Economic forecasts have nothing to do with Market Direction

Wise men are instructed in reason men of less understanding by experience; the most unknowing learn by necessity. Wise men do in the beginning what fools in the end. Anonymous
Trying to gauge where the economy is headed is almost always a waste of time; other than pouring over seams of data and losing a large dose of time, you will be none the wiser. If this activity were indeed useful then almost all Economists would be millionaires; sadly, they are not. They are usually working for large multi-million or billion dollar corporations, who can afford to hire them to come out with these silly scenarios that they do noteven believe in; it is not by coincidence that economics is referred to as the ‘dismal science.’
Most successful businesses do not waste time trying to figure where the economy is headed; they are looking at what they have to do to improve their business. In today’s age of hot money, there are two options on the table. Work hard and try to produce a better product or come out with something new that will replace an older product or service and offer it at a better price. The second option, borrow large sums of money and buy back your shares and magically improve your EPS, without doing anything extra. A large number of corporations are focussing on the second option as it is a very easy for corporate officers to reap to great bonuses without doing anything.
Naysayers would rant of a list of negative developments, some of which are listed below; but despite these developments the market has continued to soar higher.

This post was published at GoldSeek on 6 September 2016.

Household Discretionary Spending Trapped in 4-Year Range

Spending the same to end up getting less.
In all the hoopla about consumer spending – which accounts for about two-thirds of the US economy – and how lethargic its growth has been, despite some months when it perked up and gave rise to hopes that ‘escape velocity’ would finally kick in, something got lost: how totally range-bound, for the pastfour years, discretionary spending has been.
This measure of discretionary spending excludes household bills and major items such as cars or homes. It hasn’t budged in dollar terms for four years, despite inflation eating into the purchasing power of the dollar.
In August, spending by American households dropped once again, according to the Gallup US Daily survey released today. As part of this broad survey, based on telephone interviews (60% cellphone, 40% landline) conducted in August of over 15,000 adults, Gallup asks how much they spent ‘yesterday’ on items excluding normal household bills and major purchases such as a home or car. Gallup calls it an ‘indication of discretionary spending.’
So in August, the tally dropped to $91 spent ‘yesterday,’ from $100 in July. Keep in mind, this includes households with more than one earner and/or more than one spender. In terms of the prior three Augusts, that was below average ($92.7):

This post was published at Wolf Street on September 6, 2016.

The Gloves Come Off: Marc Cuban Predicts Market Crash If Trump Wins

As we noted yesterday, in the latest escalation between Donald Trump and the “political” Fed, the republican candidate said that the Fed is “keeping the rates artificially low so the economy doesn’t go down so that Obama can say that he did a good job. They’re keeping the rates artificially low so that Obama can go out and play golf in January and say that he did a good job. It’s a very false economy. We have a bad economy, everybody understands that but it’s a false economy. The only reason the rates are low is so that he can leave office and he can say, ‘See I told you.’”
He then lashed out at Yellen, whom he accused of having a political mandate when conducting monetary policy: “So far, I think she’s done a political job. You understand that.”
On whether we can have a rate hike in September: “Well, the only thing that’s strong is the artificial stock market. That’s only strong because it’s free money because the rates are so low. It’s an artificial market. It’s a bubble. So the only thing that’s strong is the artificial market that they’re created until January. It’s so artificial because they have free money… It’s all free money. When rates are low like this it’s hard not to have a good stock market.”

This post was published at Zero Hedge on Sep 6, 2016.

SP 500 and NDX Futures Daily Charts – Up, Up and Away On Apple Expectations

US stocks managed to close higher today, led by the tech-heavy NDX which is rallying in anticipation of a new product introduction from Apple tomorrow.
I think the Nas even managed to close at a new all time high today. Well done, Fed.
So here is the stock market, all dressed up, but with no place to go. The real economy cannot afford a date.

This post was published at Jesses Crossroads Cafe on 06 SEPTEMBER 2016.

Marc Cuban: “I Have No Doubt The Market Tanks If Donald Wins”

.@mcuban: In the event that @realDonaldTrump wins, I have no doubt in my mind that the market tanks. pic.twitter.com/oe1r4KnDix
— FOX Business (@FoxBusiness) September 6, 2016

As we noted yesterday, in the latest escalation between Donald Trump and the “political” Fed, the republican candidate said that the Fed is “keeping the rates artificially low so the economy doesn’t go down so that Obama can say that he did a good job. They’re keeping the rates artificially low so that Obama can go out and play golf in January and say that he did a good job. It’s a very false economy. We have a bad economy, everybody understands that but it’s a false economy. The only reason the rates are low is so that he can leave office and he can say, ‘See I told you.’”
He then lashed out at Yellen, whom he accused of having a political mandate when conducting monetary policy: “So far, I think she’s done a political job. You understand that.”
On whether we can have a rate hike in September: “Well, the only thing that’s strong is the artificial stock market. That’s only strong because it’s free money because the rates are so low. It’s an artificial market. It’s a bubble. So the only thing that’s strong is the artificial market that they’re created until January. It’s so artificial because they have free money… It’s all free money. When rates are low like this it’s hard not to have a good stock market.”

This post was published at Zero Hedge on Sep 6, 2016.

Why Central Banks Are Quietly Loading Up on Gold Shares

Former Fed Chair ‘Helicopter’ Ben Bernanke once famously said that he ‘didn’t understand gold’ and that it wasn’t really money. We’ve seen that this disdain for the yellow stuff is common among the world’s central banking class.
The systemically important ‘Too Big to Fail’ banks don’t much care for the idea of gold, either, although they certainly don’t mind manipulating it when it suits their purposes.
So it’s funny then, that central banks and commercial TBTF banks are grabbing undervalued gold and silver miners left and right. They’ve been doing it for the past five years, perhaps even longer.
No investor can afford to ignore this trend, because the profit potential here in some of the world’s most undervalued stocks is staggering…
Central Banks Would Rather You Didn’t Know
The Norges Bank, the Norwegian central bank, has filed to have its Q2 2016 U. S. equity holdings be given confidential treatment. That’s according to smaulgld.com.
The website reported that the NB filed their SEC form 13F for Q2, but that it includes a blank information table. It appears the ‘deal’ that NB has struck with the SEC is to file an Amended Form 13F a year later, providing the detailed holdings.

This post was published at Wall Street Examiner on September 6, 2016.

Pension Cuts On Deck In Latest Shock To California Workers

Many public employees utilize a tool, known as “salary spiking,” to boost their annual pensions payment in retirement and we taxpayers get to foot the bill. So what is “salary spiking?” Typically, a public employee’s pension benefit in retirement is equal to some percentage of their highest annual pay which is often their final year on the job. Fortunately for public employees who plan ahead, there are all sorts of fun games that can be played to “spike” your final year salary so that you actually earn more in retirement than you did on the job. In fact, a recent report by the Los Angeles Times found that there are 60 ways to “spike” your final year salary in California including taking cash payouts for accrued vacation time, special 1x bonuses related to graduate degrees (though we’re sure you really needed that extra degree as you head off into retirement), “longevity” bonuses, etc.
One example of salary spiking comes from former Ventura County CEO, Marty Robinson, who offered up a textbook example of how to stick it to taxpayers by planning ahead. Robinson’s official salary heading into her final year on the job was $228,000. That said, Robinson “spiked” her final year salary by cashing out $34,000 in unused vacation pay, taking an $11,000 bonus for a graduate degree and collecting more than $24,000 in extra pension benefits the county owed her. Adding all the 1x payments, Robinson earned nearly $300,000 in her final year which entitled her to an annual pension payment of $272,000 or the rest of her life…nearly 20% higher than the salary she received for actually working.
But, as the Los Angeles Times pointed out, Robinson is not alone:

This post was published at Zero Hedge on Sep 6, 2016.

Gold and Silver Market Morning: Sep-6-2016 — Gold and silver rising through $1,330!

Gold Today -New York was closed on Monday but closed at $1,325.60 on Friday after Thursday’s close at $1,313.30. London opened at $1,330.
– The $: was almost unchanged at $1.1167 down from $1.1165 yesterday.
– The dollar index was slightly weaker at 95.59 from 95.65 yesterday.
– The Yen was almost unchanged at 103.26 from yesterday’s 103.28 against the dollar.
– The Yuan was slightly stronger at 6.6800 from 6.6770 yesterday.
– The Pound Sterling was stronger at $1.3338 from yesterday’s $1.3328.
Yuan Gold Fix
After a lackluster day in London, when the gold price sat around $1,326 all day, Shanghai took the gold price higher to $1,330 and London held it there at the open.
The Yuan was slightly weaker against the dollar once more. The pound continued to strengthen as you can see.
LBMA price setting: The LBMA gold price setting on Monday was at$1,330.05. Yesterday it was at set at $1,328.30.
The gold price in the euro was set on Tuesday at 1,191.05 up strongly onyesterday’s 1,189.91.

This post was published at GoldSeek on 6 September 2016.

Global Oil Demand Set To Tumble As China Cracks Down On Teapot Refiners

One week ago we reported (for the second time) that one of the biggest mysteries for the global oil market, and certainly the biggest wildcard for future oil prices, is the current state of China’s Strategic Petroleum Reserve. As JPM reported , China’s SPR demand was equivalent to approximately 1mm bpd. More importantly, stopping shipments for the reserve would wipe out about 15 percent of the country’s imports. More to the point, according to JPM, and contrary to official data, China’s strategic oil reserve was approaching capacity, which going back to JPM’s June calculation, meant that “our base case assumes China continuing high volumes of (1mbd) SPR builds through August, while factoring in 7% domestic crude production decline and 2% refinery throughput increase. This means 15% mom decline in China’s crude imports in September, or 1.2mbd loss from the China inventory demand. China’s net oil imports ytd has expanded 16% yoy, versus a flat consumption growth.”
This has been cited as one of the reasons why China’s relentless demand for oil, which in early 2016 hit a record level of monthly import, has seen a modest decline in recent months.
However, it appears that the mystery over China’s SPR is no longer the main driver when it comes to the future of Chinese demand. According to Oilchem, a Shandong-based industry researcher, China’s major refineries cut runs to 70.3% of capacity as of September 1, down -1.43% from Aug. 18. To be sure, a big part of the utilization rates decline emerged as the Sinopec Qilu refinery with 8m ton/yr capacity, started maintenance. Oilchem expects the tuns to rebound in mid-Sept. as some plants will resume after works.

This post was published at Zero Hedge on Sep 6, 2016.

Russia Further Depletes Reserves to Cover Budget Shortfalls

The Russian news agency Tass reports that the government has accessed its reserve funds for the third time this year in order to cover a shortfall in the national budget. Tass reports that this time around, the government transferred $6 billion from its reserve fund.
This latest move to tap the fund brings the amount depleted from the fund to 18 percent in August to $32.22 billion. In April and May, the Russian government pulled a total of $12 billion from the fund to cover budget deficits. In July, the International Monetary Fund stated that it expected Russia to stay in its recession due to the drop in oil prices combined with sanctions from the West over the situation in the Ukraine.
The IMF expects a moderate recovery for the country in the coming year.

This post was published at FinancialSense on 09/06/2016.

Jobs Numbers Cause Gold Jump

After the last week’s lackluster jobs numbers were reported, gold futures got a big jump, halting a weekly decline. After the Bureau of Labor reported only 151,000 jobs were added last month, investors sought a safe haven in the yellow metal while hopes of a September rate hike were all but squelched.
The gold spike halted a weekly loss fueled by two weeks of so-called ‘hawkish talk’ from Janet Yellen and other monetary policy makers.
According to Bloomberg, gold futures for December delivery gained 0.4 percent to $1,322.40 an ounce at 12:02 p.m. on the Comex in New York, reducing a weekly loss of 0.2 percent.
Senior market strategist at RJO Futures in Chicago, Phil Streible stated, ‘Traders are bidding up gold because they think the jobs number isn’t strong enough to justify two rate hikes this year.’

This post was published at Schiffgold on SEPTEMBER 6, 2016.

All Time Highs and Lows … and the Great Collapse

Stocks and Bonds:
Dow Jones Industrial Index – high 18,636 on August 15, 2016
S&P 500 Index – high 2,190 on August 15, 2016
NASDAQ Index – high 5,262 on August 15, 2016
T-Bonds – the 30 year bond high was 176.94 on July 8, 2016
Dow Transportation Average – high on December 29, 2014 – Oops! Dow Theory says we should be worried about an unconfirmed market top.
Financial:
National Debt (US – official only) exceeds $19.4 trillion in August 2016. Unfunded liabilities are much larger. Student loan debt is over $1.4 trillion in August 2016. Debt to GDP ratio – all time high in August 2016. Central bank balance sheets – globally around $25 trillion in August 2016, and rising rapidly. Sub-prime auto loans – about $1 trillion (US) in August 2016. How many times in the past 1,000 years has ‘too much debt’ been a precursor of future prosperity and social stability?
Other Highs
Total tons of gold hoarded by China, India, and Russia continue to rise. Why would Asian countries hoard gold while western nations actively suppress gold prices and awareness of gold’s importance? The cost of buying a Presidential election, including media advertising, payoffs, focused disinformation, ‘dirty tricks,’ programming voting machines, and so much more. Central bank intrusions into markets. The Fed has helped the 1% but hurt most others. The Bank of Japan, Swiss Central Bank, and the EU are buying equities. Interest rates have been forced to the lowest levels in history. Economies are struggling even though central banks have aggressively ‘stimulated.’ Perhaps the purpose of the stimulation was to boost the wealth of the 1%…

This post was published at Deviant Investor on September 6, 2016.

Services Economy Crashes To Feb 2010 Lows, Confirming Manufacturing Collapse

Following last week’s disappointing Manufacturing ISM/PMI data, Services PMI printed a six-month-low 50.9 over the weekend “pointing to an annualised GDP growth rate of a mere 1%,” according to Markit. Services jobs fell to their weakest since Dec 2014 but the ISM Services data collapsed to 51.4 – lowest since Feb 2010 with new orders imploding to their weakest since Jan 2014.
Another chart to completely ignore…

This post was published at Zero Hedge on Sep 6, 2016.

SWOT Analysis: A Closer Look at Gold Flows

Strengths
The best performing precious metal for the week was silver with a surge of 4.18 percent following the poor jobs report. As seen in the chart below, when comparing the S&P 500 Index and Newmont Mining, the only gold mining stock in that index, on free cash flow per share growth, Newmont has performed significantly better. Both quarter-over-quarter and year-over-year, the mining company beats the broader index on this factor. The August unemployment report came in soft on Friday, with payroll expansion of 151,000, reports Bank of America. Consumer confidence surprised to the upside, while the ISM manufacturing index slipped to 49.4. In addition, the Department of Labor reported that second quarter productivity fell by 0.6 percent (the longest streak of declines in more than 35 years). As BofAML notes, when faced with a choice of defending the inflation target or allowing a modest overshoot, the Fed will choose the latter, meaning negative real rates could persist ahead. The government in Burkino Faso wants to help mining companies that are already in operation in the nation to lengthen the lives of their mines, reports Bloomberg, and make it easier for new investors to get information about deposits. The supportive policies for wealth creation in the nation are strong. Not only are troops being deployed to secure the mines, but the government is also building seven solar power plants to help deal with an electricity shortage.

This post was published at GoldSeek on 6 September 2016.

Oil Slide Stalls As Saudi Hints At Massive Budget Cuts

WTI crude has dropped back to a $43 handle this morning – erasing the Saudi-Russia statement hype ramp – after China inventories and disappointing ‘freeze’ talk but for now the plunge has stalled as Saudi Arabia is set to review thousands of contracts aiming to cancel up to $20 billion of projects. This suggests hope for higher oil prices (improved revenues) are fading.
Crude resumed its fall
As Bloomberg reports, Saudi Arabia is intensifying efforts to shrink the highest budget deficit among the world’s biggest 20 economies, aiming to cancel more than $20 billion of projects and slash ministry budgets by a quarter, people familiar with the matter said.

This post was published at Zero Hedge on Sep 6, 2016.

Is the US economy too weak for a Fed rate hike?

Some analysts argue that the US economy is strong enough to handle some rate-hiking by the Fed. Others argue that with the economy growing slowly the Fed should err on the side of caution and continue to postpone its next rate hike. Still others argue that the economy is so weak that the Fed not only shouldn’t hike its targeted interest rate, it should be seriously considering a rate CUT and other stimulus measures. All of these arguments are based on a false premise.
The false premise is that the economy is boosted by forcing interest rates to be lower than they would otherwise be. It should be obvious – although apparently it isn’t – that an economy can’t be helped by falsifying the most important of all price signals.
When a central bank intervenes to make interest rates lower than they would be in a free market, a number of things happen and none of these things are beneficial to the overall economy.
First, there will be a forced wealth transfer from savers to borrowers, leading to less saving. To understand why this is an economic problem in addition to being an ethical problem, think of savings as the economy’s seed corn. Consume enough of the seed corn and there will be no future crop.

This post was published at GoldSeek on 6 September 2016.