are awaiting the conclusion of the Federal Reserve’s Open Market Committee meeting (FOMC) that began Tuesday morning and ends early this afternoon with a statement. No changes in U. S. monetary policy are expected. However, the Fed could indicate the timing of reducing its big balance sheet of U. S. securities. The tone of the FOMC statement will also be important for markets. Just recently Federal Reserve Chair Janet Yellen has sounded a more dovish tone on U. S. monetary policy.
    In overnight news, the U. K.’s second-quarter GDP came in at up 0.3% on the quarter and up 1.7%, year-on-year. Those numbers were right in line with market expectations.

    This post was published at Wall Street Examiner on July 26, 2017.


  • Greece Approved for $1.8 Billion Conditional Loan From IMF

    The International Monetary Fund agreed to a new conditional bailout for Greece, ending two years of speculation on whether it would join in another rescue and giving the seal of approval demanded by many of the country’s euro-area creditors.
    The Washington-based fund said Thursday its executive board approved ‘in principle’ a new loan worth as much as $1.8 billion. The disbursement of funds is contingent on euro-zone countries providing debt relief to Greece.
    ‘As we have said many times, even with full program implementation, Greece will not be able to restore debt sustainability and needs further debt relief from its European partners,’ IMF Managing Director Christine Lagarde said in a statement. ‘A debt strategy anchored in more realistic assumptions needs to be agreed. I expect a plan to restore debt sustainability to be agreed soon between Greece and its European partners.’
    IMF officials estimate that, even if Greece carries out promised reforms, the nation’s debt will reach about 150 percent of gross domestic product by 2030, and become ‘explosive’ beyond that point. European creditors could bring the debt under control by extending grace periods, lengthening the maturity of the debt or deferring interest payments, the IMF said in a report accompanying the announcement.

    This post was published at bloomberg


  • More Commitment of Traders Perspective

    We all saw a lot of commentary and “analysis” over the weekend regarding the latest Commitment of Traders report. Again, these numbers are most important when considered through the lens of historical perspective and that’s what we attempt to show you today.
    It’s going to be a long and busy week. From Fedlines to Durable Goods to GDP…there’s a lot going on. And Lord knows what lies ahead politically and geo-politically! Here’s just a brief summary:

    The metals have begun the week just slightly to the upside and this is nice. More on this later today and as we go through the week, of course.

    This post was published at TF Metals Report on Monday, July 24, 2017.


  • Does the Mainstream Have the Definition of Recession All Wrong?

    Pundits and government officials keep telling us the economy is strong. Everything is great. After all, GDP is growing.
    But a lot of people recognize things aren’t all that great. Some prominent economic analysts have said a major crash is looming. Nobel Prize winning economist Robert Shiller called stock market valuations ‘concerning’ and hinted that markets could be set up for a crash. Several other notable economists have recently expressed concern about surging stock markets, particularly in the US. Marc Faber has predicted ‘massive’ asset price deflation – possibly of a drop of as much as 40% in stock market value. Billionaire investor Paul Singer recently said the financial system is not sound. And former Ronald Reagan budget director David Stockman said we should get ready of ‘fiscal chaos.’
    So, how is it that some see a meltdown on the horizon while most of the mainstream sees nothing but unicorns and roses? If the economy is growing, how can anybody things recession is right around the corner?
    Well, what if the mainstream doesn’t understand a recession?
    In the following article originally published at the Mises Wire, Frank Shostak explains why the standard ‘two consecutive quarters of negative GDP’ is not a good definition for recession.

    This post was published at Schiffgold on JULY 24, 2014.


  • S&P Raises Outlook On Greece Ahead Of Bond Sale, Keeps B- Rating

    Consider it a kiss to the bond investors who are expected to oversubscribe the upcoming latest “triumphal” Greek return to the bond markets, as soon as next week. Moments ago, rather unexpectedly, S&P raised its outlook on Greece from Stable to Positive, but reaffirmed the Greek rating at B-. The rating agency, said it believes that “recovering economic growth, alongside legislated fiscal reforms and further debt relief, should enable Greece to reduce its general government debt-to-GDP ratio and debt servicing costs through 2020.”
    We have therefore revised the outlook on Greece to positive from stable while affirming our ‘B-‘ long-term foreign and local currency sovereign credit ratings. The positive outlook indicates our view that, over the next 12 months, there is at least a one-in-three probability that we could raise the ratings.
    In other words, buy the Greek bonds, but beware a repeat of what happened in 2014.
    Full S&P note below (link):
    Outlook On Greece Ratings Revised To Positive; ‘B-‘ Long-Term Ratings Affirmed RATING ACTION
    On July 21, 2017, S&P Global Ratings revised the outlook on the Hellenic Republic (Greece) to positive from stable. We affirmed the ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings.
    RATIONALE
    The outlook revision reflects our expectation that Greece’s general government debt and debt servicing costs will gradually decline, supported by economic recovery, legislated fiscal measures through 2020, and a commitment from Greece’s creditors, specifically from the Eurogroup, to further improve the sustainability of its sovereign debt burden.
    The Eurogroup, in its statement on June 15, 2017, has agreed to facilitate market access for Greece through the creation of a cash buffer via disbursements over and above the amount needed for the Greek government to meet debt servicing obligations and pay down domestic arrears. In our opinion, this support is likely to pave the way for Greece to successfully reenter sovereign bond markets this year.

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


  • Well Well, Look What We Have Here…

    “The ObamaCare reform fiasco looks like a tipping point toward a strain of toxic political paralysis that might literally kill the government as we’ve known it. Over the many months of debate, congress never even got around to raising the salient issue: that the 18-or-so-percent of the economy ‘health care’ represents consists largely of outright racketeering.”
    Yep.
    Oh, and I believe it’s now up to 19% and change, soon be 20.
    And somewhere not far from there the entire mess comes apart.
    3+% real GDP expansion cannot be achieved when one dollar in five is literally stolen for an alleged “service” that is worthless at best and kills you at worst.
    Let us not forget that to consume you must first produce, or convince someone you will in the future (he then lends you what you spend, of course.) The latter has been made easy over the last 30 or so years (since the early 1980s) by a generally-declining interest rate environment.
    You take a million dollar loan @15% interest and you have to come up with $150,000 a year or the come take your property.
    But when the rate falls to 10%, you can borrow a million and a half, spending the other $500 large.

    This post was published at Market-Ticker on 2017-07-21.


  • The Elephant in the Room: Debt

    It’s the elephant in the room; the guest no one wants to talk to – debt! Total global debt is estimated to be about $217 trillion and some believe it could be as high as $230 trillion. In 2008, when the global financial system almost collapsed global debt stood at roughly $142 trillion. The growth since then has been astounding. Instead of the world de-leveraging, the world has instead leveraged up. While global debt has been growing at about 5% annually, global nominal GDP has been averaging only about 3% annually (all measured in US$). World debt to GDP is estimated at about 325% (that is all debt – governments, corporations, individuals). In some countries such as the United Kingdom, it exceeds 600%. It has taken upwards of $4 in new debt to purchase $1 of GDP since the 2008 financial crisis. Many have studied and reported on the massive growth of debt including McKinsey & Company http://www.mickinsey.com, the International Monetary Fund (IMF) http://www.imf.org, and the World Bank http://www.worldbank.org.
    So how did we get here? The 2008 financial crisis threatened to bring down the entire global financial structure. The authorities (central banks) responded in probably the only way they could. They effectively bailed out the system by lowering interest rates to zero (or lower), flooding the system with money, and bailing out the financial system (with taxpayers’ money).
    It was during this period that saw the monetary base in the US and the Federal Reserve’s balance sheet explode from $800 billion to over $4 trillion in a matter of a few years. They flooded the system with money through a process known as quantitative easing (QE). All central banks especially the Fed, the BOJ and the ECB and the Treasuries of the respective countries did the same. It was the biggest bailout in history. As an example, the US national debt exploded from $10.4 trillion in 2008 to $19.9 trillion today. It wasn’t just the US though as the entire world went on a debt binge, thanks primarily to low interest rates that persist today.

    This post was published at GoldSeek on Friday, 21 July 2017.


  • 20/7/17: Euro Area’s Great non-Deleveraging

    A neat data summary for the European ‘real economic debt’ dynamics since 2006:
    ***
    In the nutshell, the Euro area recovery:
    Government debt to GDP ratio is up from the average of 66% in 2006-2007 to 89% in 2016; Corporate debt to GDP ratio is up from the average of 72% in 2006-2007 to 78% in 2016; and Household debt to GDP ratio is down (or rather, statistically flat) from the average of 58.5% in 2006-2007 to 58% in 2016.

    This post was published at True Economics on Thursday, July 20, 2017.


  • Here’s the True Definition of a Recession – It’s Not About GDP

    According to the National Bureau of Economic Research (NBER), the institution that dates the peaks and troughs of the business cycles,
    A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.1
    In the view of the NBER dating committee, because a recession influences the economy broadly and is not confined to one sector, it makes sense to pay attention to a single best measure of aggregate economic activity, which is real GDP. The NBER dating committee views real GDP as the single best measure of aggregate economic activity.
    We suspect that on the back of the NBER’s much more general definition, the financial press as a shortcut introduced the popular definition of a recession as two consecutive quarters of a decline in real GDP. Also, by following the two-quarters-decline-in-real-GDP rule, economists don’t need to wait for the final verdict of the NBER, which often can take many months after the recession has occurred.
    Regardless of whether one adopts the broader definition of the NBER or the abbreviated version, these definitions are actually failing to do the job.
    After all, the purpose of a definition is to establish the essence of the object of the investigation. Both the NBER and the popular definition do not provide an explanation of what a recession is all about. Instead they describe the various manifestations of a recession.

    This post was published at Ludwig von Mises Institute on July 20, 2017.


  • Did the Fed Just Ring a Bell At the Top?

    Very few investors caught on to it, but a few weeks ago the Fed made its single largest announcement in eight years.
    First let me provide some context.
    For eight years now, the Fed has propped up the stock market. In terms of formal monetary policy the Fed has:
    Kept interest rates at ZERO for seven years making money virtually free and forcing investors into stocks and junk bonds in search of yield.
    Engaged in over $3.5 TRILLION in Quantitative Easing or QE, providing an amount of liquidity to the US financial system that is greater than the GDP of Germany.
    In terms of informal monetary policy, the Fed has consistently engaged in verbal intervention any time stocks came in danger of breaking down.
    For eight years, ANY time stocks began to break through a critical level of support a Fed official appeared to issue a statement about future stimulus or maintaining its accommodative monetary policies.

    This post was published at GoldSeek on 19 July 2017.


  • Washington D.C. Is Essentially Just A Gigantic Money Machine

    If you have ever wondered why our leaders in Washington D. C. seem to act so strangely, the truth is that it almost always comes down to just one thing. It has been said that ‘money makes the world go round’, and that is definitely true in Washington. This year the federal government will spend more than 4 trillion dollars, and that represents well over one-fifth of our national GDP. With so much money coming in and so much money going out, the stakes are incredibly high, and that is why so much money is poured into political campaigns on the national level.
    And it shouldn’t surprise anyone that those that live the closest to this gigantic money machine have benefited greatly. Forbes just released their brand new rankings for 2017, and they found that five out of the top 10 wealthiest counties in the entire country are suburbs of Washington D. C….
    Virginia’s Loudoun County holds the title of the nation’s richest county with a median household income of $125,900. While nearly 10,000 residents commute to the District, according to Forbes, about 11,700 businesses employ 161,000 county residents, with Dulles International Airport, Loudoun County Public Schools and the Department of Homeland Security leading that charge.
    The nearby city of Falls Church, Fairfax and Arlington counties in Virginia and Howard County in Maryland also lead the nation based on wealth.

    This post was published at The Economic Collapse Blog on July 19th, 2017.


  • The ECB’s Balance Sheet Is Now The Size Of Japan’s GDP

    Yesterday was a landmark day for the ECB. First, the central bank disclosed that its CSPP, or corporate bond, holdings rose above 100Bn for the first time. As DB’s Jim Reids notes this morning, to put things in perspective, a similar market cap company would be the 18th largest in the Stoxx 600 and 42nd largest in the S&P 500. It’s also roughly equivalent to the annual national output of Kuwait – the 59th largest economy in the world as of 2016.”
    Assuming that the previously disclosed percentage of bonds purchased in the primary market, or directly from the company, has not changed since our report a month ago, this means that the price indiscriminate ECB has directly injected approximately $15 billion in various European corporate entities in exchange for bonds, bypassing any middlemen in the process.

    This post was published at Zero Hedge on Jul 18, 2017.


  • Global Growth on the Rise (for Now)

    According to the Organization for Economic Cooperation and Development (OECD), global growth in 2016 was the lowest since 2009. The good news? It’s on the rebound, with growth this year expected to reach 3.5%.
    The bad news to counteract that good news? In the long-run, nearly all developed countries are converging to 0-1% trend GDP growth.
    That last unfortunate fact notwithstanding, a small pickup in global growth suggests that the current trend in equity markets will continue in the near term, as international growth continues to exceed that of domestic.
    Previous years’ growth for G20 countries, along with projections for 2017 and 2018, are included in the table below. As you can see, world growth is expected to come in at 3.5% this year, with a subtle acceleration in the works for 2018.

    This post was published at FinancialSense on 07/18/2017.


  • China Small Caps Crash To Lowest Since 2015 Amid Deleveraging “Selling Panic”

    Despite China reporting solid economic data on Monday, with beats across the board in everything from retail sales, fixed asset investment, industrial production and GDP printing at 6.9% and on track for its first annual increase since 2010…

    … despite the biggest net liquidity injection by the PBOC since mid June after the central bank injected a net 130 billion yuan, and despite yet another rebound in the Yuan, overnight China’s Shanghai Composite slumped by 1.4%, the most since December as a result of a plunge in the small-cap ChiNext index, which tumbled by 5.1%, and is now down 16% in 2017 to levels not seen since January 2015 following a fresh round of broad deleveraging amid concerns about tougher regulations and more IPOs following a high-level conference over the weekend attended by President Xi Jinping in which China hinted at the formation of a “super-regulator”.

    This post was published at Zero Hedge on Jul 17, 2017.


  • China Delivers “Surprisingly” Great Economic Data Across The Board, Yuan Yawns

    Following more dismal data from the US, hope for global growth remains in China and they did not disappoint. Despite slumping macro data, a major slowdown in real estate, and the nation’s deleveraging efforts in the last three months, GDP beat, Retail Sales beat, Industrial Production surged, and even fixed asset investment was above expectations. The Yuan hasn’t moved.
    For the last three months, Chinese data has been disappointing, along with US, as the collapsing credit impulse leaks into reality…
    ***
    But exports and consumer spending have been pillars for the economy over the second quarter, offsetting the curb on leverage, and tonight’s data shows that none of that matters.. because the deleveraging economy beat across the board
    China GDP BEAT 6.9% (exp +6.8%, prior +6.9%) China Retail Sales BEAT 11.0% (exp +10.6%, prior +10.7%) China Fixed Asset Investment BEAT 8.6% (exp +8.5%, prior +8.6%) China Industrial Production BEAT 7.6% (exp +6.5%, prior +6.5%) As the charts below show, more of the same well-managed data to show that all is well enough that hope remains…Strong growth again reflects an economy awash in credit, foretold in the latest new yuan loans (1.54 trillion yuan) and aggregate social financing (1.78 trillion yuan).

    This post was published at Zero Hedge on Jul 16, 2017.


  • FX Week Ahead Preview: Is it “End Of Days” For The Greenback

    FX Week Ahead, courtesy of Rajan Dhall from fxdaily.co.uk
    Coming off the back of another bad week for the USD, we look to a barren period for the data schedule in the US, so markets will have to determine whether to extend this weakness based on the evidence so far.
    Friday’s hit on US rates was more a function of the softer retail sales data than the inflation read, where the core year on year was unchanged at 1.7% as forecast. However, with seasonal factors supportive of a pick up in consumer spending in June, there was little improvement on the weak May readings in retail, and USD sellers were back in with force. The greenback ended the week on its lows across the board, but this was tempered to a degree against the JPY and CHF.
    Even though the JPY is still seen to be a little undervalued at current levels vs the USD, the consistent BoJ policy to keep the key 10yr JGB rate near/at zero is underpinning the spot rate to a degree, but this also depends on whether the global risk tone can be maintained. Despite the backdrop of tensions over North Korea, as well as the ever present risk of president Trump sparking a trade war (with anyone), equities continue to grind higher with their Teflon (Kevlar) coated armour, so the carry trades will naturally follow. On this note, watch out for the China GDP numbers Sunday night and any material drop from the annualised growth rate of 6.9% from Q1 – Q2 forecast at 6.8% and risk sentiment would easily stomach that.

    This post was published at Zero Hedge on Jul 16, 2017.


  • Hedge Fund CIO: “We’ve Realized Roughly 3 Years Of Gains In The First 6 Months Of 2017”

    As part of the local Sunday ritual, here is Eric Peters with his latest Weekend Notes, providing some context on recent, and not so recent market moves.
    Weekend Notes
    ‘US stocks rise roughly 7% per year,’ he said. ‘Same holds true for Australia; basically, for all economies uninterrupted by catastrophic war at home.’
    The 7% roughly equals 5% nominal GDP growth plus an extra 2% which is due to the S&P 500 index periodically kicking out bad companies and replacing them with better ones.
    ‘Sometimes the market runs ahead of this 7% rate of return, which doesn’t mean it’s the wrong price, it simply means it’s premature.’ In a world of fiat money, high prices are never wrong, they’re only early.
    ‘It took fourteen years for the stock market to return to its 1968 highs,’ he continued. ‘And at that point in 1982, with overnight interest rates at 20% and the S&P 500 price-to-earnings multiple at roughly 8, the market still had miles to run.’

    This post was published at Zero Hedge on Jul 16, 2017.


  • Global Stocks Soared $1.5 Trillion This Week – Now 102% Of World GDP

    Thanks, it seems, to a few short words from Janet Yellen, the world’s stock markets added over $1.5 trillion to wealthy people’s net worth this week, sending global market cap to record highs.
    The value of global equity markets reached a record high $76.28 trillion yesterday, up a shocking 18.6% since President Trump was elected. This is the same surge in global stocks that was seen as the market front-ran QE2 and QE3.
    This was the biggest spike in global equity markets since 2016.

    This post was published at Zero Hedge on Jul 15, 2017.