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2.22.19 - The Entire Economy is a Fyre Festival

Gold last traded at $1,328 an ounce. Silver at $15.80 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on bargain-hunting and a weaker dollar. U.S. stocks traded higher as trade talks between the U.S. and China gave investors hope for a deal.

Gold price jumps to 10-month high -Mining
"Institutional and retail investors have piled into gold in recent months. Holdings in global gold-backed ETFs rose 72 tons in January to reach 2,513 tons, hitting the highest levels in nearly six years, according to data from the World Gold Council (WGC). In dollar terms, net inflows in January equaled $3.1B with the value of gold held in ETF vaults reaching just shy of $107B by the end of the month, a 6% increase. January was the fourth consecutive month of net inflows, according to WGC data and thanks to a blockbuster December 2018, 185 tons, or $8B was injected into the scores of funds listed around the world over the past four months. The bullish sentiment is also evident in the results of the survey by the London Bullion Market Association of 30 analysts' predictions for the gold price in 2019. Two-thirds of those polled believed gold will either reach or exceed $1,400 this year. Bloomberg reports analysts at Societe Generale, a French investment bank with a long history of commodity investment, recommend buying both gold and gold mining stocks this year, saying the precious metal should 'break free' in 2019 amid a scarcity of safe havens."

China China's social credit system shows its teeth, banning millions from taking flights, trains -South China Morning Post
"Millions of Chinese individuals and businesses have been labelled as untrustworthy on an official blacklist banning them from any number of activities, including accessing financial markets or traveling by air or train, as the use of the government’s social credit system accelerates. The annual blacklist is part of a broader effort to boost 'trustworthiness' in Chinese society and is an extension of China’s social credit system, which is expected to give each of its 1.4 billion citizens a personal score. The social credit system assigns both positive and negative scores for individual or corporate behavior in an attempt to pressure citizens into behaving....Over 3.59 million Chinese enterprises were added to the official creditworthiness blacklist last year, banning them from a series of activities, including bidding on projects, accessing security markets, taking part in land auctions and issuing corporate bonds....About 17.46 million 'discredited' people were restricted from buying plane tickets and 5.47 million were restricted from purchasing high-speed train tickets, the report said....Lawyers worry that the accelerated use of the creditworthiness system will violate an individuals right to privacy. 'Many people cannot pay their debt because they are too poor, but will be subject to this kind of surveillance and this kind of public shaming,' a lawyer said. 'It violates the rights of human beings.'"

Is China Gaming America in the Trade Talks? -New York Times
"U.S. frustrations grow over China trade talks. China’s vice premier, Liu He, is scheduled to hold face-to-face trade talks in Washington today, before attending a meeting with President Trump in the Oval Office. There is still plenty to be discussed. 'The tone of the negotiations between the two nations has grown more stern,' according to Ana Swanson and Alan Rappeport of the NYT, citing unnamed sources. 'American officials have come to realize that China has been repackaging promised reforms and trying to sell them as concessions to Mr. Trump,' which has 'caused deep frustration among the administration’s China hard-liners.' Here are some of the key issues on the table: • Trade deficits. The two nations have 'reached consensus on how to alleviate the trade imbalances,' Reuters reports....• Currency stability. U.S. negotiators are said to be demanding that China stop devaluing its currency as part of a deal....• Enforcement mechanisms. 'Negotiators have struggled this week to overcome differences on specific language to address tough U.S. demands for structural changes in China’s economy.'....'The final terms of the deal are likely to be worked out in a meeting or phone call between Mr. Xi and Mr. Trump himself,' Ms. Swanson and Mr. Rappeport write."

The entire economy is Fyre Festival -Financial Times Alphaville
"Earlier this week I penned a column about the rise of abstract wishy-washy roles in the corporate and start-up space. Things like 'Chief Vision Officer', 'Influencer' and 'Thought Leader'. I equated these roles with the positions of mystics, magicians and warlocks in historic feudal courts and argued they were probably popping up because corporates no longer understood their purpose in society and the marketplace....Critical thinking that challenges the rise of executives who normalize or celebrate such practices is understandably a threat to such business models....The entire economy may indeed be Fyre Festival. It's an argument we've tried to make before, especially with respect to misleading online data metrics and the dangerous economic misallocations they may be encouraging:'...over the past 20 years we have normalized a digital economy that funds itself either by appealing to the sort of investors who will tolerate long-term cash burn if the ultimate pay-off is monopoly control or by creating business models that profit from morally ambiguous situations.' It's an argument BBC documentary-maker Adam Curtis has also been making in films such as Hypernormalisation: 'We live in a world where the powerful deceive us. We know they lie. They know we know they lie. They don't care. We say we care but do nothing.' But perhaps, just perhaps, the trance is finally breaking? And Fyre Festival was the straw that broke the camel's back?"

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2.21.19 - Hedge Funds Could Boost Gold Rally

Gold last traded at $1,328 an ounce. Silver at $15.80 an ounce.

NEWS SUMMARY: Precious metal prices eased back from 10-month highs Thursday on profit-taking. U.S. stocks backpedaled following the release of disappointing U.S. economic and housing data.

Hedge Funds Coming Off Record Short Could Boost Gold Rally -Bloomberg
"Gold’s recent rally could have further to run if hedge fund managers ramp up bullish bets after last year’s extended big short. The metal soared to a 10-month high of $1,346.80 an ounce on Wednesday as a mounting chorus warn of an imminent slowdown in global growth - yet, the fast money has largely missed this uptrend. On the heels of their record short, money managers remain only modestly allocated to the metal, according to futures positioning data from the end of January, delayed by the recent U.S. government shutdown....Heavyweight commodity analysts like those at Societe Generale SA have recommended buying both gold and miners this year, saying the metal should 'break free' in 2019 amid a scarcity of havens. A dovish Federal Reserve and central-bank buying are also providing bulls with fodder."

economy Socialism, Some Thoughts on its Eternal Appeal
"I’ve lately been recording and watching episodes of the fascinating CNBC series 'American Greed.' I’ve noticed a common theme in these episodes, and perhaps that theme is one explanation for the eternal fascination with, and perpetual attraction to, the fantasies of 'getting something for nothing' and 'prosperity for everybody without sacrifice' known as 'democratic socialism.' As I wrote in my 1995 article 'Why Socialism Failed': 'Socialism is the Big Lie of the Twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny...The temptress of socialism is constantly luring us with the offer: give up a little of your freedom and I will give you a little more security. As the experience of this century has demonstrated, the bargain is tempting but never pays off. We end up losing both our freedom and our security.'....Like the con artists profiled on American Greed (now mostly incarcerated) the 'democratic socialists' of today, like Bernie Sanders, Elizabeth Warren, and AOC, are trying to sell you 'the economic snake oil of socialism' that is as worthless and bankrupt in the long run as the numerous Ponzi schemes being profiled regularly on American Greed that leave investors penniless.....The temptation of both Ponzi schemes and socialism is based on two seductive factors common to both fantasies: a) the initial success of both Ponzi schemes (early investors temporarily get high returns in the beginning of the financial con job/flim-flam) and socialism, and b) the attraction of both myths of getting something for nothing, i.e., they are both 'get rich quick schemes,' or 'get rich at the expense of somebody else schemes.' So if thousand of financially successful Americans with a lifetime of work experience and millions of dollars in savings fall for financial Ponzi schemes so regularly on the American Greed TV series, is is any wonder that millions of millennials with limited life experience and limited financial savings are now falling for the economic snake oil and economic Ponzi scheme known as 'democratic socialism' being peddled today by AOC, Warren, and Sanders?"

US existing home sales fall sharply to 3-year low -CNBC
"U.S. home sales fell in January to their lowest level in more than three years and house prices rose only modestly, suggesting a further loss of momentum in the housing market. The National Association of Realtors said on Thursday existing home sales dropped 1.2 percent to a seasonally adjusted annual rate of 4.94 million units last month. That was the lowest level since November 2015 and well below analysts' expectations of a rate of 5.0 million units....The drop in January came after months of weakness in the U.S. housing market. Existing home sales were down 8.5 percent from a year ago. The U.S. housing market has been stymied by a sharp rise in mortgage rates since 2016 as well as land and labor shortages. That has led to tight inventory and more expensive homes. Last month, existing home sales fell in three of the country's four major regions, rising only in the Northeast."

Chinese hackers are ramping up attacks on US companies -CNN Business
"Hackers in China have significantly stepped up attacks on US companies as the two countries have clashed over trade and technology. Top cybersecurity firm CrowdStrike saw 'a big resurgence' last year in efforts by China-based groups to break into the systems of American businesses for commercial gain - a trend that 'shows no sign of stopping,' said Michael Sentonas, the company's vice president of security technology. The spike in attacks on US targets - which include telecom operators, pharmaceutical firms and hotel chains - is 'likely tied to increased tensions between the two countries,' CrowdStrike said in a report published Tuesday. The Chinese government has repeatedly denied any involvement in cyberattacks. Even after US President Donald Trump and Chinese leader Xi Jinping agreed to a truce in the trade war in December, the American government continued to pressure Beijing on cybertheft....Hackers in China are showing particular interest in targeting telecommunications operators around the world. That's a sensitive issue a time when many governments, under pressure from the United States, are debating whether using Huawei equipment in next-generation wireless networks poses a security risk."

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2.20.19 - Green New Deal: Unrealistic Economics

Gold last traded at $1,347 an ounce. Silver at $16.17 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on momentum buying and dollar weakness. U.S. stocks traded mostly flat as investors awaited the release of a summary from the Federal Reserve's meeting in January.

Gold Is Having a Great Run -Barrons
"Gold prices on Tuesday staged their biggest gain since last November, with Comex futures jumping $22 an ounce, or 1.67%, to $1,340. Gold’s advance has come in the face of the continued rally in stocks and other risky assets - instead of moving in the opposite direction of those investments. Since Barron’s first noted the nascent strength in the metal last September, gold is up from around $1,200 an ounce. Trey Reik, senior portfolio manager at Sprott Asset Management, says gold’s steady rise reflects the market’s recognition that the Federal Reserve will not raise interest rates further and will end the contraction of the balance sheet. He contends gold investors anticipated the central bank’s pivot, first enunciated by Fed Chairman Jerome Powell on Jan. 4. Since then, both financial assets and gold have been lifted by the Fed’s pause. In addition, Reik said, given the much smaller size of the markets for gold and mining stocks, it doesn’t take more than a few money managers adding a bit of these investments to their portfolios to give bullion and gold stocks a lift. Finally, the dollar has been easing after having initially rallied in tandem with the U.S. stock market since the end of 2018."

green deal The Unrealistic Economics of the Green New Deal -Wall Street Journal
"The Green New Deal that some Democrats unveiled last week is actually two deals: one to combat global warming, another to create millions of well-paid jobs for targeted groups. Individually, both goals have their merits. But by combining them, the Green New Deal promises to make climate mitigation both absurdly expensive and deeply partisan and is thus more likely to set back than advance the climate cause....Consider its goal of massive public investment to achieve 100% renewable energy in as little as 10 years. Kevin Book, head of research at ClearView Energy Partners, a research firm, estimates replacing the 83% of current U.S. generation that is not renewable with solar photovoltaic, wind and biomass would cost $2.9 trillion - nearly a full year’s tax revenue. This excludes any cost for interest, operations, maintenance, new transmission lines or compensation to private investors for writing off natural-gas and coal plants with plenty of useful life left. It assumes cheap battery storage that doesn’t yet exist. Even so, this works out to $83 to avoid one metric ton of carbon dioxide. The Green New Deal’s plan to upgrade every building in the U.S. to 'maximum energy efficiency' is even more questionable....What the U.S. needs is the Green New Deal’s sense of urgency combined with market mechanisms that incentivize carbon reduction at the lowest price, such as a carbon tax, carbon credits or tradable emission permits."

Russia to China: Together we can rule the world -Politico
"In the halls of the Kremlin these days, it’s all about China - and whether or not Moscow can convince Beijing to form an alliance against the West. Russia’s obsession with a potential alliance with China was already obvious at the Valdai Discussion Club, an annual gathering of Russia’s biggest foreign policy minds, in 2017. At their next meeting, late last year, the idea seemed to move from the speculative to something Russia wants to realize. And soon....Russia’s view of China has shifted significantly over the past five years. Moscow has abandoned any hope that the Chinese economy is an example it might emulate. Instead, foreign policy experts now talk of how Russia can use China to further its geopolitical goals. There was no doubt at Valdai that China knows how to do economic growth, and that Russia does not....Seen from Moscow, there is no resistance left to a new alliance led by China. And now that Washington has imposed tariffs on Chinese exports, Russia hopes China will finally understand that its problem is Washington, not Moscow....This alliance, if it becomes concrete, would overturn how we do global politics. Imagine an international crisis in which Russia and China suddenly emerge as a single bloc."

A Nation of Weavers -Brooks/New York Times
"The social renaissance is happening from the ground up....Our lack of healthy connection to each other, our inability to see the full dignity of each other, and the resulting culture of fear, distrust, tribalism, shaming and strife....This problem is being solved by people around the country, at the local level, who are building community and weaving the social fabric...This is a movement that doesn’t know it’s a movement....We’re living with the excesses of 60 years of hyperindividualism...We are born into relationships, and the measure of our life is in the quality of our relationships. We precedes me....The trait that leaps out above all others is 'radical mutuality': We are all completely equal, regardless of where society ranks us. 'I am broken; I need others to survive,' an afterschool program leader in Houston told us. 'We don’t do things for people. We don’t do things to people. We do things with people,' said a woman who builds community for teenagers in New Orleans....Declare your own personal declaration of interdependence and decide to become a Weaver instead of a ripper. Every time you assault and stereotype a person, you’ve ripped the social fabric. Every time you see that person deeply and make him or her feel known, you’ve woven it."

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2.19.19 - Gold Will Beat The U.S. Dollar -Analysts

Gold last traded at $1,344 an ounce. Silver at $15.97 an ounce.

NEWS SUMMARY: Precious metal prices rose to 10-month highs Tuesday on safe-haven buying and a weaker dollar. U.S. stocks traded mixed amid ongoing geopolitical worry and China trade negotiations.

Investors Sound Warning About Markets’ Complacency on Interest Rates -Wall Street Journal
"Stocks and bonds are rising on bets that the Federal Reserve has ended its nearly four-year campaign of interest-rate increases, worrying investors who believe the central bank could upend those expectations later this year....Some believe the Fed’s next move could be to cut the benchmark short-term rate, something it hasn’t done since December 2008, when the global financial crisis forced the central bank to slash rates to near zero. The shift is unsettling some investors who believe that much of this year’s rebound across stocks and bonds has been fueled by bets that the Fed won’t raise rates again in the foreseeable future....'China is probably going to get worse before it gets better, and the U.S. will feel that slowdown,' said Andrea Cicione, head of macro strategy at TS Lombard, who believes the Fed is likely to lower rates by the end of the year."

gold When trouble strikes, where should you hide? The case for gold -The Economist
"Imagine the world economy goes into a tailspin. There is panic selling of risky assets. Where should you seek safety? Cash is the most liquid asset; but which kind? The dollar is a natural focal point. Yet America’s fiscal indiscipline and its sizeable current-account deficit might give pause. Other currencies have their faults, too. There is one other destination you might consider, if only because others are starting to think the same way. And that is gold....Gold keeps some strange company. Ardent gold bugs seem to know a lot about firearms, the best places with access to fresh water and the best ways to preserve food....Consider the alternatives, though. The euro is flawed. It has no unique sovereign issuer to stand behind it. And the yuan is not a currency you can trade easily....And the dollar? As a global currency it has no peers. During the last big crisis, in 2008, the dollar rallied...Tellingly, the managers of those rainy-day funds seem a mite concerned that they are crammed into the same spot. The dollar’s central role in global trade and finance allows America to impose financial sanctions to great effect. It has been doing so with greater frequency, so Russia, for instance, has drastically cut the dollar share of its reserves, to 22%, while raising the shares of euros and yuan. Russia has been a big buyer of gold, too. In that, it is not alone. Net purchases of gold by central banks rose by 74% last year to the highest since 1971, the year the dollar’s peg to the gold price broke. Now, as then, there are growing concerns that the dollar is a crowded trade... It is why gold is starting to appeal again as a spot to converge upon."

Only A Matter Of Time Before Gold Beats The U.S. Dollar -Analysts/Kitco
"Commodity analysts have noted that gold’s recent bullish moves are impressive, as they have been made in the face of continued U.S. dollar strength...Gold has managed to hold above the critical psychological level at $1,300 an ounce. April gold futures last traded at $1,323.90 an ounce, slightly up from last Friday’s settlement price....While it’s not uncommon for the U.S. dollar and gold to rally together, the trend has never proven sustainable. Looking ahead, many analysts think that gold will eventually beat the U.S. dollar. Eugene Weinberg, head of commodity research at Commerzbank, said that he sees growing headwinds for the U.S. dollar, which will continue to benefit gold. 'There are a number of factors weighing on the U.S. dollar: growing recession fears, weaker manufacturing data and a Federal Reserve that will not be raising interest rates anytime soon,' he said....Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said that he also sees the recent rally in equity markets supporting the U.S. dollar, but this will only prove to be a limited catalyst. 'The dollar is on thinner ice, in our view, with its primary remaining support factor - the outperforming stock market - running into layers of resistance,' he said in a report Friday."

For retailers who say "no cash" Philadelphia says no dice: bill bans cards only -USA Today
"Philadelphia's city council voted Thursday to require most local businesses to accept cash as payment, pushing back on a growing trend in which restaurants and retailers accept credit and debit cards only. 'There's a reasonable segment of people who wouldn't be able to patronize those stores because they don't have any kind of credit or debit card,' said Councilman Bill Greenlee, who introduced the bill. 'It's setting up an us and them kind of situation . . .And those people tend to be a little lower income, and also minority and immigrant. I don't think that's the kind of message we want to be sending.' Mayor Jim Kenney is reviewing the bill, says Lauren Cox, a spokeswoman for the administration....A rising number of retailers are cutting out cash to speed up transactions, reduce the chance of theft, and accommodate the increased use of credit and debit cards, as well as digital wallets like Apple Pay and Google Pay, to buy services and products. Cash purchases were down to thirty percent of all retail transactions as of last year compared to 40 percent in 2012, according to IHL and the Federal Reserve."

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2.15.19 - Likelihood of Fed Pause Boosts Gold Prices

Gold last traded at $1,324 an ounce. Silver at $15.75 an ounce.

NEWS SUMMARY: Precious metal prices rose to two-week highs Friday despite a firmer dollar. U.S. stocks surged amid increasing hopes for a U.S.-China trade deal and equities were on pace to post their 8th weekly gain.

Gold hits two-week high as weak U.S. data lifts likelihood of Fed pause -Reuters
"Gold rose to its highest in two weeks on Friday after weak U.S. economic data compounded concern over a global slowdown and dialed down the chances of the U.S. Federal Reserve raising interest rates this year. 'The weak retail sales data from the U.S. in the previous session falls in line with general expectations that the Fed will not be pushing through with monetary tightening as hard as they were planning,' said SP Angel analyst Sergey Raevskiy. Gold gained 0.5 percent in the previous session after weak U.S. retail sales data, along with soft inflation numbers on Wednesday, added to disquiet about slowing growth, which could allow the Fed to hold interest rates steady for a while. The disappointing U.S. data followed a spate of weak economic reports from China and Europe. This helped gold to hold its ground amid a slight rebound in the dollar."

central banks Guess Who's Buying Gold? -Zero Hedge
"Over the long-run, I contend something has changed in the gold market. Something we should all be paying attention to....Gold is not going up because of US dollar weakness - it’s going up in real terms. The question is why? There is little doubt that the dovish tilt by Powell has helped gold, but if you look at when the rally started, it was way before his post-Christmas cave....Central Bank buying up 74% year-over-year! Highest annual net purchases since Nixon closed the gold window! These are some astounding figures that few are talking about....For the past eight years Central Banks have been hoovering gold faster than Lindsey Lohan downs greyhounds at her LL vodka launch party....Yeah, yeah, I know. Gold is a barbarous relic that has no economic value. Well, just don’t tell that to the Central Bankers who are loading up their vaults with it."

Trump Declares Emergency Over Border Wall -Wall Street Journal
"President Trump declared a national emergency to bolster his border-wall plans, he said Friday, supplementing the funding contained in a spending bill passed by Congress with billions in additional funds diverted from elsewhere in the government. The moves stave off a second government shutdown but have ignited a new battle over the legality of his border-spending ambitions. Speaking in the Rose Garden, Mr. Trump said a border wall was key to national security. 'We’re talking about an invasion of our country,' he said. The House approved the spending bill late Thursday, hours after its passage in the Senate, sending the legislation to the president’s desk. The $333 billion package of seven spending bills includes $1.38 billion in funding for 55 new miles of physical barriers....Federal law doesn’t define an emergency. The first formal emergency proclamation was issued by President Wilson in 1917....There are currently 30 national emergencies in effect, including those related to the Sept. 11, 2001, terrorist attacks and the Iraq war. President George W. Bush declared 13 national emergencies, and President Obama declared 12."

New York Could Have Avoided Amazon HQ2 Heartbreak -Bloomberg
"How romantic. Amazon chose Valentine’s Day to break off its engagement with New York City, announcing that it has withdrawn plans to build a sprawling corporate campus in Queens. In truth, who could blame one of the world’s most valuable companies from feeling spurned? It promised a long-term relationship: as many as 40,000 jobs with an average salary of $150,000 over the course of two decades. And what did it get in return? A chilly response. There were objections from citizens, politicians and neighborhood groups to the $3 billion in subsidies the city and state were offering the company. There were fears that affordable neighborhoods would suddenly become out of reach for New York’s struggling middle class....Some of these concerns were reasonable; all of them could have been addressed and resolved with smarter management and better leadership....A word to the leaders who are trumpeting Amazon’s withdrawal: The city now has a reduced capacity to improve education, housing, health care and more. These are all services that Amazon’s presence would have supported. When they are constrained, the effects fall most heavily on the less fortunate....This is an unhappy day for New York - and potentially an ominous one. Tech-world entrepreneurs are going to think twice before considering a relationship with the city, questioning its steadfastness and commitment. HQ2 is no more. All cities should learn from this breakup."

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