Highest Rent Inflation Since 2007 Sends Core CPI Above Fed’s Target For 14th Consecutive Month

US headline inflation rose for a 5th consecutive month, and has not seen a negative print since February, following today’s report that CPI in December rose 0.3%, and up 2.1% from a year ago, the highest since June 2014. Both measures came in line with expectations as energy and gas costs rise and rents and medical costs continued to rise.
Energy costs increased 1.5% from a month earlier, as gasoline rose 3%. Food prices were unchanged for a sixth month, however thiw as more than offset by shelter expenses which climbed 0.3%, reflecting a jump in rental costs.

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

Gold and Silver Market Morning: Jan 18 2017 – Gold and Silver moving higher with a lower $!

Gold Today – New York closed at $1,215.60 on the 17th January after closing at $1,196.20 on the 16th January. London opened at $1,213.00today.
Overall the dollar is weaker against global currencies today. Before London’s opening:
– The $: was weaker at $1.0687: 1 from $1.0650: 1 yesterday.
– The Dollar index was weaker at 100.69 from 101.09 yesterday.
– The Yen was almost unchanged at 113.45: $1 from yesterday’s 113.44 against the dollar.
– The Yuan was stronger at 6.8425: $1, from 6.8860: $1, yesterday.
– The Pound Sterling was stronger at $1.2298: 1 from yesterday’s $1.2115: 1.
Yuan Gold Fix
Shanghai gold held the same levels as yesterday, today, of around 272 Yuan. Because of the PBoC’s selling dollars to strengthen the Yuan it does seem that the gold price in the dollar jumped over $13 on yesterday in Shanghai.
If one takes today’s Yuan exchange rate and uses that to translate 272 Yuan into a dollar price you arrive at $1,236. In the last week the Yuan exchange rate has gone from 6.94 to 6.84 with the gold price in Yuan rising 8 Yuan at the same time.

This post was published at GoldSeek on 18 January 2017.

Border Tax “Back On The Table” After Trump Walks Back “Provocative” Statement

Just a day after Trump’s WSJ comments on the dollar being overvalued, and criticism on the proposed Border-Tax Adjustment sent the dollar into a tailspin and hit global risk level, Trump appears to have walked back his statements in an interview granted to Axios in which he “walked back some of the more provocative statements he had made only days before.” As Axios notes, “a top adviser told us the sober tone reflects a bumpy few days inside Trump Tower – and the realization that he’s days away from truly running the nation.”
Here are the highlights from the Axios interview conducted on Tuesday:
Trump said health care is his most urgent domestic topic, telling us he spoke with President Obama again on Monday about the topic. He back-tracked a bit from his promise of insurance for everybody, saying he wanted to find a mechanism – Medicaid block grants, perhaps – to help the poorest get insurance. “You know there are many people talking about many forms of health care where people with no money aren’t covered. We can’t have that,” he said.

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

Political Revolution Sprouts New Shoots Outside Goldman Sachs

Sometimes all it takes to win a war is a rallying cry. That cry started in the bowels of Wall Street on September 17, 2011 with the takeover of Zuccotti Park by grassroots protesters calling themselves Occupy Wall Street. The thunder clap from that movement, ‘we are the 99 percent,’ reverberated around the world. Occupy focused the public’s attention on the insidious wealth transfer system that has been institutionalized by Wall Street on behalf of the 1 percent – a system which has minted dozens of billionaires and thousands of multi-millionaires while collapsing the U. S. economy from 2008 to 2010 and leaving millions of Americans homeless and jobless. (See our past coverage of Occupy in related articles below.)
Yesterday, green shoots from the Occupy movement sprouted in a light falling rain outside the headquarters of Goldman Sachs at 200 West Street in Manhattan – a building also built on the backs of taxpayers. (See Wall Street Firms Spy on Protesters in Tax-Funded Center.) Dozens of protesters from New York Communities for Change and supporting organizations turned out with signs and sleeping bags to set up an encampment to last through Donald Trump’s inauguration on Friday. The rallying cry yesterday was ‘Government Sachs.’

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

Goldman Beats, Profits Surge As Trading Revenues Jump; Average Banker Comp Hits $338,600

Unlike the other big banks, Goldman’s earnings release is a breeze: since the bank has virtually no balance sheet to use as a source of income (or loss), it is all about the income statement. And it was here that for yet another quarter, Goldman surprised to the upside, reporting Q4 Revenues of $8.17BN, higher than the $7.76BN estimated, translating to EPS of $5.08, also above the $4.73 estimate, and nearly 4 times the $1.27 reported a year ago.
Like other banks, Goldman benefited from a big pick-up in trading activity during the period, as investors reset portfolios in anticipation of an interest-rate increase from the US Federal Reserve, and as the election of Donald Trump spurred big bets on stocks that stood to benefit. Net revenues from the institutional client services division were up 25% from a year earlier to $3.6bn, led by a 78% jump in revenues from the fixed-income, currencies and commodities unit.
‘After a challenging first half, the firm performed well for the remainder of the year as the operating environment improved,’ said Lloyd C. Blankfein, Chairman and Chief Executive Officer. ‘We continued to manage our expenses carefully and we enter the new year with industry leading positions across our businesses, as well as strong capital and liquidity.”
Broken down by key operating group, most segments reported numbers that beat expectations with the exception of Equities sales and trading, which came in at $1.59BN, fractionally below the $1.61BN expected.

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

May Answers the Big Brexit Question

A speech by British Prime Minister Theresa May on Tuesday answered the biggest outstanding question about the United Kingdom’s impending departure from the European Union: It will not try to stay in the bloc’s single market. Instead, May explained, her government will push for a comprehensive free trade agreement with the European Union, emphasizing that regaining control of immigration policy would take precedence over remaining a member of the market. But while her speech clarified some questions about the Brexit process and the United Kingdom’s future course, it left several major issues unaddressed.
The Cost of a Free Trade Deal
In her speech, May highlighted two themes: sovereignty and national unity. She characterized the Brexit as a means by which the United Kingdom can recover its sovereignty, especially over immigration (one of the hottest topics of the referendum campaign) but also over trade and legislation. She said the Brexit will enable the country to reduce immigration, restore the full sovereignty of Parliament, and re-establish the supremacy of British courts and judges. But, she said, to achieve those ends, the United Kingdom must leave the single market, an area in which people, goods, services and capital move freely, and sign a “comprehensive, bold and ambitious free trade agreement” with the European Union.
By leaving the single market, the United Kingdom would gain the ability to negotiate as many free trade agreements as it wants while including as many economic sectors in those deals as it desires. May indicated that, in addition to pursuing a deal with the European Union, her government would also seek to strike trade agreements with the United States, China, India, Brazil and Australia, among others. But there are downsides to that strategy: Free trade agreements usually take years to negotiate and are becoming increasingly difficult to ratify.

This post was published at FinancialSense on 01/18/2017.

What Wage Inflation? Real Average Weekly Earnings Growth Plunges To Weakest In 30 Months

Despite all the excitement and media hype that wage growth is finally upon us and the green shoots of escape velocity recovery are here, thanks to Obama and Yellen, the facts are different. Real average weekly earnings rose just 0.2% year-over-year in December – the weakest growth since June 2014 (and November’s gains were revised lower).
When Obama took office, real average weekly earnings was growing at around 2.5% YoY. As he leaves office it is growing at just 0.2% YoY.
Does that look like a healthy economic trajectory to hand over to President Trump?

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

17/1/17: Government Debt in the Age of Austerity

The fact that the world is awash with debt is hard to dispute (see data here and here), but it is quite commonly argued that the aggressive re-leveraging happening in the corporate and household sectors runs contrary to the austerity trends in the public debt segment of the total economic debt. The paradox of the austerity arguments is, of course, that whilst debt is rising, public investment is falling and public consumption remains either stagnant of rising slowly. This should see public debt either declining or remaining static. Of course, banks bailouts in a number of advanced economies would have resulted in an uplift in public debt during the early years of the Global Financial Crisis and the Great Recession, but these years behind us, we should have witnessed the austerity translating into moderating debt levels in the global economy when it comes to public debt.

This post was published at True Economics on Wednesday, January 18, 2017.

General Motors Promises $1 Billion Investment… But Not Because of Trump

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
General Motors Co. (NYSE: GM) confirmed just this morning that it will invest an additional $1 billion in its U. S. factories this year.
On top of that, the Detroit automaker stated it intends to add 7,000 new jobs over the next few years while moving some parts production from Mexico back to the States. Those plants south of the border were handled by a separate supplier, GM made sure to note today, meaning they were not direct franchise establishments belonging to the automaker.
These new GM investments add to the $2.9 billion the company announced in July 2016 to put toward its U. S. operations. Before those two efforts, GM had invested a total $21 billion in U. S. operations since 2009. In the past four years, GM has created 25,000 U. S. jobs, including 6,000 hourly manufacturing positions, and added nearly $3 billion in annual wages and benefits to the U. S. economy, according to the company’s website.

This post was published at Wall Street Examiner on January 17, 2017.

American Small Businesses Party Like It’s 2004

France reported last week that its summer hosting of Euro 2016, Europe’s soccer championships, added $1.26 billion to its economy.
This is good news, for sure, and worth celebrating.
But here’s the thing: Why doesn’t France put as much effort into supporting its businesses and markets as it does its soccer franchises?
After all, the country has an entrepreneurship problem – as in, business growth and its labor market are struggling.
A lot of the blame lies at the feet of its labyrinthine web of regulations, which the Organization for Economic Cooperation and Development (OECD) once called ‘unnecessarily complex.’ Barriers to entry in several key industries, including architecture, accounting and legal services, are prohibitively high, which has decimated the country’s labor market in the last few years. More than 25 percent of all working-age French under the age of 25 are unemployed right now, a meaningfully higher rate than for youth in the European Union (18 percent unemployment), United States (10 percent) and Japan (4 percent). Household savings rates are skyrocketing, consumer confidence is on life support and investments growth has been sluggish.

This post was published at GoldSeek on Wednesday, 18 January 2017.

Deutsche Bank To Scrap Bonuses For 2016: As Many As 90% Of Bankers, Traders Affected

While Deutsche Bank shareholders have certainly seen some recent relief following last year’s stock acrobatics which sent the the largest German lender crashing to all time lows last fall, the bank’s employees have far less to look forward to.
First, it was a report by the NY post, according to which Deutsche Bank may hold back on giving out bonuses to as many as 90% of bankers and traders, noting that only the top 10% of revenue generators may get a bonus for 2016, and even that would be paid out over the next five years, according to a source briefed on internal discussions.
The bank was rocked last year by concern about its capital adequacy, a 23% in its share price and rising litigation bills from Europe to the U. S. Chief Executive Officer John Cryan, 56, has eliminated jobs, suspended dividends and sold risky assets to shore up profitability and capital buffers. The bank on Tuesday reached a $7.2 billion final settlement with the U. S. Justice Department over its sales of mortgage securities before the financial crisis. It’s still seeking to end an investigation related to its Russian unit. While reports have suggested that the settlement could affect the bank’s ability to pay bonuses, it couldn’t be confirmed if the bank had used incentive compensation for the settlement.

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

Trump Tells Democrats Boycotting Inauguration: “I Hope They Give Me Their Tickets, We Need Seats So Badly”

In an interview airing this morning on Fox News, President-elect Donald Trump said Democrats shunning his inauguration this Friday should return their tickets. At least 54 House Democrats have pledged they will not attend the event, according to the latest whip list by The Hill. A growing number of Democrats have said they will break with tradition
and skip Trump’s presidential inauguration in three days.
The number of boycotters has swelled following Trump’s recent feud with John Lewis, who said last week he does not view Trump as a ‘legitimate president,” and said he would not attend Trump’s inauguration, leading the president-elect to accuse him of being ‘all talk’ and ‘no action’ on Twitter. Democrats initially vowed they would not attend Trump’s swearing-in after last year’s bitter presidential campaign.
‘As far as other people not going, that’s OK, because we need seats so badly,’ Trump said during a Fox News interview scheduled to air Wednesday. ‘No, what happens to their tickets?’ Trump asked host Ainsley Earhardt. “I hope they’re gonna give us their tickets. I hope they give me their tickets.’
A growing number of Democrats have said they will break with tradition and skip Trump’s presidential inauguration in three days. At least 54 House Democrats have pledged they will not attend the event, according to The Hill’s whip list.
Trump on Wednesday mocked Lewis, meanwhile, for saying he had never boycotted an inauguration despite doing so during former President George W. Bush’s in 2001. ‘He conveniently doesn’t remember. How do you forget if you go to an inauguration? I can tell you when I was at inaugurations and you don’t forget something like that.”

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

Target Tumbles After Cutting Guidance, Reports Poor Comps; Drags Wal-Mart Lower

US retailer woes continued this morning, a trend the began well prior to the poor holiday spending season, when retail giant Target not only announced ahead of its Feb 28 Q4 earnigns result that comparable sales during the combined November/December period decreased 1.3%, but that “as a result of this softer-than-expected sales performance, the Company updated its fourth quarter and full-year 2016 guidance.”
Target now expects fourth quarter comparable sales in the range of (1.5) percent to (1.0) percent, compared with prior guidance of (1.0) percent to 1.0 percent. In fourth quarter 2016, Target expects both GAAP EPS from continuing operations and Adjusted EPS of $1.45 to $1.55, compared with prior guidance of $1.55 to $1.75.

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

Trump Warns Canada, Mexico He Will Begin NAFTA Renegotiation “Within Days Of Inauguration”

In the latest unexpected and ad hoc announcement on North American trade arrangements, the Globe and Mail reports that Trump’s Commerce Secretary pick, Wilbur Ross, has informed Canadian officials that he plans to reopen NAFTA talks within days of his inauguration, and that rules of origin and independent dispute tribunals will be central in negotiations of North American Free Trade Agreement. Ross has indicated new administration will send a formal letter notifying Canada and Mexico of plans to renegotiate Nafta within days of Trump’s inauguration.
According to the G&M, Trump “want to discuss country of origin rules and the independent dispute-settlement mechanism that are key features of the 1994 NAFTA pact, officials say.”
Country of origin rules, which govern how much content from outside NAFTA a product can contain and still qualify to be shipped duty-free, are specific to each product and spelled out in writing. They cover every kind of good and service, from suits to cars. The Trump administration is expected to take a harder line on exactly what can cross the border duty-free.
NAFTA’s tripartite dispute panels are also on Mr. Ross’s radar, officials say. The United States has long complained these independent panels are unaccountable and give too much power to Mexico and Canada.
However, in what is modest good news for Canada, a senior government official told The Globe and Mail the signals from Mr. Trump’s trade team indicate the trade focus will largely be aimed at Mexico, essentially cutting the United States’ southern neighbour out of many NAFTA benefits.

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

Gold, Silver and Bitcoin Soar As Trump’s Comments Cause US Dollar To Plummet

We have stated that Donald Trump would be the cause of a barrage of news and market movements.
He’s not even President yet and it has already begun.
In a Friday interview with The Wall Street Journal, Trump said the US dollar, which touched a more-than 14-year high about two weeks ago, has gotten ‘too strong,’ against the Chinese yuan. He told the WSJ, ‘Our companies can’t compete with them now because our currency is too strong. And it’s killing us.’
The US dollar sank soon after and stock markets in Asia, Europe and North America were mostly down on Tuesday. Gold, silver and bitcoin all skyrocketed.
Gold was up nearly 1% on the day and is up just over 4.84% year to date.

This post was published at Dollar Vigilante on January 17, 2017.

2017 – Shades of 1937

As a result of some Fed actions taken in 1936 and 1937, the US economy, after experiencing a robust economic recovery starting in early 1934, slipped back into a recession midyear 1937, which lasted through midyear 1938. Based on the recent slowdown in thin-air credit growth, I believe that a significant slowdown in the growth of nominal and real US domestic demand will commence in the first quarter of 2017. The duration and magnitude of this slowdown depend on the future behavior of thin-air credit.
Let’s briefly review the US monetary history of 1936-1938. In response to the robust recovery the US economy was experiencing and the high level of excess reserves the banking system was maintaining, the Fed, in a series of steps between August 1936 and May 1937, doubled the percentage of cash reserves banks were required to hold against their deposits. The Fed believed that these de jure excess reserves held by banks were de facto excess reserves. That is, the Fed did not believe that banks desired to hold the amount of de jure excess reserves that were in existence. If these reserves held by banks truly were in excess of what they wanted to hold, then it was surmised by the Fed that banks would engage in the creation of new credit for the economy by some multiple of the existing excess reserves. If this creation of new bank credit were to occur against a backdrop of an already robust economic expansion, the US economy would be in danger of overheating. As a result of this reasoning, the Fed chose to ‘sterilize’ some of these excess reserves by converting them into required reserves.

This post was published at FinancialSense on 01/17/2017.

World’s Largest Education Company Crashes After Dire Warning, Warns Of “Unprecedented” Business Decline

British education group, and the world’s largest education company, Pearson PLC lost a quarter of its market cap in an instant this morning after it issued a dire warning about the state of the textbook business, cut profit forecast, and warned of an “unprecedented” decline in its North American business. It also put its stake in the iconic Penguin Random House book business for sale in a bid to raise cash, not long after selling the Financial Times to the Nikkei.
In an unscheduled update ahead of its full-year results in March, the former owner of the Financial Times said it was revising down its prior operating profit goal for 2017 and rebasing its dividend this year after a sharp slump in an arm of its American business. Pearson said its North American courseware market was ‘much weaker than expected’, with net revenues falling 30 per cent in the fourth quarter, taking the overall yearly decline to 18 per cent. Operating profit in 2017 will be 570 million pounds to 630 million pounds, the London-based company said in a statement, below the average analyst estimate compiled by Bloomberg of 702.9 million pounds. The world’s largest education company withdrew its profit goal for 2018 after sales of materials for U. S. higher education dropped 30 percent in the fourth quarter.
‘Whereas we had previously anticipated a broadly stable North American higher education courseware market in 2017, we now assume that many of these downward pressures will continue’, the company said. Furthermore, while Pearson said it expected 2016 operating profit in line with guidance, it scrapped its 2018 profit goal.
Chief executive John Fallon said Pearson was taking ‘more radical action to accelerate our shift to digital models, and to keep reshaping our business’.
‘The education sector is going through an unprecedented period of change and volatility. We have already taken significant steps on restructuring, reducing our cost base by 375m last year’, said Mr Fallon.

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

Gold Up 5.5% YTD – Hard Brexit Cometh and Weaker Dollar Under Trump

Gold prices extended their run of gains to a seventh session and added another $12 to $1,215 an ounce yesterday. Gold prices have consolidated on those gains today and are now up 5.5% in dollar and sterling terms and 5% in euro terms year to date.
Gold in USD – 1 Year
Gold bullion has risen every day except one so far in 2017, building on the 8.1 percent gain in 2016. Investors are concerned about the huge uncertainty facing us from a ‘Hard Brexit’ and the potential for political and financial contagion in the EU as we head into the new year.

This post was published at Gold Core on January 18, 2017.

“Everything Is A Partial Reversal Of Yesterday” – Stocks, Dollar Rebound Following Trump Scare

European shares decline led by a plunge in Pearson shares, S&P futures were modestly in the green as Asian and EM stocks gained. The dollar rebounded against most major currencies after retreating 1.3% on Tuesday to the lowest in a month following Trump’s “strong dollar” comments and halted a seven-day drop against the yen.
Asian traders said shares were helped by hopes that the concerns about a stronger dollar expressed by the U. S. President-elect at the weekend, would be beneficial to emerging markets where companies have borrowed heavily in dollars. Asia’s MSCI’s ex-Japan Asia-Pacific shares index rose 0.3%, just shy of a three-month high hit last Thursday. Energy and cyclical stocks were the chief gainers. Short-covering also helped, especially in China where stocks tumbled more than 4% last week as traders took some money off the table before Trump’s inauguration on Friday. European stock markets were fractionally in the red steady after a choppy start, banking shares under pressure as investors chewed over details of the impact of regulatory fines on Deutsche Bank.
“You’ve seen the banks ease, everything has taken a breather after the strong start in January for stocks,” Andy Sullivan, a portfolio manager with GL Asset Management in London told Reuters. “The last few days have been choppier and for the rally to be sustained, we need to see earnings growth start to come through.”
The Yen and gold retreated for the first time in eight days. Bonds edged lower before Thursday’s ECB meeting, where few surprises are expected. Oil reversed course after earlier gains, slipping below $52 a barrel. Sterling, which soared more than 3 percent on Tuesday after Prime Minister Theresa May’s Brexit speech, fell back 0.7 percent.
“Everything is just a partial reversal of the price action yesterday,” said RBC Capital Markets currency strategist Adam Cole, arguing that the greenback’s weakness had been primarily driven by excessive positioning at the end of last year.

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