US Government Caught Massively Fabricating Student Loan Default Data

Ever since 2012 we have warned that one of the biggest threats arising from the US student loan bubble – which is no longer disputed by anyone except perhaps members of the outgoing administration – is not that it is soaring at an unprecedented pace, that’s obvious for anyone with the latest loan total number over $1.4 trillion, rising at a pace of nearly $100 billion per year, but that the government – either on purpose or due to honest miscalculation – was not correctly accounting for the true extent of delinquencies and defaults. Today, we finally got confirmation that, as speculated, the US government was indeed fabricating student loan default data, making it appear far lower than it was in reality.
An the WSJ reported overnight “many more students have defaulted on or failed to pay back their college loans than the U. S. government previously believed.”
The admission came last Friday, when the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers. This also means that the number of loan defaults in various cohorts is far greater than previously revealed.
A spokeswoman for the Education Department said that the problem resulted from a “technical programming error.”
And so, the infamous “glitch” strikes again.
How bad was the data fabrication? When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country. In other words, virtually every single number was made to appear better than it actually was. And people mock China for its own “fake data.”

This post was published at Zero Hedge on Jan 19, 2017.

Top 10 Donald Trump Tweets About Gold

The golden rule of negotiation: He who has the gold makes the rules.
— Donald J. Trump (@realDonaldTrump) February 6, 2015

As Donald J. Trump continues to utilize Twitter as his primary medium of breaking news, opinion and more – Trump tweets about gold, fiat currency and major companies will continue to impact markets.
So where is a safe space to invest? Many believe gold might be the pivotal economic security blanket.
Jim Rickards gave us an exclusive look at his analysis featured in the Center on Sanctions and Illicit Finance where he noted, ‘Gold offers adversaries significant benefits in a world of U. S. imposed dollar-based sanctions. Gold is physical, not digital, so it cannot be hacked or frozen. Gold is easy to transport by air to settle balance of payments or other transactions between nations.’
Gold has been positioned to be a reliable asset in the wake of great volatility.
In the world of gold and commodities, understanding the Trump tweets about gold and topics surrounding the Federal Reserve could better position you to stay above the market noise.

This post was published at Wall Street Examiner on January 19, 2017.

Trading Inauguration Day

While president-elect Donald Trump’s post-election stock market gains are among the greatest in US History, he faces an uphill battle tomorrow as he steps to dais for inauguration. In the last 80 years, newly-elected presidents have seen inauguration-day-losses, two-thirds of the time.
Trump had been #winning…
But faces a problem tomorrow in maintaining that exuberance as the following table shows only 33.3% of newly-elected inauguration days were winners, losing on average 0.9%…

This post was published at Zero Hedge on Jan 19, 2017.

Will The Fed Start Reducing Its Balance Sheet? Here Is Goldman’s Answer

With the fate of Fed’s balance sheet suddenly under Wall Street’s spotlight, following last week’s hints by several Fed presidents that a runoff in the balance sheet may be on the horizon and prompting various sellside analysts to share their thoughts. Overnight, Goldman too decided to opine on the rising debate of what happens next to the Fed’s $4.2 trillion balance sheet, and cutting to the case, says that it continues to expect full reinvestments to end in the middle of 2018 (i.e., no runoff for at least 18 months), but adds that while “we would be very surprised to see a discussion of asset sales under Chair Yellen’s leadership” a shift to “more active management of the maturity of new Treasury purchases could be an option; shortening the duration of new purchases would quicken portfolio runoff once it begins.”
Goldman also confirms what other analysts have said previously, namely that “ending reinvestments would result in an increase in MBS issuance to private investors. For Treasuries, the impact on duration supply will depend on how the incoming administration chooses to adjust its sources of financing.”
However, should inflation indeed spike up and surprise to the upside as Jeff Gundlach recently hinted, the Fed may have no choice but to engage in just this kind of balance sheet deleveraging, which many have said should have taken place prior to the Fed’s launch of rite hikes in December of 2015.
For more details on Goldman’s opinion, read the full Goldman Q&A on the Fed’s Balance Sheet

This post was published at Zero Hedge on Jan 19, 2017.

Nomi Prins: Expect Gold Up, Dollar Down for End of 2017

Just before the inauguration of Donald Trump, Greg Hunter at USA Watchdog had Nomi Prins on to discuss her views on the possibility for the end of 2017 to end with gold up and the U. S dollar down.
Nomi Prins is a best selling author, historian and former Wall Street insider who worked at Goldman Sachs as a managing director, along with several other major banks across the globe. She is currently working on her latest book, Artisans of Money, which will focus on the connections between central banks and the creation of cheap money as a global policy.
When asked about the first 100 days of Trump’s presidency she noted, ‘There is going to be Congressional pushback. Trump is going to continue to use Twitter and other sorts of outlets to talk about small numbers of jobs that have been created. Whether it is Ford bringing back a single plant, Walmart hiring more workers, or whatever that might be. The reality of the larger infrastructure promises that have been made require funding by Congress.’

This post was published at Wall Street Examiner on January 19, 2017.

Stocks and Precious Metals – Tender Mercies

Stocks were on the weaker side and the metals were chopping sideways as the markets anticipate the inauguration of the new president tomorrow.
And the stock option expiration as well.
We had a phone call late this afternoon with the doctors and the news was much better than expected. ‘Nothing there’ is a nice thing to hear, especially when the expectations were otherwise. One finds themselves much more grateful for the things that they do have, when something happens to remind us how fragile we really are.
Thanking God for His tender mercies.
Let’s see how well the metals hold these levels just below their key short term overhead resistance.

This post was published at Jesses Crossroads Cafe on 19 JANUARY 2017.


Gold at (1:30 am est) $1200.90 DOWN $10.40
silver at $16.97: down 26 CENTS
Access market prices:
Gold: $1205.30
Silver: $17.01
Tomorrow is inauguration day. Let us see if the manipulators no longer have the Fed’s blessing in their decades old continuing raid on gold and silver as they will need Trump’s blessing , something that he will probably not give..
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
THURSDAY gold fix Shanghai
Shanghai FIRST morning fix Jan 19/17 (10:15 pm est last night): $ 1218.54
NY ACCESS PRICE: $1201.80 (AT THE EXACT SAME TIME)/premium $16.74
Shanghai SECOND afternoon fix: 2: 15 am est (second fix/early morning):$ 1217.14
China rejects NY pricing of gold as a fraud/arbitrage will now commence fully

This post was published at Harvey Organ Blog on January 19, 2017.

Another Fine Mess! At Least Half of Students Defaulted or Failed to Pay Down Debt Within 7 Years

Another fine mess … when the Federal government takes over the student loan market which is now over $1 trillion.
But at least the YoY growth is slowing down
‘Many more students have defaulted on or failed to pay back their college loans than the U. S. government previously believed. Last Friday, the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers.’

This post was published at Wall Street Examiner on January 19, 2017.

Oil Tumbles After Unexpected Crude Inventory Build

A mixed bag of crude draw and gasoline builds from API combined with IEA comments on rising US Shale output offset by Saudi jawboning about more production cuts possible has pushedoil green before today’s DOE data. However, oil prices tumbled when DOE printed an unexpected 2.347mm barrel crude build (1mm draw expected) and another major build in gasoline inventories. US crude production remains at 9-month highs.
As Bloomberg’s Julian Lee notes,
Crude inventories rose in contrast to the draw reported yesterday by the API, combined with another big jump in gasoline, is going to undo all the good work done by Saudi Arabia’s oil minister in Davos trying to talk up prices.
Crude -5.042mm (-1mm exp) Cushing -1.01mm (-500k exp) Gasoline 9.75mm Distillates 1.17mm

This post was published at Zero Hedge on Jan 19, 2017.

Treasuries Got a Break. Now Beatings Resume until the Mood Improves

What would Yellen do?
‘Waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road – either too much inflation, financial instability or both,’ Fed Chair Janet Yellen warned her rapt listeners at the Commonwealth Club in San Francisco on Wednesday.
Investors in US Treasuries are an edgy lot these days. Yellen is considered a dove, and when she exudes hawkish overtones, investors listen.
So Treasuries took another beating today, a milder one than yesterday’s. And as Treasury prices fell, yields, which move in the opposite direction, rose. The 10-year yield jumped 5 basis points today to 2.47%. It’s up 16 basis points since January 17, when yields bounced off 2.31%.
Treasury bondholders had been granted the much needed break from the brutal beatings they’d taken since July last year. At the time they’d been in Nirvana – those who buy government bonds for capital gains, and not for yield – with bond prices sky-high, and the 10-year yield bottoming out at 1.38%. But after that, it became tough. And after the election, it became a bloodbath, as prices plunged and yields soared to hit 2.61% intraday on December 15. A lot of paper wealth went down the drain.

This post was published at Wolf Street on Jan 19, 2017.

Mnuchin Hearing Descends Into Early Chaos After Senator Offers “Valium” To Colleague

Earlier this morning we predicted a fiery confirmation hearing for Trump’s Treasury Secretary pick, Steven Mnuchin. And right on cue, the confirmation had barely begun when it was promptly derailed after Senator Pat Roberts of Kansas suggested that his colleague, Senator Ron Wyden (D-OR), should pop a valium before the next round of questioning.
‘Sen. Wyden, I’ve got a Valium pill here that you might want to take before the second round….just a suggestion, sir.”

This post was published at Zero Hedge on Jan 19, 2017.

China And Other Countries Are Dumping U.S. Reserves At An Accelerated Pace – Episode 1182a

The following video was published by X22Report on Jan 19, 2017
As of right now the BREXIT is moving forward. US economic expectation soar to 15 year high as the current economic declines. Initial jobless claims crash to 44 year lows but the continuous claims rise. Home starts beat expectations, but we need to remember these normally fall through. US Government caught manipulating student loan data, it is much worse than we thought. Yellen just declared war on Trump. China and other nations are dumping US reserves at an accelerated pace. CIA documents reveal that have manipulated the market and gold, which means they are still doing it today because it is kept a secret.

Investors “Stunned” To Learn Hedge Funds Expense Bar Tabs, Private Jets, Trader Bonuses

With storm clouds already building above the hedge fund industry, which as reported last night posted deplorable results in 2016 as only 32% of fundamental and quantitative funds outperformed their benchmarks according to JPM data – the worst performance this decade – leading to the largest redemption requests since the financial crisis, as over $100 billion was withdrawn from the industry last year, the latest shock to hedge fund investors, already displeased with underperforming the S&P for years, is the realization that they also pay for many if not all hedge fund expenses, resulting in substantial payments over and above those envisioned by the conventional 2 and 20% model.
The reason for their confusion and/or anger is simple: as Reuters points out, some of the more prominent hedge funds such as Citadel LLC and Millennium Management LLC charge clients for such costs through so-called “pass-through” fees, which can include everything from a new hire’s deferred compensation to travel to high-end technology. And it all adds up with investors often paying more than double the industry’s standard fees of 2% of assets and 20 percent of investment gains, which in light of recent performance has already infuriated countless investors leading to a historic outflow from active to passive managed funds.
Clients of losing funds last year, including those managed by Blackstone Group LP’s Senfina Advisors LLC, Folger Hill Asset Management LP and Balyasny Asset Management LP, likely still paid fees far higher than 2 percent of assets.

This post was published at Zero Hedge on Jan 19, 2017.

Donald and the Dollar

No Country Can be Made Great by Devaluation
John Connally, President Nixon’s Secretary of the Treasury, once remarked to the consternation of Europe’s financial elites over America’s inflationary monetary policy, that the dollar ‘is our currency, but your problem.’ Times have certainly changed and it now appears that the dollar has become an American problem.
In a recent interview with the Wall Street Journal, the soon to be 45th President of the United States believes that the greenback’s strength – up some 25% against a broad basket of currencies since 2014 – is now ‘too strong,’ ‘killing us,’ and has hurt companies trying to compete overseas.*
A top Trump economics advisor, Anthony Scaramucci, reinforced his boss’ sentiment adding that ‘we must be careful of a rising dollar.’ Apparently, making America great again does not include the nation’s monetary standard.
Trump’s belief that the dollar is too strong also shows a distinct lack of historical understanding. Every great nation and empire (which Trump promises to restore America to) had a sound monetary system.

This post was published at Acting-Man on January 19, 2017.

Crazy Eddie Is INSANE

For a long time now, I’ve held the theory that you have to be completely insane to be a successful investor. Like, right out of your tree.
Let me put it this way: Just a few weeks ago we were all sure, 100% positive that the US dollar would continue to appreciate against the euro, because the Fed was more hawkish, and the ECB was going to have negative rates and QE forever.
In this town, your luck can change just that quickly.
Now people are not so sure. What changed?
Well, there have been a bunch of Fed speakers, and none of them sounded like raising rates was particularly urgent1.
There also has been a backlash building in Europe about zero/negative rates and how they are destroying savings.
Plus, inflation is starting to ramp, especially in Germany.

This post was published at Mauldin Economics on JANUARY 19, 2017.

“Trump Is Going To Fail” – Soros Speaks Live In Davos

In an breakout session, George Soros is again speaking in Davos, discussing items such as the fate of Europe, markets, regulation and of course, Trump, saying that he is convinced “Trump is going to fail” Here are the highlights so far:

This post was published at Zero Hedge on Jan 19, 2017.

Secular Shift in Interest Rates?

When the cost of money changes, everything changes. Interest rates affect every aspect of the financial universe.
At the global level, they impact currency and trade flows between nations. At the national level, they affect the discounted value of future cash flows, the market’s multiple, and the desirability of items such as real estate and debt. And at the micro level, they impact the financing and investment decisions of all individuals and small businesses.
That’s why it’s important to understand whether the bump in rates that we’ve seen recently is indicative of a new, secular trend, or merely a correction in the bond bull market that has lasted over three decades.
Let’s begin with the chart below, which shows the yield on the 10-year Treasury note over the past 50 years. Notice that after the major spike during the early 1980’s, interest rates settled into a long-term secular downward trend.

This post was published at FinancialSense on 01/19/2017.

Live Stream: Steven Mnuchin Testifies As Democrats Go On The Offensive

In what is sure to be one of the fieriest confirmation hearings to date, Steven Mnuchin, Trump’s pick for Treasury Secretary, is set to take questions from the Senate Finance Committee starting at 10AM EST. As the show gets started, Democrats will undoubtedly be looking to score theatrical points with the working class folks of the Midwest by peppering Mnuchin with zingers on his time at Goldman Sachs and demonizing his involvement with foreclosure efforts at IndyMac and OneWest.
As the political theater get ready to begin, per The Hill, here are some of the things to expect:
1. Democrats will undoubted try to score populist points with the working class folks of the Midwest by hitting Mnuchin on his banking background.
Democrats have ripped Trump for staffing his administration with several Goldman Sachs alumni and wealthy business figures after campaigning against corporate elites running government.
Mnuchin made millions through his private sector career in investing, banking and movie producing. He’s never worked in government, spurring Democrats to raise questions about his preparedness and familiarity with the job.
Democrats are putting a target on Mnuchin as they seek to bolster their populist credentials. They’ve already nicknamed him ‘the foreclosure king’ and claimed his lack of government service won’t translate into fighting for middle class Americans.

This post was published at Zero Hedge on Jan 19, 2017.

Does the Deep State Have It in for Trump?

Government Sachs
BALTIMORE – Two things. One we understand. The other we don’t. First, you gotta hand it to Wall Street. The financial elite were 1,000% behind Hillary. Then, when Donald Trump won the White House, within minutes, they were in his cabinet.
During the campaign, not only were they loading Hillary up with millions of dollars in funding, but they also regularly predicted doom if ‘The Donald’ were to win. Then, apparently within seconds, in the middle of the night, they saw a great dollar sign in the sky…
‘By this sign will you conquer’ was written upon it. Not since the conversion of Constantine has a turnaround been so abrupt and so complete. Mirabile dictu!
In a flash, the analysts at the nation’s top Wall Street firm suddenly realized something that had eluded them throughout the long and bitter presidential campaign: Tax cuts and spending increases might not be so bad after all!
The great sell-off ended. A buying spree took over… pushing up the price of Goldman Sachs stock by 40% and making its CEO, Lloyd Blankfein, the No. 1 beneficiary of the election (since the election, the value of his Goldman holdings have increased by $163 million).

This post was published at Acting-Man on January 19, 2017.