Not So Fast With Those Fed Hikes: Brainard Warns Costs Of Trump Stimulus Could Be “Significant”

Delivering her first speech on monetary policy since September, closely watched Fed governor Lael Brainard, considered to be one of Janet Yellen’s most trusted peers, said monetary policy “could be affected for some time by uncertainty surrounding fiscal policy and its effects on the economy”, specifically the magnitude, timing and composition of these changes.
And while the Fed’s recent shift to incorporate the “Trump stimulus” in its forecasts has been duly noted, and according to some has made the Fed more hawkish as the central bank expects substantial stimulus even with employment near capacity (granted, ignoring the 95 million Americans out of the labor force), Brainard on Tuesday took a modest step back and acknowledged that while expansionary fiscal policy could prompt the central bank to undertake a faster pace of interest rate increases and begin shrinking its balance sheet sooner than expected, the details of the policy shifts under Donald Trump are still quite uncertain and could come at “significant costs.”
In other words, the Fed may bypass the near-term impact of the Trump stimulus, and focus on the longer-term, more adverse and deflationary implications by what the president-elect will unveil. Translation: no hikes even as inflation rises “transitorily.” This may be the Fed’s first admission that it could stay pat, and not hike even if Trump manages to push through his proposed $1 trillion stimulus.

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

Draining the Swamp in Washington Through Community Banking

The currency of Washington’s power politics is campaign money. Much of that campaign money flows from Wall Street’s biggest banks: its lobbyists, its Political Action Committees, its employees and their spouses. After flooding the presidential campaign with money, Wall Street is then rewarded by being allowed to make cabinet hiring decisions as part of the new President’s transition team, ensuring continuity government and an incurable malignancy on American democracy. To begin the process of draining the corrupt swamp in Washington, it means cutting off the money flow from Wall Street – not looking for a new savior who is deeply indebted to the same Wall Street banks.
Tens of millions of U. S. consumers have the power to pull the plug on the swamp by moving their deposits from big Wall Street banks to their local community banks or their credit union. This would not only deplete Wall Street’s coffers to corrupt in Washington, it would provide the cash to reinvigorate the cities and towns that Wall Street has blighted through its dirty swap deals and its evil genius subprime housing bust.
Community banks have the same level of FDIC insurance as the big banks, so you’re not taking on more risk when you move your money – providing you hold your funds in FDIC-insured accounts and stay within the insurance limit. FDIC-insurance is backed by the full faith and credit of the U. S. government. (You should ask for a statement in writing from your new bank that the type of account you have selected is insured. See video below for more details. Mutual funds, municipal bonds and annuities are not FDIC-insured, even when you buy them from a bank.)

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Apple Hikes UK App Store Prices By 20% In Response To Plunging Pound

Ahead of Theresa May’s speech, which catalyzed the biggest jump in sterling since 2008, the signs were already there that the British currency is facing upward pressure when December U. K. inflation was reported to have accelerated to the fastest pace in more than two years, driven by the tumbling pound which drove a surge in import costs. Consumer-price growth increased to 1.6 percent, the highest since July 2014, from 1.2 percent in November, and above the 1.4% consensus estimte. A separate report showed the cost of imports soared at the fastest annual rate in more than five years according to Bloomberg.

On Monday, BOE’s Mark Carney warned on Monday that rapidly accelerating inflation will put the brakes on consumer spending this year following sterling’s 18 percent depreciation since the Brexit vote. The BOE, which will publish new projections next month, currently expects inflation to breach its 2 percent target soon. It sees the rate pushing close to 3 percent by the end of the year, while some forecasters see it even higher than that. ‘This is very much the thin end of the wedge and there is plenty more upside to come over the coming months,’ said Alan Clarke, an economist at Scotiabank. ‘We suspect that the bank will turn more hawkish.’ It is unclear if that means that the BOE may consider hiking: according to Goldman, not only will the BOE not raise rates for the next two years, but will actually engage in further easing in the not too distant future.

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

China May Soon Shock the Market

Is China preparing to devalue its currency again? The fate of the market may hang on the answer…
China last devalued between December 2015 and January 2016. The result? U. S. stocks kicked off the year to their worst start ever. And that was only a 2% devaluation.
China previously devalued 4% in August 2015. That was enough to send the Dow plunging 508 points in one session – the Dow’s eighth-worst single-day crash in its history. It looked like it may have led to ‘the big one’ so many have been expecting.
But the Fed managed once again to yank another rabbit out of its hat. The day of reckoning was averted – or at least postponed.
Could the Fed pull it off again if China devalues? But why would China devalue… when the last two occasions sparked massive financial panics?
The answer: It might have to in order to defend its domestic economy…
The muscular U. S. dollar has hung China on the hooks of a dilemma. It’s true China wants a weak currency to spark its export economy. Weak, yes. But not too weak…

This post was published at Wall Street Examiner on January 16, 2017.

Gold and Silver Market Morning: Jan 17 2017 – Gold and Silver moving higher with a lower $!

Gold Today – New York closed at $1,196.20 on the 16th January after closing at $1,198.30 on the 13th January. London opened at $1,213.20today.
Overall the dollar is weaker against global currencies today. Before London’s opening:
– The $: was weaker at $1.0650: 1 from $1.0593: 1 yesterday.
– The Dollar index was weaker at 101.09 from 101.70 yesterday.
– The Yen was stronger at 113.44: $1 from yesterday’s 114.11 against the dollar.
– The Yuan was stronger at 6.8860: $1, from 6.9082: $1, yesterday.
– The Pound Sterling was stronger at $1.2115: 1 from yesterday’s $1.2056: 1.
Yuan Gold Fix
Shanghai gold prices moved higher, with strength, through the $1,210 resistance. It traded today over Yuan 270 reaching 272 at one point. This equates, on today’s exchange rate, to $1,219.57 and $1,228.60.
Chinese investors know the Yuan will continue to fall and are protecting themselves against this. While the People’s Bank of China has been selling dollars to lift the Yuan over the last week, we doubt they will keep doing this after President Trump as of the 20th January takes office. China is preparing for a confrontation with him. We therefore see the Yuan continuing to weaken in 2017 and Chinese demand to remain robust, despite Xi’s plea not to go to a trade war and keep markets free at Davos.

This post was published at GoldSeek on 17 January 2017.

Bonds & Bullion Are Surging As Small Caps Give Up 2017 Gains

Following Friday’s plunge in bond and bullion prices, dollar weakness (on Trump’s comments), Brexit uncertainty, and looming inauguration appear to have sent a ripple of anxiety through capital markets sending Treasury yields tumbling (6-8bps lower across the curve), gold prices soaring (above $1215), and stocks tumbling (Small Caps back in the red for 2017)…

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

Keith Neumeyer: Damage Inflicted by Precious Metals Manipulation Is in the ‘Multi Billions’

Listen to the Podcast Audio: Click Here
Mike Gleason: It is my privilege now to bring in Keith Neumeyer, founder and CEO of First Majestic Silver Corp, one of the top silver mining companies in the world. Keith has an extensive background in the resource and finance sectors and has also been an outspoken voice about the manipulation that has been occurring in the futures market pricing of silver.
It’s a real privilege to have him on with us again today. Keith, thanks so much for joining us and welcome back.
Keith Neumeyer: Thanks Mike. I think we have got lots of juicy things to talk about.
Mike Gleason: Yeah, we certainly do. To start off here Keith – and before we get into the subject of manipulation, which I definitely want to cover with you today – next week Donald Trump will be sworn in as the next president here in the United States and it will mark a new era in American politics. It will also mark the first time in nearly a decade that we don’t have a democrat in the white house. It’s a new environment here for metals investors. We know many are wondering what a Trump presidency is likely to mean for metals and commodities as a whole. What are your thoughts on the subject? Will Trump and his policies ultimately be good or bad for precious metals?
Keith Neumeyer: I’m not even sure who in the office as the presidency really matters. We’ve gone through decades of presidents. Donald Trump, he talks a good story and I know there’s lots of optimism around him taking on the presidency. It’s interesting that during the election campaign everyone is saying doom and gloom if Trump gets in. Now everyone’s saying it’s going to be great for the world that he’s coming in. He’s going to industrialize the United States, it’s going to be great for metals and copper, uranium’s moving, everything seems to be moving. The Dow’s setting new highs or close to new highs. S&P’s doing the same thing.

This post was published at SilverSeek on Monday, January 16th.

Hyundai To Boost Investment In The US To $3.1 Billion Over 5 Years

Having been unleashed with a series of angry Trump tweets, the outpouring of carmarker investments in the US has turned into a veritable torrent, and just hours after GM announced it would invest $1 billion in new US factories, adding 1,000 jobs, Korea’s Hyundai Motor Group said it also plans to lift U. S. investment by 50% to $3.1 billion over five years and may build a new plant there. It has become the latest auto firm to announce fresh spending following Ford, Fiat, Toyota and GM, after President-elect Donald Trump threatened to tax imports.
As a reminder, Trump has repeatedly warned of a 35% tax on vehicles imported from Mexico, where many automakers have taken advantage of the country’s lower labor costs. Toyota Motor, Ford, and Fiat Chrysler have all recently unveiled new U. S. investment plans, while over the weekend German automakers were the latest to come under fire from Trump, provoking a blistering response from Angela Merkel.
According to Reuters, Hyundai Motor and Kia Motors which make up the Hyundai Motor Group have not been directly criticized by Trump but they may have felt vulnerable because among major brands, they have one of the lowest ratios of cars built in the United States to cars sold. To be sure, just like all other carmakers who reacted to pressure by Trump, only to deny they did so, Chung Jin-haeng, president of the group, denied the plan was due to, drumroll, pressure from Trump, adding that a new U. S. factory would depend on whether demand improved under the next U. S. administration.
“We have to be committed to the U. S. market – a strategically important market which can make or break our global success,” he told reporters in Seoul on Tuesday.

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

Bitcoin and Gold – Outlook and Safe Haven?

Bitcoin and Gold – Outlook, Volatility and Safe Haven Diversification
– Recent performance of Bitcoin and Gold
– Price outlook
– Bitcoin, China and capital flight
– Exchanges of value?
– Can bitcoin rival gold as a safe haven?
– ‘Bitcoin vs Gold’ or ‘bitcoin and gold’?
– Importance of diversification
– Conclusion: A monetary and financial revolution?
Recent performance of bitcoin and gold
What does the recent volatility and surging price of bitcoin mean for the future of the crypto-currency and does its recent outperformance mean that it may supplant gold as a safe haven currency? Can bitcoin rival gold as a safe haven? Do bitcoin’s recent price gains herald gains for gold in 2017?

This post was published at Gold Core on January 17, 2017.

Trumphoria Fades As Empire Fed Manufacturing Survey Signals More Stagflation

Having spiked exuberantly in November and December following Trump’s election, Empire Fed’s manufacturing survey limped lower in January, missing expectations, and was revised lower as Trumphoria fades.
Jan Empoire Fed printed 6.5 (missing expectations of 8.5) from a revised lower Dec at 7.6 (from 9.0)
More worrisome still is the spike in prices paid (from 22.6 to 36.1) and tumble in new orders (from 10.4 to 3.1)…

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

Highlights From Xi Jinping’s Davos Speech: Attacks Protectionism, Praises Free Trade, No Intention To Devalue Yuan

In a speech that struck all the right platitudes with this pro-globalization audience, Xi Jinping, the first Chinese president to attend Davos, slammed protectionism, defended globalization and free trade, drawing a line between himself and Donald Trump just days before the US president-elect’s inaugural address in Washington, and said he has no intent to boost China’s competitiveness through Yuan devaluation.
***
‘The problems troubling the world are not caused by globalisation,’ Xi Jinping said in an address at the World Economic Forum in Davos. ‘They are not the inevitable outcome of globalisation.’
While Xi did not mention Mr Trump by name, he warned of the dangers of protectionism. ‘Countries should view their own interest in the broader context and refrain from pursuing their own interests at the expense of others,’ the Chinese president said. ‘We should not retreat into the harbour whenever we encounter a storm or we will never reach the opposite shore.’
He also warned that ‘no one will emerge as a winner from a trade war’ and pledged that China would not seek to benefit from devaluation of its currency or a ‘currency war’.

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

US Futures, Dollar Slide; Global Stocks Drop After Trump Comments; May Speech Awaited

While traders eagerly await Theresa May’s speech set to begin in minutes, even if it was largely leaked last night to minimize “market shocks” and set the stage for a big squeeze in cable which at last check was over 100 pips higher overnight, the big catalyst setting today’s risk off mood was the previously noted Trump statement, published overnight by the WSJ, in which Trump called the US currency “too strong“, and attacked the Border-Tax Adjustment, expected to boost the value of the USD by as much as 15% should it be implemented.
As a result, European shares are sliding, S&P index futures are down 12 points, while the dollar has fallen all of its G-10 peers – with the USDJPY tumbling below 113 for the first time since December, and the USDCNH back under 6.80 – as investors flee the crowded USD trade amid concern for the future of the Trumpflation rally and worries Theresa May may say today that U. K. will leave European Union’s single market. And since the dollar is now a source of risk, traders are suddenly piling into gold, which has risen to $1,218 in early trading, the highest since November 22.

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

Theresa May Says UK To Leave EU Single Market

Update:
Britain will leave the EU’s single market when it exits the European Union, Prime Minister Theresa May said on Tuesday, putting an end to speculation that London might try to seek a “soft Brexit”. In her long-awaited speech in which she sought to define the country’s future as a global player that aims to trade freely far beyond Europe, May said the final exit deal would be put to parliament for a vote, a statement which sent cable soaring on hopes Brexit may be unwound.
Sterling, which has traded at the lowest levels against the U. S. dollar for more than three decades, rose during May’s speech hitting a day high, and jumping the most since 2008. Her announcement that she will put the final Brexit deal to a vote in both houses of parliament comes ahead of a court decision on whether she has the power to start the process of withdrawing without parliamentary approval.
May said she would seek an equal partnership with the EU but that she would not adopt models already used by other countries that have free trade agreements with the bloc.
Her statement that Britain would leave the single market was by far the clearest indication she has ever given of her plans for the future, after months of criticism that she was not being sufficiently transparent.

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

Why Futures Are Lower: JPMorgan Summarizes The Chaotic Overnight Session

As traders get to the their desks this morning after a 3-day weekend, only to find a market bombarded by a barrage of overnight news from around the globe even as Theresa May is currently delivering her Brexit speech, (so far the most impotant thing she has said is that both houses of parliament will vote on Brexit, leaving a door open that Brexit may not happen at all), here courtesy of JPM’s Adam Crisafulli is a recap of all the chaos that has taken place so far.
Market update – it was a very busy holiday weekend in the US w/a slew of Trump remarks (on foreign and domestic matters), Brexit worries, an update on Chinese growth, OPEC rhetoric, and more.
The net result of everything is generally weaker risk asset price action – Asia was weak Mon and mixed Tues while Europe is now tracking down >1% WTD. US futures are off ~12-13 points (about ~55bp).
Trump’s remarks on border taxes are the single most important/incremental piece of news from the perspective of US equities (given that tax reform has prob. been driving ~70% of the Trump/Ryan enthusiasm) – ostensibly the absence of border taxes is a ‘positive’ but it also reflects 1) the relatively inchoate nature of the overall tax reform effort (which suggests progress may not come for several months at least) and 2) it suggests the headline corporate rate may not move as low as Ryan (20%) or Trump (15%) want as the border adjustment revenue was a necessary offset.

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

The Coming Referendum in Turkey to Consolidate More Power for Erdoan

A constitutional referendum is planned to be held in Turkey in in the Spring of 2017. A survey is showing that the people are not really in favor of handing endless power to the President Recep Tayyip Erdoan. Voters are expected to decide on amending 18 articles of the Constitution of Turkey. The amendments have been the established policy of the governing Justice and Development Party (AK Party) and its founder President Erdoan. The amendments are to now include the introduction of an executive presidency that would replace the existing parliamentary system of government. Erdoan want to abolition of the Office of the Prime Minister and assume more of a dictatorial position. He also intends to reform to the Supreme Board of Judges and Prosecutors.

This post was published at Armstrong Economics on Jan 17, 2017.

The Dangers of a “Universal Basic Income”

Finland has announced that it is conducting a social policy ‘experiment’ which deserves closer examination. Through 2017 and 2018, Finland will provide a guaranteed basic income of 560 euros to 2,000 randomly selected welfare recipients. This benefit will be subtracted from other, currently existing welfare benefits that participants may be receiving, and, crucially, the payments will continue regardless of any other income that is earned. If a participant of this program finds a job, the government will continue to pay them the 560 euros in addition to any other income.
The Finnish government hopes – and many believe – that this program will help to alleviate poverty as well as make inroads in reducing the country’s current 8.1 percent unemployment rate. This test trial is supposed to prove it, potentially opening the door for a full implementation of a universal basic income (UBI).
Why People Support a Universal Basic Income The universal basic income is being considered as a partial or complete replacement to the current means-tested system of welfare. Under the current system, welfare recipients’ benefits taper off and eventually stop, completely, based upon how much income individuals independently earn. Naturally, this creates a disincentive to rejoin the labor force, because people fear a reduction in total income as welfare benefits are removed or if they believe the added income from a job isn’t worth the labor. Demonstrated very simply, if someone is currently receiving a total income of $1,100 through a means-tested welfare program, many will be less likely to seek a job which will result in similar income levels, as most prefer leisure to labor.

This post was published at Ludwig von Mises Institute on January 17, 2017.

Pound Soars Most Since 2008 After UK’s May Calls For Parliamentary Vote On Brexit

Having plunged to flash-crash lows on Sunday night following leaks of UK PM Theresa May’s Brexit speech, cable is soaring this morning as she delivered the speech confirming that both houses of Parliament will vote on the final Brexit deal.
We warned the “surprise” was priced in…
Surprise taken out of tomorrow’s speech. GBPUSD squeeze next?
– zerohedge (@zerohedge) January 16, 2017
And as Bloomberg notes, U. K. PM May’s announcement that both houses of Parliament will vote on the final Brexit deal is positive for the pound as the process should ensure that extreme outcomes are avoided, analysts say. The FT notes that the votes is expected in early 2019 and it is unclear what would happen if either house were to reject the deal.

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