February Blog Archives 2018

Gold last traded at $1,317 an ounce. Silver at $16.40 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on bargain-hunting despite a firmer dollar. U.S. stocks traded mixed as investors mulled over Fed statements and implications of rising interest rates.

Silicon Valley Joins War On Cash: Tim Cook Seeks "Elimination Of Money" -Zero Hedge
"Apple CEO Tim Cook has one big hope for the future - that he lives to see the end of money. '...I'm hoping that I'm still going to be alive to see the elimination of money.'" Speaking at a meeting for Apple shareholders in Cupertino, California earlier this month, Cook made it clear that he is firmly on the side of the war-on-cash establishment. 'Because why would you have this stuff! Why go through all the expense of printing this stuff and then some people steal it, and you've got to worry about counterfeits and all these things,' he continued. As Apple's CEO talked about the downsides of cash, BIoomberg reported that he became more animated, revealing his real passion about the topic...'We can provide a solution for the customer that's simpler, more convenient, you don't carry around a wallet with a bunch of cards in it, or a purse with a bunch of cards in it,' Cook said. Until now, it has tended to be politicians and central bankers leading the call for a cashless society... for your own good....The real reason the war on cash is gearing up now is political: Politicians and central bankers fear that holders of currency could undermine their brave new monetary world of negative interest rates....All of this anti-cash angst from Cook can be summed up in 3 short words - Use Apple Pay - and follows Visa's Andy Gerlt, who last year proclaimed: 'We are declaring war on cash.'"

Is another Great Recession just around the corner? -The Money Illusion
"When I stated blogging in early 2009, people were incredulous when I blamed the recession on tight money. Most people thought it was 'obvious' that the recession was caused by the house price bubble. OK, if was obvious that home prices were wildly excessive in 2006, why is that not also true today? Nominal house prices are now far above 2006 levels, and even in real terms they are rapidly approaching the 2006 peak, as this graph shows. So let's see what these pundits say today...Are they predicting another Great Recession? Are they predicting another crash in housing prices? Are they predicting another banking crisis? If not, why not?....Is it possible that the real problem was nominal, a fall in GDP engineered by a monetary policy that (during 2008) held the Fed's target interest rate far above the equilibrium interest rates? Lots of pundits were saying housing prices were excessive as far back as 2003; when even in real terms they were far lower than today. Do these same pundits again predict a collapse? If not, why not?"

Yes, We Have a New Federal Reserve Chairman That Could Torpedo Stocks -The Street
"Here's what the Jolt newsletter said to you Tuesday morning: 'What the market is not prepared for is a new, more-plain spoken Fed chair in Powell. Whereas Alan Greenspan, Ben Bernanke and Yellen talked in another language (aka Fedspeak) so as to not freak out markets, Powell is more plain-spoken and direct. I am not sure investors understand that and how it could impact stocks negatively during a rate-hiking cycle.' Markets tanked on Tuesday, and still looked under pressure on Wednesday, as investors realized Powell is not a Yellen clone. Powell is direct, and is keen on breaking down monetary policy so the average investor/person at home could understand it. This analysis wasn't pulled out of thin air - it comes from chatting with people in the know. And to think, this newsletter is free! Next prediction: The market starts to get worried about the lack of market/investing experts on Powell's team ahead of a 2019 filled with: (1) rising inflation; (2) ballooning deficits; and (3) even higher interest rates than in 2018. Time to sell the recent rally in the markets. Mental note: Stocks tanked on Powell's first official day in office, then tanked on his first presentation to Congress. Not setting a good precedent ..."

U.S. Fourth-Quarter Growth Revised Down to 2.5% Annual Pace -Bloomberg
"The U.S. economy's growth rate last quarter was revised slightly downward as inventories subtracted more than previously estimated, Commerce Department data showed Wednesday. Gross domestic product grew at a 2.5% annualized rate (matching est.), revised from 2.6% and after 3.2% gain in prior quarter. The latest results for GDP, the value of all goods and services produced in the U.S., show the economy ended the year on a solid note, despite the downward revision. Household and business spending remained robust. Consumer spending, which accounts for about 70 percent of the economy, was the biggest contributor of growth in the fourth quarter, adding 2.58 percentage points."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,318 an ounce. Silver at $16.34 an ounce.

NEWS SUMMARY: Precious metal prices declined Tuesday as Fed Chairman Powell talked up rate increases which boosted the buck. U.S. stocks drifted lower as the Fed warned of rate hikes ahead, regardless of rising stock market volatility.

Three charts that show gold is going to $1,400 - CNBC/Watch
"Gold just had its worst week in over two months, but one technician says the precious metal is headed for a breakout. The yellow metal is often used as a hedge against inflation; however, Carter Worth, Cornerstone Macro's head of technical analysis, argued that there is no reputable relationship between the two....Furthermore, while looking at a 10-year chart of gold, Worth noted that there are several bullish technical patterns forming on the chart. 'This is the beginning of an important move higher, even though we've already move quite nicely again from the lows of September,' Worth explained. Looking at the same chart, Worth noted that gold has also broken out of a wedge pattern. When there is a breakout from a wedge, technicians often look to that as a bullish sign of an upward trend. Finally, looking back 20 years, Worth compared the performance of gold to the S&P 500 Index, and S&P 500 total return. 'What you see there is quite remarkable. Not only is gold beating the S&P on a 20-year basis, it's kept up with dividends reinvested…by my work, there's more to come on the upside,' Worth said. 'I think [gold] will be at $1,400' by the end of the year, Worth added."

This Has Predicted Every Market Crash in History -Bonner/Bonner And Partners
“'Buy the dip' has worked for the last 38 years. And now, investors are more than 100% convinced that it will work again. But they are wrong. Here's an extract from a letter to clients of Semper Augustus, an investment group: 'Fundamental investors like to pronounce they don't think about macroeconomics. It's all about researching companies, they say...However, if there was one economic chart to pay attention to, the one presented below of changes in the Fed's discount rate is it. Every major stock market decline and every recession in the last 100 years was preceded by the Federal Reserve raising short-term interest rates by enough to provide the pin to prick the balloon.'....In a correction, the only way to stop stock prices from falling and the economy from shrinking is to bring in some more debt. But when you do that a few times, you are soon beyond Peak Debt… which is to say, you're way over the legal limit. Debt has been growing three to six times faster than income for more than an entire generation. This makes the old 1.5-to-1 ratio of debt to income seem quaint. It is now 3.5-to-1 nationwide....Because there is no way to 'grow your way out of debt' when your income is falling while your debt is still increasing. Instead, you have to suffer the indignities of a correction, including a major reset in the stock market."

1 in 5 Americans have more credit-card debt than savings -Marketwatch
"One in five Americans say they have more credit-card debt than they do in emergency savings, according to a report published Thursday from the personal-finance company Bankrate. Another 12% said they had no credit card debt, but they also had no savings. Bankrate surveyed 1,000 people during early February. But the report isn't all bad news. More than half (58%) said they had more in emergency savings funds than in credit-card debt, the highest percentage Bankrate has ever had, tied with the amount who said this in 2015. Financial experts typically recommend that all consumers have three to six months' worth of expenses saved in an easy-to-access emergency fund, to guard against any unexpected expenses. Bankrate did not ask exactly how much those surveyed had saved....Consumers trying to build an emergency fund should set up an automatic savings plan, he said. That will put a certain percentage of their paycheck into a savings account. After determining the amount they can put in that fund for each paycheck, they can then pay debt with whatever funds they can spare in their budget."

New Report on Emerging AI Risks Paints a Grim Future -Gizmodo
"A new report authored by over two-dozen experts on the implications of emerging technologies is sounding the alarm bells on the ways artificial intelligence could enable new forms of cybercrime, physical attacks, and political disruption over the next five to ten years. 'It is often the case that AI systems don't merely reach human levels of performance but significantly surpass it,' said Miles Brundage, a Research Fellow at Oxford University's Future of Humanity Institute and a co-author of the report, in a statement. 'It is troubling, but necessary, to consider the implications of superhuman hacking, surveillance, persuasion, and physical target identification, as well as AI capabilities that are subhuman but nevertheless much more scalable than human labor.' Indeed, the big takeaway of the report is that AI is now on the cusp of being a tremendously negative disruptive force as rival states, criminals, and terrorists use the scale and efficiency of AI to launch finely-targeted and highly efficient attacks....In terms of specifics, the authors warn of cyber attacks involving automated hacking, spear phishing, speech synthesis to impersonate targets, and 'data poisoning.' The advent of drones and semi- and fully-autonomous systems introduces an entirely new class of risks; the nightmarish scenarios include the deliberate crashing of multiple self-driving vehicles, coordinated attacks using thousands of micro-drones, converting commercial drones into face-recognizing assassins, and holding critical infrastructures for ransom."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,332 an ounce. Silver at $16.55 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on bargain-hunting and a flat dollar. U.S. stocks rose on the back of gains in industrial giants 3M and Boeing.

13 Of 19 Bear Market Indicators Have Now Been Triggered: BofA -Zero Hedge
"Exactly one month ago, just as the S&P hit all time high, Bank of America caused a stir when it announced that one of its proprietary 'guaranteed bear market' indicators created by the Bank of America quants was just triggered. As we said at the time, what was remarkable about this particular indicator is that it predicted not only the size of the upcoming drop (-12% on average) but also the timing (over the coming three months). Also notable: its uncanny accuracy: it was correct on 11 out of 11 previous occasions after it was triggered....We bring this up, because that particular 'crash' indicator was triggered in the context of BofA also reporting shortly prior, that 11 of 19 of its broader 'bear market' signposts also being triggered. So fast-forward to today, when the 'bear market' is that much closer according to the strangely prophetic Bank of America, which reports that as of this month, another 2 indicators had been triggered, meaning that no less than 13 of 19 bear market signposts are now flashing red....And while over two-thirds of BofA's bear market checklists being triggered sound ominous...on a historical basis, the minimum threshold for a bear market onset was no less than 80% of the signposts 'flashing red.' Which means that we are just 2 more triggers away from a 'guaranteed' bear market."

Going For Gold -Evergreen Gavekal
"The 2018 Winter Olympic Games are nearly behind us, and so is the latest chase for the ultimate sports prize: a gold medal. For anyone keeping tabs on this year's Olympics, only about 6g of each medallion is made from 24-karat gold, meaning the scrap value of that long-awaited prize is roughly $575 USD....While winning athletes competing in these games may not make their fortunes off of the scrap value of that tiny, shiny artifact, there could be a lot gained for the rest of us by investing in gold or gold-related securities. In fact, as the pages outline below, when comparing the relative price of gold to US stocks, gold is at its cheapest level in over 35 years...Here are four reasons Evergreen is 'going for gold' in the first half of 2018: 1. Gold is a Hedge Against Inflation and a Weak US Dollar - Historically, one way to hedge against this phenomenon is to increase exposure to gold, which benefits from rising prices....2. Gold and Gold Miners are Cheap Relative to US Stocks - It’s not just Evergreen that has been tooting the “this stock market is very, very expensive” horn for some time now....3. Gold Mining Stocks Typically Start Out Strong - Something we highlighted in our Bubble Watch EVA from late-December, was that we believed gold and gold miners would be poised for another early-year rally....4. Gold as Central Bank Insurance - As central banks look to reign in this exuberance by raising rates and offloading their balance sheets, we believe investors would be wise to consider a gold-backed hedge in case their radical policies end poorly....CONCLUSION - In any sport, the key to building a winning team is to diversify skillsets and piece together a number of “assets” that complement each other. The same is true with investing."

The World's Funniest Money -Bonner/Bonner And Partners
"From south of the border, we get a peek into how to make a bad situation worse. 'Venezuela Launches Its Own Cryptocurrency,' reports The Wall Street Journal. Not interested in the world's funniest money, issued by a desperate nation run by an incompetent crackpot? Oh, Dear Reader, where's your sense of adventure? Venezuela lurches from one absurdity to the next. It owes money all over town. It can't pay. Its creditors have cut it off. Who wants to lend to a country with a 5,500% annual rate of inflation?....The basic plot is simple: Venezuela spent too much. It borrowed too much. Now, it is broke. It can't even keep up appearances....As far as we know, no debt has ever disappeared, gone away, or left home leaving no forwarding address. Instead, they all are paid. If not by the debtor, then by the creditor. If by no one, then by all....By feeding fake money into the system (pretending it represents real savings)… and lending it out at fake interest rates (pretending that PhDs in economics know better than the market about where rates should be)… the feds created a debt monster. It is big. It is real. And it's coming to eat the U.S. economy. And what makes this especially lethal is that most people have no idea it's coming. With little in real savings, they are unprepared for the calamity ahead....But wait. The feds can't go broke. A country that issues its own currency can always create more to pay its debts. Yes, but for a quick look at how that turns out, make a visit to Venezuela."

Economists Stick With Optimistic U.S. Outlook Despite Market Turmoil -Wall Street Journal
"Forecasters see the U.S. economy gathering steam this year and the Federal Reserve raising short-term interest rates three or perhaps four times by the end of 2018. Economists surveyed in recent days by The Wall Street Journal on average predicted U.S. gross domestic product would rise 2.8% in 2018, accelerating from 2.5% growth in the fourth quarter of 2017 versus a year earlier, supported by the recent package of tax-code changes. They also projected the unemployment rate would fall below 4% by midyear, from 4.1% in January. The economists predicted the Fed would raise rates at its next meeting, March 20-21, followed by another move at its June 12-13 meeting....One reason several days of swinging stock prices didn't rattle forecasters: 59% said they thought U.S. stocks were overvalued, and several others said stocks had been overpriced before their recent decline."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,330 an ounce. Silver at $16.49 an ounce.

NEWS SUMMARY: Precious metal prices remained steady amid quiet marketplace. U.S. stocks rose as investors reacted to Fed report.

Head of world’s largest hedge fund says U.S. in a ‘pre-bubble phase’ with a 70% chance of recession - Market Watch
"Bridgewater Associates founder Ray Dalio recently said he sees a growing chance of a recession as the U.S. enters a 'pre-bubble stage.' 'I think we are in a pre-bubble stage that could go into a bubble stage,' the hedge-fund manager said during a Harvard Kennedy School’s Institute of Politics on Wednesday, according to a Reuters report. Dalio, whose hedge fund manages some $160 billion, making it the world’s largest fund, pegged the probability of a recession by the 2020 presidential election at 70%....Dalio’s recession comments echo remarks he has made over in a LinkedIn post, where he wrote that 'the risks of a recession in the next 18-24 months are rising.'"

Inflation Is a Bigger Danger to Stocks Than Rising Rates - Bloomberg
"Investors tend to attach narratives after events like the recent bout of market volatility as a way to provide comfort in the face of market uncertainty and losses. Although there could be any number of causes for the downturn, recent data on an uptick in inflation and rising interest rates are two of the stories that have gained ground. Both can play a role in shaping market expectations, but one, inflation, has a stronger relationship with poor market outcomes....it would make sense for investors to be more concerned about rising inflation than rising rates. Both could occur at the same time, but inflation appears to be more menacing to stocks when we look at these variables separately.... Inflation is something investors should be on the lookout for in terms of underappreciated risks. What’s good for wages may not be a great thing for investors."

Deficits may hurt U.S. response to recessions -Fed official - Reuters
"The now 'large' U.S. deficits may complicate the government’s ability to curb future recessions with tax and spending policies, so the Federal Reserve must depend less on fiscal policy, a top Fed policymaker said on Friday. 'Large deficits now may make future actions difficult' for the government, Boston Fed President Eric Rosengren said in prepared remarks to a conference of central bankers and economists here. He added it was 'difficult to depend on' fiscal policies in the face of a recession 'given political pressures and uncertainties.'"

Gold is nearing what could be an ultra-bullish key level - CNBC
"Consider this conundrum in the gold market: The metal has traditionally been a good hedge against inflation, but it hasn't seen much demand lately even in the face of rising inflation fears. It's not like gold hasn't rallied, of course; it's up a little over 6 percent since mid-December. Still, the yellow metal hasn't broken out. In fact, it has tested key resistance of $1,375 per ounce, but it hasn't managed to break above that level. The $1,375 mark was the metal's highs from both 2016 and 2017, so a break above that line would give gold a technically significant 'higher high.' Furthermore, that level is the top line in an "ascending triangle" pattern, so a break above that level would prove quite bullish on a technical basis. This is particularly true because gold has already broken above its six-year trend line, going all the way back to those 2011 highs. Of course, we always have to wait for an actual break of this key resistance level before we can declare anything. Still, investors should consider that any meaningful break above $1,375 would confirm that the multiyear downtrend has reversed."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,333 an ounce. Silver at $16.65 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on bargain-hunting and a weaker dollar. U.S. stocks rose as the 10-year yield eased back from 4-year highs.

Do Deficits Matter? -Library of Economics and Liberty
"I am seeing a disturbing rise in 'free lunch' thinking. One place this increasingly shows up is in the case of 'deficits'. People seem to have trouble grasping that deficit spending implies future austerity....Some might argue that if the growth rate of the economy exceeds the interest on debt, then there is a free lunch. Governments can simply issue more debt to pay interest on existing debt. That may work for a brief period, but beyond some point additional debt will push up interest rates, and the marginal cost of the new debt will exceed the growth rate of the economy. Indeed this may well have happened in the US in recent months, as some people believe that rising fiscal deficits partly explain the recent increase in interest rates on Treasury debt. The marginal cost of borrowing exceeds the average cost, and at some point it exceeds the average growth rate of the economy....Interestingly, there's a certain type of person who is so swayed by recent trends that they think both trade and budget deficits can go on forever. That's wrong. They also think that this is good news for the budget, but bad news for trade. That's also wrong. If we could run trade deficits forever, that would be really good news. The outside world would be a big Santa Claus for the USA."

Why America Is Going Broke -Coogan/Wall Street Journal
"Entitlements are driving deficits and debt. Absent reform, the problem will soon become a crisis. The federal deficit is big and getting bigger. President Trump's budget estimates a deficit of nearly $900 billion for 2018 and nearly $1 trillion (with total spending of $4.4 trillion) for 2019. Its balance sheet reveals that the public debt will reach $15.7 trillion by October. This works out to $48,081.61 for every man, woman and child in the U.S. That doesn't count unfunded liabilities, reported by the Social Security and Medicare Trustees, that are four times the current public debt. How did the federal government's finances degenerate this far? It didn’t happen overnight. For seven decades, high tax rates and a growing economy have produced record revenue, but not enough to keep pace with Congress's voracious appetite for spending....most Americans are aware of the budgetary importance of entitlements, the accompanying chart clarifies the magnitude of the problem....As the chart makes clear, all - yes, all - of the increase in federal spending relative to GDP over the past seven decades is attributable to entitlement spending....What about the future? Social Security and Medicare expenditures are accelerating now that baby boomers have begun to collect their government-financed retirement and health-care benefits. If left unchecked, these programs will push government spending to levels never seen during peacetime."

Congress sets sights on federal cryptocurrency rules -Reuters
"Jolted by the global investment craze over bitcoin and other cryptocurrencies, U.S. lawmakers are moving to consider new rules that could impose stricter federal oversight on the emerging asset class, several top lawmakers told Reuters. Bipartisan momentum is growing in the Senate and House of Representatives for action to address the risks posed by virtual currencies to investors and the financial system, they said. Even free-market Republican conservatives, normally wary of government red tape, said regulation could be needed if cryptocurrencies threaten the U.S. economy. 'There's no question about the fact that there is a need for a regulatory framework,' said Republican Senator Mike Rounds, a Senate Banking Committee member. 'The SEC is properly the lead on the issue,' said Republican Representative Bill Huizenga, chairman of the House Financial Services Subcommittee on Capital Markets which will hold hearings on the issue in coming weeks....While some lawmakers say speculative investments should be classed as securities, others want digital currency transactions regulated as commodities. The SEC is already cracking down on transactions known as initial coin offerings (ICOs), while the CFTC has identified digital assets as a commodity subject to its anti-fraud rules."

Pat Boone: Billy Graham Tried to Tell the World 'Our Answers Reside With God' -Fox News - WATCH
"Singer Pat Boone remembered his late friend, the Rev. Billy Graham, Wednesday on 'The Story.' Graham died earlier Wednesday in Buncombe County, N.C. at age 99. Boone said his family and Graham's family met very often and routinely attended the same functions....'The problems this world faces now are beyond human solutions,' he recalled Graham saying. 'Only divine solutions exist for us now.' Boone said he and Graham lamented the fact schools have been somewhat forced to shun organized prayer because people may be offended. He said such a development is unthinkable for a country 'built on Bible principles - the most blessed nation in the world.'....'Billy was trying to tell the world there are answers, but they reside with God,' Boone said. Watch

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,335 an ounce. Silver at $16.68 an ounce.

NEWS SUMMARY: Precious metals prices were steady Wednesday on a firmer dollar ahead of the January Fed meeting minutes. U.S. stocks traded higher as investors awaited Fed clues about inflation and interest rates.

Chaos in Washington continues to worry Wall Street -New York Post
"The first thing I should say is that the massive stock rally last week - following an even more massive decline the week before - was helped a lot by the fact that it was one of those options-expiration periods. Traders tend to mark up stock prices during such weeks and this time they did it with a vengeance. I've also been saying that the Democrats are going to regret their 'resistance' to the Trump administration and their insistence on investigations because more dirt was likely to come out on them than on anyone in the Trump camp. Mueller's indictment doesn't indicate that anyone connected with Trump knowingly had anything to do with what the Russians were doing. It did say these Russians 'communicated with unwitting individuals associated with the Trump campaign.' The indictment also said that after the election, these Russians helped organize and support both pro- and anti-Trump rallies. What rascally devils those Russians are. I don’t know if Mueller is finished. But I do know this: There is a lot of stuff that will still come out about what US intelligence did during the campaign to help the candidacy of Hillary Clinton....With the Republicans now controlling the Justice Department, there is likely to be more chaos in Washington. And Wall Street isn't going to like that, either."

The Powell Fed Is Starting to Take Shape -Wall Street Journal
"Wall Street has had a long list of questions for new Federal Reserve Chairman Jerome Powell since his nomination last November. It may finally be about to get some answers. Minutes from the Fed's last meeting, on Jan. 30-31, are due out Wednesday afternoon. Those are expected to shed light on the last conclave under the stewardship of former Chairman Janet Yellen, but may also offer some early hints about how her successor is thinking. 'The FOMC minutes should give financial markets a good idea of the tone of Chair Powell’s formal remarks,' said NatWest Markets economists in a research note. Even stronger clues on his thinking about everything from tighter monetary policy to U.S. inflation are likely to come from Mr. Powell's first testimony as chair before Congress next week....The worry among many investors is that the Fed turns more hawkish as the U.S. economy and inflation begin to pick up after years of sluggishness. '​The most likely surprise in the Fed minutes…is that they may be leaning to four hikes in 2018,' said Steven Englander, head of research and strategy for Rafiki Capital Management. The Fed had previously penciled in three rate-increases for 2018....So far, Fed officials have brushed off the bout of volatility that shook investors."

Existing Home Sales Extend Plunge, Biggest Annual Drop Since 2014 -Zero Hedge
"After new- and existing-home sales tumbled in December, expectations were for a modest 0.5% rebound in January (despite plunging mortgage applications and soaring rates). But that did not happen as existing home sales tumbled 3.2% MoM to its lowest level since Aug 2016. Existing Home Sales are unchanged since June 2015. Existing home sales are down 4.8% YoY - the biggest drop since August 2014....Of course NAR is careful to blame inventories - and not soaring rates affecting affordability: Lawrence Yun, NAR chief economist, says January's retreat in closings highlights the housing market's glaring inventory shortage to start 2018. The median existing-home price in January was $240,500, up 5.8% from January 2017....So, will higher rates break housing market momentum?...The surge in rates will have a direct impact on home sales (or prices will be forced to adjust lower) as affordability collapses."

Don't bank on cryptocurrencies as the hot tip for the year -The National
"Commodities, not bitcoin and other digital currencies will be the best asset class of 2018. Anybody who follows the long cycles in asset classes knows that some are almost always going up and some coming down, and part of the art of investing is to pick those with a future rather than those whose best days may be in the past. It's always hard to get this right, of course. But a more than 10 per cent correction in US stocks after two years of straight rises was significant, as was the fact that bond prices fell at the same time. Could this have been the top for global stock markets? It is possible but we won't know that for sure until it is too late for us to take advantage as investors. But the balance of probabilities suggests the most overvalued US stock market since 1929 has topped out, or is very near to it....A long way further down the cycle of investment you will find commodities. Silver, gold and agricultural commodities are lowest in this group followed by base metals and then oil and gas, which sit higher up the curve. Now, given that it was an inflation scare from rising US salaries that tipped the stock market over earlier this month, is it not reasonable to assume that commodity prices will benefit from inflation and so advance up the investment curve, even while stocks and bonds are slipping into a bear market?....Given that bitcoin peaked at almost $20,000 in December this already has the making of a bubble that has burst....Could history be about to repeat itself with a commodity boom as stock and bond markets, and cryptocurrencies, sell-off?"

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,331 an ounce. Silver at $16.43 an ounce.

NEWS SUMMARY: Precious metal prices zig-zagged Tuesday on mild profit-taking and a firmer dollar. U.S. stocks traded mixed with the Dow falling on weak Walmart earnings amid rising inflation and interest rate fears.

U.S. Stocks Open Lower as Volatility Returns -Wall Street Journal
"U.S. stocks pulled back Tuesday, relinquishing some of last week's big gains as shares of major retailers suffered....Walmart was one of the worst-performing stocks in early trading, as shares shed more 7% after it reported slowing online sales growth, indicating its difficulty in fending off competition from Amazon.com....Both the Dow and the S&P 500 climbed more than 4% last week, giving the indexes their biggest weekly climbs since 2013 and 2016, respectively. That had helped the Dow recover roughly half of its more than 10% decline from its January peak. Still, investors are reacquainting themselves with a market force that was absent for much of last year: volatility. 'What we're currently seeing is a regime shift and the pain of [monetary policy] normalization which does bring some volatility,' said Christian Keller, head of economics research at Barclays. 'Overall, we're facing a new situation: central banks, like the [Federal Reserve], are tightening more confidently or preparing to do so, in the case of the [European Central Bank]. That's a different theme to what we've seen over the past few years.'"

Gold bull market in 2018? Likely, yes! -Investing Haven
"Will gold enter a bull market in 2018? The likely answer is 'yes, a gold bull market is likely to start in 2018' even if our gold price forecast 2018 which we wrote many months ago was rather bearish. It is OK to change your opinion or a prediction over time. As more data points become apparent, and as chart patterns and chart trends evolve, it makes perfect sense to not rigidly stick to a previous prediction."

"....Traditionally, the rounding bottom pattern is bullish. It has a 65% probability of a bullish breakout. The long consolidation of 4.5 years is even increasing the odds....From an intermarket perspective we observe all trends moving in the same direction: 'risk on' and inflationary. That is a great market environment for gold to thrive. Back in 2004 till 2007, as well as 2010 / 2011, we saw the same market conditions. Gold did extremely well in those periods of time."

Market correction was just an 'appetizer' for what’s to come later this year, Morgan Stanley says -CNBC
"The market correction experienced earlier this month was just a prelude for what's to come later in 2018, a Morgan Stanley strategist says. On Feb. 8, the Dow Jones industrial average, S&P 500 and Nasdaq composite all closed about 10 percent below all-time highs set on Jan. 26, notching the first pullback of that magnitude since 2016. Andrew Sheets, chief cross-asset strategist at Morgan Stanley, said in a note Monday that drop was just an 'appetizer, not the main course.' 'Our cycle models suggest that [developed markets] remain in the late stages of a late-cycle environment,' said Sheets. 'Rising equities, rising inflation, tightening policy, higher commodity prices and higher volatility are (in our view) a pretty normal pattern if that view is correct.'....'Things get trickier, however, after 1Q. Past March, markets will need to digest rising … core inflation and declining [purchase manager indexes], economic surprises and (quite possibly) earnings revisions.'"

Bitcoin Thieves Threaten Real Violence for Virtual Currencies -New York Times
"The currency they were after was virtual, but the guns they carried were anything but. In the beach resort of Phuket, Thailand, last month, the assailants pushed their victim, a young Russian man, into his apartment and kept him there, blindfolded, until he logged onto his computer and transferred about $100,000 worth of Bitcoin to an online wallet they controlled. A few weeks before that, the head of a Bitcoin exchange in Ukraine was taken hostage and only released after the company paid a ransom of $1 million in Bitcoin. In New York City, a man was held captive by a friend until he transferred over $1.8 million worth of Ether, a virtual currency second in value only to Bitcoin. The rich have always feared robbery and extortion. Now, big holders of Bitcoin and its brethren have become alluring marks for criminals, especially since the prices of virtual currencies entered the stratosphere last year....'If you are rich and you own real estate, or stocks or a sports team, somebody can't mug you and take your sports team away,' said Jameson Lopp, a Bitcoin engineer and virtual currency holder. 'Having liquid crypto assets makes you much more attractive for that type of criminal attack.'"

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,357 an ounce. Silver at $16.79 an ounce.

NEWS SUMMARY: Precious metal prices gained nearly 3% this week on safe haven buying despite a firmer dollar. U.S. stocks rose for a 5th day after last week's volatile sell-off as investors focused on the positive news despite downbeat inflation data.

Gold heads for best weekly gain since 2016 -Marketwatch
"Gold futures grasped at a narrow advance Friday and headed for a weekly gain of about 3% even as the dollar index, battered in recent trading, tipped higher and stocks headed for their best week in more than a year. Financial markets may be quiet given the long holiday weekend. U.S. financial markets will close on Monday in observance of Presidents Day. The Chinese Lunar New Year could also limit trading volumes. The ICE U.S. Dollar Index a measure of the currency against six main rivals, rose 0.2% to 88.80, but the gauge was headed toward its biggest weekly loss in about nine months after it hit its lowest mark since 2014 this week....Expectations of a possible fourth interest rate increase this year by the Federal Reserve have grown after recent inflation figures and after the central bank shared its forecast of an inflation pickup later this year. Nevertheless, commodity buyers will still watch for signs of a sustainable rise in consumer prices. 'Rising inflation, coupled with slightly weaker U.S. growth readings and a struggling dollar should continue to provide gold with an element of support,' INTL FCStone analysts said in a note."

Ray Dalio's Bridgewater Increased Gold Holding In Q4 -Kitco
"Ray Dalio has waded deeper into the gold market as his hedge fund, Bridgewater Associates, increased its position in two of the world’s largest gold-backed exchange traded funds in the fourth quarter, according to filing with the Securities and Exchange Commission. The filings show that the Hedge fund, which manages about $150 billion in global assets, increased its holdings in SPRD Gold Shares by 14,091 shares, boosting its investment to around 3.91 million shares. At the same time, the hedge fund bought 34,792 shares of iShares Gold Trust, increasing its total holding in the ETF to 11.32 million shares. The firm's increased exposure to gold came at the perfect time as gold prices rallied 1.8% during the final quarter of 2017. Most of the gains in gold were seen in December as the precious metal surged following the Federal Reserve’s third rate hike of the year. Gold's rally continued into the new year as the metal rose to a 1.5-month high late-January. Currently, gold prices are up almost 9% from its December low. Investors are still digesting gold’s 2% rally during Wednesday’s session, driven by renewed technical momentum....Dalio made headlines in 2017 as he recommended investors have a 5% to 10% exposure to gold in their portfolio. He continues to see gold as an important diversifier as the risks of a recession rise."

How devices hack our happiness: Big tech companies manipulate us and deliberately limit our choices for the sake of profit -Times of India
"For the past 30 years, most of us around the globe have welcomed modern technology with few questions and fewer reservations. We have treated each new product as a 'solution' and paid little attention to its accompanying problems. The past six months, though, have seen a rapid change of opinion in the United States, as many in the technology elites have called GAFA (Google, Apple, Facebook, Amazon) and other tech giants to account....We were not surprised by this turn of events, because we had begun work, more than a year ago, on a new book on precisely this topic: technology's impacts on all of us. In the forthcoming Your Happiness Was Hacked, we were fashioning a narrative in which technology companies' interactive products have been robbing us of fulfillment and connection by deliberately limiting our choices, using sophisticated manipulation to entice us into ever more consumption of their wares. This may at first be counterintuitive. The promise of the internet, the smartphone, social media and virtual and augmented realities is of enrichment and improvement of our lives by the additional choices they offer. But it is a mirage....We accomplish less, which makes us miserable. Economists are even suggesting that the very technologies that we suppose make all of us so productive have, through their distractiveness, instead become responsible for a plateau in the growth of worker productivity in the past decade....The raw truth is that smartphones and applications foster psychological addictions without consideration of the human cost or of design principles that might be less profitable for them but healthier for people in the long run."

*Swiss America will be closed Monday, February 19 in Observance of Presidents' Day*

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,355 an ounce. Silver at $16.79 an ounce.

NEWS SUMMARY: Precious metal prices inched higher Thursday as the dollar slipped on rising inflation and deficit worries. U.S. stocks rose in choppy trading amid investor skepticism and ongoing market volatility.

Gold inches higher as dollar hits two-week low -Reuters
"Gold was on track for its fourth straight session of gains on Thursday as the dollar skidded to its lowest in two weeks on concerns about the impact of high levels of U.S debt and tax cuts....'We are back to what was driving gold prior to that little spike in volatility last week which is the direction of the dollar and the longer term direction of U.S debt and how it's going to be serviced,' ICBC Standard Bank analyst Tom Kendall said. The dollar index against a basket of currencies was down 0.4 percent at 88.768, after earlier hitting a near two-week low of 88.585....Concerns about the growing U.S. fiscal deficit have also weighed on the currency. Inflation fears boost gold, which is seen as a safe haven against rising prices."

Last week economist Jim Rickards told Fox Business host Stuart Varney that we're in the midst of the third major bull market in gold since the 1970s. The first (1971-1980) took gold prices up 2000%. The second bull market (1999-2011) lifted gold prices by 650%. The new gold bull market started in December 2015 and prices are now up 30%. Mr. Rickards says this bull market still has a long way to go, based on rising U.S. debt and inflation.

Markets Be Damned, Fed Has Inflation to Worry About -Wall Street Journal
"With the economy throwing off more heat, the biggest risk for the Federal Reserve is that it falls behind on raising interest rates. And if investors suffer as a result? So be it....The Labor Department on Wednesday reported that consumer prices rose 0.5% in January from December, putting them 2.1% above their year-earlier level. That got investors worrying again that the Fed will raise rates more than they expected this year. Treasurys fell, pushing the yield on the 10-year note to a new four-year high....What is different this time is the economy is about to get a double dose of stimulus from the tax cut and the budget deal. Coming at a time when the job market is already tight, the expected boost in growth may force the Fed to raise more than three times to keep inflation in check. That is not something investors expect. If the Fed does opt to raise rates more aggressively, financial markets aren't likely to take it well. But if it is trying to lower the danger of the economy running too hot, the Fed will consider its actions as necessary, even if the markets suffer collateral damage."

This is what happens when Skynet from ‘Terminator’ takes over the stock market -Marketwatch
"Computers, high-frequency trading and leverage can easily roil the markets. A massive amount of automated trading helped cause last week's turmoil in the U.S. stock market. It reminded me of Skynet. Remember Skynet? 'Skynet is a fictional ... artificial general intelligence system that features centrally in the 'Terminator' [movie] franchise. Skynet gained self-awareness after it had spread into millions of computer servers all across the world; realizing the extent of its abilities, its creators tried to deactivate it. - Wikipedia....Those worried that Skynet has conquered financial markets are urged to read 'Flash Boys' by Michael Lewis, who describes the proliferation of high-frequency trading. I believe the speed of the decline over the past week was driven by computers trading with other computers on high amounts of leverage. High frequency trading (HFT) routinely surpasses 50% of volume on most stock exchanges, and it may have made up more than 50% of volume last week....While this latest avalanche effect may have been triggered by the air pocket of inflows in stocks in February catalyzed by spiking long-term interest rates and imploding short-volatility ETPs, there is likely to be more volatility for the rest of 2018."

Stagflation Strikes: Industrial Production Sinks As Inflation Surges -Zero Hedge
"After surging in the last few months, US industrial production slumped in January, dropping 0.1% MoM against expectations of a 0.3% rise. Notably, December's original 0.9% surge in industrial production was revised drastically lower to just 0.4%, making this 0.1% drop in January even more significant...Manufacturing production was unchanged in January - dramatically below the 0.3% rise expected - as capacity utilization slowed for the first time since August. This drop in production hits as inflation signals surge suggesting the stagflationary scenario is strengthening."

Hyperinflation meets tech: Cash-scarce Venezuela sees boom in payment apps -Yahoo
"In tech hubs from San Francisco to Tokyo, payment is conveniently made through software on phones and watches on a routine basis. Amid a dire economic crisis in Venezuela a similar innovation is taking hold, though for very different reasons. People from vegetable sellers to taxi drivers have registered to use mobile payment applications to attract customers who do not have enough paper money, which is in short supply due to soaring prices. The maximum daily amount Venezuelans can withdraw from cash machines is around 10,000 bolivars, around 4 cents at the black market exchange rate. Venezuela's hyperinflation, one of the first of the digital era, is producing surprise winners in a tough business climate: small technology companies based in the crisis-stricken country....Without these apps, even simple transactions like tipping a waiter or paying for parking become nightmares. Still, banking websites and mobile apps often crash, as the outdated telecoms infrastructure cannot cope with surging demand....Despite some of the world's lowest internet speeds and a significant fraction of the population without bank accounts and cellphones, cash is falling out of favor in Venezuela. 'Perhaps our economy will be cash-less before Denmark,' quipped Miguel Leon, an electronic engineer leading Vippo, a Caracas-based payment app."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,358 an ounce. Silver at $16.87 an ounce.

NEWS SUMMARY: Precious metal prices jumped higher Wednesday on dollar weakness and rising inflation fears. U.S. stocks zig-zagged as investors shrugged off the now anticipated March Fed interest rate hike.

Consumer prices jump much more than forecast, sparking inflation fears -CNBC
"U.S. consumer prices rose considerably more than expected in January, fueling fears that inflation is about to turn dangerously higher. The Consumer Price Index rose 0.5 percent last month against projections of a 0.3 percent increase, the Labor Department reported Wednesday. The report indicated that price pressures were 'broad-based,' with rises in gasoline, shelter, clothing, medical care and food. Markets reacted sharply to the news. The Dow opened more than 100 points lower...Government bond yields also turned higher, with the benchmark 10-year note most recently trading near 2.88 percent, a gain of about 3.8 basis points. Investors also began to price in the likelihood that the Federal Reserve will raise interest rates at least three times this year....'Overall we think the increase in core CPI inflation in January is a sign of things to come over the rest of the year,' said Michael Pearce, senior U.S. economist at Capital Economics....'The worry of the markets is not that inflation is becoming a big problem, ... it is that the Fed is now forced to play catch up at the same time they are shrinking their balance sheet,' said Peter Boockvar, chief investment officer at Bleakley Advisory Group. 'If the Fed wasn't so scared of their own shadow in 2015 and 2016 and hiked rates three times each year, we wouldn't be having the same conversation.'"

How Dumb Is the Fed? -Bonner/Bonner And Partners
"One of the most looney features of the Bernanke-Yellen leadership years was the 'transparency' doctrine. Unlike their predecessor Alan Greenpsan, who famously spoke in mumbo-jumbo, Ben Bernanke and Janet Yellen telegraphed their intentions to investors. Unfortunately, neither Fed chief had experience in business… or markets. And they seemed to have no idea how they worked. Real investing is a win-win proposition: You put your money into a real business. It makes real money. You share in the profits. Speculating, on the other hand, is win-lose. Speculators do not buy and sell based on their assessment of the intrinsic value of a given asset. Instead, they look across the table and try to guess what cards other speculators are holding… and what they will do with them. They look for the 'fool at the table' and try to anticipate what dumb mistake he will make. For the last 10 years, the fool was easily identifiable. It was the Fed. The U.S. central bank slashed interest rates to near zero to juice up the stock market....And in a breathtaking crescendo of dumbness, it signaled to speculators exactly what it intended to do ahead of time. Naturally, the other players - hedge funds, Wall Street banks, pension funds, etc. - took advantage. They bought stocks and bonds knowing they could unload them at higher prices. Uncertainty is what keeps traders honest. They take chances. But they know their bets could go bad. So they are cautious… and often corrected. But when the Fed - by far the largest player at the table - tells them in advance what it will do, uncertainty declines. In this way, the Fed greatly reduced risk. And it was 'Party On!' - from excess to more excess, with nothing to stop them. Now, the Fed - clueless as ever - has once again made its intentions known. It's going to raise interest rates and let the bond pile it built up during QE shrink… removing an important prop from the market. How long will it take traders to put two and two together now? Betting against it - by selling stocks and bonds - should be a piece of cake."

Will the wild stock market cause the Federal Reserve to slow interest rate hikes? And should it? -LA Times
"Financial markets delivered an unwelcome gift for Jerome H. Powell when he was sworn in last week as chairman of the Federal Reserve - a nosedive. Triggered by fears of rising inflation and interest rates, the Dow Jones industrial average's record 1,175-point plunge on Feb. 5 kicked off the worst week for stocks in two years. The steep market declines and nerve-rattling volatility put Powell and his colleagues in a bind. The easiest way to calm investors would be for Fed policymakers to signal that they will slow their gradual interest rate hikes, including delaying the next small one expected in March. But that move could backfire, ultimately allowing the economy to overheat and forcing the Fed to raise rates more quickly....'If stocks do not climb back closer to the year's highs. I think it will significantly lower the chance they will hike rates,' said Chris Rupkey, chief financial economist at MUFG Union Bank in New York. 'It throws a monkey wrench into the Fed's deliberations.' The Fed has a dual mandate of maximizing employment and ensuring price stability...But there's an unwritten third mandate: financial stability. And that's led the Fed to alter its plans in the past....'When it comes to the stock market,' said Rupkey, 'they're damned if they look at it and they're damned if they don't.'"

CPI STRONG? HERE’S WHY GOLD DIPS SHOULD BE BOUGHT -Marketslant
"What happened today? Weren't we supposed to selloff on a strong CPI number? Dips may be harder to come by in this new regime of fed indecisiveness. Up $5 may soon become the dip to buy. For now, look for $1350 to be an option related magnet. If it breaks free from that, $1400 shouldn't be a problem. CPI is strong today at 0.5 on expectations of 0.2 This makes the Fed more likely to raise rates....When (if) the rate hike actually comes.. Gold will be more likely to rally as the fed must lag inflation keeping real rates close to zero or negative to prop stocks....And the unintended consequences of Gold rallying as the Fed attempts to orchestrate an orderly low volatility type of descent in stocks will become obvious....Welcome to the 1970s. 'Buy the Dip' is no longer exclusive to stocks. It may soon become Gold's mantra."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,330 an ounce. Silver at $16.52 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday as inflation and deficit fears weighed on the dollar. U.S. stocks traded lower as rising interest rate jitters extended market volatility on Wall Street.

Gold climbs as dollar weakens ahead of U.S. inflation data -Reuters
"Gold rose for a second day on Tuesday as the dollar slipped in the face of a recovery in global equities, which dampened appetite for the U.S. currency as a safe store of value. A retreat in the dollar, in which the precious metal is priced, has helped gold to pull back nearly 2 percent from last week's one-month low....While bullion is sometimes seen as a haven from risk, it benefited little last week from the slide in equities as investors moving out of stocks broadly sought refuge in the dollar, trumping other drivers. 'Gold is moving up when risk appetite is improving, and that's happening because the dollar is weakening - otherwise that should not happen,' said ABN Amro analyst Georgette Boele....Investors are now awaiting U.S. January inflation data, due on Wednesday, for clues on the next move in financial markets. Inflation is sometimes seen as gold-positive, because bullion is seen as a safe store of value at a time when price pressures are rising."

This Time is Different. Really?! -Alex Merk/Merk Investments
"'Don’t panic, buy the dip, who cares?' or 'These are rumblings of an earthquake, people will be hurt like in 1929' - which one is it? I would call it a wake-up call. Let me explain: In recent years, markets had appeared eerily 'safe'. Central banks promised to do 'whatever it takes', provided 'forward guidance' to keep rates low, even printed money to buy government debt, calling it 'quantitative easing.' Sure enough, volatility has been low, valuations have risen. Now, just as the fellow from the cartoon, many might have thought something isn't quite right. As a result, many investors have been looking to buy some insurance, protection, just in case this goldilocks environment doesn't last forever....In a February 6, 2018, CNBC interview, activist investor Carl Icahn argued that we are experiencing a passive investment bubble and that investors will be hurt like in 1929. He referred to recent events as rumblings ahead of an earthquake, calling the market a casino on steroids and that it had become a much more dangerous place....My take: I have referred to the recent surge in volatility as a wakeup call, urging investors to stress test their portfolios....Complacency continues to be very high. Anecdotal evidence I have taken suggests to me that most who are only casually watching the markets have not been impressed. Of course, this doesn't assure turmoil must happen. But in my experience, a period of greed is followed by a period of fear."

Some Lessons From The Recent Market Volatility -Real Investment Advice
"In finance there’s a metric called the Sortino Ratio. It measures return relative to downside volatility. A higher number is better than a lower number, but the number can get higher in a few different ways - returns can go up, downside volatility can go down, or both returns can go up and volatility can go down simultaneously....Over the 10- and 15-year periods ending January 31, 2018, the Sortino Ratio for the S&P 500 Index was 0.99% and 1.08%, respectively, according to Morningstar. But over the past 3- and 5-year periods, the Sortino Ratio for the index has been 2.67% and 3.10%, respectively. Clearly we've been spoiled with 3- and 5-year periods of high returns with little downside volatility....Ironically, the fraudulent Sortino Ratio of Bernie Madoff’s hedge fund was 2.95%....The first obvious lesson for investors during this bout of volatility is that periods of uninterrupted returns don't last....Another lesson is that investors should have an appetite to start buying when prices drop....Third, take this bout of volatility as an invitation to rebalance your portfolio and reassess how much stock exposure is really appropriate for you."

Few Americans reporting cryptocurrency trading to IRS -Reuters/Yahoo
"Less than 100 people out of the 250,000 individuals who have already filed federal taxes this year through company Credit Karma reported a cryptocurrency transaction to U.S. tax authorities, the company said on Tuesday. This is despite nearly 57 percent of the 2000 Americans surveyed by the credit score startup and research firm Qualtrics last month saying they had realized some gains from cryptocurrencies, according to a Credit Karma study....The IRS considers cryptocurrencies such as bitcoin as property for federal tax purposes, meaning any profits or losses from the sale or exchange of the virtual coins should generally be reported as capital gains or losses. Trading of cryptocurrencies, digital tokens whose value is not backed by central banks and hard assets, surged in 2017 amid a rally in their price. A single bitcoin is worth more than $8000, compared with $1000 a year ago. Despite the surge it remains unclear how many Americans hold cryptocurrencies as these are bought and sold on online platforms, sometimes anonymously or using pseudonyms."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,327 an ounce. Silver at $16.49 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe haven buying and dollar weakness. U.S. stocks rallied on infrastructure spending prospects after the worst sell-off in 2 years last week.

Why Gold Hasn't Rallied as Stocks Sold Off -Bloomberg
"It'’s fair to ask why havens haven't rallied as shares slumped. Gold, for example,was down last week and exchange-traded funds backed by the metal saw heavy selling, with holdings declining the most since July. One possible reason is that ETF investors might be selling gold to offset their stock-market losses, according to a note by Commerzbank AG analysts including Eugen Weinberg. It's not the first time gold has struggled during the acute phase of a sell-off - the metal also fell during the 2008 crash, probably as investors scurried to cover margin calls. Yet bullion's haven appeal is evident in its outperformance on a relative basis, turning higher in later phases of a downturn while all else continues to slide."

Gold often serves as the perfect growth hedge during stock market volatility as well as an instant liquidity pool. For example, on October 9, 2007 the DJIA peaked at 14,164 and the gold price was $736/ounce. By March 6, 2009 the DJIA bottomed at 6,443 and the gold price was at $936/ounce. So while the DJIA dropped about 55% in 18 months, gold prices rose about 27% over the same time period. Learn more about the wisdom of gold diversification in our 2018 newsletter The Future of Money.

Robots trading has hijacked the stock market -Washington Post
"Pay no attention to the volatility, the financial wizards assure us. It's just a little technical correction, a bit of froth being taken off the top of a market that had gotten a little ahead of itself. The fundamentals of our otherwise sound economy will soon reassert themselves. Why is it that when the market is climbing by improbable leaps and bounds month after month we are supposed to take that as a genuine reflection of the fundamentals, but when the market is in a free fall, we are supposed to write that off as momentary fits of irrationality? The truth is that the market is just as irrational and divorced from fundamentals on the way up as it is on the way down. It is in the nature of markets more so today than ever, as a result of the computerized high-frequency trading strategies of the Wall Street wise guys. What we've watched this week is herd behavior on steroids. It's important to remember that a small fraction of the trades on stock markets these days - maybe 10 percent - are made by real-life humans deciding to buy or sell shares in one company or another. An additional 40 percent or so reflect decisions to invest in the entire stock market, or an entire industry, or an entire class of companies - index funds, exchange-traded funds (ETFs) or other kinds of passive investments. That leaves half the trading that is done automatically by computers, according to complex algorithms that focus on changes in market prices or indexes caused by the trading done by other computers. In this kind of robots vs. robots trading with its circular logic, fundamentals are irrelevant, the volumes are enormous and the holding periods are often a matter of minutes, or even seconds."

Just One Number Matters In This Coming Week -Zero Hedge
"Stocks may have suffered through one of their most volatile weeks in years triggered by the unexpectedly large (if miscalculated) spike in January wages, the highest since 2009, resulting in the biggest volquake in history, and come this Wednesday it may be time for round 2, because at 8:30am on Valentine's Day, the U.S. inflation report - far more closely watched than the payrolls release - will hold the key to the next phase. Indeed, as Deutsche Bank notes: 'it's hard to remember a data point as eagerly anticipated as next Wednesday's January CPI report in the US. With rates, equities and vol selling off aggressively and markets on edge, the strong January average hourly earnings print this time last week has caused havoc in the market over the last few days.' Why is the fate of the market suddenly in the hands of the otherwise trivial CPI number? Because, as we showed every day last week, every single time the 10-year Treasury approached or surpassed the four-year high of 2.85% last week, equities investors panicked and yanked bids amid fears the specter of higher inflation would accelerate the pace of Fed rate hikes, crushing the nearly 10 year artificial bull market in stocks bought with nearly $20 trillion in central bank liquidity."

Courting Female Votes -Pontification Blog
"With President Donald Trump's approval rising in recent polls, and with Democrat prospects for the November elections sinking, it is obvious why the Leftist media is suddenly trying to polarize America's largest bloc of voters - women. Last Sunday, ABC's 'This Week' mobilized a hate fest condemning the President and Chief of Staff General John Kelly for not acting instantly to fire White House Staff Secretary Rob Porter, accused of domestic violence by two former wives. Despite the current scandal, one of Porter's ex-wives days ago told the U.K. Daily Mail: 'I don’t want to be married to him….But I definitely want him in the White House and the position he is in. I think his integrity and ability to do his job is impeccable.'....'This Week' anchor George Stephanopoulos, former hatchet man for Democratic President Bill Clinton, defended his man accused of violent rape. But that was a different time, before the rise of today's hyper-partisan media and #MeToo post-feminist radicalism, heard on ABC's Sunday show. Some radicals have gone beyond seeking equality for men and women and instead now, like 'gender racists,' want to 'overthrow the patriarchy,' to create a new society dominated by women....A majority of white women voted for Donald Trump in 2016, but single women dependent on government as their provider are inclined to vote for Democrats." Full story

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,315 an ounce. Silver at $16.18 an ounce.

NEWS SUMMARY: Precious metal prices ended the week modestly lower amid epic market volatility. U.S. stocks had their worst week in a two years; with major indexes plunging 10% then recovering to end the week down over 6%.

Why gold could soon get a boost from the wild market volatility -CNBC
"Some market watchers are bullish on the yellow metal despite its decline. Bill Baruch, president at Blue Line Futures, told CNBC's 'Trading Nation' on Thursday he has a positive outlook at current levels. He calls it a buying opportunity should gold fall further. Here are his reasons why. * At its 2018 high, gold was up nearly 10 percent from its December lows; it's now up a little over 6 percent from its December lows around $1,241 per ounce. * Gold's 100-day moving average, at $1,294 as of Thursday evening, represents about 2 percent below where gold was trading on Thursday. At this level, around $1,300, would be a solid buying opportunity and technical support. * The dollar has room to fall here, and any significant decline would be a key catalyst in gold breaking higher in the next three to six months. Bottom line: Commodity trader Bill Baruch is bullish on gold at these levels despite the recent weakness and sees a buying opportunity around the $1,300 level."

The Age of Inflation Is About to Begin -Bonner/Bonner And Partners
"The New York Times has noticed the world-as-we-have-known-it is coming to an end. 'World braces as an era of easy money draws to an end,' is the front-page headline this morning. The world-as-we-have-known-it was created by the trio - Greenspan, Bernanke, and Yellen. Over the last 30 years, they aided and abetted the adding of trillions in new chips- fake money, borrowed at fake rates - to the nation's gambling stock....But the defining feature of the Easy Money Era was fraud. The money was counterfeit. Interest rates were phony. As a result, asset prices were falsified....There is no chance- none - that the Fed will follow through on its 'normalization' of interest rates. Instead, when the stock market crashes... and the economy goes into recession… the Fed will quickly turn back to the tried-and-true panacea: the old miracle elixir, that snake oil known as EZ money. But... there's a catch. In the coming crisis, monetary policy alone will not be enough; the Fed doesn't have enough room to cut interest rates...the critical fraud is shifting from monetary policy to fiscal policy (government deficit spending). Yes, the Age of Inflation is coming. Fiscal stimulus. Big spending by both parties."

Senate Budget Deal Is Bipartisanship At Its Worst -Investors
"Big Government: Nothing brings together the two political parties in Washington like a bill that lets them spend more taxpayer money. Just look at the back slapping going on after the Senate agreed to a budget-busting bill....Mainly what this bill does is blow up the 2011 spending caps - imposed by Republicans in Congress in exchange for lifting the debt ceiling - that have served as an effective check on lawmakers' unquenchable desire to spend more money, a desire equally shared on both sides of the aisle....Not only does the bill open the spending floodgates, it suspends the debt ceiling for a year, without getting any sort of spending restraint in exchange. It's also 'riddled' with corporate welfare goodies, according to one analysis.In other words, it violates just about every principle 'fiscally responsible' Republicans claim to hold dear....This unfortunate turn of events reminds us of a quip from conservative author and journalist M. Stanton Evans, who once observed that: 'We have two parties here, and only two. One is the evil party, and the other is the stupid party. Occasionally, the two parties get together to do something that's both evil and stupid. That's called bipartisanship.'"

The Stock Market's Bumpy Ride Is Just Beginning -Fortune
'The 'new normal' is beginning to look a lot like the old normal....It took just a minor uptick in wage growth data to trigger these financial shockwaves: average hourly earnings rose to 2.9% year-over-year in January from December’s 2.7%. Financial markets are beginning to lose faith in the reassuring narrative of the last several years. In the aftermath of the global financial crisis, the Fed and other major central banks injected enormous amounts of liquidity into financial markets....Parts of the corporate sector will come under stress if funding costs rise faster than expected, bringing additional volatility. Expect greater volatility in FX markets as well....Reversing 10 years of massive quantitative easing and zero/negative interest rates is an unprecedented experiment. It would be folly to assume they can pull it off smoothly, without shocks or accidents....The new normal will look a lot like the old normal. But getting there will be a bumpy ride."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,319 an ounce. Silver at $16.34 an ounce.

NEWS SUMMARY: Precious metal prices steadied Thursday on bargain-hunting and a flat dollar. U.S. stocks fell sharply as rising interest rates and volatility kept investors on edge.

Gold's Bull Market Enters Phase 2 -Turk/King World News
"Every bull market for each type of financial instrument has three phases: 1) Accumulation of an undervalued asset by so-called 'smart money' that recognizes the undervaluation, 2) Growing public participation as the uptrend gains increasing attention, and 3) Inevitable speculation that leads to overvaluation of an asset and eventual resumption of a new downtrend. Gold is now in the early stages of phase 2. The gold price has been in a rising uptrend from its low of $1,050 in December 2015. This climb has occurred within a multi-year base during which gold has been accumulated because it was and still is undervalued. With gold's breakout this year above $1,300, its 2-year base should now be viewed as a launching pad that will take gold much higher in the months and years ahead as phase 2 inevitably morphs into phase 3. How much higher depends on what central banks do.Right now central banks want more inflation, and they are getting it. In 2017 crude oil - the price of which is a reliable forecast of rising inflation - rose by 12.5%. This year it has already risen 6.4%....If central banks continue their policies that debase national currencies, then expect a much higher gold price. But again, how much higher depends on how badly every central bank eats away at the purchasing power of each national currency. It also depends on one other basic element. What is gold's fair value? I use mathematical models based on historical results to calculate gold's value. These models are explained in my latest book, 'The Money Bubble: What To Do Before It Pops.' Using these models we can calculate that gold's fair value presently is about $11,000 per ounce."

Is the Stock Market Loaded for Bear? -Project Syndicate
"As 2018 progresses, business leaders and market participants should - and undoubtedly will - bear in mind that we are moving ever closer to the date when payment for today's recovery will fall due. The capital market gyrations of recent days suggest that awareness of the inevitable reckoning is already beginning to dawn. Market participants could easily be forgiven for their early-year euphoria. After a solid 2017, key macroeconomic data - on unemployment, inflation, and consumer and business sentiment - as well as GDP forecasts all indicated that strong growth would continue in 2018. The result - in the United States and across most major economies - has been a rare moment of optimism in the context of the last decade....Meanwhile the market is mispricing perennial structural challenges, in particular mounting and unsustainable global debt and a dim fiscal outlook, particularly in the US, where the price of this recovery is a growing deficit. In other words, short-term economic gain is being supported by policies that threaten to sink the economy in the longer term. The Congressional Budget Office, for example, has forecast that the US deficit is on course to triple over the next 30 years, from 2.9% of GDP in 2017 to 9.8% in 2047, 'The prospect of such large and growing debt,' the CBO cautioned, 'poses substantial risks for the nation and presents policymakers with significant challenges.'"

Bitcoin is 'The Biggest Speculative Mania in History' -Hedgeye Video
"In this special webinar, hedge fund manager and MacroVoices podcast host Erik Townsend joins Hedgeye CEO Keith McCullough for an in-depth discussion of Bitcoin, cryptocurrencies and why blockchain is 'one of the most-important breakthroughs of all time.' According to Mr. Townsend's Blockchain Debunked Research Report, "The design of Bitcoin's Blockchain DLP is seriously flawed, not scalable, and generally only worthwhile as a proof-of-concept prototype or until something better comes along....I believe that first-generation cryptocurrencies including Bitcoin will likely be outlawed and lose most if not all of their value. Finally, I'll describe why government-backed digital currencies based on the same underlying technologies will likely dominate the financial landscape in the future.'"

A Progressive Experiment That's Doomed to Fail -Greenhut/American Spectator
"Most conservatives are familiar with the goings-on in San Francisco, where stringent rent-control laws have led to the least affordable rents and most unaffordable home prices. Parts of the 'City by the Bay' resemble an open-air cesspool, given the homeless problem caused by myriad public policies. It's magnificently beautiful, though, so the city remains a magnet despite its officials' best efforts to destroy it. But what happens to a city that has few natural advantages, a less-desirable climate and nothing in particular to draw people to it? Apparently, Stockton - an historic San Joaquin Valley agricultural and port city 80 miles east of San Jose - is trying to cram every conceivable bad experiment into its 64.75 square miles. The latest idea is to offer a 'universal basic income' to a few dozen residents to see what happens when you give people money for nothing....This is one of those cases where the concept makes a certain amount of sense in the philosophical realm, while being borderline crazy in the real world....Leave it to Californians to go down this road, when a simpler path is so much better. Note that our state has the highest poverty rate in the nation, according to the Census Bureau's cost-of-living adjusted model....Our current public policies have destroyed middle-class and manufacturing jobs through excessive regulation and high taxes. They've destroyed many low-income jobs by raising minimum wages and passing union-backed work rules....Stockton is like many other California cities, only worse. It’s trying to show us what not to do. As a Stockton property owner and someone who really likes the city, I'm saddened by this kind of misbegotten experimentation."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,314 an ounce. Silver at $16.23 an ounce.

NEWS SUMMARY: Precious metal prices eased slightly Wednesday on a firmer dollar. U.S. stocks whipsawed lower then higher as the wild ride on Wall Street continues.

Gold Wins, Bitcoin Loses -Bloomberg
"Bitcoin was never really going to cut it as a true currency. Its astronomical volatility - which is a problem if you want certainty about the value of your transactions or wealth - means that the likes of the Uzbekistani soum or the Ethiopian birr stand a better chance of supplanting the greenback. Still, Bitcoin's disconnection from anything happening in the real world ought in theory to be its greatest virtue. The potential to provide negative beta - to move in the opposite direction of other assets in a portfolio, and thus take the edge off any swings and dips - has long been the best argument for investing in gold, Bitcoin's shiny physical avatar. While the S&P 500 Index fell 7.8 percent from its peak on Jan. 26 to its trough Monday, gold's drop was a modest 0.7 percent, only bettered among major assets by the 0.4 percent fall in U.S. 10-year Treasuries. Bitcoin crashed 35 percent, making it look more like a short-volatility ETF than a worthwhile hedge against market turmoil....A genuine crisis in financial markets is precisely the event to sort the sheep from the goats in terms of whether gold or Bitcoin is a better haven asset. After the past week's test, it's a metal that's proved its mettle."

Why Stocks Are Wobbly -Steve Forbes/Forbes
"Why have stocks been tumbling for the past week? Three reasons. 1) The dollar. Markets are finally waking up to the implications of the weak dollar, which has been declining for months. The greenback’s slide has been nowhere as bad as it was in the early 2000s, but the trend isn’t good. Treasury secretary Steven Mnuchin let the cat out of the bag a few days ago when he called for a dollar devaluation. As he soon learned, this is a no-no. You aren't supposed to be so open and blunt....An unstable and weak dollar does to marketplace prices what a virus does to a computer: It corrupts information....2) Overhanging trade cloud. Our economy and those of most countries today are intricately tied to one another other in an incomprehensibly complicated array of supply chains and financial links. To seriously disrupt or blow up this incredibly varied and complex ecosystem would do immense damage to all of us....We want new deals and updates of previous deals, and we want action to be taken against trade abuses, such as China’s pilfering of companies' trade secrets. But we don't want to blow up NAFTA or descend into a 1930s-style protectionist conflagration....3) The economy. The fear is that the Federal Reserve may try to slow the economy before it 'overheats.' The Fed still labors under the illusion that prosperity causes inflation. The only cause of inflation is the Fed and the Treasury department undermining the value of the dollar....In a free-market economy there will always be disruptions - new things upending incumbents, overinvestment in some hot area that leads to a shakeout...The President should publicly admonish our central bank to leave the economy alone."

Governments Hate Bitcoin and Cash for the Same Reason: They Protect People's Privacy -Reason
"Officials want to track every financial transaction you make, and they see cryptocurrencies and cash alike as barriers to achieving that goal. Publicly fretting about Bitcoin and other cryptocurrencies, last month, Treasury Secretary Steve Mnuchin assured an audience at the Economic Club of Washington that 'one of the things we will be working very closely with the G-20 on is making sure that this doesn't become the Swiss numbered bank accounts.' He specifically cited the difficulty cryptocurrencies pose to tracking transactions as a major concern. Soon afterward, India's finance minister, Arun Jaitley, sounded an even stronger note, saying, 'The government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.' Why are government officials sounding such similar notes of hostility to increasingly popular non-state cryptocurrencies?....'The rich have many ways of hiding assets and making them safe from states and from the taxman,' author John Lanchester wrote in a New York Times Magazine column about the push to abolish cash. 'Cash is one of the few ways in which ordinary citizens can enjoy a tiny taste of the freedom, privacy and security that the rich take as their due.'"

Get Ready for Most Cryptocurrencies to Hit Zero -Bloomberg
"The tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse, according to Goldman Sachs Group Inc.'s global head of investment research. Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they're replaced by a small set of future competitors, Goldman's Steve Strongin said. 'The high correlation between the different cryptocurrencies worries me,' Strongin said. 'Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero.' Today’s digital coins lack long-term staying power because of slow transaction times, security challenges and high maintenance costs, according to Strongin....Strongin was more upbeat about the blockchain technology that underlies digital currencies, saying it could help improve financial ledgers."

The Progressive Future: Money For Nothing -Pontification Blog
"In 2012 the City of Stockton in California's Central Valley declared bankruptcy. Now, six years later, it is about to become the first American city to experiment with 'universal basic income,' simply giving people money for nothing, no questions asked. This is the next great liberal utopian scheme: give everybody a guaranteed income from the government whether they need it or not, as Craig R. Smith and I document in our book Money, Morality & The Machine. While President Donald Trump is trying to make jobs easier to get, the Left aims to make working unnecessary. When families become hooked on free lifelong income of, say, $1,300 every month, Progressives believe a majority will vote for Democrats forever to keep the free cash coming. Stockton, of course, does not have the nearly $2 Billion needed to pay each of its 320,000 residents even $500 a month for 18 months. Its ambitious young Mayor Michael Tubbs, 27, a Democrat and former intern in President Barack Obama's White House, has been offered a $1.2 Million private grant to fund such an income for at most 133 families, who will be studied to see how it changes them....Will giving people what they used to have to earn destroy their work ethic? Will people use it to buy food and opportunity, or booze and California’s recently legalized recreational marijuana? Will beneficiaries become more free, or freeloaders? Full story

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,337 an ounce. Silver at $16.68 an ounce.

NEWS SUMMARY: Precious metal prices stabilized Tuesday on profit-taking and a firmer dollar. U.S. stocks gyrated as investors digested yesterday's wild price swings and rising market volatility.

Gold Steadies Near 6-Month High as Other Markets Flash Red -Bloomberg
"As the equities selloff spread from Asia to Europe, gold proved its status as a safe haven...But across other risk markets, screens flashed red as everything from bitcoin to Japanese stocks headed lower. 'The recent rout in equity markets should be supportive of gold, although not immediately,' John Sharma, an economist at National Australia Bank Ltd., said by email. 'The muted reaction stems from the recent strong jobs numbers, which indicate increased confidence about the economy.' Much will depend on whether the rout continues and the outlook for inflation, traders said. 'Gold may for the first time in maybe ten years be acting like an inflation trade,' Darius Tabatabai, portfolio manager at London-based Arion Investment Management Ltd. 'People are starting to worry about inflation a bit, and that could be good for gold.'"

Dow trades in wild 934-point range -CNBC
"U.S. stocks traded in a wide range Tuesday as the major indexes tried to recover from a recent steep sell-off. The Dow Jones industrial average traded 61 points lower after rising as much as 367 points. The index also fell as much as 567 points at its session low....On Monday, the Dow dropped 1,175.21 points, having briefly declined more than 1,500 points during the session. Other major indexes closed sharply lower. The sell-off kicked into action on Friday, after the latest nonfarm payrolls report saw interest rates in the U.S. jump....'Widespread and excessive optimism left stocks vulnerable to increased volatility as bond yields have moved off their lows,' said Bruce Bittles, chief investment strategist at Baird. 'While there is some early evidence that selling pressures are becoming exhausted, and stocks could soon see relief, the broad market is seeing meaningful deterioration.'....The Cboe Volatility index - widely considered the best fear gauge on Wall Street - broke above 50 before sliding down to 25.17. It closed at 37.32 on Monday. The surge in volatility also triggered massive selling in other volatility instruments."

Roboadvisor Websites Crash, Lock Out Traders From Their Accounts -Zero Hedge
"As the Dow plunged 1,600 points during intraday trading Monday, millions of investors rushed to check on their portfolios to survey the damage from one of the worst selloffs since the financial crisis. But customers of roboadviser firms Betterment and WealthFront were furious to find that both companies' servers crashed during today's stock-market route, locking thousands of customers out of their portfolios. As Bankinnovation pointed out, Betterment and other roboadvisers automate most of their functions, which is why they're so much cheaper than hiring a traditional, human financial advisers. But the downside to this is that these services, which have soared in popularity over the past five years, don't have much experience with market routes like what happened today."

Banks Shutter 1,700 Branches in Fastest Decline on Record -Wall Street Journal
"Banks are closing branches at the fastest pace in decades, as they leave less profitable regions and fewer customers use tellers for routine transactions. The number of branches in the U.S. shrank by more than 1,700 in the 12 months ended in June 2017, the biggest decline on record. Branch numbers fell again in the second half of 2017, according to related data submitted to bank regulators and reviewed by the Journal. That would add to the thousands of locations closed following the financial crisis, and is the longest stretch of closures since the Great Depression....Banks say they carefully consider which branches to close, examining deposit levels at each branch and commute time to the nearest location. 'We continue to evolve and optimize our branch network to ensure that we're operating as efficiently and effectively as possible,' a Capital One spokeswoman said. For decades, banks needed to add new locations to grow, pushing the number of U.S. branches to a peak in 2009. But in the aftermath of the financial crisis, some started closing branches to save money - and then kept closing them to contend with low interest rates and higher regulatory costs."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,337 an ounce. Silver at $16.68 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe haven buying despite a firmer dollar. U.S. stocks resumed their sell-off, pressured by the fast rise in interest rates last week.

How to Thrive in Any Market -Denning, Mayer/Bonner And Partners
"Editor's Note: As Bill often reminds readers, nobody knows precisely what the future holds. That's why a diversified portfolio is essential for any investor. Today, Bill Bonner Letter coauthor Dan Denning and Bonner Private Portfolio editor Chris Mayer discuss how investors can thrive no matter what the market does. Dan Denning (DD): In the July 2017 issue of The Bill Bonner Letter, Bill and I published an asset allocation strategy for readers. The idea of negative correlation is, I think, key to a traditional asset allocation strategy (60:40 stocks and bonds). But given central bank intervention has caused nearly all assets to go up (distorting values), does asset allocation make any sense anymore? Chris Mayer (CM): Interesting question. I like having an asset allocation because I think psychologically, it helps you get through rough patches. And I think re-balancing is the key. It forces you to buy more of things when they haven't done well, which is usually when they're cheaper. And vice versa. I don't think it's an exact science. I think it's more a personal decision, based on what your goals are. DD: What do you think of the strategy we recommended in The Bill Bonner Letter last July? To refresh: 25% in cash, 19% in bonds, 25% in stocks, 30% in tangible assets/real estate/precious metals, and 1% in cryptos. Initial thoughts? CM: I like it. I’m not a fan of cryptos - too speculative for me. I don't own any and I just don't have any interest in them. I'm happy people have made money owning them, but they're not for me. I like what Bill has written about before: one-third in gold, one-third in cash, and one-third in carefully selected stocks. It's simple."

Investors, it's time to buckle up -CBS News
"You know it's a bad day on Wall Street when the talk isn't about tech sector earnings, impressive GDP growth estimates or solid job market progress that's finally pushing up wages. Instead, it's all about the biblical warning of the 'Mark of the Beast,' given the Dow Jones industrials ominous loss of 666 points on Friday - the worst point decline since Lehman Brothers collapsed in October 2008....In the context of the perfection that has been the post-election uptrend - with stocks enjoying a historic, no volatility rally - the selloff was jarring. And its cause, an accelerating surge in long-term interest rates, is a big deal. The 10-year Treasury yield has pushed up to 2.8 percent from 2.4 percent at the end of 2017....The selling was catastrophic with no midday rebound, no dip buyers and no silver lining heading into the weekend. Decliners outpaced advancers by 9 to 1, and all 11 major S&P sector groups closed in the red. The dramatics continued after the close as Yellen, on her way out the door, slapped Wells Fargo (WFC) with regulatory action over it governance....The good news: Stocks are oversold in the short-term and due for a relief rebound. The bad news: The resulting bounce could be one of the last exit opportunities ahead of what's likely to be deeper declines as the cost of credit continues to rise....Buckle up."

Bitcoin Bloodbath Builds - Now Among Biggest Crashes Ever -Zero Hedge
"Bitcoin's collapse has continued through the morning to a low price of $7141. Meaning it is down over 63% from its record highs - one of the biggest drops in history. And if the VIX-BTC correlation has anything to say - there is more to come. After surging to $20,000 less than three weeks ago, Bitcoin tumbled below $8,000 again overnight following a report from Chinese media that China will block all websites related to cryptocurrency trading and initial coin offerings (ICOs) – including foreign platforms – in a bid to finally quash the market completely, according to Sina....Meanwhile, reports are rolling in that crypto-related content are being actively blocked by Chinese search engines....NYU economist Nouriel 'Dr. Doom' Roubini, after taking a very, very long sabbatical from the media scene - told Bloomberg TV that Bitcoin is 'the biggest bubble in human history' and that this 'mother of all bubbles' is finally crashing."

New Fed chairman Powell has his hands full -CNBC
"Jerome Powell, who was sworn in Monday, is the 16th person to hold the position of Federal Reserve Chairman. He faces an immediate set of challenges: a wobbly stock market, rising interest rates and the fallout from one of his predecessor's final acts - the removal of four Wells Fargo board members. Powell, 65, took the oath of office at 9 a.m. ET, succeeding Janet Yellen, who left the position Friday after serving a four-year term. President Donald Trump chose not to reappoint Yellen and instead turned to Powell, a former Fed governor expected mostly to continue to current Fed path. 'I am humbled and honored by this opportunity to serve the American people,' Powell said in a statement....'As I begin my term, I want to stress my commitment to explaining what we're doing and why we are doing it,' Powell said....Markets widely expect the Fed to hike interest rates three times this year, with the first coming at the March meeting."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,337 an ounce. Silver at $16.70 an ounce.

NEWS SUMMARY: Precious metal prices fell Friday on short-term profit-taking and a strong dollar amid growing inflation fears. U.S. stocks fell sharply after upbeat jobs data caused bond yields to spike higher.

Treasury Rout Sinks Stocks as Rate Angst Deepens -Bloomberg
"The selloff in U.S. assets picked up steam as strong jobs data increased the likelihood the Federal Reserve will lift rates next month. Equities headed for the worst week in two years and Treasuries tumbled to a four-year low....U.S. hiring picked up in January and wages rose at the fastest annual pace since the recession ended, as the economy's steady move toward full employment extended into 2018. Equities are being tested by the surge in bond yields, with some fund managers saying 3 percent U.S. 10-year rates would signal a bond bear market. The level is seen by many stock-watchers as a potential trigger for a correction in equities. In Europe, a bond selloff deepened across the continent, and equities dropped for a fifth straight day, the longest streak since November....'People are finally starting to reprice reflation, it’s about time,' Jeanne Asseraf-Bitton, head of global cross-asset research at Lyxor Asset Management, said by phone."

Smart money is presently taking some of their profit off the financial table and tucking it into safer havens. Our 2018 issue of Real Money Perspectives, The Future of Money, explains the wisdom of owning the world's most stable form of money - physical gold and silver.

A Weak Dollar Is an America-Last Policy -Constable/PJ Media
"A weak dollar is not an America-first dollar. It is an America-last strategy....'For all intents and purposes, the ‘unofficial’ weak dollar policy became ‘official’,' states a recent Academy Securities report. 'Trump's view on trade is simple. We want to export more. A weak dollar means more exports. Therefore, weaken the dollar.'....Since late 2016 the dollar index has lost more than 12 percent, according to data from the St. Louis Federal Reserve....If weakening the currency was the way to increase prosperity, then every country would try to do the same at each other's expense. It would quickly become a race to the bottom that in the end would leave no country better off than at the start. The policy of competitive devaluation once got dubbed 'beggar-thy-neighbor' because it only works at the expense of a country's trade partners....The goal of trade is not to shaft the other party but rather it is for both sides to benefit from the transactions....By definition, a decline in the value of the dollar is inflation, as John Tamny, director of FreedomWorks' Center for Economic Freedom, has mentioned to me more than once....The longer-term effect of less capital would be lower growth, fewer jobs, and higher inflation."

Bitcoin Bust: Loses Half Its Value in Six Weeks -Wall Street Journal
"Bitcoin plunged below $8,000 on Friday, extending its sharp rout since the start of the year in a selloff triggered by a widening regulatory crackdown on cryptocurrencies. In morning trading in New York, bitcoin had recovered to about $8,900, down 3% on the day after slipping below $7,700 shortly before 8 a.m. That was the lowest level since November. At its low point, the digital currency had fallen about 60% from a record high of $19,783 in December, according to research site CoinDesk Inc....Bitcoin's sharp swings illustrate just how much the digital currency remains a highly illiquid and volatile investment, particularly relative to stock, bond or currency markets....The current mood is a far cry from the end of last year, when cryptocurrency investment mania hit feverish levels....Even Facebook Inc. is cracking down. The social media giant said this week that it would stop running ads promoting cryptocurrencies and ICOs. 'I don’t think this is the end of the line for cryptos, but I'm certainly not touching any until more stability can be reached,' said Alex Beene, a 30-year-old from Nashville."

The Left's Rage and Trump's Peril -Noonan/Wall Street Journal
"The State of the Union speech was good - spirited, pointed, with a credible warmth for the heroes in the balcony, who were well chosen....The thing about the heroes in the balcony is it reminds you not of who the president is but of who we are....The Democrats in the chamber were slumped, glowery. They had chosen to act out unbroken disdain so as to please the rising left of their party, which was watching and would review their faces....The social justice warriors, the advancers of identity politics and gender politics, the young who've just discovered socialism - they run on rage. But rage is a poor fuel in politics....Trump's position is more precarious than his people see. He has too much relished the role of divider. When you're running for office you are every day dividing those who support you from those who don't, and hoping your group is bigger. But when you win you reach out to your enemies with humility, with patience - with love! - and try to drag 'em in to sup in your tent....Special counsel Robert Mueller will likely, before November, report his findings to the Justice Department...You have to assume Mr. Trump will be harpooned, and the question is whether it's a flesh wound or goes deeper. If it goes deep the Democrats may well win the House, in which case he will be impeached. Trump supporters don't view this with appropriate alarm....The president’s supporters should be frank with him about his flaws."

RealMoneyBlog - Free daily/weekly email

Gold last traded at $1,347 an ounce. Silver at $17.15 an ounce.

NEWS SUMMARY: Precious metal prices steadied Thursday after rising 3.2% in January on a weaker dollar. U.S. stocks whipsawed lower then rebounded on upbeat Facebook earnings ahead of key jobs data on Friday.

Former Fed Chair Alan Greenspan Sees Bubbles in Stocks and Bonds -Bloomberg
"The man who made the term 'irrational exuberance' famous says investors are at it again. 'There are two bubbles: We have a stock market bubble, and we have a bond market bubble,' Alan Greenspan, 91, said Wednesday on Bloomberg Television. Greenspan, who led the Federal Reserve from 1987 until 2006, memorably used the phrase to describe asset values during the 1990's dot-com bubble. Greenspan's comments come as stock indexes remain near record highs, despite selling off in recent days, and as the yields on government notes and bonds hover not far from historic lows. Interest rates are expected to move up in coming years as the Fed continues with a campaign to gradually tighten monetary policy. 'At the end of the day, the bond market bubble will eventually be the critical issue, but for the short term it's not too bad,' Greenspan said. 'But we're working, obviously, toward a major increase in long-term interest rates, and that has a very important impact, as you know, on the whole structure of the economy.'"

The Next Maestro -Lebowitz/Real Investment Advice
"There is something god-like in the idea of creating something out of nothing - especially money - which fits with the progression of status among Federal Reserve (Fed) members. The idea that their stature and judgement is beyond reproach has been in play for some time. Alan Greenspan: The absurd notion of central bankers as rock stars was popularized by Alan Greenspan. He achieved celebrity status by advancing in ways never before seen, the interventionism of the Federal Reserve....Ben Bernanke: So desperate to follow suit after he stepped down as Fed Chairman in 2014, he could not wait for someone to write his story so he penned his own in the self-aggrandizing 'Courage to Act'....Janet Yellen: In her time as the Chairman, Yellen was the beneficiary of much good fortune and did nothing to make waves (or right the ship). The disparity between the rich and poor has never been wider as Yellen assisted in hollowing out the middle class by adhering to a 'saver-punishing' low-rate policy."

"Jerome Powell: Will the latest chairman of the Fed, Jerome Powell, have the courage to act? Mr. Powell has a choice to make. He can do what's best for the country or he too can aim to become a 'pop culture phenomenon' and keep the charade going, but he cannot do both. Time will tell....The incongruence of this passion among the power-elite who manage the printing presses of the world's largest economies is akin to the contrast between pride and humility. Anyone who thinks themselves qualified to manage the monetary policy of the complex system of a major economy lacks requisite humility and is too deceived by pride to be thus qualified. A proud man is always looking down on things and people and, of course, as long as you are looking down, you cannot see that which is larger - the best interests of people or democracy.'"

India Just Caused the Price of Bitcoin to Slide Again -Fortune
"The Indian government is to ban the use of Bitcoin and other cryptocurrencies for payments, finance minister Arun Jaitley has announced, kicking Bitcoin's already-sliding value further down the slope. At the same time, Jaitley indicated that the government has a different attitude toward the blockchain technology that underpins cryptocurrencies and can be used for a variety of other purposes. 'The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system,' Jaitley said Thursday in his 2018 budget speech. 'The Government will explore use of block chain technology proactively for ushering in digital economy.' The news likely contributed to a 12% drop in Bitcoin's value over the last 24 hours, leaving the most popular virtual coin at the $8,830 mark."

Review: Envisioning 'Capitalism Without Capital' -Wall Street Journal
"Why is an airliner like a song? Both can be capital assets, according to Jonathan Haskel and Stian Westlake. An airliner is tangible capital, a song intangible. The two British authors argue that the growing importance of intangible capital requires us to change the way we think about business in postindustrial economies....The historical view of 'capital' as something tangible persists and limits our thinking, the authors argue. In 'Capitalism Without Capital,' the authors choose a broad definition and explore its implications. In so doing, they provide insights into some puzzling questions. For example, why is Uber, a company with few assets and huge losses, so popular with investors? Why are stock-market prices soaring at a time when capital investment, as typically measured, is creeping upward at only a 4% annual rate? There are lots of possible answers to these questions, but the authors start by offering two broad responses: 'We are now trying to measure capitalism without counting all the capital'; and 'the basic economic properties of intangibles makes an intangible-rich economy behave differently from a tangible-rich one.'....They find that today's much-debated inequality is increased dramatically by what occurs at high income levels and results partly from the growing importance of intangibles. Entrepreneurs like Bill Gates and Mark Zuckerberg built companies capitalized with intangibles and quickly became wealthy on the scalability of their assets....Alongside calls for improving education and encouraging research and development, Haskel and Westlake think that 'government should create the conditions for a shift from debt to equity financing,' partly through changes in tax policy, which now favors debt with interest deductibility."

RealMoneyBlog - Free daily/weekly email