2022 Blog Archives

12.30.22- Happy New Tax Hikes!

Gold last traded at $1,819 an ounce. Silver at $23.79 an ounce.

EDITOR'S NOTE: Many of the stories we have shared lately have focused on the mounting inflationary pressures we are all feeling. Apparently President Biden has an easy (for him) solution to this problem: simply increase taxes on US households. Read on to get the list of tax hikes coming soon to your bottomline.

List of Biden Tax Hikes Hitting Americans on Jan. 1

President Biden and congressional Democrats imposed a long list of tax increases as part of their “Inflation Reduction Act” passed in 2022.

On Jan. 1, 2023 the following Democrat tax hikes will take effect:

$6.5 Billion Natural Gas Tax Which Will Increase Household Energy Bills

Think your household energy bills are high now? Just wait until the three major energy taxes in the Inflation Reduction Act hit your wallet. The first is a regressive tax on American oil and gas development. The tax will drive up the cost of household energy bills. The Congressional Budget Office estimates the natural gas tax will increase taxes by $6.5 billion.

The tax hike violates President Biden’s tax pledge to any American making less than $400,000 per year. Biden administration officials have repeatedly admitted taxes that raise consumer energy prices are in violation of President Biden’s $400,000 tax pledge.

A letter to Congress from the American Gas Association warned that the methane tax would amount to a 17% increase on an average family’s natural gas bill. Democrats have included a tax in the bill despite retail prices for energy surpassing multi-year highs in the United States. READ MORE

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12.29.22 - Stock Hedge Funds Erase Billions

Gold last traded at $1,814 an ounce. Silver at $23.89 an ounce.

EDITOR'S NOTE: Spiraling stock market losses have definitely left a mark on hedge funds lately; to the tune of billions of dollars. In reality it's been a tough couple of years for these funds and 2023 doesn't look to hold any promise of a reversal. The losses seem to be exacerbated by the inflationary pressures that continue to build.

Stock Hedge Funds Erase Billions With Another Year of Losses - Yahoo!Finance

By Katherine Burton and Hema Parmar

(Bloomberg) -- In 2020, tech-heavy hedge fund Light Street Capital Management posted a banner year on bets including Amazon.com Inc. and Alibaba Group Holding Ltd.

hat was the last of the good times. The firm, along with other once-high-flying stock hedge funds, is coming off a second year of losses that erased billions of dollars in clients’ wealth.

Light Street, Whale Rock Capital Management, Tiger Global Management and Perceptive Advisors each posted declines of more than 40% during the last two years, according to people familiar with the returns. Those losses could prove problematic for smaller firms, given that investors pay lower or no fees on gains until they’re made whole.

The back-to-back downswings at some stock funds created huge dollar losses for clients because many tech- or health care-focused funds minted money when companies like Facebook parent Meta Platforms Inc., Tesla Inc. and Amicus Therapeutics Inc. were booming.

Yet as inflation picked up late last year, these same shares nosedived — and few funds increased their short bets to take advantage of the fall. READ MORE

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12.28.22 - Saxo Bank's Predictions for 2023

Gold last traded at $1,804 an ounce. Silver at $23.54 an ounce.

Long-Time Gold Bear JC Parets Turns Bullish; $5,000 Possible -Forbes

Last week, we mentioned gold price projections for 2023 going as high as $4,000 an ounce. Now another forecast sees gold topping $5,000 an ounce! As you read on, what's more important than the price projections is the underlying reasons why these price levels are a possibility. These predictions may or may not be accurate, but the fundamentals surrounding them are real. This is why many experts agree the best hedge for anyone is a position in physical gold.

By Simon Constable

A long-time bear on investing in gold bullion seems to have flip-flopped.

Now he’s bullish, and how!

JC Parets, who founded and runs technical analysis firm AllStarCharts.com now sees the price of gold bullion heading towards $5,000 a troy ounce. Among other things, technical analysts use price charts to predict where asset prices may go next.

Active month gold futures were recently changing hands at approximately $1,824 an ounce on the CME. But prices for the traditional safe-haven asset have traded in a range from around $1,640 to $2,035 since early 2020, which was the year the COVID-19 pandemic erupted.

The SPDR Gold Shares (GLD GLD -0.4%) exchange-traded fund, which holds bars of solid bullion, followed a similar pattern of ups and downs with a range.

“It’s been two years since gold hit new all-time highs,” Parets and his team write in a recent report. “And, while it hasn’t gone anywhere since, it has remained buoyant.” His emphasis.

The report continues as follows: READ MORE

"Cracked credit" and "distressed debt" are not terms we want to hear when it comes to our economy nor the potential repercussions associated with them. These are just another reflection of the financial bubbles out there we are hoping don't burst.

By Neil Callanan, Tasos Vossos and Olivia Raimonde

(Bloomberg) -- Multiple stress points are emerging in credit markets after years of excess, from banks stuck with piles of buyout debt, a pension blow-up in the UK and real-estate troubles in China and South Korea.

With cheap money becoming a thing of the past, those may just be the start. Distressed debt in the US alone jumped more than 300% in 12 months, high-yield issuance is much more challenging in Europe and leverage ratios have reached a record by some measures.

The strains are largely linked to aggressive rate increases by the Federal Reserve and central banks around the world, which have dramatically changed the landscape for lending, upended credit markets and pushed economies toward recessions, a scenario that markets have yet to price in.

Globally, almost $650 billion of bonds and loans are in distressed territory, according to data compiled by Bloomberg. It’s all adding up to the biggest test of the robustness of corporate credit since the financial crisis and may be the spark for a wave of defaults.

“Many are likely to be slightly more complacent than they should be,” said Will Nicoll, chief investment officer of Private & Alternative Assets at M&G. “It is very difficult to see how the default cycle will not run its course, given the level of interest rates.” READ MORE

The focus on rising gold prices in 2023 is gaining support from global economies as well. Saxo bank's predictions are considered to be outrageous by some, but are they? When you start breaking down their "why", it all seems justified. You be the judge.

By Hannah Ward-Glenton

Saxo Bank’s “outrageous predictions” for 2023 include a ban on meat production, skyrocketing gold prices and Britain voting to “un-Brexit.”

The Danish bank’s annual report, published earlier this month, expects global economies to shift into “war economy” mode, “where sovereign economic gains and self-reliance trump globalisation.”

The forecasts, while not representative of the bank’s official views, looked at how decisions from policymakers next year could impact both the global economy and the political agenda.

Gold to hit $3,000

Among the bank’s “outrageous” calls for next year, Saxo Head of Commodity Strategy Ole Hansen predicted the price of spot gold could exceed $3,000 per ounce in 2023 – around 67% higher than its current price of about $1,797 per ounce. READ MORE

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12.27.22 - 15 Signs the Massive Market Meltdown is Already Here

Gold last traded at $1,815 an ounce. Silver at $24.09 an ounce.

EDITOR'S NOTE: For most of 2022, we have heard that a giant economic meltdown was imminent. It appears it has arrived. Read on to learn the 15 signs that the meltdown is well underway.

15 Facts Which Prove That A Massive Economic Meltdown Is Already Happening Right Now -ZeroHedge

Authored by Michael Snyder via The Economic Collapse blog

Economic conditions just keep getting worse. As we prepare to enter 2023, we find ourselves in a high inflation environment at the same time that economic activity is really slowing down. And just like we witnessed in 2008, employers are conducting mass layoffs as a horrifying housing crash sweeps across the nation. Those that have been waiting for the U.S. economy to implode can stop waiting, because an economic implosion has officially arrived.

The following are 15 facts that prove that a massive economic meltdown is already happening right now…

#1 Existing home sales have now fallen for 10 consecutive months.

#2 Existing home sales are down 35.4 percent over the last 12 months. That is the largest year over year decline in existing home sales since the collapse of Lehman Brothers.

#3 Homebuilder sentiment has now dropped for 12 consecutive months.

#4 Home construction costs have risen more than 30 percent since the beginning of 2022.

#5 The number of single-family housing unit permits has fallen for nine months in a row.

#6 The Empire State Manufacturing Index has plunged “to a reading of negative 11.2 in December”. That figure was way, way below expectations.

#7 In November, we witnessed the largest decline in retail sales that we have seen all year long.

#8 Even the biggest names on Wall Street are starting to let workers go. In fact, it is being reported that Goldman Sachs will soon lay off approximately 4,000 employees. READ MORE

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12.23.22 - Gold at $4,000?

Gold last traded at $1,795 an ounce. Silver at $23.68 an ounce.

EDITOR'S NOTE: If these analysts are correct, they may be offering you the best gift you'll get this holiday season. With the numerous challenges our markets are currently dealing with as well as facing in 2023, gold could head to $4,000 an ounce. That's quite an assertion given that prices are sitting at just below $1,800 as we finish the trading week before the Christmas holiday. Read more to see if gold is the move for you.

Gold at $4,000? Analysts share their 2023 outlook as inflation, recession fears linger -CNBC

Gold prices could surge to $4,000 per ounce in 2023 as interest rate hikes and recession fears keep markets volatile, said Juerg Kiener, managing director and chief investment officer of Swiss Asia Capital.

The price of the precious metal could reach between $2,500 and $4,000 sometime next year, Kiener told CNBC’s “Street Signs Asia” on Wednesday.

There is a good chance the gold market sees a major move, he said, adding “it’s not going to be just 10% or 20%,” but a move that will “really make new highs.”

Kiener explained that many economies could face “a little bit of a recession” in the first quarter, which would lead to many central banks slowing their pace of interest rate hikes and make gold instantly more attractive. He said gold is also the only asset which every central bank owns.

According to the World Gold Council, central banks bought 400 tonnes of gold in the third quarter, almost doubling the previous record of 241 tonnes during the same period in 2018.

“Since [the] 2000s, the average return [on] gold in any currency is somewhere between 8% and 10% a year. You haven’t achieved that in the bond market. You have not achieved that in the equity market.”

Kiener also said investors would look to gold with inflation remaining high in many parts of the world. “Gold is a very good inflation hedge, a great catch during stagflation and a great add onto a portfolio.” READ MORE

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12.22.22 - King Dollar is facing a revolt

Gold last traded at $1,791 an ounce. Silver at $23.61 an ounce.

EDITOR'S NOTE: In yet another threat to the strength and long term stability of our dollar, countries large and small are seeking different alternatives to the US dollar. In this era of participation awards for just showing up, the same can not be said for the strength of currencies and economies. The more people participate in your economy and hold your currency, the more economic stability is derived.

Suddenly Everyone Is Hunting for Alternatives to the US Dollar

By Michelle Jamrisko and Ruth Carson

(Bloomberg) -- King Dollar is facing a revolt.

Tired of a too-strong and newly weaponized greenback, some of the world’s biggest economies are exploring ways to circumvent the US currency.

Smaller nations, including at least a dozen in Asia, are also experimenting with de-dollarization. And corporates around the world are selling an unprecedented portion of their debt in local currencies, wary of further dollar strength.

No one is saying the greenback will be dethroned anytime soon from its reign as the principal medium of exchange. Calls for “peak dollar” have many times proven premature. But not too long ago it was almost unthinkable for countries to explore payment mechanisms that bypassed the US currency or the SWIFT network that underpins the global financial system.

Now, the sheer strength of the dollar, its use under President Joe Biden to enforce sanctions on Russia this year and new technological innovations are together encouraging nations to start chipping away at its hegemony. Treasury officials declined to comment on these developments.

“This will simply intensify the efforts in Russia and China to try to manage their part of the world economy without the dollar,” said Paul Tucker, a former deputy governor of the Bank of England in a Bloomberg podcast. READ MORE

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12.21.22 - The 'Ugliest' Omnibus Bill Ever

Gold last traded at $1,814 an ounce. Silver at $24.02 an ounce.

Here's What's In The 'Ugliest' Omnibus Bill Ever -ZeroHedge

If you've been following the financial news at all the past few days you know the Congress is trying to push through a trillion dollar-plus spending bill. If all goes as planned, they will accomplish this by way of a vote on Thursday. As if our debt isn't already off the charts. Read below for all the gory details.

This week, while Democrats still (barely) have enough power to pass it, the 117th Congress is about to rush through a 4,155-page, $1.7 trillion omnibus spending bill that the WSJ Editorial Board has called the "worst in history."

"This is no way to govern in a democracy, but here we are," the board writes.

The final bill was quietly dropped Monday in the 'dead of night' - and by Thursday, if all goes to plan, it will get rushed through for a vote.

"I brought with me the omni, 4,155 pages. When was it produced? In the dead of night. 1:30 in the morning it was released," said Sen. Rand Paul (R-KY) during a press conference with Sens. Mike Braun, Ron Johnson, Mike Lee and Rick Scott - the only dissenting Senate Republicans.

Overall, the bill contains $858 billion for defense - an increase of 9.7%, and $45 billion more than President Biden sought. It will, among other things, give military members a 4.6% raise and help replenish dwindling weapons stocks. $45 billion has also been earmarked for new military and economic aid for Ukraine.

"What is more dangerous to the country? $1.1 Trillion in new debt or as Republican leadership likes to say, “Oh, it is a win! It is a big win. We’re getting $45 billion for the military,”" said Paul. "So which is more important? Which threatens the country more? Are we at risk of being invaded by a foreign power if we don’t put $45 billion into the military? Are we more at risk by adding to a $31 trillion debt?" READ MORE

The Fed’s Destructive Guessing Game - Lew Rockwell

The Fed has raised rates by a half point - which to some may seem like good news given the last several increases have been a three-quarter point. The question remains, does the Fed have a handle on this economy and are they capable of controlling it? The concern - shared by many experts - is that the Fed's actions may thrust us into another depression. Here's the reasoning ...

By Jacob G. Hornberger

The Future of Freedom Foundation

As expected, the Federal Reserve raised interest rates by half a point yesterday. It was a drop from the .75 point rate increases that the Fed has been implementing for the past several months.

A big reason the Fed is going slower is the longstanding fear among Fed officials of bringing about another Great Depression by raising interest rates too high and too fast. That’s, of course, what happened in the late 1920s, when the Fed’s actions brought about the 1929 stock-market crash, which then led to the Great Depression.

Yes, I know, most everyone is taught in their public schools and state-supported universities that the Great Depression was caused by the failure of America’s free-enterprise system. But it’s a lie. And it’s been a lie ever since U.S. officials began saying it during the Great Depression.

In fact, it was the Federal Reserve that caused the Great Depression. If the Fed had not over-contracted the money supply in the late 1920s, there never would have been a Great Depression.

At the time, U.S. officials felt it necessary to tell the lie because of the widespread economic suffering the Fed had wreaked with its monetary policies. People had lost their businesses. Multimillionaires who had lost everything were committing suicide. There was massive unemployment and tremendous suffering. READ MORE

S&P 500 Facing a Historical Warning Sign After This Year's Slump - Yahoo!Finance

In preparing for the future it makes sense to look to the past for some perspective. When it comes to the S&P however, doing so doesn't look too promising for the market average. After consecutive down years the future looks ominous based on the precedent we've seen.

By Jan-Patrick Barnert

(Bloomberg) -- Consecutive down years are rare for US stocks, so after this year’s drop, there’s only a low probability they will decline again in 2023. Yet if they do, history shows that investors will have to brace for another very unpleasant 12 months.

Since 1928, the S&P 500 Index has only fallen for two straight years on four occasions: The Great Depression, World War II, the 1970s oil crisis and the bursting of the dot-com bubble at the start of this century.

In the benchmark’s almost 100-year history, such occasions are clear outliers. Yet when they have occurred, drops in the second year have always been deeper than in the first, with an average decline of 24%. That would exceed this year’s slide of about 20% to date.

More than two back-to-back years in the red are even rarer. The S&P 500 tumbled for three straight years from 2000 to 2002 and from 1939 to 1941, while the longest losing streak remains the aftermath of the infamous Wall Street crash, when stocks fell for four years from 1929 to 1932.

To be sure, both fund managers and Wall Street strategists forecast a muted recovery for the S&P 500 next year. READ MORE

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12.20.22 - Wells Fargo on the Naughty List

Gold last traded at $1,818 an ounce. Silver at $24.16 an ounce.

EDITOR'S NOTE: Wells Fargo is sporting a big black eye after being fined nearly $4 billion for their bad deeds. If there is such a thing as a naughty list, they're on it. These acts were commited against the same households that have been struggling during these inflationary times. Hopefully the proceeds from this action will help add some holiday cheer for some of these families.

Wells Fargo Ordered To Pay $3.7 Billion Over Widespread Illegal Activity - ZeroHedge

by Tyler Durden

Wells Fargo has been ordered to pay $3.7 billion by the Consumer Financial Protection Bureau (CFPB) for a variety of illegal activity, including wrongfully foreclosing on homes, illegally repossessing vehicles, incorrectly assessing fees and interest, and charging surprise overdraft fees.

The activity affected more than 16 million consumer accounts.

The fine consists of more than $2 billion in redress to customers, and a $1.7 billion civil penalty.

"Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families," said CFPB Director Rohit Chopra. "The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender."

More via the CFPB:

According to today’s enforcement action, Wells Fargo harmed millions of consumers over a period of several years, with violations across many of the bank’s largest product lines. The CFPB’s specific findings include that Wells Fargo: READ MORE

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12.19.22 - Why hasn't gold skyrocketed?

Gold last traded at $1,787 an ounce. Silver at $23.04 an ounce.

EDITOR'S NOTE: A very simple, yet powerful statement; "Gold is money everything else is credit". Mr. Grass breaks down the negative rationale associated lately with investing in gold. What I really enjoy about this read is the author's introduction of perspective. I hope you enjoy it as well.

Gold Is Money: Everything Else Is Credit - Mises Institute

By Claudio Grass

Throughout the better part of 2022 there has been one question that has consistently, and predictably, popped up in conversations with my friends, clients and readers. Those who know me and are familiar with my ideas are well aware of my position on precious metals and the multiple roles they serve, so I can’t blame them for them for being curious whether I still "stick to my guns" in this era of irrationality in the markets and the economy.

Especially for those not versed in monetary history, which is regrettably the vast majority of the population, it is natural to wonder: "If gold is such a great hedge against inflation, why hasn't it skyrocketed now that inflation is finally here?"

Well, there are a couple of reasons for that, some more obvious than others. The interest rate hikes that the Fed spearheaded and repeatedly escalated are the most straightforward explanation. At least that’s the answer most mainstream economists and analysts will give you. And it makes sense: If gold pays you no interest for holding it, then why not switch to something that does? This is the mindset of most investors and that weakens demand, which in turn drags the price down. That’s how the theory goes anyway.

If, however, we’re willing to examine the question a little more closely, we might begin by scrutinizing its premises. The question takes for granted that gold has underperformed this year. But has it really? READ MORE

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12.16.22 - US Jobs "Overstated" By At Least 1.1 Million

Gold last traded at $1,791 an ounce. Silver at $23.17 an ounce.

EDITOR'S NOTE: Another thread unravels as the Philadelphia Fed announces the job reports have been overstated by over 1 million jobs. The depth of weakness in today's marketplace/economy seems to be compounding by the day. Add to this, the Dow poised to finish the year at its lowest point since 2008.

Here Comes The Job Shock: Philadelphia Fed Admits US Jobs "Overstated" By At Least 1.1 Million - Zero Hedge

Regular readers are well aware that back in July, Zero Hedge first (long before it became a running theme among so-called "macro experts") pointed out that a gaping 1+ million job differential had opened up between the closely-watched and market-impacting, if easily gamed and manipulated, Establishment Survey and the far more accurate if volatile, Household Survey - the two core components of the monthly non-farm payrolls report.

We first described this divergence in early July, when looking at the June payrolls data, we found that the gap between the Housing and Establishment Surveys had blown out to 1.5 million starting in March when "something snapped." We described this in "Something Snaps In The US Labor Market: Full, Part-Time Workers Plunge As Multiple Jobholders Soar."

Since then the difference only got worse, and culminated earlier this month when the gap between the Establishment and Household surveys for the November dataset nearly doubled to a whopping 2.7 million jobs, a bifurcation which we described in "Something Is Rigged: Unexplained, Record 2.7 Million Jobs Gap Emerges In Broken Payrolls Report."

Whether this divergence was due to wrong seasonal adjustments (a remnant of the overreaction taken by the Dept of Labor following the covid crunch to normalize for a new normal labor market), due to erroneous Birth-Death assumptions (here too, the Dept of Labor was assuming early cycle new business creation which clearly is wrong with the economy late cycle and millions of businesses shutting down, ignoring the open PPP fraud that took place in early/mid-2000s as everyone "opened up" businesses to get free money from the government), due to the Establishment Survey inability to tell the difference between full, part and multiple-jobs - as a reminder we first showed that since March, the US had lost 400K full-time jobs offset by far lower paying part-time jobs as well as double-counted multiple jobholders... READ MORE

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12.15.22 - Is a 'deep, job-destroying recession' on the horizon?

Gold last traded at $1,777 an ounce. Silver at $23.09 an ounce.

EDITOR'S NOTE: On the heels of yet another rate increase, it looks like lower rates and reduced inflation are nowhere in sight. As we end 2022, things are not looking up. Most experts agree, we can't yet see the light at the end of the tunnel.

Bill Ackman: Fed won't meet inflation goal without 'deep, job-destroying recession' -Yahoo!Finance

By Alexandra Semenova

Hedge fund manager Bill Ackman believes the Federal Reserve’s 2% inflation target is unattainable without severe pain for the U.S. economy.

The Pershing Square Capital founder and CEO said in a tweet Wednesday it would take a “deep, job-destroying recession” for inflation to return to that level, which marks the U.S. central bank’s long-term price stability goal.

“Even if it gets back to 2%, it won’t remain stable there for the long term,” Ackman said after the Fed's latest rate hike, also adding that target was "no longer credible." “Accepting 3% +/- inflation is a better strategy for a strong economy and job growth over the long term.”

The Fed raised interest rates by half a percentage point to a range of 4.25%-4.5% on Wednesday, the seventh and final time monetary policy makers lifted their benchmark policy rate in 2022. The cumulative 4.25% increase in interest rates this year marked the most since 1980.

Following the decision, Fed Chair Jerome Powell said further hikes were likely coming in the new year, emphasizing the central bank would proceed with tightening financial conditions as long as needed to hit its inflation goal. READ MORE

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12.14.22 - The Surveillance State Is Making a List

Gold last traded at $1,807 an ounce. Silver at $23.92 an ounce.

You’d Better Watch Out: The Surveillance State Is Making a List, and You’re On It

HO HO HO! The Deep State is offering us a not so Merry Christmas. In a day and age in which our privacy is becoming further removed from each of us, it seems the efforts to do so have really ramped up. The concern for those of us not in favor is not an attempt to conceal, but rather the fear our information will be used against us or fall into the hands of the wrong people.

“He sees you when you’re sleeping

He knows when you’re awake

He knows when you’ve been bad or good

So be good for goodness’ sake!”

—“Santa Claus Is Coming to Town”

You’d better watch out—you’d better not pout—you’d better not cry—‘cos I’m telling you why: this Christmas, it’s the Surveillance State that’s making a list and checking it twice, and it won’t matter whether you’ve been bad or good.

You’ll be on this list whether you like it or not.

Mass surveillance is the Deep State’s version of a “gift” that keeps on giving…back to the Deep State.

Geofencing dragnets. Fusion centers. Smart devices. Behavioral threat assessments. Terror watch lists. Facial recognition. Snitch tip lines. Biometric scanners. Pre-crime. DNA databases. Data mining. Precognitive technology. Contact tracing apps.

What these add up to is a world in which, on any given day, the average person is now monitored, surveilled, spied on and tracked in more than 20 different ways by both government and corporate eyes and ears.

Big Tech wedded to Big Government has become Big Brother. READ MORE

Don't expect the Fed to save the day – it'll keep interest rates high even even if a recession crushes stocks next year, BlackRock warns

With all the downward price pressure on stocks recently, you may be expecting the Fed to soften rates or lower borrowing costs ... you may be disappointed. This according to BlackRock investment strategists. In a year that has been filled with a lot of bumps in the road, it doesn't sound like there's much of a break in store.

by George Glover

Don't assume the Federal Reserve will bail out US stock markets and bonds next year if they get hammered by a severe recession, a team of BlackRock strategists has warned.

On Thursday, the US central bank is expected to raise interest rates for the seventh time in 2022, as it tries to curb high levels of inflation. While the rate of price rises has cooled from recent 40-year highs to 7.1% in November, that's still far above its 2% target.

The Fed's actions are likely to fuel a selloff in stocks in 2023, as its tightening campaign plunges the US into a recession, the strategists at BlackRock's Investment Institute said.

"Major central banks will hike rates again this week: getting inflation down means they need to crush demand, making recession foretold," they wrote in a research note published Monday.

"We expect central banks to keep rates high as recession unfolds — not save the day." READ MORE

401(k) 'hardship' withdrawals hit record high, Vanguard says — another sign households feel the pinch of inflation - CNBC

The real cost of inflation continues to take its toll on American households. Rising costs are something we've grown accustomed to seeing over the course of a lifetime, but as we've referenced before, wages have kept pace with past increases for the most part. Today's increases tell a different story as we're seeing a record number of Americans digging into their retirement savings to put food on the table.

The share of retirement savers who withdrew money from a 401(k) plan to cover a financial hardship hit a record high in October, according to data from Vanguard Group.

That dynamic — when coupled with other factors like fast-rising credit card balances and a declining personal savings rate — suggests households are having a tougher time making ends meet amid persistently high inflation and need ready cash, according to financial experts.

Nearly 0.5% of workers participating in a 401(k) plan took a new “hardship distribution” in October, according to Vanguard, which tracks 5 million savers. That’s the largest share since Vanguard began tracking the data in 2004.

Put another way, roughly 25,000 workers took one of these distributions, which allow workers to tap their 401(k) plans before retirement for an “immediate and heavy” financial need.

Meanwhile, savers have been dipping into their nest eggs via other means — loans and “nonhardship” distributions — in higher numbers throughout 2022, according to Vanguard data. READ MORE

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12.13.22 - Millions Of Americans May Lose Their Jobs In 2023

Gold last traded at $1,810 an ounce. Silver at $23.71 an ounce.

EDITOR'S NOTE: Another Wall Street bank warns of a very grim outlook on the 2023 job front. They are estimating as many as two million jobs cold be lost over the course of next year. All when the exploding cost of living has already been wreaking havoc on American households.

A Wall Street Bank Is Warning That Millions Of Americans Will Lose Their Jobs In 2023 - The Economic Collapse Blog

Is your job secure? Over the past couple of years, American workers generally didn’t need to be concerned about job security. Even if someone got fired unexpectedly, it was just so easy to find new employment because there simply was not enough able-bodied workers out there. But now everything is changing. Some of the largest corporations in the entire country are starting to conduct mass layoffs as the U.S. economy steadily slows down. Unfortunately, it appears that a lot more pain is ahead. In fact, as you will see below, one of Wall Street’s biggest banks is ominously warning that millions of American workers will lose their jobs next year.

Stories about mass layoffs are hitting the news at a fast and furious pace these days. For example, we just learned that a factory that makes Jeep Cherokees in northern Illinois will be laying off 1,350 workers…

The company, which employs about 1,350 workers at the plant in Belvidere, Illinois, said the action will result in indefinite layoffs and it may not resume operations as it considers other options. READ MORE

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12.12.22 - A Silver Price Forecast For 2023

Gold last traded at $1,781 an ounce. Silver at $23.33 an ounce.

EDITOR'S NOTE: For those of us who like the concept of asset diversification with physical metals being a part of our portfolio, some experts have some very promising news for us in 2023. The fundamental reasoning behind these forecasts is very strong - a good reason to add to your portfolio or to get started with metals today.

A Silver Price Forecast For 2023 - Investing Haven

The price of silver will move to our first bullish target of 34.70 USD in 2023. We see a test of 48 USD soon after, not later than 2024.

Silver will move higher in 2023 because we expect a top to be set in the US Dollar. Moreover, leading indicators like inflation expectations and certainly the CoT positions in the silver market are strongly bullish for 2023. That’s why our silver price forecast for 2023 is 34.70 USD. Note that this is our first bullish target, also a longstanding target that we expected to be hit in 2022. Once silver trades near 36 USD it will be a matter of time until it will attack ATH. In our gold forecast 2023 we mentioned that our preference goes to silver investments in 2023 and beyond. We also tipped silver as the precious metal to buy for 2023.

We want to re-iterate our bullish stance about the silver market. Our silver price targets for 2022 were not met, not yet, although the market came very close to our first bullish target. Our silver price targets stand strong, the fact that they are not hit in 2022 means that they are postponed to 2023.

A Silver Price Prediction: Why?

What we are really interested in is catching the next really big move in silver that might bring it back to 50 USD/oz or even higher. That’s the reason why silver has a top spot in our watchlist. READ MORE

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12.9.22 - 401(k) 'hardship' withdrawals hit record high

Gold last traded at $1,796 an ounce. Silver at $23.48 an ounce.

EDITOR'S NOTE: The real cost of inflation continues to take its toll on American households. Rising costs are something we've grown accustomed to seeing over the course of a lifetime, but as we've referenced before, wages have kept pace with past increases for the most part. Today's increases tell a different story as we're seeing a record number of Americans digging into their retirement savings to put food on the table.

401(k) 'hardship' withdrawals hit record high, Vanguard says — another sign households feel the pinch of inflation - CNBC

The share of retirement savers who withdrew money from a 401(k) plan to cover a financial hardship hit a record high in October, according to data from Vanguard Group.

That dynamic — when coupled with other factors like fast-rising credit card balances and a declining personal savings rate — suggests households are having a tougher time making ends meet amid persistently high inflation and need ready cash, according to financial experts.

Nearly 0.5% of workers participating in a 401(k) plan took a new “hardship distribution” in October, according to Vanguard, which tracks 5 million savers. That’s the largest share since Vanguard began tracking the data in 2004.

Put another way, roughly 25,000 workers took one of these distributions, which allow workers to tap their 401(k) plans before retirement for an “immediate and heavy” financial need.

Meanwhile, savers have been dipping into their nest eggs via other means — loans and “nonhardship” distributions — in higher numbers throughout 2022, according to Vanguard data. READ MORE

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12.8.22 - Is the market misjudging risk?

Gold last traded at $1,788 an ounce. Silver at $23.06 an ounce.

EDITOR'S NOTE: BlackRock is warning of the misjudgments the market is making in regard to underlying risks. Many experts agree that central banks have no near term solution for any of the problems currently plaguing Wall Street and this will cause continued investment portfolio declines; unless funds are invested and diversified properly. We agree. With faltering markets and continuing inflation, we believe diversification is vital as we move into 2023.

BlackRock says the market is misjudging these key risks. Here’s its advice on stocks and bonds. -MarketWatch

Wall Street is on a five-day losing streak. The decline, -0.19%, 3.6% as measured by the S&P 500 SPX, isn’t that big, but it seems depressingly inevitable once the benchmark fails to stay above its 200-day moving average again.

The recurrence of each rally in 2022 is a recognition that stocks’ relationship with central banks has changed. Once supportive, his fight against inflation has put pressure on equities and made markets more volatile.

Our call of the day is from BlackRock BLK, -0.16% , who say this challenging macroeconomic landscape will continue and that investors will need a new three-pronged strategy to navigate it.

“The new macro regime is playing out. We think this requires a new, dynamic playbook based on market risk appetite and pricing of macro damages,” says BlackRock’s investment institute team led by Jean Boivin.

First, let’s quickly settle that, unlike more optimistic Federal Reserve observers, BlackRock doesn’t believe the US central bank will be providing much aid to investors any time soon. READ MORE

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12.7.22 - Should the SEC regulate crypto?

Gold last traded at $1,786 an ounce. Silver at $22.72 an ounce.

Elizabeth Warren's tough-on-crypto bill is taking shape - Semafor

The crackdown on crypto begins in earnest. If Elizabeth Warren gets her way, the governing controls will be handed over to the SEC. Is this really the best entity for the job? Given the financial fallout experienced on Wall Street over the last several years, it would seem the SEC already has a full plate; but who else could be tasked with this responsibility? It is for this reason most experts have always warned "caveat emptor" when buying crypto, which still seems to be the most sound advice.

By Joseph Zeballos-Roig

Sen. Elizabeth Warren, D-Mass. is working on a sweeping cryptocurrency bill that would hand the Securities and Exchange Commission most regulatory authority over the market, according to two people familiar with her efforts.

While discussions are still early and details could change, Warren’s office is looking at a range of crypto-related issues, including regulations, taxation, climate, and national security. The senator has recently stepped up her criticism for the industry and demanded “comprehensive” new rules to govern it following the massive collapse of the crypto exchange FTX. (FTX founder Sam-Bankman Fried is an investor in Semafor.)

Ideas on the table in Warren’s talks also include ensuring broker-dealers and crypto exchanges comply with certain regulatory obligations like providing audited financial statements, and imposing bank-like capital requirements so they’re able to withstand financial shocks, the people said. Another is barring the commingling of customer assets so a company can’t use customer deposits to finance other investments, and securing them so customers are first in line to get their money back in the event of bankruptcy. It could also further expand tax reporting requirements beyond new rules lawmakers enacted last year. READ MORE

US debt explosion funded by Americans, not foreign countries, posing risks to economic growth - Fox Business

In other news, we're learning that the surge in US Government debt isn't being done externally (by other countries), but rather internally (by US citizens and entities). The risk we run in this situation is that if there is an actual bursting of the debt bubble, it will create a widespread domestic implosion as well as a huge ripple effect felt across the globe.

By Peter Kasperowicz

US treasury holdings by China and Japan have been falling.

The explosion in U.S. government borrowing over the last 15 years has been fueled not by lending from China and Japan but through the purchase of treasuries by U.S. financial institutions, state governments and other domestic entities.

Federal borrowing has more than tripled since the housing crisis in 2008. Before the housing bust, the government was $9 trillion in debt, a number that ballooned to $31 trillion this year. But while new government debt is usually thought of in terms of borrowing from overseas, most of the new debt seen since the housing crisis has been funded by domestic entities.

In late 2010, shortly after the housing crisis, federal debt owned by the public totaled $7.8 trillion, and close to two-thirds of that represented lending from Japan, China and other foreign nations. By the summer of 2022, total debt owned by the public more than tripled to $23.9 trillion – a jump of $16 trillion that was mostly financed by U.S. banks, mutual and pension funds, state and local governments and other domestic entities, according to federal data analyzed by the Committee for a Responsible Federal Budget (CRFB). READ MORE

Wall Street chorus grows louder warning that 2023 will be ugly

As 2022 comes to a close, more experts have less than rosy predictions on where the stock market is headed in 2023. After a year of constant finger crossing and breath holding for some, it is looking like we're heading for some rough markets ahead. Yet another reason to be as balanced and diversified as possible with our retirement and investment funds.

In the Federal Reserve’s quiet period before its officials meet to decide their final actions this year, Wall Street watchers are filling the void, loudly warning that next year’s outlook for the US economy and stocks is grim.

From Goldman Sachs Group Inc.’s David Solomon caution that the economy faces “bumpy times ahead,” to JPMorgan Chase & Co.’s Jamie Dimon grimmer view that this would be a “mild to hard recession,” and Morgan Stanley Wealth Management’s Lisa Shalett, who told Bloomberg Television that corporations are facing a “rude awakening” on earnings, the messages have become increasingly dire.

“We do not think the economic conditions for a sustained upturn are yet in place,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note. “Growth is slowing and central banks are still raising rates.”

Investors appear to be heeding the warnings. Following a two-month rally, the S&P 500 Index has fallen in all but one of the last eight sessions and dropped 1.4% on Tuesday. READ MORE

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12.6.22 - Silver crunch to push prices upward

Gold last traded at $1,771 an ounce. Silver at $22.20 an ounce.

EDITOR'S NOTE: Some good news to brighten your holiday season ... there is a strong chance silver prices may experience a nice run up in 2023. This is due in part to severe supply shortages -the greatest we've seen in decades. What lends strength to this prediction is well-rounded global demand, which experts are suggesting is just now starting to heat up.

Silver heads for biggest deficit in decades, Silver Institute says

LONDON, Nov 18 (Reuters) - Global demand for silver is expected to rise 16% this year to 1.21 billion ounces, creating the biggest deficit in decades, according to the Silver Institute on Thursday night.

Use of silver by industry, for jewellery and silverware and for bars and coins for retail investors were all forecast to reach record levels, the institute said.

Automakers are using more silver as the amount of electronics in vehicles increases, but the sector accounts for only around 5% of total demand. Solar panels account for around 10% of silver demand. READ MORE

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12.5.22 - Will Your State Reject The Fed's Digital Dollar?

Gold last traded at $1,767 an ounce. Silver at $22.21 an ounce.

EDITOR'S NOTE: Like it or not, the day of digital, government-controlled dollars may be here soon. States are gearing up for what could be the next chapter in the world of currency, what it looks like and how we spend it. There is already talk about regulating what people buy to ensure it "mitigates climate change" and "promotes financial inclusion". We may soon be on the same social credit system as China. Read on to find out how this will affect your day-to-day spending but most of all your privacy and freedom. Alternatives are out there. Seek them out now before prices are out of reach.

Will Your State Reject The Fed's Digital Dollar? - ZeroHedge

Authored by MN Gordon via EconomicPrism.com

Personal and political freedoms are inseparable from economic freedom. To this end, economic freedom is contingent upon an economy that transacts using honest money that’s free from coercion.

Volumes have been written on America’s experience with money of varying veracity. Here we’ll touch on a few key events.

Article I, Section 8, of the U.S. Constitution empowers Congress to coin money and regulate its value thereof. Article I, Section 10, specifies that no state shall make anything but gold and silver coin a tender in payments of debts.

The Federal Reserve Act of 1913, passed by the 63rd Congress and signed into law by President Woodrow Wilson on December 23, 1913, established the Federal Reserve System, the central bank of the United States. The Federal Reserve Act also delegated the right to issue money from Congress to the Federal Reserve.

In this regard, the current U.S. dollar, a Federal Reserve Note, is illegal money. It is issued by the Federal Reserve – not Congress – in direct violation of the U.S. Constitution. Moreover, when states collect tax dollars that are devoid of gold or silver coin, they violate the Constitution.

Economic freedom has been greatly undermined by Washington over the years. Executive Order 6102 of 1933, for example, forced all American citizens to turn in gold coins and bars. Gold ownership in the United States, with some small limitations, was illegal for the next 40 years.

Economic freedom was again undermined when President Nixon “temporarily” suspended the convertibility of the dollar into gold in 1971. This action removed any remaining protection workers and savers had against their hard-earned dollars being inflated away.

But now, as the year 2022 nears its close, another extremely destructive event approaches…READ MORE

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12.2.22 - Will stocks recover in this decade?

Gold last traded at $1,797 an ounce. Silver at $23.14 an ounce.

EDITOR'S NOTE: Billionaire Leon Cooperman is speaking up about the sting of future price inflation, the long-term repression of financial markets and the mirage of bitcoin. There is no shortage of opinions as to what the future holds, but it's worthwhile to take a closer look when people who have seen this all before are talking.

Billionaire investor Leon Cooperman says the S&P 500 won't hit a new high for a long time - and predicts a US recession and stubborn inflation - Markets Insider

By Theron Mohamed

• Leon Cooperman expects the S&P 500 to eke out mediocre returns for the rest of this decade.
• The billionaire investor predicts a US recession and stubbornly high inflation.
• Cooperman trashed crypto, saying he was happy the government never endorsed it.

US stocks will suffer a hangover for years, and the US economy will endure stubborn inflation and slump into recession, Leon Cooperman has warned. He also trashed cryptocurrencies following the recent collapse of Sam Bankman-Fried's FTX exchange.

"We've been through probably the most speculative period in our financial history, aided and abetted by foolish fiscal and monetary policy," the billionaire investor told CNBC on Wednesday.

Cooperman pointed to the boom in cryptocurrencies, special-purpose acquisition companies (SPACs), and commission-free trading during the pandemic, fueled by near-zero interest rates and historic amounts of government stimulus.

He warned that after years of easy money and rampant speculation, ... READ MORE

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11.30.22 - Double-digit percentage drop to hit stocks?

Gold last traded at $1,769 an ounce. Silver at $22.17 an ounce.

Wild ride': Morgan Stanley's Mike Wilson predicts double-digit percentage drop will hit stocks in early 2023 - CNBC

What's in your portfolio? As we get ready to head into a new year, some analysts are suggesting that the bear in this market is still not ready for hibernation. Earnings forecast are not rosy and the fundamentals are still a bit suspect; to put it mildly. Read on to see what these forecasts may mean for your portfolio.

Investors may be on the doorstep of a deep pullback.

Morgan Stanley's Mike Wilson, who has an S&P 500 year-end target of 3,900 for next year, warns corporate America is getting ready to unleash downward earnings revisions that will pummel stocks.

"It's the path. I mean nobody cares about what's going to happen in 12 months. They need to deal with the next three to six months," he told CNBC's "Fast Money" on Tuesday. "That's where we actually think there's significant downside. So, while 3,900 sounds like a really boring six months. No... it's going to be a wild ride."

Wilson, who serves as the firm's chief U.S. equity strategist and chief investment officer, believes the S&P could drop as much as 24% from Tuesday's close in early 2023.

"You should expect an S&P between 3,000 and 3,300 some time in probably the first four months of the year," he said. "That's when we think the deacceleration on the revisions on the earnings side will kind of reach its crescendo." READ MORE

Derivatives Time Bomb - Is **YOUR** Bank on this list? - Hal Turner Radio Show

As the woes of FTX have dominated the news in recent weeks, it would appear an issue related to them may be getting ready to rear its ugly head again. The connectivity derivatives have to the various asset classes creates a compounded vulnerability; meaning if one domino falls, there's a potential they all may fall.

For years there has been much talk about how "Derivatives" are a gigantic problem, and if Derivatives Markets collapse, it is the end of the financial world as we know it. We looked at Bank exposure to "Derivatives" and below is a list that will likely frighten you. US Banks are on the hook for two Quadrillion dollars, in "Derivatives." Is **YOUR** bank on this list? If it is, ask yourself "If they LOST all this money, would MY money still be safe in this bank?" Act accordingly.

Below is the list of United States banks and how much exposure they have to "Derivatives." Two quadrillion dollars is the total notional value of derivative contracts off-balance sheet. Need collateral.

It’s notional. Not sustainable. Triffins dilemma. Dollar shortage. More collateral. But from where?

Of course, net notional value is completely different than directional risk. Just seeing these numbers does NOT indicate how much the bank itself is on-the-hook for.

Moreover, there is still value in the underlying commodities for many of these derivatives. People that think these are all bilaterally netted (Hedged) and those people are partially correct. But that bilateral netting will lead to the complete collapse of equities markets.

The numbers are utterly staggering and logic dictates the banks with the highest exposure, have the most to lose.

Being that derivatives are interest rate sensitive, for most of these banks, it’s a doomsday scenario. READ MORE

Market Crash Alert: FTX Could Still Be the Next Lehman Brothers - InvestorPlace

Will the recent woes associated with the FTX collapse create a Lehman Brothers-style collapse with a similar consequential ripple effect throughout the markets? This event is yet another example of the very delicate underbelly of today's marketplace. Nobody wants to relive 2008, but is a crash of that magnitude a realistic possibility?

Will FTX's collapse ring in a wider market crash like Lehman Brothers in 2008?

As fears continue to swirl that FTX’s bankruptcy may lead to a wider market crash, parallels are being made to another once-upon-a-time financial darling: Lehman Brothers. While some maintain FTX’s losses will be relatively self-contained, investors shouldn’t underestimate the lag between major market catalysts and eventual economic repercussions. It’s not too late for FTX to become the next Lehman Brothers.

In 2008, Lehman Brothers, the then-fourth largest investment bank in the country, declared bankruptcy due to overexposure to the collapsing subprime housing market.

For many, this was confirmation that the once-booming real estate industry would give way to a widespread, malicious recession. What followed Lehman’s demise was a virtual firestorm of government intervention in order to prevent a wider collapse of our entire economic system, bringing about a major recession in its stead. In 2022, it’s not hard to see the analogy with Sam Bankman-Fried’s monolithic crypto platform.

FTX was the crypto exchange. It had dozens of brand deals, endorsements from the biggest celebrities, billions of dollars in investments, and a renowned founder. FTX was the second-largest crypto exchange in the world.

On Nov. 8, FTX stopped allowing customers to withdraw cash from the platform in fear of a virtual bank run. This, it turned out, was because ... READ MORE

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11.29.22 - FTX Could Be the Trigger to a Major Market Crash

Gold last traded at $1,748 an ounce. Silver at $21.24 an ounce.

Market Crash Alert: FTX Could Still Be the Next Lehman Brothers - InvestorPlace

EDITOR'S NOTE: Will the recent woes associated with the FTX collapse create a Lehman Brothers-style collapse with a similar consequential ripple effect throughout the markets? This event is yet another example of the very delicate underbelly of today's marketplace. Nobody wants to relive 2008, but is a crash of that magnitude a realistic possibility?

Dana Summers/Copyright 2022 Tribune Content Agency

Will FTX's collapse ring in a wider market crash like Lehman Brothers in 2008?

By Shrey Dua

• With FTX at the center of a potentially major crypto collapse, parallels to the 2008 financial crisis continue to gain validity.
• Some argue FTX could be the 2022 equivalent of the Lehman Brothers.
• While markets have been relatively stable given the magnitude of FTX’s collapse, we could be in a sort of lag before the storm.

As fears continue to swirl that FTX’s bankruptcy may lead to a wider market crash, parallels are being made to another once-upon-a-time financial darling: Lehman Brothers. While some maintain FTX’s losses will be relatively self-contained, investors shouldn’t underestimate the lag between major market catalysts and eventual economic repercussions. It’s not too late for FTX to become the next Lehman Brothers.

In 2008, Lehman Brothers, the then-fourth largest investment bank in the country, declared bankruptcy due to overexposure to the collapsing subprime housing market.

For many, this was confirmation that the once-booming real estate industry would give way to a widespread, malicious recession. What followed Lehman’s demise was a virtual firestorm of government intervention in order to prevent a wider collapse of our entire economic system, bringing about a major recession in its stead. In 2022, it’s not hard to see the analogy with Sam Bankman-Fried’s monolithic crypto platform.

FTX was the crypto exchange. It had dozens of brand deals, endorsements from the biggest celebrities, billions of dollars in investments, and a renowned founder. FTX was the second-largest crypto exchange in the world.

On Nov. 8, FTX stopped allowing customers to withdraw cash from the platform in fear of a virtual bank run. This, it turned out, was because ... READ MORE

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11.23.22 - Could Corporate Defaults Double?

Gold last traded at $1,739 an ounce. Silver at $21.07 an ounce.

Corporate Defaults Would More Than Double Even In Mild Recession, S&P Global Warns - The Epoch Times

As fingers remain crossed that our economy is turning around, some experts warn even a mild recession would wreak havoc on many corporations. There is only so much more corporate America (and our households) can take on top of the last few years of financial distress.

by Katabella Roberts

The rate of corporate defaults for companies in the United States could soar if the economy tips into a "shallow recession," S&P Global analysts warned on Monday.

According to S&P Global Ratings, the default rate for American companies could reach 3.75 percent by September 2023 if the Federal Reserve’s hawkish policy of raising interest rates prompts a shallow or mild economic downturn.

In a far worse scenario in which a more serious economic downturn occurs, default rates could reach 6 percent, the highest since March 2021, analysts said.

“Much will depend on the length, breadth, and depth of a recession should one occur, and if the Fed will continue to raise rates through a recession,” the S&P analysts wrote on Monday.

“The current pace of widening yields in secondary markets would continue, while consumption would contract, forcing businesses to dig into their cash holdings to ride out a deeper recession.”

Elsewhere on Monday, Deutsche Bank said that default rates on U.S. leveraged loans - those made by banks to companies or individuals who have considerable amounts of debt - will hit a near-record high of 11.3 percent in 2024, while defaults on euro-leveraged loans will reach 7.1 percent.

Analysts at the bank said that the U.S. economy will likely slip into a recession in the second half of 2023, and companies will take a significant hit to their profit margins resulting in missed interest payments, and prompting increased default rates.

However, Deutsche Bank does not anticipate default rates to soar in 2023. READ MORE

China 'likely' stockpiling gold to lessen reliance on US dollar - FinBold

We've been hearing a lot about Central Banks buying up physical gold in recent months and now China is following suit; with the specific purpose of offsetting the vulnerabilities in the US Dollar. Gold has historically served as the ultimate hedge during times of uncertainty and China is taking full advantage of this approach.

by Jordan Major

This year, central banks have been on a buying frenzy for gold, but it is unclear which ones are responsible for most of that spending, which has fueled speculation that China is a major participant.

Analysts believe that China and perhaps other nations, seeing how Russia has been affected by monetary sanctions imposed by the West, must be making haste to minimize their dependency on the dollar, according to a report by Nikkei Asia.

Central banks purchased a net amount of 399.3 tonnes of gold from July through September, an increase that more than quadruples the previous year’s figure, per a study published in November by the industry group the World Gold Council. READ MORE

The CPI Inflation Number Is A Lie, And That's A Fact -Bruce Wilds/AdvancingTime Blog

Over the last several weeks we've been offered assurances that inflationary pressures are dying down with the Fed working hard to keep things in check; but are the numbers reflecting the same scenario? Many experts suggest not, as least as it relates to the CPI. Let's take a closer look at what they are saying.

It is important to remember the CPI inflation number is a lie. This means even if the CPI falls dramatically in 2023, we may, or most likely will still have inflation. When economic growth is slow and unemployment rises, inflation takes on the moniker of stagflation. Currently, the website ShadowStats claims real inflation is closer to 17.15% rather than the 8.5% that the media, the Biden administration, and the Federal Reserve claim.

America’s inflation is now the highest since 1981. The number slightly above 17% is based on calculating inflation the same way economists and politicians did in the 1980s. Yes. inflation is a problem and indicators such as the inverted yield curve in the bond market are screaming that we should expect a recession. Considering what we are seeing and the fact Fed Chairman Jerome Powell has warned of pain ahead, there is good reason to think he is telling the truth.

The crux of this issue is that there is a huge difference between these two views of inflation and accepting the wrong number as fact could greatly impact your future. This rapidly becomes apparent in retirement for those older Americans fortunate to have accumulated some savings. The problem is that unless their investments perform at least as well as inflation they face seeing their wealth vanish into the deep dark hole of inflation.

Decades ago, politicians and those concocting this system created it as a way to reduce the cost of living adjustments for government payments to Social Security recipients, etc. By moving to a substitution-based index and weakening other constant-standard-of-living ties those reporting inflation have muddied the water lessening the impression of just how much our cost of living is being impacted by inflation. The general argument used to promote this change was that changing relative costs of goods results in consumers could easily substitute less-expensive goods for more expensive goods, the reality is that this assumption is often false. READ MORE

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11.22.22 - Will this be worse than Lehman?

Gold last traded at $1,739 an ounce. Silver at $21.07 an ounce.

Hedge funds left with billions stranded on FTX - Financial Times

EDITOR'S NOTE: The FTX saga continues ...

In today's headlines, hedge fund managers now have billions of invested dollars stranded on the FTX exchange; with very little hope they will be able to recover even a portion of their losses. A huge amount of wealth has been vaporized in the past few weeks and now the government wants to get in on this medium of exchange? If the greatest money minds among us were duped into believing this system was sound, what chance does the Fed have? Or any of us for that matter.

by Laurence Fletcher and Joshua Oliver

Hedge funds have billions of dollars stuck on failed cryptocurrency exchange FTX and could face years of waiting to recover anything at all from a marketplace they once believed to be one of the industry’s most reliable bets.

In a situation reminiscent of Lehman Brothers in 2008, which left billions of dollars of hedge funds’ assets trapped for years, investors who traded on the Bahamas-based exchange have found themselves among the thousands of creditors in a highly complex bankruptcy.

The sudden failure this month of FTX, valued at $32bn this year, has shocked investors who backed it and traders who used it. Legal filings on Sunday revealed that FTX owes its 50 largest creditors, likely to include a wide variety of hedge funds, more traditional asset managers and other traders, more than $3bn.

“I lost my investors’ money after they put faith in me to manage risk and I am truly sorry for that,” tweeted Travis Kling, founder of Ikigai Asset Management, which has a “large majority” of its hedge fund’s assets stuck on FTX. “I have publicly endorsed FTX many times,” he added. “I was wrong.” Crypto-focused hedge funds have direct exposure to FTX Group or to FTT, FTX’s own digital token which it promoted to incentivise more trading on its main exchange, of around $2bn, according to data group Crypto Fund Research. Read more...

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11.21.22 - Will Money Go Marxist?

Gold last traded at $1,738 an ounce. Silver at $20.86 an ounce.

Fedcoin: It Starts with a Trial Run - Mises Institute

EDITOR'S NOTE: It appears a new digital currency - to replace our existing currency - may be on the horizon. This comes at a time when news of widespread theft, negligence and gross mismanagement plagues the crypto world daily. Our government - in conjunction with the big banks - will begin testing what could become our new, global means of exchange. What could possibly go wrong?

By Robert Aro

A cashless society would be the nail in the coffin for liberty and freedom, offering centralization, the likes of which Marx could only dream. The existence of a government backdoor or spyware becomes a real possibility, and given the State’s track record, a real likelihood. Then, of course, the ability to track, freeze, and even set expiry dates on money, will be marketed as “features” to protect the public.

As for the 5.9 million Americans considered “unbanked,” i.e., those who have no checking or savings accounts, (the poor, weak, and vulnerable) they can expect life to get more difficult. This is the price we pay for free market intervention.

Earlier in the week, the Federal Reserve Bank of New York made the announcement: READ MORE

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11.18.22 - ‘This situation is unprecedented’

Gold last traded at $1,751 an ounce. Silver at $20.94 an ounce.

‘This situation is unprecedented’: 10 crazy things detailed in FTX’s bankruptcy filing -MarketWatch

EDITOR'S NOTE: As more details emerge from the FTX meltdown, it's becoming increasingly clear that anything goes in the virtual currency world. In an instant, crypto wealth can be created ... but it can just as easily and swiftly be erased. Whether bitcoin will weather this latest storm is yet to be seen but it begs the question, is this the type of investment that will hold true in the long term?

by Nathan Vardi

On Thursday, John Ray, III, the new CEO of FTX, dropped a long-awaited declaration in U.S. bankruptcy court, giving a sober assessment of the collapse of Sam Bankman-Fried’s crypto empire. The bankruptcy-court filing followed a whirlwind of events, including the publication of explosive texts Bankman-Fried sent to a Vox reporter earlier this week.

Ray set the tone for what he has found since FTX filed for bankruptcy protection last week, citing his 40 years of experience in the legal and restructuring business, including a role as chief restructuring officer and CEO of Enron, one of the biggest corporate collapses ever.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray wrote. “This situation is unprecedented.”

Here are 10 revelations that Ray made in federal bankruptcy court on Thursday about Bankman-Fried and the FTX debacle he created. READ MORE

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11.17.22 - $17 Billion in Paper Losses for Banks

Gold last traded at $1,760 an ounce. Silver at $20.98 an ounce.

Mortgage Market Upheaval Spurs $17 Billion in Paper Losses for Banks -Bloomberg

EDITOR'S NOTE: Interest rates continue to dominate the financial news with banks now reporting paper losses due to the changing landscape of the mortgage market. Even though these are only paper losses reported in adherence to accounting requirements, they are also reflective of the many lingering storms in the financial markets. We all need to keep a watchful eye on this, as its movements could have a large ripple effect throughout all markets.

by Jenny Surane and Hannah Levitt

Higher interest rates helped Wells Fargo & Co. land more than $3 billion in profit in the third quarter. From a capital perspective, they also wiped out nearly three-quarters of that.

While rising rates buoy revenue for the country’s largest banks, in the short term they also force them to write down the value of assets they hold on their balance sheet, exacerbating a capital squeeze that’s prompted most of them to halt buybacks. At Wells Fargo, it was an additional $2.4 billion in unrealized losses on mortgage-backed securities and other bonds that weighed on shareholder equity in the third quarter.

Wells Fargo’s three biggest rivals took a similar hit. On mortgage-backed securities alone, the four banks’ unrealized losses have climbed to $17 billion, based on company filings.

“When it comes to managing capital, we should be extremely conscious of what the risks are that are around us,” Wells Fargo Chief Executive Officer Charlie Scharf warned last month, citing swings in the value of the bank’s investment portfolio as well as geopolitical risks. “Those are all reasons, given where we sit today, to be more conservative on capital rather than less conservative.”

The unrealized losses don’t appear on the firms’ income statement, but under accounting rules they still end up hitting the banks’ balance sheets, affecting so-called accumulated other comprehensive income, or AOCI. There, the country’s four largest banks -- JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo -- reported a $16 billion drop in AOCI for the third quarter, to negative $102 billion, company filings show. Because swings in AOCI affect shareholder equity, the drop in AOCI has weighed on key capital ratios.

The writedowns come at a tough time for banks, which are trying to hoard capital to meet new, higher regulatory requirements. They’re just one of a bevy of headwinds weighing on capital ratios. Others include new accounting rules that say banks must set aside even more in reserves as a result of rising inflation that’s threatening the overall economic outlook. And with markets on edge over the Federal Reserve’s rate hikes, banks have also been battling back an increase in risk-weighted assets, which are used to determine minimum capital levels. Read more...

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11.16.22 - UK Inflation hits 11.5%

Gold last traded at $1,773 an ounce. Silver at $21.51 an ounce.

‘Big Short’ Michael Burry projects gold to rise amid ‘contagion’ of crypto scandals - Finbold

The discussion about the big unknown of cryptos continues. To add misery to the mystery, there is now talk of widespread scandal of this barely understood currency. If there is a silver (golden) lining to this cloud, some say it could be a good thing for gold prices. Here's why.

By Paul Luvaga

American investor and hedge fund manager, Michael Burry, commonly known as “The Big Short,” has shared his view on the prospects of gold in the wake of the crypto market downturn. Burry, credited with predicting the 2008 financial crisis, believes gold might rise to the occasion, especially in the wake of crypto scandals.

In a now-deleted tweet on November 15, Burry stated that the moment for gold to rise would be when crypto-related scandals merge into what he termed a ‘contagion.’

Burry’s comments come as gold continues to rally despite the prevailing macroeconomic factors driven by rising inflation and possible continued interest rate hikes. In particular, gold hit a 60-day high, trading at $1,780.

Crypto market remains depressed amid piling scandals

It is worth noting that the crypto space has been impacted by myriad scandals that have significantly contributed to the depressed prices. For instance, in May, the market was hit with the Terra (LUNA) ecosystem crash, followed by widespread bankruptcy filings, impacting firms like the Celsius Network and Voyager Digital. READ MORE

Inflation hits 41-year high of 11.1% on the back of energy and food price hikes -Yahoo Finance UK

Inflation is continuing to pushing higher in the UK in sectors that affect everyone - energy and food. There's been much discussion - dare I say debate in some circles - as to whether or not inflation is here, was here or is coming, but make no mistake; if food and energy cost more, it will hurt a lot of families as we head into the holiday season. These are not optional expenses.

By Pedro Goncalves

The UK’s rate of inflation hit a fresh 41-year high in October, accelerating to 11.1% on the back of the soaring cost of dairy products, eggs and energy bills.

The Office for National Statistics (ONS) estimated that the 11.1% reading for the consumer prices index (CPI) measure of inflation was the highest since October 1981. It added that prices rose between September and October 2022 by as much as they did in the entire year to July 2021.

The latest increase was driven by the biggest surge in grocery bills since the late 1970s and higher energy costs even after the government introduced a £2,500 cap on average gas and electricity prices.

Food and non-alcoholic beverage prices rose by 16.4% in the 12 months to October 2022, up from 14.6% in September 2022. That’s the highest since September 1977, the ONS estimates.

“The largest upward effect came from milk, cheese, and eggs, where prices for shop-bought milk and cheddar cheese rose between September and October 2022 but by more than between the same two months in 2021,” the ONS said. READ MORE

'A major problem': The US is now a record $31 trillion in debt, made worse by rising interest rates — and this is who holds the IOUs -Yahoo! Finance

EDITOR'S NOTE: The US is breaking records! Problem is, they aren't good ones. The US is now over $31 trillion in debt. If this wasn't a big enough problem, higher interest rates are accelerating that debt at a very rapid rate. This equates to $93k of debt per person in the country! Read on to find out what this means for each of us and how much worse it could get.

By Lauren Bird

The gross national debt in America has hit new heights, surpassing $31 trillion, according to a recent U.S. treasury report.

If you find that hard to wrap your head around, it basically boils down to more than $93,000 of debt for every person in the country, according to the Peter G. Peterson Foundation.

And with the dramatic rise in interest rates over the past few months — the Fed funds rate is currently between 3.7% and 4% — the national debt will be growing at a rate that makes it even harder to ignore.

"Interest rates are a major problem," says Phillip Braun, clinical professor of finance at North Western University’s Kellogg School of Management.

"The Treasury finances the debt with a lot of short-term borrowing … It'll push other budgetary items out."

The last couple of years have been expensive

A deficit is what happens when the government spends more money in a fiscal year than it brings in through taxes — and the last couple of years have been expensive.

Several large bills with hefty price tags have been approved since the start of the pandemic, including the American Rescue Plan Act, which cost $1.9 trillion, and $750 billion for student debt relief, all adding to the deficit, which then adds to the debt. READ MORE

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11.15.22 - A bigger Big Brother?

Gold last traded at $1,777 an ounce. Silver at $21.55 an ounce.

EDITOR'S NOTE: Changes are coming to our currency and it appears this will happen sooner rather than later. What type of changes, you may ask? Digital changes. Will this mean a better tomorrow for you and me? Nobody knows with certainty all of the consequences these changes may bring, but one guarantee is a loss of financial privacy for all of us. Is that a good thing? You be the judge.

CBDCs: What Can We Learn From Dollarized Countries? - AIER

by Nicolás Cachanosky

A central bank digital currency (CBDC) is a digital currency issued by a central bank. It is important to distinguish between digital currency and a digital claim to a currency. Commercial banks offer digital claims to a currency in the form of checking account balances. A CBDC, in contrast, would be a digital currency, not a mere claim. In simple terms, the US dollar would be issued electronically.

CBDCs are not merely a matter of intellectual curiosity anymore. Several countries have already issued CBDCs. As William Luther has written, the White House looks to be moving towards issuing a CBDC at some point in the future, as well.

Launching a CBDC would imply a significant change in the financial market, and the everyday life of every individual. There are important trade-offs to consider, including issues related to financial privacy. Advocates of a cashless economy argue that eliminating cash would reduce tax evasion and illegal transactions. In plain English, the government will be able to see what you are doing with your money. Granting the state more powers to become an even bigger Big Brother is probably not a good idea.

Dollarized countries offer important insights for the CBDC discussion. Ecuador, El Salvador, and Panama are three dollarized countries in Latin America. Zimbabwe, which was dollarized from 2007 to 2017, is also an interesting case. Each one of these countries implemented dollarization, albeit somewhat differently in each case.

Dollarization is not a single monetary reform. It is a set of reforms, just like a chain is a set of links. Also like a chain, dollarization is as strong as its weakest link. Paying attention to the weakest link of monetary reform is an important lesson for the US, and any country considering launching a CBDC.

Dollarization is, first and foremost, an institutional reform. It can protect the public from the advances of a populist regime. A robust dollarization is designed to limit the damage by the government. Weak dollarization leaves the door open for government abuse. For example, El Salvador and Ecuador kept their central banks when dollarizing at the turn of the century. Panama, on the other hand, never had a central bank. Dollarization in Panama is more robust than in El Salvador and Ecuador as a consequence.

Consider Ecuador. It is estimated that between 2005 and 2017, Rafael Correa seized $5.8 million of reserves. The process was quite simple:

• Step 1. Impose a new tax on foreign assets and mandate banks to transfer their foreign reserves to Ecuador’s central bank.

• Step 2. Increase the banks’ reserve requirements.

• Step 3. Instruct the central bank to purchase treasury bonds with those reserves.

Zimbabwe also illustrates how weak dollarization is easily undone. READ MORE

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11.14.22 - National Debt 'a major problem'

Gold last traded at $1,770 an ounce. Silver at $21.98 an ounce.

EDITOR'S NOTE: The US is breaking records! Problem is, they aren't good ones. The US is now over $31 trillion in debt. If this wasn't a big enough problem, higher interest rates are accelerating that debt at a very rapid rate. This equates to $93k of debt per person in the country! Read on to find out what this means for each of us and how much worse it could get.

'A major problem': The US is now a record $31 trillion in debt, made worse by rising interest rates — and this is who holds the IOUs -Yahoo! Finance

By Lauren Bird

The gross national debt in America has hit new heights, surpassing $31 trillion, according to a recent U.S. treasury report.

If you find that hard to wrap your head around, it basically boils down to more than $93,000 of debt for every person in the country, according to the Peter G. Peterson Foundation.

And with the dramatic rise in interest rates over the past few months — the Fed funds rate is currently between 3.7% and 4% — the national debt will be growing at a rate that makes it even harder to ignore.

"Interest rates are a major problem," says Phillip Braun, clinical professor of finance at North Western University’s Kellogg School of Management.

"The Treasury finances the debt with a lot of short-term borrowing … It'll push other budgetary items out."

The last couple of years have been expensive

A deficit is what happens when the government spends more money in a fiscal year than it brings in through taxes — and the last couple of years have been expensive.

Several large bills with hefty price tags have been approved since the start of the pandemic, including the American Rescue Plan Act, which cost $1.9 trillion, and $750 billion for student debt relief, all adding to the deficit, which then adds to the debt. READ MORE

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11.11.22 - New Bull Market Unlikely

Gold last traded at $1,771 an ounce. Silver at $21.71 an ounce.

EDITOR'S NOTE: Yesterday's market rally was in large part fueled by what some are saying is an overly optimistic perspective on inflation while the costs of good and services continue to soar. Granted these factors have a lead time in terms of being absorbed into finished goods pricing, but the underlying fundamentals suggest the inflation train is still rolling down the tracks and will be for some time to come.

Fed Pivot Will Be No Cure For Stock Market's Ills - Zero Hedge

Posted by Tyler Durden

Authored by Simon White, Bloomberg macro strategist

The longed-for Fed pivot may come quicker than expected -- especially after this week’s very soft inflation data -- but equities still face more downside if hopes for easier monetary conditions clash with the rising risk of a recession.

The Fed’s battle with inflation this year has pitched the stock market into one its most bearish cycles in decades. The expectation -- or hope -- is that once the Fed takes its foot off the brake, stocks will cast off their shackles and new a bull market will take flight.

That doesn't look likely. And that’s despite the fact that evidence is mounting that the Fed is at, or at least very close to, peak hawkishness.

Central-bank rhetoric has begun to soften, the midterms are now behind us, and market expectations of where the Fed rate will peak now consistently exceed the high-point implied by its so-called “dot plot” projections. With the market now helping, not hindering, the Fed in its monetary objectives, the central bank shouldn’t have to keep sharpening its talons for much longer.

On top of that, the Fed pivot could come much sooner than most expect. The median length of time between the peak in inflation and the first rate cut is 22 weeks, according to US hiking cycles going back to 1972. June’s CPI print likely marks this cycle's peak in headline inflation which, historically speaking, would put the first cut in as little as four to eight weeks.

This is not a prediction. But it does highlight how a Fed reversal could happen more quickly than the market expects. Either way, equity investors should treat it as the false dawn it is.

Firstly, financial conditions continue tightening for about five quarters after the first Fed hike. In the current cycle this would take us until the second half of 2023. Secondly, there’s a still greater squeeze in liquidity to come. The Global Real Policy Rate is still extremely negative and close to the all-time lows of -6% it reached in 1974, before it rose all the way to +3% by the early 1980s. Today it is at -4.4%, barely above its -5.6% nadir.

Overall, global financial conditions, as measured by the Global Financial Tightness Indicator, remain very restrictive, with no respite on the horizon. This will remain a poor environment for equities and other risk assets. READ MORE

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11.10.22 - Is bitcoin back?

Gold last traded at $1,753 an ounce. Silver at $21.65 an ounce.

EDITOR'S NOTE: The value of Bitcoin is making headlines once again this week. The price has plummeted due to a crash of FTX - a major platform utilized for exchange. FTX boss Sam Bankman-Fried is now making plans to rescue his company. But is this really what has crypto owners on edge? Or is it because this recent hiccup reveals even more uncertainty surrounding these markets. The SEC has been very vocal about the lack of oversight as well as their inability to prevent things like this from happening. But will oversight really remove the unknowns?

Crypto market sees bounce as FTX boss outlines next steps - Yahoo! Finance

by Anthony Cuthbertson - Independent

The price of bitcoin has bounced back from a two-year low after the boss of the beleagured FTX cryptocurrency exchange apologised for his role in the crash and outlined his plans to rescue his company.

FTX suffered a “significant liquidity crunch” this week when customers rushed to withdraw billions of dollars worth of assets due to fears relating to its digital token FTT.

As the world’s third largest exchange by trading volume, the uncertainty had repercussions for the rest of the market.

Rival exchange Binance initially sought a rescue deal, with both FTX founder Sam Bankman-Fried and Binance CEO Changpeng Zhao, known as CZ, announcing a non-binding letter of intent for the takeover.

“Our teams are working on clearing out the withdrawal backlog as is... But the important thing is that customers are protected,” Mr Bankman-Fried tweeted.

However this fell through late on Wednesday. READ MORE

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11.9.22 - I'm Selling My Blood To Eat, I Have No Choice

Gold last traded at $1,706 an ounce. Silver at $21.12 an ounce.

"An Asymmetric Payoff": Why Goldman Sees Gold Soaring 30% When The Fed Starts Cutting Rates - Zero Hedge

At a time when it seems there is a drought of good news, we may finally have some for gold investors from Goldman. These remarks are reflective of what has been a pretty consistent and long-standing tradition of the yellow metal being a safe haven - or hedge - during inflationary periods.

In recent weeks, gold has been caught in a perfect vice of bullish and bearish forces.

On one hand, the Hawkish Fed has continued to pile relentless pressure on the precious metal; to wit, during his recent press conference, Chairman Powell hinted at slowing down the pace of rate hikes, while also signaling that terminal rates may peak at a higher level. Following the conference, US rates and the dollar surged. Importantly, the Fed reiterated that bringing inflation down to 2% remains a top priority, triggering a sharp fall in gold after the announcement.

But wait, isn't inflation good for the world's oldest inflation hedge? Well, as Goldman's Mikhail Sprogis writes in a note this morning, in given circumstances, it is: for example, high inflation tends to be (extremely) bullish for gold when the market questions the central bank’s ability to fight it, such as during Burns’s tenure in the 1970s. In contrast, high inflation tends to be bearish for gold when the market gives the CB credit in its ability to reduce it, such as during Volcker’s fight on inflation in the early 1980s.

In any case, the Fed’s consistent message that it is willing to sacrifice growth to bring inflation under control has helped keep breakeven inflation expectations stable and pushed real rates to the highest level since the GFC. As a result, gold ETFs and speculative positions have fallen as the effect of higher real rates has offset the impact of rising recession worries.

On the other hand, as we reported last week, Central Bank buying of gold, especially among emerging markets, just hit a record: according to the World Gold Council, in Q3 2022 CB gold purchases of 400 tonnes, the largest quarterly figure on record, and 300 tonnes above trend.

As an aside, and as we discussed last week, the record-high buying emanated from an "unexplained" component of the World Gold Council data, which reflects purchases by countries which either do not report their activity or report with a lag. For example, Russia stopped reporting gold purchases this year, while China often reports with a large lag. The largest reported purchases came form Turkey, Uzbekistan and Qatar. Still, one thing we can be reasonably sure of is that the buying is done by a combination of EM CBs. Meanwhile, DM CBs have not been significant gold buyers since the 1960s. READ MORE

S&P 500 will fall another 16% before bottoming out at 3,200 in the middle of next year, UBS economist says - Market Watch

There's been a lot of optimism as it relates to the chatter on Wall Street recently. After many positive days, there's been a lot of talk about the markets finally turning the corner. There are some however who are saying don't break out the bubbly just yet; we may have more than just a few more down days ahead of us.

U.S. stocks won’t bottom out until the middle of next year as the Federal Reserve pivots back to lowering interest rates, according to Arend Kapteyn, an economist at UBS Group AG.

Kapteyn expects the S&P 500 will fall as far as 3,200, which would represent a decline of nearly 16% based on the large-cap index’s value around 11:30 a.m. Eastern Time on Wednesday.

The decline is expected to be driven by weak corporate earnings growth and more Fed interest rate hikes, which will continue at least through the first quarter of next, the UBS economist said.

“We expect it will not regain its January 2022 high of 4,796 before end 2025,” Kapteyn said. READ MORE

"I'm Selling My Blood To Eat, I Have No Choice": Biden Inflation Crushes Americans -Zero Hedge

In yet another chapter of today's economy and the ever growing disconnect between the government and American citizens, more truly disheartening news about the state of US households. There is a growing trend of families who are having to sell their own blood in order to put food on the table. As commonplace as it seems anymore to hear or see a negative economic report, there's nothing run of the mill about this current phenomenon.

Gas, groceries, electricity, and rent -- the price of everything has soared to four-decade highs under the Biden administration. Household finances are under severe pressure as wage growth fails to outpace inflation for 18 months, leading many folks to find a second job. Even holding two jobs isn't enough to sustain the cost-of-living crisis, as some are finding the nearest plasma clinic to donate blood to earn extra cash.

Cashe Lewis, 31, of Denver, Colorado, works multiple jobs and is trying to find a third job due to rising shelter inflation. She told The Guardian she works six days a week, sometimes more than 16 hours per day, just to pay the bills.

"I'm exhausted all the time ... on the one day I have off a week, I donate plasma for extra money. I'm literally selling my blood to eat because I have no choice," Lewis said.

She said many of her "friends and family work multiple jobs" as inflation makes "nothing affordable and the roadblocks set up to keep people in the cycle of poverty benefit the most wealthy members of our society."

Lewis said: "We aren't living, we're barely surviving, and we have no choice but to keep doing it."

More Americans than ever are working multiple jobs as inflation wipes out real wage growth.

Real wage growth has been negative for 18 consecutive months.

The personal savings rate has tumbled to multi-decade lows at 3.1%, just shy of the record low of 3.0%...

And some experts are concerned about the pace of growth in consumer credit as debt loads for households soar as their wages can't cover added costs of food, shelter, and energy.

But according to MSNBC's Joy Reid, her latest comments claim that Americans were oblivious to inflation until conservative political candidates started talking about it. READ MORE

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11.8.22 - Rates above 6%?

Gold last traded at $1,711 an ounce. Silver at $21.34 an ounce.

EDITOR'S NOTE: The stock market continues to rally in anticipation of favorable midterm election results. What isn't clear is exactly what that will bring. Republican victories may be wildly contested. If the Democrats instead stay in power, we will likely have more of the status quo which most would say has been anything but pleasant. Regardless of tonight's outcome, it seems imminent that the Fed will soon be raising rates yet again as they attempt to control inflation.

The Fed may need to hike interest rates above 6% to crush stubborn inflation, ex-Treasury chief Larry Summers says - Business Insider

by Theron Mohamed

• The Fed may have to hike interest rates above 6% to curb stubborn inflation, Larry Summers said.
• The US economy seems to be shrugging off the rate increases so far, the former Treasury chief said.
• Summers warned that rising inflation expectations could lead to more, intractable price increases

Unrelenting inflation could force the Federal Reserve to hike interest rates to north of 6%, the highest level in more than two decades, Larry Summers has warned.

The US central bank has rapidly raised rates from virtually zero in March to a range of 3.75% to 4% today, in a bid to cool the economy and bring down inflation from near 40-year highs.

Yet prices rose an annualized 8% in September — not far off their peak pace of 9.1% in June — and there's little sign of demand weakening or the labor market softening.

"The good news is the economy is looking robust," Summers said in a recent Bloomberg interview. "The bad news is there's not much evidence of inflation restraint yet."

Summers is a Harvard economics professor who previously served as Treasury secretary and the director of the National Economic Council. He suggested the economy might be more resilient to rate increases than expected, which could heap pressure on the Fed to hike further.

"It would not be surprise me if the terminal rate reached 6% or more," he said. The Fed last targeted an interest rate that high in 2001.

Summers also flagged a worrying increase in inflation expectations, which can spur workers to demand higher wages, and businesses to raise prices in anticipation of rising costs. Those behaviors can kickstart a wage-price spiral, making inflation a self-fulfilling prophecy. READ MORE

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11.7.22 - Does the Market Care Who Wins Tomorrow?

Gold last traded at $1,675 an ounce. Silver at $20.82 an ounce.

EDITOR'S NOTE: The stock market rallied heavily today in anticipation of tomorrow's midterm election results. The optimism is refreshing, but is it realistic? Many experts suggest that the economic factors and vulnerabilities brewing out there are nonpartisan in nature; meaning things are not going to magically improve or go away no matter who is elected.

Stocks start week higher as midterms, CPI report loom- Yahoo! Finance

by Alexandra Semenova

U.S. stocks pushed forward Monday as investors geared up for another week of potentially market-moving events: the Nov. 8 midterm elections and October consumer price data.

The S&P 500 (^GSPC) rallied 1%, while the Dow Jones Industrial Average (^DJI) jumped more than 400 points, or roughly 1.3%. The technology-heavy Nasdaq Composite (^IXIC) gained about 0.9% after the index posted its worst weekly decline since January.

A batch of downbeat corporate news has renewed focus on the wreck across technology stocks after disappointing earnings last week dragged the sector's heaviest hitters — Apple (AAPL), Amazon.com (AMZN), and Alphabet (GOOGL) — to losses of more than 10% each.

Apple (AAPL) reversed a loss of more than 1% to close higher after the company said in a statement Sunday it expects fewer shipments of its newest premium iPhones than previously anticipated, citing COVID lockdowns in China that dented operations at its biggest smartphone maker Foxconn's factory.

Also among tech giants, Facebook parent Meta (META), which is now the worst performer in the S&P 500 index this year, is expected to begin large-scale layoffs this week, according to a report from the Wall Street Journal on Sunday. Shares rose 6.5%. READ MORE

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11.4.22 - The Mad Dash to Cash

Gold last traded at $1,681 an ounce. Silver at $20.85 an ounce.

EDITOR'S NOTE: BofA reports that investors are fleeing to cash at a very rapid pace right now; at a time when inflationary pressures are greater than we've seen in many, many years. Is cash the safest vehicle in times like these? Historically the answer to that question is no. It's actually one of the worst places to be.

If you haven't already contacted us to receive your free copy of TheSecret War on Cash - which outlines what's happening to our money and what we can do about it - do so right now. You can receive your copy by calling or texting our offices at (800) 289-2646. Do it today!

BofA Says Rush to Cash Is Now at Fastest Pace Since Pandemic

(Bloomberg) -- Cash is king, with investors fleeing to the safety of cash funds at the fastest pace since the coronavirus pandemic as the Federal Reserve remains firmly hawkish, according to strategists at Bank of America Corp.

The asset class had inflows of $62.1 billion in the week through Nov. 2, according to a note from the bank citing EPFR Global data. That’s contributed to $194 billion of inflows into cash from the start of October -- the fastest start to a quarter since the pandemic roiled markets in the second quarter of 2020.

Bank of America’s strategists don’t expect the Fed to pivot anytime soon as inflation remains high and unemployment is low. “Lesson is job losses catalyst for 2023 pivot,” strategists led by Michael Hartnett wrote in the Nov. 4 note.

A recession and credit events will need to occur for the Fed to end tightening, prompting the start of a new bull market, Hartnett said. Data today showed that US businesses reported strong hiring and wage increases in October although the unemployment rate climbed.

Hartnett’s comments come after Fed Chair Jerome Powell indicated this week that he’s prepared to push interest rates as high as needed to stamp out inflation, even as the central bank eyes a downshift to a slower pace of increases. The Nasdaq 100 closed at the lowest level since July 2020 on Thursday, with the gauge on track for its worst week since January. The S&P 500 is set for its worst week since September.

Among other asset classes, global equity funds saw $6.3 billion of inflows in the week, while nearly $4 billion was pulled from bonds, according to the EPFR data. READ MORE

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11.3.22 - Central Banks Quietly Buying Gold

Gold last traded at $1,629 an ounce. Silver at $19.45 an ounce.

EDITOR'S NOTE: On the heels of an email we sent earlier this week, here's another on the record pace at which Central Banks are buying up gold right now. With this in mind, there is one question we should all be asking ourselves; should I be doing the same?

We often times receive emails from our clients and readers asking, "why isn't gold going up with all of this buying?". In short, there's likely a lot of short selling and manipulation stalling its rise, but this isn't stopping the banks from gobbling it up. Be diversified. Own gold. It will be there for you when you need it and you will be glad it is.

Central Banks Are Quietly Buying Gold At The Fastest Pace In 55 Years - ZeroHedge

Posted by Tyler Durden

By Alex Kimani of OilPrice.com

Central banks globally have been accumulating gold reserves at a furious pace last seen 55 years ago when the U.S. dollar was still backed by gold. According to the World Gold Council (WGC), central banks bought a record 399 tonnes of gold worth around $20 billion in the third quarter of 2022, with global demand for the precious metal back to pre-pandemic levels.

Retail demand by jewelers and buyers of gold bars and coins was also strong, the WGC said in its latest quarterly report. WGC says that the world's gold demand amounted to 1,181 tonnes in the September quarter, good for 28% Y/Y growth. WGC says among the largest buyers were the central banks of Turkey, Uzbekistan, Qatar and India, though other central banks also bought a substantial amount of gold but did not publicly report their purchases. The Central Bank of Turkey remains the largest reported gold buyer this year, adding 31 tonnes in Q3 to bring its total gold reserves to 489 tonnes. The Central Bank of Uzbekistan bought another 26 tonnes; the Qatar Central Bank bought 15 tonnes; the Reserve Bank of India added 17 tonnes during the quarter, pushing its gold reserves to 785 tonnes.

Retail buyers of gold bars and coins also surged in Turkey to 46.8 tonnes in the quarter, up more than 300% year-on-year.

These developments are hardly surprising taking into account gold is still considered the pre-eminent safe asset in times of uncertainty or turmoil despite the emergence of cryptocurrencies like bitcoin. Gold is also regarded as an effective inflation hedge, though experts say that this only rings true only over extended timelines measured in decades or even centuries.

Unfortunately, rising interest rates spoiled the party for the gold bulls, with exchange traded funds (ETFs) storing bullion for investors becoming net sellers. Indeed, offloading of bullion by ETFs countered buying by central banks pushed gold prices down 8% in the third quarter. Gold is a non-interest bearing asset, and investors tend to move their money to higher yielding instruments during times of rising interest rates. An overly strong dollar has also not been helping gold (and commodity) prices. Gold prices are down 9.3% YTD and nearly 20% below their March peak of $2,050 per ounce. READ MORE

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11.2.22 - About those Brutal Losses in Your 401(K)

Gold last traded at $1,634 an ounce. Silver at $19.21 an ounce.

Stocks could sink 25% as the liquidity crisis in Treasuries threatens to spill over to other markets, analyst says - Business Insider

As Wall Street celebrates the recent upswing as a market turnaround, several analysts are saying some underlying problems could bring this recent rally to an end. Here are some of the lingering issues at hand.

By Brian Evans

* A liquidity crisis is brewing within the $24 trillion US Treasury market, and the turmoil has the potential to sink stocks.
* Treasury liquidity is showing signs of weakness not seen since the Great Financial Crisis, warned James Demmert.
* "A liquidity crisis would most likely extend the current bear market in stocks to much deeper levels in the range of a further 20-25% or total of 50% for the year."

A liquidity crisis is brewing within the $24 trillion US Treasury market, and the turmoil has the potential to sink stocks as well as cripple financial markets more broadly, according to analysts.

Bond yields have seen big swings as a lack of liquidity has widened the price gaps between investors buying and selling Treasuries. That means trades that didn't move the market before are now creating more volatility. Rate-sensitive growth stocks are especially vulnerable as borrowing costs are already rising on Fed rate hikes.

In fact, Treasury liquidity is showing signs of weakness not seen since the Great Financial Crisis, warned James Demmert, founder and managing principal at Main Street Research.

"One has simply to look back at 2008 or the pandemic to understand the seriousness of a liquidity freeze — particularly in the US Treasury market — which is deemed to be the most liquid market in the world," he said. "A liquidity crisis would most likely extend the current bear market in stocks to much deeper levels in the range of a further 20-25% or total of 50% for the year." READ MORE

The end of cheap money reveals global debt problem - Reuters

In other debt related news, we have now officially left the era of cheap money. What some are referring to as the "handwriting on the wall", is not too promising. It's another vulnerability that has serious potential ramifications.

By Hugo Dixon

The global financial crisis of 2008 was supposed to have taught the world the dangers of excessive debt. But borrowing has shot up since then. The debt of governments, companies and households was 195% of global GDP in 2007, according to the International Monetary Fund. By the end of 2020 it had reached 256%.

These debt mountains are harder to bear because interest rates are rising to stamp out inflation, the Covid-19 pandemic and the energy crisis have clobbered growth, and investors are more averse to risk. This will cause economic stress especially in Europe, China and the Global South, poisoning domestic politics and geopolitics.

Debt has risen for three main reasons. First, governments bailed out the financial system. Then they supported households and companies during the pandemic. Now they are cushioning the blow of eye-popping gas and electricity prices.

QE DEBT SPLURGE

Cheap money enabled these splurges. In the West, this came in the form of quantitative easing (QE), where central banks bought government bonds and other assets. While they were right to use QE to prevent an economic slump, cheap money has been a painkiller. Many governments stopped worrying about balancing their books. Companies and emerging markets also leveraged up.

If the borrowers had used the money to fund productive investment, that might not have mattered. But instead, they spent much of it on unproductive investment or consumption.

China’s excess property construction is the prime example of unproductive investment. The country’s debt as a proportion of GDP has doubled since 2007, according to the IMF. This is suffocating its economy and is one of the reasons the World Bank has just slashed its growth forecast for China this year from 5% to just 2.8%. READ MORE

About those Brutal Losses in Your 401(K) – Here Are the Charts -Wall Street on Parade

Are you retired or nearing retirement? Do recent losses have you worried? Even those of us still working and contributing to a retirement plan have had some restless nights watching the markets have their way with our nest eggs. Is the worst over, or is there more to come?

By Pam Martens and Russ Martens

Whether your mutual fund was one of the popular 60/40 funds (60 percent equities and 40 percent bonds) or was 100 percent in equities, you’ve been battered this year. The Fed’s relentless hiking of interest rates this year beat down the market value of existing bonds because they have lower fixed rates of interest, thus making them less valuable than the newly issued bonds with higher rates of interest. Growth stocks, which have dominated the investment scene for years, were particularly crushed because growth companies need to borrow money to grow and higher interest rates mean that their cost of capital will become more expensive, thus slowing growth and hurting their earnings outlook.

Another factor weighing on the negative performance of equities (stocks) is that higher interest rates pumped up the value of the U.S. dollar, hurting the earnings of U.S. companies that are big exporters. (Consumers in foreign countries hold foreign currency that has lost value to the U.S. dollar, thus making the cost of U.S. manufactured goods more expensive to them. That incentivizes those consumers to trim purchases of U.S. goods and/or switch to a less expensive foreign brand.)

The Financial Times reported on Saturday that the strong dollar is forecast to wipe $10 billion off U.S. corporate earnings in just the third quarter. Bloomberg News estimates that “The greenback’s strength is likely to reduce the profits of a third of the companies in the S&P 500 this quarter.” READ MORE

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11.1.22 - Mystery Buyers Responsible For Central Bank Gold Boom

Gold last traded at $1,647 an ounce. Silver at $19.63 an ounce.

EDITOR'S NOTE: The mainstream financial news media has had a field day talking about gold prices taking a hit in the month of October ... while touting the recent surge in cryptocurrencies. What's interesting is that during this period of a slump in gold prices, central banks have "scooped" up more than 400 tons of physical gold. That's more than FOUR times the physical consumption compared to the year prior. How can all this buying be taking place and prices be dropping? What's really at work here?

Who Are The Mystery Buyers Responsible For Central Bank Gold Boom? -Bloomberg

By Eddie Spence
With assistance from Sing Yee Ong

Central banks bought a record amount of gold last quarter as they diversified foreign-currency reserves, with a large chunk of the purchases coming from as-yet unknown buyers.

Almost 400 tons were scooped up by central banks in the third quarter, more than quadruple the amount a year earlier, according to the World Gold Council. That takes the total so far this year to the highest since 1967, when the dollar was still backed by the metal.

Bullion prices have been pressured this year by aggressive US interest-rate hikes as the Federal Reserve tackles soaring inflation, which have prompted exchange-traded fund investors to sell the non-yielding asset. But support has come from other areas, such as retail buyers in Asia and central banks.

Central banks including Turkey and Qatar were among recent buyers, ... READ MORE

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10.31.22 - A Lot For Markets To Be Scared About

Gold last traded at $1,633 an ounce. Silver at $19.15 an ounce.

EDITOR'S NOTE: Happy Halloween! Tonight many people will get dressed up, spend time with family and friends, and make sure their children get enough candy to keep their dentists busy for years to come. There will be those intent on trying to put their fair share of scare into this evening as well; but hopefully all in the name of fun. What's not fun, however, are scared markets. We want confident, strong and unshakable markets. Some analysts are saying there are many reasons for the markets to be terrified worldwide.

"It's Halloween And There's A Lot For Markets To Be Scared About" - Zero Hedge

Posted by Tyler Durden

By Michael Every of Rabobank

It’s Halloween and, clichéd as it is, there is a lot for markets to be scared about.

Let’s start off with the optimists, who, like Linus and his never-appearing Great Pumpkin, are waiting for a Fed pivot to bring them gifts. Yes, the RBA, BOE, BOC, and (on the surface) the ECB all backed off hawkishness to some degree, and the BOJ stuck to their guns on yield curve control on Friday.

However, the Japanese government is increasing stimulus by another $200bn to fight inflation(!) while insisting JPY cannot fall - something is going to break there; we don’t think the ECB were as dovish as the market interpreted them; the RBA are seen going 50bp this week by at least one big name; the BOE are still likely to go 75bp; and not only is another 75bp from the Fed baked into the pumpkin pie too, but others just upgraded where it stops to 5%, which we said months ago.

However, the Japanese government is increasing stimulus by another $200bn to fight inflation(!) while insisting JPY cannot fall - something is going to break there; we don’t think the ECB were as dovish as the market interpreted them; the RBA are seen going 50bp this week by at least one big name; the BOE are still likely to go 75bp; and not only is another 75bp from the Fed baked into the pumpkin pie too, but others just upgraded where it stops to 5%, which we said months ago.

Indeed, Eurozone inflation data on Friday will have made the ECB jump, as core inflation did too. The same scare was seen in US personal income and spending, while Bloomberg reports ‘Wages are soaring in US cities with the highest inflation’. Even though we are in a blackout period ahead of the FOMC, the Fed Whisperer at the Wall Street Journal put out another article saying last week’s data offered, “more questions to the Fed than answers about the true trajectory of the economy… But the compensation report... could keep the Fed raising interest rates slightly higher in 2023 than officials had anticipated at their meeting last month."

The depth of analysis on how we get out of this is also terrifying. Central banks are in the dark, with an inflation monster. "Inflation is going up due to Wall Street decisions", says Alexandria Ocasio-Cortez (whom Gad Saad dubs Occasional-Cortex). Stumbling Big Tech aside, Wall Street is going up due to official decisions, whisper some. Stocks have surged off lows and bond yields have tumbled, which the Fed has no desire to see given it loosens financial conditions - so they are more likely to raise rates further.

Worse, fears are soaring on the global supply-side inflation. Even as some FinTwit voices calling for looming deflation now underline that they think inflation will soar again afterwards, a see-saw assumption long floated as a risk here too, Russia cancelled the Ukraine Grain Deal.

As our Michael Magdovitz puts it, removing Ukraine’s food supply from global markets will drive up food prices everywhere. The exception, perhaps, is Ukraine where there will be a glut, which will ultimately cause long-term scarring of the agri economy, because Ukrainians will refuse to produce things they cannot sell. Major improvements in westbound road, rail, and river transport can now handle 50%-60% of Ukraine’s normal exports, which is not enough to stop food prices surging. Meanwhile, it is being reported Ukraine, Turkey, and the UN have notified Russia they are organizing a convoy of 14 grain ships with grain to sail despite the renewed Black Sea blockade. The tensions are palpable. READ MORE

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10.28.22 - 65% of employed Americans living paycheck-to-paycheck

Gold last traded at $1,644 an ounce. Silver at $19.24 an ounce.

EDITOR'S NOTE: Yet another consequence of mounting inflationary pressures; more and more American families are having to live paycheck-to-paycheck. Some of these families have had to tap their emergency savings and, even worse, their retirement accounts. From our vantage point, it sure looks like the worst is yet to come.

‘Living paycheck-to-paycheck has become the norm’: Inflation takes its toll on American finances as emergency funds run dry -MarketWatch

By Quentin Fottrell

'Americans’ monthly expenses have outpaced their personal income growth,' said Kristi Rodriguez, senior vice president of Nationwide Retirement Institute

Inflation is taking its toll on people’s emergency funds.

The share of workers who say they are living paycheck-to-paycheck has surged among middle- to high-income earners — 63% and 49%, respectively — up from 57% and 38%, respectively, a year ago, according to an independent survey of almost 4,000 workers released this week by online loan specialist LendingTree. Overall, 65% percent of employed consumers were living paycheck-to-paycheck in September 2022 — up from 60% a year ago.

Meanwhile, the personal savings rate — savings as a percentage of disposable income — fell to 3.3% in the third quarter from 3.4% in the prior quarter, the government said Thursday, the lowest level since the Great Recession 8th. Adjusted for inflation, savings are down 88% from their 2020 peak and 61% lower than pre-pandemic. (Personal savings hit $629 billion in the second quarter of 2022, down from $1.41 trillion in the second quarter of 2019.)

Millions of Americans face rising prices on essential goods and services such as food and rent as their savings are drying up after a post-pandemic spending splurge. On Wednesday, Kraft Heinz Co. KHC, 2.39% said its third-quarter prices were 15.4 percentage points higher than a year before. National retail sales rose 8.2% on the year in September. “There has certainly been some pent-up demand from the pandemic,” said Larry Pon, a financial planner based in Redwood City, Calif.

To help retain and attract workers, some major companies — including Starbucks SBUX, 2.13% and life-insurance company Transamerica — are offering “savings programs” and “emergency savings accounts.” There appears to be genuine cause for concern: Only 68% of people said they had $400 in emergency cash or its equivalent, according to the most recent survey on the issue by the Federal Reserve, although that figure that has been steadily climbing from 50% in 2013.

But there’s another reason for the apparent dearth of emergency funds. “Because of the spike in inflation, Americans’ monthly expenses have outpaced their personal income growth,” Kristi Rodriguez, senior vice president of Nationwide Retirement Institute, told MarketWatch. “This suggests that households are spending more, not as much because they want to, but because they have to with increased costs for essential items such as gasoline, groceries and healthcare.” ... READ MORE

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10.27.22 - Will interest rates continue their climb?

Gold last traded at $1,662 an ounce. Silver at $19.55 an ounce.

EDITOR'S NOTE: Challenging economic data continues to be reported in a year already full of investment snafus. The latest? Mortgage rates are now at their highest levels since 2002. Our government continues to tell us all is well, but how much more strain can our financial markets take? Rates at these levels could have a crippling effect on our markets and therefore result in severe losses in wealth for households throughout the country.

{Photo credit: Dan Moyle/Flickr}

by Patrick Hilsman

Average mortgage interest rates have surpassed 7%, rising to their highest level in 20 years, the Federal Home Loan Mortgage Corp. said Thursday.

Significant interest rate increases from the Federal Reserve, aimed at curbing inflation, are affecting the housing market. As inflation endures, customers are seeing higher costs at every turn, causing further declines in customer confidence this month," Freddie Mac's chief economist, Sam Khatar, said in a statement.

The increase has led to stagnation in the housing market, and "many potential homebuyers are choosing to wait and see where the housing market ends up, pushing demand and home prices further downward," Khatar said. READ MORE

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10.26.22 - Gold at $2,250?

Gold last traded at $1,664 an ounce. Silver at $19.66 an ounce.

Goldman Sachs sees a scenario where gold prices rally sharply to $2,250 by 2025 - Kitco

At a time when markets are volatile and there is a thirst for stability, gold may be the perfect place to watch your money shine. This is according to recent commentary by Goldman Sachs. Owning physical gold gives you the benefit of an unencumbered asset - an asset that is not in some way tied to debt. Goldman Sachs and others are suggesting gold will not only provide you with much needed stability but some nice returns as well.

"by Neils Christensen- The Federal Reserve's commitment to slow the economy to cool down rising inflation continues to push the U.S. economy closer to a recession.

Tuesday, in an interview with CNBC, David Soloman, CEO of Goldman Sachs, said that this is a time to be cautious as there is a good chance of a recession. The comment comes as the investment bank sees potential upside for gold in a recessionary environment.

In a report published last week, commodity analysts at Goldman Sachs said that despite gold's volatile year, its upside potential is greater than the downside risks, even as uncertainty dominates the marketplace." Read more.

{Photo by Cole Burston/Bloomberg}

It's not only households feeling the pain of rising prices and inflation, but US corporations as well. The deterioration of corporate credit has now reached a critical level, according to financial analysts. The repercussions of this are far reaching as it falls into the global vacuum of financial strains as well as the personal application to our own finances through falling stock prices.

"Corporate credit conditions are worsening, says Janus Henderson Investors

by Tasos Vossos

Corporate credit conditions are worsening, with the last of three key measures now “flashing red,” according to a traffic-light system used by Janus Henderson Investors." Read more.

Wall Street Warns of Trouble Brewing in Auto Loans as Prices Dip - Yahoo Finance

The auto manufacturing sector in another vulnerable area of the stock market. Analysts are anticipating poor earnings as car loans fall into default and higher interest rates prevent access to auto loans for many. Here's a breakdown of what they see happening.

"By Jenny Surane and Max Reyes The largest US banks are warning of trouble ahead in auto loans as dropping prices for used cars risk leaving borrowers underwater.

Wells Fargo & Co. said that higher loss rates for loans it originated late last year contributed to an increase in write-offs for the period. Ally Financial Inc., the country’s second-largest auto lender, saw charge-offs for retail auto loans quadruple in the third quarter. And Fifth Third Bancorp said it’s pulling back on originations.

Used-car prices slumped 7% in the third quarter, the worst decline since the depths of the global financial crisis, according to data compiled by vehicle-auction company Manheim. The risk, investors fear, is that if consumers end up owing more than their cars are worth, they might stop making payments and let the vehicles be repossessed.

“There has been a real tightening in margins on new-auto production, on one hand, and on the other there’s been a decline in used-car prices,” Fifth Third Chief Executive Officer Tim Spence said in an interview. “That has caused us to throttle a bit back on production” of loans." Read more.

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10.25.22 - Are supply chain shortages the "new normal"?

Gold last traded at $1,651 an ounce. Silver at $19.31 an ounce.

EDITOR'S NOTE: Inflation, inflation, inflation ... just a euphemism for price increases. The term 'price increase' seem to personalize it a little more; especially when those price increases directly impact our families. We've seen some pretty dramatic inflation for two straight years now, but what's in store for us going forward? According to the CEO of Kraft Heinz - a very well established food provider - not only are we going to see more increases through 2022, but he expects to continue seeing them well into 2023.

Kraft Heinz CEO predicts continued inflation, more price increases next year - Fox Business

by Aislinn Murphy

Kraft Heinz CEO Miguel Patricio predicted in a recent interview that inflation will persist and more price increases will happen in 2023.

He made the comments during a CNN Business interview published Monday in which he discussed certain challenges impacting the food industry.

"We’ve already increased the prices that we were expecting this year, but I’m predicting that next year, inflation will continue, and as a consequence [we] will have other rounds of price increases," he told the outlet.

Both consumer and wholesale inflation have been hovering at painfully high levels, FOX Business previously reported.

The consumer price index in September rose 0.4% from August and 8.2% from the prior year. Meanwhile, in the same month, the producer price index climbed 0.4% on a monthly basis and 8.5% on a yearly basis.

Kraft Heinz has attempted to "minimize inflation on everything we do," Patricio reportedly said, noting it would be "very easy to just pass the price to consumers, but that has consequences." READ MORE

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10.24.22 - The Honest Indicator of a Market Bottom

Gold last traded at $1,651 an ounce. Silver at $19.28 an ounce.

EDITOR'S NOTE: As the stock market continued Friday's rally into today, is the market telling us that the worst is behind us? One potential lurking danger is the amount of leverage (or debt buying) that is supporting stocks right now. Currently the leverage factor is almost 40% higher than what we saw at the 2020 lows. The below commentary outlines some of the things we might expect to see with such a high leverage factor in the market today.

Margin Debt Is Still Far from Calling a Bottom for Stocks- Wolf Street

It nailed the top last November and it nailed the tops and bottoms going back at least to the 1990s.

By Wolf Richter for WOLF STREET

Increases and decreases in leverage, when large enough, drive markets up or down. The only summary data on stock-market leverage that we can get is margin debt, reported monthly by FINRA, which obtains the data from its member brokers. There is a lot more leverage in the market, but we don’t get a summary figure of it. Margin debt is our stand-in for overall stock market leverage.

Margin debt data that was released last November, for the month of October, nailed the top in the stock market, as margin debt had nailed prior tops. More on that in a moment, including my annotated long-term chart. Now we're looking for signs of a bottom. But as of the latest release of margin debt, we’re far from any bottom. READ MORE

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10.21.22 - Is Another Lehman Effect on the Horizon?

Gold last traded at $1,657 an ounce. Silver at $19.42 an ounce.

EDITOR'S NOTE: Leading stock market indices ended the week on a high note; but is this reflective of the true health of our markets? Are markets immune to all of the pitfalls we are hearing so much about these days? The threats of inflation, defaults, canceled production orders, etc ... and that's only the short list. Economist Nouriel Roubini believes not only are corrections coming, but they are going to be some of the worst we've seen.

'Dr Doom' Nouriel Roubini says to brace for a crash that combines the worst of the financial crisis and 1970s-style stagflation - Business Insider

By George Glover

• Markets should brace for a period of decline that echoes crashes of the 1970s and 2008, according to Nouriel Roubini.
• He predicted that central banks will "wimp out" from fighting inflation, fueling a financial crisis.
• "It's going to get ugly, the recession, and you'll have a financial crisis," Roubini told Bloomberg.

The global economy will experience a period of decline that combines the worst aspects of the 2008 financial crisis and the 1970s, Nouriel Roubini has warned.

The "Dr Doom" economist said Wednesday that he expects red-hot inflation to lead to a recession – before major cracks start to appear in financial markets.

"It's going to get ugly, the recession, and you'll have a financial crisis," he told Bloomberg's Odd Lots podcast.

Roubini sees supply-side shocks including the coronavirus pandemic and the war in Ukraine as drivers of global stagflation, which refers to a combination of soaring prices and sluggish growth.

That would echo the economic pain of the 1970s, when efforts to tame high inflation plunged the US into a deep recession.

"Inflation is not going to fall fast enough because you have the negative supply shock," Roubini said.

"Remember when you have negative supply shock, you get a recession and high inflation," he added. "We're not going to get a fall in inflation that's rapid enough to go to 2%."

But Roubini also compared the current outlook to the 2008 crisis ... READ MORE

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10.20.22 - US heating worries mount

Gold last traded at $1,626 an ounce. Silver at $18.63 an ounce.

EDITOR'S NOTE: Over the past few weeks, temperatures across the country have started to drop as we head into another winter. There is grave concern over what inflation will do to the cost of heating. Many fear they will be facing some very tough decisions soon - feeding their families vs. keeping them warm. Sadly, it seems the current administration will acknowledge the situation, assure us it is not as bad as it is being portrayed, and then do nothing to provide a solution. These inflationary pressures are real and the time to prepare is now. Read on to learn more about what me might expect to see this winter.

US heating worries mount amid growing costs, uncertainty - Associated Press

By DAVID SHARP

JAY, Maine (AP) — Across the U.S., families are looking to the winter with dread as energy costs soar and fuel supplies tighten.

The Department of Energy is projecting sharp price increases for home heating compared with last winter and some worry whether heating assistance programs will be able to make up the difference for struggling families. The situation is even bleaker in Europe, with Russia’s continued curtailment of natural gas pushing prices upward and causing painful shortages.

In Maine, Aaron Raymo saw the writing on the wall and began stocking up on heating oil in 5-gallon increments over the summer as costs crept upward. He filled a container with heating oil as he could afford it, usually on paydays, and used a heating assistance program to top off his 275-gallon oil tank with the arrival of colder weather.

His family is trying to avoid being forced into a difficult decision — choosing between food or heating their home. CONTINUE READING

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10.19.22 - US Recession Forecast? 100% chance

Gold last traded at $1,628 an ounce. Silver at $18.45 an ounce.

America's 6 biggest banks are expected to set aside $4.5 billion in Q3 to cover future loan losses — why that's a clear bad sign for the global economy--Yahoo! Finance

As price inflation and increasing interest rates continue to plague the economy, banks are preparing for the worst. If you want to know how banks feel about the Fed's attempts to regain control of this economy, the following story should give you an idea.

Fears of a looming recession and a tightening economy are pushing the country’s big banks to prepare for the worst.

According to a report from Bloomberg, six of the biggest banks in the U.S. — JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Wells Fargo and Morgan Stanley — plan to set aside about $4.5 billion to protect against loan losses in their third-quarter earnings.

Banks typically build up their loan loss provisions when there are concerns borrowers won’t be able to make their payments. Read more.

Forecast for US Recession Within Year Hits 100% in Blow to Biden- MSN

There's been a lot of back and forth discussion about whether or not we are entering a recession. I think we all want to hope for the best, but that's fairly challenging as we look at the numbers currently being released. If Bloomberg is right, they say our chances are 100%!

(Bloomberg) -- A US recession is effectively certain in the next 12 months in new Bloomberg Economics model projections, a blow to President Joe Biden’s economic messaging ahead of the November midterms.

The latest recession probability models by Bloomberg economists Anna Wong and Eliza Winger forecast a higher recession probability across all timeframes, with the 12-month estimate of a downturn by October 2023 hitting 100%, up from 65% for the comparable period in the previous update.

The forecast will be unwelcome news for Biden, who has repeatedly said the US will avoid a recession and that any downturn would be “very slight,” as he seeks to reassure Americans the economy is on solid footing under his administration. Read more.

Noland: "Dominoes Are Aligning For A Major Synchronized Global Crisis"-- Zero Hedge

Many of us remain concerned over the weaknesses in our markets and our economy domestically, but there is also growing concern about what is developing globally. In today's world, it seems any pebble thrown into the financial pond has a ripple effect across the globe. Here's what we're seeing overseas.

It would have been a nonevent; inconsequential. Confirming New Cycle Dynamics, the Truss government’s “mini budget” has unleashed absolute mayhem. Pension funds blowing up. Emergency central bank rescue operations. Global market instability. UK’s Treasury Secretary sacrificed after a mere 38 days, while an entire government hangs in the balance.

Friday evening Financial Times headlines: “Gilts in Fresh Slide as Investors Say Truss U-turn Did Not Go Far Enough.” “Can Liz Truss Survive as UK Prime Minister?”; “Austerity Beckons as Truss Seeks to Restore Britain’s Reputation with Investors.” And “UK Debacle Shows Central Bank ‘Tough Love’ is Here to Stay.” Read more.

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10.18.22 -Average American is losing $34K and everything else on Biden’s watch

Gold last traded at $1,652 an ounce. Silver at $18.75 an ounce.

EDITOR'S NOTE: Bidenflation is here. And no matter what the Fed says or tries, it doesn't look like it's going away any time soon. Yesterday we highlighted some of the concerns faced by those who are retired or planning for retirement - and what some of the potential consequences of not having a well balanced portfolio might bring. Today we'll take a look at the real rate of inflation and some of the more specific implications it is bringing with it.

Average American is losing $34K and everything else on Biden’s watch - New York Post

By Stephen Moore and E. J. Antoni

Have you taken a peek at the balance in your 401(k) retirement accounts lately? Here’s our advice: Don’t bother. It will ruin your whole day, week and month.

Here’s why: We’ve now had seven straight months of 8%+ inflation. A year ago we were assured by the White House economic wizards that these rapid price increases in everything from groceries, to rental cars, to gasoline at the pump, to health insurance were merely “transitory.” Whoops.

The most immediate sticker shock from Bidenflation, of course, has been to shrink real take-home paychecks of workers. We have calculated that over the past 20 months, this rise in consumer prices over wages means that the average family in America has lost nearly $6,000 in purchasing power. This from the Lunch Bucket Joe president who promised to help boost the incomes of the middle class. When, exactly?

But this pay-cut effect on family incomes is only part of the curse of runaway inflation.

We’ve just completed an analysis of how the highest inflation rate in almost 40 years has impacted the retirement funds of ordinary Americans. Here is what we found.

Savings collapse

Not surprisingly, since President Biden took office, monthly savings have collapsed, falling 83%. (We could never understand how Biden could say with a straight face that Americans are saving more. His “transformation” of the US economy has had just the opposite effect.) Many millions of Americans who are living paycheck to paycheck just don’t have the money after paying the inflated bills to save much.

But to add insult to injury, even what has been already saved and invested by older Americans over past years and even over several decades has been erased from these accounts.

Thanks to the thief of inflation.

Most of the 150 million Americans with one form or another of retirement savings have invested the majority of those tens of thousands of dollars in stocks. The major stock indices are all way down since Biden came into office. Here are the returns as of Oct. 10, according to the Federal Reserve Bank of St. Louis: .... CONTINUE READING

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10.17.22 - This is Why Your Portfolio Needs Gold

Gold last traded at $1,650 an ounce. Silver at $18.67 an ounce.

EDITOR'S NOTE: As we draw nearer to the election, American families continue to face mounting economic pressures. Market volatility has become the investment norm; which is unnerving to those planning for retirement or those who are currently retired. When you combine this volatility with the sharpest price increases in our consumable goods that many have seen in their entire lifetime, it leaves most of us feeling completely overwhelmed.

Is there a solution to this problem? Is there a safe way to approach investing during these times? The one thing we can count on is that markets are going to fluctuate; they will go up and they will go down. What many experts suggest as the solution to uncertainty and volatility is a properly diversified investment portfolio. Here's a breakdown of how a properly balanced portfolio has performed.

Today millions of Americans are worried about how rising market volatility could affect the value of their IRA, 401(k) or 403(b) retirement accounts.

During uncertain times like these, physical GOLD offers financial stability by protecting the long-term purchasing power of your savings and retirement funds - as well as offering excellent growth potential in the future! Click here for more info!

There are a lot of misconceptions among today’s investors about Gold as an asset class. Many investors feel that Gold is an old-fashioned investment. And some investors are reluctant to invest in Gold because Gold doesn’t provide dividends or capital gains the way stocks can. But in these arguments, these investors don’t recognise that Gold, as a protective asset class, plays a crucial role in any balanced portfolio.

Gold hedges against a depreciating US Dollar

In a globally-diversified portfolio, a declining US Dollar will eat into your returns, but having an allocation to Gold hedges your investments against a depreciating US Dollar.

How?

The value of the US Dollar can decline significantly if there’s an oversupply of US Dollars in the global economy. An oversupply of US Dollars drives international investors and major central banks to reduce their US Dollar exposure in order to preserve their assets’ value in their home currencies. Specifically, they reduce their US Dollar exposure by selling their US Dollar reserves and then buying Gold.

This act of mass offloading the US Dollar drives down its value while driving up the demand for Gold. Basic rules of supply and demand tell us that when demand increases, so does the price. We saw this exact scenario play out after the 2008 Financial Crisis: The Fed’s quantitative easing caused the US Dollar to depreciate by more than 20% on a trade-weighted basis by 2011. At the same time, Gold prices nearly doubled up until 2012.

Gold protects your downside in a financial crisis

A factor that makes an asset class a good diversifier is when its value isn’t correlated to other assets classes in a portfolio all the time. Correlation measures how one asset class moves in relation to another asset class. Two asset classes are positively correlated when they move in tandem, and negatively correlated when they move in opposite directions.

In the case of Gold, its prices are relatively uncorrelated to equities in good times and positively correlated to equities when the stock market is doing exceptionally well.

Figure 1 shows how Gold performs depending on how big of a move up or down the S&P 500 makes. When we see the S&P 500 move up or down moderately (less than 2 standard deviations), the price of Gold has very little correlation with the market. But, when the S&P 500 does exceptionally well as measured by an upward move of more than 2 standard deviations), Gold prices tend to move up along with the market.

To get to the heart of why Gold is such an important protection in a financial crisis, pay attention to how Gold performs when the market goes down significantly (down more than 2 standard deviations). As seen in Figure 1, Gold prices have a high negative correlation when the markets go down significantly. That is to say, when the market crashes, Gold goes up substantially.

Figure 1: Correlation of US stocks to gold and other commodities READ MORE

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10.14.22 - The Era Of Cheap Food And Cheap Gasoline Is Over

Gold last traded at $1,642 an ounce. Silver at $18.22 an ounce.

EDITOR'S NOTE: Inflation, unemployment, soaring interest rates, falling markets ... these are just a few of the terms we are bombarded with each day. They are words used so often, they now ring hollow. Somehow we always manage to navigate through the turbulence of these terms; but is this time perhaps different? Some market watchers are saying yes. The article below outlines why and how cheap prices -on everything from food to gas- may soon be a distant memory. Read on to learn more on this perspective.

Also, if you haven't already done so contact our office via phone or text at (800) 289-2646 and request a free copy of our most sought after report The Secret War on Cash which breaks down the war being waged against our finances daily.

The Era Of Cheap Food And Cheap Gasoline Is Over - Zero Hedge

Posted by Tyler Durden
Friday, Oct 14, 2022 - 04:20 AM

Authored by Michael Snyder via TheMostImportantNews.com

All of our lifestyles are about to change in a major way, but the vast majority of the population still does not understand what is coming. Throughout our entire lives, we have always been able to depend on a couple of things. There would always be cheap gasoline to fuel our vehicles and there would always be mountains of cheap food at the grocery store. No matter who was in the White House and no matter what else was going on in the world, those two things always remained the same. Unfortunately, those days are now over and they aren’t coming back.

So you might as well get used to high gas prices. Earlier this month, brand new all-time record highs were set all over southern California…

• Los Angeles-Long Beach – $6.46 (Record high)
• Orange County – $6.42 (Record high Saturday)
• Ventura County – $6.40
• Riverside County – $6.33 (Record high)
• San Bernardino County $6.32

But that isn’t the real problem.

The real problem is with natural gas.

Thanks to the war in Ukraine, supplies of natural gas in Europe have become extremely tight, and this has pushed prices into the stratosphere.

Needless to say, this is going to greatly affect food productions in the months ahead. According to Bloomberg, over two-thirds of all fertilizer production capacity in Europe has already been shut down due to soaring natural gas costs…

Europe’s fertilizer crunch is deepening with more than two-thirds of production capacity halted by soaring gas costs, threatening farmers and consumers far beyond the region’s borders.

This is an absolutely massive story, but hardly anyone in the United States is covering it.

Global fertilizer production is going to be greatly reduced, and that is going to have very serious implications for agricultural production all over the world…

“Nitrogen plant shutdowns in Europe are not simply a problem in Europe,” she said. “Reduced supply on the scale seen this week not only raises the marginal cost of production of nitrogen fertilizers, but will also tighten the global market, putting pressure on plant nutrients’ availability in Europe and beyond.”

We’re already seeing prices elsewhere rise again. The price of the common nitrogen fertilizer urea in New Orleans rose over 20% in weekly prices Friday, the most since March, a few weeks after the war began, according to Green Markets.

I know that fertilizer may not be the most exciting topic for a lot of people, but the truth is that approximately half the global population would starve if we didn’t have any…

In fact, it’s estimated that nitrogen fertilizer now supports approximately half of the global population. In other words, Fritz Haber and Carl Bosch — the pioneers of this technological breakthrough — are estimated to have enabled the lives of several billion people, who otherwise would have died prematurely, or never been born at all.

Let that paragraph sink in for a moment.

The only way we can even come close to feeding everyone on the planet is by using vast quantities of fertilizer, but now fertilizer plants all over Europe are being forced to shut down because of the price of natural gas.

As long as this global energy crisis persists, the global food crisis will also persist.

Russia is normally the largest exporter of natural gas in the entire world, and an end to the war in Ukraine would go a long way toward solving our current problems.

But there isn’t going to be an end to the war in Ukraine.

Once again, western leaders are assuring us that the war will not end until Russia is forced out of every inch of Ukrainian territory.

That includes Donetsk, Luhansk and Crimea.

Of course the Russians would use tactical nukes long before we ever get to that point.

And once the Russians use tactical nukes, the west will do the same.

As it currently stands, there is no “off ramp” for this war.

Instead, we are simply counting down the days until it goes nuclear.

I am sorry to tell you that, but it is the truth.

If the American people truly understood what was at stake, there would be massive peace protests all over the nation right now.

Meanwhile, the worst multi-year megadrought in 1,200 years continues to absolutely ravage agricultural production in the western half of the United States.

A reporter from FOX recently visited the cornfields of Wayne County, Nebraska and what he discovered is extremely chilling… READ MORE

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10.13.22 - The Never-Ending State of Excessive Gov't

Gold last traded at $1,666 an ounce. Silver at $18.89 an ounce.

NEWS SUMMARY: Precious metal prices eased slightly Thursday amid rising U.S. Treasury yields. U.S. stocks ended higher as traders shook off another hot inflation report.

New bill introduced to bring the U.S. back to the gold standard to control gov't spending and inflation -Kitco

"One American politician proposes bringing stability back to the U.S. economy and its currency by introducing a new gold standard.

Last week, U.S. House Representative Alex Mooney (R-WV) introduced the Gold Standard Restoration Act. The bill looks to peg the U.S. dollar to gold to address the growing inflation threat, massive deficit spending and instability within the U.S. monetary system.

'The gold standard would protect against Washington's irresponsible spending habits and the creation of money out of thin air,' said Rep. Mooney in a statement.

'Prices would be shaped by economics rather than the instincts of bureaucrats. No longer would our economy be at the mercy of the Federal Reserve and reckless Washington spenders,' Mooney added.

The bill noted that the dollar, referred to as the Federal Reserve note, has lost more than 30% of its purchasing power since 2000. At the same time, the U.S. has lost 97% of its purchasing power since the Federal Reserve Act was passed by congress in 1913.

The proposed legislation would require the Federal Reserve and the U.S. Treasury to disclose all records pertaining to the government's gold reserves and gold-related transactions over the last 60 years....

'Today's debt-based fiat-money system serves primarily to support big government and wealthy financial insiders - while the Federal Reserve's serial policy of currency debasement punishes savers and wage earners as it undermines the economy,' explained Stefan Gleason, President of the Sound Money Defense League, in a statement.

'A return to gold redeemability would arrest the problem of inflation, restrain the growth of wasteful and inefficient government, and kick off an exciting new era of American prosperity,' Gleason added.

Although the proposed legislation has some grassroots support, some political analysts see it as a long shot. Federal Reserve Chair Jerome Powell has actively opposed the idea of a gold standard."

The Not-So-Invisible Hand: Central Banks -Wall Street Journal

"Politicians may debate whether big-government socialism or free-market capitalism leads to better economic outcomes. Their constituents may worry about rising prices and declining prospects for retirement.

But neither group has the power to create money with no questions asked, manipulate the cost of capital, or counteract movements in financial markets. The central bankers are in charge - and perhaps that should change.

Even if duly elected leaders try to make good on campaign promises, they face hurdles if monetary authorities, domestic and global, disagree. What happened in Britain is a cautionary tale for nations that have relinquished to central banks the keys to economic performance. British Prime Minister Liz Truss, together with her finance minister, Kwasi Kwarteng, last month announced plans to spur investment and economic expansion by cutting taxes for individuals and businesses. Days later, they were verbally lashed by Mark Carney, a former governor of the Bank of England, for 'working at some cross-purposes' with the nation’s central bank....

Then there’s the audacity of the International Monetary Fund, which publicly rebuked the U.K. government’s budget and urged it to 're-evaluate the tax measures, especially those that benefit high income earners.'

Since when did unelected monetary officials gain the authority to tell political leaders what to do? It’s unseemly, but perhaps not surprising: When government organizations are imbued with breathtaking powers to determine financial conditions, it magnifies their clout - and elevates their status.

But central banks, led by the U.S. Federal Reserve, have embraced the notion that curbing demand is the road to monetary redemption. That same Fed not long ago failed to anticipate the pervasive inflationary pressures unleashed through the extraordinary fiscal and monetary measures to mitigate the economic consequences of the Covid-19 shutdown....

It is time to question whether central banks have become too powerful, too prominent and too political. In the name of preserving central bank independence, lawmakers have ceded huge swaths of their own responsibility for ensuring the welfare of citizens through sound economic policies. By doing so, elected representatives have granted influence to unelected officials that is inconsistent with democratic norms and limited powers.

It will require a Copernican revolution to shift the field of monetary theory from an understanding of economic performance that doesn’t put central banks at its core. But it’s a change that must be made if we are to prevent further demoralization of free markets and free people."

The never-ending state of rotten and excessive government -Washington Times

"Many, including those in government, often fail to remember when the U.S. Federal Reserve was established back in 1914, it was given the sole mandate of price stability. A few decades ago, the Fed’s mandate was expanded to include maintaining full employment - as if the requirement of price stability would never conflict with the requirement to support policies that would ensure full employment.

The Biden administration has now required that the Federal Reserve take on the added responsibilities of offsetting the cost of the pandemic, ensuring climate preservation, and promoting race and gender equality - but the inflation rate is almost 9%. Oh, never mind!

I expect that at some point a Fed chairman will testify before the Senate and be berated by a senator for not hitting the inflation targets. And the Fed chairman responding: 'Yes, we missed our inflation targets but we did hit our target for hiring Native American women, and our target of reducing our carbon impact by replacing the Fed motor vehicle fleet with electric cars and trucks. So two out of three is not bad.'

The European Central Bank (ECB) also had as its original mandate 'price stability,' which it did quite successfully until it was hit with eight or so other goals in the past couple of years. And like America, the euro countries now have a 9% inflation rate. So much for keeping their eyes on the ball.

As President Thomas Jefferson wrote more than two centuries ago, it is the nature of government to expand at the expense of the liberties of the people. Most are aware that governments have been growing, but most are not aware of how rapidly the governments in every major and most smaller countries have grown in the last half-century....

The natural tendency of bureaucracies is to grow because of the desire of those in charge of them to gain power and money by expanding their turf. Many government agencies and regulatory bodies endlessly poach off the real bailiwicks of others to expand their influence, power, and budgets. The Securities and Exchange Commission in the U.S. is now trying to give itself an environmental regulatory role, even though it has no statutory authority for doing so."

To Rein in Biden, Look To Florida's Example -Newsweek

"President Joe Biden's regulatory assault on American families is easily the worst in American history.

It's driving up grocery prices, utility bills, and the cost of everyday life, leaving people paying a lot more while getting a lot less. If Republicans truly want to fight back, they should look to the states for inspiration - especially our home state of Florida.

The Sunshine State is rolling back red tape at a record pace, thanks in large part to a unique policy that empowers lawmakers to block new mandates. Republicans in Congress should rally around a similar law to stop President Biden's rule by administrative fiat.

Compare what's happening in D.C. to what's happening in Florida.

At the federal level, President Biden proposed and enacted new regulations costing a staggering $201 billion in his first year alone. That's more than three times the burden imposed by President Barack Obama over the same timespan, and 40 times that of President Donald Trump....

Compare that with what's happening in Florida.

The Sunshine State proposed the lowest number of regulations in modern history last year, according to new research from the Foundation for Government Accountability. It follows years of regulatory repeal and relief by governors and lawmakers alike.

This sustained progress puts Florida well ahead of its competition. California now has more than twice as many regulatory restrictions. New York has about 75% more, and Illinois 65% more. Even Texas has a larger regulatory burden than Florida....

Why is Florida cutting red tape so quickly and effectively? One of the biggest reasons is a 2010 law, passed over then-Gov. Charlie Crist's veto, that says the state legislature must approve all rules that cost $1 million or more over five years. If lawmakers don't affirmatively approve such a regulation, it doesn't go into effect. This policy ensures that the people's representatives have a say on new mandates.

Florida's policy is the definition of common sense - but the federal government takes the opposite, and nonsensical, approach. President Biden can force Americans to pay hundreds of billions of dollars in higher regulatory costs because there's no real check on his administration's ability to propose new rules. Congress gets no say in the matter, even though the Constitution invests the House and the Senate with sole lawmaking power. Lawmakers are bystanders when they should be referees....

Florida proves this policy works. The state's economy is booming, with new residents moving here every 50 seconds and 1,800 new start-ups setting up shop every day. The state's light touch on red tape, driven by the governor's and lawmakers' willingness to stop costly new rules, is undoubtedly contributing to the Sunshine State's ever-brightening outlook."

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10.12.22 - The Real Reason The Fed Should Pause Rates

Gold last traded at $1,674 an ounce. Silver at $19.07 an ounce.

NEWS SUMMARY: Precious metal prices steadied Wednesday amid rising whoesale inflation data and a firmer dollar. U.S. stocks traded flat as investors weighed price data that came in higher than expected, signaling more interest rate hikes are ahead.

The Gold Market's Great Migration Sends Bullion Rushing East -Bloomberg

"There’s a global migration underway in the gold market, as western investors dump bullion while Asian buyers take advantage of a tumbling price to snap up cheap jewelry and bars.

Rising rates that make gold less attractive as an investment mean that large volumes of metal are being drawn out of vaults in financial centers like New York and heading east to meet demand in Shanghai’s gold market or Istanbul’s Grand Bazaar.

As a result, gold and silver are selling at unusually large premiums over the global benchmark price in some Asian markets....

The rotation of metal around the world is part of a gold-market cycle that has repeated for decades: when investors retreat and prices drop, Asian buying picks up and precious metals flow east - helping to put a floor on the gold price during times of weakness.

Then, when gold eventually rallies again, much of it returns to sit in bank vaults beneath the streets of New York, London and Zurich....

While plenty of gold is heading east, it’s still not enough to meet demand. Gold in Dubai and Istanbul or on the Shanghai Gold Exchange has traded at multi-year premiums to the London benchmark in recent weeks, according to MKS PAMP - a sign that buying is outstripping imports."

An Economics Nobel for and by Central Bankers -Wall Street Journal

"The committee that awards the Nobel Prize in economics announced Monday it has chosen three U.S. economists for the 2022 prize: former Federal Reserve Chairman Ben S. Bernanke, Douglas W. Diamond of the University of Chicago and Philip H. Dybvig of Washington University in St. Louis.

The award is for 'research on banks and financial crises.' The committee praised the winners for doing work 'of great practical importance in regulating financial markets and dealing with financial crises.' Many monetary economists would disagree....

'I would like to say to Milton Friedman and Anna Schwartz: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again,' said Mr. Bernanke, then a member of the Fed’s board of governors, at Friedman's 90th birthday party in 2002. Unfortunately, as Fed chairman, Mr. Bernanke, with his fellow Fed governors, did do it again.

The difference between the Bernanke and Friedman/Schwartz views was that Mr. Bernanke thought providing more liquidity during a crisis wasn’t enough; he emphasized the importance of salvaging particular financial intermediaries, even if some of them arguably should have gone bankrupt....

Quantitative easing, which expanded the money supply, got all the press. Less discussed were two Bernanke initiatives that choked off the increase in the money supply. One was the sale of Treasury securities, which removed from the economy much of the money the Fed had injected in 2008 via the Bear Stearns bailout and the Term Auction Facility. Economists call this 'sterilization.'

The result was that in the year ending August 2008, the monetary base (currency plus bank reserves) had increased by less than $20 billion, or 2.24%. Had Mr. Bernanke simply increased the money supply substantially, as Alan Greenspan had done in response to the 1987 market crash, the 2007-09 recession would have been shorter and shallower. The second measure restraining liquidity was Mr. Bernanke’s 2008 choice to pay interest on bank reserves, which caused banks to sit on reserves rather than lend them out....

The Nobel Prize in economics is funded not by the Nobel Foundation but by Sweden’s central bank. I don’t usually think that matters, but in this case I wonder if it does. The 2022 award seems to be an affirmation by central bankers of the value of central banking."

The Real Reason The Fed Should Pause -Alhambra Investments

"The Federal Reserve has been on a mission lately to make sure everyone knows they are serious about killing the inflation they created. Over the last two weeks, Federal Reserve officials delivered 37 speeches, all of the speakers competing to see who could be the most hawkish. Interest rates are going up they said, no matter how much it hurts, no matter how many people have to be put on the unemployment line, because that’s the only way to kill this inflation, to save the people from higher prices....

The big problem with the Fed's plan to kill inflation by reducing economic growth and raising the unemployment rate is that those things are not the source of our current inflation problem. People working don’t cause inflation unless they are not creating sufficient supply to meet their own demand.

That being the case, one could easily see why too many government workers might be highly problematic. But in the private sector, companies generally don’t hire people who aren’t productive. I’d just suggest that maybe it isn’t the job of the Federal Reserve to determine how many people are allowed to work. Maybe they could help the inflation rate by laying off half - or more - of the 400 economists they employ who don’t produce anything useful.

It is certainly true that the Fed could hike rates far enough to cause an economic contraction and higher unemployment. And it is also true that in that situation, inflation is likely - but not certain - to come down. But has anyone at the Federal Reserve considered that maybe they could reduce inflation without killing the economy and throwing people out of work? Does the medicine have to kill the patient? Do we have to destroy the village to save it?

Powell has said previously that backing off rate hikes too soon was a big mistake in the 1970s and he doesn’t want to repeat that. But is it true? Well, maybe, but I think the Fed is drawing the wrong conclusion from the 70s. From December 1968 to August 1969, the Fed raised the Fed Funds rate from 4.0% to 9.75%. In other words, they tightened rapidly. They then had to cut rates all the way back down to 3% in the subsequent recession.

The logical conclusion here is that the rapid - and large - tightening of policy led to big drops in economic activity that then necessitated a rapid loosening of policy which caused another burst of inflation and a repeat of the pattern.

The Fed today seems hell-bent on repeating this mistake. Powell and the other members of the Federal Reserve have said repeatedly in all these speeches that their goal is to raise rates to a restrictive level and hold them there for a long time. If they keep hiking rates at the current pace, they will either create a severe recession or a financial crisis of some kind that ensures they will fail in that goal."

Some Questions I Have About Stocks, the Economy & Other Stuff -Wealth of Common Sense

"We humans have an insatiable desire to predict the future. This desire gets even worse during bad times.

I have opinions just like everyone else but I truly don’t know how the current economic mess is going to shake out.

I do have some questions though:

How long will good news be bad news for stocks?

On Friday, the employment data came out stronger than expected. The unemployment rate actually fell, despite the Fed’s best efforts.

The stock market immediately fell on the better-than-expected labor market news.

Why did stocks fall on good economic news?

The Fed is trying to slow the labor market to slow inflation....

What if companies just went through laying off a bunch of people during the pandemic and had such a hard time finding workers these past few years that they don’t want to turn around and do it again so soon?

The Fed wants to make the unemployment rate go higher. They keep telling anyone who asks that they want people to lose their jobs to bring supply and demand back into balance so inflation will fall.

I’m not a fan of this plan but they don’t care what I think.

Regardless, I’m worried about what happens if the Fed’s plan doesn’t work, at least for a while....

How are we ever going to increase the supply of homes in this country?

For a decade following the Great Financial Crisis, we didn’t build enough homes because homebuilders were so scarred the housing bust.

I can’t imagine things are going to be much better in the 2020s, despite the millennials now being the biggest demographic in the country and ready to buy.

Homebuilders basically had an 18 month window of insane demand that is falling off a cliff now that mortgage rates are 7%.

How could we ever expect them to build enough houses if their business goes from boom to bust and back to quickly?

One of my biggest worries is an entire generation of young people is going to be forever pissed off about the state of the housing market."

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10.11.22 - Economists Fear Deep Downturn

Gold last traded at $1,678 an ounce. Silver at $19.45 an ounce.

NEWS SUMMARY: Precious metals rose Tuesday on bargain hunting and a weaker dollar. U.S. stocks see-sawed as investors worried that higher interest rates and inflation will tip the economy into recession and hurt corporate earnings.

Gold's Contribution to Society -World Gold Council

"The WGC has long believed that responsible gold mining supports sustained socio-economic development in countries and communities that host gold mining operations, through its contribution to jobs, tax revenue and investment in local communities. The gold industry makes a meaningful contribution to the UN's Sustainable Development Goals.

Gold itself also plays a critical role in supporting societies’ needs and is considered important across cultures globally. It is deeply understood and recognized as a source of financial security and is critical to numerous technological and healthcare applications.

Gold mining is a major economic driver for many countries across the world. Well-managed, transparent and accountable resource extraction can be a major contributor to economic growth due to the creation of employment and business opportunities for local people. As well as direct and indirect jobs, gold mining also brings foreign direct investment and tax revenues to countries....

Gold mining companies also have ethical and commercial incentives to improve the health and education of the communities that they operate in. Many invest in social infrastructure, including schools, colleges and health centers that improve the opportunities and well being of local people....

Gold is an extraordinary metal, which has an array of unique properties which makes it irreplaceable in today’s world. Gold is used extensively in electronics but is also widely used in many other applications. It is now one of the most studied nanomaterials, and has been incorporated in a variety of products and devices. For example, gold nanoparticles are used in the billions of rapid medical diagnostic test kits produced annually, including in the COVID-19 antigen and antibody tests.

Beyond gold's role in our daily lives , it is also at the cutting edge of scientific advancement. In our documentary series The Golden Thread, we highlight many of gold’s unique but often less well-known or hidden applications, from space exploration to wearable diagnostic electronics. Gold is being used in increasingly varied and innovative ways and continues to help shape the world around us."

Currency Crises Make a Comeback -Camelot Portfolios

"It has been quiet in the currency markets during the last few years. Now, currency crises are coming back with a vengeance.

In the last 10+ years of worldwide synchronized low interest rates, with some even running below zero, currency movements have been mostly benign. The early days of these loose monetary policies saw allegations of currency wars, an allegation first waged by Brazil's Finance Minister of the time, Guido Mantega. Smaller currencies had occasional hiccups, of which the surprise Swiss Franc revaluation of 2018 was the most notable...Now, with the U.S. going it alone in its aggressive tightening, we expect turmoil in the currency markets to return to levels of the 1980s.

The Fed is pretty much alone in its aggressive rate hikes and is seen as the only major central bank that is not just talking about inflation, but acting. Neither the ECB nor the BoJ dare to follow its lead due to the high level of indebtedness of the public sectors in these two currency blocks. Despite a decade of ultra-low and negative interest rates (two decades in Japan), governments have not been able to balance their budgets, much less reduce debt levels....

While the pound's brief flash crash to its lowest level created headlines, many seem to have overlooked that the pound's weakness is not an isolated case. Against the Euro, at 55% of exports still the dominant trading partner of the UK, sterling is barely changed.

The brief all-time low against the US dollar on September 25 that made headlines was reversed within hours. It appeared to be a technical move during Asian trading hours early on a Monday morning...Somehow, headlines focused on the low point of the exchange rate only, while volatility is the real story. 5% intraday moves in a currency typically are associated with currency crises....

Overall, the strong dollar is bad news for the stock market and the economy. After the strong moves that we have seen in currencies, we would normally be inclined to be contrarian and recommend increasing exposure to foreign equities. After all, the risk/reward ratio now favors the dollar over other currencies – we would need dollar-appreciation-forever to make a case for pulling out of non-dollar assets and reallocating to dollars. All it takes is a Fed pivot, and we would expect to see a violent dollar depreciation, given that everyone is positioned for a strong dollar."

Fed’s Inflation Fight Has Some Economists Fearing an Unnecessarily Deep Downturn -Wall Street Journal

"Some economists fear the Federal Reserve - humbled after waiting too long to withdraw its support of a booming economy last year - is risking another blunder by potentially raising interest rates too much to combat high inflation....

Fed Chairman Jerome Powell has said the central bank isn’t trying to cause a recession, but it can’t fail in its effort to bring down inflation. 'I wish there was a painless way to do that. There isn't,' he said last month.

Still, several analysts worry the Fed is on track to raise rates higher than required, potentially triggering a deeper-than-necessary downturn.

'They’ve done a tremendous amount of tightening,' said Greg Mankiw, a Harvard University economist who advised President George W. Bush. 'Recessions are painful for a lot of people. I think Powell’s right that some pain is probably inevitable…but you don’t want to cause more than is necessary.'....

Former Fed Vice Chairman Donald Kohn agrees it is near time for Fed officials to slow their rate increases. 'They need to downshift soon. They need to somehow downshift without backing off,' he said....

Some Fed critics say the current surge in inflation is the result of global disruptions rather than an overheated U.S. labor market, and they are pointing to signs that prices have begun to fall for a swath of goods and services, including commodities, freight shipping, and housing....

Asset prices have also taken a beating, which tends to reduce spending and investment. A portfolio invested 60% in stocks and 40% in bonds is down nearly 20% this year.

'The housing market doesn’t look pretty, and that will eventually spread to the rest of the economy,' said Mr. Mankiw. Lower asset prices will, too, at some point, he said."

Earnings Preview: Q3 and Beyond -Briefing.com

"The third quarter is over, but we're not done with it yet. In fact, we are going to hear a lot about the third quarter in coming weeks as publicly traded companies report their earnings results for the July-September period.

We know already that it was a tough period for the stock market. The S&P 500 declined 5.3% in the third quarter. It did so as interest rates went up and earnings estimates came down.

We'll soon learn if the third quarter earnings estimates were cut too much or not enough. According to FactSet, the estimated earnings growth rate for the third quarter was 9.8% on June 30. Today it sits at 2.3%.

The third quarter earnings bar has been lowered significantly, and we suspect it will be relatively easy for most companies to clear it. The bigger hurdle - and where we think more companies than usual will get tripped up - is the guidance.

We do not want to go astray on this earnings preview piece delving into the economic releases, but the fact of the matter is that the economy is going to factor prominently in the earnings reporting period.

That isn't anything new, yet it will have more bearing than it typically does because the U.S. economy - and the global economy for that matter - is thought to be at a tipping point because of the rapid-fire rate hikes from many of the world's leading central banks.

In many respects the global economy has already tipped. Growth is slowing and now it is a matter of whether the economy keeps tipping into a recession. Some will argue that it already has, sticking to a technical definition of two straight quarters of a decline in real GDP, yet others will point to remarkably low unemployment rates to refute that notion.

Regardless, the behavior of the stock market this year and the inverted yield curve make it clear that economic optimism is not running high.

An 8.1% growth rate for 2023 sure seems to be generous at this point given all the writing on the economic wall of worry that points to little growth at best in 2023 or a recession at worst."

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10.10.22 - Americans Are Losing Their Work Ethic

Gold last traded at $1,668 an ounce. Silver at $19.63 an ounce.

NEWS SUMMARY: Precious metal prices retreated Monday on rising interest rates and a firmer dollar. U.S stocks fell, led by the tech-heavy Nasdaq Index; which hit a 2-year low on spiking interest rates.

Why You Should Buy The Dip In Gold -Forbes

"It's the job of Jay Powell and the Fed to manage the expectations of people about price pressures. As Bernanke once said, monetary policy is 98% talk. And Powell and company have been doing a lot of talking.

But it's not easy to talk down the price increases that are right in front of our noses every day. And beyond the supply/demand dynamics that are putting upward pressure on prices, it's perception that can lead to behavior, and behaviors (related to inflation) are what can lead a dangerous spiral. For that reason, the Fed worries about perception.

If you’re buying today, at any prices, because you think price will be higher tomorrow, that's a recipe for an inflationary spiral. The current housing market is a perfect example....

Clearly gold has been a dislocated asset in this market and economic environment. But that creates an opportunity to see that dislocation corrected....

For gold, fundamentally, the outlook is strong given the explicit devaluation of cash through unlimited Fed QE and seemingly unlimited deficit spending. So is the longer term technical outlook...

This is a classic C-wave (from Elliott Wave theory) here in gold. This technical pattern projects a move up to $2,700."

Fed on Track for Another Large Interest-Rate Hike After Jobs Report -Wall Street Journal

"The September solid employment report will keep the Federal Reserve on track to approve another large interest-rate increase at its meeting next month as officials seek to lift borrowing costs high enough to soften the labor market and ease inflation pressures.

Employers added 263,000 workers in September. While that marked a slight slowdown from the average pace of hiring in recent months, it is still well above the monthly gains of around 50,000 that economists think would keep the unemployment rate from falling.

The unemployment rate dropped to 3.5% last month from 3.7% in August. Average hourly earnings rose somewhat more slowly in September than in the prior month, increasing 0.3% from August and 5% from a year earlier.

Fed officials have been raising rates rapidly this year to combat inflation that is near 40-year highs. Officials believed last year that prices were being driven up by supply-chain bottlenecks and strong demand fueled by government stimulus....

The Fed lifted rates by 0.75 percentage point at each of its past three meetings, bringing its benchmark federal-funds rate to a range between 3% and 3.25% last month - the most rapid pace of increases since the 1980s. Officials have indicated they are prepared to make a fourth increase of 0.75 point at their Nov. 1-2 meeting.

Fed officials are focused on lifting rates to levels that will slow spending, investment and hiring. Rate increases raise borrowing costs and reduce the prices of stocks and other assets.

The persistence of inflation in recent months has led officials to signal less optimism about that outcome. Fed governor Christopher Waller said the already narrow landing strip for a soft landing has gotten smaller 'the longer inflation has stayed up, and the more aggressive we had to be.'"

The Fed Might Just Break the Global Economy -New York Magazine

"For now, widespread inflation persists. And the Federal Reserve remains committed to raising interest rates, even as major Wall Street banks warn that further hikes just might break the financial system's fragile 'plumbing.'

To make sense of our economy’s present - and assess the prospects for its future - I reached out to an expert on its past. Adam Tooze is among the world's most prominent economic historians and prolific Substack commentators. He's authored celebrated books on each of the world's last two financial crises.

We spoke about the inequities and instabilities of the existing financial system, the class politics of monetary policy, and why progressives should support the construction of new gas pipelines in the United States (for global justice’s sake).

To be clear, there’s two different kinds of worries. One is about 'something breaking' in the sense of a 2008-style meltdown of the financial system. And I think there, the optimistic case is that we’re no longer in a world where that can happen; under the current system, central banks will simply do whatever’s necessary to plug the relevant holes. But then there’s the second worry that - even if the Fed can rescue the financial system from a crisis - it can't simultaneously fight a financial crisis and inflation.

'That’s the kind of dilemma which we might be impaled upon. I mean, obviously, we shouldn’t allow that to sit for very long because if the issue is financial stability, the answer is reform of financial structure.

'If things do start to break, structural reform of the U.S. Treasury market should go way up the agenda, which is where it should have been really since at least the spring of 2020. It has actually been quite a while since we had a year in which there wasn't anxiety about the Treasury market. Which is a problem, since the U.S. Treasury market is gigantic and, at least notionally, the platform of stability for all other private finance. Yet it no longer seems to have the stability properties that it's supposed to.

What's your biggest worry about the global economic situation right now?

I think it's not the most likely scenario, but the biggest risk is the financial system breaking down. The more likely bad outcome is a worldwide recession. Which would be a disaster."

Americans Are Losing Their Work Ethic -Reason

"Policy analysts who favor reduced immigration to the United States have always had one plausibly compelling argument: If you cut off the supply of cheaper labor, they maintained, employers would be forced to raise wages for lower-skilled, native-born workers, who would then demonstrate the fiction behind the contention that there were some jobs 'Americans just won't do.'

Well, we have just conducted a fascinating real-world test of that hypothesis. Beginning with the restrictionist presidency of Donald Trump in 2017, and then supercharging through the effective 2020–21 border-closure triggered by the COVID-19 pandemic, the U.S. took in about 1.7 million fewer working-age immigrants than would have come at the prior intake rate, according to a recent analysis by Giovanni Peri, economics professor at University of California at Davis.

This should have been the moment when the startlingly high number of prime-aged Americans classified as Not in the Labor Force ('NILFs,' no really) got off the sidelines and back into the job market.

And yet: 'That did not increase work rates or labor force participation of Americans who are already here,' says American Enterprise Institute economist Nicholas Eberstadt, author of the freshly revised (with post-pandemic intro) 2016 book Men Without Work. 'We've now got this incredible peacetime labor shortage, and we also have a drop in the number of people in the workforce, by at least a ballpark of 3 million lower than we would have expected on trend before COVID. And that's leaving out immigration, so it's actually lower.'

Friday's new jobs report from the Bureau of Labor Statistics underscores America's globally anomalous position: The unemployment rate is at an enviable 3.5 percent, businesses still have 10 million unfilled positions, and yet the labor force participation rate languishes at a miserable 62.3 percent - more than a percentage point lower than before the pandemic.

'For every [25–54-year-old] guy who is out of work and looking for a job…in 2022, there are four guys who are neither working nor looking for work,' Eberstadt told me this week in an interview for The Fifth Column podcast.

'Americans,' Eberstadt writes in his new introduction, 'have been renowned for their work ethic, but the future of that work ethic should not be taken for granted.'

The data is startling to behold. A higher percentage of prime-aged American men don't work now - again, at a time of historically low 'unemployment' - than during the Great Depression."

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10.7.22 - Another Lost Decade in US Stocks?

Gold last traded at $1,694 an ounce. Silver at $20.03 an ounce.

News Summary: Precious metal prices retreated Friday on upbeat jobs data and a firmer dollar. U.S. stocks fell as traders evaluated September’s jobs report, which showed the unemployment rate continuing to decline and sparked an increase in interest rates.

There is a growing divergence between physical gold and the paper market -WisdomTree/Kitco

"Although rising bond yields and an extraordinary rally in the U.S. dollar has created significant headwinds for gold, there is no doubt it remains an essential hedge for investors, according to one commodity analyst.

In a recent interview with Kitco News, Nitesh Shah, head of commodity research at WisdomTree, said that although gold has been in a downtrend through most of 2022, the precious metal is holding up relatively well.

This week, the precious metal has seen a short-covering rally pushing prices back above $1,700, cutting the loss to 6% year-to-date.

Shah said that according to his modeling, given how far bond yields have risen this year and the U.S. dollar's rally to a 20-year high, gold prices should be down 21% this year.

'I know some people have been disappointed with gold, asking why prices aren't higher given where inflation is but against this setup, gold is doing pretty well,' he said. 'If you are a nondollar gold investor, then gold prices are near record highs.'

Shah said that he suspects the growing divergence between the physical market and the paper market is the reason why gold has performed well in the current environment."

US Home Prices Now Posting Biggest Monthly Drops Since 2009 -Yahoo Finance

"Home prices in the US have taken a turn and are now posting the biggest monthly declines since 2009.

Median home prices fell 0.98% in August from a month earlier, following a 1.05% drop in July, mortgage-data provider Black Knight Inc. said in a report Monday. The two periods mark the largest monthly declines since January 2009.

'Together they represent two straight months of significant pullbacks after more than two years of record-breaking growth,' said Ben Graboske, Black Knight Data and Analytics president.

The housing market is losing steam fast with skyrocketing mortgage rates driving affordability to the lowest level since the 1980s. The Federal Reserve has sought to curb inflation, which has thrown cold water on the US real estate boom....

The sharpest correction in August was in San Jose, California, down 13% from its 2022 peak, followed by San Francisco at almost 11% and Seattle at 9.9%, the company said.

It’s not just buyers who are stepping away from the fast-cooling market. The doubling of rates has disincentivized would-be sellers from giving up historically low rates. Inventory was on the rise from May to July but stalled in August, according to Black Knight."

Could We See Another Lost Decade in the U.S. Stock Market? -Wealth of Common Sense

"Last week legendary hedge fund manager Stanley Druckenmiller told CNBC his baseline is for U.S. stocks to go nowhere for a decade:

'I’m just saying we’ve had a hurricane behind us for 30 or 40 years, and it’s reversing, and I wouldn’t be surprised - in fact, it’s my central forecast - the Dow won’t be much higher in ten years than it is today.'

Druckenmiller has been publicly bearish for many years now but a lost decade in the stock market has happened in the past and will probably happen again in the future. This is the nature of risk assets....

We've now had two bear markets for the S&P 500 in less than three years. That's the first time this has happened since the Great Depression.

That’s in addition to the lost decade of the 2000s which saw the S&P 500 offer investors negative total returns from 2000-2009 while the market got cut in half not once but twice.

History is chock-full of crashes, crises and calamities in the financial markets. Read a history book or three and you understand every generation has had to deal with challenging times."

What Biden must do right now to fix our broken economy -Fox Business

"To the surprise of no one outside the White House, a recent ABC News/Washington Post poll showed that 74 percent of Americans believe the economy is in bad shape, up from 58 percent in the spring of 2021.

With 84 percent or respondents identifying the economy as a top issue in the upcoming midterm elections and 74 percent saying the same about inflation, why does the Biden administration seem more intent on exacerbating the problems than addressing them? Let’s take a look at how Biden got us into the current economic crisis and what he could do to get us out of it....

As Biden took office, vaccines became available, and things started returning to normal. Economists who had served in both Democrat and Republican administrations saw the problem - demand was unnaturally high, and supply was unnaturally low. They warned Biden and his Democrat allies that increased government spending would juice demand driving inflation. The Biden administration ignored the advice, denied the existence and severity of any problem, and spent with the abandon of drunken sailors.

In March of 2021 Biden and the Democrats unilaterally and unnecessarily passed their $1.9 trillion spending bill (ironically called the American Rescue Plan) at a time when most Americas were already flush with cash. That released the inflation Kraken. To make matters worse, it was followed by a $1.1 trillion infrastructure bill, a climate change bill with $437 billion in spending (absurdly called the Inflation Reduction Act) and a $400 billion student loan write off. Not surprisingly, inflation surged and continues at levels not seen in 40 years.

So, what could Biden do reverse the results of his thus far disastrous economic policies? Simply, we need to reduce demand, increase supply, and inflation will subside. It's not like this is a mystery."

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10.6.22 - "The Coming Recession Could Be the Biggest Ever"

Gold last traded at $1,714 an ounce. Silver at $20.67 an ounce.

News Summary: Precious metal prices eased back Thursday on profit taking and a firmer dollar. U.S. stocks fell as traders weighed interest rates and awaited the jobs report.

Gold price rally to resume after foundation akin to 1999 is built, watch USD vs. EUR disparity, says Bloomberg Intelligence-Kitco

"Gold is building a foundation similar to the one established in 1999, and once that price base is established, the gold rally will resume, according to Bloomberg Intelligence.

The price bottom established in 1999 at around $250 was so solid that gold never returned below it again. And Bloomberg Intelligence's senior commodity strategist Mike McGlone sees a similar pattern developing in 2022. McGlone pointed to gold in U.S. dollars vs. gold in euros and Japanese yen as something to keep a close eye on....

'Rising gold on a non-dollar basis is showing the kind of stress that may break the Federal Reserve's rate-hike trajectory,' McGlone noted in his October metals outlook. 'The relative discount in the dollar vs. euro gold spread is showing currency distress and suggests a potential catalyst for a gold bottom - an easing of Fed rate-hike expectations.'

And as soon as there is a sign that the Fed is ready to ease, it would be an ideal time for gold to return to its rally mode.

'Aggressive Federal Reserve tightening is a leading headwind for the price of gold in 2022, and if past trends are a roadmap, this too shall pass. The key question may be when,' McGlone added. 'It makes sense that the dollar price of gold is down about 10% in 2022, with the trade-weighted broad dollar index up about the same, but most scenarios may favor a resumption of enduring appreciation for the metal.'"

U-Turn Ahead?-Bonner Private Research

"U-turn… no, you turn. We’ll all turn.

Yesterday morning, Liz Truss called off Britain’s proposed tax cut. Someone must have reminded her that the cut would inevitably lead to higher deficits… which would inevitably lead to more inflation… which would inevitably lead to un-happiness in merry ol’ England.

Meanwhile, the Australians turned the wheel too… raising rates less than expected. And as the US economy weakens, investors bet heavily on a U-turn by the Fed.

'Disruptive monetary policy?' That’s what the Bloomberg team calls the Fed’s attempt to get back to normal. The elite were having such a good time pumping fake money and credit into the system. And then… someone comes along to 'disrupt' the party. They don’t like it.

But this party is coming to an end, whether they like it or not. And not just because central banks are raising rates. The whole post-war era is petering out. Things are falling apart. Throughout the West, the elite are failing, flailing, and falling down....

Like the Fed… the Bank of England… and the Truss government… 'the People' have their limits. They may be long-suffering… and, like all beasts of burden, slow to anger. But their patience is not unlimited.

How far can the elite go? How much incompetence and corruption will the deplorables tolerate? How much can the economy stand? We may soon find out."

It’s Likely Going to Be a Fairly Hard Landing -The Market

"The risk of a severe recession is rising, financial markets are going crazy. Stephen Kane and Bryan Whalen, Co-Chief Investment Officers at US bond giant TCW, share what risk indicators they’re monitoring in today’s unpredictable environment and how they’re positioning their portfolio for an economic downturn.

Sentiment is approaching panic levels. Following last week’s interest rate decision by the Federal Reserve, a tremor is shaking global financial markets. The benchmark S&P 500 index fell to a new low and has lost 24% since the beginning of the year. Meanwhile, bond yields are shooting up. The strong dollar is hitting the global economy with the force of a wrecking ball.

For Bryan Whalen and Stephen Kane, the risk of a severe economic downturn is high because of the Federal Reserve’s aggressive monetary policy. The two portfolio managers jointly took over as chief investment officers at TCW from Tad Rivelle earlier this year. The Los Angeles-based firm is one of the world’s largest active bond managers, with $220 billion assets under management.

In this in-depth interview with The Market/NZZ, which has been edited for clarity, Mr. Kane and Mr. Whalen discuss recent market developments, what indicators they’re watching to navigate today’s difficult environment, and where they spot investment opportunities despite the great uncertainty.

So what’s in store for the next few weeks and months?

Stephen Kane: First of all, the highly synchronized nature of what’s going on is noteworthy. It’s not just a US phenomenon. What’s happening with interest rates and the Fed is going on in almost every single developed country around the globe except for Japan and China. It’s pretty easy right now for central banks like the Fed and the ECB to say: Let’s go after inflation, let’s go hard! There is no trade-off.

Unemployment is low, and almost everybody who wants a job can find one. So it’s not very difficult to be hawkish for the central bankers in the here and the now. That’s also why you’re seeing this uniformity within every central bank in terms of voting members, all of them wanting to attack inflation aggressively. But at some point, it will be more difficult for them. There will be trade-offs.

Recent developments in the UK have shown how quickly things can get out of control. How do you assess the situation in the USA?

Mr. Kane: It’s easy for Fed Chair Powell to be hawkish and to say that there will be pain for consumers and businesses today when there is no pain. But at some point, it’s going to be much more challenging to hold the line. I’m not saying the Fed won’t be able to stick to their plan to fight inflation, but there will be a dilemma as slack builds in the economy, people begin to lose their jobs and unemployment goes up.

The other thing, which is sort of basic economics and monetary policy, is they are fighting hard against inflation using inflation itself as a measure of what they are doing. But we know that inflation lags the economy, which lags monetary policy itself. That means they’re driving with the rearview mirror, and they are probably going to overtighten.

What will the consequences be for the U.S. economy?

Bryan Whalen: We feel that we will get a pretty severe recession. The Fed will get the job done on inflation, but probably with a lot more economic pain than what is being discounted in the financial markets today. It’s remarkable, the FOMC’s economic projections indicate a rise in the unemployment rate to 4.6% for next year.

There’s a presidential election cycle coming up, so it’s no small thing for them to say the unemployment rate is going to rise 0.9 percentage points from today. It shows an unusual amount of confidence from the Fed in terms of staying the course to put that out in the market. If the unemployment rate starts rising almost a full percentage point because people actually are losing their jobs, they will be able to say: «We said this was going to happen. This was part of the plan."

This stock-market strategist says the coming recession could be the biggest ever: 'I recommend prayer' -Marketwatch

"'I'm about as bearish as I’ve been since 2008,' says Hedgeye’s Keith McCullough. He’s steering investors to cash, gold and other defensive plays.

Keith McCullough, founder and CEO of Hedgeye Risk Management, isn’t one to mince words in discussing financial markets, the Federal Reserve or the economy.

Right now he has a few less-than-charitable things to say about how the Fed’s rate hikes have ground up stock and bond investors.

His investment-research firm’s economic models turned bearish on stocks and bonds at the beginning of 2022. Prices have since tumbled, but McCullough is still bearish. He’s now steering investors to defensive positions primarily in cash, the U.S. dollar, gold and income-producing equities.

McCullough is preparing investors for the painful recession he expects for both Wall Street and Main Street in 2023. To anyone expecting the Fed to realize its rate increases have been excessive and rescue the markets, McCullough is blunt: 'There's no dovish pivot,' he says.

Even if the Fed were to relent, McCullough says the damage is done. 'They’re far too late,' he says of the Fed. 'Just like it was impossible for them to stop inflation, it’s impossible for them to stop the pending U.S. corporate profit recession or the mainline recession.'"

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10.4.22 - A Recipe for Systemic Implosion

Gold last traded at $1,725 an ounce. Silver at $21.03 an ounce.

News Summary: Precious metal prices extended gains Tuesday on safe haven buying and a weaker dollar. U.S. stocks rose as investors looked for bargains and dismissed global recession warnings.

Safe-haven buying boosts gold, silver prices sharply higher -Kitco

"Gold and silver prices are posting strong gains in midday U.S. trading Monday. Silver is out-performing and scored a six-week high, while gold notched a three-week high and poked above the key $1,700 level.

The two precious metals are catching a solid safe-haven bid as the global stock and financial markets remain jittery, as media outlets are focusing on a desperate Russian president that may resort to using nuclear weapons in his war with Ukraine, and amid bullish outside markets that see higher crude oil prices and a weaker U.S. dollar index on this day....

The marketplace is uneasy to start the month of October, which history shows can be rocky for the stock and financial markets. There are reports and rumors swirling that investment bank Credit Suisse may be in serious financial trouble....

Broker SP Angel this morning said in an email dispatch: 'A global tightening of liquidity by central banks is hitting the credit sector, with signs of a credit crunch beginning to surface. A syndicate of banks including Barclays and Bank of America cancelled a $3.9 billion debt offering last week amid a lack of demand...Outflows in U.S. investment grade bonds hit their third largest outflow on record last week, following six weeks of withdrawals totaling $22.3 billion. Credit default swaps across major European banks have soared in September, with Credit Suisse's CEO noting the bank was facing a 'critical moment.' ....

If a major global investment bank may be on the verge of collapsing and the dictator of the nation with the most nuclear warheads in the world has his back against the wall, while at the same time major global economies are battling inflation and teetering on recession, it appears increasing numbers of the public are now opting to possess gold and silver. It will be important for the gold and silver bulls to show follow-through price strength this week, which would then begin to suggest sustained price uptrends could develop in both metals."

Why Interest Rates Are Rising Everywhere—Except Your Savings Account -Wall Street Journal

"The Federal Reserve’s campaign to fight inflation by raising interest rates seems to have reached nearly every corner of the economy except one: Americans’ savings accounts.

Mortgage rates doubled this year to nearly 7%, and it has become more expensive to get a car loan or carry a credit-card balance. Yet the interest on savings accounts barely budged. In March 2020, the average annual yield on a standard savings account was 0.1%, according to Bankrate.com. It fell to a pandemic low of 0.06% after Americans’ personal saving rate peaked, and is now up to 0.14%.

U.S. commercial banks held $16.8 trillion in deposits as of June, according to the Federal Deposit Insurance Corp. Much of that vast sum sits in individual checking and savings accounts, earning little interest and losing significant value to inflation. There are savings accounts that yield as much as 3%, for those willing to shop around.

At a hearing on Capitol Hill last month, Rep. Michael San Nicolas (D., Guam) remarked on depositors’ underwhelming returns to the leaders of the nation’s largest banks.

'One of the only silver linings in a rising interest rate environment is that savers are supposed to be rewarded for their savings,' he said. 'They're supposed to see the interest that they earn on their savings accounts go up.'....

The country’s largest banks can keep payouts on savings accounts low because they seem to have plenty of deposits to cover their lending businesses for now and don’t need to attract more by raising interest rates.

Some other banks are offering some of the most generous yields in years, but those still paying out meager interest can count on customer inertia: We fail to take advantage of better deals, because switching banks seems like a headache."

5 signs the world is headed for a recession -CNN Business

"Around the world, markets are flashing warning signs that the global economy is teetering on a cliff’s edge. The question of a recession is no longer if, but when.

Over the past week, the pulse of those flashing red lights quickened as markets grappled with the reality - once speculative - now certain - that the Federal Reserve will press on with its most aggressive monetary tightening campaign in decades to wring inflation from the US economy. Even if that means triggering a recession. And even if it comes at the expense of consumers and businesses far beyond US borders.

There’s now a 98% chance of a global recession, according to research firm Ned Davis, which brings some sobering historical credibility to the table. The firm’s recession probability reading has only been this high twice before — in 2008 and 2020.

Let’s unpack five key trends:

1. The mighty US dollar - The US dollar plays an outsized role in the global economy and international finance. And right now, it is stronger than it’s been in two decades....

2. America’s economic engine stalls - The No. 1 driver of the world’s largest economy is shopping. And America’s shoppers are tired. After more than a year of rising prices on just about everything, with wages not keeping up, consumers have pulled back....

3. Corporate America tightens its belt - Business has been booming across industries for the bulk of the pandemic era, even with historically high inflation eating into profits. That is thanks (once again) to the tenacity of American shoppers....

4. Welcome to bear territory - Wall Street has been hit with whiplash, and stocks are now on track for their worst year since 2008 - in case anyone needs yet another scary historical comparison....

5. War, soaring prices and radical policies collide - Nowhere is the collision of economic, financial, and political calamities more painfully visible than in the United Kingdom. Like the rest of the world, the UK has struggled with surging prices that are largely attributable to the colossal shock of Covid-19, followed by the trade disruptions created by Russia’s invasion of Ukraine."

THE FED'S STRONG USD POLICY: A RECIPE FOR SYSTEMIC IMPLOSION - GoldSwitzerland

"Having spent years creating the inflation (QE1 to unlimited QE, Repo bailouts, massive money supply expansion, and an historical wealth transfer from an inflated, Fed-driven stock market), the Fed will be cleaning up its own inflation mess on the backs of the U.S. working class and its other global 'allies' while blaming the CPI inflation on Putin, Covid and climate change.

How’s that for rigged to fail? But that’s just the beginning, and it’s not just about the USA.

By raising rates into what we all know is a recession, Powell, who delusionaly pretends to be Volcker re-born, wants to solve the inflation he helped create by engineering a demand-crippling recession which he thinks he can control, but can’t and won’t.

And this will be the mother of all recessions, as there is an historical and concomitant debt (and hence currency) crisis in every corner of the globe ($300T+) as well as every corner of the nation ($90T+), from the toxic corporate bond market and over-strapped households to a grotesquely bloated ($30T+) government debt market.

It’s all horribly simple, in fact.

If debt is the everywhere-driver of the economy and markets, then any significant increase in the cost of that debt will destroy every corner of that economy and those markets, from zombie enterprises to negative yielding US Treasuries.

Powell’s hawkish stance will lead to anything but a 'contained recession,' which the Fed will be no less effective 'containing' as they were in 'containing' their so-called 'transitory inflation.'

Rising rates will cripple nearly every asset but the artificially inflated USD until all savings are gone, most citizens are hand-out dependent, and most markets and currencies are on their knees.

At that point, Uncle Sam will either default on the IOU’s (Treasury bonds) which no one will want, or the Fed will pivot to more mouse-click money to buy/support his debt addiction, following the recent example in the UK.

And since the US is too arrogant to fail/default (TAF), the Fed’s only stupid choice left among a long history of stupid, will be a gold-boosting QE pivot."

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10.3.22 - Hottest Trend in Investing is a Sham

Gold last traded at $1,700 an ounce. Silver at $20.71 an ounce.

News Summary: Metals soared Monday - with silver up 7% - as dollar, bond yields stumbled. Stocks pushed for a rally to kick off Q4.

One of the Hottest Trends in the World of Investing Is a Sham -New York Times

"Wall Street has been hard at work on a rebrand. Gone is the 'Greed is good' swagger that embodied its culture in the 1980s. 'Greed and good' may best summarize its messaging today as it seeks to combine high profits with lofty intentions.

'To prosper over time,' Laurence D. Fink, the founder and chief executive of the investment giant BlackRock, wrote in a remarkable public letter in 2018, 'every company must not only deliver financial performance, but also show how it makes a positive contribution to society.'

At the heart of this rebranding is a new industry of funds, created by BlackRock and peers such as Vanguard and Fidelity, that purport to invest in companies that are good corporate citizens — that is, companies that meet certain environmental, social and governance criteria. These E.S.G. criteria are wide ranging, pertaining to issues such as carbon emissions, pollution, data security, employment practices and the diversity of corporate board members.

On the face of it, E.S.G. investing could be transformative, which is why it’s one of the hottest trends in the world of investing. After all, allocating more capital to companies that do good helps them grow faster and lower their cost of capital, creating an incentive for all companies to be more socially and environmentally conscious.

But the reality is less inspiring. Wall Street’s current system for E.S.G. investing is designed almost entirely to maximize shareholder returns, falsely leading many investors to believe their portfolios are doing good for the world.

For E.S.G. investing to achieve its potential, Wall Street players will have to change their system. More likely, the Securities and Exchange Commission will have to change it for them....

But contrary to the spirit of E.S.G. investing (and likely unknown to most investors), the leading rating agencies are not scoring companies on their degree of environmental or social responsibility. Instead, they are measuring how much potential harm E.S.G. factors like carbon emissions have on companies’ financial performance.

Corporate responsibility and financial risk, however, are not the same thing. Indeed, they can be diametrically opposed."

House of Gold -Bonner Private Research

"For most Americans, the largest investment they’ll make during their life will be their primary place of residence. Their home. Typically, we measure real estate in dollars (or yen, euros, loonies, aussies, what-have-you). But the value of fleeting fiat may well ebb and flow dramatically over the course of one’s lifetime. Why not measure man’s biggest investment in history’s longest serving money?

We wondered as much aloud last weekend...

What about [real estate] prices in your neighborhood? Do you recall what you paid for your first home (in oz) compared to what it’s worth today? It would be interesting to compare real estate across the country – and the world! – ounce to ounce.

Dear readers responded from sea to shining sea... and from abroad, too! A small sample of their thoughtful anecdotes we thought we’d share with you today. Please enjoy...

Reader Lowell L. writes...

I just want to add my 2 cents (2 ounces) to the discussion of the number of ounces of gold to buy a house years ago to the number of ounces to buy the same house today. My own experience is somewhat different than the two examples that were cited in the email. I think my experience really illustrates the long term value of holding gold.

When I bought my house in 1977, interest rates for the typical 30-year mortgage of the time were at 8% to 9% and on a rocket ride up to 14 to 17%. I was lucky to lock in at the time to an 8% mortgage. Incidentally, when the opportunity presented itself in the coming years to get an introductory rate of 4%, I quickly paid off the loan and rolled over to a 4% loan. Eventually, I paid off the mortgage in less than 15 years, so not too bad. Back to the issue at hand of gold versus value of house cost. In 1977, my house was worth 365 ounces of gold. At today's prices, my cost would be (drum roll) 365 ounces of gold. My house has appreciated at the same rate as the price of gold.

To me, this illustrates exactly what gold should do. It holds its value across the long term regardless of the ups and downs in the value of the dollar. Over the long term, whether the dollar is strong or weak, you can count on gold to hold its value. At least, it did in my case. ...

Reader Raymond S. writes...

If I have the math right: I bought a house in 1998 for $380,000 and gold was about $279/oz. That's 1,362 oz.

Today Zillow says that house goes for $939,300 (I moved out of state and sold it in 2010 for about $470,000 - Yikes!). KITCO says the spot price for gold is $1676/oz. That's 560 oz.

Again, yikes!....

Reader Jeff writes...

Purchased our house in June 2002 for $260,000 equal to 825 oz’s of gold at that date. Gold was $315.

Today’s date Sept 2022, the medium home value on Maui is 1.2 mil, one down the street sold for that and this is much better. Gold price today is $1679 so you could buy this shack for a mere 714 oz’s of gold.

A savings of 111 oz’s or $186,369. Wow!"

Fed’s preferred gauge shows inflation accelerated even more than expected in August -Fox Business

"Inflation in August was stronger than expected despite the Federal Reserve’s efforts to bring down prices, according to data Friday that the central bank follows closely.

The personal consumption expenditures price index excluding food and energy rose 0.6% for the month after being flat in July. That was faster than the 0.5% Dow Jones estimate and another indication that inflation is broadening.

On a year-over-year basis, core PCE increased 4.9%, more than the 4.7% estimate and up from 4.7% the previous month.

Including gas and energy, headline PCE increased 0.3% in August, compared with a decline of 0.1% in July. It rose even with a sharp decline in gas prices that took the cost at the pump well below the nominal record above $5 a gallon earlier in the summer.

The Fed generally favors core PCE as the broadest indicator of where prices are heading as it adjusts for consumer behavior. In the case of either core or headline, the data Friday from the Commerce Department shows inflation running well above the central bank’s 2% long-run target.

Outside the inflation data, the numbers showed that income and spending continues to grow.

Personal income rose 0.3% in August, the same as July and in line with the estimate. Spending rose 0.4% after declining 0.2% the month before, beating the 0.3% expectation. After-tax income increased just 0.1% after rising 0.5% the previous month, while inflation adjusted spending rose 0.1%.

The inflation data reflected the shift in spending from goods back to services, which saw respective gains of 0.3% and 0.6% on the month. Food prices rose 0.8% while energy prices slid 5.5%. Housing and utilities prices were up 1% while health care rose 0.6%."

Wild Moves Send Stocks and Bonds Lower in Third Quarter -Wall Street Journal

"The rout in markets deepened in the third quarter as hope faded that monetary tightening would soon ease, sending bond yields soaring and leaving U.S. stocks on track for their worst year since the 2008 financial crisis.

The intensifying declines alarmed investors who entered the quarter enjoying a summer rally that more than halved the S&P 500’s 2022 losses before fizzling. As the months progressed, hair-raising moves dashed any remaining sense of safety, with major stock indexes enduring their deepest one-day retreats since 2020 and government bond yields interrupting their ascent to notch their biggest daily pullbacks in years.

The mounting losses and hazy outlook weighed on investors’ spirits, with surveys showing individual investors were the most pessimistic in years and fund managers holding unusually high levels of cash.

Growing certainty that the Federal Reserve would persist in raising interest rates to fight inflation despite the risk of economic pain reverberated throughout markets. The yield on the 10-year U.S. Treasury note climbed above 4% for the first time in more than a decade, while the dollar strengthened to a decadeslong high against other currencies.

G Fed Vice Chairwoman Lael Brainard said on Friday that while the central bank was monitoring financial tremors that could result from its rate-rising campaign, it wasn’t going to halt it prematurely. Underscoring the challenge facing the Fed and other central banks, data releases Friday in the U.S. and Europe showed no signs of price increases abating.

Consumer spending in the U.S. rose in August as did the Fed’s preferred measure of inflation. In the eurozone, the annual rate of inflation in September hit 10%, the highest level since records began in 1997.

U.S. stocks fell Friday, cementing their quarterly losses. The S&P 500 declined 54.85 points, or 1.5%, to 3585.62. The Dow Jones Industrial Average dropped 500.10 points, or 1.7%, to 28725.51. The tech-heavy Nasdaq Composite retreated 161.89 points, or 1.5%, to 10575.62."

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9.30.22 - Gold Holds through "Everything Selloff"

Gold last traded at $1,662 an ounce. Silver at $19.04 an ounce.

News Summary: Gold attempted to stabilize Friday, factoring in higher rates and safe haven demand. Stocks continued their slide on the final day of a rough quarter.

Gold Has Served As An Impressive Store Of Value During The Current "Everything Selloff"- Forbes

"'Gold is no longer a safe haven.' 'Gold isn't an effective hedge against inflation.' 'Gold is dead.'

You may have heard and read these comments, and others like it, numerous times over the course of the recent 'everything selloff.' This is staggeringly shortsighted to me. Gold is down only around 9.5% for the year, despite surging bond yields, and despite the U.S. dollar being at its strongest level ever relative to other major currencies.

Given these incredible headwinds, you would expect gold to have lost far more of its value than it has. But compared to other assets, from stocks to bonds to digital currencies, the yellow metal has been remarkably resilient.

And that's gold priced in the U.S. dollar. When we price it in other world currencies, gold has done even better since many currencies have declined significantly in value relative to the greenback. This week, the British pound sterling fell to an all-time low against the dollar, as did the Chinese renminbi....

There are a number of signs that the global economy could be headed for a recession (or that we're already in one), the most recent of which is that U.S. home prices are in freefall. This week, the Case-Shiller 20-City Index posted its first month-over-month decline in 10 years. Although released this week, the data records prices as of the end of July, meaning home prices may have slipped even further since then....

If it all comes crashing down, I would want to have some gold in my portfolio, which has historically been an attractive store of value when markets cratered."

Mortgage rates rise for the sixth consecutive week- Fox Business

"The 30-year fixed-rate mortgage averaged 6.70 percent with an average 0.9 point as of September 29, 2022, according to government-sponsored mortgage securitize Freddie Mac. The rate is up from last week when it averaged 6.29 percent. A year ago at this time, the 30-year FRM averaged 3.01 percent...

'The uncertainty and volatility in financial markets is heavily impacting mortgage rates,' said Sam Khater, Freddie Mac's Chief Economist. 'Our survey indicates that the range of weekly rate quotes for the 30-year fixed-rate mortgage has more than doubled over the last year. This means that for the typical mortgage amount, a borrower who locked-in at the higher end of the range would pay several hundred dollars more than a borrower who locked-in at the lower end of the range.'

Khater continued, 'The large dispersion in rates means it has become even more important for homebuyers to shop around with different lenders.'

Freddie Mac's latest report comes as higher mortgage rates are making it more difficult for potential homebuyers. Bank of America strategists said the average interest rate on the most popular U.S. home loan could soon climb above 7%, hitting the highest level since the early 2000s....

National Association of Realtors Chief Economist Lawrence Yun expects the economy will remain sluggish throughout the remainder of this year, with mortgage rates rising to close to 7% in the coming months."

As the Market Falls, New Retirees Need a Plan -Kiplinger

"Anyone newly retired or nearly so must feel like they have the worst timing in the world. A portfolio tends to be largest near retirement, just before those savings are about to be drawn down. These days, however, most portfolios have lost value; the S&P 500 is down about 20% so far this year.

The financial industry has a name for this scenario: sequence of return risk. 'It matters most at retirement when you're selling assets for income,' says Wade Pfau, a professor of retirement income at The American College of Financial Services in King of Prussia, Pa. 'You need to sell a larger number of shares to get the same amount of money. Those shares are then gone so even if the market bounces back, your portfolio won't recover as much.'

The newly retired are particularly vulnerable because they're 'relying on this pot of money to finance the next 20 to 30 years of their life,' says Amit Sinha, head of multi-asset design at Voya Investment Management in New York City.

Sequence of return risk is less of a concern for someone further along in retirement because retirees typically shift to safer, more conservative investments and have fewer years to pay for. Plus, these investors may have benefited from portfolios boosted by strong returns early in retirement....

If cashing out now is the worst thing you can do, what are some smart steps to take instead...

Further diversify your portfolio. Greater investment diversification could speed up how quickly your portfolio recovers....

Delay retirement. If you haven't retired yet and can keep working, you could wait for your portfolio to recover. You would avoid spending down your savings at a low point and could invest some of your earnings now at bargain prices....

'Find an acceptable level of risk and remember it's impossible to time the markets.'"

How the United States is exporting inflation to other countries - CNN Business

"The Federal Reserve is laser-focused on stemming price increases in the United States. But countries thousands of miles away are reeling from its hardball campaign to strangle inflation, as their central banks are forced to hike interest rates faster and higher and a runaway dollar pushes down the value of their currencies.

'We're seeing the Fed being as aggressive as it has been since the early 1980s. They're willing to tolerate higher unemployment and a recession,' said Chris Turner, global head of markets at ING. 'That's not good for international growth.'

The Federal Reserve's decision to raise rates by three-quarters of a percentage point at three consecutive meetings, while signaling more large hikes are on the way, has pushed its counterparts around the world to get tougher, too. If they fall too far behind the Fed, investors could pull money from their financial markets, causing serious disruptions...

'The dollar doesn't strengthen in isolation. It has to strengthen against something,' said James Ashley, head of international market strategy at Goldman Sachs Asset Management...

The global financial system is 'like a pressure cooker' right now, Turner said. 'You need to have strong, credible policies, and any policy missteps are punished'"

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9.29.22 - A Hard Landing Scenario is Inevitable

Gold last traded at $1,658 an ounce. Silver at $18.71 an ounce.

News Summary: Gold prices eased back Thursday as Treasury yields rose. Stocks saw sharp losses with the Dow now back in bear market territory as a decline in Apple shares weighed on the major averages.

Gold Buying Once Again on the Agenda for Central Banks- International Banker

"According to the latest figures from the World Gold Council (WGC), central banks stepped up their purchases of gold in May, marking the second consecutive month of clearly bullish sentiment for the yellow metal, thus adding to the long-term trend of central banks’ growing appetite for gold.

Having added a net 19.4 metric tons (t) of gold to their reserves in April, central banks added a further 35t in May, with the same banks largely responsible for the main additions during both months—Turkey (13.3t), Uzbekistan (9t), Kazakhstan (6.3t) and India (3.8t). Qatar also added 4.7t of gold to its reserves in May to replenish all of the gold it had sold earlier in the year, the WGC noted, while Germany was the only major country to be a net seller in the month, shedding its gold reserves by 2t. All this means that 2022 is shaping up to be a year for considerable gold acquisition by many countries worldwide, particularly emerging markets....

As such, recent gold-buying activity extends a multi-year trend of central banks adding to their gold reserves. Last year saw them buy a net 463t, 82 percent more than they acquired in 2020 and the 12th year in a row in which they were net buyers. The WGC reported earlier in the year that central banks hold more than 35,000t of gold, equivalent to around one-fifth of all the gold that has ever been mined, further underlining their insatiable appetite for the yellow metal."

How low could stocks go? Much further, say Wall Street analysts- The Hill

"In the midst of a bear market and with the Federal Reserve expected to hike interest rates even further, leading Wall Street analysts are eyeing one question with increasing concern: Just how much further could stocks fall? The precise answer is impossible to predict, but experts told The Hill they expect investors to see more pain before growth in the economy resumes.

'Based on our client discussions, a majority of equity investors have adopted the view that a hard landing scenario is inevitable and their focus is on the timing, magnitude, and duration of a potential recession and investment strategies for that outlook,' Goldman Sachs analysts David Kostin and Ben Snider wrote in a note to investors last week.

Major stock indices have now entered a bear market, indicating a drop of 20 percent from recent highs....

Most of those losses have come since the Federal Reserve started raising interest rates in March from around zero percent to between 3 and 3.25 percent now. The central bank will raise rates as high as 4.6 percent next year, according to its median forecast released last week. "

Bank of England steps in to calm markets- BBC News

"The Bank of England has said it will step in to calm markets after the government's tax-cutting plans sparked a fall in the pound and caused borrowing costs to surge.

It warned that if the market volatility continued there would be a 'material risk to UK financial stability'.

The Bank will start buying government bonds at an 'urgent pace' to help restore 'orderly market conditions'.

It comes after the currency hit a record low on Monday following the chancellor's mini-budget, which pledged $45bn worth of tax cuts, funded by borrowing, as part of a plan to boost economic growth...

The Bank of England was forced to intervene after the market turmoil heaped huge pressure on pension funds, which are required to invest in government bonds because they are usually so stable.

So called Liability Driven Investment funds - which support defined benefit pensions schemes - were facing a collapse in the value of the bonds they hold, which in turn could have forced them to rush to sell other assets, sparking yet more market panic.

The Bank has already said it will 'not hesitate' to hike interest rates to try and protect the pound and try and stem surging prices. Some economists have predicted the Bank of England will raise the interest rate from the current 2.25% to 5.8% by next spring...

'It wouldn't be a huge surprise if another problem in the financial markets popped up before long.'"

U.S. economy shrank in the first half of 2022, updated GDP figures confirm- Market Watch

"The U.S. shrank in the first six months of the year, revised government figures confirm, and painted a picture of economy buffeted by strong headwinds and tailwinds.

Gross domestic product, the official scorecard of the economy, fell at a 0.6% annual clip in the second quarter, the Bureau of Economic Analysis said Thursday. That’s unchanged from the prior estimate....

Political partisans have sparred over whether the U.S. had slipped into recession ahead of the pivotal fall elections in which control of Congress is at stake. An old but informal rule-of-thumb defines a recession as two consecutive quarters of negative GDP.

Yet while U.S. growth has clearly slowed, the strongest labor market in decades signals the economy is still in expansion mode. Businesses are hiring, layoffs are at a record low and the unemployment rate is near the lowest level since the 1960s.

In any case, the debate might already be moot. The U.S. economy is facing stronger headwinds this fall and another recession might be looming.

Big picture: The updated GDP figures offer a slightly clearer view of what’s happened to the economy since the pandemic, but it tells us nothing about the future. And the future looks dimmer.

While the third quarter is likely to show the economy expanding again, the latest forecasts show, a storm is brewing as 2023 approaches."

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9.28.22 - There is a quick way to help the poor, but Democrats won't do it

Gold last traded at $1,659 an ounce. Silver at $18.93 an ounce.

News Summary: Precious metals jumped Wednesday on safe-haven buying amid a nervous marketplace. U.S. stocks turned higher amid a fall in U.S. Treasury yields and a surprise intervention from the Bank of England in the U.K.

Gold price up on safe-haven demand amid anxious marketplace - Kitco

"Gold prices are moderately higher and near daily highs in early U.S. trading Wednesday, on safe-haven buying amid a very nervous marketplace as the calendar is set to turn to what can be a tumultuous month of October for stock and financial markets. Traders and investors are keeping a very close eye on the currency markets...

The U.S. dollar index is higher and hit another 20-year high today. A Barron’s headline today reads, 'The greenback has gone ballistic.' The strong U.S. dollar is putting serious pressure on the currencies of many smaller countries, which is very worrisome to those who endured currency crises of past decades. The main concern is a general marketplace contagion developing if secondary currencies dislocations and illiquidity spill over into extreme anxiety and lack of confidence in the global financial transactions system....Major economies have taken steps over the years to prevent another global financial market crisis, but when everyone runs for the exit doors at once, even robust systems can be over-run. Any investment bank or big hedge fund that appears to be in trouble may provide the first clue of a much bigger problem developing. Such a scenario would likely prompt a bigger into the hard assets, safe-haven gold and silver.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed to modestly lower openings when the New York day session begins and at or near for-the-move lows. The marketplace was somewhat assuaged overnight when the Bank of England made a surprise announcement that it will begin purchases of U.K. government bonds in order to stabilize the rattled U.K. bond market. The International Monetary Fund said the U.K. government should re-examine its stated plan to stimulate its economy through massive borrowing and bond sales."

Rickards: How Far Could Stocks Fall?- Zero Hedge

"The stock market was down again yesterday, the exchanges beginning where they left off last week. But it’s the larger trend that’s really disconcerting.

Investors don’t need to be told about the stock market collapse in recent months. The Dow Jones Industrial Average is down over 20% since January. The S&P 500 is down 23% since January. And the Nasdaq Composite is down 32% since its all-time high last November.

Those falls are not as bad as the crashes in March 2020 during the pandemic or late 2008 during the global financial crisis, but those comparisons offer little comfort since they were among the worst in history.

The real problem for stock investors today is not that the crash is bad so far, but that it might just be getting started.

We may be looking at losses that more closely resemble the over-80% collapse of the Dow Jones from 1929–1932 or the 80% collapse of the Nasdaq in 2000–2001 in the wake of the dot-com bubble....

The Fed is trying to crush inflation by reducing demand in the economy. They’re focusing on 'demand pull' inflation where consumers are buying in anticipation of even higher inflation to come.

But the inflation we’re seeing is called 'cost push' inflation. This comes from the supply side, not the demand side. It comes from global supply chain disruptions and the war in Ukraine.

Since the Fed has misdiagnosed the disease, they are applying the wrong medicine. Tight money won’t solve a supply shock. Higher prices will continue. But tight money will hurt consumers, increase savings and raise mortgage interest rates, which hurts housing among other things....

History shows that the Fed will overshoot. There won’t be any 'soft landing.'"

There is a quick way to reduce inflation and help the poor, but the Democrats won't do it - American Thinker

"The media and other Democrats come up with all sorts of ways to reduce inflation, but they ignore the elephant in the room.

First, they have a slush fund where they raise taxes, hand out mass subsidies to their political contributors and they falsely call it the Inflation Reduction Act. The only potential to reduce one component of inflation is down the road on prescription drug prices, which haven't been rising very fast compared to other necessities like food, gas, utilities, and housing.

Most of the poor already get their drugs for free so it doesn't help them, now or in the future. They also don’t have enough money to buy electric cars or solar panels no matter what the subsidy is....

Another fallacy we hear is that getting rid of the tariffs will lower inflation. Inflation didn't go up with the tariffs so why would it go down without them?

Reliance on China for so many of our products has contributed greatly to our supply chain and inflation problems. Getting rid of the tariffs will increase that reliance It is an ignorant and dangerous solution...

What we rarely, if ever, see is the recognition by the media of the disastrous inflation that is caused by the Democrats’ intentional destruction of industries that supply plentiful, practical, affordable, and reliable energy. That is the elephant in the room. Cost-push inflation will continue until they get rid of these policies where they falsely claim they can control temperatures, sea levels and storm activity forever to justify the destruction of the fossil fuel industry."

John Templeton’s Way- SmeadCap

"We marveled for years listening to Sir John Templeton talk about the stock market. His best advice was shared during the most difficult stock market environments of the 1980s, 1990s, and 2000s on 'Wall Street Week' with Louis Rukeyser....

What does this review of the 'Sir John Templeton Way' tell us about the current bear market that we are sitting through?

First, shares purchased between now and the end of this bear market are likely to get rewarded in the future. Second, the shares we own today trade at very low multiples of earnings, book value, and free cash flow. It doesn’t matter in a market suffering indiscriminate selling, but it should matter a great deal over the next 5-10 years.

Third, bear markets bottom on a rotational basis just like bull markets do on the upside. We like buying very depressed mall REITs like Simon Properties (SPG), home builders like D.R. Horton (DHI), e-commerce yard sales like eBay (EBAY), and oil and gas companies like Occidental Petroleum (OXY).

Lastly, in the remainder of this bear market in stocks, there will be companies that fit our eight criteria for common stock selection which become available for purchase. We will get interested when the folks who have owned them on the way down give up and professional and amateur investors are afraid to go there.

In conclusion, this is a very difficult bear market with an unknown end date. However, just like the Crash of 1987, the Dotcom Bear of 2000-2003, and the Financial Crisis Bear of 2007-2009, this too shall pass. When it does, we believe that stock selection will be at a premium and valuation will matter dearly as it did for Sir John Templeton."

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9.27.22 - Paulson Warns US Housing May Fall, Touts Gold

Gold last traded at $1,630 an ounce. Silver at $18.42 an ounce.

NEWS SUMMARY: Precious metals rebounded Tuesday on bargain hunting and a weaker dollar. U.S. stocks rose as the DJIA and S&P 500 attempted to bounce back from their lowest closing levels in nearly two years.

John Paulson Warns US House Prices May Fall, Touts Gold As Haven Asset -Business Insider

"John Paulson, who called the implosion of the mid-2000s housing bubble, warned US home prices could slump again, but ruled out the decline sparking another financial crisis.

'We're not at risk of a collapse today in the financial system like we were before,' he told Bloomberg in a recent interview. 'Housing may be a little frothy. So housing prices may come down or they may plateau, but not to the extent it happened.'....

Paulson also took aim at some of his fellow short sellers during the interview. He called them out for hyping up stocks to unwitting retail investors in order to drive up their prices, then stopping the promotion so that the stocks plummeted in value and the sellers' short positions paid off....

Paulson predicted last year that stubborn inflation would lead to higher interest rates, spurring investors to ditch cash and bonds for gold. He noted to Bloomberg that the yellow metal has served as a haven asset this year, given its smaller decline relative to stocks and bonds.

Moreover, he suggested gold could jump in value if the Federal Reserve's campaign of interest-rate hikes fails to crush inflation. He argued that investors would lose faith in the central bank and their long-term inflation expectations would rise, boosting demand for the metal as a hedge."

The Inflation Reduction Act Won’t Reduce Inflation -Acton Institute

"But you knew that already.

President Biden has signed the Inflation Reduction Act (IRA), his attempt at delivering on his campaign promises of new investments to combat climate change, improve healthcare, and impose 'fair' corporate taxes. The IRA is a revival of the now defunct and unpopular Build Back Better (BBB) Act, ushered in at a whopping $3.5 trillion.

Penn Wharton estimates that the IRA will reduce cumulative budget deficits by $264 billion over the 10-year budget window. The Tax Foundation estimates come in at a $178 billion reduction - and both studies suggest a near-zero effect on inflation. The promise for the inflation reduction lies in the new spending being offset by increases in taxes, as well as promises to lower prices in healthcare and energy. But keep in mind that this just piles on to massive existing spending and the new student-debt relief, to the tune of $1 trillion....

There are several significant issues the IRA emphasizes, including corporate tax provisions, healthcare, and the ubiquitous climate. Uncoincidentally, these are of great importance to the elite progressive left, which fully intends to delegitimize corporations and instill greater federal governance.

Just this week, Lindsey Graham offered to team up with Elizabeth Warren and Josh Hawley to spawn a new regulatory agency that would oversee and license companies like Twitter and Facebook. Bernie Sanders wants to make healthcare 'free,' and AOC is pursuing a radical climate-change agenda to battle a crisis she asserts only the government can wage. Our brave new world has arrived.

The IRA establishes a corporate alternative minimum tax of 15%, which, according to the White House, is aimed at leveling the playing field by making corporations pay their 'fair share.' It also imposes a 1% excise tax on the corporate net repurchase (buyback) of stock. It provides $79 billion in new IRS funding over the next 10 years, which will in part be used to hire more IRS agents.

Biden promises that if you make less than $400,000 per year, you will face no new tax burdens. It leads one to wonder how all the new IRS agents will spend their time. Certainly, they will come after more than just the billionaires. The obvious answer to all this is to simplify rather than complicate the tax code....

The IRA also includes $368 billion for energy and climate programs, including tax credits and efforts to encourage domestic production of solar panels, wind turbines, and batteries. This is nothing more than old-fashioned mercantilism dressed up as modern industrial policy. Don’t worry if you can’t afford a high-end Tesla - there’s are subsidies for that, like the $7,500 tax credit for new electric-powered vehicles and $4,000 for used ones.....

Just this week, Biden celebrated the IRA at the White House, calling it a bill that will cut costs for families, is pro-worker, and will raise taxes on 'billion-dollar corporations.' This is hard to reconcile with pressing inflation and constant fears of a looming recession. This bill seems much more like a Hail Mary to pacify voters ahead of the midterm elections. We shouldn’t be fooled."

The Bear Market Is Back -Commonwealth

"We are now in another downswing in the ongoing bear market. Using the S&P 500 as a measure, as I write this the markets are down 22 percent from the peak at the end of last year and just under 14 percent from the end of the most recent rally in August. This year, there have been four drops and three rallies - and we are down quite a bit. That doesn't feel good. But, feel good or not, here we are. So, the real question is: what should we do about it? To figure that out, we need to look at two things.

First, let’s look at history. Have we seen this before? Is the current pullback unusual, or is it fairly typical? If it looks pretty normal, that in itself is reassuring. History doesn’t repeat itself, but it does tend to rhyme. And history can give us an idea of how the song is likely to go.

Second, why is this happening? Is there a reason that we can understand behind all of this? If there is a reason, then that understanding provides a basis for looking to the next steps.

Although history is on our side, we still need to understand why this decline is happening. The primary reason is rising interest rates. There is an old Wall Street saying, 'don’t fight the Fed,' which basically asserts that when the Fed is raising rates, the market will have a tough time. Just as the phrase bear market speaks to how normal the phenomenon is (normal enough to have a name), this too is normal enough to have a catchphrase associated with it. Not only the drawback itself but also the reason behind it are normal - and things we have seen before.

That answers the questions we started with. Yes, this pullback, although scary, is normal and something we have seen many times before. And, yes, we know why the market is pulling back, and again it is normal and makes sense. Given those two conclusions, we can think about what comes next.

When we look at the primary cause of the pullback (i.e., inflation and the consequent Fed tightening of interest rates), we see reasons for both caution and hope. The Fed has committed to raising rates until inflation is brought under control, which is what sparked the current renewed downturn and is a reason for caution. We can expect continued market turbulence for some time."

What is the Fed Doing? -Wealth of Common Sense

"Don’t fight the Fed used to be a positive slogan.

That’s not the case anymore.

If anything, it feels like the Fed wants to fight us, all of us, including the stock market and the economy.

The Fed is actively trying to crash the stock market, break the housing market and push the economy into a recession.

How do I know this? Because Fed officials are literally telling us this every time they speak....

When asked how long Americans should be prepared to experience economic pain, Powell said he wants wages to fall:...

In some ways, I understand why the Fed is so hell-bent on slowing rising prices. People REALLY don’t like sky-high inflation.

But in other ways, I think what the Fed is doing is INSANE.

What are they doing?!

The pandemic seriously messed up the economy and markets in a multitude of ways. The Fed was responsible for some of those problems....

They want the stock market to go down. They want people to lose their jobs and make less money. They will take the economy down if they have to so prices will stop rising.

The Fed is more or less telling us they are willing to raise interest rates high enough to crush the economy.

Should we believe them? For now I guess."

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9.26.22 - Frank Holmes: Gold - Buy the Dip and HODL

Gold last traded at $1,625 an ounce. Silver at $18.38 an ounce.

NEWS SUMMARY: Precious metal prices steadied Monday on bargain hunting despite a firmer dollar. U.S. stocks fell as surging interest rates and foreign currency turmoil threatened to push the S&P 500 to a new closing low for the year.

Frank Holmes: Gold Advice as Price Falls - Buy the Dip and HODL -Investing News

"Speaking to the Investing News Network, Frank Holmes, CEO and chief investment officer at US Global Investors, pointed out that the yellow metal's decline is a buying opportunity.

'Buy the dip and hold on for dear life, as the crypto kids say - HODL,' he said. HODL (Hold On for Dear Life) is a term that originated in the cryptocurrency community, although it’s since gained mainstream usage through popular memes.

Even as the gold price dips, Holmes said that physical demand for the yellow metal is high, and gold companies continue to produce strong results. 'A lot of the gold stocks are doing well - 60 percent of the gold producers have free cash flow,' he said, noting that this is a crucial element for him.

Speaking to the Investing News Network, Frank Holmes, CEO and chief investment officer at US Global Investors (NASDAQ:GROW), pointed out that the yellow metal's decline is a buying opportunity."

What Does Declining Faith in Capitalism and in Socialism Leave? -Reason

"Americans don't much like each-other and many are willing to fight each other over their differences. But what do the opposing factions believe in?

When it comes to economic systems and whether production and consumption should be dictated from above or guided by free exchange, a growing number of Americans don't seem to believe in much at all. Both capitalism and socialism are losing support, especially among Democrats.

'Today, 36 percent of U.S. adults say they view socialism somewhat (30 percent) or very (6 percent) positively, down from 42 percent who viewed the term positively in May 2019,' Pew reports. 'And while a majority of the public (57 percent) continues to view capitalism favorably, that is 8 percentage points lower than in 2019 (65 percent).'

Among Republicans, support for capitalism declined from 78 percent to 74 percent, and for socialism from a rock-bottom 15 percent to a slightly rock-bottomier 14 percent. With Democrats, capitalism became a minority taste, dropping from 55 percent support to 46 percent, while socialism's favorable standing eroded from 65 percent to 57 percent....

'Americans see capitalism as giving people more opportunity and more freedom than socialism, while they see socialism as more likely to meet people's basic needs, though these perceptions differ significantly by party,' Pew notes in partial explanation of the disagreement. OK, but that's aspirational; do Americans really understand the differences between the economic systems?....

'The vast majority of Republican voters - 85 percent - believe anyone who works hard can get ahead, while 53 percent of Democrats feel that way,' a recent Wall Street Journal poll reveals. 'Democrats often say that hard work isn't sufficient for all Americans to advance, partly due to systemic hurdles based on class or race, and that the government should help.…'Republicans, by contrast, say the government should as often as possible get out of the way of efforts by individuals, businesses and charities to help people advance economically.'....

In terms of capitalism and socialism, Americans may not entirely know what they're talking about, but it seems clear that many of us have very different visions for the country in which we want to live. If there's one thing on which we can agree, it's that we'll continue to strongly disagree."

Will Higher Interest Rates Tame Inflation? -RealClearMarkets

"Ludwig von Mises once said that the value of money is at least as important to a society as its Constitution. The value of money should be sacrosanct, and Government, if that’s who’s in charge of it, has a responsibility to keep it stable.

Fourteen years ago the Federal Reserve completely changed the way it manages the value of our money when it shifted monetary policy from a 'scarce reserve' model to an 'abundant reserve' model, and we believe there is a direct connection between these actions, and the dramatic decline in the value of our money the likes of which we haven’t seen in 40 years. Inflation undermines work, living standards, investments and is a nightmare for future planning. The Fed has failed....

In other words, while under the old system the market was involved in setting interest rates, today, the Fed now artificially sets interest rates. And as you might deduce, if the government sets interest rates, they likely set them lower than they would be if markets decided what interest rate was correct....

So, while raising interest rates may reduce economic growth and may throw the US into recession, there is no guarantee that this will fix inflation. Interest rates don’t determine inflation; the amount of money circulating in the economy determines inflation. And this is where the problem lies....

If the Fed raises rates to 4% under this new method of managing monetary policy, it will pay private entities $200 billion per year! Wait until politicians who love to hate banks find this out! Moreover, the Fed is now losing money on much of its bond portfolio because it bought so many bonds at low interest rates. At some point the Fed will be paying out more in interest than it is earning on its securities....

Like the rest of the government, the Fed has become way too big. Too many resources, and too much power in the hands of so few is antithetical to free markets. To say we are worried about this is an understatement. We just wish more people understood it and called the Fed to task. The Fed should return to a scarce reserve model as soon as possible."

US housing recession could send home prices tumbling 20%, economist says -Fox Business

"U.S. home prices are finally falling from a record high notched earlier this year, and could tumble by as much as 20% by mid-2023, according to a top economist.

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said in an analyst note published this week that home prices have already declined 5% from their May peak. His projections show that seasonally adjusted existing home sales slid 0.7% in August, the third monthly decline.

'The plunging trend in sales has further to go, and prices are falling,' Shepherdson wrote in the note.

Painfully high inflation and rising borrowing costs have proven to be a lethal combination for the housing market, forcing potential buyers to pull back on spending. Many experts – including Shepherdson – agree the housing market is now experiencing a recession.

But unlike the 2008 housing crash that helped to fuel a broader global financial crisis, the current recession is unlikely to seep throughout the rest of the U.S. economy. That's because the market has fewer entrenched risks than compared to the mid-2000s housing bubble.

'The very low level of inventory means that a headlong collapse in prices is unlikely, but we still expect a total decline of up to 20% by the middle of next year,' Shepherdson said."

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9.23.22 - Investors Will Want to Hold Their Gold

Gold last traded at $1,643 an ounce. Silver at $18.84 an ounce.

NEWS SUMMARY: Precious metal prices traded lower Friday pressured by rising rates and a firmer dollar. U.S. stocks tumbled as investors fear the Fed’s aggressive hiking campaign to fight inflation will lead to an economic downturn.

Investors want to hold on to their gold as the pain from rate hikes is coming - SSGA's George Milling-Stanley - Kitco

"Now is not the time to liquidate your core gold positions as the Fed has been clear that economic pain will be coming, according to one gold market strategist.

In an interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that gold prices could continue to struggle as three components of the U.S. economy show resilient strength even as the Federal Reserve maintains its aggressive monetary policy stance....

'Equity markets have been rallying on cheap money since 2008 and free money since 2018, and they are down, but they have further to go if Powell wants to get inflation back to 2%,' he said. 'Powell will keep raising rates until the stock market comes down further. It could take a few months before investors start to feel the real pain of higher interest rates.'

Although investment demand has been lackluster through most of 2022, Milling-Stanley said that the impending economic slowdown from rising interest rates is the reason why investors should hold on to their core gold holdings.

'Inflation is still worryingly high, and Powell has made it very clear that he is going to have to cause some pain to the economy to bring it down,' he said. 'We face a lot of macroeconomic and geopolitical uncertainty and in this environment, I certainly would not be selling my safe-haven assets. At these prices, I would be looking to add to my core position, which is something I think we are seeing.'"

Doug Casey on America's Rude Awakening -Bonner Research Partners

"The original International Man riffs on dollar weaponization, the coming 'Greater Depression' and civil wars both at home and abroad...

There are some people who go out of their way to appease others, to say what they think the majority wants to hear, to mollycoddle their audience and make nice with anyone they meet so as not to ruffle any feathers.

Doug Casey is not that person. Whether on the prospect of civil war at home…

'It seems that Americans have broken into two groups; the red people and the blue people. And they don’t like each other. In fact, they actually hate each other.'

Central banking… 'An idiotic institution which should be abolished…'

College education… 'Worthless degrees of indoctrination…'

The fate of the US Dollar as the world’s reserve currency… 'I think that half or three-quarters of the world’s countries are going to find alternatives to the dollar and the Swift payment system. And this is going to devastate America.'

Western European leaders… 'The people running these western European countries are all died-in-the-wool, dogmatic socialists; they’re nothing nobodies.'

Or discussing what he calls the 'Greater Depression,' in which he expects the average American is in 'for a very rude awakening'… 'You’re going to have a lot more people living in their cars and under bridges. This is serious.'

Doug doesn’t waste time mincing words. Listen in as we discuss all of the above, including what Doug’s doing with his own money and practical ways he sees to minimize what’s coming down the pike."

War, Inflation Knock World Economy Off Balance -WSJ

"The global economy outside the U.S. is stuttering, knocked off course by soaring inflation, an energy crisis and now Russia’s nuclear war threats.

Business surveys published on Friday indicate that economic activity in Europe declined sharply in September, raising the risk of recession in one of the world’s industrial powerhouses as governments grapple with surging prices and disruptions from Moscow’s attack on Ukraine.

The pullback in economic activity in Germany, Europe’s largest economy and the most exposed to its gas crisis, was particularly dramatic, data firm S&P Global said.

For the wider eurozone, the firm’s composite purchasing managers index fell to 48.2 in September, a 20-month low, with a reading below 50 indicating a contraction. The reading - based on the survey of manufacturers and service providers - suggests a deepening economic downturn that is likely to gather further momentum in coming months, the data firm said.

'A eurozone recession is on the cards as companies report worsening business conditions and intensifying price pressures linked to soaring energy costs,' said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Germany’s economy is deteriorating at a rate not seen outside of the pandemic since the 2008 global financial crisis, Mr. Williamson said.

Around the world, trade volumes are sputtering and inflation is crushing household and business confidence. China’s housing market is cracking while Europe’s energy crisis is hammering factory output."

From a booming economy to an economic bust! -Washington Examiner

"It was inevitable but is worth noting that Republican midterm chances seem to be reviving as Election Day, Nov. 8, draws nearer.

Parties hope to find an October surprise to jolt sentiment against opponents late in the race, but voters focus less on passing irritations and more on cardinal concerns the closer they are to making their decision....

The 'future of democracy' is extremely concerning to half of respondents, but that cuts both ways because each side seems to represent as much a danger as the other. Then there is abortion policy at 45%, which helps Democrats, and higher crime rates at 43%, which favors Republicans. Two of the three top issues, therefore, break for Republicans.

The persistence of inflation as a fact and as the cause of public disquiet makes GOP victories that Washington thought 'baked in' six months ago, but collapsed like a premature souffle this summer, seem possible again. Hence Senate Minority Leader Mitch McConnell (R-KY) talks optimistically behind the scenes after weeks of gloom and complaint about weak Trumpy candidates....

Elections ask whether those in power have done a good job and deserve to stay or be replaced. Democrats running Washington have done their best to make the election about abortion and Trump, but it is really about their fiscal incompetence producing inflation that is draining value from all our incomes and savings, as well as rising interest rates and likely a recession. The economy was booming until the Democrats took over. Now it’s gone boom. The two are very different."

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9.22.22 - Gold to Hit $1,800 After Hikes - Analysts

Gold last traded at $1,670 an ounce. Silver at $19.62 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on bargain hunting and a weaker dollar. U.S. stocks drifted lower following a big decline in the major averages as traders weighed another large rate hike from the Fed.

Gold Executives, Analysts Say Prices to Hit $1,800 After Fed Hikes -Bloomberg

"Not even the most hawkish Federal Reserve in decades can beat down the exuberance of gold enthusiasts at the industry’s biggest annual gathering.

Bullion prices will reach $1,806.10 an ounce by year end, according to the average estimate in a survey of 10 participants at the Denver Gold Forum, the yearly meetup of mining executives, investors, bankers and analysts. The forecast is 7.8% above Monday’s spot closing price. The last time gold settled that high was at the beginning of July.

'You’ll continue to see investment globally interested in owning gold strategically' including from central banks, World Gold Council’s Joseph Cavatoni said in an interview at the 34th annual event. 'Plus the geopolitical risks are going to keep it front and center, on the mind of every investor.'

Still, Cavatoni predicts 'a bumpy ride' between now and the end of the year, with gold fluctuating until central banks around the world give more clarity on their fight against inflation."

How interest rate hikes ripple throughout the economy -Vox

"The Federal Reserve raised interest rates by three-quarters of a percentage point on Wednesday in an attempt to bring the highest inflation in 40 years under control.

It was the fifth time the Fed has lifted rates since March, and another unusually large increase for the central bank. Inflation has recently started to slow: In August, prices rose 8.3 percent compared to a year ago, down slightly from July’s 8.5 percent, according to a Consumer Price Index report released last week. Still, higher prices have made it harder for Americans to afford basic essentials like food and housing.

When the Fed raises interest rates, the central bank is ultimately hoping to stabilize rapidly rising prices. The effect of this can ripple throughout the economy as higher interest rates make borrowing money more expensive. The Fed is effectively trying to slow the overall economy by reducing consumer demand for goods and services. The hope is that eventually, prices will stop growing so quickly if demand falls.

So far, the impact has been most visible in the housing market, which has suffered a severe downturn as mortgage rates have recently skyrocketed to their highest levels since 2008. But economists say the full impact of the Fed’s campaign to rein in inflation will become clearer in the coming months...higher interest rates can eventually lead to a rise in unemployment and fewer job opportunities....

Higher mortgage rates have led to slower home construction and souring sentiment among homebuilders. Although housing starts, or the start of construction on new residential housing units, unexpectedly rose to 1.575 million units in August, starts are still slightly down compared to a year ago. And building permits plunged 10 percent from the month before, signaling slower construction in the coming months."

Fed-funds rate could end up as high as 5%, says overseer of $1.3 trillion in assets -MarketWatch

"In the run-up to Wednesday’s policy announcement by the Federal Reserve, SEI, an overseer of $1.3 trillion in assets, sees a likelihood that the central bank’s hiking cycle will end at a level that leaves interest rates twice as high as they are now.

The Oaks, Pennsylvania-based firm sees a 'reasonable base case' that the level at which Fed officials will stop hiking rates is between 4.5% to 5%, according to chief market strategist Jim Solloway. That’s double the current level between 2.25% and 2.5% and above the 4.25% to 4.5% range that traders are mostly expecting for year-end, though it’s not far from where market expectations are increasingly heading for next year, according to the CME FedWatch Tool.

For now, the broader financial market has remained focused on the likelihood that Wednesday’s rate hike will be 75 basis points, plus the slim chance it might be a jumbo-size full-percentage-point hike - which would push borrowing costs into a range that’s at or above 3%. Generally speaking, investors have yet to fully wrap their heads around the risk of a 5% level by next year. Policy makers’ updated projections, released on Wednesday, will signal how much higher they’re willing to keep pushing rates next year and over the long run.

Some - like Paul Ashworth, chief North America economist for Capital Economics - still see the possibility that the Fed could shift back to smaller increments of hikes after Wednesday’s widely expected move, under the assumption that inflation should ease soon. However, inflation has proven to be stubbornly persistent, and if the Fed pencils in further rate hikes for 2023, that could easily push the fed-funds rate target above 4.5%.

'Given our view for continued resilience in U.S. economic growth and higher-for-longer inflation, the Fed will need to keep raising rates into 2023,' SEI’s Solloway wrote in an email on Tuesday. 'A peak funds rate of 4.5%-to-5% is a reasonable base case, but the risks appear skewed to the upside.'"

Why We Expect the Fed to Cut Interest Rates in 2023 -Morningstar

"We expect the Fed will pivot to easing monetary policy in 2023 as inflation falls back to its 2% target and the need to shore up economic growth becomes a top concern. The full analysis is detailed in our 2022 U.S. interest-rate & inflation forecast.

Interest-rate forecast. We project a year-end 2023 federal-funds rate of 1.75%, compared with 3.25% for the consensus. Further out, our 2026 and long-run projection for the fed-funds rate and 10-year Treasury yield are 1.75% and 2.75%, respectively. We do, however, expect rates to dip below these levels in 2024 and 2025 as monetary policy leans accommodative.

Inflation forecast. We project price pressures to swing from inflationary to deflationary by 2023, owing greatly to the unwinding of price spikes caused by supply constraints in durables, energy, and other areas. This will make the Fed's job of curtailing inflation much easier. In fact, we think the Fed will overshoot its goal with inflation averaging 1.4% over 2023-26.

The inflation analysis is critical to our near-term projections for GDP and interest rates. If inflation becomes much more entrenched, the Fed will have to engineer a sharp short-run recession by hiking interest rates much higher than we expect.

As long as the Fed is allowed to shift to easing in 2023, GDP should continue trending upward and then accelerate in 2024 and 2025. Housing, which is the most interest-rate-sensitive major component of the GDP, will drive much of the fluctuation in GDP growth. Lower rates in 2024 and 2025 will be needed to improve housing affordability and thereby resuscitate demand in the housing market."

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9.21.22 - Jumbo Fed Rate Hike to Add $2.1T to National Debt

Gold last traded at $1,677 an ounce. Silver at $19.75 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday ahead of the Fed rate decision. U.S. stocks rose as investors awaited another interest rate hike from the Fed as it fights to tame surging inflation.

Russia's new gold exchange could challenge LBMA and reveal gold's 'fair' price -Kitco

"The Moscow World Standard, an alternative to the London Bullion Market Association (LBMA), could end gold price manipulation and reveal the metal's fair market value, according to Matthew Piepenburg, Commercial Director at Matterhorn Asset Management.

Russia is proposing its own international standard for precious metals after getting banned by the London Bullion Market Association (LBMA). The country's Finance Ministry said it is 'critical' to create the new Moscow World Standard (MWS) to 'normalize the functioning of the precious metals industry' and create an alternative to the LBMA.

Russia is also proposing to fix prices of precious metals in the national currencies of key member countries or via a new monetary unit - such as the new BRICS currency proposed by Russia's President Vladimir Putin.

'Putin knows, like everyone else knows, that the LBMA is an open joke,' said Piepenburg.. 'It's legalized use of leverage to artificially repress the gold price.'

Piepenburg referred to LBMA banks having 'thousands and thousands of levered contracts short when most of the market is going long,' hence engaging in an 'artificial legalized way' of suppressing the gold price.

As a monetary reset occurs, Russia may set up a reserve currency backed by a basket of commodities, including gold.

'Russia and the East like things like fertilizer, gold, hay, and hard assets,' said Piepenburg. 'As we de-dollarize, as the Petro dollar gets diluted by other exchanges and other trades, they'll do the same thing with the gold market because it is real, it is a monetary metal.'"

Central Bankers Are Gaslighting Us about the 'Strong Dollar' -Mises

"The yen has dropped 21 percent against the dollar over the past year, yet Japan's central bank apparently has no plans to change course. Nor should we expect it to do so. Japan's debt load has become so immense that any attempt to raise interest rates or otherwise tighten monetary conditions would prove extraordinarily painful. So, it's no surprise the BOJ is now positioned to become the world's last central bank clinging to negative interest rates.

The yen is sliding the most among the world's major currencies, but it's not alone. Over the past year, the euro has fallen 14 percent against the dollar while the pound has fallen 13 percent. Even the Chinese yuan, which is subject to even more currency manipulation than the West's central banks, has fallen against the dollar.

All of this means is we're hearing a lot about the supposedly 'strong dollar,' but not in a good way. Rather, the reputedly strong dollar is being discussed in a context of how harmful it is, and how we must explore ways to make the dollar weaker as soon as politically feasible.

Such talk must be heartily opposed, of course, as the dollar is not 'too strong,' Rather, talk of the dollar's 'strength' is not really about the dollar at all. It's about the weakness of other currencies and it's about how other central banks have embraced monetary policy that's even worse than that of the US's Fed....

The fact that American central bankers—forced by populist pressure mounting over CPI price inflation in the US - have slightly reined in monetary inflation in the US is hardly a reason to beat our breasts over the supposedly Herculean strength of the US dollar. Rather, we should be focusing on 'the weak euro, the wimpy yen,' and the 'tragic Sri Lankan rupee.'

Nonetheless, central bankers and their media allies are trying to gaslight us into thinking the problem is the dollar's strength. American central bankers are guilty of much, but it's not their fault that central bankers elsewhere are so often even more capricious."

Another jumbo Fed rate hike poised to add $2.1T to national debt, CRFB says -Fox Business

"The Federal Reserve is expected to deliver a third consecutive super-sized interest rate increase this week, a move that will have serious consequences for the U.S. government and its finances.

The Committee for a Responsible Federal Budget, a nonprofit that advocates for federal deficit reduction, estimated that another 75-basis-point rate increase on Wednesday will add about $2.1 trillion to the national debt, which is already hovering near $31 trillion, over the next decade.

'While raising rates is needed to help fight inflation, each Fed rate hike means much higher interest payments on government debt,' the CRFB said in a statement to FOX Business. 'Policymakers can help the Fed by limiting the need for rate hikes with fiscal policy that pushes inflation in the right direction. That means not enacting legislation and executive orders like student loan forgiveness that have ballooned deficits and only made demand pressures worse.'

That is because as interest rates rise, so too will the federal government's borrowing costs on its $30.89 trillion in debt.

The current benchmark federal funds range of 2.25% to 2.50% is around the 'neutral' level, meaning that it neither supports nor restricts economic activity. A three-quarter percentage point increase would put the range at 3.00% to 3.25%.

'The growth in interest costs presents a significant challenge in the long-term as well,' the Peter Peterson Foundation said.

The CBO's projections show that interest payments could eventually total close to $66 trillion over the next 30 years, eventually taking up almost 40% of all federal revenue by 2052."

Fed’s Poor Performance Is Big Reason Inflation's Out Of Control -Issues & Insights

"Federal Reserve leaders always talk about being 'data dependent.' Of course, their behavior in 2021 proves that is not the case. It appears the Fed’s top officials implicitly signed on to Modern Monetary Theory, that is, the printing of money to pay for excess federal government spending, in 2021.

While they likely knew that the MMT concept was not valid, they continued to play the MMT game until early 2022, with disastrous consequences.

In MMT, central bank action replaces the decisions households and capital markets would make in response to excessive federal spending. That is exactly what the Fed’s monetary policy did in 2021.

Fed leaders didn’t lean against the mounting inflation pressures, so they are not data dependent. And there was no reason to expect Congress to show any discipline when it came to spending....

Fed leaders did the exact opposite of leaning against that $5 trillion of excess outlays by letting capital markets decide how to respond. Instead, Fed policymakers engaged in the absurd policy of monetizing the $5 trillion by expanding the Fed’s balance sheet by nearly the same amount....

Fed leaders may need a hard landing next year to truncate that drawn-out process of reducing inflation to their target level of 2%. A major recession in 2023 may cause inflation to hit its target of 2% again in 2024, but not without an awful lot of pain first."

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9.20.22 -Cruel Winter for Wall St. as Debts Come Due

Gold last traded at $1,670 an ounce. Silver at $19.35 an ounce.

NEWS SUMMARY: Precious metal prices drifted lower Tuesday as the dollar touched 20-year highs. U.S. stocks slid as the Federal Reserve kicked off its September policy meeting and Wall Street braced for another large rate hike due out Wednesday.

This Should Have Been a Great Year for Gold. Here’s Why It Isn’t. -WSJ

"Investors expected sticky inflation to lift gold prices this year. Instead, the opposite happened....

Gold is prized by investors for its usual stability during times of turmoil. Prices jumped near all-time highs earlier this year, shortly after Russia’s invasion of Ukraine upended markets for stocks and commodities. In early March, gold settled at a 2022 high of $2,069.40 a troy ounce. Now, it is down 8.2% so far this year,....

The volatility is another example of how the Federal Reserve’s aggressive rate-raising campaign is shaking up all corners of financial markets. Last week’s report that inflation remains stubbornly high all but cemented expectations that the interest-rate hikes will continue. The Fed is expected to announce another big rate increase when it meets this week...

'Gold’s not as attractive as it was in 2020,' said Ruth Crowell, chief executive at the London Bullion Market Association To be sure, gold remains a better option than stocks, Ms. Crowell added. The S&P 500 is down 18% this year.

Many investors expect the Fed to slow its pace of rate increases next year, which could bring down yields and the dollar, boosting gold prices."

SocGen maintaining its safe-haven exposure in gold even as price action remains lackluster -Kitco

"The gold market may continue to suffer as the Federal Reserve's aggressive monetary policy strategy drives bond yields and the U.S. dollar high; however, one bank still sees it as an essential asset to hold in the current environment of heightened uncertainty.

Analysts at Societe Generale said in their fourth quarter multi-asset portfolio report, said that they are maintaining their exposure to gold even as they reduce their overall exposure to commodities. The analysts said that having exposure to gold as a safe-haven asset will be important as central banks continue to push the global economy closer to a recession.

'In the short term, gold could continue to suffer from higher real yields, themselves pushed up by further Federal Reserve rate hikes. However, from a portfolio construction standpoint, with expected rising recessionary forces at play and sticky inflation, on top of the Fed pivot (calling the peak of the USD itself), gold appears as a very defensive asset in troubled times,’ the analysts said in their latest report.

The French bank added that it prefers gold over long-duration equities.

'We think defensive assets such as gold are preferable, as we expect them to outperform first. The main reason is that the earnings growth outlook for U.S. stocks will likely get worse in 1H23 on the back of a strong USD, a weaker oil price, and the likelihood of continued economic slowdown,' the analysts said....

Finally, SocGen analysts also warned investors that although markets no longer expect the Federal Reserve to pivot its monetary policy anytime soon, that time will eventually come, and investors should be prepared to move quickly."

Don't blame labor for today's high inflation -The Hill

"In September, the consumer price index (CPI) was 8.3 percent higher than a year ago, and core inflation, which excludes the volatile energy and food components of consumer spending, printed at 6.3 percent. Clearly, one of the most important causes of America’s inflationary surge has been skyrocketing oil and food prices, which not only boost the 'headline' CPI figure but bleed into core inflation as well. Beyond that, the pressure of rising aggregate demand, particularly the tightness of labor markets, has been a key factor pushing up core prices.

Rising job vacancies have been widely cited as an indicator of this tightness, and these vacancies have indeed soared since the beginning of the COVID-19 pandemic. The coincidence of rising job vacancies with rising inflation may seem to suggest a standard wage-price Phillips curve story, with overheated labor markets leading to higher wages that boost labor costs and force companies to charge higher prices....

Is higher inflation the result of tight labor markets that in turn lead to higher wage growth and thus higher price inflation? The evidence for this view is mixed at best.....

In our view, job vacancies reflect excess demands for goods and services, and these could be driving up corporate markups as well as input prices, wages, rents and other costs of doing business. Those excess demands are the result of several factors, including heavy fiscal outlays earlier in the pandemic, spending out of large household savings also accumulated during the height of the pandemic and, on the supply side, reductions in labor force participation.

An implication of our findings is that a rise in unemployment and a decline in wages may not be a necessary condition to bring inflation under control."

Cruel winter ahead for Wall Street as pandemic debts come due -New York Post

"A banker recently told me that CEOs 'would have to do something pretty special to fall into bankruptcy' the last couple of years as government pumped massive liquidity into the market, on top of the pandemic handouts.

That’s now changing, possibly quickly, with the Fed raising interest rates and reducing the size of its balance sheet.

A cruel winter is likely for Wall Street as markets remain choppy and their biggest clients scale back. Traditional deal-making such as IPOs has dropped significantly. At every major investment house, management is quietly planning layoffs (and some, like Goldman Sachs, not so quietly).

If you think the Fed needs to raise rates by a lot (which, given the latest inflation number, it does) the economy will suffer. Recession looms. The likelihood is that some segments of corporate America loaded up on cheap debt and will need help avoiding bankruptcy - or navigating a way out of it. That becomes a big business for Wall Street.

The unwinding of the credit cycle to tighter lending standards is always pretty tough on corporate balance sheets, but it could be particularly brutal this time given the monetary policy experiment - and corporate debt binge - of the past two-plus years, bankers tell me."

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9.17.22 - 'Aggressive Upside' to Undervalued Gold

Gold last traded at $1,670 an ounce. Silver at $19.35 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Monday as interest rates rose to 11-year highs. U.S. stocks fell as investors fear the worst, ahead of a major fed rate hike this week.

Gold is 'undervalued' and could see 'aggressive move to the upside,' despite Fed rate hikes -Kitco

"Fed rate hikes have put downward pressure on the gold price, but gold will eventually break out aggressively, said Luke Alexander, CEO and President of Newcore Gold, a Vancouver-based gold miner.

Gold's price fell by 8.6 percent over the year, despite U.S. inflation peaking at 9.1 percent in June.

Alexander mentioned that as the Fed raises rates, the U.S. dollar would continue to perform well, which will be an 'overhang on the gold price.' He added that when 'expectations start to change, I think that's when we'll start to see gold perform… It could be a very aggressive move to the upside.'

'[Gold] is undervalued in terms of the momentum that I see in the next six months, in terms of inflation starting to ease, as well as some of the tensions that we're continuing to see across the world,' he said."

Higher for Longer -Bonner Research Partners

"Higher for longer. No, it’s not the name of Snoop Dog’s new album. It’s what investors are forecasting the Fed will do with interest rates in the face of persistent, decidedly non-transitory inflation. Here’s MarketWatch:

'What the sellside is slowly realizing is not just that the Fed is going to be aggressive in September after the latest shocking inflation figure, but that the central bank will have to keep rates higher, and for longer.'

And if the Fed takes an even more aggressive approach than the market is expecting? Economists Dominic Wilson and Vickie Chang of Goldman Sachs ran the numbers: 'In the more severe scenario where the jobless rate would have to hit 6%, the S&P 500 would fall 27%, to below 2,900, the yield on the 5-year Treasury would climb 182 basis points, and the dollar would rise 8%.'

An equal weighting to gold and greenbacks has proven reliable ballast so far in 2022, part of a strategy Tom Dyson calls 'Maximum Safety Mode.' (His select few 'tactical trades' have averaged a +7% return... not bad considering the S&P 500 was down ~18.5%, last we checked.)

So while the market anticipates 'higher for longer,' cash will be king... but if and when the winds change, the Midas Metal will be the last man standing.

On just that point, a Dear Readers wrote in with some anecdotes which underscore well the idea that gold is a way to preserve wealth over the long haul...

Reader MoodyP writes...'We bought our first and only house in 1984 when interest rates were 16-17%. It would have taken 238 Oz of gold to buy the house back then. We noted the other day that it is for sale at a price nearly 3x what we paid. We also computed it would take 168 Oz of gold to buy it. A 300 percent increase in dollars. A 30% decrease in ounces. Fascinating. I’ll be picking up another 5 Oz tomorrow.'"

Thank Goodness Global Warming Alarmists Don't Live Their Religion -RealClearMarkets

"The light came on at roughly midnight, at which time Ms. Tutunjian 'said a prayer of thanks and got up quickly.' Why was she getting up when most would be going to sleep? According to New York Times reporter Raja Abdulrahim, Ms. Tutunjian 'did not know how much time she had before she would be plunged back into darkness.'

This is life in Beirut at the moment. Amid an economic crisis born of government error (the redundancy of all redundancies), the electricity that powers modern living standards is intermittent. Ms. Tutunjian operates with great speed in the middle of the night because that’s when the odds of electricity access are greater. In the words of Abdulrahim, upon getting up Tutunjian 'stripped the sheets off the bed – soaked with sweat from Beirut’s stifling and humid heat,' only for her to start 'the first of as many loads of laundry as the electricity would allow.'

Please stop and think about the misery they’re presently enduring in Beirut. Please think about it in terms of what global warming alarmists would like to foist on others. It’s surely others simply because vanishingly few of us in the more developed parts of the world would willingly suffer as Ms. Tutunjian does nightly for the alleged 'greater good' of energy starvation.

Thinking about this more specifically, John Kerry is a big believer in the supposedly looming horrors of global warming, but does any reader seriously think that he wakes up to sheets soaked in sweat during Washington, D.C.’s unbearable summers? The question answers itself, after which there will be no writing about Kerry’s presumed hypocrisy.

Instead, this write-up will cheer Kerry and the comforts he doubtless enjoys. Let’s call those comforts progress, and they signal what the whole world will enjoy if economic freedom triumphs over the government error that has sadly wrecked a Beirut that was once referred to as 'the Paris of the Middle East.'

If the earth is indeed 'warming' as Kerry theorizes, how brilliant that technological advances have made it possible for more and more of us to maneuver around brutal summers thanks to air conditioning and other fruits of profit."

The Bidenomics Sham Is Collapsing -Issues & Insights

"With red lights flashing nearly everywhere, the economy’s prospects look grim. Soaring inflation, crashing home sales, plunging GDP, falling real incomes. No question, the economy is a mess. So why is the Biden administration saying things are going better?

It’s not just this week’s 'unexpected' 8.3% inflation jump. Or the scary plunge in stock prices, destroying trillions of dollars in household wealth in just days. It’s that the ruling party, the Democratic Party, seems utterly oblivious to the damage it’s done.

This week, President Joe Biden touted the 'progress' made by his administration against inflation, just a day after the report that prices had risen 8.3% overall, and food prices by 11.4%, the fastest since 1979.

'Today’s data show more progress in bringing global inflation down in the U.S. economy,' Biden bragged. 'Overall, prices have been essentially flat in our country these last two months: that is welcome news for American families, with more work still to do.'

Prices have not been 'essentially flat.' They’re rising sharply, as the data clearly and unequivocally show.

But even worse, new data from the Atlanta Federal Reserve’s GDPNow data set show the economy is clearly tanking. GDPNow tells you what the economy has done so far in the quarter. With just over two weeks to go, the GDPNow growth estimate - based on real numbers, not future estimates - is 0.5% annual growth for the third quarter, down from 1.3% just two weeks ago.

That means incoming data are much weaker than anticipated. We’re just one or two 'unexpectedly weak' economic reports away from shrinking for a third-straight quarter.

Don’t worry. If it happens, the Biden administration and its shills in the media will again deny the economy’s in recession. Or blame Donald Trump."

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9.16.22 - How Inflation Reduction Act Impacts Retirees

Gold last traded at $1,675 an ounce. Silver at $19.50 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on bargain hunting and a flat dollar. U.S. stocks headed for sharp weekly losses following an ugly earnings warning from FedEx about the global economy.

Inflation is hotter than expected, gold colder than hoped -FX Street

"The annual CPI decelerated in August but came in higher than expected. Bets on a more hawkish Fed increased, while in the case of gold, they decreased.

Inflation stayed hot in August. Unbelievable! At least for the majority of pundits who expected softer inflation. However, I’m not surprised, as I’ve repeated many times that 'inflation is likely to stay elevated for some time.' But let’s stop bragging – and start digging into the recent CPI report.

What does the hot CPI report mean for the gold market? Well, it strengthened expectations of a hawkish Fed and boosted bond yields. ....

They say that there is always a silver lining. Indeed, forget about the peak in inflation and the soft landing. Given that the Fed was delayed in its fight against inflation and that interest rates are a rather blunt tool of monetary policy, the U.S. central bank is probably going to overdo it, which will lead to a recession. Then – or sooner if the Fed pivots before the downturn – gold will rally again."

Rising Interest Rates Threaten Washington’s Solvency -Peterson Foundation

"Over the past two decades, falling interest rates have saved Washington trillions of dollars on its debt payments and brought complacency regarding the escalating federal debt. An inflation rate surging to 9.1 percent has already begun pushing interest rates upward - and these higher interest rates threaten to bury the federal budget, with damaging economic consequences....

The real potential danger to the federal budget comes from permanently higher interest rates that persist long after inflation has been defeated. The Federal Reserve has raised its federal funds rate from zero to 2.5 percent, yet will likely have to go much higher to crush inflation. And once inflation is defeated, a more vigilant Fed is unlikely to drop rates back within the zero-to-2.5 percent range that has prevailed over the past 14 years.

Even after inflation has been defeated, investors will likely demand many years of higher interest rates and an inflation risk premium to avoid getting burned again by inflation. This same scenario occurred when the unexpected inflation of the 1970s produced negative real interest rates (much like today), which in turn induced markets to demand much higher nominal interest rates in the 1980s - significantly raising real interest rates as inflation fell.

Inflation’s legacy of higher real interest rates poses a significant danger to the federal budget. Indeed, the surprising three-decade decline in interest rates has been the main reason why spiraling federal debt has not yet induced the debt crisis that economists have long warned.

Between 1997 and 2021, the national debt held by the public leaped by nearly 500 percent, from $3.8 trillion to $22.3 trillion. Yet the annual net interest costs to the federal government rose by only 44 percent, from $244 billion to $352 billion. Had the 1997 interest rate continued, today’s annual interest expenses would be $1 trillion higher (or more, given the larger national debt accumulated from decades of higher interest costs)....

The current inflation surge that shocked economists and markets should remind policymakers that markets are indeed unpredictable. The president and Congress cannot easily control future inflation or interest rates, but they can influence the size of the federal debt that will be subject to those rates. With the possibility of standard interest rate fluctuations pushing budget deficits to nearly $3 trillion within a decade, lawmakers should craft a responsible fiscal policy based on gradual, sustainable, deficit reduction, and with an eye on maintaining low inflation."

FedEx Stock Tumbles More Than 20% After Warning on Economic Trends -WSJ

"FedEx Corp. shares fell more than 20% after the company reported a swift downturn in shipping volumes in recent weeks as macroeconomic trends worsened, prompting a round of belt tightening to preserve profits.

The warning, issued late Thursday, presents a fresh challenge for FedEx’s new Chief Executive Officer Raj Subramaniam, who took over in June from founder Fred Smith, and offers evidence that the global economy may be on shaky ground, some analysts said.

The Memphis, Tenn., company also withdrew its full-year financial forecasts issued in June, a reversal of one of Mr. Subramaniam’s first public acts as CEO.

FedEx, which was planning to report quarterly results next week, said that the macroeconomic picture darkened in both the U.S. and international markets. The company is freezing hiring, closing locations, parking some cargo aircraft and reducing Sunday operations in some markets in response.

In an appearance on CNBC Thursday, Mr. Subramaniam said he expects the global economy to enter a recession. Analysts at Evercore said Mr. Subramaniam’s on-air comments 'don’t augur well for macro read-throughs given the size and global scale' of FedEx.

Other analysts said that FedEx’s results could loom large over the coming earnings season. Analysts at Cowen said the results could be a 'canary in the coal mine,' signaling that broader economic challenges are weighing on companies.

Shares of FedEx fell 23% in morning trading on Friday to $157.52, adding to a year-to-date drop of about 21%."

How the Inflation Reduction Act Impacts Retirees -US News

"The Inflation Reduction Act of 2022 provides several benefits for retirees and older Americans. It could be a huge benefit to low-income seniors and those living on fixed incomes. The bill will also help tackle skyrocketing health care costs for seniors. However, many significant provisions don’t go into affect for several years.

The Inflation Reduction Act of 2022 will:
-Enable Medicare to negotiate the price it pays for prescription drugs.
-Caps the cost Medicare enrollees pay for out-of-pocket drug expenses at $2,000.
-Dramatically reduces the copay Medicare recipients pay for insulin.
-Provides no cost vaccines to Medicare Part D beneficiaries.

Medicare will be required to provide any vaccine recommended by the CDC’s Advisory Committee on Immunization Practices at no cost to the beneficiary. This will make a wide range of vaccines available free to retirees, including the shingles vaccine and the annual flu shot.

Several other provisions of the new law may provide cost savings to some retirees. There are incentives to buy energy-saving appliances and electric cars and an extension of health insurance subsides for those who benefit from the Affordable Care Act."

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9.15.22 - Brace For a Fed-Induced Recession

Gold last traded at $1,665 an ounce. Silver at $19.23 an ounce.

NEWS SUMMARY: Precious metal prices traded sharply lower Thursday on Fed rate fears and a stronger dollar. U.S. stocks fell as investors mulled over several economic reports that showed a muddy picture of the U.S. economy.

Gold Price and Silver Go on Divergent Paths, Likely to Converge Again Soon -Daily FX

"Spot gold has been weak, and as outlined last week it was expected that the bounce at the time would end sooner rather than later. This has a major area of support in play around the 1680 level that extends back to early 2021.

At the same time, spot silver has been quite strong coming from levels not seen in over two years. This has lead to a material breakdown in the almost always reliable positive correlation between gold and silver.

It’s not the first time this has happened nor will it be the last time, but the divergence is highly unlikely to be sustainable for a long period of time. The last time the one moth correlation was negative was in July 2021, and sporadically over time before that. Otherwise, it is often in the very strong 0.80-1 range.

It is currently at 0.35, it’s lowest level since last year. The divergence could continue for a little while longer, but the correlation could strengthen at any time without notice. What could change this? Getting back to XAU and the 1680 level, if this were to hold and put a floor in gold then we could see gold and silver move higher together."

Brace for recession as the Fed spikes interest rates and inflation soars -New York Post

"Consumer prices surged again last month - they’re now up 8.3% over last year. But what do you expect? President Joe Biden and Congress have done zilch to stem the tide and instead have kept fueling it.

That’s left the job to the Federal Reserve, which will now have to risk a painful 'hard landing' recession to rein in runaway inflation.

Last month Biden boasted that the economy had '0% inflation' in July, though prices were up 8.5% over a year earlier, near the worst in 40 years. He and his supporters tried to pretend the crisis was over, or at least easing.

Yet figures Tuesday from the Bureau of Labor Statistics show they’re actually still rising and up more than economists expected, despite falling gasoline costs - themselves the result of Americans driving less thanks to (you guessed it) . . . higher gas prices.

So much for Biden’s Inflation Reduction Act, which does nothing to curb inflation but instead spends money on green-agenda subsidies, a surefire way to keep inflation raging. The law also slaps Americans with billions in new taxes, which will only discourage investment and make a hard-landing recession even harder-landing.

Throw in a tight labor market and the Federal Reserve is going to have a near-impossible time trying to curb price hikes via steep interest-rate upticks without also tanking the economy. It’s expected to boost rates by a larger-than-normal .75 percentage points next week, though some think even a full-point raise is possible.

Economists are rightly grim: Deutsche Bank warns that the economic 'pessimists' will prevail in dismissing a 'soft landing,' with the full impact of interest hikes felt only next year."

Can Congress Rein in the Fed? -AIER

"Say what you will about Karl Marx, the man knew how to turn a phrase. His observation about history repeating itself, first as tragedy then as farce, surely applies to the ongoing failure of U.S. monetary policy. Alex Pollock’s insightful essay reminds us that the Federal Reserve faced similar challenges in the past and overcame them with a combination of economic wisdom and strong leadership. Unfortunately, both are in short supply at today’s Fed.

As Mr. Pollock recognizes, inflation is 'an endogenous effect of government and central bank behavior.' Under the guise of stabilizing an economy ravaged by covid, politicians and bureaucrats worked together to flood markets with excess liquidity. The combined government budget deficit for 2020 and 2021 was nearly $6 trillion. $3.3 trillion (about 55% of the deficit) in government bonds ended up on the Fed’s books. In effect, the central bank monetized a large share of deficit spending. Lulled into a false sense of security by weak price pressures from 2008-2020, monetary policymakers were unprepared for the subsequent inflationary wave. Consumer prices are now rising at an astonishing 8.5 percent per year, the fastest since 1981.

We’ve been here before. Mr. Pollock tells the story of Fed Chairman Paul Volcker’s resolve to crush inflation. 'The Volcker program triggered a sharp recession,' drawing strong condemnation from politicians on both the left and right. Yet Volcker persisted and was eventually vindicated. Inflation fell to manageable levels, the economy boomed, and President Reagan reappointed him to helm the Fed.

Sadly, Volcker’s triumph wasn’t the last word on inflation. There is no such thing as the end of history, especially in economic policy. The 'temptation to governments and their central banks of excessive printing [and] monetization of government deficits' is always with us. That temptation is currently prevailing over fiscal and monetary prudence.....

In retrospect, the creation of the Fed was a mistake. The intent of the Federal Reserve Act of 1913 was to strengthen the National Banking System, which admittedly had many flaws. The Fed’s main purpose was facilitating emergency transfers between banks to stave off financial panics. Instead, it gradually morphed into a full-fledged central bank. The American public never truly consented to monetary technocracy. At some point following World War II, it became a fait accompli.

Nor can the Fed be justified by its beneficial consequences. Recessions in the central banking era are just as frequent and severe as they were before. Inflation, which before the Fed was largely unknown in peacetime, has become habitual. Reducing inflation volatility is the Fed’s one apparent improvement. But even this is uncertain. Before the Fed, inflation volatility was high because of wartime finance procedures: suspend the gold standard, print money, redeem the paper when things settle down. After the Fed, the Great Moderation (roughly 1984-2007) made central bankers appear more capable than they are.

Today, the Fed is a juggernaut. With nearly $9 trillion in assets and the ability to pay interest on excess reserves, the Fed has immense power to allocate credit, influencing investment and capital structure throughout the economy. It abuses its regulatory authority by meddling in environmental and social policy on the flimsy pretext that these issues are relevant to financial stability."

Powell's Pivot to "Pain" but No Gain: Triggering the Coming Recession -Mises

"Jay 'The Inflation We Caused Is Transitory' Powell finally did it.

On Friday, the Fed chair finally mustered the courage to say that he is going to do the job he has been hired to do: the Fed will not 'pivot' to cut interest rates until inflation slows meaningfully and persistently - even if the stock, bond, and housing bear markets become much worse and the economy goes into recession....

Other dangers he didn’t mention include how the inflation the Fed creates also causes the boom-and-bust business cycle, destroys scarce capital resources, lowers overall living standards, and increases the size and power of the government. But we can only expect so much clarity from the Fed....

Price inflation is driven first by aggressive money creation by the Fed and banks. That is what has driven the inflation we have now. But then, as high inflation drags on, people start to reduce their demand for money as they seek value in tangible goods. That is what can ultimately lead to hyperinflation and the destruction of the currency, as has happened many times in the past, including in Germany in the 1920s. At least the Fed understands they should try to prevent that!

The Fed continues to say they do not expect their policies to cause a recession. But remember, they recently thought inflation was 'transitory.' The Fed has a terrible track record of not only 'managing' the economy, but also forecasting the economy.

Unfortunately, a recession is likely unavoidable at this point, even if the Fed started cutting interest rates right now. Keep in mind, the Fed cut interest rates all throughout the recessions of the early 2000s and 2008–09, and they were unable to prevent them."

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9.14.22 - Who Will Save Americans From the IRS?

Gold last traded at $1,699 an ounce. Silver at $19.58 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on inflation data and a weaker dollar. U.S. stocks attempted to recover from the worst market sell-off in 90 days.

Gold gets reprieve as dollar slips, rate hike bets check advance -CNBC

"Gold edged up on Wednesday as the dollar pulled back, but gains were capped by bets for more aggressive Federal Reserve rate hikes fueled by a surprise rise in U.S. inflation....

While weakness in dollar is helping pull gold off its lows, higher yields are likely to make it more difficult for prices to make any meaningful gains in the short term, said Michael Hewson, chief markets analyst at CMC Markets.

Gold prices saw their biggest one-day percentage decline since July 14 in the previous session, as the dollar logged its best day since March 2020 after an unexpected rise in U.S. August consumer prices.

'Tuesday’s decline was probably in some way an over reaction. Of course gold is suffering from rising rates, but market risks remains significant and gold is strongly holding its safe haven asset role,' said Carlo Alberto De Casa, external analyst for Kinesis Money.

The inflation data stoked expectations the Fed could raise U.S. borrowing costs faster and further than previously anticipated, with some even speculating a 100-basis-point hike at the end of its Sept. 20-21 meeting."

Good news about economic freedom for former communist countries -Washington Times

"The annual Economic Report of the World was just published by the Fraser Institute and a number of other think tanks. The authors of the Report measure economic freedom on a number of dimensions, including the size of government and taxation, legal system and property rights, sound money, freedom to trade internationally, and regulation.

Of the 165 countries measured, the top three were predictable – Hong Kong (1), Singapore (2), and Switzerland (3). And the bottom - Argentina (161), Syria (162), Zimbabwe (163), Sudan (164), and Venezuela (165) – were also predictable, plus economic basket cases like Cuba and North Korea, which lack reliable data for a ranking. (This unfortunately is the last year Hong Kong will be included because the data is pre-PRC economic takeover.)

What was not predictable, and in fact wholly unexpected thirty years ago is that many of the former countries in Eastern Europe that were part of the Soviet Union or under the Soviet thumb have become some of the economically freest and most successful countries.

The seven countries listed above are in the top 20% of the countries of the world in economic freedom. They rank higher than many major countries often considered to be economically free, like Germany, Spain, Sweden, Italy, and France. Most of the other former communist countries, like Poland and Hungary, rank in the top 50% of economic freedom.

As a result of economic freedom, real incomes have also risen rapidly so most are now middle income – which is a sharp change from the poverty that they were mired in during Soviet times. The question is 'Why did they do so well?'

All had some form of the market economy before they were taken over or dominated by the Soviet Union; and having experienced socialism or communism, they saw its failures on a daily basis. Despite the censorship, most citizens of these countries were well aware that life was getting better and better in Western Europe and the Americas, while their misery continued year after year with little improvement."

Who Will Save Americans From A Weaponized IRS? -Issues & Insights

"Our American republic did quite well for nearly a century without the IRS or its forerunner, the Office of the Commissioner of Revenue. Today, federal 'revenooers' are the greatest threat to freedom in a country where liberty is already being lost at an alarming rate.

The IRS is more than a mere revenue collector for the federal government. It has often been used an instrument of intimidation, even terror, against political foes, and those who might not be so enthusiastic about paying income taxes, or simply have a financial hardship that limits their ability to pay.

Administrations all the way back to Franklin Roosevelt’s have used the IRS to target their opponents. Elliott Roosevelt, one of FDR’s sons, said his father 'may have been the originator of the concept of employing the IRS as a weapon of political retribution.'

And of course most of us recall the IRS sitting on and rejecting applications for tax-exempt status for groups that were trying to organize against the policies of Barack Obama, essentially barring their existence.

Now it’s Joe Biden 'turn' to unleash the pain. His misleadingly named Inflation Reduction Act created, as we noted earlier, 'a small army of IRS shock troops who will abet the progressive-socialist political complex’s consolidation of raw political power while wrecking families, individuals, and small businesses.'

The legislation, passed by a party-line vote in both chambers of Congress, hands the IRS an additional $80 billion, more than six times its current annual budget. It will increase the agency’s enforcement funding by 69% through fiscal 2031, and add as many as 87,000 new employees to its overall workforce.

How bad can things get? For that, let’s look to the author of 'Unbridled Power: Inside the Secret Culture of the IRS,' written in the late 1990s by Shelley Davis, the first and last official IRS historian."

Biden's bragging about the economy just proves how financially illiterate he is -New York Post

"Last week, the White House attempted to define its economic vision in a 58-page report titled 'The Biden-Harris Economic Blueprint.' One first notices the report’s sloppiness. Five footnotes supposedly sourcing the White House data include in bold letters: 'Error! Bookmark not defined.'

There is also awkward repetition, such as cutting-and-pasting 'the strongest and most equitable labor market recovery in modern history' in paragraph after paragraph (eventually getting excited enough to remove the word 'modern,' allowing the president to also declare superiority over all ancient economic recoveries).

The most revealing aspect of the White House economic vision is what is not included: inflation or deficit reduction.

Sure, the introduction declares that 'President Biden’s top economic priority is bringing down inflation and lowering costs for families,' yet none of the report’s 'five core pillars' focuses primarily on combating inflation, which remains incredibly high — 8.3% in August.

In fact, the report repeatedly brags about policies that worsen inflation. This includes mandating Project Labor Agreements and Davis-Bacon prevailing wage rules (union giveaways that raise costs for federal projects), and expanding federal Buy American rules that bar federal agencies from buying cheaper imports.

The White House even trumpets its mandate applying expensive Davis-Bacon regulations to semiconductor manufacturers in the CHIPS Act — contradicting the bill’s purpose to lower production costs and spur domestic semiconductor production.

The White House report also laments the rising cost of college tuition, yet also brags about steep increases in Pell grants and college student aid that (according to the Federal Reserve) leads colleges to hike tuition further to capture 60% of all student aid.

If bringing down inflation is really the president’s top economic priority, we do not see that in his policies."

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9.13.22 - Coddled Wall St. in for Rude Awakening

Gold last traded at $1,702 an ounce. Silver at $19.35 an ounce.

NEWS SUMMARY: Precious metal prices eased back Tuesday after rising inflation boosted the dollar. U.S. stocks fell sharply on the unexpected rise of inflation despite falling gas prices.

Gold Rises on Weakening Dollar Ahead of US Inflation Data -Yahoo Finance

"Gold gained as the dollar extended its retreat from a record high ahead of US inflation data that could bear on the Federal Reserve’s monetary policy.

The metal rose as the greenback slipped for a second day, providing relief to commodities priced in the currency. Bullion has found a floor near $1,700 an ounce this month after slumping in August on the dollar’s rally....

'A bit of dollar weakness on top of recent short selling by funds was all it took to get the ball rolling,' said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

Economists forecast the August US inflation would slow for the second month in a row to 8.1%, potentially easing pressure on the US central bank to keep aggressively hiking rates. Still, officials last week seemed to point to another super-sized increase of 75 basis points in September. Fed Governor Christopher Waller said Friday he favored 'another significant' increase."

Despite What Economists Believe, Putting People Out of Work Does Not Reduce 'Inflation' -Forbes

"Recently the New York Times reported on the ShotMaster Pro, a remarkable piece of machinery that can make eight different espressos at a time, or 700 per hour. The cost of this modern 'robot' is $50,000, which apparently is the annual cost of employing a human barista in New York City.

Readers of reasonable intelligence can hopefully see where this is going. While economists believe consumption powers economic growth, the obvious reality is that investment does. And the impetus for investment is to produce exponentially more goods and services at costs that continue to plummet. Applied to the ShotMaster, what presently fetches $50,000 will soon enough retail for a fraction of the previous number.

This is worth keeping in mind with economists top of mind. In a recent opinion piece, Harvard professor Jason Furman wrote with evident worry that 'To bring price increases down to 2%, we may need to tolerate unemployment of 6.5% for two years.' The discredited Phillips Curve lives in faculty lounges!

Back to reality, inflation has nothing to do with unemployment...Inflation is a decline in the unit of account. Put more plainly, inflation is a currency devaluation....

Which brings us back to inflation. It’s yet again a devaluation of the currency. Over the last 18 months the dollar has soared against every major foreign currency...It should have serious readers seriously wondering if they’ve mistaken rising prices for inflation. There’s an ocean of difference between the two."

Traders see inflation falling for rest of 2022, but that likely won't end Fed rate hikes or market volatility -MarketWatch

"There’s a bit of good and bad news in the run-up to the next major U.S. inflation data on Tuesday, following July’s bigger-than-expected decline in the U.S. consumer-price index which triggered a short-term relief rally among stock investors.

The corner of financial markets with money on the line in getting the CPI data just right is expecting a continued drop in inflation for August and the rest of the year. Traders of derivatives-like instruments known as fixings now expect August’s annual headline inflation rate to be 8.1%, down from 8.5% in July.

They also see the rate gradually declining to 7.7% for September, 6.9% for October, almost 6.4% for November, and 6.1% for December. The problem is that the decline still likely won’t be nearly enough to put an end to continued rate hikes by the Federal Reserve, or the market volatility that accompanies them.

The reason is that the number that matters almost as much as the annual headline CPI rate is the so-called core reading, which kicks out volatile food and energy prices, said Gang Hu, an inflation trader with New York hedge fund WinShore Capital Partners. By his calculations, headline inflation readings at these levels through year-end imply monthly core readings of 0.3%, or 3.6% on a 12-month basis.

'There’s been quite a bit of change after the last CPI report, and the market definitely sees readings that are a fair amount lower than where they were before,' Hu said via phone on Monday. 'You could have a relief rally in bonds and equities if these numbers are realized, but I don’t think the relief rally is going to stay.'

'The Fed is going to hike 75 basis points next week, to above 3%. But core inflation is stabilizing around the wrong levels, and if you have inflation at 0.3% for the next three to four months, the job is not done and the Fed will have to keep going,' Hu said via phone. 'We don’t know how much further the Fed will have to keep going or when is going to be enough.'"

Coddled Wall Streeters in for a rude back-to-the-office awakening -New York Post

"The most coddled generation that Wall Street has ever encountered is about to find out what it means to really go to work.

That is the word coming from the C-suites of the big banks - Morgan Stanley, JP Morgan and Goldman Sachs. The CEOs of these firms made their bones back in the day when the price paid for a lucrative career on Wall Street was long hours while being screamed at by your boss.

Now they want to turn back the clock - even if that means getting on the wrong side of the influx of pampered millennials and Gen-Z’ers whom they needed to hire during the long bull market. They won’t say this publicly, of course, but they’re secretly welcoming the looming economic and Wall Street deal-making slowdown as a way to reassert control over the woke masses.

The stock market and deal-making boom extended incredible leverage to a class of Wall Street employees brainwashed by woke college professors and administrators into believing any and all of their feelings are important and existential,

Wall Street, despite its Darwinian rep, succumbed to the pressure, transforming itself into something like a college safe space because it needed entry- and associate-level bodies to process deals and trades, and faced competition for talent from Big Tech. That meant more perks for the grunts of the business (think stuff like free Pelotons on top of higher pay), flexible work hours and demands to work from home well after the worst of the COVID pandemic subsided.

It also meant accepting the ­mores of the new generation even if it meant lower productivity. Wall Street execs used to brag that they slept in the office under their desk when big deals were on the line. Now the up-and-comers embrace something known as 'quiet quitting' where doing the bare minimum is the norm....

But times appear to be changing again. The boomers who run the big banks - Jamie Dimon at JP Morgan, James Gorman at Morgan Stanley and David Solomon at Goldman - are said to have had enough, I am told, and will use the looming deal-making slowdown and recession to show the young’uns who’s boss."

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9.12.22 -Gold Price Rises on Fed Expectations

Gold last traded at $1,725 an ounce. Silver at $19.81 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on a sharply weaker dollar. U.S. stocks extended gains on investor hopes that inflation has peaked.

Gold price rises on expectations of super-sized Fed rate hike -Mining.com

"Gold advanced to the highest since late August on Friday as expectations firmed for a super-sized interest rate increase from the US Federal Reserve later this month.....

Meanwhile, the dollar dropped to a more than one-week low against its rivals, making greenback-priced bullion less expensive for overseas buyers.

'The US dollar index really dropped sharply overnight and that has supported the gold and silver markets. Also seeing some short covering in the futures markets heading into the weekend,' Jim Wyckoff, senior analyst at Kitco Metals, explained to Reuters....

Investors now await US inflation data for August – due early next week – after the recent hawkish comments from Federal Reserve Chair Jerome Powell cemented bets of a large interest rate hike, which could further dampen non-yielding assets like gold.

On Thursday, Powell said the US central bank needed to 'act now' and 'forthrightly' to bring inflation under control, boosting the prospect of a 75 basis point hike when it meets September 21-22. Expectations also grew that the European Central Bank will lift rates by the same amount in October."

Recession Signals Abound As Fed Hikes Rates -RIA

"At the Jackson Hole Summit, Jerome Powell made it clear the Federal Reserve remains focused on combatting inflation despite recession signals rising in tandem. To wit:

'Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.'

While the Federal Reserve is focused on fighting inflation and willing to cause 'some pain' to achieve victory, they hope to do so without evoking a recession. Such may be a challenge for two primary reasons:

The Fed remains focused on lagging economic data, such as employment, which are highly subject to future revisions, and;

Changes to monetary policy do not show up in the economy until roughly 9-12 months in the future.

There is little doubt we are amidst an economic slowdown. With the Federal Reserve focused on combating inflation by tightening monetary policy, thereby slowing economic demand, logic suggests that economic data trends will continue to decline.

As the Fed continues to hike rates, each hike takes roughly 9-months to work its way through the economic system. Therefore, the rate hikes from March 2020 won’t show up in the economic data until December. Likewise, the Fed’s subsequent and more aggressive rate hikes won’t be fully reflected in the economic data until early to mid-2023.

Given the Fed manages monetary policy in the 'rear view' mirror, more real-time economic data suggests the economy is rapidly moving from economic slowdown toward recession."

Renewable Faith -Bonner Private Research

"Testing mankind's eternal belief in fake money, green energy and political hubris...

'The West became very rich by ‘printing’ money to buy many more consumer goods than the value of the output made warranted. But that ability to ‘print’ arose from unique circumstances of low inflation - that was, in turn, enabled by cheap exports coming from Russia and China.'

'Naturally, the West crucially doesn’t want the low inflation paradigm to end, but in this conflicted era where commodities, factories, and fleets of ships are dominated by states (Russia and China) that are in conflict with the West, the low inflation world has reached its end.' - Alistair Crooke

Thoughts, like viruses, pass from person to person; some succumb, some recover, some are barely affected at all. And then, when enough people get the bug, they are likely to do something crazy. Not just individually, but collectively....

History is festooned with such wild tales. The purge of protestants from France… the purge of Jews from Europe…the purge of muslims from India and Armenians from Anatolia – all were bloody disasters, and most were catastrophes for the perps as well as the victims. They left millions of corpses… millions of refugees… broken families, broken countries and broken societies.

And now, ‘western’ civilization undertakes its most ambitious purges ever – to bleed out racism, sexism and inequality… (it has apparently given up the fight against poverty and drugs)…

…and to rid the world of fossil fuel. Janet Yellen, America’s Treasury Secretary, and former head of the Fed, will take up this last challenge today....

But if 15% of our power is generated, as claimed, from 'renewable' sources, that means that 6.8 billion people depend 100% on the energy from the sun, condensed over millions of years into ‘fossil’ fuels. And while governments have encouraged the use of more ‘green energy’ – putting up windmills all over Europe – most of the energy in the Old World still comes from oil, gas and coal.

So, with that as prologue, let’s look at what is already going wrong, right now, in Europe...."

How Biden's Handling of Inflation Compares to Gerald Ford's in the 1970s -Reason

"Republican President Gerald Ford was simultaneously one of the luckiest and unluckiest presidents when he took office in 1974. He was lucky because he got the job without ever being on a ballot outside of Michigan's 5th Congressional District. He was unlucky because the country was experiencing the worst inflation since 1947.

Inflation that August would hit 10.9 percent, then rise to 11.9 percent in September, with huge increases in food and energy prices. Federal spending on the Vietnam War and Great Society programs had ballooned, and the Bretton Woods monetary system, which sought to maintain global currency values, had collapsed. To his credit, Ford did not shy away from talking about inflation. 'My conclusions are very simply stated,' he said in an address to Congress that October. 'We must whip inflation right now.'

Ford's policy prescriptions in that speech were a mixed bag. The better ideas included deregulation of natural gas supplies, removal of acreage limits on a few agricultural products, and, most important, a rejection of price controls and rationing. 'Peacetime controls actually, we know from recent experience, create shortages, hamper production, stifle growth, and limit jobs,' Ford said, adding that they would 'cause the fixer and the black marketeer to flourish while decent citizens face empty shelves and stand in long waiting lines.'.....

Americans responded by making 'Whip Inflation Now' (WIN) pins, along with stickers, jewelry, and clothes. Some even put WIN on their footballs, coasters, baby bibs, watches, and knit sweaters. According to a 2021 Washington Post retrospective, more than 15 million orders were placed for WIN buttons, and hundreds of thousands of people wrote to the White House in support of the campaign.

But it was only a matter of months before people got tired of WIN-ing. Inflation remained in the double digits for another six months and did not fall below 5 percent until November 1976, the month Ford narrowly lost to Jimmy Carter....

Now Biden faces his own inflation dilemma. In June 2022, prices were 9.1 percent higher than 12 months before, a 41-year high reaching almost back to Ford's administration. Food and energy price hikes were again the primary symptoms of inflation, with both categories seeing their largest increases in decades.

Ford blamed foreign oil-producing nations for high prices. Biden blames oil companies and gas stations. Ford was in the midst of a recession with 6 percent unemployment. Under Biden, the unemployment rate was just 3.6 percent as of June, with the economy dipping into a recession....

Biden is responsible for the last and largest round of stimulus checks, and he refuses to take the limited executive actions available to him: cutting tariffs and encouraging domestic oil and gas production.

Perhaps our failure to learn the lessons of past inflationary eras deserves a new slogan: Whip Inflation Eventually."

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9.9.22 - Elites Lie About Inflation

Gold last traded at $1,716 an ounce. Silver at $18.83 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on bargain hunting and a weaker dollar. U.S. stocks staged a relief rally after weeks of fretting over the economic impact of higher interest rates.

Gold remains undervalued as markets continue to price in a pivot in second half of 2023 -Kitco

"According to Huw Roberts, head of analytics at Quant Insight, with rising interest rates and a strong U.S. dollar, gold prices should be trading around $1,760 an ounce. Although gold is about 2% below its fair value, Roberts said that traders could be waiting for a better entry point....

Although it's a challenging environment for gold, Roberts said there is still potential for the precious metal. He explained that in July, markets prematurely started to expect the U.S central bank to pivot on its aggressive monetary policy; however, hawkish comments from Powell dashed that expectation. Markets see a 76% chance of a 75-basis point move later this month.

'Gold investors got excited about a dovish pivot, and those expectations haven't gone away; they have just been pushed back to the second half of 2023,' he said.

Although the market currently believes in the Fed's aggressive stance on inflation, Roberts noted that a lot can happen in the next six months.

'Looking at current macro fundamentals, in the current environment, gold is undervalued.'"

Inflation, the Price Level, and Economic Growth: Everything the Elites Tell You about It Is Wrong -Mises

"Fundamentally, inflation is fraud. The central government or bank printing more money lessens the value of the money already in circulation. A truckload of sand isn’t particularly valuable in Saudi Arabia. An increased supply of money means ultimately that prices denominated in that money will go up.

Unless you are the one to receive that new money at its point of entry, and thus keep pace with the inflation, the real value of your money holdings will go down.

So, in essence the government has taken wealth from you, and offered nothing in return, except the vague promise that the inflation will grow the economy, from which you will subsequently benefit. As we will show in this article, that is a false promise that has never once worked, and there is plentiful evidence against it ever working. Fortunately, there is another way.

If inflation is a fraud on the general populace in that its false promise of improved growth rings hollow time after time, it is more specifically a fraud on ordinary working people.

When new money is created it enters the economy through the government, financial, and corporate sectors. The distributors and initial recipients of this new money obtain it before prices go up, in fact prices are then driven up by their spending of the new money. Those responsible for the inflation are thus ahead of it....

Thus, inflation can only ever benefit the elite at the expense of ordinary people. Which is hardly surprising given the revolving door between the federal reserve and the financial sector. The same people who control the power of inflation are the ones who can directly benefit from it.

However, inflation is completely unnecessary for a growing and prosperous economy. Under a strict gold standard, inflation, defined by Mises as the printing of money by a government entity, does not take place. Thus the only way price inflation, or more aptly, price increases, can take place are due to natural economic or environmental factors and government folly other than inflation."

We could see slow economic growth for the rest of the decade -CNN

"There isn't much to celebrate in the foreseeable future. We could still very well find ourselves in a recession over the next 12 months, with limited economic growth and lower prospects for improvement in Americans' standard of living that could linger for the rest of the decade.

As the fear of the pandemic subsides and households return to pre-pandemic spending patterns, the pace of recovery in consumer services will slow, and by 2023, job growth in this sector will no longer be unusually high. Since consumer spending on services makes up about 45% of the US economy, the slowdown in this segment could tip the economy into a recession, especially if the rest of the economy continues to contract.

In its fight to tame inflation and slow the economy, the Federal Reserve will continue to rapidly raise interest rates. Industries sensitive to rate hikes - like the housing market and auto sales - will suffer. Housing starts and sales, for instance, are already in deep contraction and will continue to decline as mortgage rates remain elevated. In addition, stock prices tend to decline when interest rates rise, reducing households' net worth and spending.

First, as baby boomers retire, working-age population growth is slowing to a halt. Second, people in the 25 to 34 age group, especially men without a college degree, are more likely to be out of the labor force. They are much more likely to be single and living with their parents with less of a need to earn income.

Third, for decades, people under age 25 have been withdrawing from the labor force to enroll in higher education. And in recent decades, there has been a large increase in the share of people who have opted out of the labor force due to disability....

This has created an economy where significant job growth and low inflation cannot coexist. It is either one or the other, because significant expansion of employment in a super-tight labor market will accelerate wages, and therefore prices. In such an environment, we should expect slow economic and job growth for the rest of the decade."

Mortgage Rates Hit 5.89%, Highest Level Since 2008 -WSJ

"Mortgage rates touched their highest level in nearly 14 years this week, another blow to the rapidly cooling housing market.

The average rate on a 30-year fixed mortgage rose to 5.89%, topping an earlier high from June, according to a weekly survey by Freddie Mac released Thursday. This time last year, rates were below 3%.

And mortgage rates look set to continue rising. The Federal Reserve has been lifting rates to try to curtail inflation, which has driven up borrowing costs across the board. The central bank currently appears to be on a path to lift rates another 0.75 percentage point this month.

The housing market is a key focus for the Federal Reserve because rising costs there are a major component of this year’s sky-high inflation. It also is an area where Fed policy can have an outsize impact because the housing market is so sensitive to interest rates. Higher rates can add hundreds of dollars to a buyer’s monthly mortgage costs.

The record-low rates of the pandemic era had ushered in a bonanza in the mortgage market, with many companies growing rapidly by refinancing borrowers into lower-rate loans. But rising rates have slowed that business considerably, forcing some firms to lay off employees or close up shop.

Higher rates have led many buyers to think twice before purchasing a home."

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9.8.22 - Gundlach: 'The Period of Abundance Is Over'

Gold last traded at $1,707 an ounce. Silver at $18.51 an ounce.

NEWS SUMMARY: Precious metal prices drifted lower Thursday as hawkish Fed comments boosted the dollar. U.S. stocks attempted to rebound as investors shook off concerns about higher interest rates.

Gold, silver bounce as USD, Treasury yields decline -Kitco

"Gold and silver prices are higher and near daily highs in midday U.S. trading Wednesday, on short covering in the futures markets and perceived bargain hunting in the cash markets, following recent losses.

The U.S. dollar index and U.S. Treasury yields backed down from their higher levels today, which also encouraged some buying interest in the metals markets. However, a big drop in crude oil prices to an eight-month low today did limit the upside in the precious metals.

U.S. stock indexes are higher at midday but still trending down on the daily charts. Risk aversion remains somewhat elevated in the general marketplace. China reported today its imports and exports fell more than the trade expected in August as the world's second-largest economy continues to stall amid Covid lockdowns, a wobbly property market and a weaker yuan.

'The headwinds facing the Chinese economy are becoming increasingly fierce and recent efforts to shore it up have appeared inadequate,' said an email dispatch from analyst Craig Erlam with OANDA....

The key outside markets today see Nymex crude oil prices sharply lower and trading around $82.65 a barrel. The U.S. dollar index is a bit weaker after hitting another 20-year high in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching around 3.2%."

Jeffrey Gundlach: 'The Period of Abundance Is Over' -The Market

"Jeffrey Gundlach, CEO of DoubleLine, worries that the Federal Reserve is overreacting in the fight against inflation. He expects a severe slowdown of the economy and says how investors can navigate today’s challenging market environment. A conversation with the Bond King.

When Jeffrey Gundlach speaks, financial markets around the globe listen carefully. The founder and CEO of DoubleLine, a Los Angeles based investment boutique mainly specializing in bonds, ranks among America’s highest-profile investors. On Wall Street, he is known for speaking his mind.

According to his view, one of the biggest risks right now is that the Federal Reserve is doing considerable damage to the economy with its aggressive rate hikes: 'The next shock is that we’re having to put in a big overreaction to the inflation problem which we created from our initial reaction of excess stimulus,' Mr. Gundlach says. 'My guess is that we will end up creating momentum that’s more deflationary than a lot of people believe is even possible.'

In this in-depth interview with The Market NZZ, the market maven explains why he expects a severe economic downturn in the coming months, where he sees the weak links in the system, and where he spots opportunities for prudent investments in today’s volatile market environment.

Mr. Gundlach, financial markets are in a fragile state. Inflation is the highest in more than four decades, and stocks as well as bonds suffered significant losses this year. What’s on your mind in light of this environment?

'The Federal Reserve is very keen on preserving what is left of its credibility and reputation because they have not been able to execute on their interest rate plans for many years. Every time they try to tighten monetary policy, it doesn’t take long for the economy to get weak, and they get embarrassed. In the past, the Fed was able to pivot like it did at the end of 2018 when it completely reversed its course in just six weeks because the stock market collapsed. It was able to do that because the inflation rate was still below 2%, so it didn’t seem to have much of a near-term consequence.'

And how about today?

'This time, the inflation rate is 500+ basis points higher than the yield on any Treasury bond, and the Fed has said forcefully and repeatedly that they are going to bring it down. Therefore, they are not in a position to do a quick pivot.'"

Can the HOUSES Act Solve the Housing Crisis? -City Journal

"America’s pandemic-induced residential reshuffling has highlighted the national housing crisis. While the United States has continued to grow over recent decades, the supply of homes has failed to keep pace. Joint Economic Committee (JEC) economists Kevin Corinth and Hugo Dante estimate that the U.S. has a national housing shortage - an informal measure indicating the gap between the actual number of homes and the number that there would be absent supply-constraining regulations - of more than 20 million homes.

The result: Americans are priced out of the areas where they’d like to live, residing instead in regions without good job prospects, spending more time in the car on long commutes, and having fewer kids.

To address this social and economic quandary, Senator Mike Lee - the JEC’s ranking Republican - has proposed the Helping Open Underutilized Space to Ensure Shelter Act of 2022 (the HOUSES Act), which would let states purchase certain federally owned lands for the explicit purpose of developing new housing.

With national house-price averages at historic highs and western states seeing the sharpest price increases, using the expansive federal holdings west of the Great Plains to expand supply is a nifty idea. By Corinth and Dante’s county-level methodology, the HOUSES Act could add 2.7 million homes to the national tally, shrinking the housing shortfall by 14 percent.

As Corinth and Dante explain in their JEC report, they reach this figure by simulating home construction on a minute portion of the total acreage that the federal government owns. Since the federal government actually owns more than one-quarter of all U.S. land, there’s much to work with, and the HOUSES Act would limit new housing development only to parcels that state and local governments themselves select.

The mechanism enabling this would be a new authority under the Federal Land Policy and Management Act (FLPMA), by which a state government or a local government (with state approval) would nominate a tract of land administered by the Department of the Interior’s Bureau of Land Management (BLM). Lands with special protected designations, such as national monuments, wilderness areas, and national recreation areas, would not be eligible....

As Senator Lee sees it, HOUSES would pull one of the few levers Congress can use while enhancing state and local decision-making power. In so doing, HOUSES would epitomize the FLPMA’s 'multiple use' doctrine, which directs Interior to use America’s land and resources in ways that will best meet the present and future needs of the American people, accounting for changing needs and conditions."

Former Greenpeace Founder Patrick Moore Says Climate Change Based on False Narratives -Epoch Times

"Patrick Moore, one of the founders of Greenpeace, said in an email obtained by The Epoch Times that his reasons for leaving Greenpeace were very clear: 'Greenpeace was ‘hijacked’ by the political left when they realized there was money and power in the environmental movement. [Left-leaning] political activists in North America and Europe changed Greenpeace from a science-based organization to a political fundraising organization,' Moore said.

Moore left Greenpeace in 1986, 15 years after he co-founded the organization.

'The ‘environmental’ movement has become more of a political movement than an environmental movement,' he said. 'They are primarily focused on creating narratives, stories, that are designed to instill fear and guilt into the public so the public will send them money.'

He said they mainly operate behind closed doors with other political operatives at the U.N., World Economic Forum, and so on, all of which are primarily political in nature.

The Intergovernmental Panel on Climate Change [IPCC] is 'not a science organization,' he said. 'It is a political organization composed of the World Meteorological Organization and the United Nations Environment Program.'

'The IPCC hires scientists to provide them with ‘information’ that supports the ‘climate emergency’ narrative.'

'Their campaigns against fossil fuels, nuclear energy, CO2, plastic, etc., are misguided and designed to make people think the world will come to an end unless we cripple our civilization and destroy our economy. They are now a negative influence on the future of both the environment and human civilization.'

'Today, the left has adopted many policies that would be very destructive to civilization as they are not technically achievable. Only look at the looming energy crisis in Europe and the UK, which Putin is taking advantage of. But it is of their own making in refusing to develop their own natural gas resources, opposing nuclear energy, and adopting an impossible position on fossil fuels in general,' Moore wrote."

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9.7.22 - Russia Cuts Off Gas Supplies to Europe

Gold last traded at $1,715 an ounce. Silver at $18.42 an ounce.

NEWS SUMMARY: Precious metal prices inched higher Wednesday on bargain hunting despite a firmer dollar. U.S. stocks attempted to rally as Wall Street tried to shake off a three-week slide amid ongoing interest rate worries.

Gold Price Jumps as Inflation Pressures, ECB Rate Outlook in Focus -Bloomberg

"Gold traded little changed for a second day as the dollar steadied and markets awaited an expected European Central Bank interest-rate hike

Bullion is stabilizing after capping five months of declines through August as the US dollar and 10-year Treasury yields climbed, which weighed on the non-interest bearing precious metal. Gold is also finding support as a traditional hedge against price pressures.

Central banks globally are raising rates to fight inflation, with growing expectations for the ECB to hike by 75 basis points at its policy decision Thursday. Meanwhile, the People’s Bank of China has moved in the opposite direction, most recently cutting its key policy rate by 10 basis points.

On Monday, China said it’s 'crucially important' for the country to adopt supportive policies this quarter as it tries to recover from pandemic-related losses. The PBOC also reduced the amount of foreign-exchange deposits banks need to set aside as reserves for the second time this year in a bid to boost the yuan after the currency hit a two-year low."

Biden's Speech Casts Him as Maxwell Smart -WSJ

"Joe Biden's 'Soul of America' speech is said to have been inspired by the popular historian Jon Meacham, who used that phrase as the title of a 2018 book. But I think the president owes a debt to Mel Brooks and Buck Henry. His speech reminded me of nothing so much as 'Mr. Big,' their 1965 pilot episode of the spy satire sitcom 'Get Smart!'

Mr. Big, an agent of the evil spy organization KAOS, threatens to destroy the U.S. city by city using a device called the 'inthermo ray,' capable of 'converting heat waves into immense destructive power.' KAOS has stolen the inthermo and kidnapped its inventor, Prof. Hugo Dante. (Dante’s inthermo - get it?) Maxwell Smart, agent 86 of the top-secret counterespionage organization CONTROL, is assigned to the case. 'Mr. Big must be stopped before he goes any further,' Max’s boss, known only as 'The Chief,' tells him urgently.

You can see the parallel: Donald Trump is Mr. Big, 'MAGA Republicans' are KAOS, and Mr. Biden is in CONTROL. The Chief warns: 'Max, this is a big one. The fate of our entire nation may depend on it.' Mr. Biden: 'Donald Trump and the MAGA Republicans represent an extremism that threatens the very foundations of our Republic.'

Mr. Big plans to start by destroying the Statue of Liberty. As Max puts it: 'So that’s their target. Miss Liberty herself!' 'We, the people,' Mr. Biden intoned, 'have burning inside of each of us the flame of liberty that was lit here at Independence Hall. . . . That sacred flame still burns.'....

Mr. Biden’s speech, despite its flimsy attempt at admonitory statesmanship, was a translucid partisan bid for votes in the midterm elections, its exaggerations at once obvious and ridiculous.

At the end of the 'Mr. Big' episode, Maxwell Smart congratulates himself: 'Mission accomplished. KAOS destroyed. That’s the end of Mr. Big. If only he could have turned his evil genius into - niceness.' In accepting the 2020 presidential nomination, Mr. Biden said: 'It’s a moment that calls for hope and light and love.' If only he would follow the advice his predecessor often tweeted: 'Get Smart!'"

Energy crisis: Why has Russia cut off gas supplies to Europe? -CNBC

"Europe has been thrown into its biggest energy crisis in decades with natural gas supplies from Russia becoming volatile and unpredictable even before the invasion of Ukraine began. Now, those supplies have come to a complete halt.

Russia claims punitive economic sanctions imposed on it by the West are responsible for the indefinite halt to gas supplies via Europe’s main pipeline.

'Problems in pumping arose because of the sanctions imposed against our country and against a number of companies by Western states, including Germany and the U.K.,' Kremlin spokesman Dmitry Peskov told reporters on Monday, according to Russian state news agency Interfax.

Asked whether pumping gas via Nord Stream 1 was completely dependent on the sanctions and that supplies would resume if these were lifted or relaxed, Peskov replied, 'Of course. The very sanctions that prevent the maintenance of units, which prevent them from moving without appropriate legal guarantees, which prevent these legal guarantees from being given, and so on.'

'It is precisely these sanctions that the Western states have introduced that have brought the situation to what we see now,' Peskov added.

Coming directly from the Kremlin, such comments represent the clearest indication yet that Russia is seeking to pressure Europe to lift the economic measures, brought on to punish Russia over its unprovoked invasion of Ukraine, in order for the taps to be turned back on ahead of winter."

Think Biden's student loan write-offs are unfair? Just take a look at the fine print -New York Post

"President Joe Biden’s plan to instantly write off up to $20,000 in individual loans is bad enough, costing the taxpayers north of $300 billion - but the rest of his idea is even worse: He wants to the public to eat most all future student debt, too.

Yes, 'Part 1' is horrifically unfair: Folks who chose not to take out such loans, or got them paid off, or never went to college at all, will be picking up the tab for college-educated borrowers with excellent incomes. Yet the rest of the scheme would make this injustice permanent.

Biden would roll back borrowers’ maximum monthly payment on undergrad loans to just 5% of 'discretionary' income - and cut the amount of earnings considered 'discretionary.' Then he’d wipe out all remaining debt after just 10 years for many borrowers.

The payment limit by itself is huge: The White House boasts it means 'no borrower earning under 225% of the federal poverty level … will have to make a monthly payment' at all. And even those earning more than $50,000 right after graduating would face trivial payments - barely denting the principal before Biden sticks taxpayers with the bill.

In short, this is a recipe for nearly free 'loans' for an ever-increasing number of people, courtesy of the general public. Until the public goes broke, that is. The Penn Wharton Budget Model estimates the full plan could drive total future costs toward $1 trillion."

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9.6.22 - IRS Exposed Confidential Info Online

Gold last traded at $1,700 an ounce. Silver at $17.99 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on bargain hunting and a weaker dollar. U.S. stocks extended losses as investors digested the economic impact of dramatically higher interest rates.

Gold advances on dollar retreat after U.S. jobs data -CNBC

"Gold bounced over 1% on Friday as the dollar retreated after U.S. jobs data came mostly in line with expectations, but it was still bound for a third consecutive weekly fall pressured by an elevated interest rate environment....

'The jobs numbers were very close to market expectations. The market is deeming it as a goldilocks number as it doesn’t suggest weakness, but is not too strong to prompt an even more aggressive Fed,' said Jim Wyckoff, senior analyst at Kitco Metals.

'Gold is kind of seeing a relief-short covering rally.' Nonfarm payrolls increased by 315,000 jobs last month, the Labor Department said in its closely watched employment report.

Economists polled by Reuters had forecast payrolls increasing 300,000. The dollar index was down around 0.1%, making gold cheaper for overseas buyers while U.S. Treasury yields were also lower for the day."

Consumers Feel Worse Now Than They Did During Covid Lockdowns -WSJ

"The University of Michigan survey of consumer sentiment measures how U.S. consumers feel about their personal finances, business conditions and buying conditions. Recent surveys have shown that consumers have rarely felt more downbeat about all of these measures.

In the past, when consumer sentiment was as depressed as it is today, stocks were in a bear market, unemployment was higher than average or prices were rising faster than usual.

This year, inflation has been near four-decade highs and a main driver of consumer pessimism. The S&P 500 is in a bear market, but up 7% from its 2022 low. Uncharacteristically of periods with low sentiment, unemployment is historically low.

Jonathan Millar, a senior economist at Barclays Investment Bank, recently said that 'the fundamentals fall somewhat short of explaining the worsening of sentiment since January.'

Michael Gapen, head of U.S. economics at Bank of America, argues that 'a multitude of factors influence sentiment, these can be economic or noneconomic factors.'....

In June, 65% of consumers - the largest on record - said it was a bad time to buy large household items, such as furniture, a TV or kitchen appliances. The main reason they cited was high prices.

The Federal Open Market Committee, the policy-making arm of the Federal Reserve, has repeatedly mentioned weaker consumer sentiment as a risk to the U.S. economic outlook.

The minutes from the FOMC’s most recent meeting said that 'consumer sentiment had deteriorated, and households were reportedly becoming more cautious in their expenditure decisions.'"

Hanging in the Balance -Bonner Research Partners

"It was another rough spell in the markets. Stocks ended lower for their third straight week as the Fed’s impending rate hikes weigh heavily on investors’ shoulders. The Dow Jones Industrial Average fell by 2.5%, the S&P 500 dropped 2.7% and the Nasdaq closed out the week 3.6% in the red. The three major indices are down 14.4%, 18.2% and 26.5%, respectively, for the year.

Ordinarily, investors would look to the bond market to help salve some of their equity market wounds. A traditional, 'balanced' portfolio – that is, 60% stocks and 40% bonds – is designed to smooth out some of the inevitable market volatility through non-correlated asset allocation. (That is, when stocks sink, bonds are supposed to provide some measure of safety.)

And for a long, long time, that’s been the case. Between 1926 and 2021, according to data from Vanguard, the annualized return of a 60% U.S. stock and 40% U.S. bond portfolio was 8.8%. By reinvesting dividends and allowing the magic of compounding to do its work, 'balanced' investors have enjoyed what may fairly be termed a 'Century of Plenty.'

Alas, as the bear market bounce in equities fades into memory, bonds too are lagging. Bloomberg has the numbers...

'The Bloomberg Global Aggregate Total Return Index of government and investment-grade corporate bonds has fallen more than 20% below its 2021 peak, the biggest drawdown since its 1990 inception…'

Meanwhile, gold is down 6.5% year to date... real estate is teetering... cryptos, tech fliers and meme stocks are piled sky high at the dump. What’s an investor to do?....

In The Dollar Report, I wrote about what levels of debt-to-GDP or deficit-to-GDP precede a crisis. Once total government debt is over 130% GDP, and once annual deficits are 15-20% of GDP, two kinds of crisis can happen. The first is a sovereign debt crisis, where interest rates spike and bond prices crater. Or, if the government intervenes in the bond market (as the Fed has been doing since 2008), you get a currency crisis.

This is what we’re preparing for. Fortunately, we don’t have either yet in America, although you could argue that inflation is a slow-motion currency crisis. After all, a strong dollar doesn’t make much difference to Americans who are not vacationing in Europe this summer. Other than rising food prices, rising energy prices, rising rents, and the relentless rise of college tuition and health insurance, there’s no dollar crisis at all.

I mention all of this because there’s no easy public policy fix to $32 trillion in debt. Both parties in Washington are committed to the status quo and the perpetual expansion of the Welfare State and the Warfare State. Voters keep sending the same clowns back to the DC circus. Your only defense against that is to try and keep or accumulate as much wealth and financial independence as possible before the inevitable crisis."

IRS admits it exposed confidential information of taxpayers online -Fox Business

"The Internal Revenue Service accidentally published confidential information involving about 120,000 taxpayers on its website before discovering the mistake and removing the data, officials said Friday.

The data shared came from Form 990-T, a business tax return document used by tax-exempt entities, including individual retirement accounts, to report and pay income tax on income generated from certain investments or income unrelated to their exempt purpose, the IRS said.

The 'inadvertent' exposure included names, contact information and financial information about income within those IRAs. However, it did not include Social Security numbers, full individual income information, detailed financial account data or other sensitive information that could affect a taxpayer's credit.

'The IRS took immediate steps to address this issue,' the agency said in a statement provided to FOX Business. 'The files have been removed from IRS.gov and will be replaced with updated files in the near future. In addition, the IRS also will be working with groups that routinely use the files to remove the erroneous files and replace them with the correct versions as they become available.'"

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9.2.22 - Entering the Superbubble's Final Act

Gold last traded at $1,710 an ounce. Silver at $18.01 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on bargain hunting and a weaker dollar. U.S. stocks rose as August’s jobs report came in about as expected, cooling fears that a hotter labor market would boost Fed rates further.

Gold price rallies modestly as U.S. jobs data close to expectations- Kitco

The gold market is holding on to modest gains but is still looking to end the week on a sour note below $1,750 an ounce as the U.S. economy continued to add slightly more jobs than expected last month.

Friday, the Bureau of Labor Statistics said 315,000 jobs were created in August The data beat expectations economists were forecasting job gains of around 295,000...

The gold market is seeing some buying momentum following the latest employment report. December gold futures last traded at $1,721 an ounce, up 0.68% on the day.

Although the headline number was positive, the report noted sharp downward revisions for June. The bureau revised June’s employment data down by 105,000 jobs to 293,000. July’s data was revised down to 526,000 from the initial estimate of 528,000.

Also positive for gold are signs that wages could be plateauing, a sign that inflation pressures continue to ease. The report said that average hourly wages increased 0.3% or by 10 last month. Economists were expecting to see a 0.4% increase. For the year wages have risen 5.2%.

The weak wage inflation data’s positive impact on gold could seem counter intuitive for some investors. However, market analysts have noted that easing inflation pressure could prompt the Federal Reserve to slow its pace of monetary policy tightening, which would be positive for gold.

Entering the Superbubble’s Final Act -Grantham/GMO

"Executive Summary - Only a few market events in an investor’s career really matter, and among the most important of all are superbubbles. These superbubbles are events unlike any others: while there are only a few in history for investors to study, they have clear features in common.

One of those features is the bear market rally after the initial derating stage of the decline but before the economy has clearly begun to deteriorate, as it always has when superbubbles burst. This in all three previous cases recovered over half the market’s initial losses, luring unwary investors back just in time for the market to turn down again, only more viciously, and the economy to weaken. This summer’s rally has so far perfectly fit the pattern.

The U.S. stock market remains very expensive and an increase in inflation like the one this year has always hurt multiples, although more slowly than normal this time. But now the fundamentals have also started to deteriorate enormously and surprisingly: between COVID in China, war in Europe, food and energy crises, record fiscal tightening, and more, the outlook is far grimmer than could have been foreseen in January. Longer term, a broad and permanent food and resource shortage is threatening, all made worse by accelerating climate damage.

The current superbubble features an unprecedentedly dangerous mix of cross-asset overvaluation (with bonds, housing, and stocks all critically overpriced and now rapidly losing momentum), commodity shock, and Fed hawkishness. Each cycle is different and unique – but every historical parallel suggests that the worst is yet to come.

Prepare for an Epic Finale - Previous superbubbles saw a much worse subsequent economic outlook if they combined multiple asset classes: housing and stocks, as in Japan in 1989 or globally in 2006; or if they combined an inflation surge and rate shock with a stock bubble, as in 1973 in the U.S. and elsewhere.

The current superbubble features the most dangerous mix of these factors in modern times: all three major asset classes – housing, stocks, and bonds – were critically historically overvalued at the end of last year. Now we are seeing an inflation surge and rate shock as in the early 1970s as well. And to make matters worse, we have a commodity and energy surge (as painfully seen in 1972 and in 2007) and these commodity shocks have always cast a long growth-suppressing shadow.

Given all these negative factors, it is unsurprising that consumer and business confidence measures are testing historic lows. And in the tech sector, the leading edge of the U.S. (and global) economy, hiring is slowing, layoffs are rising, and CEOs are increasingly bracing for recession. Recently, we have seen a bear market rally. It has so far played out exactly in line with its three historical precedents, the bear market rallies that marked the middle phase of deflating superbubbles.

If the bear market has already ended, the parallels with the three other U.S. superbubbles – so far so strangely in line – would be completely broken. This is always possible. Each cycle is different, and each government response is unpredictable. But these few epic events seem to act according to their very own rules, in their own play, which has apparently just paused between the third and final act. If history repeats, the play will once again be a Tragedy. We must hope this time for a minor 7 one."

Rising Mortgage Rates Complicate Decision on Buying Versus Renting -WSJ

"Home buyers are feeling the pinch of rising costs more than renters.

The median monthly mortgage payment was almost one-and-a-half times as much as the median monthly asking rent in the second quarter, the largest differential in records going back to 2009, according to data tracked by the Mortgage Bankers Association, an industry trade group.

Home prices and rents have risen briskly over the past year-and-a-half. But the rising relative cost of buying is largely the result of additional interest buyers are paying when they lock in mortgages at the highest rates in years.

The average 30-year fixed mortgage rate rose to 5.66% this week, nearly double what it was a year earlier, according to a Freddie Mac survey. The shift is a shock for many buyers because low interest rates in the past few years had ushered in a period of greater affordability and brought many first-time buyers into the market.

In the fourth quarter of 2020, median mortgage payments and asking rents were basically equal at just under $1,200. Since then, rents have risen 10% to $1,314 in June, according to Census Bureau data, while mortgage payments have risen 58% to $1,893, according to MBA mortgage application data. The ratio between the two stood at 1.44.

'The ratio is a great indicator for households deciding should we rent or should we go ahead and buy' said Edward Seiler, a housing economist at the MBA.

By some measures, housing is the least affordable in decades because the rise in rates has collided with a jump in home prices. With inflation hitting all facets of daily life, the higher costs of buying are encouraging some prospective buyers to bite the bullet and keep renting, even if their landlords are asking for more money."

The Biden Administration Fails Econ 101 -CATO

"President Biden and his advisers seem confident that they can deny reality by ignoring long-standing economic principles and the basic market forces of supply and demand. The Biden team is in serious need of an Econ 101 refresher course. Key economic policies that the administration adopted during the president’s first year and a half in office defy economic principles covered in introductory courses.

Consider one of the administration’s earliest and most preposterous claims, that the federal government can increase its annual expenditures (and budget deficits) by trillions of dollars and that the cost will be nothing. As he tweeted on September 25, 2021, 'My Build Back Better Agenda costs zero dollars.' But even that’s not the worst of it. He also claimed that the substantial added federal spending has dampened the rise in the inflation rate and that additional spending under his proposed agenda would have lowered inflation even more, if Congress had approved it, which it didn’t.

President Biden and his advisers apparently have never heard the economic axiom, 'There’s no such thing as a free lunch.' Because Biden insists that his trillions in additional federal expenditures cost nothing, he can feign - as he and his advisers have done - that his economic agenda will not impose a 'single penny of additional taxes' on Americans who earn less than $400,000 annually. Moreover, Biden proclaims, 'Everyone benefits.'

Nonsense. If only President Biden and his advisers would reflect on their Econ 101 lessons. Federal taxes reduce what Americans at all income levels can buy for themselves and their families with their paychecks, thus transferring resources for public purposes. Added federal expenditures - whether financed by added taxes or deficit spending - have the same consequence but sometimes in obscure and hidden ways. The added spending always soaks up real resources and, in doing so, reduces the availability of resources to produce an array of private goods....

No matter his reasons, President Biden’s record on economic policies suggests that he either learned very little in his Econ 101 course or has forgotten most of what he learned. His insistence that his trillions of added deficit spending, which the Fed largely monetized, has had nothing to do with the rising inflation rate would, by itself, put in grave jeopardy his grade in my introductory course and in those courses taught by most economics professors who are not beholden to partisan ideologies and politics."

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9.1.22 - Great Resignation Creates Robot Boom

Gold last traded at $1,695 an ounce. Silver at $17.80 an ounce.

NEWS SUMMARY: Precious metal prices steadied Thursday on bargain hunting and a flat dollar. U.S. stocks extended losses as investor worried about rising interest rates and the economic impact.

This is the scenario in which gold price jumps $300 this fall -Kitco

"Even though gold is heading for its fifth monthly drop, a high price scenario of above $2,030 an ounce cannot be ruled out this fall, according to RBC Capital Markets.

After peaking above $2,000 an ounce back in March, gold is ending the month of August down more than 5% year-to-date, with December Comex futures last trading at $1,731.70 an ounce.

'The large rally that we saw at the beginning of the year, particularly as Russia invaded Ukraine, was the type of crisis performance typical of gold,' Christopher Louney, commodity strategist at RBC Capital Markets, told Kitco News.

Since then, gold has fallen from its yearly highs. And that's because the particulars of this type of crisis were negative for the precious metal, Louney explained....

But the heightened geopolitical tensions could still support gold into the year-end, which is why a price tag above $2,000 is still possible this fall.

'Gold's tug of war is happening against a high-risk environment. One where there is a war in continental Europe that's ongoing. Also, I wouldn't write off U.S.-China tensions over Taiwan. On top of that, there are the broader geopolitical trade intricacies of what is happening in terms of an energy crisis and economic performance more broadly,' Louney pointed out. 'There is this high-risk perceived safe haven undercurrent that is a tailwind supporting gold.'"

Hopes for Fed Pivot Have Faded, Sapping Stocks’ Momentum -WSJ

"Not long ago, many investors thought the Federal Reserve would cut interest rates next year. Now, few do.

The shift in thinking around the Fed’s policy direction, spurred by Fed Chairman Jerome Powell’s speech in Jackson Hole, Wyo., last week, is taking the steam out of the summer rally that had helped stocks, bonds and cryptocurrencies bounce back from their lows.

U.S. stocks have fallen every day since Mr. Powell stressed that the central bank must keep raising interest rates and then hold them at high levels to fight inflation, even if it hurts economic growth. It marks a shift from earlier in the summer, when investors bet that inflation had peaked and that the central bank would be able to pull off a soft landing, a scenario in which it slows down the economy without causing a prolonged or deep recession....

Even without a recession, investors see the potential for pain ahead: Further interest-rate increases threaten to put more pressure on expensive parts of the stock market, which were among the biggest gainers in the summer rally. Meme stocks, shares tied to cryptocurrencies and technology stocks have slumped in the past week.

'With each interest rate hike, the ability to stick that landing and make everyone happy…that’s getting more and more difficult to do,' said Rod von Lipsey, a managing director at UBS Private Wealth Management".

What’s in the New 401(k) Retirement Bills -U.S. News

"Retirement plans could see some major changes if proposed new legislation is approved by Congress. 'They have so many bills,' says Ed Slott, president and founder of Ed Slott and Company. 'Some people call the whole batch SECURE 2.0. There’s an EARN Act (Enhancing American Retirement Now). One is the Retirement Protection Act. There’s a bunch of different acts here.'

These retirement bills would:

-Increase the maximum annual contribution for retirement accounts by $4,000

-Increase the age when you must begin required minimum distributions.

-Require automatic enrollment and escalation for employer-sponsored plans.

-Increase the amount for the catch-up provision for those 50 and older.

-Allow employers to help those who are burdened with student debt save for retirement.

Many of the changes are intended to encourage employees to prepare for retirement. 'For the most part, what they're trying to do is get people really to save,' says Eric Bond, a wealth advisor with Bond Wealth Management in Long Beach California. 'They feel that people don't have enough money in their retirement accounts.'....

These legislative proposals are not current law and are subject to change. 'It hasn't come together yet,' Slott says. 'The bottom line is more people will be able to put more away for their retirement, especially older people who need to catch up.'"

The Great Resignation forced U.S. companies to order a record number of robots in 2022 -Fortune

"The U.S. robotics industry is booming, partly thanks to the nation’s record labor shortage.

Despite recession warnings and fears of an inevitable economic collapse, America in 2022 is full of jobs, it’s just that nobody wants to take them.

In 2021, the U.S. added 3.8 million jobs, an 'unprecedented' number according to the U.S. Chamber of Commerce.

But since then, labor participation has declined sharply, with around 3.4 million fewer workers participating in the job market than immediately before the pandemic, according to the chamber.

Companies of all shapes and sizes have struggled to cope with the mounting labor shortage, and have seemingly tried everything to remedy it, from reducing operating hours to offering employees previously unheard-of perks.

Now new data suggests that American companies are leaning more on something else to combat the lack of human workers: robots....

The U.S. robotics industry sold 12,305 units last quarter, a 25% bump from the same period in 2021 and 6% higher than in the first quarter of this year.

Last quarter was also the second-best on record in terms of revenues, with U.S. robot manufacturers raking in $585 million, slightly down from the $646 million revenue from the first quarter of 2022, but nonetheless a 29% increase over the same period last year.

Leading the demand for new robots last quarter was the automotive industry, which accounted for 59% of new orders according to A3, although other industries saw rising demand as well, as more and more sectors started turning to automation to cope with staffing and logistics issues."

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8.31.22 - What Jerome Powell Purposely Didn't Say

Gold last traded at $1,713 an ounce. Silver at $18.04 an ounce.

NEWS SUMMARY: Precious metal prices steadied Wednesday on lackluster jobs data and a flat dollar. U.S. stocks traded lower for a third day as investors fear the Fed will keep raising rates despite the potential recessionary impact.

China’s gold imports from Russia surge 750% in July -Kitco

"China has significantly stepped up its gold purchases from Russia amid a Western ban on Russian gold following its invasion of Ukraine.

China imported $108.8 million worth of Russian gold in July. That is a 750% jump from the previous month’s total of $12.7 million and an increase of 4,800% from $2.2 million reported during the same month a year ago, Russian media RBC reported citing Chinese customs data. The data listed included raw and semi-finished forms of gold.

More buying from China comes after the U.S., Britain, Canada, Japan, the EU, and Switzerland banned Russian gold exports following Russia’s invasion of Ukraine.

Earlier in August, it was reported that Russia is looking into its own international standard for precious metals after getting banned by the London Bullion Market Association (LBMA). And it could have a fixed price in national currencies.

The country’s Finance Ministry said it was 'critical' to create the new Moscow World Standard (MWS) to 'normalize the functioning of the precious metals industry' and have an alternative to the LBMA....

According to the Finance Ministry, Russia was the second highest gold producer by volume in 2021, with gold output rising by 9% to 343 tons. The precious metals industry in Russia accounts for around $25 billion a year."

What Jerome Didn't Say -Bonner Research Partners

"Jerome Hayden Powell took just 8 minutes to deliver his remarks at the Fed’s colloquium in Jackson Hole on Friday, one of the shortest speeches there on record. Word for word, these may well have been the most expensive utterances of Mr. Powell’s career thus far. The key passage:

'There will very likely be some softening of labor market conditions, while higher interest rates, slower growth, and softer labor market conditions will bring down inflation. They will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation.'

On hearing the words 'slow,' 'soft' and 'pain,' investors promptly began panicking…

Fox News called the chairman’s remarks a 'sobering prediction.'

'The Stock Market Finally Heard Powell’s Message Loud and Clear,' came the headline in Barron’s. 'It Wasn’t Pretty.'....

By the close of the session, the Dow Jones Industrial Average was down 1,008 points (3%)... the S&P 500 was lower by 147 points (3.4%)... and the Nasdaq was off by 497 points (almost 4%). Ouch!

In the spirit of clarity and honesty due the long-suffering American worker, we offer some unsolicited editorial suggestions.

To the 'some softening of labor market conditions' line, for example, Mr. Powell might have added, 'which will disproportionately impact middle and low income Americans, many of whom have been forced to take second and/or part time jobs to make ends meet. And here, I’ll level with you a bit...' [Pause for effect]

'You see, behind the ‘528 thousand jobs added in July’ headline, some 385 thousand of those fell into the ‘second’ or ‘part time’ designation. Hardly a sign of a robust economy. In fact, the labor force participation rate is back to where it was in April... of 1977!

'Moreover, adjusted for inflation - which I’ll come back to in a second - workers’ real wages are actually going backwards... so no matter how many extra jobs the common laborer or blue collar worker takes on, he’s unlikely to find enough hours in the day to keep his head above water. Okay, moving on...'

Here Mr. Powell might have paused once more, letting the gravity of his words sink into the collective consciousness of a nation already deep in recession....

'Sadly, nothing in this world is free, not even the Fed’s funny money. Somehow, some day, someone has to pay. Which brings me back to everyday, working Americans...'

At this point, Mr. Powell might have rolled up his sleeves, as politicians sometimes do, to affect some solidarity with the folks on the factory floor.

To the 'unfortunate cost of reducing inflation,' the head of the world’s most powerful central banking system might have appended 'that we, as central bankers who flatly refused to see what was obvious to any non-wonk in the land, had a heavy hand in causing.

'You’ll recall we assured you there was nothing to be concerned over here, that inflation, if we ever did manage to conjure such a thing, would only be ‘transitory.’ Well, as I said before, the word ‘transitory’ means different things to different people. So that ought to be the end of that. And now, as you can see from my rolled-up sleeves, we now have the matter firmly in hand going forward. You can, as always, trust us to guide the ship from here on out.'"

Republicans Should Stand for More Than Opposing Democrats -WSJ

"I much dislike sentences that begin 'Polls have shown...' Still, but, yet, nevertheless and however, polls have shown that the confidence Republicans earlier felt in the forthcoming midterm triumphs may not be justified. The gain in House seats is now predicted to be less than expected and hopes for a Republican Senate majority dimmer than a few months ago.

Among the causes of this are the Supreme Court decision overturning Roe v. Wade, which is said to have roused many women against the Republicans; the poor quality of the current batch of Republican candidates; and the division within the party between pro- and anti-Trumpers. But I wonder if something deeper isn’t in play.

I wonder if the problem isn’t inherent in our political parties, at least in their current propensities. Here the Democrats feature the particular, the Republicans the general. Democrats are for, among other things, fighting climate change, eliminating student debt, taxing corporations more heavily; the Republicans, among other things, are for entrepreneurship, laissez-faire economics, strict construction of the Constitution.

With their specific programs, the Democrats seem always on the political offensive; with their general principles, the Republicans on the defensive, seeing it as their chief task to block costly Democratic bills and other attempts at radical change. The best offense is a good defense, or so it is often said in football and other sports; it is less certain that this is so in politics.

Can one hope to win elections based on general principles instead of particular policies and programs? What the Republicans had going for them in the midterms was opposition to inflation, the obvious madness (and sadness) of our open southern border, the crime openly rampant in big-city streets, the wobbly foreign policy of an American president who in this realm and others seems well over his head.

However worthy of attack these things are, they leave the Republicans in the respectable but limited position of loyal opposition. What, apart from this opposition, does the party stand for that American voters can get behind in the passionate way that wins elections?

The lack of positive policies or programs leaves Republicans open to the old argument that the party stands for little more than the defense of rich and the maintenance of the status quo. In this scheme - or, as we say nowadays, narrative - the Democrats stand for progress, they are the party of the people, holding the torch of social justice high, while the Republicans stand for regress, the continual enrichment of the 1%, a deep insensitivity to injustice and suffering.

In time not for the midterms but surely for the 2024 presidential elections, it would be of great aid to the Republicans if they were to formulate and promote some significant policies and programs. This might begin with a sound immigration policy that also dealt justly with the so-called Dreamers, the children born to illegal immigrants and raised in this country. How useful it would be if the party looked into the reasons for the escalating cost of higher education and devised better policies than those that now travel under the wasteful banner of 'diversity, equity and inclusion.'

Instead of being against all economic regulation, why can’t Republicans stand for sensible regulation? Rather than denying climate change, Republicans might get serious about a solution that doesn’t simultaneously cripple the economy and diminish the general quality of life. The party could also unapologetically take up the law-and-order mantle in a way that Democrats, lest they be thought racist, have obviously been nervous about doing."

Biden’s Spendy, Bloated Government Corrodes Our Economic Freedom -Heritage Foundation

"America’s economic freedom is in growing peril.

That was one of the core findings of The Heritage Foundation’s 2022 Index of Economic Freedom, published in February. The annual global benchmark report, which compares countries’ economic governance and competitiveness, underscored the urgent need for America to change policy course.

The latest index reported that the U.S. fell from 20th to 25th place in the rankings of global economic freedom - its lowest showing since publication of the first index in 1995....

Despite America’s already weakened fiscal health, the Biden administration has barreled full steam ahead to implement a socialist policy agenda that has added trillions to the national debt, hiked taxes through higher inflation, increased the regulatory burden, and centralized more federal power over the economy....

From a broader perspective, the cost, size, and intrusiveness of government are a central issue of economic freedom.

Widening deficits and a growing debt burden, both of which are direct consequences of poor government budget management, have led to the erosion of America’s overall fiscal health, which the ongoing spending spree has been exacerbating. Deviations from sound fiscal positions often disturb macroeconomic stability, induce economic uncertainty, and thus undermine America’s economic freedom and resilience.

The nation’s competitive position isn’t threatened because the federal government fails to spend enough. The problem is that government has grown too big in scale, scope, and power over our daily lives.

The political current is always running toward statism. But as G.K. Chesterton said, ‘a dead thing can go with the stream, but only a living thing can go against it.’ Ever since America’s founding - upon principles of market capitalism that elites hated then as now - we have been the living thing in the global economy."

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8.30.22 - Gov’t Aid Fueling 'Pro-Lazy' America

Gold last traded at $1,723 an ounce. Silver at $18.42 an ounce.

NEWS SUMMARY: Precious metal prices eased Tuesday amid falling oil prices and a flat dollar. U.S. stocks fell as the Federal Reserve signaled they will raise interest rates to squash inflation despite the negative consequences for economic growth.

Gold subdued by bets for more Fed rate hikes -CNBC

"Gold prices edged lower on Tuesday on expectations of more interest rate hikes by the U.S. Federal Reserve, while a softer dollar capped declines....

'Gold prices remain under the mercy of rising Treasury yields as markets come to terms with the Fed’s vow to digest to tame soaring inflation,' said Lukman Otunuga, senior market analyst at FXTM....

At the Jackson Hole central banking conference in Wyoming last week, the Fed and the ECB struck a hawkish tone, pledging all efforts to tame high inflation even if economic growth takes a hit. The Fed has been raising borrowing costs since March, with a majority of traders now expecting a 75 basis points hike in September.

Any gain in gold may be muted as Fed chief 'Jerome Powell’s comments highlighted that plenty of intervention is still required to bring inflation under control,' said Rupert Rowling, analyst at Kinesis Money.

Although gold is considered a safe bet during economic uncertainty, rate hikes increase the opportunity cost of holding bullion."

Too much free government aid is fueling 'pro-lazy' America -New York Post

"Government policies have created a culture of laziness in recent years — mostly in ways you’d expect, but some you wouldn’t.

First the COVID-19 pandemic opened up the spigot of government aid. Initially that aid went to families that, in many cases, genuinely needed it because of government-mandated business closures that prevented people from working. Yet as those lockdowns loosened, the benefits provided to people who stayed home remained intact. The government never turned off the tap.

Notably, this public policy was supported not only by most Democrats, but also by prominent Republican legislators like Senator Josh Hawley and President Trump, who refused to sign an aid package into law unless it contained a higher threshold ($2,000 vs. $1,600) of government aid to families.. It’s part of the age-old promise of bread and circuses: it’s legal to bribe citizens to reelect you as long as you do it with government money. Of course, you’re ultimately bribing them with their own money, and diluting its value through inflation too.

This cornucopia of free money has contributed to a culture of laziness that has resulted in the greatest labor shortage in the United States in over a generation. People simply became accustomed to not working - and quite liked it. White-collar employees enjoyed 'working' from home with a measurable downtick in how much they were actually completing work, in my experience. So far, we’re still early in the process of formally studying it, and the existing evidence is mixed.

A recent analysis in the Wall Street Journal suggests that the US’s more generous unemployment benefits than other countries’ contributed both to its lower labor-force participation rate and, because of fewer workers to help meet demand, higher inflation.

You would predict that people start going back to work when the unemployment benefits stop. But we’re not seeing that happen - at least not yet. Why? Because people got accustomed to the idea of not working and enjoyed it enough to stop working for longer than they could afford."

Elon Musk Says World Needs More Oil and Gas -WSJ

"Tesla Inc. boss Elon Musk told European energy leaders that the world needs more oil and natural gas and should continue operating nuclear power plants while investing heavily in renewable energy sources.

'I think we actually need more oil and gas, not less, but simultaneously moving as fast as we can to a sustainable energy economy,' Mr. Musk, Tesla’s chief executive and largest shareholder, told a conference in Stavanger, Norway.

Mr. Musk said work on developing battery-storage technology is key to making the most of investments in wind, solar and geothermal energy. “I’m also pronuclear,” Mr. Musk said.

'We should really keep going with the nuclear plants. I know this may be an unpopular view in some quarters. But I think if you have a well-designed nuclear power plant, you should not shut it down, especially right now,' he said.

Mr. Musk’s comments at the gathering of oil-company executives, energy analysts and government officials came as a global energy crisis has driven record natural-gas and electricity prices and fears of winter fuel shortages across Europe. Russia’s war in Ukraine has made global energy supplies even tighter as economies have emerged from periods of low energy demand earlier in the pandemic....

Fears of power outages and threats of potential natural-gas rationing, along with soaring prices, have already spurred some businesses to self-impose energy curbs or shut down operations.

The crisis has also highlighted the division between governments and energy-thirsty industries buckling under high prices and recession worries and oil companies that have faced criticism from environmentalists, taxpayers and politicians for record profits."

Anthony Fauci: The Last 'Trusted Doctor' - His credibility did not survive the pandemic intact. -Slate

"After four decades of spearheading America’s responses to infectious disease threats from AIDS to monkeypox, Dr. Anthony Fauci announced on Monday that he plans to step down. Some are toasting the achievements of a towering figure in public health, while others are celebrating the exit of a government official whom they view as having mismanaged the COVID-19 pandemic.

Back in April 2020, Fauci was one of the most revered figures in America - the 'trusted doctor' so many sought to guide them in uncertain times. But now, Fauci is closer in popularity to the IRS.

Fauci’s personal achievements as a scientist are indisputable - he’s one of the most-cited living researchers on the planet for his work on HIV and other topics. But his legacy as a government health official will, for better or worse, be more complicated. In a pandemic that was weaponized by a cynical president from the very start, Fauci may have tried to stay above the fray, but now, he’s firmly in the grip of politics.

Even on his way out the door, some congressional Republicans still want to investigate Fauci for his handling of the COVID-19 response (as well as for the conspiracy theory that he indirectly caused a lab leak in Wuhan, China). 'Fire Fauci' has become a common refrain on the right. Even some Democrats have grown increasingly tired of the government’s pandemic guidance. Did Fauci fail to rise to the occasion, or did the occasion drag him down?....

Like most people in power during a fast-moving pandemic, Fauci has been wrong. Most infamously, he was wrong about masks and asymptomatic transmission early in the pandemic. He was also wrong about vaccines stopping transmission. He was dismissive about the possibility of the lab origins of the virus - which, though increasingly unlikely, could not at the time be completely ruled out - which later raised eyebrows and fed into conspiracy theories because the NIH had provided grant money that indirectly funded virus research in Wuhan....

But a deeper issue, I think, is that the archetype of the 'trusted doctor' just did not survive the pandemic. It might be easy to chalk this loss up to a hyperpolarized country that can’t agree about anything. Or to blame decades-long efforts to generally destabilize scientific expertise. These are both factors. But the loss of the trusted doctor is also about a nation confronting a truth easier to ignore before the pandemic: Public health is unavoidably political.

Fauci’s strength as a communicator relied on projecting an air of neutral scientific authority, but in reality, that was always a bit of legerdemain for him, or any scientist. So many of the controversies of this pandemic aren’t about facts, but values. That the mRNA vaccines save lives is an empirical fact. Whether we should mandate them is a political choice. When Fauci advocates for vaccine mandates - even if it’s consistent with the principles of public health - he’s taking a position that elevates collective benefit over individual choice.

Another factor is that there have always been some deeper flaws with the 'trusted doctor' archetype, particularly when it tends toward the paternalistic. In a public health crisis, the CDC’s mantra is 'be first, be right, be credible' - a set of goals that are surely admirable but are clearly somewhat in conflict with each other. Fauci was America’s prominent mouthpiece for delivering on this axiom. The problem was that Fauci was not always a straight-shooter. He and many others in the public health profession repeatedly told the public 'noble lies' - statements meant to shape public behavior in potentially socially beneficial ways at the expense of the whole truth."

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8.29.22 - Dow Falls Over 1,000 Points After Powell Speech

Gold last traded at $1,738 an ounce. Silver at $18.81 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Monday on a flat dollar. U.S. stocks extended losses following hawkish Fed interest rate comments last week.

Gold remains under pressure after Powell speech -FX Street

"Gold remained in negative territory Friday and the odds of another test of the $1740 support remains in place, particularly while under $1750. If gold manages to break firmly above $1755, the intraday outlook could change. Above, the next strong barrier is seen at $1770....

Fed Chair mentioned that higher interest rates will persist for some time and added the 'historical record cautions strongly against prematurely loosening policy'. The tone of Powell was seen as 'hawkish'.

The latest report on Friday showed a better-than-expected reading in the University of Michigan’s Consumer Sentiment Index for August, which came in at 58.2 against the market consensus of 55.2.

Earlier on Friday, a report showed the Core Personal Consumption Expenditure Price Index dropped in July by 0.1% unexpectedly, while the annual rate declined from 6.8% in June to 6.3% against expectations of 7.4%."

Dow Falls More Than 1,000 Points After Powell Speech -WSJ

"The Dow Jones Industrial Average sank more than 1,000 points Friday after Federal Reserve Chairman Jerome Powell vowed to keep pressing the fight against inflation, even at the expense of economic growth.

In a highly anticipated speech, Mr. Powell said the Fed must continue raising interest rates and keep them high until inflation is under control. His comments disappointed investors who had hoped inflation had peaked and the Fed would shift from raising rates to lowering them sometime next year.

Friday’s selloff capped off two consecutive weeks of losses for major stock indexes and largely wiped out the market’s gains since late July. Technology stocks that were flying high earlier this summer took a particular beating, with Amazon.com and Netflix both falling more than 4% for the day....

All three indexes declined more than 4% for the week, following an up-and-down ride in which investors weighed worries over Fed tightening against economic data that pointed to underlying strength in the U.S. economy.

Mr. Powell’s comments at the Fed’s summit in Jackson Hole, Wyo., highlighted how the central bank is preparing to shift from a phase of rapid and large rate increases to potentially one in which it focuses on reaching an interest-rate level that slows hiring, spending and growth, then holds at that level for some time.

'The biggest surprise here is that investors were bracing for Fed Chair Powell to talk tough on inflation, yet are reacting negatively after he did exactly that,' said Michael Arone, chief investment strategist at State Street Global Advisors. 'It appears investors were naively hoping for a Powell-pivot, but instead he doubled down on the Fed’s inflation-fighting credibility.'....

At the next Fed meeting, officials will likely debate whether interest rates should be raised by 0.5 or 0.75 percentage point. Futures markets indicate that traders are split, with roughly 60% expecting the larger increase and about 40% anticipating the smaller, half-point hike."

The Sellers Strike and Housing Inventory -Calculated Risk

"Starting in July, new listings declined year-over-year according to my local market data, and also Realtor.com and Redfin. Realtor.com economist Jiayi Xu noted today:

'New listings - a measure of sellers putting homes up for sale - were again down 12% from one year ago. This week marks a seventh straight week of year over year declines in the number of new listings coming up for sale and a second consecutive week with double digit declines.'....

'Many homeowners have been reluctant to put their houses up for sale during a market slowdown, which is now holding back inventory growth,' said Deputy Chief Economist Taylor Marr. 'That means buyers have fewer homes to choose from and may lose some of their newfound bargaining power, which allows sellers to maintain their list prices instead of having to cut them.'....

There are always people that need to sell due to the so-called 3 D’s: Death, divorce, and disease. Also, in certain times, some homeowners will need to sell due to unemployment or excessive debt (neither is much of an issue right now).

And there are homeowners who want to sell for a number of reasons: upsizing (more babies), downsizing, moving for a new job, or moving to a nicer home or location (move-up buyers). It is some of the 'want to sell' group that is 'on strike'.

It is financially difficult to move when your current mortgage rate is around 3%, and your new mortgage rate will be in the 5 1/2% to 6% range. So, it seems likely that new listings will be down year-over-year for some time (something to watch closely)."

Is America on the verge of a new housing collapse? Mountain West and Sun Belt overvalued by 72% -Daily Mail

"House prices could fall by up to 20 percent next year if there's a recession, experts warn - and property in some areas of the country is overvalued by as much as 72 percent.

Mark Zandi, chief economist for Moody's Analytics, was pessimistic about the housing market in May, but he has now made his forecasts even more bleak, Fortune reported on Wednesday.

It comes amid ongoing arguments over whether the US is already in a recession, with the country recording two consecutive quarters of negative growth - the traditional definition of such a slump.

-Boise, Idaho; Charlotte, North Carolina and Austin, Texas were the three most overvalued areas in the United States, according to Moody's Analytics.

-Moody's found that found that 183 of the nation's 413 largest regional housing markets are 'overvalued' by more than 25 percent.

-If a recession hits, house prices in those 183 regions could plummet by as much as 20 percent, Moody's predicted.

-If there is not a recession, they will still fall 10-15 percent, the analysts believe - echoing other experts.

-The housing inventory is at its highest level since April 2009, as sellers struggle to get rid of their property because mortgages have become more expensive.

-Mortgage rates have nearly doubled since January, rising to 5.13 percent for a 30-year loan as of last week, according to Freddie Mac."

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8.26.22 - Student Debt: Canceled - Why Stop There?

Gold last traded at $1,738 an ounce. Silver at $18.90 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Friday ahead of Fedspeak on a weaker dollar. U.S. stocks traded near flatline ahead of Powell’s speech in Jackson Hole.

Gold price lower as Fed Chair Powell on deck -Kitco

"Gold prices are lower in early U.S. trading Friday. The marketplace is highly anticipating Federal Reserve Chairman Jerome Powell's Friday morning (10:00 a.m. Eastern time) speech at the Jackson Hole, Wyoming Federal Reserve annual symposium, which began Thursday.

Past Jackson Hole Fed meetings have significantly moved markets. Gold and silver traders are expecting from Powell comments that are bearish for metals markets: a hawkish lean for U.S. monetary policy and on the Fed's fight against inflation....

A hawkish U.S. monetary policy stance by Powell can be extrapolated into weaker U.S./global economic growth that would mean less demand for metals.

Also, hawkish rhetoric from Powell should be bullish for the U.S. dollar and for rising bond yields. However, many traders can correctly argue that Powell and other Fed officials have laid out their aggressive monetary policy tightening in recent weeks, and that should be 'baked into the cake' for markets.

It could be that the precious metals post a 'relief rally' if Powell in his remarks today does not get any more aggressive on Fed tightening."

Student Debt: Canceled -Bonner Private Research

"Every day the headlines come. And every day they are a mixture of real news, propaganda and claptrap. CNBC: 'Biden cancels $10,000 in federal student loan debt for most borrowers Nearly 45% of borrowers, or almost 20 million people, would have their debt fully canceled, according to the White House.'

Isn’t that nice of him, dear reader? Of course, it wasn’t his money. And canceling the debt won’t cost him a penny.

But Biden’s generosity is a big step forward in financial history. For thousands of years, we humans have been plagued by debt. And now we have the answer - just ‘cancel’ it.

Free at last… free at last…

And now it’s time for Our Savior to take aim at all the other disagreeable debits in our lives; he should cancel auto-loans… and mortgage loans… and payday loans… revolving loans… government debt… pawn shop loans… bank loans… credit card debt… margin loans… social obligations (‘they invited us…we need to reciprocate’) …loans for solar panels and EVs… child support… alimony… gambling debts… and bar tabs too.

Thanks to the Fed’s ultra-low interest rates and its 'money-printing,' our economy is burdened by $90 trillion in debt. And Mr. Biden has just shown us all how to get rid of it.

And why stop there? Why should we have to return the umbrella we borrowed from the Merrion Hotel during a sudden downpour in Dublin… or the serving platter Ms. Jones left with us when she brought over some cookies? We also have a nice little rental car in the driveway; we’d like to keep it.

Only Fox News dared to ask: if the people who got the service don’t have to pay for it, who does? Education is a service. It has a cost. It must be paid by someone.

Biden’s act of largesse means that the freight will be paid by people who didn’t ride the train, many of whom didn’t go to college and don’t earn as much as the people who did. In other words, the law clerks and bookkeepers will have to pay for their bosses' professional training.

Is that such a good idea? Maybe not."

The Fed wants to replace private cryptocurrencies with its own -The Hill

"The Federal Reserve’s academic publications and statements make it apparent that it intends to expand its regulatory authority over stablecoins. This concentration of power at the Fed relegates accountability to Congress and favors a framework where bureaucrats will substitute privately issued stablecoins with a central bank digital currency (CBDC) run by the federal government.

Employees at the Fed have proposed policy recommendations that threaten to wipe out privately issued stablecoins - digital assets backed by the U.S. dollar or bonds. One proposal, according to a paper co-authored by an attorney at the Fed, is to 'introduce a central bank digital currency and tax private money out of existence.'

In one footnote, the paper comments that this recommendation is 'essentially the route the Peoples Bank of China has taken with respect to cryptocurrencies.' China banned private cryptocurrencies so that its citizens would adopt the state-run central bank digital currency.

The Fed is not opposed to pursuing the same heavy-handed policy that will crowd out private cryptocurrencies, limit options for consumers and consolidate control over Americans’ payment transactions with the central bank.

The establishment of a central bank digital currency could provide the Internal Revenue Service with another tool to increase tax enforcement. The Fed’s report states that 'governments could use a CBDC to collect taxes.'

A study by Zijian Wang concludes that if a 'CBDC offers less anonymity than cash' then the IRS would be able to more easily interfere in the lives of American taxpayers. Although Americans should pay what they owe in taxes, the IRS could use central bank digital currencies to target small businesses and abuse taxpayers' right to privacy....

Increasing the regulatory powers of the Fed could sound the death knell for private stablecoins. Future consideration of policies should enable both banks and nonbanks to utilize the innovative technology unhindered by excessive government intervention.

This can best be achieved by offering a clear legislative framework that continues to enable members of Congress to have a direct say in future regulation, instead of handing off the job to unelected bureaucrats with no accountability to the American people."

The Social Security 2100 Act Is a Bad Deal for Workers -Cato

"Democrats are reportedly gearing up to move the Social Security 2100 Act (H.R. 5723) in the House Ways and Means Committee this fall. Their goal is to bring the bill to the House floor before the election.

Introduced last year by Rep. John Larson (D‑CT), Democrats announced their plans earlier this month, around the time Social Security marked 87 years since enactment. President Biden also jumped on the bandwagon along with 202 Democratic co‐​sponsors.

This is not the first time that Rep. Larson introduced a Social Security reform bill. Yet, the version before Congress now is very different from previous iterations. A closer look at the changes to the Social Security 2100 Act indicate that Democrats’ election timing is likely no accident.

H.R. 5723 would expand Social Security in size and scope, to the detriment of workers. And it would do so in a politically driven way that lacks transparency and good policy principles.

While I was no fan of the original bill nor of the version introduced last Congress, I could appreciate what Rep. Larson was trying to accomplish by making the program solvent over the 75‐​year projection period. The new version of the bill gives up on long‐​term solvency, undermining one long‐​standing principle.

H.R.5723 is also far less transparent and far more political than its previous version (H.R.1902). H.R. 1902 introduced last Congress would have raised taxes and benefits across the board, growing this outdated and poorly targeted old‐​age entitlement program in size and scope.

As my then‐​colleagues Rachel Greszler and Drew Gonshorowski at the Heritage Foundation pointed out, the Social Security 2100 Act would have doubled down on what’s already a raw deal for most workers."

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8.25.22 - End of Gold Standard = Lower Standard of Living

Gold last traded at $1,756 an ounce. Silver at $19.21an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on momentum buying amid mixed economic data and a flat dollar. U.S. stocks traded slightly higher ahead of Jackson Hole Fedspeak on Friday.

Money Does Matter: The End of the Gold Standard Led to a Lower Standard of Living -Mises

"On August 15, 1971, Richard Nixon announced that the US dollar (USD) would no longer be redeemable in gold. This was supposed to be temporary. And yet, 51 years later, here we are. The gold standard was gradually destroyed in the twentieth century. Now people are experiencing the consequences: less purchasing power, more economic cycles, and a weaker economy.

In the chapter 4 of his book What Has Government Done to Our Money?, Murray Rothbard goes over the steps the government took to end the gold standard over the twentieth century, from the end of the classical gold standard to the closing of the gold window in 1971.

The classical gold standard tended to prevent the government from running budget deficits and going into debt, as it could not easily create inflation. In 1913, the Federal Reserve (Fed) was born. When the US entered the World War I, US dollars were printed at an excess of the gold reserves. At this point, the US got off the classical gold standard and this money printing contributed to the depression of 1920–21....

Today, the federal debt is above $30.5 trillion. The Fed can’t raise rates without crashing the economy. The US has gone from being the world’s biggest creditor in the early 1970s to the world’s biggest debtor today (the US has more debt than all other governments in the world combined).

The consequences of the end of the gold standard began to be felt in the 1970s. The devaluation of the USD substantially reduced Americans’ real wages. Before 1970, usually only one member of a family was able to support it. From the 1970s onwards, this began to change to the point where today this is only possible for wealthier people.

Despite all the technological advancements, the standard of living today is lower than in the 1950s and the 1960s, as today, in order to live and to buy things they want or need, people need to work a lot more (and even go into debt).

If the USD had not been devalued since 1913 (or even if it had been appreciated, which is what tends to occur when there is no monetary expansion), the standard of living would be much higher today."

Jerome Powell's Dilemma: What if the Drivers of Inflation Are Here to Stay? -WSJ

"Central bankers worry that the recent surge in inflation may represent not a temporary phenomenon but a transition to a new, lasting reality.

To counter the impact of a decline in global commerce and persistent shortages of labor, commodities and energy, central bankers might lift interest rates higher and for longer than in recent decades - which could result in weaker economic growth, higher unemployment and more frequent recessions.

The Federal Reserve’s current round of interest-rate increases, which economists say have pushed the U.S. to the brink of a recession, could be a taste of this new environment.

'The global economy is undergoing a series of major transitions,' said Mark Carney, former Bank of Canada and Bank of England governor, in a speech at an economics conference in March. 'The long era of low inflation, suppressed volatility and easy financial conditions is ending.'

This new era would mark an abrupt about-face after a decade in which central bankers worried more about the prospects of anemic economic growth and too-low inflation, and used monetary policy to spur expansions. It also would be a reversal for investors accustomed to low interest rates.

The challenges for policy makers will take center stage from Thursday to Saturday when they gather for the Kansas City Fed’s annual retreat in Jackson Hole, Wyo., being held in person for the first time since 2019."

The CDC is broken and apologies can't fix it -The Hill

"Dr. Rochelle Walensky, director of the Centers for Disease Control and Prevention, is getting credit for a mea culpa for saying what seems obvious: 'For 75 years, the CDC and public health have been preparing for COVID-19, and in our big moment, our performance did not reliably meet expectations,'

This is a classic act of contrition theater, in which Walensky avoids taking any responsibility for the agency’s failure to understand the threat the nation faced or the CDC’s unfounded 'guidance' regarding how to slow the spread of COVID, measures that the agency now acknowledges are flawed.

It is not a small issue that CDC personnel undermined respected scientists outside of government who quarreled with mask mandates, social distancing, shutting schools, closing businesses, and promoting universal vaccination with serums whose known risks to some were downplayed. All this while dismissing Americans who doubted that the CDC had a monopoly on 'the science.'....

In truth, the CDC did a great deal of damage to public faith in science and enormous damage to public trust in government writ large. The more consequential cost, of course, is what epidemiologists know as excess death - those whose lives were lost following government guidance on how to save their lives.

Walensky’s apology came as a prelude to the release of an internal review of the CDC’s management that she ordered in April in response to growing criticism including the threat of a congressionally mandated investigating commission....

With no private sector input, the report appears very much a product of Washington - interesting findings that will hold off critics but are unlikely to regenerate trust in the agency....

Acknowledging failure and offering apologies won’t work to recapture public trust. The CDC’s inability to detect COVID’s presence early on and its failures to deliver a workable containment strategy are not new problems. The agency failed similarly in the HIV-AIDS epidemic and the CDC is already behind in controlling monkeypox....

To hold the public’s trust again, Walensky should ask Congress to cut the CDC down to size, restoring its focus on preventing communicable diseases. Many of the agency’s other efforts can be sent to other government agencies, many within the National Institutes of Health, for primary responsibility. Without such a drastic move, no apology, however sincere, will save the agency."

Biden's Student Debt Forgiveness Plan Will Worsen Inflation -Reason

"When President Joe Biden and his fellow Democrats were pushing the passage of a $1.9 trillion stimulus bill in early 2021, economist Larry Summers warned that the American Rescue Plan would likely trigger runaway inflation.

He was ignored, but he was ultimately proven right.

Now, Biden is prepared to announce a broad-based student loan forgiveness plan that will erase between $10,000 and $20,000 in debt for Americans earning as much as $125,000 this year. The proposal also reportedly extends an ongoing payment moratorium through the end of the year....

Summers, a veteran of both the Clinton and Obama administration, is once again warning that the policy could worsen already high inflation.

'Student loan debt relief is spending that raises demand and increases inflation,' Summers wrote on Twitter yesterday. 'It consumes resources that could be better used helping those who did not, for whatever reason, have a chance to attend college. It will also tend to be inflationary by raising tuitions.'

An entirely predictable response to a $10,000 student loan forgiveness plan would be colleges and universities hiking tuitions - while telling future students not to worry about the rising sticker prices because, hey, a portion of your loans will likely get forgiven anyway.

In short, student loan forgiveness will contribute to inflation on both macroeconomic and microeconomic levels, Summers explained. 'Unreasonably generous student loan relief' would contribute to generally higher prices throughout the economy, he tweeted, while simultaneously 'encouraging college tuition increases.'"

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8.24.22 - Dollar Decline Results in Solid Gains for Gold

Gold last traded at $1,749 an ounce. Silver at $19.06 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on bargain hunting and a flat dollar. U.S. stocks traded higher as investors awaited more guidance from Fed Chairman Powell on the central bank’s fight against inflation.

Dollar declines after hitting twenty-year high resulting in solid gains for gold -Kitco

"The Federal Reserve is pivoting from an extremely accommodative monetary policy to a policy of monetary tightening. The Federal Reserve would continue to raise rates at each of the three FOMC meetings that followed. In May the Fed raised rates by 50 basis points, 75 basis points in June, and another 75 basis points in July. This took the cost of borrowing capital from virtually zero to 2 ½%.

With inflation rising at the highest pace in 41 years, the Federal Reserve was slow to initiate a series of rate hikes and had for too long been behind the curve. The greatest error made by the Federal Reserve was its assumption that rising levels of inflation were transitory and would naturally dissipate over a relatively short amount of time. The fact that the Federal Reserve was incorrect in its assumption would force them to initiate an extremely aggressive series of rate hikes over a short period of time....

The Federal Reserve turned a blind eye to inflation spiraling out of control with consistent and consecutive upticks month after month.

In April of this year following the Federal Reserve’s first-rate hike, inflation had a fractional decline from 8.5% to 8.3%. By the time the Federal Reserve had raised rates three times inflation continued to rise to hit a peak in June of 9.1%, a level not seen in 41 years. The first meaningful decline in inflation occurred last month moving the CPI from 9.1% to 8.5% in July.

Concurrently, the dollar index rose from 99.26 in March to its highest closing value in 20 years yesterday when the dollar index closed at 108.965. This also had a dramatic bearish impact on gold which hit its highest value in March this year trading at $2077 to its lowest value for 2022 on July 21, when gold futures hit a low of $1680....

The dollar index declined by 0.47% today which means that it accounted for roughly half of the gains in gold with the remaining gains directly attributable to market participants bidding the precious yellow metal higher."

The Housing Market Downturn Is Here -Compound Advisors

"The mountain of evidence pointing to a housing market downturn continues to build…

- Housing Starts hit a 17-month low in July, down 8% year-over-year.

-The US Housing Market Index (a measure of homebuilder confidence) fell for the 8th straight month, moving back below 50 for the first time since May 2020.

- New Home Sales hit a 6-year low in July, down over 50% from their 2020 high.

- Existing Home Sales continue to plummet, down 20% over the last year and at their lowest levels since June 2020.

- The breakdown in existing home sales by price range now shows declines in transactions across the board (from low end to high end).

The housing market is not like the stock market, where rapid price adjustments can happen in a matter of days.

Due to much lower liquidity, higher emotional anchoring, and a dearth of forced sellers, housing prices generally take much longer to move.

What you tend to see first is a sharp decline in transactions, as buyers go on strike and sellers are reluctant to cut prices enough to meet this shift lower in demand. The new and existing home sales numbers illustrate that we are well into this phase, with a collapse in transactions at a rate that we haven’t seen since the pandemic recession in 2020.

We’re now entering the second phase, where sellers are starting to face the reality of the situation and cut prices in response. The roughly 8% of listings with price drops in the past 4 weeks is the highest we’ve seen on record with data going back to 2015.

Sale prices, in turn, are starting to move lower as well. The median sales price is now down over 5% since the peak in June (from $395k to $374k). During the same period last year prices rose.

The biggest factor driving demand and prices lower is the lack of affordability, with the Housing Affordability Index at its lowest level in 33 years...Today, the price declines have just begun."

Global Economies Flash Warning of Sharp Slowdown -WSJ

"Business activity in the U.S., Europe and Japan fell in August, according to new surveys, pointing to a sharp slowdown in global economic growth as higher prices weaken consumer demand and the war in Ukraine scrambles supply chains.

U.S. companies reported a sharp drop in business activity in August in a broad-based decline led by services companies, though manufacturing slowed as well. High inflation, material shortages, delivery delays and interest-rate rises all weighed on business activity, the S&P Global survey said....

'Gathering clouds spread across the private sector as services new orders returned to contractionary territory, mirroring the subdued demand conditions seen at their manufacturing counterparts,' said Siân Jones, senior economist at S&P Global Market Intelligence.

The U.S. economy has contracted for two consecutive quarters, though job growth remains robust with unemployment matching a half-century low. Inflation remains near records despite a slight cooling of inflation in July with the Federal Reserve pursuing an aggressive rate-raising strategy to cool demand and slow price gains.

Europe business activity also declined for a second month in a row amid a renewed rise in energy prices over uncertainty about Russia’s willingness to maintain its already reduced supply of natural gas ahead of the heating season.

Russian state gas supplier Gazprom on Friday said it would shut down the Nord Stream natural-gas pipeline to Germany for three days of maintenance later in August. That sent gas prices up, spurred by worries over Europe’s ability to amass sufficient fuel supplies before winter....

Economists at Barclays expect the eurozone economy to grow this quarter and then contract in the final three months of this year and the first quarter of 2023. But, in a note to clients, they said their forecast of a mild recession 'increasingly looks too optimistic,' given uncertainties about the availability of natural gas.

S&P Global’s surveys indicated that private-sector activity in Japan and Australia also declined in August for the first time since a wave of new Covid-19 infections at the start of the year."

Same As It Ever Was -Alhambra Investments

"'History never repeats itself. Man always does.' -Voltaire

Mark Twain is credited with a similar saying, that history doesn’t repeat but it rhymes. Of course, there is scant evidence that Clemens said anything of the sort just as Voltaire may or may not have penned the quote above. But both men were much wittier than I – than most – so I’ll take them both as being representative, if not genuine.

I have been a professional investor for now over 30 years and I have seen investors make the same mistakes over and over, as if they are ruled by some mysterious force that prevents them from learning from their past. And that may well be true. Reality is, as Einstein may have said, an illusion, albeit a very persistent one.

What we see as reality is in actuality merely an approximation, a prediction of our brains. We can’t actually see the present because there is a lag between the information being captured by our eyes and processed by our brains. To make our life easier, our brains essentially predict the future, based on past experience, and present us with reality as it believes it should be based on what it was a few milliseconds ago.

Today, in an age of instant information, we are bombarded by seemingly convincing evidence that continually reinforces our existing biases and prevents us from breaking free of our past experiences. Investors today see all economic slowdowns and all bear markets in the context of 2008 and 2020. And if they’re a bit older, maybe 2000-2002....

I have said many times that it isn’t my job to predict the future but merely to accurately observe the present. I’m human too so it isn’t easy but after 4 decades as an investor, I have learned to recognize my own biases and shortcomings – most of the time. I spend a lot of time trying to figure out the consensus and how it will be wrong....

Recession seems inevitable as yield curves invert. Inflation is coming down but not fast enough and wages aren’t keeping up. Europe is in a natural gas noose of its own making. Inventories are rising and real retail sales peaked 16 months ago in March of 2021. Consumer sentiment is awful and the leading economic indicators are down for 5 consecutive months.

You have to ask yourself though, with all that bad news, why is the S&P 500 up 17% from its lows? How, in the face of all that bad news about the economy, can anyone have the confidence to buy stocks?

The answer is that there are some people who can do what Warren Buffett says you should do in these situations (and what he is actually doing by the way), namely buy when everyone else is fearful. It’s hard to do because the bad news is obvious while the good news is not....

I don’t know where the economy or the markets are headed from here. But I am absolutely certain that whatever the outcome, it will be different than 2000 or 2008 or 2020. Because it is always different this time but investors are not. They will always be fearful at the bottom and ecstatic at the top. They will always be ruled by their emotions rather than logic. And it will always be tempting to embrace the bosom of the consensus."

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8.23.22 - Gold: 4 Reasons To Buy This Dip

Gold last traded at $1,746 an ounce. Silver at $19.09 an ounce.

NEWS SUMMARY: Precious metal prices rebounded Tuesday amid housing weakness and a flat dollar. U.S. stocks traded mixed as investors braced for a hawkish message from the Federal Reserve.

Gold: 4 Reasons To Buy This Dip -Investing.com

"Governments, central banks, monetary authorities, and supranational financial institutions hold gold as an integral part of their foreign exchange reserves. Moreover, they have been adding to reserves over the past decades, validating gold’s role in the global financial system....

Aside from its monetary role, gold is a commodity and an ornamental metal that symbolizes love, wealth, and security. Unparalleled, gold’s brand remains the ultimate form of money....

Since 1999, gold took off on the upside, making higher lows and higher highs. In June 2022, the bullish trend is nearly 23 years old, with no signs of ending any time soon.

Gold is an integral part of many investors’ savings. Gold is an asset that provides safety and is a store of value with thousands of years of performance history. Perhaps the most compelling reason to own gold is that governments hold the metal as part of their foreign currency reserves.

At least four compelling factors make gold a critical asset for all portfolios:

-History: Gold’s role as a means of exchange dates back thousands of years. It is a proven asset that is a store of value and a symbol of wealth.

-Inflation: Governments can expand the money supply to their heart’s content. The only way to increase the gold supply is to extract more from the Earth’s crust.

-Geopolitical turmoil: The hopes for globalism have evaporated with the bifurcation of nuclear powers. The Chinese/Russian 'no-limits' cooperation threatens the US, Europe, and their allies.

-An emerging gold standard: Russia recently declared that 5,000 rubles could be exchanged for one gram of gold. The move lifted the Russian currency’s value against the US dollar despite the wide-ranging sanctions."

Larry Summers urges Fed to admit unemployment will rise, end 'confusion' -New York Post

"The Federal Reserve is causing 'confusion' among investors by avoiding a clear declaration that unemployment is likely to rise during its fight against inflation, according to ex-Treasury Secretary Larry Summers.

Summers, a frequent critic of the Fed’s handling of inflation, detailed his concerns as Fed Chair Jerome Powell prepares to deliver pivotal remarks later this week at an economic conference in Jackson Hole, Wyo.

'My worst fear would be that the Fed will continue to be suggesting that it can have it all in terms of low inflation, low unemployment and a healthy economy,' Summers said during an appearance on Bloomberg’s 'Wall Street Week' in remarks published Monday.

Powell will address the Fed’s current view of the economy as investors seek clarity on the central bank’s next move. The market is currently pricing in a 54.5% probability of a three-quarter-percentage-point hike at the Fed’s next meeting in September as officials aim to tame inflation while still avoiding a lengthy economic slowdown.

Summers asserted that Powell needs to be honest about the fact that tightened economic policy will most likely result in job losses. The lack of a clear message would leave the market 'very much in doubt about what lies ahead' and could further harm the Fed’s credibility, he added....

'My hope is that we will get clarity that policy is not yet restrictive, that it needs to be restrictive if we’re going to contain inflation, and that we’ll need to accept the consequences of that,' Summers added.

Powell is widely expected to reiterate the Fed’s commitment to bringing down inflation during his remarks in Wyoming, which are set to occur on Friday."

In U.S., Poor Life Ratings Reach Record High -Gallup

"The percentage of Americans who evaluate their lives poorly enough to be considered "suffering" on Gallup's Life Evaluation Index was 5.6% in July, the highest since the index's inception in 2008.

This exceeds the previous high of 4.8% measured in April and is statistically higher than all prior estimates in the COVID-19 era. Across extensive measurement since January 2008, the suffering percentage has reached 4.5% or higher on a handful of occasions.

The most recent results, obtained July 26 to Aug. 2, 2022, are based on web surveys of 3,649 U.S. adults as a part of the Gallup Panel, a probability-based, non-opt-in panel of about 115,000 adults across all 50 states and the District of Columbia.

For its Life Evaluation Index, Gallup classifies Americans as 'thriving,' 'struggling' or 'suffering,' according to how they rate their current and future lives on a ladder scale with steps numbered from 0 to 10, based on the Cantril Self-Anchoring Striving Scale.

Those who rate both their current and future lives a 4 or lower are classified as suffering. Those who rate their current life a 7 or higher and their anticipated life in five years an 8 or higher are classified as thriving.

The percentage of U.S. adults estimated to be thriving has steadily declined since it reached a record high of 59.2% in June 2021. The latest estimate of 51.2% is an 18-month low."

How Could We Have Been So Naive about Big Tech? -Brownstone Institute

"The 1998 movie Enemy of the State starring Gene Hackman and Will Smith seemed like fiction at the time. Why I didn’t regard that movie – which still holds up in nearly every detail – as a warning I do not know. It pulls back the curtain on the close working relationship between national security agencies and the communications industry – spying, censorship, blackmailing, and worse. Today, it seems not just a warning but a description of reality.

There is no longer any doubt at all about the symbiotic relationship between Big Tech – the digital communications industry in particular – and government. The only issue we need to debate is which of the two sectors are more decisive in driving the loss of privacy, free speech, and liberty in general....

The lockdowns were the great shock for me, not only for the unconscionably draconian policies imposed on the country so quickly. The shock was intensified by how all the top tech companies immediately enlisted in the war on freedom of association. Why?

Some combination of industry ideology, which shifted over 30 years from a founding libertarian ethos to become a major force for techno-tyranny, plus industry self-interest (how better to promote digital media consumption than to force half the workforce to stay home?) were at work....

Just this weekend, The New York Times carries a terrifying story about a California tech professional who, on request, texted a doctor’s office a picture of his son’s infection that required a state of undress, and then found himself without email, documents, and even a phone number. An algorithm made the decision. Google has yet to admit wrongdoing. It’s one story but emblematic of a massive threat that affects all our lives.

Amazon servers are reserved only for the politically compliant, while Twitter’s censorship at explicit behest of the CDC/NIH is legion. Facebook and Instagram can and does bodybag anyone who steps out of line, and the same is true of YouTube.

Those companies make up the bulk of all Internet traffic. As for escaping, any truly private email cannot be domiciled in the US, and our one-time friend the smartphone operates now as the most reliable citizen surveillance tool in history....

Do we give up? Never. During lockdowns and medical mandates, the power of the state and its corporate allies truly reached its apotheosis, and failed us miserably. Our times cry out for justice, for clarity, and for making a difference to save ourselves and our civilization."

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8.22.22 - Stocks Are Divorced From the Economy

Gold last traded at $1,735 an ounce. Silver at $18.97 an ounce.

NEWS SUMMARY: Precious metal prices retreated Monday on a stronger dollar. U.S. stocks fell as investors worried about more aggressive rate hikes from the Fed.

Jackson Hole Symposium to US GDP: 5 factors that may impact gold price this week -Mint

"Gold price outlook: After four consecutive weeks of gains, the gold rally paused and prices gave way to selling pressure while facing resistance around the psychological $1,800 per ounce mark. In the week gone by, MCX gold rates corrected more than 2 per cent whereas spot gold price dipped over 3 per cent. It was majorly the strength in the dollar index, which acted as a key headwind for the precious metal....

After the US Fed tightening expectations underpinning the dollar index, focus has now shifted towards the Jackson Hole Symposium scheduled from 25th to 27th August next week that will provide further cues for gold prices. Here we list out top 5 triggers that my impact gold price in near term:

1] Jackson Hole Symposium: 'At the annual conference, the highly anticipated speech from the Fed chair will provide further guidance about how high the US borrowing costs could go in the coming months'....

2] Dollar index: 'Focus would be on the trend of the dollar index as that will largely steer gold prices for the week. The index has a key hurdle at the 108 mark'....

3] US Q2 GDP data: 'Third estimate of the US Q2 GDP data will be released next week and gold investors are advised to remain vigilant about data release as it would give more idea about the health of US economy'....

4] US preliminary whole sale inventory and trade balance: 'These US numbers are quite important after the Jackson Hole Symposium as weak trade balance data may put US dollar under pressure leading to rise in gold prices,' said Anuj Gupta of IIFL Securities.

5] US home sales and job data: A host of other economic data releases will further add to the volatility in gold prices. Next week features the US and European manufacturing data, US Services PMI, new home sales, core durable goods orders, and core PCE price index."

Stocks Are Divorced From the Economy - but Won’t Be Forever -WSJ

"Here’s a thought experiment. Imagine the economy is looking a bit end-of-cycle-y, unemployment close to as low as it has ever been, forecast growth low, interest rates being cut and stocks high.

Then fast forward three years to an economy that’s not much bigger than it was and has unemployment slightly lower, growth forecast to be much lower and interest rates being raised. Where should stocks and other risky assets be?

The right answer, at least for where stocks in fact are, is up by a third. That end-of-cycle economy was 2019, and today’s economy looks worse for investors on almost every measure - except the fat profits being made by companies.

Start with the numbers. After the short but deep pandemic recession, U.S. gross domestic product was about 2.5% higher in the second quarter of this year than at the end of 2019. Unemployment at 3.5% is fractionally below 2019, and the equal-lowest since the end of the 1960s boom. Consensus Economics calculates the average forecast for year-ahead GDP growth is 1%, about half that in 2019. Finally, interest rates are already well above where they stood in 2019, and rising, not falling, thanks to runaway inflation....

Here’s where we get the risk to stock prices. Earnings come from the gap between revenues and costs, and this year many obvious costs have been rising faster than sales. Labor costs are up, productivity is down. Input costs are up, and domestic after-tax profit margins have dropped back to where they were in 2019, after hitting a record high last year. The result is that for the U.S. corporate sector as a whole, as measured by economic data, earnings gains have been purely due to revenue gains, the vast bulk of which is merely inflation.

Again, investors don’t seem bothered, because the stock market isn’t the economy. S&P 500 profit margins have bucked the broader economic trend and remain higher than in 2019, having done well after the initial shock of the pandemic. Forecast margins are coming down but remain elevated, especially for Big Tech. On top of that, big companies increased their sales far more than the growth in the economy and inflation. Higher margins on bigger sales is exactly what investors want.

The key question is how long the stock market can remain divorced from the economy. There are reasons for divergence, such as IPOs, stock issuance, valuation changes and international earnings. But historically there’s a strong link between overall profits and economic growth, which vanished in the past three years."

Yes, inflation has come for tech products, too -The Verge

"For many, this summer has been the season of inflation. After fuel prices spiked earlier this year (and have only slowly started to come down), it seems like everything we had to pay for suddenly became more expensive. Outside of the gas station, this is most likely felt at the grocery store, where staples like bread, pasta, vegetables, and other consumables all cost more now than they did a year (or even just a few months) ago.

Inflation has also impacted the price of tech products, like smartphones and laptops, but it can be harder to spot. Unlike food or other consumables, technology products have a long production cycle, often taking 18 months or more to go from an idea to a store shelf. Many companies set a product’s target price at the start of its development cycle, which makes them more insulated from short-term swings in inflation. Tech devices also rarely go up in price after they’ve been released; in fact, we’re accustomed to them becoming less expensive over time.

But this year, we’ve seen numerous examples where devices have either gotten explicitly more expensive or just haven’t fallen in price over time the way we’ve been conditioned to expect them to. Part of this is due to the ongoing supply chain crunch, which makes it harder for companies to source components, especially for devices that don’t use high-end smartphone or laptop processors. But big companies are also not immune to rising fuel costs and other inflationary effects, and that’s also driving prices up for your next gadget....

As we head into the big product launch season, we can expect to see more effects of inflation in the prices of new phones, laptops, and other devices that get announced. Industry analysts are warning that the iPhone 14 will be more expensive than the iPhone 13 was; if that pans out, Apple could keep the iPhone 13 in the lineup without lowering its price like it has with older models in years past. It will still look like a savings compared to the new one while still costing the same as it did a year ago. Apple is also expected to use the same processor in the iPhone 14 as in the iPhone 13, similar to how Samsung’s new watches use the same chips as last year but cost more.

Amazon is reportedly raising the price of its seller fees this fall as a way to deal with inflation — you can certainly expect that cost to be passed on to you, the consumer, which means your next USB-C cable or phone case will likely cost more.

We’ve been used to the cost of tech coming down over time, and if you look at a long-term scale of decades, that’s still certainly the case. But we can’t expect technology to be immune to the rest of the economy forever, and if your next loaf of bread costs more than it did before, your next smartphone likely will, too."

If You Think Your Landlord's Gouging You Now, Just Wait -TheStreet

"If you are among the 34% of American households renting their residence, you have likely experienced soaring rents first-hand.

Rental information service Zumper’s National Rent Index hit a record high in July. The median one-bedroom rent totaled $1,450 in the month, up 2% from June and 11.3% from a year earlier. The two-bedroom median rent hit $1,750 in July, also up 2% from June and up 9.3% from July 2001.

Fifteen of the 100 cities studied have seen rents rise by 25% or more over the past year. They range from Tuscon, Arizona, up 25%, to Detroit, up 32.1%, to New York City, up 41%.

And now Bank of America Institute, the bank’s internal think tank, has released rent numbers for BofA customers who pay rent with debit/credit cards, automated clearing house, and bill pay. Their median rent climbed 7.4% year-over-year in July, up from a 7.2% increase in June.

For those taking in less than $50,000, the rent rise was 7.4%. At the top of the spectrum, those with annual income of more $251,000 saw a rent increase of 5.9%.

But as troublesome as the rent rises have been, there's likely more pain ahead. Rent may well continue to rise, the BofA Institute report says. It notes that the Dallas Federal Reserve Bank forecasts the rent component of the consumer price index, which gained 6.3% year-on-year in July 2022, will peak at an 8.4% increase in May 2023....

If the economy continues to cool down, home prices should slide along with it. So if you want to buy a home, it may make sense to suck up a high rental rate now and wait to buy until prices come down."

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8.19.22 - China Investors Are Buying Gold's Dip

Gold last traded at $1,748 an ounce. Silver at $19.11 an ounce.

NEWS SUMMARY: Precious metal prices slipped further Friday as the U.S. dollar extened gains. U.S stocks fell with the S&P 500 on track to break its winning streak as Wall Street's summer rally lost its steam.

Swiss gold exports to China surge to 5-1/2-year high -Reuters

"Swiss exports of gold to China in July rose to their highest since December 2016, Swiss customs data showed on Thursday, as demand in the world's largest bullion market improved.

Switzerland shipped 80.1 tonnes of gold worth 4.4 billion Swiss francs ($4.6 billion) to mainland China, up from 32.5 tonnes in June and the second-highest monthly total in figures that stretch back to 2012.

Gold prices slipped below $1,700 an ounce in July from more than $2,000 earlier in the year as rising interest rates triggered selling by Western investors.

Retail consumers in markets like China often buy less when prices rise and more when they fall. China had also in July emerged from COVID-19 lockdowns earlier in the year....

Switzerland is the biggest refining and transit hub for gold and its data offer insight into global market trends."

The Pandemic Home-Building Boom Is Over -Reason

"New U.S. home construction is plunging after a brief pandemic boom, showing the strain of continued supply chain woes mixed with persistently high inflation.

Data released Tuesday by the U.S. Census Bureau and U.S. Department of Housing and Urban Development show that 1,446,000 new homes started construction in July, a 9.6 percent fall from June and an 8 percent fall from July last year.

This is the latest bit of bad news to come out of the industry, adding to the growing pessimism in the homebuilding sector.

'A housing recession is underway with builder sentiment falling for eight consecutive months while the pace of single-family home building has declined for the last five months,' said National Association of Home Builders Chief Economist Robert Dietz in a press release. He did note that multifamily construction, while down in July, was still up nearly 20 percent from 2021.

The talk of a housing recession was echoed by credit reporting agency Finch, which said the likelihood of a 'severe downturn' in the housing sector featuring price declines of 10 to 15 percent had increased....

'Prospective home buyers have gotten to the place that they are either intentionally stepping out of the housing market as they wait and see what happens next or are forced out of the housing market given the higher costs of homeownership,' Ali Wolf, chief economist at real estate company Zonda, told The Washington Post....

The price of building materials continued to tick up in July, according to the latest Producer Price Index. They've risen 35 percent since 2020, with most of that increase coming after 2021. Labor shortages have also hit construction companies hard."

Soaring inflation driving retired employees back to the workforce -Fox Business

"Retirement, even without growing concerns over a potential recession, has provoked feelings of stress and anxiety within people who have spent decades building up a career or running a business, according to an industry expert.

'Any type of change that you make can be perceived as a loss because you're giving up something to go to something else,' Michael Liersch, the head of wealth and investment management advice and planning at Wells Fargo, told FOX Business.

Retirement isn't sitting on Adirondack chairs and gazing at the sun, Liersch said. Instead, it's a drastic shift from a familiar lifestyle that gives you a lot of social and cognitive benefits in terms of the challenges that you confront, he added.

You also have to adjust to a life where you no longer rely on employer benefits....

According to the BMO Real Financial Progress Index, inflation and rising consumer costs have also forced a quarter of Americans to delay their retirement.

Liersch has noticed three trends among people who have decided to reenter the workforce.

For one, retirees are shifting into consulting work for their former firm or business. Some have also opted to do hourly consulting work for any organization that could benefit from their services, Liersch said. Some retirees have decided to go back full time, either with their old company or a new one, although they may be 'leveling down' in terms of their position.

Another trend he noticed is people taking the chance to reevaluate what brings them passion as they weigh going back to work. In some cases, he said, it's pushing them in a totally different direction.

Not only does it keep their skills and network active, it also provides income during a time when there's economic uncertainty."

Even the Washington Post Knows the Government Has Messed Up the Economy - The American Spectator

"A recent top front-page Washington Post headline hyped the Democratic comeback: 'Senate passes key climate, health bill: Sweeping goals were long stalled. Biden agenda gets boost as Democrats unite.' The formal bill title is the Inflation Reduction Act, but the phrase does not appear until in the space below a large photo of Senate Leader Chuck Schumer celebrating the great Democratic victory.

Lurking below was a smaller headline worth a year’s subscription: 'Why the ‘Inflation Reduction Act’ is no such thing,' by former longtime Post economics columnist Steven Pearlstein. It begins:

'One of the more enduring fallacies informing discussion of the economy is that there are a couple of dials located in a vault somewhere in Washington that officials can turn this way or that to control employment, output, inflation - even the price of gasoline.'

It is a statement that could have come right from Goldwater himself, or even Bill Buckley. Pearlstein continues:

'For decades, the country had been living well beyond its means, running large and persistent trade and budget deficits made possible by an overvalued dollar, artificially low interest rates and the willingness of trading partners to recycle their surpluses back into the American economy. Indeed, those imbalances had persisted for so long that just about everyone had come to think they were the new normal and that they could continue in perpetuity.'

Recovering from this excess 'cannot be painless,' he says. 'Government spending will have to be more in line with government revenue.' The only alternative is 'living with the boom-and-bust cycle of the last 30 years.' He concludes:

'In short, a healthy, sustainable economy is not one that requires government officials to be constantly and dramatically adjusting macroeconomic dials in Washington to keep things in balance. Rather, it is one that relies more on the natural self-correcting mechanisms of open, competitive, and well-regulated markets.'"

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8.18.22 - Inflation-Weary Shoppers Pulling Back

Gold last traded at $1,758 an ounce. Silver at $19.52 an ounce.

NEWS SUMMARY: Precious metal prices steadied Thursday amid a firmer dollar and falling home sales. U.S. stocks traded mixed as investors digested retail earnings and downbeat forecasts.

Gold price holding steady loss as Federal Reserve remains focused on inflation threat - Fed Minutes -Kitco

"Gold prices remain under pressure but are largely ignoring the minutes from the Federal Reserve's July monetary policy meeting, even as the central banks continue to focus on the ongoing inflation threat.

The minutes showed that the committee continues to see inflation as a significant risk to the economy.

'Participants observed that inflation remained unacceptably high and was well above the Committee's longer-run goal of 2 percent,' the minutes said. 'Participants also noted that the high cost of living was an especially great burden on low- and middle-income households. Participants agreed that there was little evidence to date that inflation pressures were subsiding.'....

Many analysts have noted that gold has managed to hold up well as investors are expecting the U.S. central bank to reserve course on interest rates by mid-2023.

The market expects the Federal Reserve to continue to raise interest rates aggressively next month. Markets are roughly split 50/50 on whether it will be a 50-basis point move or a 75-basis point move."

If the Job Market Is So Good, Why Is Gig Work Thriving? -New York Times

"American workers are experiencing, by many measures, one of the best job markets ever. The unemployment rate has matched a 53-year low. Job listings per available worker are at historic highs. Wages, while not quite keeping up with inflation, are rising at their fastest pace in decades.

So why would people keep doing gig work, a notoriously difficult and insecure way to make a living?

Online platforms like Uber and Lyft say the number of people providing services on their networks is rebounding steadily after a sharp decline early in the pandemic, while businesses like hotels and restaurants are breaking work into hour-by-hour increments available on demand.

Picking up shifts offers something that traditional permanent employment still generally doesn’t: the ability to work when and as much as you want, demand permitting, which is often essential to balance life obligations like school or child care.

And lately, inflation has provided an extra incentive. As the cost of rent and food soars, gig work can supplement primary jobs that don’t provide enough to live on or are otherwise unsatisfying....

Lexi Gervis, an executive at a financial management app called Steady, said that users’ data showed that more people were involved in gig work - and that the average gig income per worker grew - from the start of the pandemic through this summer.

'We were seeing this move towards multiple income streams, because that work was picked up as a stopgap and then continued,' Dr. Gervis said....

Gig companies say it will bolster their labor supply, as the hardship caused by rising prices has. Uber said on its second-quarter earnings call that for 70 percent of its new drivers, the cost of living influenced their decision to join. 'There’s no question that this operating environment is stronger for us,' said Dara Khosrowshahi, the chief executive.

But in an economic downturn, an increase in worker availability for online platforms could coincide with a fall in demand. If customers reduce delivery orders and take fewer cab rides, it would be harder for those who depend on the apps to make a living."

Target profit plunges 90% as inflation-weary shoppers pull back -CNN

"Target reported profit plunged 90% in the second quarter, falling far short of expectations, as inflation-weary customers pulled back on spending on nonessential items.

Retailers, including Target, have been forced to cut prices on general merchandise, such as clothing, electronics and home goods, because of excess inventory of goods. Consumers had to shift more of their spending to higher priced food and gasoline.

But Target reported that its price cuts did little good: It ended the quarter with 1.5% more inventory than it had three months earlier and 36% more than it had a year ago....

After seven quarters of strong profit growth, this marks the second-straight quarter of plunging earnings at Target - and this decline was much more significant than the 40% drop in the previous quarter.

Consumers' pullback on demand for discretionary items is one of the factors raising fears of a recession, as consumer spending is responsible for nearly three-quarters of the nation's economic activity....

It's a difficult time to be a retailer given the unpredictability of consumer spending activity and the effect of macro factors like inflation.

'Target is hearing from our guests is that they still have spending power but they're increasingly feeling the impact of inflation,' said Christina Hennington, the company's chief growth officer."

Study: What Americans really think -Axios

"'Self-silencing' - people saying what they think others want to hear rather than what they truly feel - is skewing our understanding of how Americans really feel about abortion, COVID-19 precautions, what children are taught in school and other hot-button issues, a new study finds.

Why it matters: The best predictor of private behavior is private opinion. People's actual views are far more likely than their stated views to drive consumer and social behavior - and voting.

'When we're misreading what we all think, it actually causes false polarization,' said Todd Rose, co-founder and president of Populace, the Massachusetts-based firm that undertook the study. 'It actually destroys social trust. And it tends to historically make social progress all but impossible.'

The big picture: People are often more moderate than they'll readily admit when 'being pulled toward a vocal fringe,' whether left or right, Rose said.

But in some cases, he said, people reshape their privately held views to conform to what they think their group believes, even if that assessment is inaccurate.

The gap between real and stated views can have a generational impact, he said, because media amplifies perceptions that then cue young adults: 'This generation's illusions tend to become next generation's private opinion.'"

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8.17.22 - Reagan's Lessons in Economic Leadership

Gold last traded at $1,765 an ounce. Silver at $19.87 an ounce.

NEWS SUMMARY: Precious metal prices softened Wednesday on upbeat retail data and a firmer dollar. U.S. stocks retreated amid a fresh batch of retail earnings.

Gold will play a big role in the coming global 'monetary reset' -Kitco

"A global monetary reset is inevitable, as fiat currencies are being debased due to excessive money printing.The U.S. dollar will be dethroned as the dominant global reserve currency by currencies backed by a basket of commodities including gold, according to Maxime Bernier, Founder and Leader of The People's Party of Canada.

'A commodity-backed money system will happen,' he stated. 'I don't know when, but a fiat money system cannot live too long. And after many decades, with all this debt and money printing across America and Canada and Europe, it will have to end.'

'We need to tell central bankers to have an inflation target of zero,' he said. 'After that, I believe we need to have a monetary reset internationally, having money that will be based on gold or other commodities, like we had in the 19th Century,' said Bernier.

Bernier, a former minister from 2006 to 2015 under Prime Minister Stephen Harper, said that excess money printing and rising federal debt burdens had led to high inflation in Canada. Canada's inflation rate stands at 8.1 percent in June.

'We have inflation because of bad monetary policy,' he explained. 'We need to balance the budget. We need to stop spending money we don't have.'"

The Day America Dies -Bonner Private Research

"Dear Reader,

Our founder, Bill Bonner, has given out only three major warnings during his half-century career. This is his fourth. It may be his most important.

We’ve organized this presentation so Bill’s warning can reach a wider audience. You may see it elsewhere on the Internet. or even YouTube. And some of our colleagues in the publishing industry have asked if they can share it with their readers.

As one of our long-standing or current readers, you’ll be familiar with the key points in this message. But for many, these ideas and forecast will come as a shock. Why?

For our kids, it will be a very different America

What Bill sees now could be the worst crisis ever to hit the US…a combination of incompetence…out-of-control inflation…a stock market crash…a wipeout in the bond market…under-investment in the industries that we depend on…along with a horrendous power outage – followed by riots and revolution.

Bill’s presentation is called 'The Day America Dies.' He's organized it into 16 chapters—designed to introduce unaware Americans to the threats they face to their wealth and liberty. He also introduces new readers to some our basic strategies for preserving and protecting what you have.

Feel free to watch the presentation if you like. Or share it with someone you think could benefit from it. We wanted to make you aware of its existence before it reaches a wider audience. And explain why we decided it was so important to release it now."

Reagan's Lessons in Economic Leadership -WSJ

"President Biden’s signing of the so-called Inflation Reduction Act brings back four-decade-old memories of better economic leadership. On Aug. 13, 1981, President Reagan signed the Omnibus Budget Reconciliation Act into law. It unleashed a quarter-century of American prosperity, which made it possible to restore price stability and win the Cold War.

In this time of harsh rhetoric and political zealotry, it is comforting to remember Reagan not only for what he did for the country but for the kind of man he was....

Reagan was more than a leader who knew who he was and what he wanted to do. He was a man who could keep things in perspective. With the economy enduring double-dip recessions, Republicans lost 26 House seats in 1982, and even with the support of conservative Democrats, Reagan no longer had a bipartisan conservative majority....

In one of their first acts, my Democratic colleagues voted to throw me off the Budget Committee. The president and Republicans publicly urged me to change parties, but I had been elected as a conservative Democrat, and I felt that if I just changed parties, some people in my district might feel betrayed.

The only honorable thing to do was to resign from Congress and stand for election as a Republican. While many later saw this as a clever political move, it didn’t feel that way at the time....

The president’s political director, Lee Atwater rushed into Reagan’s office and pleaded with him to call me and tell me not to resign. When the president called, he started by telling me that Lee was on the verge of having a stroke - could I please explain what I was doing and why? I explained, and told him it was the right thing to do. To my astonishment, the president agreed: 'People have a way of judging a person’s character and knowing when a man is doing right.'

I didn’t discover until after I had resigned, run against nine Democrats and won that Lee Atwater had demanded that the president call me back that day. He predicted that I was going to lose and, in the wake of the 1982 defeats, that it would be the beginning of the end of the Reagan presidency. Reagan responded: 'Lee, the whole world does not revolve around me or my presidency. This is about Phil Gramm, and he is doing the right thing, and I can live with whatever the result turns out to be.'

To paraphrase Archie Bunker, we could use a man like Ronald Reagan again."

How Long Will This Recession Last? -Mises

"The most important question for asset prices right now, from stocks to houses to Bitcoin, is whether we’re due for a recession. Last week we got confirmation that according to the traditional definition of a recession – 2 quarters of negative growth – we are already in a recession.

The response from this administration has been denial and word games rather than actually trying to stop the slide. At which point the betting shifts to whether it’ll be a shallow 1991-style recession or a big, 2008-style one, perhaps with a financial crisis to spice things up.

Bigger-picture, what we’re seeing is a concentrated version of the world that paper money delivers: an endless series of booms, busts, and financial crises, all to sustain a permanent siphon of the peoples’ wealth towards subsidizing federal deficits and Wall Street-brokered leverage. Millions are waking up to what fiat money does, which could be bullish for Bitcoin in the long run....

So where to next? Given the Fed is openly engineering a recession in order to slow inflation, the key question is whether inflation comes down on its own or will the Fed try to engineer harder?....

The main drivers of inflation these past two and a half years are fading, but most of that fresh money is still locked up. So we could still have a long period of elevated inflation. And, if we do, the Fed could continue panic-hiking into a serious recession or even a financial crash.

That leaves the most likely stubborn-inflation scenario: Fed pretends it’s not there for a while, then crashes the economy so We the People get to, once again, tighten our belts.

So, bottom line, it’s a recession at the moment; whether it gets worse depends on inflation, and policymakers goofing around whistling past graveyards should give anyone pause."

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8.16.22 - Who Will Those 87,000 New IRS Agents Audit?

Gold last traded at $1,775 an ounce. Silver at $20.14 an ounce.

NEWS SUMMARY: Precious metal prices steadied Tuesday on a flat dollar. The S&P 500 slipped as traders assessed earnings results from Walmart and Home Depot and looked ahead to more big retail reports.

How the US Toppled the World’s Most Powerful Gold Trader -Bloomberg

"In December 2018, a man in his early 30s was intercepted on arrival at Fort Lauderdale airport and taken to a room where two FBI agents sat waiting.

The target was scared and already on high alert - one of his associates had recently admitted to crimes he knew he'd also committed. Christian Trunz wasn’t a terrorist or a drug trafficker, but a mid-level trader of precious metals returning from his honeymoon. Crucially: he was also a longstanding employee of JPMorgan Chase & Co., the biggest bullion bank.

The FBI’s airport ambush described by Trunz was a crucial step in the pursuit by US prosecutors of JPMorgan’s precious metals desk, leading up to last week’s climax - the conviction on 13 counts of the man who was once the most powerful figure in the gold market, the desk’s former global head Michael Nowak.

Watched with a mixture of fascination and horror by precious metals traders around the world, the case has shone a light on how JPMorgan’s traders - including Nowak and the bank’s long-time lead gold trader Gregg Smith - for years allegedly manipulated markets by placing bogus orders designed to wrongfoot other market participants, principally algorithmic traders whose high-speed activity became a major source of frustration.

Nowak has become one of the most senior bankers to be convicted in the US since the financial crisis, and faces the prospect of decades in prison, although it could be far less."

Fact-Checking Team Biden on Who Those 87,000 New IRS Agents Would Audit -Heritage Foundation

"The Biden administration has promised not to raise taxes on anyone making under $400,000 a year. And despite estimates from official congressional scorekeepers that the Schumer-Manchin-Biden tax increase indeed would raise taxes on those Americans, the administration has doubled down on the claim as a final vote nears on Democrats’ bill....

But considering the sheer magnitude of 87,000 new IRS agents and an estimated $204 billion in new revenues from enforcement, is it possible for all those new audits and revenues to involve only taxpayers making over $400,000?

-Returning to 2010 audit rates for all individuals making over $400,000 would generate only 28%, or $9.9 billion, out of the estimated $35.3 billion in new IRS enforcement revenues in 2031.

-Even increasing recent audit rates 30-fold for taxpayers making over $400,000—including 100% audit rates on taxpayers with incomes over $10 million—still would fall more than 20% short of raising the estimated $35.3 billion in new revenues in 2031. ....

Despite the Biden administration’s claims, it’s almost certain that households making less than $400,000 a year would face increased audits under Democrats’ bill.

And that seems to be the true intent of the IRS. According to a 2021 report from the Government Accountability Office, 'From fiscal years 2010 to 2021, the majority of the additional taxes IRS recommended from audits came from taxpayers with incomes below $200,000.'....

Instead of increasing taxpayer audits, policymakers should simplify taxes across the board. That way, it would be easier for everyone to pay the correct amount to the government".

Will This "Magic" S&P 500 Number Really Signal a Bull Market? -InvestorPlace

"Earlier this week, CNBC published an article with a headline that seemed fanciful at best – misleading at worst.

You may have seen it: 'The magic S&P 500 number that would mean this is a new bull market and not just a bear bounce... Jonathan Krinsky, a technical analyst at BTIG, said in a note late [Aug. 4]. Therefore, if the S&P 500 were to exceed 4,231, we would have to assume that June was the low for this cycle.'

All we can say about that is… not so fast. There’s far more involved that would propel us into a bull market than just a 'magic' number on the S&P 500.

Because up until Wednesday morning, the S&P 500 had been struggling against resistance between 4,150 and 4,175 (at the time of this writing, it’s hovering at about 4,254). 'Resistance' just means that the security cannot break higher than that range.

This happens when traders become mentally 'anchored' to the price at which they last sustained losses. Intuitively, this makes sense; imagine a bad trade experience from your past – you certainly remember the number at which you had to sell your shares or close out a loss. It stings, and you don’t forget it.

And if enough investors are in a similar position when the price comes back up, they are likely to increase their selling activity.

This is important because inflation is still high enough to motivate the Fed to continue raising interest rates through the end of the year.

The Other Side of the Equation - From a technical perspective, we aren’t optimistic that stock prices are going to rise another 12-14% like they did in July. However, there has been enough improvement in the economic outlook for us to feel a lot more confident about support holding for now in the 3,875-3,900 range."

Playing Powell-itics as inflation target in peril -New York Post

"Federal Reserve officials are not mincing words: The central bank and its chair, Jerome Powell, believe the 2% inflation target is sacrosanct and will risk a recession and bear market to get there.

So why are markets rallying hard - as if Powell is about to soon cut interest rates, not raise them?

The answer is that many traders and investors are convinced what was once the least political layer of government - the Fed - has become among the most politicized. Powell, whose main job is to keep inflation low, will jettison the inflation target for something much more palatable to appease Dems in Congress and economists in the Biden administration.

It is fashionable in left-wing circles to accept inflation as necessary. Rising prices don’t matter so long as government budgets keep getting bigger.

How soon they forget the dreadful stagflation of the 1970s where the economy slowed while prices soared. It didn’t matter if you had a job. You couldn’t afford to put enough food on the table and gas in your car, much less buy a new one or eat in a restaurant.

So where is Powell’s head at? ....

Based on his record, the belief on trading desks is that Powell is looking for a way out of his rate hikes. He will soon 'blink' and rationalize a higher inflation target rather than become the target of the powerful leftist contingent that currently runs President Biden’s economic policy.

The July inflation drop, however minuscule, gives him the cover to begin reversing course."

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8.15.22 - A Solution To Our Economic Woes

Gold last traded at $1,777 an ounce. Silver at $20.23 an ounce.

NEWS SUMMARY: Precious metal prices eased back Monday on profit-taking and a firmer dollar. U.S. stocks traded mixed on a slowing China economy ahead of retail earnings reports.

Traders buy the dip all week reinforcing support for gold futures at $1800 -Kitco

"On Monday, August 8 gold opened at $1790 and by the close of trading had broken and closed above its 50-day moving average and closed at $1805 per ounce. Throughout the remainder of the week, December gold futures closed above $1800 on a daily chart. On Tuesday, Thursday and today December gold briefly traded to an intraday low between $1798 and $1799 prompting traders to buy the dip and move gold back above the key important level of $1800 per ounce.

In six instances market participants witnessed gold briefly break below $1800 and on each occasion recovered and closed above that key psychological price point. Both the daily and intraday charts demonstrate traders' resolve to buy gold futures on each occasion that they perceived gold had become oversold below $1800.

December gold closed the week near its weekly high of $1824.70 resulting in the fourth consecutive week of gains. Over the last four weeks, gold has traded from a low of $1680 which occurred during the week of July 18, and gained approximately $137 or 7.53% in just four weeks of trading....

Spot gold also finished solidly higher on the week taking physical gold just above $1800 per ounce for the first time since the beginning of July."

When is a Bear Market Over? -Wealth of Common Sense

"A reader asks: 'When is a bear market by definition over?'

Like many things in the market, there aren’t any hard and fast rules for this kind of thing, especially in real-time.

Let’s look at the 2008 scenario as an example. The S&P 500 topped out in early October 2007 and bottomed in March 2009.

On a price-only basis, the index didn’t reach those 2007 highs again until March 2013:...So did the bear market last from peak to peak? Peak-to-trough?....

The problem is we have cyclical bulls, cyclical bears, secular bulls and secular bears. They vary in length and magnitude so there are no all-clears when you’re in it.....

So is the current bear market over? Was that the bottom? I don’t know. I’m not smart enough to answer that question."

Rate hikes and recession are still in the cards -CNN

"There appears to be some confusion about the trajectory of prices in the US. That's partially because month-over-month inflation eased in July while year-over-year, it remained near historic highs.

That raises an important question for consumers and investors alike: Is inflation peaking or not?

The answer, according to the market analysts, is probably. But there's still a long way to go before we are where we want to be.

First of all, we need to remember that the 'I' in CPI and PPI stands for index. That means that shrinking inflation could come from prices falling in some sectors but not others. And that's exactly what's happening. Energy prices have dropped significantly over the last two months, dragging the top-line inflation numbers down along with them. But the costs of food, shelter and nearly every other commodity are increasing....

It's likely that we've reached peak inflation, agreed Charlie Ripley, a strategist at Allianz Investment Management. 'However, we would caution that while the trend is improving, we have a long ways to go to get back towards [the Fed's target goal of] 2% inflation.'

Most traders expect a recession would last less than one year just as they expect inflation to ease by the end of 2023....

Americans are struggling to keep roofs over their heads as rental costs have grown at their fastest pace in more than three decades. The median cost of a monthly rental is now over $2,000 for the first time ever."

A Solution To Our Woes - That No One Is Discussing -RealClearMarkets

"One does not have to search hard to find examples where basic economic ignorance is doing great damage to society. As long as we've had the Republic we have had political disagreements, but often it seems we are not debating about a difference of opinion in policy, as much as debating without a foundation of economic truth.

Even with greater economic education there will continue to be political divide. Our nation can withstand disagreement and division, and in fact, it existed even in the very time that our founding fathers were creating a system of government to best account for such divisions.

But what we may not survive is worse than mere disagreement; it is the willful decision to stay ignorant or uninformed. Economic mastery may not be needed within the population, but perhaps economic literacy is?

When I refer to 'economics' I do not mean the same thing as financial literacy. I am a big proponent of that, too, but financial literacy is a practical application in a specific category of life. Balancing a checkbook and avoiding credit card debt matter, a lot, but they are actions we take to be responsible adults. Economics, on the other hand, is a social science that looks at the reality of the world, the reality of human nature, and studies how humans act to allocate scarce resources....

We need a more economically-educated citizenry because we need a more economically-active society! Central planners have failed to deliver, and their failure was entirely predictable for those who knew economics – those who knew that no central authority has the knowledge necessary to steward the affairs of society.

Basic laws of economics teach us about incentives, risk-taking, and the rational process humans engage in when they stand to bear both the risk and reward of a given decision. In all our attempts to numb people from the reality of bad economic decisions we have facilitated an environment of worse economic decision-making."

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8.12.22 - Democrats Expand IRS Almost Twofold

Gold last traded at $1,801 an ounce. Silver at $20.76 an ounce.

NEWS SUMMARY: Precious metal prices zig-zagged higher Friday on bargain hunting despite a firmer dollar. U.S. stocks rose with consumer confidence on the hope inflation is peaking.

Ex-JPMorgan gold traders convicted after 1-month long spoofing trial -Kitco

"Two out of three former JPMorgan Chase & Co employees were convicted by a federal jury in Chicago after being charged with manipulating gold prices for years. The jury found the traders used spoofing to rig prices.

After a three-week trial and an eight-day deliberation, the jury came out with a guilty verdict for JPMorgan's former top gold trader Gregg Smith and the bank's former head of the precious-metals desk Michael Nowak. The conviction included charges of price manipulation, spoofing, and wire fraud. Smith was convicted on 11 charges, and Nowak was convicted on 13 charges.

Jeffrey Ruffo, the bank's former executive director specializing in hedge fund sales, was acquitted. All three defendants pleaded not guilty.

Prosecutors on the case accused the three of manipulating and rigging gold prices for eight years between 2008 and 2016.

'They had the power to move the market, the power to manipulate the worldwide price of gold,' Bloomberg quoted prosecutor Avi Perry as saying during closing arguments.

Spoofing is a tactic of manipulating the gold market by making bids and canceling them before execution while also placing orders on the opposite side. The misleading orders confuse the market's supply and demand dynamics, which leads to gold price changes. Spoofing has been outlawed since 2010 following Congress passing the Dodd-Frank Act after the financial crisis.

'The defendants placed orders that they intended to cancel before execution in order to drive prices on orders they intended to execute on the opposite side of the market. The defendants engaged in thousands of deceptive trading sequences for gold, silver, platinum, and palladium futures contracts traded through the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by CME Group Inc.,' according to the press release published by the Department of Justice."

Strike Three -Bonner Private Research

"Real wages... GDP... and now real productivity, all down, down and down...

And so… the strike-out is complete…

Strike one: real wages are going down…

Strike two: real GDP is going down (US in recession)…

Strike three: Real productivity is going down….And you’re out!

From the year we were born until now, productivity could be counted on to increase. And productivity, more than any other single measure, tracks our wealth. There are only 24 hours in a day… from the day man first stood on two legs until today, the length of a day has not increased by a single minute. We are wealthy inasmuch as we are able to use those minutes to produce goods and services. The more output – goods and services – per minute, the richer we are.

But now, the time goes by and we have less and less to show for it. In a typical hour, we just can’t produce as many goods and services as we did last year.

How did that happen?

Did masons forget how to mix their mortar? Did machinists forget how to bend their steel? How about accountants; did they forget how to add and subtract?

We doubt it.

More likely, thanks to the Inflation Reduction Act… along with countless other acts of petty insult or grand larceny…. America’s 'hard working families' can hardly work at all. They have too many laws, regulations, taxes and jackass rules to work around. And they have the feds misleading them with phony price signals and stimmie checks. But of all the Fed’s many crackpot schemes, lowering interest rates to discourage savers was probably the most harmful. Savings allow us to invest in new factories, new machines, and new output. It is savings, in other words, that makes us more productive… and richer.

As savings went down so did serious capital investment. Instead of spending years building real, profit-making businesses, for example, entrepreneurs wanted to create overnight ‘start-ups’ that they could quickly unload on leveraged speculators. Less money was spent on new plant and equipment… and more on share buybacks, Mergers & Acquisitions, and other payouts to the rich. Why bother with the risk and hassle of long term business investment when you can borrow below the rate of consumer price inflation and jack up your stock price… or, like Michael Saylor, buy a crypto that was going to the moon?

The result was predictable. And now it is here."

How your profession can predict your politics -New York Post

"Why are you a conservative? Or a libertarian, Republican, Democrat, socialist?

How do people come to such different conclusions? We like to think that our politics are formed by rational analysis. We analyze what conservatives and liberals write, weigh their ideas and form conclusions based on facts and evidence.

But it turns out something else is probably going on. I can predict your political party pretty accurately if I just know what you do for a living.

Here’s why I say that: When you give money to a political candidate, the government requires that candidate’s campaign to ask you what your profession is. That information is turned over to the Federal Election Commission....

Eighty-nine percent of people who work in the fossil-fuel industry donate to Republicans. Teachers mostly (79%) give to Democrats.

Sixty-four percent of flight attendants give to Democrats, but pilots (62%) prefer Republicans. Why?

In my new video, Rob Henderson, who studies the psychology of politics at the University of Cambridge, tries to explain.

For pilots, he says, 'Their job is whether they take off and land and everyone’s alive. Whereas for flight attendants, their job is more reliant on, How do people feel about you? ' Those differences lead them to different political parties."

Democrats' IRS Expansion Empowers Ruling Elites to Target Americans -Daily Signal

"The Senate on Sunday passed the Inflation Reduction Act, on a 50-51 vote along party lines, legislation that has little to do with reducing inflation and much more to do with funding progressive spending priorities and—more ominously—doubling the size of the Internal Revenue Service.

The IRS currently has 93,654 employees; the Senate-passed legislation would add 87,000 new hires. The bill also is set to add about $80 billion to the IRS by 2031.

Interesting that the Biden administration is focused on doing this when the nation’s southern border is a sieve and military recruitment is catastrophically low.

Of all the bad parts of the Senate legislation, this massive expansion of the IRS is the aspect that is most concerning. In fact, I’d bet that six months or a year from now, it’s all the average American really will remember from it.

Democrat officials and media allies strenuously insist that the expansion of the IRS is all about monitoring the rich, and that you have nothing to worry about if you are following the law....

Biden and Democrats in Congress know where the big money is in this country. It isn’t with the rich. No, it’s in the hands of America’s vast, though perhaps shrinking, middle class. The Wall Street Journal explained what the legislation is really about:

'The main targets will by necessity be the middle- and upper-middle class because that’s where the money is. The Joint Committee on Taxation, Congress’s official tax scorekeeper, says that from 78% to 90% of the money raised from under-reported income would likely come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000.'

Also, who doesn’t have a story about some government agency - the IRS or the DMV, for instance - making a mistake and putting you through misery while the cumbersome, bumbling bureaucracy slowly untangles the mess?

The IRS is about to go 'beast mode,' as the Journal explained. It will unleash an army of agents - larger in number than the armies of most NATO countries - to harass and eat out the substance of the poor and middle class, to paraphrase the Declaration of Independence."

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8.11.22 - 'Wage-Price' Spiral a Symptom of Inflation

Gold last traded at $1,788 an ounce. Silver at $20.31 an ounce.

NEWS SUMMARY: Precious metal prices steadied Thursday on upbeat data and a weaker dollar. U.S. stocks traded mixed despite a slight drop in wholesale inflation last month.

Gold, silver gain amid slightly tamer U.S. inflation data -Kitco

"Gold and silver prices were modestly up in midday U.S. trading Wednesday, in the wake of a U.S. inflation report that came in not as hot as the marketplace expected. Gold prices hit a four-week high and silver prices a five-week high today.

The U.S. consumer price index report for July came in at unchanged from June and up 8.5%, year-on-year. The report was expected to be up 8.7%, year-on-year, after a rise of 9.1% in the June report. Gold prices initially rallied to a four-week high on the news, as the U.S. dollar index dropped sharply and U.S. Treasury yields declined.

However, bond yields then ticked back up. Meantime, the U.S. stock indexes rallied amid 'risk-on' trading attitudes that also worked to push the safe-haven metals down from their higher levels.

After having a bit of time to think about today’s CPI data, traders and investors reckoned that while the data was a bit tamer, it still suggests problematic price inflation that will probably keep the Federal Reserve on its aggressive path of tightening U.S. monetary policy. Thursday comes the producer price index report for July, seen up 0.2% from June and compares to the June report’s rise of 1.1% from May."

Making Sense of the Recession -AIER

"It should come as little surprise that something as simple as identifying the start of a recession would generate controversy. Everything has become politicized. One could point out that the current economic contraction is still quite mild.

Or that pandemic mitigation policies of the previous administration were as much (if not more) of a factor in choking off economic growth as the wokism of the current one. One could, if so inclined, point to the Fed’s languorous response to steadily rising prices throughout 2021.

But no. The response has been predictably partisan, challenging the very definition of a recession itself. Postmodernists and lawyers, always a disproportionately large cohort of the very worst people in society, currently hold the high ground of discourse.

Nevertheless, as recessions go the current one is an odd duck indeed. Examples of recessions where the labor market has been strong, let alone as strong as the current one, are essentially nonexistent in recent economic history.

In the post-WWII era, increases in unemployment lag the start of recessions by varying amounts. In twelve economic recessions, the trough of the employment rate has preceded the start of recession by an average six months, with a range of one to sixteen months.

Unemployment does not cause recessions; recessions – declining economic growth – cause rates of unemployment to rise. So if history is any guide, a rise in unemployment may be from months or to longer than a year off.

But why is the job market so hot? Doesn’t that clash with notions of an economy in contraction? Possibly, but not necessarily. In light of the unprecedented circumstances wrought by lockdowns, stay-at-home orders, and other commercial depressants over the last few years, alternate or contributing explanations deserve consideration.

Inflation is at levels not seen in 40 years. US equity markets (read: 401Ks and IRAs) had their worst six-month start since 1970 in the first half of 2022."

Mar-a-Lago Search Shows the Swamp’s Trump Obsession -WSJ

"Let us assume that for 99.99% of the U.S. population in early August 2022, the last thing on their mind was Mar-a-Lago. Instead, a short list of real things preoccupying Americans would include inflation, crime, battles in Congress over spending, Ukraine fighting World War III for us in Europe, and China conducting massive live-fire military exercises around Taiwan.

So it came as a surprise to discover Monday evening that the Justice Department and FBI decided the most important thing in the world just now was raiding former President Donald Trump’s estate in Palm Beach, Fla. Among other thoughts, a three-letter acronym starting with W comes to mind.

Forgive me for not spending more than a moment on the legal niceties of this event—the applicability of the Presidential Records Act, that it had be about 'something big' involving classified documents, or that no one, including a former president, is above the law. They are all beside the point.

You can hate Donald Trump until your eyes pop out, but let us be clear: He was elected the 45th president of the U.S. He served four years in office. No former president who was disliked by many—not Clinton, Reagan nor FDR - had his home invaded by a squad of FBI agents. This should never happen in the U.S. End of discussion.

But it did happen. The Trump raid is now a wall-to-wall political disaster for the United States, doing more damage, if that’s possible, to the country’s internal divisions and even creating external risks."

The 'Wage-Price' Spiral Is a Symptom of Inflation, Not the Cause -FEE

"It is true that in a tight labor market businesses have to compete keenly for workers. But it is not true that they can do so simply by offering higher wages and passing the cost onto consumers. If a restaurant, say, raises its prices to cover higher wages, it may lose customers. And if this business can raise prices without losing customers the question has to be asked: Why didn’t it do so before?

The phenomenon we are faced with is one where the restaurant can raise prices without losing customers, and that happens because the customers have more money to spend. Here we approach the real cause of inflation: the creation of extra money.

With a fixed supply of money in the economy, the rise of one price will cause consumers to scale back consumption of either that good or some other good (or a mix of both). Whichever it is, the quantity demanded will simply fall until equilibrium is achieved: there is no spiral.

If the amount of money the consumer has to spend increases, on the other hand, they can pay the higher price without cutting back elsewhere. But the key is where they got that extra money from.

If the total supply of money in the economy is fixed, then someone else’s holdings of money must have fallen and, with it, their capacity to spend. Their demand will decrease, which means there is no general increase in prices. Once again, there is no spiral.

But if the amount of money the consumer has to spend increases and so does everybody else’s—or many people’s, at any rate - then their increase in spending does not correspond with an offsetting decrease somewhere else. Indeed, everyone can increase spending together. Now we have a spiral.

The essential fact of the matter is that any 'wage-price' spiral is a consequence, not a cause of inflation. The cause is the increase in the supply of money."

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8.10.22 - China’s Looming Baby Bust

Gold last traded at $1,793 an ounce. Silver at $20.68 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Wednesday following a July monthly CPI of 8.5% and a sharply weaker dollar. U.S.stocks rose after a key inflation reading showed a moderate slowdown for rising prices.

Gold: A No-Brainer -Seeking Alpha

"Gold and gold miners have been controversial investments over the last several years. Despite its substantial run-up from late 2018, gold has primarily traded sideways and has underperformed most major stock market averages over the previous few years. Therefore, many investors view gold as an unnecessary investment or a hedge that may or may not pay off.

However, gold is much more than a hedge. We are witnessing the highest inflation in decades in the U.S. Additionally, the U.S. national debt is sky high and is likely only moving higher. The Fed's balance sheet is remarkably bloated, and while the central bank is raising interest rates now, it may have to reverse policy sooner than expected.

Gold gets no respect from the market, is an unloved trade, and has been a hated investment for years. Now, the market is substantially behind the curve on gold and gold miners.

One of the greatest investors of all time, Benjamin Graham, said that the market is a voting machine in the short term but a weighing machine in the long run. The market has been voting negatively on gold recently, but the market should begin weighing the yellow metal soon, and the price of gold should go much higher.

According to Mr. Graham, the intelligent investor is a realist who sells to optimists and buys from pessimists. Many pessimists have been selling their gold mining shares lately, and quality gold miners should appreciate considerably as gold surges in the coming years....

Moreover, we witnessed remarkably oversold technical conditions, as Gold's RSI dropped close to 20 for several weeks, illustrating panic and capitulation-like market conditions. Gold may have put in another long-term bottom and could continue rising, possibly to new highs....

The price of gold will probably move much higher once the weighing begins. Once we apply a similar 550% (monetary base expansion) appreciation to gold's price of around $800 in 2008, we arrive at a gold price target of approximately $5,000. This mark is the level gold could reach within the next several years, providing significant upside potential for gold investors."

Baby bust: China’s looming demographic disaster -The Spectator

"This week, the world is gripped by the risk of conflict between the US and China. The People’s Liberation Army has fired live missiles into the Taiwan Strait in retaliation for US House Speaker Nancy Pelosi’s visit to Taipei and those who fear that China vs America is the next world war see Taiwan as a flashpoint. Some analysts imagine a repeat of the Cold War: two countries, two rival political systems, vying for world economic supremacy.

China’s dominance is inexorably linked to the size of its population. It has long been the world’s most populous country. A technologically advanced society, with a great army of young workers and soldiers, is inevitably a power to be reckoned with. Only three years ago the UN predicted that in a decade China would reach a population peak of 1.46 billion. But what if these forecasts are dramatically wrong? What if China’s sabre-rattling masks a fear of a demographic collapse – a baby bust?

According to a new UN report, China’s population growth has collapsed by 94 per cent, from eight million a decade ago to just 480,000 last year. What’s particularly worrying for Chinese leaders is that this means a rapid reduction in the working population.

The previous set of projected figures suggested that by the year 2100, China’s 15- to 64-year-old population would be 579 million. This has now been revised down to 378 million, a 35 per cent fall. If this prediction plays out, the implications for China – and the rest of the world – could be brutal.

Today, every 100 working-age Chinese need to support 20 retirees. If trends continue, by the turn of the next century, every 100 workers will have to support 120 retirees. This means China will have the largest drop in working-age population among any of the G20 economies by 2030, with more than 23 million fewer Chinese. In percentage terms, Japan and South Korea will shrink even faster – but they became rich before birth rates began plummeting.

China likes to talk a tough game. But the demographic crisis means that there is a question over the way in which China could sustain any military attack. Part of the reason for Vladimir Putin’s invasion of Ukraine was a calculation that soon the Russian army wouldn’t have the manpower for a full-blown war. Xi Jinping faces a different dilemma – can the People’s Liberation Army continue its shift from a force based on sheer numbers to one that is smaller and relies on technology first and foremost?....

The baby bust is real and, as the CCP has found out, while you can force families not to have more than one child, you can’t force them to have more than one."

The Agenda behind Climate Change Catastrophism -Mises

"Democrats on Capitol Hill are pressuring the Biden administration to declare a climate emergency, voicing their doomsday predictions that without immediate action to curb and ultimately end our dependence on fossil fuels, 'the planet' and, by implication, every living creature that inhabits it, will die. 'If we don’t really begin to lower emissions, this planet has no chance,' said Representative Alan Lowenthal, a California Democrat.

'We have a few years left and that’s it. The planet is dying.' This dire assessment and apocalyptic warning echoes Al Gore’s 2006 book and documentary, An Inconvenient Truth, and his subsequent statements that climate inaction would cause the complete summertime meltdown of the North Pole ice by 2013.

Even though such ridiculous predictions as Gore’s have been put forth and have been proven false, it appears that, thanks to the rise of 'stakeholder capitalism' and the Environmental, Social, and Governance (ESG) Index, climate change catastrophism’s heyday has finally arrived.

It becomes necessary, therefore, to address it directly. This does not necessarily mean readjudicating the climate change science, since others have done well to subject the narrative to withering critique and debunking. Critics have raised the following issues with climate change catastrophism:

-the previously peddled 'crises' of global cooling, acid rain, and ozone layer depletion, which proved to be unfounded;
- the complete dismissal of the benefits of fossil fuel use;
- the failure to acknowledge that fossil fuel–powered technologies significantly mitigate the effects of climate emergencies;
- the fact that deaths from extreme weather events have decreased during the so-called climate emergency;
- the fact that solar and wind energy technologies, after fifty-plus years of development, are far from capable of replacing fossil fuels;
- the disingenuous use of the coldest period in the Holocene as the starting point for measuring rising temperatures;
- the manipulation of surface temperature readings to counter satellite readings, which show no significant recent warming;
- the exaggerated synthesis of scientific studies by the Intergovernmental Panel on Climate Change (IPCC) and the further exaggeration in disseminating synthesized findings to the public by designated 'experts' and the media;
- the IPCC’s hiding of its raw data and methodology, its blocking of outside investigations attempting to replicate its results, and its blocking of climate change–skeptical scientists from publishing their findings in peer-reviewed journals ('Climategate')....
- the strong likelihood that warming is not necessarily negative at all but may, in fact, be positive;
- the well-known greening of the planet due to increased CO2 levels and the benefits derived thereof, including for agriculture and cooling;
- the fact that there is no known optimal or “natural” global temperature, even if global temperatures could be accurately measured, which is doubtful.

This is but the skeleton of a body of reasons for concluding that climate change catastrophism is overwrought and hyperbolic, if not based on outright fraud."

Biden needs to stop stock trading in Congress -MSNBC

"Two days before the House was scheduled to vote on a bill concerning the domestic semiconductor chip manufacturing industry, Paul Pelosi, the husband of Speaker Nancy Pelosi, sold $5 million worth of stock in chipmaker Nvidia.

Speaker Pelosi, D-Calif., denies having shared nonpublic information with her husband, but it doesn’t matter whether Paul Pelosi had inside information about the semiconductor bill or not. It looks awful.

It’s important that Congress pass a law prohibiting its members and their spouses from trading in individual stocks while in office. For years, such reform has faced considerable resistance from members of both political parties, including the speaker, but it is necessary if public confidence in Congress is to be restored. Democrats have been discussing a plan to introduce such legislation this month.

The problem that Paul Pelosi’s trade illustrates isn’t new. As far back as 1789, members of Congress traded in securities affected by their official duties. This included the states’ Revolutionary War debt securities that members of Congress furiously bought up on the market at a fraction of their face value before passing a bill, the Assumption Act, paying off these same debt securities at full face value. Sen. William Maclay of Pennsylvania complained at length about this and other unethical conduct in Congress in a diary.

Fast-forward 230 years. Thanks in part to our campaign finance system, which gives wealthy candidates an advantage, we have a Congress full of multimillionaires, many of whom trade in stocks while they vote on bills, conduct investigations and perform other official duties that affect the value of those stocks.

Such trading is a crime for unelected officials in the executive branch. The law imposes criminal penalties on nonelected federal employees who participate in government matters affecting their financial interests or the financial interests of their spouses. That includes matters affecting stocks in their portfolios.

Such a conflict of interest can be a felony for every federal employee except the president, the vice president and members of Congress, who passed the law making it illegal for other federal employees to perform official duties that make them richer."

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8.9.22 - Inflation Reduction Act to Double IRS Audits

Gold last traded at $1,794 an ounce. Silver at $20.49 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday ahead of inflation data and a weaker dollar. U.S. stocks fell after after another chipmaker warned about tough times ahead.

Gold Price Forecast - Double-Top May Hold Further Upside For Now -Daily FX

"Gold starts the week pretty much unchanged from Friday’s closing levels with the precious metal changing hands around $1,775/oz...The closely watched UST2/10s yield spread is currently quoted around minus 40 basis points, a strong clue from the fixed income market that a recession is on the way in the US, whatever definition is used.

On Wednesday, the latest look at US inflation will be released for the month of July. Core inflation, y/y, is expected to nudge 0.2% higher to 6.1%, while headline inflation is seen 0.4% lower at 8.7%, according to market estimates.

The recent uptick in gold cannot disguise that the precious metal still remains in a downtrend off the March 2022 high. The series of lower highs and lower lows remain in place, while in the short-term the $1,795/oz. double top will be tough to break pre-US inflation. Short-term support is seen at $1,763/oz. and $1,753/oz."

The inflation problem nobody is talking about -Washington Examiner

"Voters rank inflation as their top concern as prices continue to rise at the fastest pace in 40 years . And though the inflation conversation tends to center on consumer goods and energy, something else has become much more expensive than before: job qualifications, especially for work in the public sector. Rolling back an overreliance on college degrees can help.

Employers increasingly equate college degrees with job readiness, even for jobs that do not need that investment. When employers require degrees for low- or middle-skill positions, the resulting phenomenon is called 'degree inflation.' These positions have not required college degrees in the past and have not seen an increase in job responsibilities. Instead, possession of a college degree has simply become the primary box to check.

It should be no surprise, then, that public sector employment has failed to return to pre-pandemic levels. While barely one-third of the U.S. workforce possesses at least a four-year degree, over 60% of state government jobs require one. Considering college tuition has risen nearly five times faster than other consumer goods over the past 50 years, degree inflation causes increased vacancies for employers and traps strong, qualified candidates beneath a 'paper ceiling.'

To combat degree inflation, Maryland Gov. Larry Hogan removed college degree requirements from over half of the state’s positions, expanding work eligibility to more than a million workers in the state. These newly eligible candidates, called STARs (skilled through alternative routes), are active in the labor force, have on-the-job training, and are competitive candidates. They simply lack a college degree.

Maryland expanded work eligibility for jobs apt to draw from the STAR labor pool. Most of the positions are in IT, administration, and customer service, fields for which STAR candidates likely have the requisite experience.

The problem of degree inflation extends beyond the public sector. There are 71 million STARs in the nation, more than half of whom are overqualified for their current positions, according to Opportunity@Work, a nonprofit group that aims to remove barriers in the labor market. With over 11 million current job openings in the United States, allowing the consideration of STAR candidates alongside traditional college graduates could triple an employer’s pool of eligible applicants."

U.S. Lawmakers Look to Digital Dollar to Compete With China -WSJ

"Lawmakers are pushing the Federal Reserve to move swiftly toward issuing a digital dollar, to combat steps from China and others they say could one day threaten the U.S. status as the global reserve currency.

The bipartisan group of lawmakers, including Reps. Maxine Waters (D., Calif.) and French Hill (R., Ark.), has sought for the U.S. to counter global competitors launching digital versions of their currencies. The House Financial Services Committee, which both serve on, might vote on related legislation as soon as next month.

Ms. Waters has framed competition over new forms of central-bank money as 'a new digital assets space race.' The Biden administration and the Fed don’t share a sense of urgency.

Unlike private cryptocurrencies such as bitcoin, a Fed-issued central bank digital currency would be backed by the U.S. central bank, just like the Fed backs physical currency.

Fed Chairman Jerome Powell has indicated the central bank isn’t in a rush, as it confronts inflation and a slowing economy. Mr. Powell has said it is more important to get the digital dollar right than to be first to market, in part because of the dollar’s critical global role. He has also said the Fed won’t issue a digital dollar without support from elected officials. The White House has largely remained neutral on a digital dollar, with President Biden ordering a study to determine its implications for issues such as economic growth and stability....

For about a century the dollar has reigned supreme as the world’s most important currency, prized for its ubiquitous acceptance in almost any transaction from a cup of coffee at the neighborhood diner to a sale of bonds in Hong Kong and elsewhere abroad. There is now a serious debate about whether that status could be threatened by the march of technology and if, in response, the dollar needs to go digital.

A digital dollar could provide a new option to the way consumers pay for products and services. In addition to using a credit or debit card - or Venmo or Apple Pay - individuals would have a digital version of cash on their phones that could be used anywhere, likely through existing financial firms. That could lead to faster, cheaper and safer payments and make paper currency obsolete."

The Inflation Reduction Act would double IRS agents and audits — but superrich aren't real targets -New York Post

"The Manchin-Schumer 'Inflation Reduction Act,' which could clear the Senate this weekend, is supposed to raise tens of billions of dollars by adding $80 billion to the IRS budget and hiring as many as 80,000 more auditors and agents.

The plan is estimated to double the number of Americans audited each year. To quote the Church Lady from 'Saturday Night Live': 'Well, isn't that special?'

Most of the money raised from these audits won’t come from the superrich or multibillion-dollar corporations — both well-stocked with accountants and tax attorneys to fight IRS allegations.

Small-business owners and upper-middle-income workers will likely be the targets. The woman who runs an accounting firm or a restaurant won’t have the resources to fight the government in tax court.

This proposal comes just a year after the IRS’s latest scandal, with agents illegally leaking millionaires’ and billionaires’ private tax-return data to the media.

We all want Americans to pay the taxes they owe. But this plan is a brutal way to make that happen.

The bill is also counterproductive: It would add new green-energy tax write-offs and other loopholes to an abstruse 30,000-page tax code.

All this enforcement activity won’t raise nearly the money Congress hopes it will. The backbone of our tax system — as almost all IRS commissioners have noted - is voluntary compliance from the 150 million American workers and businesses that file returns each year."

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8.8.22 - 2023: Will the Fed Cut Rates?

Gold last traded at $1,787 an ounce. Silver at $20.60 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on momentum buying and a weaker dollar. U.S. stocks rose on investor earnings optimism and confidence in a mild recession.

Gold's industrial uses, Gold will integrate with blockchain technology -Cavatoni/Kitco

"Gold nanoparticles can integrate with chemotherapy for cancer treatments. The McLaren F1 sports car uses gold foil in its engine bay as a heat deflector. And gold is used in semiconductors for cellphones and computers.

These are just a few of the surprising industrial applications of gold, said Joe Cavatoni, the World Gold Council's Head of Global Sales and Regional CEO.

'You don't have an iPhone unless you have gold, you don't have an iPad unless you have gold,' he said.

Cavatoni also said that The World Gold Council hopes to use blockchain technology to track and trace gold transactions, so that consumers can be certain of gold quality and sourcing. ...

The World Gold Council recently released its Golden Thread documentary series, which can be viewed on YouTube. Presented by BBC presenter and mathematician, Dr. Hannah Fry, the series examines the various uses of gold in religion, art, science, and industry.

'We're really proud of the work the team did to put The Golden Thread series together,' said Cavatoni. 'Everyone thinks, in particular in North America, about futures contracts, about the next three months, about investment, and they worry about the price [of gold]. But what people are really missing is that gold is everywhere.'"

Beware Money Pox! -Bonner Research Partners

"And what’s new? Oh no… not again! The New York Times:

'As Monkeypox Spreads, U.S. Declares a Health Emergency - President Biden’s health secretary on Thursday declared the growing monkeypox outbreak a national health emergency, a rare designation signaling that the virus now represents a significant risk to Americans and setting in motion measures aimed at containing the threat.'

'We’re prepared to take our response to the next level in addressing this virus, and we urge every American to take monkeypox seriously,' the health secretary, Xavier Becerra, said at a news briefing

Not a single American has yet died from monkeypox. Millions die each year from murder, suicide, disease, heartbreak and old age. Why make a federal case out of the simian pox?

Oh, dear, dear reader… you know as well as we do. Emergencies… alarums… war - each one is a call to arms… and an excuse to spend money. The feds love 'em all....

As we saw earlier this week, major trends get underway in confusion and contradiction. Mr. Market seems to make a point of keeping investors guessing. Years go by and they guess wrong about what is afoot. It is only after the fact that we see the long, broad strides of a primary trend.

Looking back on the last 42 years, you’d have to be blind to miss it. Paul Volcker tamed inflation. Interest rates fell from 1981 until 2020. Falling interest rates meant that you could refinance - your home, your business - every few years… borrow more and more… and still have lower monthly payments. ...

The Fed giveth; the Fed taketh away. And there will be Hell to pay.

As long as the Fed sticks with the anti-inflation program the primary trend should be roughly equal and opposite to the last 40 years. That is, asset prices, now high, should fall. Interest rates, now low, should rise.

Does the Fed have the backbone to follow through?"

Reality Catches Up -Collaborative Fund

"An asset you don't deserve can quickly become a liability.

Maybe your portfolio surged during a bubble, your company hit a monster valuation, or you negotiated a salary that exceeds your ability. It feels great at the time. But reality eventually catches up, and demands repayment in equal proportion to your delusions – plus interest.

These debts are easy to ignore because they are often repaid in the form of self-doubt and crushed morale. But they are very real, and when you understand their power you become careful what you wish for.

Companies should want the valuation they deserve, and not a penny more.

Workers should want a salary that matches their skill, and nothing more.

Families should want a lifestyle they can sustain, and nothing higher.

None of those are about settling or giving up. It’s about avoiding a certain kind of psychological debt that comes due when reality catches up....

The question is how do you define 'deserve?' I don't think there’s an easy formula, especially in a world driven by stories and feelings vs. cold calculations.

But Bill Gates had it right when he said success is a lousy teacher, because it makes you forget how the world works. That’s especially true when all you focus on is the 'success' - the higher stock prices, the higher valuations, the more social media followers – and not the earned work that goes into building enduring success."

Why We Expect the Fed to Cut Interest Rates in 2023 -Morningstar

"We expect the Fed will pivot to easing monetary policy in 2023 as inflation falls back to its 2% target and the need to shore up economic growth becomes a top concern. The full analysis is detailed in our 2022 U.S. interest-rate & inflation forecast.

Interest rates. We project a year-end 2023 federal-funds rate of 1.75%, compared with 3.25% for the consensus. Further out, our 2026 and long-run projection for the fed-funds rate and 10-year Treasury yield are 1.75% and 2.75%, respectively. We do, however, expect rates to dip below these levels in 2024 and 2025 as monetary policy leans accommodative.

Inflation. We project price pressures to swing from inflationary to deflationary by 2023, owing greatly to the unwinding of price spikes caused by supply constraints in durables, energy, and other areas. This will make the Fed's job of curtailing inflation much easier. In fact, we think the Fed will overshoot its goal with inflation averaging 1.4% over 2023-26.

The inflation analysis is critical to our near-term projections for GDP and interest rates. If inflation becomes much more entrenched, the Fed will have to engineer a sharp short-run recession by hiking interest rates much higher than we expect....

Long-term forces - far outside of the control of the Fed - have acted to push down interest rates in the United States and other major economies for decades.

In other words, the natural rate of interest has shifted downward because of demographics and slower productivity growth, among other factors. These factors will keep interest rates lower for longer."

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8.5.22 - U.S.-China Tensions Push Gold to 1-Month Peak

Gold last traded at $1,774 an ounce. Silver at $19.89 an ounce.

NEWS SUMMARY: Precious metal prices fell back Friday as better-than-expected jobs data boosted the dollar. U.S. stocks fell as investors feared upbeat jobs data may force the Fed to more aggressively boost interest rates.

Dollar dip, U.S.-China tensions push gold to a new 1-month peak -CNBC

"Gold prices climbed over 1% to hit a fresh one-month peak on Thursday underpinned by a retreat in the dollar and U.S. Treasury yields, and as investors kept a close tab on U.S.-China tensions....

'As of late, yields are coming down slightly, that has been along with the dollar's recent weakness one of the key benefits to gold,' said David Meger, director of metals trading at High Ridge Futures.

The dollar’s retreat bolstered gold’s appeal among overseas buyers, while benchmark U.S. Treasury yields also slipped, reducing the opportunity cost of holding non-yielding bullion.

'We’ve seen some rising tensions between the U.S. and China, so one additional reason why gold has been well supported coming into the morning,' Meger added."

Home Sellers Cut Prices as Housing Market Cools -WSJ

"There are a lot of unhappy people in the housing market right now. Among the most miserable are sellers realizing they have listed their properties too late.

For much of the country, real estate had been on a tear since the start of the pandemic. Home prices are up about 44% over the past two years, according to Redfin.

But prices have cooled lately and many homeowners are coming to grips with the reality that they may not get the same prices their neighbors did. Roughly one in seven homes on the market had a price reduction in June, according to Realtor.com. That is nearly double the rate of one in 13 homes a year ago.

As more homeowners weigh cutting prices, they face several difficult decisions at once. They could need to cut prices once or even several times. Eventually, the seller may need to accept less than they feel their home is worth or choose to take it off the market and try again when conditions improve....

Jennie Jackson, 33 years old, listed her three-bedroom Las Vegas home for $465,000 earlier this summer. In March, her neighbor sold a comparable home for about $485,000, she said.

Over the course of about 35 days, she cut the price three times. She recently accepted an offer for about $405,000.

'I thought this may be the highest offer I’ll get so let me get out while the going is good,' said Ms. Jackson....

Homes that have been on the market for three months or longer are reducing prices by around 11% from the list price, according to the National Association of Realtors.

'The days of bidding wars and homes selling for tens of thousands of dollars over asking are over,' said Daryl Fairweather, chief economist at Redfin."

Surprises? Not Many -The Big Picture

"We enter the dog days of summer with markets coming off of their best July in years. There is some hope that the lows set in June will be 'the bottom' and that markets can return to their prior upward bias.

Plenty of skepticism remains that it’s this easy: Markets have seemingly discounted a mild recession already but nothing more serious; the 2/10s yield curve has inverted a little more deeply than last time; CPI comes out next week, providing a fresh hint as to where inflation is, and what the Fed might do at their September meeting. If all goes well, perhaps all the optimism is warranted.

And yet . . .

There are lots of ways this rally can peter out. The biggest concerns are corporate revenue and earnings. All things considered, they have been holding up rather well. It appears investors are relying on earnings to stay robust even if the economy suffers a short, shallow recession....

My worry is not Q2 earnings but rather, Q3: As we have discussed repeatedly, consumers and businesses have shown continued strength throughout the first half of the year. The concern is the impact of the aggressive FOMC tightening cycle. The dynamic results of these changes were not felt in the first two quarters of the year. The consecutive negative GDP prints were more a technical combination of inventory build, trade, a strong dollar, and high inflation than an actual contraction of economic activity.

But that was before we had two consecutive 75 basis increases in rates - we went from zero a year ago to 2.25-2.50% from what was effectively zero prior to March of this year. And that is before we ended quantitative easing (QE), and replaced it with quantitative tightening (QT).

September is when we could see preannouncements that are rather ugly. It’s a bit too neat to expect an October revisit of the lows as the FOMC’s overtightening impacts corporate profits, but that is certainly one possibility."

What's Lacking Right Now Is the Fed's Will To Act -RealClearMarkets

"The Financial Crisis Inquiry Commission (FCIC) was empaneled to have the final say on the 2008 panic. A political affair though not necessarily partisan, its true purpose was to get the public to stop talking about the disaster by appearing thorough, to dissuade regular folks from asking more questions before someone might eventually hit upon the right ones.

Judging from history’s response to the government's conclusions, the effort was extremely effective having produced that very effect. More's the pity.

To this day, ask the average American what had gone wrong back then and ninety out of a hundred will tell you subprime mortgages, the dirty recklessness of greedy Wall Street bankers. The odd ten leftovers will scream conspiracy.

FCIC’s work left no doubt subprime was its members’ conclusion, too. Having interviewed more than 700 witnesses, entered millions of documents into evidence, the lengthy final report used that very word 784 times.

That’s been the idea from the very start, though ironically perhaps the most famous crisis-era statement was Ben Bernanke’s in March 2007 before Congress, 'At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.'

Having been made to eat those words, the Federal Reserve’s Chairman would then say to the FCIC several years later that:

'Prospective subprime losses were clearly not large enough on their own to account for the magnitude of the crisis. Rather, the system’s vulnerabilities, together with gaps in the government’s crisis-response toolkit, were the principal explanations of why the crisis was so severe and had such devastating effects on the broader economy.'....

As always, you needn’t take my word for anything. The discussions, documents, and material are all freely available, those specifically about the Global Financial Crisis as well as in the decades leading up to it. GDP or market charts prominently bent right at 2007-08 can be found - even for Russia - from practically any source.

What’s lacking is nothing more than the will to act, to actually learn what 'the system’s vulnerabilities, together with gaps in the government’s crisis-response toolkit' is really all about, and what it still means, sadly, for all of us fifteen years later. Social breakdown and growing chaos or political danger didn’t come out of nowhere, we know where and particularly when it all went wrong."

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8.4.22 - How The Gold Standard Prevented Inflation

Gold last traded at $1,794 an ounce. Silver at $20.24 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying and a weaker dollar. U.S. stocks inched higher on speculation the U.S. economy may be able to escape a full-blown recession.

Charts suggest now is the perfect time to buy gold, Jim Cramer says -CNBC

"CNBC's Jim Cramer on Wednesday told investors that gold is poised to rally, making now an optimal time for investors to pounce.

'The charts, as interpreted by the legendary Larry Williams, suggest that the general public’s giving up on gold en masse and he thinks that that makes it the perfect entry time to do some buying,' the 'Mad Money' host said.

Gold futures fell on Wednesday, facing pressure from a stronger U.S. dollar and Treasury yields after Federal Reserve leaders’ hawkish comments on inflation the day before took metals lower.

Gold is considered a safe investment and often attracts investors during periods of economic and geopolitical turmoil.

Cramer began his explanation of Williams' analysis by examining the weekly action of gold going back to 2014, paired with the Commodity Futures Trading Commission’s Commitments of Traders report data....

While this doesn’t mean investors should always do the opposite of what small speculators are doing, this is a sign that gold could gain soon, according to Cramer."

What Did We Do About Inflation Before Economists? -RealClearMarkets

"In their new book America In Perspective, David Sokol and Adam Brandon report that in 1700, what eventually became the United States had a population of 250,000. By 1770 it was 2.1 million. One hundred years later there were 40 million Americans. By 1914, the number had ballooned to 99 million.

What explains the surge of humans from all over the world? It’s a waste of words to answer the question, but for those still a little bit sleepy, the answer to the question is economic growth. Word travels fast on the matter of prosperity. Abnormally fast growth logically proved a magnet for the world’s strivers in search of something better....

Why was growth so substantial in the colonies that became the U.S., and in the United States itself? Certainly the arrival of ambitious people seeking the U.S.’s freedom and free markets loomed large. Call it the dominant factor. Of course, a low-entropy input to this growth was that the dollar had a stable definition from the late 18th century through the first third of the 20th as 1/20.67 of a gold ounce.

Love or hate the gold standard, it cannot be denied that it personified dollar-price stability. And with the dollar stable, inflation wasn’t a problem. Substantial growth, but no inflation. Please keep it in mind given the modern discussion of 'inflation.'

What prevailed throughout much of the U.S.’s early existence requires routine re-statement due to the rising consensus on the Left and Right that 'demand' is the source of our alleged 'inflation' troubles today. In his most recent opinion piece for the Wall Street Journal, Harvard professor and former Obama administration CEA Chairman Jason Furman asserted that the 'economic logic for demand reduction to curb inflation is clear.' It's hard to know where to begin here.

In Furman’s case he’s arguing that reduced economic growth via 'higher taxes, lower government spending, or a combination of the two' will tamp down rising price pressures. Except that these won't. Figure that measures taken to reduce 'demand' will by definition reduce supply. Waste of words? Most certainly, but once again necessary. It’s necessary because Furman believes slower economic growth is the inflation answer. Actually, the inflation answer is a stable dollar. Nothing else....

The challenge of the moment is that basic economics is being pushed aside. Well educated thinkers on the Right and Left have chosen to redefine inflation, all the while ascribing new causes of it. They remind us that economic knowledge isn’t born of education, and never was. It's just common sense. We’d be much better off if Lefties from Harvard and Right-of-Center 'free market' thinkers from University of Chicago just skipped what wastes time and money, only to read Adam Smith.

Whatever the solution, we know that inflation isn’t a consequence of 'demand' and economic growth. If it were, the U.S. of 1787-1914 would have been defined by rampant inflation in an economic sense. Except that it wasn't. Inflation is a departure from currency-price stability. Nothing else. That this is lost on the experts of today means lots of words are being wasted in concert with very little learning."

Is a Housing Market Crash Going to Be the Next Black Swan Event? -InvestorPlace

"The housing market has been under intense scrutiny lately. Plummeting home sales and rising mortgage rates have some economists calling for a real estate cool down. Some even believe a housing market crash could be the next black swan event that sends the wider economy into a tumble.

A black swan event is defined as an unexpected and devastating phenomenon that impacts a large number of people and is frequently considered obvious in hindsight. Many refer to the 2008 housing crash as an example of a black swan event. It sparked widespread turmoil across the country and globe, and came at what was then the peak of housing in the U.S. It is also often characterized as obvious for those who performed the proper due diligence.

By definition, a black swan event is difficult to see until it happens. For the housing market, however, there are barriers to a crash that make the event even more difficult to predict. Given the historic rise of home prices since the start of the pandemic, housing may seem an obvious candidate for the next major black swan event. On the other hand, despite signs of a receding market, there remains plenty of doubt surrounding the notion of a potential crash.

Housing has long been an integral aspect of the U.S. economy. Real estate is a major source of domestic wealth, and house construction employees a large number of Americans. In fact, housing regularly contributes between 15% and 18% to gross domestic product, or GDP. As such, rumors of a housing crash are especially startling to economists. If housing falls, the U.S. economy would be liable to plummet as well....

Since just Q2 2020, the median price of homes sold in the U.S. has climbed nearly 40%. Currently, the median sales price of houses sold in the U.S. is $440,300. Now, especially with 2008 in the rearview mirror, it’s no surprise some have started peddling rumors of a housing bubble. But there are also some major barriers to a substantial pullback in home prices.

Easily the most salient argument against a housing crash is the simple undersupply of homes in the U.S. While the demand for homes is quickly falling, reflected in plummeting completed home sales, the U.S. still only has a roughly three-month supply of homes. This is far from the five- to six-month supply typical of a balanced housing market....

With that said, economists are split on the subject. In an interview with Business Insider, José Torres, a senior economist at Interactive Brokers, argues housing is subject to a hefty pitfall:

'At this point, housing is unreachable when considering household incomes and individual incomes. The percentage of the average monthly payment to household incomes and individual incomes is at record highs - similar to levels that we saw during the 2008 financial crisis … We’re going to see something very similar to what we saw during the Great Financial Crisis.'

Housing is clearly closely related to the health of the overall economy. In that sense, both realms are currently operating in a state of uncertainty. Whether housing proves the black swan some make it out to be remains to be seen."

How to Be Happy in a Recession -The Atlantic

"After years of historically loose monetary policy, trillions of dollars in stimulus checks, and supply-chain wreckage during the coronavirus pandemic, perhaps we shouldn’t be surprised that a recession is looming, and may already be upon us. But the fact that it is predictable doesn’t make the high prices, effectively lower wages, and tanking investments hurt any less.

Along with material security, many Americans are losing their sense of control over their economic fate. When stock markets are declining quickly, almost no amount of work can keep retirement savings from falling, swallowing up months and years of sacrifice. If you’re a homeowner, knowing that your house is losing value comes with a special sense of helplessness.

The unhappiness that accompanies recession is real, and you’re not irrational if you feel it. Your instincts might tell you to fight these bad feelings by focusing on the problem intently and managing your affairs meticulously. But that’s not actually the best way to alleviate your suffering. To ride out the coming recession with your happiness intact, you’ll need to figure out how to pay less attention than your brain is telling you to....

Research shows us that financial hardship leads to a vicious cycle of unhappiness: Recession begets misery, which makes for more economic bad times. You naturally make the pattern worse by following your loss-aversion instincts and focusing intently on the prices of gas and food, the estimated value of your house, and the numbers in your retirement account.

Although you probably can’t break the global economy out of this feedback loop, you can break yourself out of it. Start with the following three practices.

1. Stop checking. Here is my advice as an economist: Make a prudent set of basic rules about your spending, savings, and investments. For example, make sure that you automatically save 15 percent of your income every month if you can....

2. Turn off the news. Bingeing on information is a tempting way to try to eliminate the feelings of uncertainty that our current economic moment might inspire. But consuming news and commentary about the economy can become compulsive....

3. Remember you’re not alone. When things are going south in your bank account, portfolio, or home value, it is easy to feel all alone in your misfortune, and to beat yourself up for not doing something before the economy started to tank....

If you want to end the boom and bust cycles in your happiness, you need to stay just as steady in the good times as you do in the bad."

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8.3.22 - 'Inflation Reduction Act' Won't Work

Gold last traded at $1,761 an ounce. Silver at $19.99 an ounce.

NEWS SUMMARY: Precious metal prices eased back Wednesday on profit taking and a firmer dollar. U.S. stocks rallied as traders cheered better-than-expected earnings and economic data.

Gold pulls back after longest winning streak since April -Marketwatch

"Gold retreated on Wednesday after a five-day winning streak that was its longest stretch of uninterrupted gains since April.

Rupert Rowling, a market analyst at Kinesis Money, attributed the retreat in gold and silver prices to comments from Chicago Federal Reserve President Charles Evans and San Francisco Fed President Mary Daly on Tuesday.

The two senior Fed officials, neither of whom have a vote on the Fed’s policy-setting committee this year, pushed back on the notion that the Fed is ready to reduce the pace of its rate hikes.

Late Tuesday and again on Wednesday morning, St. Louis Fed President Jim Bullard said on CNBC’s ‘Squawk Box’ that the Fed can hike interest rates without triggering a recession. Bullard has also said he would like to see the high end of the Fed’s target rate at 4% by year’s end.

More Fed officials are expected to deliver public commentary on Thursday. The hawkish comments helped revive Treasury yields and the dollar, making gold less attractive by comparison.”

The 'Inflation Reduction Act' Won't Actually Reduce Inflation -Reason

"Complicated pieces of legislation rarely live up to the glitzy names scrawled across the first page. But even by that familiar standard, the Inflation Reduction Act of 2022 is going to disappoint anyone excited by its title.

The bill, introduced last week after a long-awaited deal was struck between Senate Majority Leader Chuck Schumer (D–N.Y.) and moderate Sen. Joe Manchin (D–W.Va.), was pitched as a way to lower costs for consumers while also reducing the federal budget deficit and spending billions on environmental initiatives meant to combat climate change.

It didn't take long for a problem to present itself.

'The impact on inflation is statistically indistinguishable from zero,' concluded the Penn Wharton Budget Model (PWBM), a number-crunching policy center based at the University of Pennsylvania. In fact, if the bill's passage had any impact on inflation in the short term, it would be to increase it very slightly until 2024, according to the group's preliminary analysis, released on Friday.

Other parts of the Inflation Reduction Act would do what Manchin and Schumer claim. According to the PWBM report, the bill would reduce future deficits by a cumulative $247 billion over the next decade and would marginally reduce the national debt as a result. It would spend about $370 billion on new environmental and climate initiatives. It would pay for all that by raising taxes and by boosting IRS enforcement, in hopes of chasing down revenue that currently goes unpaid.

But again, the Inflation Reduction Act won't actually reduce inflation."

In Ukraine, the Private Sector Keeps Meeting the Moment -RealClearMarkets

"A powerful new force, largely overlooked but hardly unappreciated, is fighting side by side with soldiers and citizens to defend Ukraine against the heartless Russian onslaught now entering its sixth month: the private sector.

Dozens of American corporations are digging deep for the cause: Dupont vowed to contribute $200,000, IBM $500,000 and Adobe $2.5 million, just to cite three random examples.

At last count, 359 private-sector organizations, primarily corporations, have either donated or pledged more than $1.5 billion, either in cash or in-kind contributions, according to new data from the United Nations, with support from the Connecting Business Initiative, a global network that engages the private sector in disaster preparedness, response and recovery.

Examples abound elsewhere, too. Danish logistics firm DSV has transported Ukranian refugees to Poland, where home retailer JYSK has donated 26,000 blankets. More than 36,000 AirBnb hosts worldwide, including 3,000 in the U.S., have offered temporary residences to up to 100,000 Ukrainian refugees.

In Ukraine, telecom firms are allowing international calls to the country free of charge and eliminating roaming charges there. Eurostar, a high-speed rail service, is giving free seats to Ukrainians with a valid visa going to London. Levi’s has donated $300,000 to aid Ukrainian refugees and pledged to match contributions from employees on a two-for-one basis. ‘The level of mobilization by companies around the world in support of the people of Ukraine is record-breaking,’ says Osnat Lubrani, UN resident coordinator in Ukraine.

With increasing frequency, then, whether after a volcanic eruption in Tonga or flooding in Sri Lanka, private enterprise is coming to the rescue. Government agencies and nonprofit organizations can do only so much to enable a country to cope with disasters. Corporations, utilities, and others in the private sector are needed to leverage skills and material resources, cut through red tape and quickly lend a hand."

Entire Biden economic team needs to be replaced -Washington Times

“What is a recession? Who is to say? What is an economist, and who is to say? For many years after completing my graduate education, I called myself an economist with a certain pride - but these days not so much.

I thought I was following in the footsteps of many great thinkers, starting with Adam Smith who fathered the field with his great book, 'The Wealth of Nations' (1776), followed by people like David Ricardo, John Stuart Mill, Frederic Bastiat, Alfred Marshall, up to the modern era with Milton Friedman, F.A. Hayek and many others.

Rather than continuing to advance knowledge, many of the better-known economists seem to have forgotten the fundamentals, which is causing them to say idiotic or 'woke' things and, worse yet, convince political airheads like President Biden to follow disastrous policies.

Fortunately, we are blessed with many funny, yet solid, thinkers outside the world of academic economics. One of those is Bill Frezza, an MIT-trained electrical engineer, successful venture capitalist and policy wonk. Back in 2012, he wrote a classic article for Forbes, asking: 'Why do we allow economists to formulate economic policy?'

Why are economists accorded such respect and influence given the fact that they claim knowledge over the unknowable, promote theories that are untestable, and make forecasts for which they are never held accountable? Isn’t that the definition of a witch doctor?

Fortunately, not all are 'witch doctors.' The great F.A. Hayek warned us about the limits of knowledge, 'the fatal conceit,' and our ability to forecast. Vernon Smith continues to bring real science to economics by creating testable experiments that can be duplicated.

Mr. Frezza goes on to say: 'If engineers were held to the same standards, bridges would collapse as often as banks, planes would fall from the sky (if they ever got off the ground), etc.'"

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8.2.22 - 61% in U.S. Now Live Paycheck to Paycheck

Gold last traded at $1,766 an ounce. Silver at $20.04 an ounce.

NEWS SUMMARY: Precious metal prices extended gains Tuesday on safe-haven buying despite a firmer dollar. U.S. stocks fell for a second day as investors weighed China tensions and a new batch of earnings.

Gold Price Hits Four-Week High as Pelosi's Taiwan Trip Stirs Tensions -Bloomberg

"Gold rose to the highest level since early July as investors braced for a stormy period in US-China relations with House Speaker Nancy Pelosi heading for Taiwan.

The precious metal often benefits from bouts of geopolitical turbulence, and the Pelosi trip only adds to tailwinds that have helped gold rebound from a 15-month low. A reversal in the dollar's rally and growing fears about the global economy have also aided bullion prices.

Pelosi is expected to arrive later Tuesday in Taiwan, which China views as its territory. She would be the most senior US politician to visit the island in a quarter of a century, and Beijing has warned of consequences including military action if the trip goes ahead.

'Dollar weakness is aiding gold's move higher with some support seen from the rising US-China tensions,' said Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services."

The R-Word -Bonner Private Research

"Call it what you like, if it looks like a duck, waddles like a duck and quacks like a duck...

Last week, we heard from America's two most hoary financial authorities:

'I do not think the U.S. is currently in a recession and the reason is there are too many areas of the economy that are performing too well,' said Jerome Powell, jefe of the Fed.

'This is not an economy that's in recession,' added Janet Yellen, former Fed chief and now US Treasury Secretary.

The good news hung in the air like the perfume of a passing transvestite - fraudulent but not unpleasant.

But scarcely 18 hours later, over the wires came word the US economy really is in recession. Last quarter showed negative growth of 0.9%. Combine that with the 1st quarter and you have annualized growth of about MINUS 1.25% so far this year. Those are the feds’ own numbers. They show a recession underway.

Curiously, the press was eager to reframe the 'recession' story in a way that made it less threatening to the Biden Administration. That is, reporters aimed to distract readers and help them to miss the point....

Fearing a recession is a psychological phenomenon. Experiencing one is a whole different thing. And if fear were the real risk, the recession itself must be of no importance. It also echoes FDR's famous line, that 'all we have to fear is fear itself,' leaving readers to believe that it must be a little unpatriotic even to imagine such a thing.

You can see how easy and useful this new journalism can be. When the stock market is crashing, reporters could chortle: 'Wall Street values greatly increased yesterday.'

Likewise, the technique might be useful for Baltimore's overworked crime reporters: 'A mass shooting today on the corner of North and Charles has left citizens worrying about whether they have adequate life insurance'

But as they say in the legal trade, if it looks like a duck, waddles like a duck, and quacks like a duck... well, it is a duck. And it looks like a recession to us.

Stocks have fallen...Bonds have fallen. Real estate is beginning to fall.

And now, the economy is actually shrinking. Quack, quack, quack..."

As inflation surges, more Americans are living paycheck to paycheck -CNBC

"Inflation has been causing economic hardship for workers across all income levels.

As of June, 61% of Americans - roughly 157 million adults - lived paycheck to paycheck, according to a new LendingClub report...A year ago, the number of adults who felt stretched too thin was 55%.

Even top earners have been struggling to make ends meet, the report found. Of those earning $200,000 or more, 36% reported living paycheck to paycheck, a jump from the previous month.

Another recent survey, from consulting firm Willis Towers Watson, estimated 36% of those earning $100,000 or more said they were living paycheck to paycheck.

Although average hourly earnings are up 5.1% from a year ago, prices have been rising even faster, especially for groceries and - until quite recently - gasoline, so paychecks can't stretch as far.

The Consumer Price Index, which measures the average change in prices for consumer goods and services, jumped a higher-than-expected 9.1% in June, the fastest pace since 1981.

Those struggling to afford their day-to-day lifestyle tend to rely more on credit cards and carry a higher monthly balance, making them financially vulnerable, the survey said."

Investors Fear Stock-Market Rally Will Be Short-Lived -WSJ

"Bearish investors aren't buying into hopes that July's rapid advance for stocks heralds the start of a new bull market.

If anything, they say the worst might be yet to come as inflation remains high, the Federal Reserve plans more interest-rate increases and stocks trade at valuations that still don't look cheap.

'We don't think the market has bottomed,' said David Spika, president and chief investment officer at GuideStone Capital Management. With earnings expectations yet to meaningfully decline, he said that 'We clearly have not priced in a recession.'

That view is at odds with the market's sudden appetite for stocks. After a punishing first half, the S&P 500 rallied 9.1% in July, its strongest month since November 2020. The gains pared the index's year-to-date decline to 13%. On Monday the S&P 500 began August by slipping 0.3%.

And although Fed Chairman Jerome Powell sounded warning notes during his press conference last week, markets chose to view them as being less hawkish than many had feared. That reinforced views expressed in the bond markets that while the Fed will continue to raise interest rates for some time, it will then have to quickly pivot and begin lowering them....

Investors this week will parse the next round of earnings reports from companies including Caterpillar Inc., PayPal Holdings Inc., Starbucks Corp. and CVS Health Corp. for clues about the market's trajectory. They also will scrutinize the latest jobs report to gauge how employment is holding up as the economy shows signs of weakness."

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8.1.22 - Consumers Powered Through the Pandemic and Inflation ... Until Now

Gold last traded at $1,768 an ounce. Silver at $20.29 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on bargain hunting and short covering. U.S. stocks inched higher despite growing recessionary inflation fears.

Consumers Have Powered Through the Pandemic and Inflation - Until Now -WSJ

"The past week revealed new evidence from companies and the government that household spending is increasingly strained. Families are paring back purchases of items such as electronics and furniture as prices for essentials like food and gasoline have become more expensive. Inflation drove consumer spending in June to a new four-decade high while personal incomes fell when adjusting for inflation and taxes.

Two of the country's biggest retailers, Walmart and Best Buy warned last week that a steeper-than-expected pullback in shoppers' spending would crimp their profits. The latest financial results also show that many big companies' profits have held up so far this year by passing along to consumers higher labor and fuel costs.

Consumer confidence, however, has softened. After raising interest rates for the fourth time this year to battle inflation, Federal Reserve Chairman Jerome Powell said Wednesday that people are going to the grocery store and finding that their budget no longer covers their usual shopping list.

On Thursday, the government said that the nation's gross domestic product contracted for a second consecutive quarter, raising fears that inflation and a slowdown in inventory building and the housing market are dragging the economy into a recession.

'Consumers' budgets are stretched,' said Sean Connolly, chief executive of Conagra Brands Inc., which makes Slim Jim meat snacks and Healthy Choice meals. 'It forces consumers to be very discerning about what they buy and to find the best overall value.'....

Many consumers who weathered the pandemic with the help of government stimulus and fewer expenses of their own are running out of steam. Some of them now face the return of commuting costs, a need for new work clothes and steeper child-care expenses....

Mark Zandi, chief economist of Moody's Analytics, cautions that consumer and business sentiment are so far gloomier than their actions would suggest. Although some consumers are cutting back spending on goods, it is being accompanied by increased spending on services, Mr. Zandi said. Hiring has remained strong and core business investment, excluding defense and transportation, has remained steady.

'There's all kinds of disconnects in this economy, but there's a very strong disconnect between how people say they feel and how they're behaving,' Mr. Zandi said. 'This gap between sentiment and behavior is the widest I've ever seen.'"

Webcast: James Grant on inflation, rates, and geopolitical uncertainty -WGC

"James Grant, noted economic expert and Founder and Editor of Grant's Interest Rate Observer, joined us to share timely insights on key topics including:

-Potential inflation scenarios and economic growth outcomes including stagflation, recession and a 'soft landing'

-Long-term implications of global monetary policy

-Rethinking asset allocation amid increasing bond-equity correlations."

"Recession? 'The Fed is tightening into a downturn'....

Gold? 'Until now, Gold has been the loser from the world's infatuation with intangibility ... To me one of the strengths of gold is it's magnificent tangibility... I think gold does better as investors lose confidence in central bank policy and fiat currencies'....

'I think The world will soon see that the Fed is trapped, unable to do enough, and gold will have it's moment... credit is at risk and gold is the answer to that risk.'"

Are You Prepared for A Possible Lost Decade Ahead? -Pring Turner

"While it is true in the very long run stocks go up, it is also true that secular bear markets are a fact of life. These dangerous extended periods where inflation adjusted stocks underperform can last 10-20 years or more. How many of these challenging 20-year periods do you have in your investment lifetime? How can you identify them and prepare a successful gameplan to navigate the cyclical ups and downs?

A byproduct of the record monetary and fiscal stimulation that took place between 2020 and 2021 has been rampant speculation in financial markets. That frothy behavior has extended from housing through to technology stocks, SPACS, NFTs and of course crypto. In the early phase of the 2022 equity decline we held the view that the secular bull market dating from 2009 was likely intact and that a further up leg to the post 2009 secular bull market possible. We therefore assumed that the decline represented a counter-cyclical correction in an on-going secular uptrend, rather than a pro-trend primary bear under the context of a secular bear market.

The distinction is incredibly important because primary trend bear markets that develop under the context of a secular bull environment are almost invariably contained in either magnitude (15 - 25%), duration of 6 to 9 months, or both. This compares to the typical 40 - 60% loss over 15- to 24-months when the secular movement is bearish.

At Pring Turner, we call the former 'burglars', because they have the effect of temporarily hurting portfolios. The latter are named 'bank robbers' because their effect is far more pervading. The current primary bear market at around -20% has yet to exceed the burglar range in either magnitude or duration....

We can't be sure that the equity secular bull market for stocks is over, but it's quite apparent that several reliable indicators are moving in that direction. Many others are on the brink of a sell signal. The saving grace lies in the fact that the inflation adjusted S&P has reached support in the form of its secular up trendline and several intermediate indicators are in place to support a summer rally and sentiment is quite bearish...

That said, there are enough secular style bearish omens to indicate the necessity of maintaining a cautious stance until the long-term evidence reverts to a more positive direction.

The good news is that it is possible to build wealth during a secular bear market, but investors must first discard the buy-and-hold, indexing and passive asset allocation strategies that worked well in the secular bull market...The key to success is the understanding of the relationship of business cycles and financial asset classes. In essence, it is having a gameplan for both offense and defense."

Recession another victim of Democrats' rewriting of the English language -New York Post

"When is a recession not a recession? When a Democrat is in the White House, apparently.

The traditional rule of thumb for when an economy is in a recession is a decline in gross domestic product for two consecutive quarters - a shrinking economy for half a year. Under previous presidents, that was not a controversial definition. In 2008, Joe Biden's National Economic Council director, Brian Deese, wrote, 'Economists have a technical definition of recession, which is two consecutive quarters of negative growth.'

But here's Deese Wednesday: 'Two negative quarters of GDP growth is not the technical definition of recession.' He's not the only one. Treasury Secretary Janet Yellen Sunday: 'we are not in a recession now' even if GDP declines for a second straight quarter. 'That's not the technical definition.'

You can guess the reason for the spin: When the second-quarter GDP number came out Thursday - surprise! - it was negative for the second straight quarter. Just don't say the R-word. President Biden's response: 'That doesn't sound like recession to me.' It's like a three-card-monte dealer looking you in the eye and saying, 'That's not the queen.'....

Yellen also argues it's not a recession until the National Bureau of Economic Research says it is. But the NBER does historical statistics, so it often takes a year for it to declare a recession. Talk about trying to run out the clock....

What is it with Democrats trying to change the meaning of words? ... It's less Orwell than Lewis Carroll's Humpty Dumpty: 'When I use a word, it means just what I choose it to mean - neither more nor less.'...

The goal is to be master of the press. The New York Times, the Associated Press, and CNN all shrugged - who really knows what a recession is?"

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7.29.22 -The Housing Slowdown is Here

Gold last traded at $1,753 an ounce. Silver at $19.95 an ounce.

NEWS SUMMARY: Precious metal prices continued to climb higher Friday amid a weaker dollar and bond yields. U.S. stocks rose on the back of upbeat corporate earnings reports.

Gold to be the standout metal for the rest of 2022 -Bloomberg/Kitco

"Following another 75-basis-point hike from the Federal Reserve, gold looks to be the standout metal in the second half of the year, especially in light of lower industrial metals prices signaling deflationary forces coming back to the fore, according to Bloomberg Intelligence.

Following the Fed's July decision, gold jumped around $30, with August Comex gold futures last trading at $1,749.30, up 1.76% on the day. This comes after gold got stuck in consolidation mode following a sudden drop to the $1,700 an ounce level, which was led by a strong U.S. dollar....

'The 75-bp rate hike at the July meeting could solidify foundations for an elongated bull market in gold and U.S. Treasury bonds. Copper and gold are a bit too cold at the end of July, but we see greater industrial metal headwinds,' Bloomberg Intelligence's senior commodity strategist Mike McGlone said in a report this week.

Bloomberg Intelligence sees gold as a potential standout in the second half of the year after delivering steady results in the first half of 2022."

Biden says US not in a recession despite two consecutive quarters of shrinking economy -Fox Business

"President Biden said the United States 'is not in a recession,' despite Thursday's GDP report, saying it is 'no surprise that the economy is slowing down' amid inflation.

The U.S. economy shrank in the spring for the second consecutive quarter, meeting the criteria for a recession as record-high inflation and higher interest rates forced consumers and businesses to pull back on spending.

Gross domestic product, the broadest measure of goods and services produced across the economy, shrank by 0.9% on an annualized basis in the three-month period from April through June, the Commerce Department said in its first reading of the data on Thursday. Refinitiv economists expected the report to show the economy had expanded by 0.5%.

Biden touted the job market, saying it 'remains historically strong, with unemployment at 3.6% and more than 1 million jobs created in the second quarter alone.'....

'My economic plan is focused on bringing inflation down, without giving up all the economic gains we have made,' he said. 'Congress has an historic chance to do that by passing the CHIPS and Science Act and Inflation Reduction Act without delay.'"

The housing slowdown is here -Axios

"The big picture: Home sales are slowing down, and some of the pandemic era's hottest 'Zoomtowns' - sleepy areas where remote workers pushed up real-estate prices - are already seeing price drops.

Why it matters: The idea of a real estate downturn might seem scary, especially if you lived through the last one. But with home prices at record highs, this was a market overdue for cooling off.

What's happening: 'Activity in the housing sector has weakened,' is how Fed Chair Jerome Powell put it Wednesday, at a press conference announcing another 0.75 percentage point rate hike.

Contract signings for home purchases, or deals signed but not yet closed, fell 8.6% in June from a month ago, the National Association of Realtors reported yesterday. That was well above what economists were predicting, and a 20% drop from last year.

'It was also the slowest pace since September 2011 - except for the first two months of the pandemic,' notes CNBC. Meanwhile, mortgage applications are at their lowest level of activity since February 2000."

The Fed's Secrets -Bonner Private Research

"Empires need enemies. China is a good one. It's big. It's powerful. And it's a plausible candidate to replace the US as the world's number one hegemon.

Already, FBI agents are looking under the beds for Chinese agents. The Wall Street Journal was on the case yesterday: 'China tried to build a network of informants inside the Federal Reserve System'...

Oh those wily, inscrutable, clever Chinese. They're going to steal the Fed's secrets... and infiltrate its policymaking... steering it to dumber and dumber policies.

Excuse us... but we need to take a break to laugh... and catch our breath.

The idea that the Chinese may learn Fed secrets, or pervert Fed policy, is like suggesting that it might be trying to steal Bernie Madoff's business plan. How it worked was obvious; its failure was inevitable.

The Chinese can have all they want - all the scientific-sounding formulas, the large numbers, the Greek symbols and the crackpot theories. Besides, why bother? Want to know something about the US economy? Just go on the Internet. There are reams of data... tomes of theories... endless research. Almost all of it free.

People think the Fed team are like nuclear engineers... or maybe surgeons. They believe the Fed must have expertise... some tricks... some gnostic awareness - above and beyond normal humans - that enables them to pull the right lever at exactly the right time. That's why the mainstream press refers to Powell's 'skill' as a central banker that will be needed to avoid a recession.

But Mr. Powell has no known skill. And he has only one thing to work with - liquidity, both cash and credit. He adds it. Or subtracts it. Everything else is detail. And if he had any idea of what he was doing he wouldn't have been adding liquidity when the economy was entering an inflationary cycle... and wouldn't now be 750 basis points 'behind the curve.' He'd be ahead of it... inflation would be under control... and he could lower rates when the economy goes into recession."

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7.27.22 - Fed May Soon Need Treasury's Help

Gold last traded at $1,724 an ounce. Silver at $18.80 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on dollar weakness ahead of the Fed statement later today. U.S. stocks rose on upbeat tech earnings and investor expectations of a .75% interest rate increase from the Fed.

Gold, silver and copper are ripe for short covering -analysts/Kitco

"Hedge funds continue to add to their bearish bets on gold. Still, analysts say that the downside could be limited and the market is becoming an attractive contrarian move....

Analysts have noted that the gold market has been in a solid downtrend as the Federal Reserve has aggressively raised interest rates to slow down the economy and cool rising inflation pressures. The central bank is looking to raise interest rates by another 75 basis points Wednesday. Markets see interest rates potentially rising to between 3.50 and 3.75% by the end of the year.

However, many analysts have also said that these rate hikes have been priced into the market, limiting gold's downside through the rest of the year. Some analysts have also noted that a slowing economy and potential recession could cause the Fed to slow the pace of rate hikes.

'Any sign that the Federal Reserve is relenting on rate hikes will be good for gold,' said John Hathaway, senior portfolio manager of Sprott Hathaway Special Situations Strategy....

Analysts note that the last time gold's net positioning was this bearish, the market quickly turned around and went on a months-long rally that pushed prices to record highs above $2,000 an ounce."

Why the Fed May Soon Need Treasury Help -WSJ

"Here we go again. Another meeting of the Federal Reserve’s monetary policy committee, and another press conference at which Chairman Jerome Powell will attempt 'to explain our actions and answer your questions.' One question financial journalists should ask: Why is the Treasury about to start underwriting the Fed’s operating expenses?

The public may not be aware that when the Fed raises rates, it does so primarily by raising what it pays to commercial banks and other depository institutions on the reserves they hold at the Fed - which are interchangeable with cash and effectively serve as checking accounts....

The tricky situation the Fed now faces is that its own net interest income - $116.8 billion in 2021, of which 93% was remitted to the Treasury - will soon be exhausted by the higher interest rates it intends to pay on those combined cash funds....

Americans might ask why their Treasury will soon provide funds to pay interest on non-U.S. banks’ cash parked at the Fed. This matters because American exporters are bearing the cost of a rising dollar while other major central banks continue to maintain ultralow interest rates to support their domestic economies."

Delaying retirement? Should you also delay claiming Social Security? -Motley Fool

"Changing your retirement date means it's time to take a long look at your financial plans, including the age when you decide to claim Social Security. Sometimes, there can be some real advantages to delaying benefits for a while, especially if you don't need them right away.

The main reason people want to delay Social Security is to increase their checks for every month delayed, at least until they reach their maximum benefit at 70. But a lot of people aren't able to delay because they can't afford to; they need their monthly benefits to help pay the bills. If you choose to delay retirement as well, you'll have a paycheck to help you with the bills, and you might be able to put Social Security off a while longer.

Delaying Social Security might also help you avoid the program's earnings test. This only affects people who are working and claiming benefits while below their full retirement age (FRA). That's anywhere from 66 to 67 for today's workers.

If you'll be under your FRA for the full year, the Social Security Administration withholds $1 from your check for every $2 you earn over $19,560 in 2022. If you'll reach your FRA this year, you only lose $1 for every $3 you earn over $51,960, and that's only if you hit this amount before your birthday.

Delaying retirement could be a personal preference or it could be due to a lack of finances. In either case, there's nothing stopping you from claiming Social Security while working as long as you're eligible for the program.

Claiming benefits while working might actually be the smart move if you don't expect to live long. Delaying Social Security rarely makes sense in this situation; by opting to delay, you run the risk of waiting too long and not receiving benefits at all before you die."

Society Is a Blessing, but Government Is Evil -Thomas Paine/Mises

"A great part of that order which reigns among mankind is not the effect of government. It had its origin in the principles of society, and the natural constitution of man. It existed prior to government, and would exist if the formality of government was abolished. The mutual dependence and reciprocal interest which man has in man and all the parts of a civilized community upon each other create that great chain of connection which holds it together.

The landholder, the farmer, the manufacturer, the merchant, the tradesman, and every occupation prospers by the aid which each receives from the other, and from the whole. Common interest regulates their concerns, and forms their laws; and the laws which common usage ordains, have a greater influence than the laws of government. In fine, society performs for itself almost everything that is ascribed to government.

To understand the nature and quantity of government proper for man it is necessary to attend to his character. As nature created him for social life, she fitted him for the station she intended. In all cases she made his natural wants greater than his individual powers. No one man is capable, without the aid of society, of supplying his own wants; and those wants acting upon every individual impel the whole of them into society, as naturally as gravitation acts to a center.

But she has gone further. She has not only forced man into society by a diversity of wants, which the reciprocal aid of social affections, which, though not necessary to his existence, are essential to his happiness. There is no period in life when this love for society ceases to act. It begins and ends with our being.

If we examine, with attention, into the composition and constitution of man, the diversity of talents in different men for reciprocally accommodating the wants of each other, his propensity to society, and consequently to preserve the advantages resulting from it, we shall easily discover that a great part of what is called government is mere imposition.

Government is no further necessary than to supply the few cases to which society and civilization are not conveniently competent; and instances are not wanting to show that everything which government can usefully add thereto, has been performed by the common consent of society, without government."

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7.26.22 - When Fake Wealth Disappears

Gold last traded at $1,718 an ounce. Silver at $18.65 an ounce.

NEWS SUMMARY: Precious metal prices steadied Tuesday on Fed uncertainty and a stronger dollar. U.S. stocks fall after Walmart cut its earnings forecast, sending other retail shares lower on concerns that consumer spending might not be strong enough to keep the U.S. out of a recession.

Gold looks good as the Fed will Pivot on Interest rates after the summer -Hathaway/Kitco

"In an interview with Kitco News, John Hathaway, senior portfolio manager of Sprott Hathaway Special Situations Strategy, said that while gold still faces some challenging headwinds, the fundamental outlook is starting to shift.

Hathaway's bullish outlook on gold comes as markets look for the Federal Reserve to raise interest rates by 75 basis points on Wednesday. Hathaway said one of the reasons why he is bullish on gold is because the U.S. central bank is closer to the end of its tightening cycle than it is to the beginning.

He added that tightening monetary policy has probably already pushed the U.S. economy into a recession.

'The Federal Reserve's hawkish posturing is cratering the economy,' he said. If you look at the economy on a real-time basis, it's declining. 'Any sign that the Federal Reserve is relenting on rate hikes will be good for gold.'

Hathaway said that he would expect the central bank to start to pivot and slow the pace of rate hikes by the end of the summer. He added that the central bank will not want to push the economy into a recession ahead of the November election.

'By the end of summer, inflation could moderate from 9% and the Fed will declare victory. But moderation is not a victory, inflation will still remain high and a problem for consumers,' he said."

Fed tightening alters investors' expectations, but will a recession ensue? -The Hill

"At the start of the year, investors were upbeat about the prospects for the economy even though inflation accelerated in the second half of 2021. The main reason is they concurred with the Federal Reserve's assessment that the pickup was transitory. Accordingly, they anticipated that the Fed would raise rates very gradually 'by 25 basis points a quarter' to bring inflation closer to its 2 percent average annual target.

But when inflation surged to a four-decade high this year, the Fed was compelled to raise the funds rate by 50 basis points and 75 basis points, respectively, at the May and June Federal Open Market Committee meetings. Moreover, it is expected to make another 75 basis point hike at next week's meeting in the wake of the June CPI report that showed headline inflation topped 9 percent.

The Fed's aggressive stance has heightened investor concerns that it could be making a policy error and tip the economy into recession. The U.S. stock market and bond market both posted their worst first half returns since the early 1970s and 1980s, respectively....

What is not in dispute is that the economy is softening. The focus now is on consumer spending, which accounts for almost 70 percent of GDP. It slowed in the first half of this year as real income growth turned negative due to high inflation. The latter has also shaken consumer confidence with the University of Michigan survey plummeting to an all-time low while the Confidence Board survey shows a smaller decline.....

The risk, however, is that core inflation that excludes food and energy may remain well above the Fed's 2 percent target for some time. The primary reason is that the cost of shelter, which accounts for one third of core CPI, is poised to rise further due to the steep increase in mortgage rates this year and home prices previously. Therefore, the Fed may be compelled to raise the funds rate beyond what is currently priced into markets."

When Fake Wealth Disappears -Bonner Private Research

"Jobs. And houses. Houses and jobs.Those are the two pillars of US middle class living standards.

Jobs provide income. Houses are assets that can be readily sold. But it looks to us like the housing pillar is beginning to crack....

Consumers are very sensitive to interest rate changes and for good reason. The difference between a 3% mortgage on a $200,000 and today's 5.8% is nearly $500 a month.

Which is why demand for refinancing has fallen 80% over the last year.

We remind readers that in a healthy economy, wealth increases as goods and services are offered. But in the fake economy of the last 30 years, people enjoyed fake wealth by refinancing debt at lower and lower interest rates.

Lenders don't draw down savings; they create new money. This new money is what bids up asset prices - stocks, bonds, real estate. People feel richer when their assets go up in price. But it is a mirage. And then, when the refinancing stops, the fake wealth disappears....

Meanwhile, the return of consumer price inflation coincides, more or less, with two other major shifts. After 40+ years, the credit cycle is also finally rolling over. And the bull market in financial assets has turned into a bear market.

Stocks turned down at the end of 2021. They had been going up for most of the last 4 decades. Now, they have given up about 15% of their value. There is nothing very noteworthy about this correction. Except! The other downturns 2000 and 2008 happened when the Fed was not so far 'behind the curve.' Then, the Fed could lower its key interest rates and get the party going again.

This time, the Fed must raise its lending rate to fight inflation. In other words, it can't jolly investors up with lower rates nor can it make it easy for households to refinance their debt. This is the major difference between today and every other sell-off since 1982. This time, the correction will have to run its course. At least, for now."

Why these 'unretirees' went back to work -CNN

"In 2020, Joe DiPastena felt confident enough to retire earlier than planned. But by 2022, he was having second thoughts. 'When the economy started to tank and my investments started to dwindle...I started to get pretty nervous,' said DiPastena, who lives in Phoenix. 'I didn't want to deplete my savings.'

DiPastena, a 64-year-old freelance graphic designer, had considered himself semi-retired in early 2020, with a few clients. But once the pandemic lockdowns were in full swing, that work quickly dried up. Still, he was feeling good about retirement and felt his finances were in good shape.

But this year, his confidence began to wane.

After the S&P 500 gained 27% in 2021, the first half of 2022 has been one of the worst years in more than 50 years. DiPastena decided the best way to weather the storm was to return to work.

'I just kept on watching my investments go further and further down, and then my financial adviser was saying: 'maybe we ought to do this or that.' And it's like, 'well the best thing I can do is go get a freaking job,' DiPastena said.

He started a new full-time position as a product specialist in June, in a completely different field than his previous career. 'I feel like I can replenish my savings and...ultimately have more savings than I anticipated.'

The pandemic prompted a wave of workers to retire. Some did so voluntarily. Others lost their jobs, were forced out or accepted buyout packages....But now the economy is on much shakier ground: stock markets have been selling off, recession fears loom and inflation is at a 40-year high."

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7.25.22 - Economy: Both Consumers and Experts Baffled

Gold last traded at $1,719 an ounce. Silver at $18.44 an ounce.

NEWS SUMMARY: Precious metal prices drifted lower Monday on a flat dollar ahead of Fedspeak. U.S. stocks traded mixed as investors awaited earnings and economic reports.

Here's what could trigger a lasting rally in gold prices -Marketwatch

"Gold has failed to show its value as a haven investment so far this year....Even so, it may be safe to bet that the metal will prove once again just how precious it is to investors - under the right conditions.

Even so, it may be safe to bet that the metal will prove once again just how precious it is to investors-under the right conditions.

'Gold has spent the past couple of years stuck in a trading range, with the upper $1,600s on the lower end and stiff resistance just under and above $2,000 - and that is likely the range the market will continue to see as the year concludes', says Peter Spina, president of GoldSeek.com.

However, an indication that the U.S. Federal Reserve is nearing the end of its rate hikes would trigger a big response in gold prices, he says, potentially lifting prices toward the top end of their trading range or higher.

Red-hot U.S. inflation numbers have produced fears of more aggressive interest rates, raising the risk of a recession. The June U.S. inflation reading showed a rise to a nearly 41-year high of 9.1%, backing expectations for more interest-rate hikes by the Fed."

Real Estate Outlook: DR Horton See Deals Fall Through As Mortgage Rates Rise -Business Insider

"A growing number of would-be homebuyers are backing out of deals for newly constructed homes as they confront higher mortgage rates and an uncertain future for the housing market.

Now homebuilders are cutting back on the number of homes they're building and offering up more incentives to keep sales moving. D.R. Horton, the nation's largest builder by production volume, is no exception.

Nearly a quarter of D.R. Horton's contracts fell through in the three months ending in June, the company reported in its third-quarter earnings call Thursday.

D.R. Horton executives maintained a mostly positive outlook despite the rash of cancellations, since they said the supply of homes is still low and demand, albeit diminished, remains strong. The company attributed the increase to worsening consumer sentiment as economic woes reduce buyers' confidence in the real estate market.

The Federal Reserve's efforts to bring the economy into equilibrium have raised mortgage rates and priced out many would-be buyers, putting a dent in demand for homes. According to Freddie Mac, the average US fixed rate for a 30-year mortgage came in at 5.54% this week. This rate is a notable increase from a pandemic low of 2.68% in December 2020."

'There's a Recession Coming': The Rich Rush to Offload Luxury Properties -Vice

"After a decade of feeling invincible, the tech industry is suddenly facing something new: financial insecurity. Valuations are down, layoffs are up, startup funding no longer feels limitless, and an air of fear has started to permeate the sector, as bosses and workers alike adjust to a harsher version of reality.

In cities like San Francisco, New York, and Miami, luxury real estate agents are starting to notice the effects of the tech downturn on their business, they tell Motherboard, as wealthy tech clients grapple with the fact that raises, bonuses, and job offers no longer seem as inevitable as they did a few months ago.

'The elephant in the room these days is that there's a recession coming,' said Karley Chynces, a blockchain-focused real estate agent at Sotheby's International Realty in Miami.

There are signs that the housing market may have temporarily peaked. Asking prices have slipped ever so slightly, homebuilders are starting work on fewer homes, and mortgage demand is the lowest it's been since 2000. For now, home sales are down most among the cheapest homes, where buyers are more price-conscious and typically affected more by interest rates changes.

But a spokesperson for the real estate brokerage Redfin, which analyzes housing data, said markets like San Francisco are 'definitely cooling.' A recent Redfin analysis found sales of luxury homes were down almost 18 percent in the three months leading up to May, compared to a 5.4 percent drop among non-luxury homes....

Talk of a potential recession has only added to the sense of fear....'The climate's changed,' said Danny Hertzberg, another luxury real estate agent in Miami. Hertzberg, who claims to hold the record for highest sale in the city's history, said the housing market has slowed down not only in the U.S. but internationally too, according to his conversations with agents in countries including France, Italy, England, and Argentina."

You're not the only one who's confused about the economy. The experts are baffled, too -CNN

"The recovery wasn't supposed to go like this. Wall Street and Main Street alike are suffering from whiplash when it comes to the current state of the US economy.

In their roles as consumers, investors and members of the workforce, ordinary Americans have the sense that the country is at an economic inflection point, but without a clear picture of what happens next, nor how to prepare.

Conventional wisdom is that a recession is characterized by two metrics moving in the opposite direction for a sustained period: Economic output falls, and unemployment rises. That's not what's happening now -- not exactly, anyway.

'If you're not a little confused about the economy, you're not paying attention,' Harvard economist and former White House economic adviser Jason Furman tweeted last week.

Companies are hiring, but output is dropping. Consumers are pessimistic about what lies ahead, but they keep spending. The economy zigged when it was supposed to zag, and even the professionals are searching for answers....

With all of this head-scratching by the experts, it's no wonder ordinary Americans are feeling anxious, exhausted or dispirited - or all three.

'People have been put through the wringer these last two years,' said Mark Zandi, chief economist at Moody's Analytics. 'The sentiment is consistent with a very nervous consumer.'"

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7.21.22 - Jobless claims rise to highest level since November

Gold last traded at $1,714 an ounce. Silver at $18.75 an ounce.

News Summary: Precious metal prices jumped Thursday on U.S. dollar weakness as ECB raised interest rates. Stocks retreated on weak earnings and recession concerns.

Gold Shines as a Haven in 2022- Morningstar

"So far, 2022 is turning out to be an unusually painful year for investors. Stocks lost more than 20% during the first half of the year, with even deeper losses for the growth-oriented tech stocks that previously led the market. At the same time, the Fed's initial steps toward hiking interest rates-along with expectations for future interest-rate hikes-dented bond valuations. As a result, bonds have posted some of their worst returns in decades, with the Morningstar US Core Bond Index losing about 10% for the first six months of the year.

Gold, along with commodities and cash, was one of the few places where investors could take shelter. Gold has mostly stayed in a trading range in recent months (priced at about $1,737 per ounce as of this writing), but still ranks as one of the better-performing asset classes in this year's market rout...

Gold has a long history as a safe haven. The price of gold is largely independent of other asset classes, and it has also traditionally been used as a refuge against weakness in the U.S. dollar. It can also serve as a hedge against inflation and market volatility.

There are two primary ways to invest in gold: buying the commodity directly (gold bullion) or buying shares in companies that mine and sell gold (gold equity). Because gold stocks have both financial and operating leverage, their results tend to magnify the impact of changes in the price of gold. They're also significantly more volatile than bullion, which only depends on the underlying commodity price. In this article, I'll focus on gold bullion, which is a better fit for investors seeking a hedge against market-related risk.

As mentioned above, gold has lived up to its reputation as a buffer asset in this year's market drawdown. As shown in the chart below, the price of gold is down slightly so far this year (as of July 11, 2022), but it still has provided a cushion against much deeper losses in stocks."

China is no longer the top holder of US debt after its total dips below $1 trillion for the first time in 12 years- Business Insider

"China is no longer the biggest foreign holder of US debt, as its portfolio has dipped below $1 trillion for the first time since 2010.

In May, China held $980.8 billion in US debt, down $23 billion from the prior month and almost $100 billion from a year ago, according to Treasury Department data released on Monday. China has reduced its Treasury holdings for six straight months.

Japan, which trimmed its US debt stockpile to $1.212 trillion in May from $1.218 trillion in April, is now the top overseas holder.

Total foreign holdings of US debt fell to $7.42 trillion in May from $7.45 trillion in April.

Beijing has been moving to diversify its debt holdings, while the Federal Reserve's rate-hiking cycle that began earlier this year has been lowering prices of US bonds.

In June, the central bank hiked interest rates by 75 basis points. And Wall Street is broadly expecting the same-size hike for the upcoming July meeting."

A wake-up call: Your financial plan can help 'stress test' your retirement strategy through inflation, market downturn - CNBC

"'Staying the course' is often cited as a key retirement savings strategy by financial advisors. Yet, that can be tough for many workers as they try to stomach a dramatic plunge in the stock market. The S&P 500 Index, for example, lost 20% in the first six months of this year, the worst mid-year performance in over a half a century.

'It is hard emotionally when you go online and you see your account value just dropping, dropping, dropping, but I encourage everybody to stay focused,' said Shelly-Ann Eweka, a certified financial planner and the senior director of financial planning strategy at TIAA.

With inflation rising and account balances falling, financial advisors say having a plan is more important than ever - and can help 'stress test' your investment strategy.

'You can't just assume that "I'm just gonna just keep putting money aside into my retirement account and see the value go up every year, and then when I retire, I take the money out to cover my lifestyle and that's it,"' Eweka said.

Yet, many Americans are unprepared. About 63% of workers admit they don't know as much as they should about retirement investing, according to a recent survey by Transamerica Center for Retirement Studies. Only 35% work with a professional financial advisor and just 29% have a written plan, the survey found."

Jobless claims rise to highest level since November- The Hill

"New applications for jobless benefits rose to the highest weekly level since November last week, according to data released Thursday by the Labor Department.

In the week ending Saturday, initial claims for unemployment insurance rose to 251,000 after seasonal adjustments, up by 7,000 from the previous week's total of 244,000. The average weekly number of claims over the past four weeks rose by 4,500 to 240,500.

'The labor market is softening but the change is so far gradual. The U.S. economy is cooling but is probably not in recession in July,' said Bill Adams, chief economist for Comerica Bank, in a Thursday analysis.

'Between economic data and news reports, it's clear that job losses are underway in the tech, mortgage finance, real estate brokerage, and big box retail sectors.'

While the increase in jobless claims was relatively small, it marked yet another week of rising layoffs amid deepening concerns about the strength of the economy. Weekly claims have jumped from a low of roughly 160,000 in mid-March by nearly 100,000 new applications per week.

The Federal Reserve's recent series of interest rate hikes has taken a serious toll on industries sensitive to sharp increases in borrowing costs. Major companies in the technology, real estate, mortgage lending and retail sectors have begun to lay off workers and slow hiring as they face fewer sales and smaller profit margins.

The somewhat steady rise in jobless claims may be a sign that a historically strong U.S. job market is feeling pressure from high inflation, rising interest rates and poor consumer confidence."

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7.20.22 - Inflation may hit Social Security recipients twice

Gold last traded at $1,700 an ounce. Silver at $18.70 an ounce.

News Summary: Precious metal prices eased back Wednesday amid a firmer U.S. dollar. Stocks wavered as traders assessed more corporate earnings.

Gold missed the latest rally, but prepares for a notable reversal - FX Street

"Gold is mostly missing the latest party of financial markets, where risk appetite has increased. The value of the troy ounce has changed little since last Friday, mostly hovering in a narrow range of $1702-1716, near the lows since April 2021.

On the technical analysis side, gold is oversold on the daily charts, as RSI has been below the 30 mark for the past two weeks. This disposition creates an impressive potential for a bounce, following the example of the stock and cryptocurrency markets, as we have seen in recent days....

A correction of more than 17% from historical highs makes gold an attractive investment at current levels. However, short-term speculators maintain a wait-and-see attitude....

In the current environment, signals from leading central bankers regarding measures and interest rate levels they believe are sufficient to control inflation could kick-start a rise in gold.

Signs next week that the Fed is already thinking about where it stops in its current rate hike cycle could loosen the bears' grip on gold and stop the flow from it into bonds.

After all, central bankers must realise that because of the huge debt burden and chronic fiscal deficits, the economy is now prepared to endure much lower rates than it did in the early 1980s. And that forms a very bullish environment for precious metals. It should not be forgotten that emerging market central banks are now probably placing more emphasis on gold reserves than on dollars and euros.

All of the above means that gold investors are not yet in a hurry to win back the market ripples but are preparing for a notable and sustained upward reversal, which could start in the next two months."

We're Dealing With a Very Different Animal - The Market

"Rarely has the landscape of the financial markets been as challenging as it is today. With inflation rising sharply, stocks and bonds have suffered significant losses this year. Increasing fears of a global recession are now also hitting the commodities sector.

'I think we just had a classic bubble bursting,' says contrarian investor Kevin Duffy. 'The Fed's hands are tied. They're not able to reflate the bubble. If anything, they're accelerating the unwind', he adds....

In this in-depth interview with The Market NZZ, the straight-talking American explains what makes the current bear market particularly dangerous in a historical comparison, what one should pay particular attention to right now, and where opportunities open up for a prudent investment strategy.

Mr. Duffy, the climate in the financial markets remains tough with inflation the highest in 41 years. The S&P 500 has corrected by more than 20%. As a long-term investor and contrarian, what does the view look like from 10,000 meters?

This is a really interesting time. If you go back over the last fifty years, we've experienced a series of bubbles. We can start with the Nifty Fifty bubble in 1972, followed by crude oil in the late 70s and early 80s, personal computers in 1983, then the massive Japan bubble in the late 1980s, coinciding with a frenzy in U.S. takeover stocks. In 1996, there was a craze for adding semiconductor capacity. Around that time, you also had the first wave of the internet boom with the Netscape IPO which culminated in the late 90s dot-com and technology bubble. That was replaced by a housing and credit bubble, followed by the latest iteration which reached its speculative peak in February of last year....

How can investors navigate their way through this difficult environment?

I don't think putting all your money in cash right now is an option, not when the world's central bankers still have a license to print money. There's always something interesting: an overreaction, an entrepreneur solving a problem, a company riding a secular wave, eventually even another bull market. I like Seth Klarman's advice: 'worry macro, invest micro.' We can worry about all the macro factors, but at the end of the day we need to translate that into action. If we're going into a recession, look at defensive businesses providing basic necessities: food, healthcare, even energy to a certain extent. You have to turn over a lot of rocks, rolling up your sleeves and trying to figure out who will be able to withstand a harsh economic environment and how much bad news is discounted in the stock price. The good news is that there are a ton of cheap stocks. At the micro level, I'm more excited today than I have been in a long time. But at the macro level, I'm kind of terrified."

The Global Economic Shift - Visual Capitalist

"As the post-pandemic recovery chugs along, the global economy is set to see major changes in the coming decades. Most significantly, China is forecast to pass the United States to become the largest economy globally.

The world's economic center has long been drifting from Europe and North America over to Asia. This global shift was kickstarted by lowered trade barriers and greater economic freedom, which attracted foreign direct investment (FDI). Another major driving factor was the improvements in infrastructure and communications, and a general increase in economic complexity in the region....

China is expected to surpass the U.S. by the year 2030. A faster than expected recovery in the U.S. in 2021, and China's struggles under the 'Zero-COVID' policies have delayed the country taking the top spot by about two years.

China has maintained its positive GDP growth due to the stability provided by domestic demand. This has proven crucial in sustaining the country's economic growth. China's fiscal and economic policy had focused on this prior to the pandemic over fears of growing Western trade restrictions.

India is expected to become the third largest country in terms of GDP with $10.8 trillion projected in 2031.

Looking back, India had a GDP of just $949 billion in 2006. Fast forward to today and India's GDP has more than tripled, reaching $3.1 trillion in 2022. Over the next 15 years, it's expected to triple yet again...

By the year 2031, there will be major changes in the global economic power rankings.

As we said before: China will have become the world's largest economy in terms of GDP and India will be the world's third largest economy...

Now, the big question. Is it inevitable that China takes the top spot in the global economy as predicted by this forecast? The truth is that nothing is guaranteed. Other projections have modeled reasonable alternative scenarios for China's economy. A debt crisis, international isolation, or a shrinking population could keep China's economy in second place for longer than expected."

Inflation may hit Social Security recipients twice - Fox Business

"Scorching-hot inflation is inflicting financial pain on millions of U.S. households, but the rising price of everyday necessities has squeezed one group in particular: retirees living on a fixed income.

Although Social Security recipients receive a cost-of-living adjustment, or COLA, that is indexed to inflation, the amount of benefits exempted from tax has remained unchanged for decades. Since 1984, retirees have owed taxes on their benefits if their income - including their Social Security payments - is more than $25,000 if they are single or $32,000 if they are a married couple.

Individuals who earn more than $34,000 and couples who earn more than $44,000 can be taxed on up to 85% of their benefits.

Now, experts say the hottest inflation in a generation could ultimately push more seniors into higher tax brackets as a result of what's likely to be a record-high cost-of-living increase....

Should Social Security beneficiaries see a 10.5% increase in their monthly checks next year, it would mark the steepest annual adjustment since 1981, when recipients saw an 11.2% bump. The decades-high benefit increase is not necessarily good news for recipients. It could push many into a higher tax bracket - meaning retirees will pay more taxes on a bigger share of their monthly payments, according to Mary Johnson, a policy analyst at the Senior Citizens League who conducted the analysis.

Some seniors may never have owed taxes on their benefits, but that's likely to change next year when they file their tax returns. In fact, the Congressional Budget Office has estimated the share of Social Security benefits subject to tax could grow by 10% this year and another 10% in 2023. In all, total income taxes paid on that money is projected to climb by 37% this year....

Higher monthly income can also reduce seniors' eligibility for low-income programs like SNAP, the Supplemental Nutrition Assistance Program (food stamps), Johnson said."

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7.19.22 - The High Cost of Free Money

Gold last traded at $1,711 an ounce. Silver at $18.78 an ounce.

News Summary: Precious metal prices remained stable Tuesday as the U.S. dollar continues to fall. Stocks extended gains as Wall Street bets on better-than-expected earnings.

Gold prices steady as easing dollar lifts appeal- CNBC

"Gold steadied on Tuesday as a weakening dollar made it cheaper for overseas buyers, while investors awaited more cues from top central banks on their monetary policy plans....

While the dollar index shed 0.7% to lift gold, UBS analyst Giovanni Staunovo said prices were likely to see more volatility in the run-up to U.S. manufacturing data due late this week, which could influence the size of the Fed's next rate hike....

Meanwhile, euro zone bond yields jumped and the euro rallied on news that the European Central Bank would discuss this week whether to raise rates faster than expected.

'A surprise from the ECB, hiking more than the assumed 25 bps could weaken the dollar and provide support for gold,' said Ricardo Evangelista, senior analyst at ActivTrades, adding the metal was likely to remain under pressure, with significant resistance around $1,750."

Weekly Market Pulse: There Is No Certainty In Investing- Alhambra Partners

"Investors crave certainty. They want to know that there are definitive signals for them to follow as they adjust their investments to fit the current market and economy. They want to know that A leads to B leads to C. Tea leaf readers are always in high demand on Wall Street and they continue to find employment despite their almost universally dismal track record. In this case, it is demand that drives supply rather than the other way around. The constant demand for answers creates an audience for those willing to give them and also drives engagement on social media. You don't get Twitter followers with a series of posts that effectively say 'I don't know'. I can attest to that personally. Prognostication in the investment business is more about drawing an audience than providing actual, useful advice....

If you hang on every economic report like it is handed down from on high, as if you can discern something useful from every report, you're going to be in a constant state of distress. Every report isn't worth your attention. Most of the breathless Santelli reports from the floor are nothing more than noise. There are some indicators that have been useful in the past and I respect those but even with those, I'm a practicing skeptic.

The economy is a chaotic system that defies prediction. Small things can sometimes have big consequences for markets but only when they reach a critical phase. Today, when we ask how the economy will look in the next 6 months or the next year, we are actually asking a range of questions that are unanswerable...

I believe there are some economic indicators that are useful to the investor but it is a short list. Don't get caught up in the day-to-day reports of impending boom or gloom. Concentrate on what you can control and don't forget what investing is really all about. Your portfolio is not a series of bets. The elements of your portfolio, from stocks to real estate to commodities to bonds, are investments in the future and your future returns depend on what you pay today. Yes, something could happen that changes that future and if it does, you'll have to adjust. But today, right now, the market is offering good investments at reasonable prices and long-term investors should be taking advantage of the current volatility. You need to be choosy but that isn't something that should only apply in a bear market. Tune out the day-to-day noise and concentrate on what really matters."

The High Cost of Free Money- The Wall Street Journal

"Did pandemic stimulus payments harm lower-income Americans? That's the implication of a new study by social scientists at Harvard and the University of Exeter.

Liberals argue that no-strings-attached handouts encourage better financial decisions and healthier lifestyles. The theory is that low-income folks become more future-oriented if they're less stressed about making ends meet. The Harvard study put this hypothesis to the test and found the opposite.

During a randomized trial conducted from July 2020 to May 2021, researchers assigned 2,073 low-income participants to receive a one-time unconditional cash transfer of either $500 or $2,000. Another 3,170 people with similar financial, demographic and socioeconomic characteristics served as a control group. The trial was funded by an anonymous nonprofit....

The top-line result: Handouts increased spending for a few weeks-on average $26 a day in the $500 group and $82 a day in the $2,000 group-but had no observable positive effect on any individual outcome. Bank overdraft fees, late-payment fees and cash advances were as common among cash recipients as in the control group.

Handout recipients fared worse on most survey outcomes. They reported less earned income and liquidity, lower work performance and satisfaction, more financial stress, sleep quality and physical health, and higher levels of loneliness and anxiety than the control group. There was no difference between the two cash groups....

The handouts induced people to spend more and also reduced the incentive to work, which fanned inflation. Now there's evidence that the payments could have reduced personal well-being as well. A tome could be written on all of the government mistakes during the pandemic. One lesson for Congress seems clear: Never again send out cash with no strings attached."

Bear market 'far from over' as recession risks rise: Morgan Stanley- Fox Business

"The stock market has briefly bounced back from a widespread selloff that began earlier this year, but equities are likely to see further losses as sky-high inflation and an increasingly hawkish Federal Reserve continue to pose risks to the economic outlook.

That's according to Morgan Stanley analysts, who said in a new analyst note that the relief rally may prove to be short-lived as recession risks climb.

'Counter-trend rally may continue, but make no mistake, we don't believe this bear market is over, even if we avoid a recession,' the strategists, led by Michael Wilson, wrote in the note.

Wilson estimated the odds of a recession have climbed to 36% over the next year, noting the steady climb in unemployment claims and the decline in job openings. He said he is 'skeptical' about expectations that margin pressures would ease in the second half of the year.

'The combination of continued labor, raw material, inventory and transport cost pressures coupled with decelerating demand poses a risk to margins that is not reflected in consensus estimates,' Wilson said.

The analyst note comes amid growing concerns that out-of-control inflation could force the Federal Reserve to hike interest rates so much that it triggers a recession....

Hiking interest rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending. Mortgage rates are already approaching 6%, the highest since 2008, while some credit card issuers have ratcheted up their rates to 20%.

'Everything is in play,' Atlanta Fed President Raphael Bostic told reporters in St. Petersburg, Florida, on Wednesday following the latest inflation data. Asked whether that included a full percentage point interest rate hike, Bostic said: 'It would mean everything.'"

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7.18.22 - How Today's Inflation Impacts Your Retirement

Gold last traded at $1,707 an ounce. Silver at $18.73 an ounce.

News Summary: Precious metal prices were firmer Monday on bullish outside markets and a weaker U.S. dollar. Stocks higher as investors bet that the Fed will be less aggressive against inflation than feared.

Gold recoups some losses on easing dollar, hopes of less hawkish Fed- CNBC/Reuters

"Gold prices firmed on Monday, as a pullback in the dollar helped bullion recover some of its recent losses, while easing fears of a 100-basis-point rate hike by the U.S. Federal Reserve also supported bullion....

The dollar index was off its near 20-year high, down 0.3%, making greenback-priced bullion less expensive for buyers holding other currencies.

'Markets are paring back the odds of a 100-basis point Fed rate hike at its July policy meeting, which is translating into some measure of relief for bullion,' said Han Tan, chief market analyst at Exinity.

U.S. consumers tempered their inflation expectations in July alongside a sharp drop in gasoline prices over the past month, a development likely to be welcomed by Federal Reserve officials worried that expectations for high inflation could become embedded and complicate their task of reining in price increases....

'However, with a 75-basis point move now looking more likely, the U.S. dollar has weakened slightly from the record it hit last week, providing relief across equity and commodity markets,' Rupert Rowling, market analyst at Kinesis Money, said.

Fed officials signaled on Friday that they would stick to a 75-bp rate increase at their July 26-27 meeting. Focus also remains on the European Central Bank's meeting later this week where it is expected to raise rates by 25 bps."

Bread for $10 Is the New $5 Gas as Demand Wanes for Basics- BNN Bloomberg

"People really begin noticing inflation when it shows up in things that they regularly buy. That's why gasoline and milk get so much attention. Add bread to a growing list of basics that are rising in price and crushing consumer sentiment.

Amid the highest US inflation in four decades, bread prices have soared this year, pushing more premium options to an unheard-of $10 a loaf and beyond.

'It's kind of like a punch in the nose,' said Mark Cohen, director of retail studies at Columbia University. These are prices 'nobody has seen before' and have the same impact as gasoline hitting $5 a gallon, he said.

The big question with the US economy is how long can consumer demand hold up amid such inflation. When shoppers are worried about their finances, they traditionally cut back on discretionary items, and they are doing that (see Netflix and Peloton).

But the cracks in demand are spreading to basic goods. Shoppers are skipping the bread aisle, with unit purchases from US grocers declining 2.7% over the past year through July 2, according to data from NielsenIQ. Americans have also bought less milk and eggs from retailers over the same period, though a portion of all these declines can be chalked up to a return to eating out....

In the past few weeks, prices for gasoline and other commodities have declined, offering some hope that inflation is cooling. But bread could stay elevated longer because it has specific pressures beyond the rising costs for transportation and labor that are affecting nearly everything....

There is more volatility coming in wheat and bread prices that will likely last well into next year - if not longer, according to Arlan Suderman, chief commodities economist at StoneX Financial....

'It's really hard because how high can you pay for a loaf of bread? 'said owner Vincent Colombet. 'Can you pay $20 for a loaf of bread? No. We are really squished between the hammer and the anvil.'"

The World Economy Is Imperiled by a Force Hiding in Plain Sight- The New York Times

"This past week brought home the magnitude of the overlapping crises assailing the global economy, intensifying fears of recession, job losses, hunger and a plunge on stock markets.

At the root of this torment is a force so elemental that it has almost ceased to warrant mention - the pandemic. That force is far from spent, confronting policymakers with grave uncertainty. Their policy tools are better suited for more typical downturns, not a rare combination of diminishing economic growth and soaring prices....

The specter of slowing economic growth combined with rising prices has even revived a dreaded word that was a regular part of the vernacular in the 1970s, the last time the world suffered similar problems: stagflation.

Most of the challenges tearing at the global economy were set in motion by the world's reaction to the spread of Covid-19 and its attendant economic shock, even as they have been worsened by the latest upheaval - Russia's disastrous attack on Ukraine, which has diminished the supply of food, fertilizer and energy....

The pandemic prompted governments from the United States to Europe to unleash trillions of dollars in emergency spending to limit joblessness and bankruptcy. Many economists now argue that they did too much, stimulating spending power to the point of stoking inflation, while the Federal Reserve waited too long to raise interest rates.

Now playing catch-up, central banks like the Fed have moved assertively, lifting rates at a rapid clip to try to snuff out inflation, even while fueling worries that they could set off a recession.

Given the mishmash of conflicting indicators found in the American economy, the severity of any slowdown is difficult to predict. The unemployment rate- 3.6 percent in June - is at its lowest point in almost half a century.

But anxiety over rising prices and a recent slowing of spending by American consumers have enhanced fears of a downturn. This past week, the International Monetary Fund cited weaker consumer spending in slashing expectations for economic growth this year in the United States, from 2.9 percent to 2.3 percent. Avoiding recession will be 'increasingly challenging,' the fund warned."

Determining How Today's Inflation Impacts Your Retirement Ongoing Needs Tomorrow- Forbes

"The Bureau of Labor Statistics reported that inflation was up 9.1% for the 12 months ending June 2022. The increase has drawn the concern of many, especially those living in retirement.

The good news is that the headline number merely represents an average. That means your actual inflation rate may diverge from this average. It all depends on what you buy and where you buy it....

The bad news, however, is that inflation still impacts you. It could be worse than average, depending on where you live. Furthermore, retirees often find themselves in a precarious position regarding inflation based on several factors.

'Regardless of whether retirees' expenses are more or less affected by inflation than workers, higher expenses introduce additional risk to a retirement plan,' says Walsh. 'First, expenses may rise at a faster rate than their fixed income. This creates the need to either reduce spending or withdraw more money from investments during a bear market. Second, the Fed's response to high inflation has been to raise rates which may negatively impact the value of existing fixed income investments that are owned more often by retirees than workers. Third, high inflation and rising rates may create additional volatility in the stock market which affects retirees more since they are actively taking withdrawals from their investment accounts.'

If you're retired, close to retirement or just thinking about retirement, no doubt inflation has you wondering about your plans.....

Inflation affects everyone, but you can be especially vulnerable if you're retired. Those who rely on the kind of income sources once popular among previous generations can find themselves most at risk.

'Inflation harms retirees as they generally live on a fixed income comprised of Social Security, pensions and withdrawals from their retirement portfolios,' says Michael Fischer, Director and Wealth Advisor for Round Table Wealth Management in Westfield, New Jersey. 'Sustained inflation over a number of years can drastically reduce your purchasing power, especially without cost-of-living adjustments in pension payments or strong investment markets to buoy retirement accounts.'"

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7.15.22 - Wholesale prices shoot up near-record 11.3%

Gold last traded at $1,704 an ounce. Silver at $18.67 an ounce.

News Summary: Precious metal prices remained flat Friday amid a weaker U.S. dollar and higher oil prices. Stocks were higher following five days of losses as investors digested a stronger than expected June retail-sales report and upbeat earnings.

JPMorgan Spoofed Gold to Keep Hedge Funds Happy, Ex-Trader Says- Yahoo! Finance/Bloomberg

"Big hedge funds like Moore Capital Management and Tudor Capital Corp. were so important to JPMorgan Chase & Co. that its precious-metals traders routinely manipulated gold and silver markets to get the best prices on client orders, a former trader for the bank told a Chicago jury.

'They brought in a huge volume of trading, which made the bank a lot of money and our team a lot of money,' John Edmonds, a former trader on JPMorgan's precious metals desk, said Wednesday when asked about Tudor. He made similar statements about Moore Capital. 'Knowing that they're trading in the market and what they're doing' was valuable information for the bank, he said.

Edmonds worked on the JPMorgan precious-metals desk for more than a decade and pleaded guilty in 2018 to conspiracy and commodities fraud related to 'spoof' trading. He is testifying against his former boss, Michael Nowak, the longtime head of the trading desk, gold trader Gregg Smith and hedge funds salesman Jeffrey Ruffo. They're accused of thousands 'spoof' trades in which huge orders were placed and quickly canceled in the hope of moving prices up or down so they could complete desired trades.

Prosecutors allege the traders were influenced by the needs of hedge fund clients, whom at times were looking to buy or sell millions of dollars in gold or silver in a matter of seconds or minutes. Edmonds said that when a client needed an order filled, everyone on the desk would stop trading so as not to 'get in the way' of filing that order. Edmonds said he'd regularly watch Nowak or Smith use spoof trades to fill those order."

What We Can Learn From Past U.S. Recessions- U.S. News

"Recessions can cause tremendous pain, but these business cycle ebbs and flows are normal and many follow patterns that can reveal insights into future economic downturns.

'Recessions come around like the seasons of the year,' says Jonathan Slain, author of 'Rock the Recession.' 'We don't know what will cause them, but we know there will be one.'...

There have been roughly 17 recessions in the U.S. over the last century. These include the Gulf War Recession, the Dot-com Recession, the Great Recession and, most recently, the COVID-19 Recession.

Characteristics of recessions include high unemployment and a dip in household incomes. Sometimes, a recession may also coincide with a bear market - defined as a 20% decline in the stock market - but a stock market crash and a recession aren't always related....

Though each recession has its unique circumstances, some financial analysts have drawn comparisons between today's economic environment and periods in the 1970s and 1980s marked by high inflation and international crises....

'Most of our economy is driven by consumers. We as consumers start to lose confidence, we spend less,' he says. 'Manufacturers begin to make less stuff because people aren't buying as much as they were before. Then manufacturers have to fire people, they spend less, and it becomes a doom loop.'

From these historical recessions, consumers and investors can prepare themselves for future recessions. They can anticipate the recession's duration as well as its likely characteristics and formulate a plan."

Wholesale prices shoot up near-record 11.3% in June on surge in energy costs- CNBC

"Inflation hit hard at the wholesale level in June, as producer prices surged a near-record amount from a year ago due to a big jump in energy costs, the Bureau of Labor Statistics reported Thursday.

The producer price index, a measure of the prices received for final demand products, increased 11.3% from a year ago, the highest reading since the record 11.6% in March.

Of that gain, almost 90% came from a 10% increase in final demand energy costs as prices for oil, natural gas and other products soared during the month....

The release comes one day after the BLS reported that the consumer price index, which measures final-sale prices in the marketplace, surged 9.1%, the highest 12-month gain since November 1981.

In a separate Labor Department report, weekly jobless claims rose to 244,000 for the week ended July 9, the highest number since Nov. 20, 2021. Continuing claims, which run a week behind the headline number, fell to 1.33 million, a decline of 41,000.

While there are signs the jobs market is weakening, the focus has been on inflation.

Energy and food prices have been particularly burdensome, but the June reports show price pressures are broadening."

Biden won't fight inflation because he doesn't want to anger unions and greenies- NY Post

"Perhaps the most remarkable aspect of the surging inflation tearing through the economy is how little the White House and Congressional leaders seem to care. The latest inflation report is brutal. Price are up 9.1% over the past year - the highest rate since 1981.

While many experts keep predicting inflation to slow down, the June rate soared at an annualized rate of nearly 17%. Nearly all parts of the economy are buckling under rising prices. Price increases in the past year have leaped for groceries (12%), gas (60%), electricity (14%), new cars (11%), and flights (34%).

Over the past 18 months, the combination of growing home prices and mortgage rates has pushed up the monthly mortgage on a new median-priced home from $1,195 to $1,904.

Inflation is slowing down in one key area: wage growth. Which means that real wages have collapsed by 3.6% in the past year, as workers fall further behind.

And what are President Biden and Congressional leaders doing to combat this deepening crisis? Pointing fingers, deflecting blame, and little else. President Biden spent 2021 dismissing inflation as transitory - even as he pushed through a $1.9 trillion American Rescue Plan that poured gasoline on the fire.

The White House became a punchline for releasing a video bragging that 'The cost of a 4th of July cookout in 2021 is down $0.16 from last year.' When inflation became too persistent to dismiss, the White House shifted to scapegoating. It has blamed COVID and 'big meat,' termed it 'Putin's price hike,' and endorsed the view that it is a 'high-class problem.'

This empty rhetoric is meant to cover up the White House's refusal to offer any concrete plan to bring down inflation. Even as President Biden published an op-ed asserting that 'I have made tackling inflation my top economic priority,' he offered no specific proposal to do so."

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7.14.22 - Average American has lost $3,400 in annual wages

Gold last traded at $1,712 an ounce. Silver at $18.49 an ounce.

News Summary: Precious metal prices were lower Thursday amid a rise in the U.S. dollar. Stock saw sharp losses on rate-hike fears as traders digest latest inflation data.

Gold and inflation: Why traders should prepare for Inflageddon?- Capital

"Buckle up, there is a certain threshold of inflation that causes gold prices to skyrocket.

The global economy is presently on the verge of a new 'Inflaggedon', or point of no return, in which inflation expectations become unanchored and people desperately try to put their money into anything that preserves buying value while everything else crumbles like a house of cards.

In June 2022, the US Consumer Price Index (CPI) grew at an annual rate of 9.1%, the highest since November 1981 and surprsing [sic] once again market expectations (8.8%). It's been 25 months in a row that inflation has gone up each month. The last time such a run happened was during the Great Inflation in the mid-1970s...

Gold is often considered to be an effective inflation hedge, or an asset that may protect the purchasing power of investors from the harmful effects of inflation....

Historically, gold has competed with government-issued paper currency.

Unlike dollars, gold cannot be printed by a central bank because there is a fixed amount of it in nature. On the other hand, we need to use paper dollars, not gold, to buy and sell things every day in the real economy.

However, when people lose confidence in the central bank's ability to control consumer price increases and see their currency's real purchasing power dwindling, then they rush to buy gold....

Federal Reserve policymakers are now struggling to control inflation despite aggressive rate hikes. Perhaps the Fed woke up too late or the rise in inflation is due to factors outside the scope of monetary policy, such as a global energy crisis.

The point is that when there is a worry that inflation may spiral out of control for political reasons, the demand for gold as a hedge against inflation skyrockets, resulting in a huge increase in the price of the bullion.

The 1970s served as evidence. Will history repeat itself in 2022?"

Inflation rose 9.1% in June, even more than expected, as consumer pressures intensify- CNBC

"Shoppers paid sharply higher prices for a variety of goods in June as inflation kept its hold on a slowing U.S. economy, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, a broad measure of everyday goods and services related to the cost of living, soared 9.1% from a year ago, above the 8.8% Dow Jones estimate. That marked the fastest pace for inflation going back to November 1981....

'CPI delivered another shock, and as painful as June's higher number is, equally as bad is the broadening sources of inflation,' said Robert Frick, corporate economist at Navy Federal Credit Union. 'Though CPI's spike is led by energy and food prices, which are largely global problems, prices continue to mount for domestic goods and services, from shelter to autos to apparel.'

The inflation reading could push the Federal Reserve into an even more aggressive position...

'U.S. inflation is above 9%, but it is the breadth of the price pressures that is really concerning for the Federal Reserve.' said James Knightley, ING's chief international economist. 'With supply conditions showing little sign of improvement the onus is the on the Fed to hit the brakes via higher rates to allow demand to better match supply conditions. The recession threat is rising.'...

For workers, the numbers meant another hit to the wallet, as inflation-adjusted incomes, based on average hourly earnings, fell 1% for the month and were down 3.6% from a year ago, according to a separate BLS release.

Policymakers have struggled to come up with answer to a situation that is rooted in multiple factors, including clogged supply chains, outsized demand for goods over services, and trillions of dollars in Covid-related stimulus spending that has made consumers both flush with cash and confronted with the highest prices since the early days of the Reagan administration."

Average American worker has lost $3,400 in annual wages under Biden thanks to inflation- Fox Business

"The average U.S. worker has lost $3,400 in annual income as a result of skyrocketing inflation since President Biden took office nearly 18 months ago.

Overall, the Consumer Price Index, a key inflation measurement, surged 9.1% year-over-year in June, a more-than-expected increase that marked its highest level since November 1981, according to a Bureau of Labor Statistics report Wednesday. The decline amounts to a roughly $3,400 yearly income decrease for the average worker and a $6,800 reduction for families in which both parents work, E.J. Antoni, a research fellow at The Heritage Foundation, told FOX Business....

'There are plenty of families that that's more than their food budget a year,' Antoni told Fox Business in an interview. 'I can't emphasize enough how much this is really crushing consumers.'

'It's truly crushing the middle class and then the White House spokesperson says these garbage lines like "the economy is in transition,"' he continued. 'Transition in the same sense, I suppose, that an iceberg transitioned the Titanic into a submarine.'...

'One year ago this week President Biden's reckless stimulus checks began flooding the economy, and we are seeing the result: Inflation is raging and getting worse, forcing massive paycuts for American families,' House Ways and Means Committee Ranking Member Kevin Brady said in a statement Wednesday.

According to Antoni's calculation, inflation has effectively erased the money Americans received from federal stimulus checks during the pandemic. The federal government sent three stimulus payments - worth $1,200, $600 and $1,400 respectively - between March 2020 and March 2021."

The biggest monthly rent increase in 36 years is adding fuel to the inflation fire- Market Watch

"Rent prices are helping to fuel inflation, new government data shows, seeing their largest monthly increase in more than three decades.

The consumer price index jumped by a stunning 9.1% in June from a year earlier, according to a Wednesday report from the Bureau of Labor Statistics. And while a lot of the blame is being placed on soaring gas prices - the overall energy index accounted for almost half the increase in inflation from May to June - housing costs are fanning the flames too.

Rent prices rose by 0.8% in June from a month earlier, according to the Labor Department, the biggest monthly gain since 1986. Over the past 12 months, meanwhile, rents are up by 5.8%.

The data likely come as no surprise to the 36% of American households that rent.

The national median monthly asking rent passed $2,000 for the first time in May, according to data from Redfin, increasing by 15% from a year earlier. Some renters are now facing eviction due to nonpayment, or are spending an unsustainable amount of their income on housing to get by...

Despite the pain tenants are facing, it's unclear that they'll get relief in the near term - which could make it more difficult to curb inflation. Thanks to higher mortgage rates, would-be homebuyers might stick on the sidelines and decide to rent for a while longer, increasing demand for an already-tight supply of units, economists say.

'There are considerable headwinds in the Fed's fight against inflation. Notably, the data used to calculate shelter inflation, which accounts for about 40 percent of Core CPI (excluding food and energy), is meaningfully delayed by approximately six to twelve months,' Mark Fleming, the chief economist at First American Financial Corp., said in his commentary ahead of the report's release. 'This means that the rapid growth in rent expense over the last year is only now beginning to hit the headline CPI figure.'"

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7.13.22 - Why Recessions Matter to Investors

Gold last traded at $1,736 an ounce. Silver at $19.24 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday following the June inflation report showing an official rise of 9.1%. U.S. Stocks gyrated lower as investors were surprised by the steepest rise is prices in 40 years.

Gold prices fall after hotter-than-expected inflation report -CNBC

"The U.S. consumer price index surged 9.1% in June from a year ago, or the fastest pace of inflation going back to December 1981. The figure came in above the 8.8% estimate from Dow Jones.

The hotter-than-expected number renewed investor fears of a more aggressive Federal Reserve, which many expect will hike interest rates by 75 basis points later this month to combat inflation.

With the market convinced the Fed will go with the jumbo hike at its July meeting, it feels like long positions in gold are still swimming upstream, but data showing inflation has peaked could mitigate rate-hike pressure and gold should catch a small flyer, Innes said.

Although gold is seen as an inflation hedge, higher rates draw investors away from zero-yield bullion."

A look back at the runaway inflation of the 1970s -The Week

"The Fed's moves bring to mind another era of rampant inflation - the 1970s - and the man who eventually brought it under control: Paul Volcker. Under his leadership, the Fed's 'tight money' policies triggered a massive recession that pushed the unemployment rate up to 11 percent in 1982. Inflation subsided, but the effort was painful for millions of workers and their families.

What was inflation like in the 1970s? - It was pretty bad - reaching as high as 14 percent by the end of the decade - and it also lasted a long time: The era from 1965 to 1982 was known among economists as 'The Great Inflation.' You couldn't even escape rising prices by watching your favorite TV show. 'Meat prices also spiked. On the popular sitcom All In The Family, Archie Bunker was reduced to eating meatless spaghetti,' Scott Horsley wrote last year for NPR. President Nixon was the first to try to battle the problem, with a program of wage and price controls, but that didn't work so well: 'When his controls were lifted, prices bounced even higher.'

President Gerald Ford was the next to take a swing, and it also turned out badly. His 'Whip Inflation Now' program - WIN, get it? - called on Americans to fight inflation by making voluntary personal sacrifices: 'To help increase food and lower prices, grow more and waste less. To help save scarce fuel in the energy crisis, drive less, heat less.' He even had buttons made. There was some initial enthusiasm, but it didn't really work. 'Inflation wasn't something that could be solved by planting a garden or shopping at a thrift store,' Stephen Mihm wrote for Bloomberg in December.

Next up: President Jimmy Carter. His term in office ended up with an even worse problem than mere inflation - the era of 'stagflation,' which happens when prices are rising, but unemployment is high and the economy is growing slowly. Like Nixon, he tried wage and price controls. Like Ford, he asked Americans to use less energy. Like both men, he failed.

But Carter did make one fateful move: In 1979, he appointed Volcker to lead the Fed.....

Volcker's legacy is clearly hovering over the decisions now being made by Jerome Powell, the Fed's current chairman. 'We're strongly committed to using our tools to get inflation to come down,' Powell said last month. Yes, there's a risk that raising rates could trigger a recession. But 'I wouldn't agree that it's the biggest risk to the economy. The bigger mistake to make ... would be to fail to restore price stability.' Sounds like old times."

Inflation Report Likely to Seal Case for Fed's 0.75-Point Rate Rise in July - WSJ

"Another big increase in consumer prices last month keeps the Federal Reserve on track to raise its benchmark interest rate by 0.75 percentage point at its meeting later this month.

The consumer-price index rose 9.1% in June from a year earlier, the Labor Department said Wednesday, a 41-year high. The 8.6% rise in the CPI in May added to signs last month that the inflation outlook was worsening and prompted the Fed to accelerate its rate increases at its June meeting.

The Fed's June rate rise, its largest since 1994, lifted its benchmark rate to a range between 1.5% and 1.75%. Many Fed officials had already signaled they were prepared to support another 0.75-point increase at their July 26-27 meeting to raise rates quickly to levels high enough to slow the economy, and Wednesday's report adds to that urgency.

Fed leaders had indicated in recent weeks the central bank was likely to debate an increase of either 0.50 percentage point or 0.75 point at its meeting in two weeks. But investors in interest-rate futures markets dialed up their expectations Wednesday that rates might rise by a full percentage point at the meeting. Market probabilities of a one-percentage-point increase rose to around 38% in the hour after the inflation report, up from 12% before its release, according to CME Group."

Why Recessions Matter to Investors - The Big Picture

"There is some confusion about a) What a recession actually is, and b) Why it matters. Sometimes, ideas we think of as obvious get taken for granted, and simple matters become the subject of disagreement. When that occurs, we go back to first principles to explain what these issues mean and why they are significant.

Investors are concerned about Recessions because economic contractions shrink employment, lower consumer and business spending, reduce corporate revenue, and ultimately, impact profits negatively. The key for investors is that last item: Lower Earnings.

While there are numerous theories about stock market prices, they all seem to come down to some combination of two items: Profits and the market multiple assigned to them....

The key question for investors is a potential policy error: Will the Fed get execute this plan just right? Can they cause a growth recession - cooling the economy enough to end inflation - but not cause a full recession? Or will they overtighten and cause an actual economic contraction?

My position is that we are likely past peak inflation, that much of the price increases we have seen are beyond the Fed's control, and they no longer need to raise rates aggressively. Instead, they should be on a more gradual path towards normalization. The CPI report on June 13th might provide some clues if we are going to see a 50bps or 75 bps rate increase."

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7.12.22 - Inflation, Unemployment & Fed Credibility

Gold last traded at $1,726 an ounce. Silver at $18.97 an ounce.

NEWS SUMMARY: Precious metal prices steadied Tuesday near 9-month lows amid historic dollar strength. U.S. stocks teetered as traders braced for earnings.

Dollar strength, looming rate hikes pin gold near 9-month low -CNBC

"Gold was pinned at near a nine-month low on Monday as bets for aggressive interest rate hikes by the U.S. Federal Reserve and the dollar's ascent dimmed appeal for bullion.

Despite recession risks, lately investors have opted for dollar over gold, pushing the currency to a near-two decade peak, also eroding appeal for bullion among overseas buyers.

Interest rate hikes, meanwhile, raise the opportunity cost of holding bullion since it pays no interest.

'Gold is under pressure as the dollar is making major runs and there is expectations of a fairly large interest increase after the (recent U.S.) federal report highlighted a strong labor market,' Edward Moya, senior analyst with OANDA, said.'Gold prices could tentatively breach below the $1,700...'"

The Biggest Argument in Finance Right Now -Wealth of Common Sense

"Some people assume a recession is when real GDP contracts for two consecutive quarters.

Simple enough, right?

But this definition hasn't been fulfilled in two out of the last three recessions.

The 2020 downturn lasted just two months, not two quarters. And in the brief 2001 recession real GDP didn't contract for two quarters in a row either.

That's because recessions are officially determined by a group of economists at the National Bureau of Economics (NBER) and they use a host of measures beyond real GDP to make it official....

We can basically boil it down to income and employment. If income and employment turn south, there's a good chance economic output will be lower.

The strange thing about the current setup is output is slowing but income and the labor market are still solid....

It may seem like splitting hairs to argue about the definition of a recession but I just want to prepare you for a potentially bizarre economic scenario in the months ahead where some people will argue we're in a recession while others will refute that idea vigorously.

Things are going to get weird."

Inflation, Unemployment, and Fed Credibility -AIER

"Our inflationary trajectory looks increasingly grim, and recession fears are mounting. Commentators worry the Federal Reserve will only be able to control surging prices by depressing output and employment ...

The unemployment-inflation trade off is an old idea in economics. Many policymakers, journalists, and intellectuals believe in it. But they're wrong. The tradeoff is an illusion.

The persistence of this misguided belief is nothing more than zombie economics. If central bankers are doing their job, there is no relationship between unemployment and inflation. It only seems like we face a choice if they're behaving irresponsibly.

What if the Fed isn't credible? Perhaps markets have good reasons not to trust the Fed.For example, the Fed might try to fool markets by promising 2 percent inflation and then overshooting. In the short run, unexpectedly easy money gives production a jolt. Laborers work overtime; machines run faster; inventories shrink. But this only lasts until market participants get wise to the game.

Once they know the Fed's policy isn't compatible with 2 percent inflation, they start replacing those quantity adjustments with price adjustments. Workers demand higher nominal wages. Businesses require higher nominal prices. The end result is a higher rate of inflation than the Fed promised.

In the short run, it might appear lower unemployment goes hand-in-hand with higher inflation. The tradeoff seems real. But this isn't a meaningful economic relationship. It's got nothing to do with the structure of market economies."

Love is in the Air -Smead Capital Management

Love is in the air, everywhere I look around
Love is in the air, every sight and every sound
And I don't know if I'm being foolish
Don't know if I'm being wise
But it's something that I must believe in
And it's there when I look in your eyes

Chairman and largest shareholder, Harold Hamm, is trying to own our shares of Continental Resources (CLR US) at a price of $70. We've seen it trade above there in the open market in the last month. How strange? Warren Buffett is bidding on a regular basis to buy shares of Occidental Petroleum (OXY) from other existing shareholders. The stock isn't sprinting higher on this news. How strange? These are historically control investors who don't mind playing for keeps.

Public markets need to recognize that, 'Love is in the air, everywhere I look around.' People in the oil and gas business are petrified of the environment that we are in because they had to live through the miserable 2010s and stared into the abyss of negative oil prices in the spring of 2020.

This has caused the industry to look at mid-cycle pricing of $50-$70 per barrel in making their capital allocations and forecasts. We don't agree with this, "And I don't know if I'm being foolish."� These companies are cheap and exploding with cash. No new supply is in sight. We see $85 per share, "And it's there when I look in your eyes!"�

Love is in the air, in the whisper of the tree
Love is in the air, in the thunder of the sea
And I don't know if I'm just dreaming
Don't know if I feel safe
But it's something that I must believe in
And it's there when you call out my name

Investor unwillingness to own oil and gas investments comes down to a few simple things. First, they have been taught that volatility is a bad thing. In fact, the investment business might have a special place in hell ready for the promotors of these insane doctrines. You wouldn't know who Sir John Templeton and Warren Buffett are if they hadn't been willing to trade volatility for investment success. The unwillingness to provide capital in lieu of focusing on volatility is near-sighted. We believe that low volatility is a crowded investment space."

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7.11.22 - Did JPMorgan manipulate markets?

Gold last traded at $1,734 an ounce. Silver at $19.15 an ounce.

NEWS SUMMARY: Gold softened Monday on a higher US dollar and lower oil prices. Stocks started the week on a downward slide.

JPMorgan Gold Desk Ripped Off Market for Years, Jurors Told -Bloomberg

The precious-metals business at JPMorgan Chase & Co. operated for years as a corrupt group of traders and sales staff who manipulated gold and silver markets for the benefit of the bank and its prized clients, a federal prosecutor told jurors in Chicago.

'This case is about a criminal conspiracy inside one of Wall Street's largest banks,' said Lucy Jennings, a prosecutor with the Justice Department's fraud section. 'To make more money for themselves, they decided to cheat.' ....

The trial of three former JPMorgan employees, including the veteran head of precious metals, Michael Nowak, is the most ambitious effort yet in a years long US crackdown on market manipulation and spoofing. Unlike past cases of alleged trading fraud, the trio is accused of a racketeering conspiracy under the 1970 Racketeer Influenced and Corrupt Organizations Act -- a criminal law more commonly used against the Mafia rather than global banks.

Spoofing, banned by law in 2010, involves huge orders that traders cancel before they can be executed in a bid to push prices in the direction they want to make their genuine trades profitable. While canceling orders isn't illegal, it is unlawful as part of a strategy intended to dupe others....

'Somebody got ripped off.' She added, 'We will prove that all three defendants knew from day one that this trading was wrong and did it anyways.'

Lawyers for Nowak and Smith offered jurors a much different view, saying prosecutors had misrepresented how and why orders are made in the precious-metals market, and insisted that the defendants had never intended to deceive anyone.

They said the government had cherry-picked trading data to create the false impression that the traders were spoofing when they were actually placing real, executable, open-market orders.

'The government's simple narrative doesn't tell the full story -- far from it,' David Meister, Nowak's attorney, said in his opening statement.

Jonathan Cogan, Smith's attorney, said gold and other precious metals were traded in a marketplace where computer-generated algorithms can buy and sell commodities in one-millionth of a second.

To compete with the so-called 'algos,' and to execute trades on behalf of JPMorgan clients, Smith routinely had buy and sell orders at the same time, Cogan said. While some orders were only active for seconds, that's 'an eternity' in such a fast-moving market, he said.

According to Meister, evidence presented at the trial will show that the vast majority of all market orders are canceled, and the typical lifespan of an order is just a couple of seconds."

Opinion: The real labor shortage is looming, and everything we're doing is making it worse- Market Watch

"A big change is coming to the U.S. economy: a prolonged period of labor shortages. And nearly everything we're doing now is making the problem worse.

Over the past year, we've seen a hint of what labor shortages could mean: delays, higher prices and the frustration of not being able to buy things when we want them...

On Friday, the Bureau of Labor Statistics estimated that nonfarm payroll jobs increased by 372,000 in June. That's a slowdown from the average of 545,000 over the past year, but it's more than the average hiring in the 2010s of 190,000.

But soon enough, sometime in the next few years, the lack of available workers will slow monthly job growth below 100,000, perhaps to less than 50,000.

That's not a reckless economic prediction; it's a conservative demographic projection of current trends.

This structural labor shortage could have a profound impact on our economy, politics and society, both good and bad. But if we want the good things that could come from slower growth, we'll have to plan for it."

US gas fueling up for "�highest prices of a generation,' energy expert warns- Fox Business

"Despite a gas price 'reprieve' this week, one energy expert cautioned the road to lower prices isn't quite clear yet on 'Mornings with Maria' Friday.

'The people I know that chart this for a living think that the wholesale price could get above $5, which would indicate a $6 retail price,' OPIS Energy Analysis global head Tom Kloza told FOX Business' Maria Bartiromo.

'I do think that we could see the highest prices of a generation, even when adjusted for inflation,' he continued, 'these prices are going to be very, very high.'

The energy expert explained there are 'too many things' that can send gas prices higher this summer, including Vladimir Putin leveraging Russian oil supply, high consumer demand and potential inclement weather in the Gulf of Mexico....

'If I had to bet, I would say that those $5 numbers that we saw about a month ago, that's not going to be the high for the season,' he predicted. 'We could have a little touch of California and the Mediterranean on the East Coast or, really, in a lot of different states.'

Even though some states are seeing gas prices fall below $4 this week, Kloza gave a reminder that oil is part of a global market....

Kloza anticipates the noticeable lower gas prices across America will only last through next week.

'I cannot be Tony Robbins' motivational speaker today,' the expert said, 'because I think the coast is not yet clear.'"

Food Prices Squeeze Poorest in Rich Countries- Wall Street Journal

"Rampant food inflation is roiling the world's least-developed nations. It is also hitting poor people in rich countries.

Matsentralen Norge, a food-bank operator in oil-rich Norway, says it is distributing 30% more food compared with the same period in 2021, a year that in itself saw sharply higher demand because of the Covid-19 pandemic. Food-bank usage is on the rise in the U.S., too, while grocery stores report customers there are trading down, buying more store-brand food and avoiding more expensive meat and fish.

In Britain, the pain has been especially stark. The U.K.'s overall inflation rate hit 9.1% in May, compared with the same month a year ago, the fastest rise in prices for a member of the Group of Seven, the club of rich economies. Food prices rose 8.5% in May.

'We're seeing real food poverty for the first time in a generation,' John Allan, chairman of Tesco PLC, Britain's biggest grocery chain, recently told the British Broadcasting Corp....

Deshia Shkalla, an unemployed single mother living in a one-bedroom apartment, feeds her infant regular milk rather than formula, eats less meat and plans her food budget down to the penny. She first noticed prices taking off after late February, when Russia invaded Ukraine, one of the world's largest grain exporters. Her local food bank now often runs out of products.

'We all heard about the war, but we didn't expect food prices to climb like this,' she said. 'It changed everything.'

The war is now rattling through kitchens around the world. The cost of grains soared following Moscow's invasion, and while they are now well below these highs, their prices are still bolstered by Ukraine's inability to properly export its harvests."

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