Ex-Goldman Trump Advisor Drops Glass-Steagall Bombshell

Is there hope?
According to ‘people with direct knowledge of the matter,’ cited by Bloomberg, White House economic adviser and one of the ex-Goldman Sachs executives in the Administration, Gary Cohn, dropped a bombshell at a meeting on Capitol Hill yesterday.
The meeting was arranged by Senate Banking Committee Chairman Mike Crapo of Idaho. Lawmakers and their staffs from both parties participated in the discussion that ranged from tax reform to financial regulation.
Cohn said he generally is in favor of splitting commercial banks from everything else, in a return of sorts to the days of the Glass-Steagall Act. Bloomberg:

This post was published at Wolf Street on Apr 6, 2017.

Why The Fed’s Recent Stock Market Warning Is More Ominous Than Ever Before

The Fed minutes were released yesterday and there’s one sentence everyone is talking about: ‘Some participants viewed equity prices as quite high relative to standard valuation measures.’ By ‘quite high’ I imagine they are referring to the fact that even by their own measures the broad stock market is now more expensive than it was at the height of the dotcom mania. The Fed stopped updating the series below in 2014, when valuations first surpassed the 2000 peak but it’s not hard to imagine what it might look like today with the stock market 15% higher and GDP just 7% higher.

This post was published at Wall Street Examiner on April 6, 2017.

The Economy Is Imploding At A Faster Pace & You Need To Be Prepared – Episode 1248a

The following video was published by X22Report on Apr 6, 2017
Initial jobless claims magically surge. The real estate market is falling apart, reality and manipulated stats are going there separate way. Venture Capitalist in San Fran and Silicon Valley are drying up and office space is empty. 50% of Americans don’t have $500 in their account. NY Fed ready to bring down the economy. SocGen says the Feds actions are going to have the opposite effect. Everytime the Fed mentions overvalued the stock market comes down.

APRIL 6/GOLD AND SILVER HOLD THEIR GAINS FROM YESTERDAY/SILVER OPEN INTEREST RISES TO 222,000 CONTRACTS OR ONLY 2000 AWAY FROM RECORD LEVELS DESPITE SILVER BEING OVER 2 DOLLARS BELOW THE PRICE WH…

Gold: $1250.30 UP $4.90
Silver: $18.23 UP 6 cents
Closing access prices:
Gold $1252.45
silver: $18.26!!!
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1264.90 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: 1254.60
PREMIUM FIRST FIX: $10.30
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1263.95
NY GOLD PRICE AT THE EXACT SAME TIME: 1253.95
Premium of Shanghai 2nd fix/NY:$10.00
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est 1253.75
NY PRICING AT THE EXACT SAME TIME: 1254.75
LONDON SECOND GOLD FIX 10 AM: 1252.50
NY PRICING AT THE EXACT SAME TIME. 1252.50
For comex gold:
APRIL/
NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 126 NOTICE(S) FOR 12600 OZ.
TOTAL NOTICES SO FAR: 562 FOR 56,200 OZ (1.748 TONNES)
For silver:
For silver: APRIL
0 NOTICES FILED TODAY FOR nil OZ/
Total number of notices filed so far this month: 523 for 2,615,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
FEDERAL RESERVE BANK OF NEW YORK EARMARKED GOLD MOVEMENT:
The FRBNY just released its March report on Gold movement at the FRBNY:
In February’s report: 7841 billion dollars worth of gold was in inventory valued at $42.22 per oz
In the March report: 78.41 billion dollars worth of gold was in inventory valued at $42.22 per oz
No of gold oz moved: zero

This post was published at Harvey Organ Blog on April 6, 2017.

Destroy All Monsters! Cohn Said to Back Wall Street Split of Lending, Investment Banks

Former Goldman Sachs executive Gary Cohn said he supports breaking up the too-big-to-fail (TBTF) banks that have grown to be behemoths through acquisitions.
In a private meeting with lawmakers, White House economic adviser Gary Cohn said he supports a policy that could radically reshape Wall Street’s biggest firms by separating their consumer-lending businesses from their investment banks, said people with direct knowledge of the matter.
Cohn, the ex-Goldman Sachs Group Inc. executive who is now advising President Donald Trump, said he generally favors banking going back to how it was when firms like Goldman focused on trading and underwriting securities, and companies such as Citigroup Inc. primarily issued loans, according to the people, who heard his comments.
The remarks surprised some senators and congressional aides who attended the Wednesday meeting, as they didn’t expect a former top Wall Street executive to speak favorably of proposals that would force banks to dramatically rethink how they do business.

This post was published at Wall Street Examiner on April 6, 2017.

The Coming Economic Crisis And ‘Opportunity’

21st Century Wire says…
‘Most mainstream economists don’t seem to have heard of the second law of thermodynamics. Perhaps this isn’t really their fault, since it’s not in their textbooks. But it should be. It governs all life and all systems on Earth, including the economy. As our leaders in business and government race to implement misguided economic models that are not founded upon the laws of thermodynamics, and as nation after nation refuses to question the pursuit of never-ending economic growth, we draw closer to a fate that will end in tears for the human race. I worry that the tears have already begun falling…’
David A. Jones PhD – Southampton University, United Kingdom
The economic alarm bells are ringing nationally and globally if anyone’s listening. While the political struggles surrounding the Trump administration remain our focus, economic distress will come calling.

A soaring stock market and shrinking corporate profits combined with an M&A (merger and acquisition) frenzy to purchase profits, rising interest rates, an end to qualitative easing are all signs of forthcoming stock market correction, or, more ominously, a collapse. Stock price to earning ratio has soared to 26.38 as stock prices rise much faster than profits. Global M&A has exceeded $700 billion a year for the first time since pre-collapse 2007.

This post was published at 21st Century Wire on APRIL 6, 2017.

Strange Moves in Gold, Federal Reserve Policy and Fundamentals

Counterintuitive Moves
Something odd happened late in the day in Wednesday’s trading session, which prompted a number of people to mail in comments or ask a question or two. Since we have discussed this issue previously, we decided this was a good opportunity to briefly elaborate on the topic again in these pages.
A strong ADP jobs report for March was released on Wednesday, and the gold price dutifully declined ahead of it already, while the stock market surged concurrently. Later in the day, the Fed minutes were published, and their tone was definitely seen as very ‘hawkish’, at least by today’s standards.
There was quite a bit of talk about rate hikes and – gasp! – even about ending reinvestment of funds the Fed receives when debt securities in its QE portfolio mature. The merry pranksters also bemoaned the egregious bubble their own policies have given birth to.
According to Reuters:
‘Most Federal Reserve policymakers think the U. S. central bank should take steps to begin trimming its $4.5 trillion balance sheet this year as long as the economic data holds up, Fed meeting minutes showed.
The minutes also showed ‘some participants viewed equity prices as quite high relative to standard valuation measures.’ [duh…] (emphasis added)
Here is a 15 minute candle chart encompassing Wednesday’s intra-day moves in June gold futures:

This post was published at Acting-Man on April 6, 2017.

Beyond the Gloomy Headlines, This Global Index Suggests Manufacturing Is in Good Shape

Lee Smales, Curtin University
Economic data released this week has provided some good news for the global economy. The Purchasing Manager Indexes (PMI) from around the world show manufacturing is at above long term averages or at multi-year highs.
The data suggests that economic growth will follow. Buoyed by low interest rates, and the prospects of government stimulus, firms are benefiting from a surge in new orders.
Australian PMI
The Australian PMI report includes comments from manufacturers that suggest current demand is driven by higher commodity prices, infrastructure projects, the continued NBN rollout, and higher defence spending. But it also highlights concerns surrounding energy prices and security.

This post was published at FinancialSense on 04/06/2017.

Is a ‘Taper Tantrum’ on the Horizon?

Over the last several months, analysts have focused on Federal Reserve rate hikes. The central bank nudged rates up in December, and then bumped them another .25 points in March. Many observers expect the Fed to boost rates another two – maybe even three more times in 2017. But all of this focus on interest rates misses an even more significant issue facing the Fed – its bloated balance sheet.
In the wake of the 2008 financial meltdown, the Fed engaged in a series of asset purchase programs in an attempt to lower long-term rates and stimulate economic growth. In that time, the Fed balance sheet grew from under $1 trillion before the crisis to $4.5 trillion today.
For all of its intervention, the Fed did little to stimulate growth. The post-crash expansion has been historically anemic compared to past boom cycles, with GDP growth languishing under 2%. But all of its quantitative easing has inflated a giant stock market bubble. Last spring, Yahoo Finance reported an analysis showing that 93% of the entire stock market move since 2008 was caused by Federal Reserve policy.
At some point, the Fed will try to ‘normalize’ that balance sheet by selling off those purchased assets. That may well be the pin that pops that stock market bubble. The AP explains what happened the last time the Fed hinted it might try to shrink its balance sheet.

This post was published at Schiffgold on APRIL 6, 2017.

These Eight Retailers Will File For Bankruptcy Next, According To Fitch

The situation is rapidly deteriorating for America’s “bricks and mortar” retailers. As discussed earlier this week, some 9 retail outlets have already filed for bankruptcy protection in 1Q 2017 alone according to Alix Partners. That volume of filings matches the total number of retail bankruptcies for all of 2016 and puts the industry on pace to exceed even the ‘great recession’ highs.
Confirming that even more retail defaults are imminent was the following chart from Morgan Stanley according to which in just the first quarter there were nearly 2,100 store closures, nearly double the number from Q1 of last year.

This post was published at Zero Hedge on Apr 6, 2017.

Although the Recent Weakness in Bank Credit Growth May Not Be a Concern to Others, It Is to Me

Starting around this past December, growth in commercial bank credit (loans and securities) slowed precipitously (see Chart 1). Annualized 13-week growth in bank credit of late is the slowest since the summer of 2013. This weakening in bank credit growth has been noticed and commented on by at least two economic analysts besides me – University of Oregon economics professor Tim Duy and Goldman Sachs economist Spencer Hill. These two analysts have concentrated on the weakness in one component of bank credit – commercial and industrial(C&I) loans – and concluded that there is nothing to get excited about with respect to the pace of US economic activity. I do not share their sanguine view. Notice that the data in Chart 2 show that the growth in bank credit excluding C&I loans also has slowed precipitously since this past December. If history is any guide, this weakening in bank credit growth excluding C&I loans is cause for concern with regard to the pace of economic activity.

This post was published at FinancialSense on 04/06/2017.

Gold and Silver Market Morning: April 6 2017 – Gold still consolidating on support!

Gold Today – New York closed at $1,256.10 yesterday after closing at$1,256.30 Tuesday. London opened at $1,253.65 today.
Overall the dollar was slightly stronger against global currencies early today. Before London’s opening:
– The $: was stronger at $1.0664 after yesterday’s $1.0670: 1.
– The Dollar index was slightly stronger at 100.60 after yesterday’s100.57.
– The Yen was slightly weaker at 110.77 after yesterday’s 110.70:$1.
– The Yuan was weaker at 6.8995 after yesterday’s 6.8892: $1.
– The Pound Sterling was stronger at $1.2475 after yesterday’s $1.2428: 1.
Yuan Gold Fix
The Shanghai Gold Exchange reopened today and was trading at 280.6towards the close. This translates into $1,264.97. New York is trading at a $3.87 discount to Shanghai and London opened at a $6.32 discount to Shanghai.
LBMA price setting: The LBMA gold price was set today at$1,253.75 from yesterday’s $1,252.50.
The gold price in the euro was set at 1,174.58 after yesterday’s1,173.96.

This post was published at GoldSeek on 6 April 2017.

Kashkari Slams Dimon: “If Demand For Loans Is High, Why Are You Buying Back Your Stock?”

While Jamie Dimon made headlines with the warning that “something is wrong“ with America, to which he dedicated a substantial portion of his latest annual letter to shareholders, a less discussed declaration by the JPM CEO was that the too-big-to-fail problem, one which clearly impacts his own bank, JP Morgan, has been solved. It was this that Neel Kashkari took offense with, and in a post on Medium, today the Minneapolis Fed president who has long waged a crusade to warn Americans that US banks remain very risky, he said that Dimon’s claims about the too-big-to-fail banking problem being solved and banks being over-capitalized are ‘demonstrably false.” To wit:
At 46 pages, Mr. Dimon’s letter includes a lot of interesting commentary. In this essay, I am going to respond to two of his main points because I strongly disagree with them. First, Mr. Dimon asserts that ‘essentially, Too Big to Fail has been solved? – ?taxpayers will not pay if a bank fails.’ Second, Mr. Dimon asserts that ‘it is clear that the banks have too much capital.’ Both of these assertions are demonstrably false.
Addressing the first part of Dimon’s argument, the “solution” of the too big to fail problem, Kashkari says that ‘Mr. Dimon repeatedly points to various regulatory schemes that all have the same unrealistic feature: In a crisis, bondholders will take losses rather than taxpayers. It sounds like an ideal solution. The problem is that it almost never actually works in real life.”

This post was published at Zero Hedge on Apr 6, 2017.

The Long-Term Effects of Negative Real Interest Rates

Two things happened recently:
1. Jeff Bezos became the second-richest person in the world, passing Warren Buffett. He’s
worth about $76 billion.
***
2. Tesla’s market cap surpassed that of Ford. For what it’s worth, Ford sells a lot more
cars than Tesla. Here’s a picture of Elon Musk (who was seen taunting the shorts on
Twitter the other day).

This post was published at Mauldin Economics on APRIL 6, 2017.

A Key Reflation Trade Support Level Just Broke

While most eyes are focused on the longer-end of the curve and the butterfly-rotations in the Treasury complex…
***
RBC’s Mark Orsley points out that there is a substantial repricing going on in the front-end that could bleed into the broader reflation theme.
Arguably the most popular way in rates to play reflation and the thought of a more aggressive Fed has been the EDZ7/EDZ8 steepener (buying Dec ’17 Eurodollars/selling Dec ’18 Eurodollars). Conventional wisdom was the curve had 2 hikes priced in, the Fed has been saying 3 hikes for 2018 so its 1 hike light and thus a buy (steepener). Fair enough and I was a believer of this theory as well. However, Dudley really threw the Eurodollar market for a loop when he:
talked down the Fed’s urgency to hike revealed that the taper of reinvestments represents a hike or two showed us that the markets current pricing for terminal rates is pretty fair when he said there is 100-150bps more of hikes (was priced)

This post was published at Zero Hedge on Apr 6, 2017.

How US Actions Against North Korea Will Impact Gold & Silver – Golden Rule Radio #13

The following video was published by McAlvany Financial on Apr 6, 2017
This week we review how the conflict in North Korea could have major impacts on the Asian markets which in turn will move the metals markets. Richmond Fed President Jeffry Lacker resigns suddenly after admitting to leaking insider information. Steve Bannon is removed from the National Security Committee & Donald Trump meets with China’s Xi Jinping to discuss rising tensions in North Korea. Thanks for listening.

Turks Buying Gold, Uncertain of Their Political Future

A constitutional referendum in Turkey in mid-April could bring the most significant change to the county’s political structure since the introduction of its multiparty election system in 1945. With all of the uncertainty surrounding the vote and a shaky monetary system, Turks are starting to buy gold in large quantities. Turkish gold imports surged 17-fold to 28.2 tons in March, according to a Reuters report, as Turks seek out the safe haven inherent in precious metals.

Polling indicates a close and contentious vote, and passage of the referendum would create a ‘Turkish-style’ executive presidency and vastly increase the president’s powers. According to Human Rights Watch, two important provisions would immediately go into effect.
‘The president would have increased authority over the body that administers the judiciary and controls the appointment of judges and prosecutors, and the prohibition against the president having a formal party affiliation would be lifted. The courts in Turkey are already under political influence and these changes would further reduce judicial independence.’

This post was published at Schiffgold on APRIL 5, 2017.