• Tag Archives Money
  • 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.

  • Paulson Shutters Long-Short Equity Fund Amid Massive Healthcare Losses

    After gaining instant fame with his massive subprime bet back in 2008/2009, John Paulson can’t seem to buy a clue of late. Over the past couple of years, a series of strategic missteps have resulted in abysmal returns and increasing concern among investors that Paulson may have been nothing more than a “one-trick pony” all along.
    Of course, as we pointed out back in November, one of the biggest of those ‘missteps’ seems to have been the creation of a $500 million, long-short equity fund focused on healthcare about two years ago.
    The strategy seemed simple enough at the time: make a massive, Paulson-esque bet on the consolidation of large multi-national pharmaceutical businesses, hedge that bet with bearish wagers on the broader markets and sit back and wait for the money to flow in just like with the subprime bet. Unfortunately, exactly the opposite happened in 2016 with the broader markets advancing while Paulson’s largest pharma holdings completely collapsed anywhere from 30% – 85%. Oops.

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

  • Markets Relax Merrily on a Powerful Time Bomb

    Magnitude unknown but huge. Brokerages push it to new heights.
    Stock and bond market leverage is everywhere. Some of it is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or ‘shadow margin’ because no one knows how much of it there is. But it’s a lot. And it’s booming.
    These loans can be used for anything – pay for tuition, fix up that kitchen, or fund a vacation. The money is spent, the loan remains. When security prices fall, the problems begin.
    Finra, the regulator for brokerages, doesn’t track this shadow margin, nor does the SEC. Both, however, have been warning about the risks. No one knows the overall amount of this shadow margin, but some details have been reported:
    Morgan Stanley had $36 billion of these loans on its balance sheet as of the end of 2016, up 26% from 2016, and more than twice the amount in 2013. Bank of America Merrill Lynch had $40 billion in SBLs on the balance sheet at the end of 2016, up 140% from 2010;

    This post was published at Wolf Street 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.

  • Bankers Ditch 7-Figure Salaries To Climb Aboard The ICO “Rocketship”

    In just a few short months, companies – many of dubious legitimacy – have raised more than a billion dollars through ICOs. Some of the better-hyped offerings in the field of 900 new coins that have been created this year managed to raise tens of millions of dollars in minutes. Investors, who were eager to throw money at the new coins, blindly hoping they would land on the next bitcoin or Ethereum.
    With all this money flying around, it’s no small wonder that bankers in New York, Hong Kong and London are abandoning seven-figure salaries to try their luck in the nascent ICO industry, according to Bloomberg. Stories like this have become commonplace with every passing fintech trend, as bankers, fearing the technology’s potential to disrupt the banking business and threaten their bonus pool, hoping to cash in on the next technology enabled ‘revolution.’

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

  • Spot The Outlier – Seattle Home Prices Go Vertical As Laundered Chinese Money Flows In

    Last summer we declared that “China’s favorite offshore money laundering hub is officially no longer accepting its money” after the city of Vancouver slapped a 15% tax on foreign real estate buyers. The tax was intended to curb a massive real estate bubble which had resulted from an influx of Chinese money over the preceding years. The move seemingly worked as it resulted in a staggering and immediate 96% drop in foreign buyers (see: Foreign Buying Plummets In Vancouver: Sales To Foreigners Crash 96%).

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

  • These Blue Apron Stock Price Predictions Are Absolutely Wrong

    Blue Apron Holdings Inc. (NYSE: APRN) stock has been trading for about a month, and a slew of bullish Wall Street ratings and Blue Apron stock price predictions were just released. However, Money Morning experts believe those predictions are dangerously wrong…
    The meal-kit delivery service stumbled as a public company right out of the gate with a stock issue price some 40% below estimates. That was thanks in part to the giant Amazon.com Inc. (Nasdaq: AMZN) announcement that it will buy Whole Foods Market Inc. (Nasdaq: WFM) released nine days earlier. And when Blue Apron stockstarted to trade, it almost immediately began to slide lower.
    From its June 29 debut at $10 per share, its price tumbled 35%.
    Analysts, however, see investors changing their views on the company even with competition from Amazon. According to data from MarketWatch, Blue Apron now enjoys seven ‘Buy’ ratings and four ‘Equal Weight’ ratings. Only one analyst in the group maintains a ‘Sell’ rating.

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

  • North Carolina Governor Signs Bill Eliminating Sales Tax on Gold and Silver

    North Carolina Gov. Roy Cooper has signed a bill into law exempting the sale and purchase of gold and silver from state sales taxes. This removes one barrier from buying gold, silver and platinum. It will also help encourage their use and take the first step toward breaking the Federal Reserve’s monopoly on money.
    Rep. Dana Bumgardner (R-Gastonia) and Rep. Jeff Collins (R-Rocky Mount) introduced House Bill 434 (H434) in March. The legislation exempts precious metals in various forms from state sales tax, including investment metal bullion, US Mint-produced gold and silver, investment coins and non-coin currency.
    The House passed H434 on second reading by a 104-8 vote in May. It then gave final approval on the third reading by a voice vote. The Senate concurred with a vote of 35-13 on June 27. With the governor’s signature, the law went into effect retroactively to July 1, 2017.

    This post was published at Schiffgold on JULY 26, 2016.

  • 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.

  • Who Bought The New Greek Bonds: Here Is The Answer

    After triumphantly returning to the bond market three years after it last issued a euro-denominated long bond (which one year later nearly defaulted when only a third bailout prevented Grexit), this morning Bloomberg has provided details of who the lucky buyers of the just priced 3BN bond offering were. And not surprisingly, the biggest source of new funds for the Greek government (which will then use most of this to pay interest owed to the ECB) were US buyers.
    As Bloomberg notes, just under half, or 1.425BN of the 3BN deal was new money with 1.57b of existing paper rolled, with the following geographic distribution of new sources of cash:
    U. S. 44% U. K./Ireland 26% Greece 14% France 7% Spain/Portugal/Italy 3% Germany/Austria 3% Others 3% By investor type:
    Fund managers 46% Hedge funds 36% Banks/private banks 13% Others 5%

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

  • Beware The Ides Of October…

    – Mark Twain (maybe)
    We have been speaking a lot about how the liquidity in the market today is different than in the past. The chart below reflects this better than anything we have seen.

    The monetary base in the U. S. has exceeded M1, the most narrow definiton of money, since the financial crisis. The monetary base consists of money in circulation and reserves held at the Fed (see definition below).
    The M1 money multiplier is still less than one, which reflects that for every dollar created by the Fed – an increase in the monetary base – results in a less than one dollar increase in the money supply (M1). Credit and deposit creation of commercial banks is thus still impaired, though improving and its repairment may be one reason why the Fed is a bit nervous and in tightening mode.
    A rapid turnaround and improvement in the money multiplier, which may be also be reflected in improving bank net interest margins and growing balance sheets, could act as an early indicator of potential inflationary pressures and a flag that the massive amount of high powered money in the financial system is being converted to credit based money.

    This post was published at Zero Hedge on Jul 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.

  • Congo’s mining revenue ‘missing’ – Global Witness

    According to a Global Witness report, the money is being distributed through corrupt networks linked to President Joseph Kabila.
    At least $750m (580m) has gone missing over the past three years, it says.
    The government has not commented but has previously denied allegations of corruption in its mining sector.
    DR Congo is Africa’s biggest producer of copper and the world’s largest supplier of cobalt used in batteries for electric cars.
    It is also rich in gold, diamonds and coltan, used in mobile phones, but its people remain among the poorest in the world following years of conflict and mismanagement.

    This post was published at BBC

  • Bolivia’s President Declares “Total Independence” From World Bank And IMF

    Via The American Herald Tribune,
    Bolivia’s President Evo Morales has been highlighting his government’s independence from international money lending organizations and their detrimental impact the nation, the Telesur TV reported.
    “A day like today in 1944 ended Bretton Woods Economic Conference (USA), in which the IMF and WB were established,” Morales tweeted. “These organizations dictated the economic fate of Bolivia and the world. Today we can say that we have total independence of them.”
    Morales has said Bolivia’s past dependence on the agencies was so great that the International Monetary Fund had an office in government headquarters and even participated in their meetings.
    Bolivia is now in the process of becoming a member of the Southern Common Market, Mercosur and Morales attended the group’s summit in Argentina last week.

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

  • Money Is Money, Wherever It Comes From

    One of the crucial things to understand about today’s world is that money is fungible. Whether it’s created in Japan, Europe, China or the US, once it’s tossed by a central bank into one or another part of the global economy, it eventually finds its way to a common pool of liquidity.
    So the modest US tightening of the past year (100 basis point increase in the Fed Funds rate, slight decrease in Fed balance sheet) has to be seen in a global context. And that context is still insanely easy. Here, for instance, is China’s ‘social financing’ – their term for total new debt:

    This post was published at DollarCollapse on JULY 25, 2017.

  • Five Reasons to Buy Gold

    Despite what Warren Buffet might tell you, there are good reasons to buy gold.
    In a speech several decades ago, the billionaire basically called the yellow metal useless.
    [Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility.’
    In the first place, the statement is patently false. Gold is increasingly being used in technological applications from biomedical processes to energy production. But even if Buffet was right and there were no practical uses for the yellow metal, there would still be good reasons to buy gold – starting with the fact that gold is money.
    Here are five reasons to own gold gleaned from a Forbes article by analyst Olivier Garret.
    Gold is money – Gold possesses all of the characteristics of money Aristotle listed 2,000 years ago.

    This post was published at Schiffgold on JULY 25, 2017.

  • World Stock Markets Mixed, Quiet; FOMC Meeting In Spotlight

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    Global equity markets were steady to narrowly mixed in quieter overnight dealings. U. S. stock indexes are pointed toward firmer openings when the New York day session begins. The U. S. indexes are at or near record highs with no early chart clues to suggest they are topping out.
    Gold prices are moderately lower in pre-U. S. session trading, on some normal profit taking from recent gains that saw prices hit a four-week high on Monday.
    Focus of the world marketplace is on the Federal Reserve’s Open Market Committee meeting (FOMC) that begins Tuesday morning and ends early Wednesday 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 closely watched German Ifo business sentiment index rose to a record 116.0 in July, from 115.2 in June. A July reading of 114.9 was forecast.

    This post was published at Wall Street Examiner on July 25, 2017.