19/5/17: A Reminder: Social Security is Only Getting More Insolvent…

On foot of my earlier post on U. S. household debt, it is worth mentioning another, much-overlooked in the media, fact concerning U. S. real economic debt crisis. This fact is a staggering one, even though it has been published a year ago, back in April 2016.
Based on the 2016 OASDI Trustees Report, officially called “The 2016 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds” (see link here: U. S. Social Security’s total income will exceed total cost of Social Security payouts through 2019. However, beyond 2019, interest income and money taken out of reserves will have to cover the funds required to offset Social Security’s annual deficits until 2034.

This post was published at True Economics on Friday, May 19, 2017.

A Trillion Dollar Down Day

After reaching a record market cap of $74.1 trillion this week, global equities saw almost $1 trillion evaporate in a single day…

As Bloomberg notes, concern over Donald Trump’s administration and a political crisis in Brazil pushed the MSCI All-Country World Index down 1.5 percent in the past two days, the most since September.

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

Commercial/Multifamily Borrowing Up 9 Percent from Last Year (Retail Originations Down 23%)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
The retail sector can’t seem to buy a break these days. With 8,600 brick-and-mortar stores may close their doors in 2017, lending was expected to decline.
According to the Mortgage Bankers Association, commercial/multifamily originations rose 9% from Q1 2016.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ May 19, 2017.

Want to Understand Rising Wealth Inequality? Look at Debt and Interest

“Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must).”
I often refer to debt serfdom, the servitude debt enforces on borrowers. The mechanism of this servitude is interest, and today I turn to two knowledgeable correspondents for explanations of the consequences of interest.
Correspondent D. L. J. explains how debt/interest is the underlying engine of rising income/wealth disparity:
Here is a table of the growth rate of the GDP.
If we use $16T as the approximate GDP and a growth rate of, say, 3.5%, the total of goods and services would increase one year to the next by about $500B.
Meanwhile, referencing the Grandfather national debt chart with the USDebtClock data, the annual interest bill is $3 trillion ($2.7 trillion year-to-date).
In other words, those receiving interest are getting 5-6 times more than the increase in gross economic activity.

This post was published at Charles Hugh Smith on FRIDAY, MAY 19, 2017.

MAY 19/GOLD REBOUNDS NORTHBOUND BY $1.25 AND SILVER IS UP 16 CENTS/THE DOLLAR TANKS AGAIN/THE AMOUNT OF SILVER STANDING INCREASES AGAIN FOR THE 15TH CONSECUTIVE TRADING DAY/HUGE CHINESE TELECOM U…

GOLD: $1253.90 up $1.25
Silver: $16.82 up 16 cent(s)
Closing access prices:
Gold $1256.00
silver: $16.88
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: $1259.45 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: 1250.00

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

Senior WH Official Is ‘Significant Person Of Interest’ In Russia Probe: Report

In an update to the original WaPo story, according to which a senior White House official was a “significant person of interest” in the Russia probe, NBC reported late on Friday that according to two US officials, an unnamed current White House official is under FBI investigation related to Russia collusion. While there is no concrete further information, some pundits have tossed around the name of Jared Kushner as a potential target of the probe.
NBC News confirms: the activities of a current White House official are now under investigation in FBI's Russia probe, 2 U. S. officials say
— Bradd Jaffy (@BraddJaffy) May 19, 2017

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

Oil Prices Rise as OPEC Discusses Deeper Output Cuts

OPEC is discussing a potential deepening of crude oil output cuts in a bid to accelerate market rebalancing, sources from the cartel told Reuters. The news came as the group’s Economic Commission Board met to discuss possible scenarios for next week’s meeting in Vienna. Expectations are that the meeting will yield a consensus agreement on an extension of the cuts, but this is the first time a potential deepening is also being mentioned.
So far, several OPEC members have declared their support for an extension, including the leader, Saudi Arabia, as well as the largest non-OPEC participant in the cut, Russia. In a joint statement, the two countries’ energy ministers said they will support an extension of the cut.
Listen to Greg Weldon on Oil, Commodities, and Fed
While analysts had argued that at the current rate of production, global inventories would take too long to rebalance, so the cuts needed to be deeper, but no comments were coming from OPEC on that point. This latest report could inject some optimism among traders, although one of Reuters’ sources noted that ‘Today’s meeting is just informative, nothing major.’

This post was published at FinancialSense on 05/19/2017.

Stocks and Precious Metals Charts – Between the Crosses, Row By Row

“One of the common failings among honorable people is a failure to appreciate how thoroughly dishonorable some other people can be, and how dangerous it is to trust them.”
Thomas Sowell
Today was an option expiration, and we had an additional pop in stocks in order to complete the routing of the bears who piled on to the ‘Trump dump.’
The putative reason for today’s rally was a statement by the Fed’s Bullard about the role that additional QE may play. I am not sure if this was ‘real’ or just another reasons to wash and rinse the public.
Next week will be the June option expiration for precious metals on the Comex.
Stocks are at a bit of a crossroads here. The SP 500 futures and big cap tech in the NDX, for example, have retraced approximately fifty percent of the recent drop, and are both at the midpoint of their respective bull trend channels.

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

Silver – The Only Commodity 66% Cheaper Than 37 Years Ago

Silver has gone from being the cartel’s kryptonite to being its LHC, or Large Hadron Collider. There are a lot of theories on what is going on with silver but the reality will probably be something even more fantastic. I keep getting back to lumber by way of comparison. The OI in silver is 55 times higher than in lumber, yet the global physical lumber market by dollar volume is actually higher. – quote from LeMetropole Cafe’s ‘Midas’ Report

This post was published at Investment Research Dynamics on May 19, 2017.

Japan’s “Correction Protection Team” Rescue Stocks For Second Day

A year ago, we noted that The Bank of Japan (BoJ) was a Top 10 holder in 90% of Japanese stocks. In December, we showed that BoJ was the biggest buyer of Japanese stocks in 2016. And now, as The FT reports, the real “whale” of the Japanese markets is stepping up its buying (up over 70% YoY) entering the market on down days more than half the time in the last four years.
Since the end of 2010, The FT notes that the BoJ has been buying exchange traded funds (ETFs) as part of its quantitative and qualitative easing programme. The biggest action began last July, when its annual acquisition target was doubled to 6tn. Since then, the whale designation has seemed pretty obvious: the central bank swallows a minimum of 1.2bn of ETFs every single trading day (tailored to support stocks that further ‘Abenomics’ policies), and lumbers in with buying bursts of 72bn roughly once every three sessions.

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

Ex-Goldman Banker Taking Over The Fed? Mark Carney Spotted At The White House

Now that Trump finally figured out he needs lower interest rates to preserve the debt-funded “growth” of the US and prevent the $20 trillion in government debt from spontaneously combusting (as higher rates lead to higher interest outlays, resulting in even more debt and so on)…

… speculation about who may replace Janet Yellen has faded despite her term ending in 2018.

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

“Bond Bears Have Had A Difficult 2017” Goldman Mocks Its Clients After Cutting Its Treasury Yield Target

It has been a day of capitulation for Goldman. Just hours after the bank that controls the White House cut its forecast for Trump tax hikes by nearly 50% from $1.7 trillion to $1.0 trillion, moments ago Goldman, which starts off every single year predicting that 10Y yields will rise to 3.00% (or higher) over the next 12 months – much to our recurring mocking every single year – just cut its 10Y Treasury yield forecast for the end of the year. To be fair (to those who lost money listening to its reco) it did so kicking and screaming, with chief GS Intl strategist Francesco Garzarelli adding saying that “in relation to expectations around nominal activity growth and credit expansion, 10-year bonds now screen as expensive across the board.”
Well, maybe relative to Goldman’s expectations for nominal activity. Others, which as of today also include Fed’s Bullard, however are watching the chart below and have realized that any hopes for an economic rebound in the remaining 7 months of the year are now long gone.

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

Here Are The Three Choices Facing OPEC Next Week

The last time OPEC (and Non-OPEC) member nations sat down to attempt a coordinated increase in oil prices by cutting production they succeeded… for about three months. Every since then, oil has been on a gradual declining path, boosted by a surge in US shale output and declining global demand, with WTI recently even sliding sliding below OPEC’s implicit price floor of $50/barrel. Which is why on May 25, after the failure of the first 6 month production cut, the same nations will try the same exercise, this time looking to cut output for 9 months, and hoping for a different outcome.
At least that is the general expectation. Overnight, BofA’s Francisco Blanch has released a note previewing next week’s OPEC meeting titled “OPEC: extend and pretend“, and which boils down to the 3 choices faced by OPEC: maintain, curb, or hike output. For its part, BofA believes that OPEC will extend cuts and hope demand recovers. Additionally, Blanch also states that oOPEC’s goal for the oil market is to reach backwardation, not a specific price level and does not believe that OPEC will proceed with deeper cuts as this would likely mean ceding more market share to U. S. shale production.
As Blanch explains in the summary, the global oil market deficit is smaller than the bank thought (see the dramatic, 500kb/d downward revision to global demand growth in chart 2 below) and as a result the cartel is struggling to bring down global stocks. This situation presents a major challenge for the cartel, as OPEC is targeting a shift in the term structure of global crude markets and not a specific oil price band according to Blanch: the idea is to penalize forward sellers and squeeze refiners. But soft demand in India and Mexico, a warm US winter, and an OPEC crude oil production overhang from 4Q16 have gotten in the way of a good plan.

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

Commodities Bust Hits Farm Lenders, Delinquencies Surge 225%

Just as the deflating Farmland bubble leaves its marks.
When it comes to agricultural debt, the numbers aren’t huge enough to take down the global financial system. But this shows how much pain the commodities rout is producing in the farm belt just when the farmland asset bubble that took three decades to create is deflating, and what specialized lenders and the agricultural enterprises they serve – some of them quite large – are currently struggling with in terms of delinquencies.
This is what delinquencies on loans for agricultural production – not including loans for farmland, which we’ll get to in a moment – look like:

This post was published at Wolf Street by Wolf Richter ‘ May 19, 2017.

Lower 48 Production Nears Cycle Highs As Rig Count Rises For 18th Straight Week

While much was made of this week’s drop in US crude production, it was driven by an Alaskan supply drop, not the Lower 48 whose production is at Aug 2015 highs. WTI back above $50 on the back of more OPEC jawboning appears to have everyone convinced this time is different, but for the 18th week in a row US oil rig counts rose (by 8 to 720).
*U. S. OIL RIG COUNT +8 TO 720 , BAKER HUGHES SAYS :BHI US *U. S. GAS RIG COUNT 180 , BAKER HUGHES SAYS :BHI US The 18th weekly oil rig count rise…

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

Will The $40 Billion Saudi Infrastructure Gift Influence Trump?

It’s ‘Infrastructure Week’ in Washington, and foreign powers are taking note.
Ahead of President Donald Trump’s upcoming visit to the Middle East, Saudi Arabia has promised to make $40 billion of its sovereign wealth fund available to the United States to bankroll part of the roughly $1 trillion in infrastructure improvements that Trump promised on the campaign trail.
The move is reminiscent of the KSA’s strategy amongst its allies in the Gulf Cooperation Council (GCC), as well as Morocco and Jordan. This GCC + 2 group of kingdoms is regularly showered with billions of dollars in gifts from its wealthiest members, earmarked for similar construction projects, allowing the most stable Arab countries to remain intimately connected through financial obligations. The monarchial structure of these countries allows the lead executive to accept the sizeable donations without much fuss from the public. It’s just the way things are done there, and citizens of those regions generally accept.

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