Who Is Most Likely To Lie On Their Loan Application: A Surprising Answer From UBS

According to conventional wisdom, or at least logic, the less income one has the more likely they would be to lie on a loan application due to disproportionate and non-scaled needs to obtain capital as well as the willingness – statistically speaking – to do so at any cost, even if it means lying. And while that would have been accurate 6 months ago, the latest quarterly UBS Evidence Lab survey of consumer credit reveals something surprising.
As UBS’ Matthew Mish writes, “the manipulation of risk estimates appears to be continuing for non-mortgage consumer loans. Specifically 26% of respondents (vs 25% in Q1) describe the factual accuracy of their loan applications (student, auto or card) as inaccurate.”
Translation: while the overall percentage of potential “cheating” borrowers is increasing, the chart below shows the unexpected finding is that while the proportion of those making $40-$99K in June responding their loan applications were inaccurate declined from March 31 to June 30, the percentage of respondents in the $100K and higher bucket spiked from 20% to 24%, which means that the wealthiest Americans are – as of this moment – as likely to lie on their loan applications as those making as little as $40K. Just as disturbing is that the incidence of lying on loan applications among the “richest” bucket Americans has jumped by far the most YTD, from 17% at the start of the year to 24% currently.

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

Outgoing Ethics Chief Says Country Is “Pretty Close To A Laughingstock” Under Trump

The outgoing director of the federal government’s ethics office has decided to seize his 15 minutes of fame on his way out the door by sitting down for an interview with the New York Times to warn Americans that President Trump has turned the country into a “laughingstock.”
Shaub is apparently most concerned about Trump’s visits to his family-owned resorts which he says creates “the appearance of profiting from the presidency.”

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

A Decade of Fallacy

Ten years ago yesterday, Bear Stearns sent a letter to shareholders of two specific hedge funds that it sponsored. Whenever anyone brings up the name now, you immediately know where this is going. That wasn’t the case in 2007, however. Whatever the world may think of Bear in hindsight, a decade ago it was a highly reputable firm.
These two particular hedge funds had earlier that year caused a rumble throughout the shadow system. On July 17, 2007, the bank finally declared them all but worthless, total wipeouts. In the mainstream, nobody could quite figure out why apart from invoking the generic idea of subprime mortgages. Everyone knew, or claimed afterward to know, that they were risky, but pinpointing the exact point of failure proved incredibly difficult. Something, something, CDS.
I wrote on August 1, 2007:
The strategy for the hedge funds, in simple terms, was to invest in senior tranches backed by subprime mortgages, hedged by puts against an ABX index. Information on the exact nature of the investments is still hard to come by under the veil of hedge fund secrecy but it looks to be that 90% of the investments were senior or better, meaning that 90% of the assets were AAA rated…

This post was published at Wall Street Examiner on July 18, 2017.

Preparing for the End Game

A Potential Road Map for the End of the Current Bull Market & Economic Expansion
History books refer to the last economic slowdown we experienced, triggered by the 2007-2008 financial crisis, as the Great Recession. Its impacts were so severe – the worst global recession since the Great Depression of the early 1930s – that central banks across the globe responded with an unprecedented emergency stimulus. But that era is now drawing to a close and, with it, the countdown to the next economic recession and bear market in equities has begun.
Economic, Market Cycles and Monetary Policy
Central banks raise interest rates when they feel an economy is overheating and they are more concerned about price stability (inflation) than growth. Central banks cut interest rates when their primary concern is growth. A natural question to ask is, ‘How do central banks know when to stop raising rates?’ When something breaks!
Those who are the most leveraged with the weakest balance sheets are the first casualties when the Federal Reserve begins to raise interest rates and remove liquidity from the financial system. These are the entities Warren Buffet was referring to when he famously said, ‘It’s only when the tide goes out that you learn who has been swimming naked.’
As the casualties build and those naked run for cover, eventually the increased financing costs and slower economic activity culminate in a recession (in red).

This post was published at FinancialSense on 07/18/2017.

Why Smallpox Will Make A Comeback: Canadian Researchers Spend Only $100,000 To Reconstitute Extinct Virus

The Eradication of smallpox was arguably one of the greatest medical achievements of the modern era. A disease which killed at least 300 million people in the 20th century alone, was snuffed out after decades of hard work by scientists and doctors, and after over a billion dollars (adjusted for inflation) was spent on vaccination campaigns.
Unfortunately, this achievement could be easily undone with modern technology, and at a tiny fraction of what it initially cost to eradicate smallpox. Last week it was revealed that a team of Canadian researchers managed to synthesize an extinct strain of smallpox, by piecing together several mail order samples.
The horsepox virus the Canadian team created is not a threat to human health – or even the health of horses – should it ever escape from a lab. And it’s not the first virus created by putting pieces of DNA together in the right sequence.
Still, the news that a team headed by David Evans, a professor of medical microbiology and immunology, had accomplished this feat – at a relatively low cost of about $100,000 plus labor – was a bit of a wakeup call. The news was first reported Thursday in Science Magazine.

This post was published at shtfplan on July 18th, 2017.

My Mother Wasn’t White Trash

“At first reading, the story of my mother’s life seems like little more than a tragedy. However, it is much more than that. Her story reveals the stark realities of growing up poor. All across Appalachia, there are thousands of women just like my mother working, striving, struggling, just to exist. So many people in Appalachia have broken minds and broken bodies and broken hearts, and they do nothing more than survive because that’s all they can do.
It is as popular now as ever to blame poor people for their station in life. Republican politicians love to talk about how poor people could stop being poor if only they made better choices or worked harder.

This post was published at Jesses Crossroads Cafe on 18 JULY 2017.

The ECB’s Balance Sheet Is Now The Size Of Japan’s GDP

Yesterday was a landmark day for the ECB. First, the central bank disclosed that its CSPP, or corporate bond, holdings rose above 100Bn for the first time. As DB’s Jim Reids notes this morning, to put things in perspective, a similar market cap company would be the 18th largest in the Stoxx 600 and 42nd largest in the S&P 500. It’s also roughly equivalent to the annual national output of Kuwait – the 59th largest economy in the world as of 2016.”
Assuming that the previously disclosed percentage of bonds purchased in the primary market, or directly from the company, has not changed since our report a month ago, this means that the price indiscriminate ECB has directly injected approximately $15 billion in various European corporate entities in exchange for bonds, bypassing any middlemen in the process.

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


GOLD: $1242.00 UP $7.50
Silver: $16.29 UP 16 cent(s)
Closing access prices:
Gold $1243.00
silver: $16.28
Premium of Shanghai 2nd fix/NY:$9.53
LONDON FIRST GOLD FIX: 5:30 am est $1237.10
For comex gold:
For silver:
120,000 OZ/
Total number of notices filed so far this month: 2890 for 14,450,000 oz

This post was published at Harvey Organ Blog on July 18, 2017.

Social Security Will Be Paying Out More Than It Receives In Just Five Years

When social security was first implemented in the 1930’s, America was a very different country. Especially in regards to demographics. The average life expectancy was roughly 18 years younger than it is now, and birth rates were a bit higher than they are now. By the 1950’s, the fertility rate was twice as high as it is in the 21st century.
In other words, for the first few decades, social security seemed very sustainable. Most people would only live long enough to benefit from it for a few years, and there was an abundance of young workers who could pay into the system. Those days are long gone. As birth rates plummet and people live longer, (which otherwise should be considered a positive development) social security’s future is looking more and more bleak.
No matter how you slice it, it doesn’t seem possible to keep social security funded. In fact, social security is going to start paying out more money than it receives in just a few short years. It may even be insolvent before the baby boomer generation dies off.
According to the Social Security Board of Trustees, the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be depleted in 2034.
When this happens, only 77 percent of benefits will be payable. That estimate is no change from last year’s estimate.

This post was published at shtfplan on July 18th, 2017.

Calling for Market Top Within The Next Three Weeks

Last week, I noted: “As long as last week’s low is not broken, the market still has a set up in place to rally up towards the 2500SPX region.”
And, as we saw, the market has rallied up towards our long-term target region. The high we struck on Friday is now only 24 points from the bottom of our long-term target box, which we set several years ago.
Since bottoming back in February of 2016, the S&P500 has rallied 38%. That is one of the best runs in the market’s history. But, were you prepared for it?
The truth is that most in the market were quite bearish back in February of 2016. As I have noted before, back on February 10, 2016, bearish sentiment, according to the AAII Investor Sentiment Survey, was at one of its highest readings, hitting 48.7% (with only 24% responding as bullish), whereas it has a historical average of 30.5% bears and over 40% bulls. The February 10th measurements are considered to be relatively extreme bearish numbers.
How many of you even reasonably considered that the market could attain 2500+ in the S&P500 back in February of 2016, even after I continued to strongly suggest that potential? If you are honest with yourself, the answer is likely going to be an extremely small percentage. But, the potential was clearly on the chart for all those who knew where to look.

This post was published at GoldSeek on 18 July 2017.

What The Senate’s Healthcare Fiasco Means For Trump Policies: Goldman Explains

Now that Trump’s hope to replace Obamacare is dead indefinitely following last night’s mini rebellion in the Senate , and only the possibility of repeal remains although even that is not likely, pundits are asking what this means for Trump’s overall agenda, and whether it will accelerate or further delay (or block outright) the implementation of any other Trump proposal, chief among which is budget resolution, increasing the government debt ceiling and passing tax reform. Regarding the latter, the stakes are especially great because as Bank of America explained earlier, “there is a general consensus that without tax reform the GOP could lose their majority in the House.”
Still, for a market that has gotten used to ignoring everything out of Washington, if not virtually all newsflow, the reaction will likely be delayed because as BMO’s Ian Lyngen writes, investors will likely ‘start looking at the issue more closely in the coming weeks, but don’t expect any visceral market response till the 11th hour from either Congress or the markets.” Still, they warn that ‘the broader implications of this health-care failure may reverberate a bit more over time than markets may be currently assuming.”
So while we wait for the market response, what happens next? Overnight Goldman’s chief political analyst Alec Phillips writes that while Congress may still pass a health bill, it just won’t be this one and notes that the “enactment of much more narrowly-focused health legislation is still possible this year, in light of problems facing the individual insurance market for 2018.”

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

Gold Prices Rise 3rd Day as US Debt Ceiling ‘Blocks Fed Rate Hikes’, Dollar Falls

Gold prices rose sharply for the third session running in London on Tuesday, gaining as world stock markets fell, commodities rose, and interest rates on major government bonds retreated to new lows for July.
Silver stalled at $16.14, unchanged from Monday’s jump, while platinum gave back $10 per ounce from yesterday’s spike to 1-month highs at $934.50 per ounce.
Peaking above $1238, gold priced in US Dollars recovered almost the last of this month’s earlier 3% loss, driven by “technical follow-up buying” after breaking above the “important” 200-day moving average according to a commodities note from German bank Commerzbank.
“The weak US Dollar is also playing its part – it has depreciated to a 14-month low against the Euro.”
Looking at US interest rates, “[Last week’s] unexpectedly dovish tone from Fed Chair [Janet Yellen] and weaker than expected CPI [inflation] data raised questions on the Fed’s ability to stay its course,” says a note from Canadian brokerage T. D. Securities.

This post was published at FinancialSense on 07/18/2017.

Gold and Silver Market Morning: July 18 2017 – Gold and silver markets continue to climb!

Gold Today – New York closed yesterday at $1,234.00. Londonopened at $1,237.00 today.
Overall the dollar was much weaker against global currencies, early today. Before London’s opening:
– The $: was much weaker at $1.1559 after yesterday’s $1.1457: 1.
– The Dollar index was much weaker at 94.64 after yesterday’s95.21.
– The Yen was stronger at 112.14 after yesterday’s 112.44:$1.
– The Yuan was much stronger at 6.7481 after yesterday’s 6.7704:$1.
– The Pound Sterling was weaker at $1.3026 after yesterday’s $1.3066: 1.
Yuan Gold Fix
New York closed $2 lower than Shanghai’s close yesterday, with London opening today at a discount to Shanghai’s trading today of $7.10, the same discount to Shanghai we saw yesterday. But London is being pulled up by Shanghai. Shanghai in turn was pulling back today from its high as the Yuan strengthened, bringing Shanghai’s gold price to the same differential as it had yesterday.

This post was published at GoldSeek on 18 July 2017.

India’s Love Affair with Gold

We focus on India a lot. Why? Because Indians have a love affair with gold. It’s not just a luxury. Even the poor buy gold in India.
There are two main reasons to follow the Indian gold market closely. First, the country ranks second in the world in gold consumption. What happens in India can have a major impact on the world gold market. Second, the attitude of the Indian people can teach us a lot about the wisdom of buying and owning gold.
After a lull in demand last year, Indians have already purchased more gold this year than they did through all of 2016. We saw their passion for gold on vivid display when Indians bought more 23 tons of gold in a single day during the Akshay Tritiya festival. But what drives it? Why do Indians seek gold?
A recent article at MoneyControl.com sheds some light on Indian attitudes about the yellow metal.

This post was published at Schiffgold on JULY 18, 2017.

Global Asset Allocation Update: Not Yet

There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are no changes to the portfolio this month.
Growth and inflation expectations rose somewhat since last month’s update. The change is minor though and within the range of what we’ve seen in recent months. The most significant change from last month is the continued drop in the US Dollar as growth expectations for the rest of the world continue to outpace US expectations. The dollar has lost considerable luster since the beginning of this year when everyone thought it had nowhere to go but up. Absent some kind of legislative win from the Trump administration, I see no reason to think the trend is about to reverse although sentiment is getting a mite negative on the greenback.
The weak dollar is mostly having the impact on markets one would expect. International stock markets are outperforming which is nice since our portfolio is positioned to benefit from just such a trend. Gold and other commodities haven’t responded as positively but gold is at least up over the last six months. Commodities more generally are down on the year, mostly a reflection of the drop in crude prices. If the dollar keeps falling I would expect commodity performance to improve. Real estate, another real asset sensitive to dollar movements, is performing well both domestically and internationally.

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

Amazon Drives Discount Double Check in Retail Industry

Our offices are located on Michigan Avenue, otherwise known in colloquial terms as “The Magnificent Mile,” which is paved with one retailer after the next. You can find Ulta; you can find Nike; you can find Gucci; you can find Crate & Barrel; you can find Gap, Nordstrom, Ralph Lauren, Tiffany & Co., and the list goes on and on.
Oh, and you can also find lots of “sale” signs.
What we see in terms of “sale” signs on Michigan Avenue is probably no different from what readers see in their own shopping districts and/or malls these days. Many brick and mortar retailers, and especially the apparel and accessories retailers, are hurting for traffic as consumers have increasingly embraced e-commerce for their spending activity, partly because it is convenient, partly because it takes less effort, but mostly because that’s where lower prices can be found.
The fact of the matter in the apparel and accessories world, where true differentiation and competitive moats are hard to come by, is that full-price selling doesn’t sell for the average consumer. What sells as a traffic driver are big discounts.
Amazon, in effect, is ruling the retail universe with an invisible hand and retailers have no choice but to perfect an operating strategy that combats Amazon’s ever-present, always-on, competitive threat.

This post was published at FinancialSense on 07/17/2017.

Global Growth on the Rise (for Now)

According to the Organization for Economic Cooperation and Development (OECD), global growth in 2016 was the lowest since 2009. The good news? It’s on the rebound, with growth this year expected to reach 3.5%.
The bad news to counteract that good news? In the long-run, nearly all developed countries are converging to 0-1% trend GDP growth.
That last unfortunate fact notwithstanding, a small pickup in global growth suggests that the current trend in equity markets will continue in the near term, as international growth continues to exceed that of domestic.
Previous years’ growth for G20 countries, along with projections for 2017 and 2018, are included in the table below. As you can see, world growth is expected to come in at 3.5% this year, with a subtle acceleration in the works for 2018.

This post was published at FinancialSense on 07/18/2017.