Real Money Podcast
Mar 30, 2021
3.30.21 - $2,200 Gold Target in 2021 -Wells Fargo
Gold last traded at $1,682 an ounce. Silver at $23.92 an ounce.
NEWS SUMMARY: Precious metal prices were pressured lower Tuesday as rising interest rates boosted the dollar. U.S. stock fell amid heightened volatility and continued fallout after a hedge fund was forced to liquidate several media stocks.
Gold's 'strongest price rally' is coming: Wells Fargo's 2021 target is $2,200 -Kitco
"Investors could still see some of the strongest price action in gold this year, according to Wells Fargo, which sees signs of a developing rally.
The driver behind this new spark in prices is diminishing supply growth. And it could get gold up to $2,200 an ounce this year, said Wells Fargo's head of real asset strategy John LaForge.
'Gold supplies have flipped from excessive to deficient,' LaForge said in the latest update. 'Such times in the past have sparked some of gold's strongest price rallies'....
However, this picture has shifted in the past three years, with gold supplies moving from 'excessive to deficient.' This is why Wells Fargo has turned positive on gold.
'Such times in the past have sparked some of gold's strongest price rallies … We believe gold could be on the eve of a new commodity bull super-cycle, which would be only the seventh since the year 1800,' LaForge said. 'Gold prices have climbed over 40% since 2018, and we believe that more gains lie ahead.'....
'These trends remain largely intact, and we remain gold bulls with a 2021 target range of $2,100 to $2,200,' LaForge said."
Is Bitcoin Good for Business? -Project Syndicate
"Following its rapid rise in value, Bitcoin is now being touted as an investment that legitimate businesses would be remiss to ignore. But business leaders should stay off the bandwagon, because the cryptocurrency revolution has already failed.
In a recent commentary for the Financial Times, economist Dambisa Moyo makes a case for why business leaders should invest in Bitcoin. Her three main arguments are that Bitcoin is a way to mitigate company risk; cryptocurrencies can provide possible solutions for doing business in emerging economies; and digital currencies augur an exciting new future of 'currency platforms.'....
First, it is unclear how buying Bitcoin can mitigate company risk. The only risk Moyo identifies is that of missing out on what could be one of the greatest speculative bubbles of all time....Equally far-fetched is the idea that cryptocurrencies could provide solutions to problems often encountered in emerging economies....
Moyo also suggests that Bitcoin could facilitate remittances to low- and middle-income countries. But this ignores the fact that Bitcoin transactions are notoriously inefficient. Because its block size is capped at one megabyte and the block-discovery process takes approximately ten minutes per block, only seven transactions can be completed per second. By contrast, Visa executes an average of 1,700 transactions per second, and could feasibly handle more than 65,000 transaction messages per second. By design, Bitcoin is simply too inefficient ever to become an effective medium of payment....
Bitcoin and similar cryptocurrencies are extremely unattractive as stores of value. No sensible investor should go near them (unless she has very deep pockets and extremely low risk aversion). Moreover, Bitcoin's extremely high energy demand is another nail in its coffin. Bitcoin transactions are verified through proof-of-work 'mining' operations that require exorbitantly energy-intensive computational efforts. The Cambridge Bitcoin Electricity Consumption Index estimates annualized consumption at 139.15 terawatt-hours – more than that of Argentina....
The bottom line is clear: Bitcoin is an excessively risky and environmentally undesirable investment. It is not a sensible solution to any emerging-market problem, and it cannot possibly serve as a store of value or reliable medium of exchange. The sooner it and other DLT-based cryptocurrencies are relegated to a footnote in economic history, the better."
GDP Hides the Damage from the Covid-19 Lockdowns -Mises
"Do not believe government pronouncements that the economy is rebounding from very minimal damage caused by unprecedented covid-19-inspired closures of businesses. Government will use its favorite statistic of the health of the economy to justify its actions - gross domestic product (GDP).
GDP is supposed to represent the total of spending on final goods and services in the economy. It is a Keynesian term that elevates a concept called 'aggregate demand' as most important. Not production and especially not savings.
In fact Keynesians fear savings most of all. Now, you and I know that we can become wealthier only by saving some of our income and investing it wisely for the future. But Keynesians invented a concept called 'the paradox of thrift,' whereby they claim that the economy enters a death spiral from reductions in spending caused by an increase in savings. Individually, savers may be better off, they say, but collectively the economy suffers....
There are two critical problems with GDP. One, it does not capture a lot of spending on longer-term and intermediate-term production, but rather mostly retail sales...Headlines that retail sales are up are supposed to generate confidence that all is well with the economy. But is it? If you and I spent all our savings and even borrowed more, we would soon find ourselves in the poorhouse. But Keynesians would say that our individual financial difficulties were good for the economy. Anybody buying that? I certainly hope not!
But the biggest problem with GDP is the most obvious one - that GDP measures price increases, not increases in the production of real goods or services. For example, in the past month or so the price of a gallon of regular gasoline in my home state of Pennsylvania has gone up from just under $2.50 to around $3.00. That's a 20 percent increase in price. Since gasoline consumption changes little in the short run, selling the same volume of gasoline at a higher price causes GDP to go up. But our standard of living just went down!....
The best measure of long-term price inflation is not necessarily measuring retail prices in the short run but measuring the increase in the money supply over time....M2 is the broadest measure of the money supply that can be accessed by the public on demand...M2 stood at $7.215 trillion in 2008, then was juiced to $15.419 trillion by January of last year. It now stands at $19.384 trillion. That's a 169 percent increase, and tracks well with inflation in asset prices like stocks and housing.
The lesson is this - don't be fooled by government statistics, especially GDP, that the economy is recovering nicely from the covid-19 lockdowns. The covid-19 lockdowns have caused immense damage to the economy. Government money printing may goose GDP, but It will do nothing to compensate for the deadweight loss that millions have suffered."
White House dramatically increased tax proposal -San Diego Union
"When President Joe Biden’s team began putting together his infrastructure and jobs package this February, the White House National Economic Council circulated an internal proposal calling for about $3 trillion in new spending and $1 trillion in new tax hikes, according to three people with knowledge of the matter.
But soon enough, some members of the economic team second-guessed themselves, concerned that the plan could jeopardize the nation’s long-term financial stability. The officials worried that the large gap between spending and revenue would widen the deficit by such a large degree that it could risk triggering a spike in interest rates, which could in turn cause federal debt payments to skyrocket, said the people familiar with the matter.
Partially in response, the two-pronged package Biden will begin unveiling this week includes higher amounts of federal spending but also significantly more in new tax revenue - with possibly as much as $4 trillion in new spending and more than $3 trillion in tax increases, said the people, who spoke on the condition of anonymity to describe private dynamics....
Biden's 'Build Back Better' agenda is ambitious in scope, aiming to confront global climate change, rebuild the nation's infrastructure, revive domestic manufacturing, and transform U.S. child care, among other goals. Beyond blunting the deficit impact, raising taxes also would advance liberals’ goal of cutting inequality....
Republicans have already begun to attack the White House for embracing large spending and tax plans - which would largely reverse former president Donald Trump’s 2017 tax cut - that reflect Democratic priorities with very narrow majorities in Congress....
The tax component is expected to be the heaviest lift politically for the administration. The White House is studying a range of tax hikes on wealthy investors, corporations and rich people to pay for the package. Steve Rosenthal, a tax expert at the nonpartisan Tax Policy Center, said the tax increases would be the largest in decades."
Real Money Podcast
Mar 29, 2021
3.29.21 - If Deficits Don't Matter, Why Tax?
Gold last traded at $1,710 an ounce. Silver at $24.64 an ounce.
NEWS SUMMARY: Precious metals traded lower Monday on profit-taking and a firmer dollar. U.S. stocks fell amid weakness in bank stocks caught in the downdraft of Friday’s margin call.
What's the catalyst to take gold price to $1,900? -Kitco
"Now that gold is sitting comfortably above $1,700 an ounce, is it ready for liftoff towards $1,900? Analysts remain optimistic but say that the precious metal needs a new catalyst to get it there....
'Factors that would normally weigh on gold, such as rising stock markets and the firm U.S. dollar, do not appear to be pressuring its price all that much at present,' said Commerzbank analyst Eugen Weinberg.
This trading pattern could be a sign that it's time to start picking up gold, RJO Futures senior commodities broker Daniel Pavilonis told Kitco News.
'Market sentiment is low compared to where it was back in August. This is a good sign. It is probably the time to start picking up gold. Next week, we could see more of an up week for gold,' Pavilonis said.
Gold is being pulled by two different outlooks - the short-term risk-on view, which is based on vaccinations and the economic recovery, and the long-term risk-off view, which is filled with uncertainty and an accommodative Federal Reserve....
'We happen to think we break out into $1,900 by year-end because we will see inflation and no action from the Federal Reserve,' said TD Securities head of global strategy Bart Melek. 'Also, we'll have more debt and more infrastructure spending.'"
If Deficits Don't Matter, Why Bother with Taxes? -Mises Institute
"On March 18, Joe Wiesenthal of Bloomberg Markets had MMT economist Stephanie Kelton on the show. If you're not familiar with modern monetary theory, they think governments should print more money because deficits aren’t a big deal. At one point in the show, Wiesenthal asked, 'If we don't need to worry about deficits, why do we have taxes?' Kelton’s response was illuminating....
Kelton’s answer? Taxes would still be needed, because they make us poor. And because they can punish people she doesn't like.
Specifically, Kelton likes that taxes 'remove dollars from our hands, so we can't spend them,' leaving more purchasing power for the government. So taxes make the people poor, and that's a selling point to her, presumably because she thinks governments are really good at lifting people out of poverty. Anybody who's spent time in America’s inner cities, where government money is pretty much the only money, might disagree.
Ah, but it's not just about spending our money more wisely than we ever could, Kelton adds two secondary reasons she loves taxes: to punish particular people by redistributing their money, and to punish people for doing things she doesn’t like. Such as failing to buy energy-efficient appliances (no, really). In other words, social engineering with carrots for your friends, sticks for your not-so-friends.
Aside from the morality of preying on our neighbors, demanding they pay an ever-growing 'fair share' that invariably exceeds what, say, a journalist or professor pays, using taxes for redistribution and punishing - 'nudging,' in the fashionable parlance - carries enormous collateral damage. Because redistribution arranges society into hostile factions either trying to violently dispossess one another or defending against that dispossession....
If, indeed, the only remaining justification for taxes in an inflationary regime is to redistribute and punish - to erode social harmony in a fiscal war of all against all while impoverishing society and enabling a creeping totalitarianism - then it is much closer to the mark that modern taxes have become not the price of civilization, but the predator of civilization."
Hold Big Tech accountable -Washington Examiner
"The current trend to deploy false, distorted, selective, and deliberately misleading information in pursuit of various objectives may be a more troubling contagion than COVID-19. We see it in traditional media with 'journalists' who now view their role as the promotion of narratives rather than the objective account of facts. Big Tech now imposes its ideologies on vast swaths of America while answering only to executives, principal shareholders, and employees.
For example, Google, Twitter, Facebook, Apple, and Amazon inflicted a digital death sentence on the social media application Parler by withholding the infrastructure and linkages on which Parler depended, a practice known as 'deplatforming.' In other cases, malleable terms of service agreements provide an excuse for selective censorship, deplatforming, or manipulation of the search ranking algorithms effectively to bury content....
Ominously, many of the civil rights enumerated in the Constitution and its amendments are effectively being abridged by Big Tech companies, which often hold more power than the government over our day-to-day existence. Few would function 'normally' without Amazon, Google's search engine, app stores, Twitter's forum, and Facebook's 'communities,' but these companies operate with impunity because the public's constitutional protections do not apply to private entities, only to actions of government....
Big Tech companies essentially function as public utilities yet are not regulated as such. Would we accept a phone company scanning our calls and interrupting for voice ads or even cutting off a connection in real time? But we allow Big Tech to do a similar thing to us all. The irony is that, for constitutional reasons, the government cannot directly censor the censors....
Content that offends or misinforms would persist, but that is the price of a society with freedom of expression. Nobody is forced to purchase, read, or 'follow' anything or anyone. The decision-making power would return to the consumer. If consumers want to reside in an echo chamber of their own beliefs, so be it. In other words, put everything that is not poisonous, regardless of how it tastes, on the information buffet table and let the consumer consume.
The current behavior by Big Tech assumes that it can 'properly' arbitrate what is acceptable or accurate, but that vests far too much power in unelected and undeserving parties."
The 'Green Energy' That Might Be Ruining the Planet -Politico
"Here's a multibillion-dollar question that could help determine the fate of the global climate: If a tree falls in a forest - and then it's driven to a mill, where it's chopped and chipped and compressed into wood pellets, which are then driven to a port and shipped across the ocean to be burned for electricity in European power plants - does it warm the planet?
Most scientists and environmentalists say yes: By definition, clear-cutting trees and combusting their carbon emits greenhouse gases that heat up the earth. But policymakers in the U.S. Congress and governments around the world have declared that no, burning wood for power isn't a climate threat - it's actually a green climate solution.
In Europe, 'biomass power,' as it’s technically called, is now counted and subsidized as zero-emissions renewable energy. As a result, European utilities now import tons of wood from U.S. forests every year - and Europe's supposedly eco-friendly economy now generates more energy from burning wood than from wind and solar combined.
Biomass power is a fast-growing $50 billion global industry, and it's not clear whether the climate-conscious administration of President Joe Biden will try to accelerate it, discourage it or ignore it. It's usually obvious which energy sources will reduce carbon emissions, even when the politics and economics are tricky; everyone agrees that solar and wind are cleaner than coal.
But when it comes to power from ground-up trees, there's still a raging substantive debate about whether it's a forest-friendly, carbon-neutral alternative to fossil fuels, or an environmental disaster. Even within the Biden administration, senior officials have taken different sides of that debate....
In documentaries, lawsuits and the teenage activist Greta Thunberg's spirited Twitter feed, critics of the industry have suggested an alternative climate strategy: Let trees grow and absorb carbon, then don't burn them. Deforestation is a major driver of climate change, and the United Nations climate panel has warned that the world needs to end it worldwide to meet the ambitious Paris emissions targets for 2050.
In February, more than 500 scientists and economists wrote to President Joe Biden and other leaders to warn that converting wood into power is a carbon disaster, a forest destroyer and an absurdly inefficient way to generate energy."
Real Money Podcast
Mar 26, 2021
3.26.21 - Stocks Don't "Only Go Up"
Gold last traded at $1,731 an ounce. Silver at $24.97 an ounce.
NEWS SUMMARY: Precious metal prices rose Friday on bargain-hunting and a weaker dollar. U.S. stocks rose led by bank shares and economic reopening plays as investors cheered government stats showing 'subdued' inflation.
Finally A Bottom In Gold? -Seeking Alpha
"Gold continues to be in a strong multi-year uptrend, and I anticipate large gains in value in the decade ahead as governments around the world continue to stimulate their respective economies with both fiscal and monetary stimulus....
Finally, it appears that gold could be ready to end its multi-month decline....I currently expect gold to trade sideways to up from here before it overtakes the $1,800 level in late Spring or early summer.
Beyond the technical support, we also see signs of a bottom in our internal Options Sentiment indicator. Current values under 5% suggest that the options market participants are positioned for higher prices in the days and weeks ahead. Options and futures expiration often becomes a time to mark price reversals and pivots in the gold price.
Negative real interest rates can be a catalyst for gold ownership, and real interest rates are correlated to the price of gold over time. At the moment real interest rates on the 5-year treasury TIP are negative 1.65%. Gold, which earns 0% real interest rates if held in bullion form, has a superior expected inflation-adjusted return over 5-year TIPs....
I currently anticipate a battle to overtake $1,800, and this may take 2-3 months to chew through various resistance levels."
An Inflationary Boom Is Coming -Bonner/Rogue Economics
"You can inflate a tire. You can inflate a balloon. Or you can inflate the money supply… and an economy. It's this last form of inflation that leads to Katastrophenhausse.
It loosens the moorings of a society… so that it is soon floating high above the ground… in a kind of miracle fog, where everything seems possible - even replacing real jobs and real earnings with fake money… And then it crashes.
It was Austrian economist Ludwig von Mises who called it a 'Katastrophenhausse,' usually translated as a 'crack-up boom.' As you can see, there are two parts to it – the boom… and then the crack-up.
Lottery winners often go through a similar phenomenon. First, they get a lot of money. Then, they lose their wives, their jobs, their friends… and finally, their money, too....
Last year, the American government - federal and state - made one of the most catastrophic decisions in history, causing mass panic and destroying millions of jobs and small businesses.
Then, by printing trillions of new money, it gave the impression that no real harm had been done by the lockdowns… and that the economy can be rescued by printing even more money.
According to a recent Bloomberg report the Biden Bunch is planning to go 'Full Katastrophenhausse,' spending another $3 trillion it doesn't have, in addition to the $1.9 trillion it didn't have....
In our view, inflation is a problem, and the Fed will not be able to control it. We've already gone too far, stayed too long… And now, we can't get back. Like the Japanese fleet, we wait to be sunk.
And here is our prediction. Please cut this out… and put it on your refrigerator. Refer back to it… if it proves prescient. If not, kindly toss it in the waste can…
The first stage of the coming Katastrophenhausse is most likely the 'inflation scare.' Scottish economist Russell Napier says that inflation has become not just cyclical but structural. He sees a U.S. inflation rate of 4% by some time next year. That will be enough to set off alarms.
The Fed will make a limp gesture toward 'normalizing' interest rates and slowing its asset purchases. Then, stocks and bonds will crash, as investors' fear puts an end to the Bubble Epoch....But neither the BS words nor the BS money - will stop the crack-up."
Stocks Don't "Only Go Up" -Pragmatic Capitalism
"It's become popular during the last year to argue that 'stocks only go up'. And yes, it sure feels like that some times. In fact, in the long-term, it’s mostly true.
The problem with this view is that we don’t live our lives in the long-term. We live our lives in the short-term and a large portion of our financial liabilities are short-term - our rent, mortgage, car payments, etc. In financial portfolios we have what is called a perpetual asset liability mismatch. That is, you have certain short-term and long-term liabilities that you need to match with certain short-term and long-term assets....
While the stock market is a wonderful long-term asset it is often a horrible short-term asset...the potential reality that a short-term drawdown turns into a long-term drawdown which creates months or even years worth of portfolio and income uncertainty.
The problem with narratives like 'stocks only go up' is that it fools people into chasing returns when they are mostly chasing risk. Now, this might not be bad for some people. If you are young and risk tolerant then that might be a fine view. But for most of us we either don't have the risk tolerance or we don't have the runway required to endure a 5 year drawdown and all the uncertainty that comes with it.
So we have to accept a little less risk knowing that we might forego some return. Life is all about tradeoffs and one of those tradeoffs is recognizing that the stock market not only doesn't 'only go up', but in fact recognizing that sometimes it MUST go down in order to make the upside sustainable.
It's important to remember this when the market is good because the worst time to discover this reality is when the market is bad. We prepare for the bad times during the good times. So be wary of this narrative that stocks only go up. It's just not true."
Americans Made an Additional $1.1 Trillion Last Year on Stimulus -Bloomberg
"Americans earned an additional $1.1 trillion last year - the most ever in data dating back to 1930 - thanks entirely to stimulus checks and other government aid.
Total U.S. personal income rose 6.1% last year to $19.7 trillion as a surge in pandemic-era aid outpaced gains in wages, property values and other sources of wealth, according to the U.S. Bureau of Economic Analysis.
The dollar amount of so-called transfer receipts, which include Covid relief payments, steered income growth in 26 states while increases in other types of personal income led in 25 including the District of Columbia, the preliminary estimates show.
The report illustrates how important government relief programs have been in helping to shore up Americans' finances as the world's largest economy recovers from the pandemic. On top of stimulus checks, an additional $498 billion was doled out in state unemployment benefits last year, according to the data.
Personal income growth ranged from 8.4% in Arizona and Montana to 2.4% in Wyoming. Gains were strongest in the West."
Real Money Podcast
Mar 25, 2021
3.25.21 - Bull Run: Save Yourself From Market Hype
Gold last traded at $1,730 an ounce. Silver at $25.14 an ounce.
NEWS SUMMARY: Precious metal prices traded mixed Thursday as upbeat jobs data boosted the dollar. U.S. stocks fell as the recent rally took a pause with investors reassessing the growth picture.
Pandemic 'changed the world' and gold price will reap the benefits -CPM Group/Kitco
"After a record year, gold is bound to see more gains in the medium and long-term, according to the CPM's Gold Yearbook.
The pandemic has changed the world, making some of the existing problems even worse and setting gold up to benefit, the CPM Group said.
'While the pandemic will eventually pass, it has left the world changed and has in fact compounded and worsened some of the factors that are supportive of gold prices,' the CPM Group said.
The biggest drivers that will support gold as the world reopens include sovereign and private sector debts, deficits, and ultra-loose monetary policies.
Governments around the world will struggle to reverse the fiscal policies introduced as a response to the pandemic, said the CPM Group, citing lackluster economic growth in coming years.
'This scenario positions gold well for further gains in the medium to long term,' the Yearbook stated. 'The pandemic has deepened these problems and will make it harder to reverse some of these issues, which will help to keep investors interested in the metal.'....
The use of gold as a portfolio diversifier is expected to grow this year, which should help the prices move higher....Central banks are projected to remain net buyers of gold in 2021, with about seven million ounces estimated to be bought."
Running of the Bulls: Save Yourself From Market Hype -Iskyan/American Consequences
"It's a bubble market in… everything. Stocks have been flirting at or near all-time highs for months. By most any measure, they’re expensive on a valuation basis.
But what's more worrisome is the prices at which things that are literally worthless – in terms of underlying value – are exchanging hands.
Dogecoin is a meme-inspired digital currency (though it really isn't) that was called a 'joke' by the guy who made it. It serves no real-world purpose but hit a market capitalization of upwards of $10 billion. It was up by as much as 15-fold this year.
And things that are next-door neighbors to worthless – by any normal person, normal market kind of standards – are also selling for waaaay too much money....
More than 400 years of market bubbles reflect a recurring pattern. In 2008, a Canadian scholar named Jean-Paul Rodrigue published a model that defines the stages of a bubble…
Stealth Phase: In the stealth phase of a bubble, early so-called smart-money investors sense a new market opportunity or paradigm....
Awareness Phase: As market prices rise, more investors are drawn to the new investment story. The media begins to cover it....
Mania Phase: Now everyone notices the rising prices. The media is touting “the investment of a lifetime.” Prices detach from underlying economic reality....
Blow-off Phase: At some point, buying abates and a paradigm shift slowly – or sometimes quickly – unfolds...In this stage, prices fall faster than they rose when the bubble was inflating. Often, prices fall below pre-bubble levels.
A simple ways to protect yourself...rebalance your portfolio by selling the big gainers and redistributing to the assets where you have a smaller allocation."
Welcome To The Winter Of Our Discontent -Smith/Zero Hedge
"Wall Street's euphoria knows no bounds, so how can this be the Winter of Our Discontent? We all know the source of Wall Street's euphoria: $1.9 trillion in stimulus, followed by another $3 trillion for corporate welfare, oops, I mean infrastructure, and a Federal Reserve whose solution to destabilizing wealth and income inequality is to make the rich even richer because, well, that's what we do here at the Federal Reserve.
An old adage holds that what everybody else already knows has little value. So everybody knows about the Fed's endless spew of monetary giveaways to Wall Street and the federal government's endless trillions in borrow-and-blow stimulus, but does everyone already know that the stimulus-based economy and all the Fed-inflated asset bubbles are completely phony?
Yes, phony. Does everyone already know that none of the promises that have been made to you can possibly be kept?
'Free' (to you) healthcare: no.
Future Social Security payments with an equivalent purchasing power to the checks issued today: no.
A national currency that holds its value into the future: no....
A status quo that has some realistic plan to impose Cold Turkey withdrawal on all of Wall Street's junkies addicted to Fed smack: you must be joking. The junkies are running the entire financial system.
The faint glimmerings of reality leaking through the public-relations blitz is the first light of The Winter of Our Discontent. The Federal Reserve's apologists and lackeys are speaking 21 times this week, all to reassure the Wall Street junkies and dealers that the Fed's supply of smack is infinite. Why don't we just rename the Fed The Ministry of Propaganda? Wouldn't a dash of calling it what it really is be refreshing?....
If you think this scale of stimulus is sustainable and consequence-free, you must be mainlining Delusionol. According to the Fed's apologists and the political class, Spring is here and will last forever. This chart says The Winter of Our Discontent has yet to start, but the first signs are visible to those willing to look past the PR."
Men Looking for Work Drive Migrant Surge at the U.S. Border -Wall Street Journal
"The surge in illegal immigration across the southern U.S. border is shaping up to be the biggest in 20 years. Unlike migrant surges in 2019 and 2014, which were predominantly made up of Central American families and unaccompanied children, so far this one is being driven by individual adults.
Most of the migrants are Mexicans, often men in search of work with the pandemic easing and the U.S. economy set to boom....Single adults account for 82% of the apprehensions so far this fiscal year, according to U.S. Customs and Border Protection data. Some 60% of all single adults apprehended were Mexicans....
Some are camping out at the border in hopes that the Biden administration will soon allow them the chance to come into the U.S. legally....It's unclear how many people are making it into the U.S. by crossing the border illegally. Estimates compared with how many are apprehended vary widely.
During the past seven days, border officials estimated that about 6,500 people evaded detection while entering the U.S., according to a person familiar with the government's internal estimates. A week ago, border agents had recently averaged about 5,000 arrests a day, according to internal Homeland Security documents reviewed by The Wall Street Journal....
Additionally, some migrants say there is a widespread perception that it’s become easier - and more inviting - to enter the U.S. under President Biden than under former President Donald Trump.
'Expectations were created that with the government of President Biden there would be a better treatment of migrants,' Mexican President Andrés Manuel López Obrador said at his daily press conference on Tuesday. 'And this has caused Central American migrants, and also from our country, wanting to cross the border thinking that it is easier to do so.'
The Department of Homeland Security said in a statement, 'There is no change in policy: the border remains closed. Families and single adults are being expelled under Title 42 and should not attempt to cross illegally.'"
Real Money Podcast
Mar 24, 2021
3.24.21 - A Fed With No Fear Should Scare Investors
Gold last traded at $1,735 an ounce. Silver at $25.15 an ounce.
NEWS SUMMARY: Precious metal prices inched higher Wednesday on bargain-hunting despite a firmer dollar. U.S stocks rebounded as investors made bets on a strong economic recovery from the pandemic.
Silver Is A Sleeping Giant - Time To Load Up -Seeking Alpha
"We have just passed the first anniversary of silver's elevator shaft ride to the lowest level since 2009...The spike low did not last for long. Silver was back over the $12 level in March 2020. In April, the price rose above $16 per ounce. May took silver to a high of over $18.50, and in July, the price eclipsed the level of critical technical resistance at the July 2016 $21.095 high. In 2020, silver reached a high of $29.915 per ounce, the highest price since early 2013....
The precious metal put in a marginally higher high when it traded to $30.35 on February 1. Silver was sitting below the midpoint of its 2021 trading range on Monday, March 22, as the precious metal is consolidating and digesting its gains over the past year....As we learned last year, when silver decides to take off on the upside, the volatile metal takes no prisoners....
The bottom line is that while the bullish sentiment has evaporated from the silver market, the price has not violated any technical levels that would jeopardize the overall bullish price trend....long-term price momentum and relative strength indicators continue to point to a bullish trend in the silver market....
Inflation is historically bullish for silver and all commodity prices...when rates move to the upside because of inflation, commodities tend to appreciate."
An inflation test is coming for the markets and the Fed -Briefing
"It's amazing how people can sometimes look at the exact same picture and see entirely different things...It's also interesting how market participants can hear the same thing but have an entirely different take on what was heard. That captures the essence of the disparate reactions by the stock and Treasury markets to the latest FOMC decision and press conference....
The Summary of Economic Projections for 2021 showed an upward tilt to the median estimate for the change in real GDP to 6.5% from 4.2%, a downward tilt in the median estimate for the unemployment rate to 4.5% from 5.0%, and an upward tilt in the median estimate for the PCE inflation rate to 2.4% from 1.8%.
What didn't change at all, however, was the median estimate for the target range for the fed funds rate. That target range is expected to remain 0.00-0.25% through 2023....
In brief, Fed Chair Powell said for the umpteenth time that the fed funds rate isn't going up anytime soon and that the Fed is unlikely to be swayed by any scary-looking inflation data that could present itself in coming months.
What the stock market heard right after the FOMC decisions and press conference was: 'Party on!' In brief, what the Treasury market heard was: 'No need to worry about a taper.'
What the Treasury market heard initially and what it subsequently thought have turned out to be two different things. The subsequent thought was that 'the Fed risks playing with inflation fire and we might get burned.'
Accordingly, the 10-yr note yield, which moved down to 1.63% (from 1.67%) immediately after the FOMC decision and press conference, subsequently rocketed to 1.75% on some inflation-fear boosters.
That move is setting up to be an interesting test, not only for the Treasury market and the stock market, but for the Fed as well. The coming months are likely going to produce some scary-looking inflation data."
A Fed With No Fear of Inflation Should Scare Investors -Wall Street Journal
"It has taken four decades, but the Federal Reserve has finally shaken off its fear of inflation. The markets are only just waking up to the implications of the shift.
The outlines of the turnaround have been developing for a while as the Fed’s focus has moved from its inflation mandate to a constant emphasis on its goal of full employment. Meanwhile, its measure of rising prices has moved to an average target, allowing inflation to overshoot a 2% goal to make up for past misses....
A hawkish Fed can counteract a big-spending White House by hiking rates. But Mr. Powell has committed to no hikes until inflation is sustainably at the Fed’s target and the country is at full employment. Most policy makers think that means at least three more years of near-zero rates.
The question is what happens if the target is reached earlier. If inflation picks up fast, say to 3%, will the Fed be willing to hike rates early and risk a rise in unemployment? What about 4%?....
A synchronized global recovery this year will mean upward pressure on commodity prices, a classic source of inflation. And Covid-related disruption has led to widespread production problems, including shortages of shipping containers and critical parts for cars, which again points to higher prices....
Inflation is poised to leap higher in the next few months due to a sharp dip in prices a year ago, as Mr. Powell himself pointed out on Wednesday. He said the Fed would ignore what he expected to be merely a blip. The economy is likely to be growing fast, too; the New York Fed’s Nowcast model, for example, predicts 6.3% annualized growth in the first quarter.
Combine that with a commitment to low rates and a president already moving on to his next spending plan, and it makes sense that people would worry more about rising prices."
Presidential Advisors Prepare $3 Trillion in New Spending -New York Times/MSN
"President Biden's economic advisers are pulling together a sweeping $3 trillion package to boost the economy, reduce carbon emissions and narrow economic inequality, beginning with a giant infrastructure plan that may be financed in part through tax increases on corporations and the rich.
After months of internal debate, Mr. Biden’s advisers are expected to present the spending proposal to the president and congressional leaders this week, as well as begin outreach to industry and labor groups. On Monday, Mr. Biden’s national climate adviser, Gina McCarthy, discussed his infrastructure plans - and their role in combating climate change - in a meeting with oil and gas industry executives....
The $1.9 trillion economic aid package that Mr. Biden signed into law this month includes money to help vulnerable people and businesses survive the pandemic downturn. But it does little to advance the longer-term economic agenda that Mr. Biden campaigned on, including transitioning to renewable energy and improving America’s ability to compete in emerging industries, like electric vehicles. Administration officials essentially see those goals - building out the nation’s infrastructure and shifting to a low-carbon future - as inseparable....
Republicans are united in opposition to most of the tax increases Mr. Biden has proposed. Business groups have warned that corporate tax increases would scuttle their support for an infrastructure plan. 'That’s the kind of thing that can just wreck the competitiveness in a country,' Aric Newhouse, the senior vice president for policy and government relations at the National Association of Manufacturers, said last month."
Real Money Podcast
Mar 23, 2021
3.23.21 - Tide is Turning: 'You Have to be in Gold'
Gold last traded at $1,728 an ounce. Silver at $25.16 an ounce.
NEWS SUMMARY: Precious metal prices eased Tuesday as higher interest rates boosted the dollar. U.S. stocks fell as investors took some profits in shares that will benefit from the reopening of the economy.
Tide is turning: 'You have to be in gold/silver' -Kitco
"A lot happened in the gold space over the last week. And the tides may finally be turning for the precious metals. Here's a breakdown of the top three stories.
1. The Federal Reserve kept its monetary policy unchanged but revised up its economic and inflation expectations. The Fed now sees U.S. GDP at 6.5% and inflation at 2.4% in 2021. In response, gold finally rose as the Fed signaled that it plans to keep rates near zero through 2023. Fed Chair continued to refer to any price spikes as transitory while ignoring rising yields. As all of this was being digested, gold breached above $1,750 an ounce - almost a 3-week high.
2. Mark Mobius, founder of Mobius Capital Partners, said that investors have to be in precious metals, citing everything from gold to silver, platinum, and palladium. He described the precious metals as the best 'long, long term investment simply because they represent a form of currency.'
3. Ray Dalio, founder of Bridgewater Associates, warned investors that high levels of debt in the U.S. could trigger 'shocking' tax changes that might involve prohibitions against assets like gold and bitcoin. Dalio gave examples from the 1930s and 40s when the Fed was able to control yields because gold was banned in the U.S. Dalio once again said that cash is 'trash' and told investors to buy 'any stuff that will equal inflation or better.'"
Reading Between the Fed's Lines -Mises Institute
"The conclusion of the March Federal Open Market Committee (FOMC) meeting last Wednesday, reiterates that low rates and perpetual increases to the money supply should now be considered permanent features of the economy....
While it sounds like the Fed's accommodative stance is temporary, once his Fedspeak ('employment and inflation outcomes') is deciphered, doubt comes to light as to how temporary the policy stance will be....
Powell expects price inflation, measured through various inflation calculations like the CPI Index, should rise to over 2% this year, and if this were to happen it would be 'transitory.'....
Since all inflation calculations are problematic as is, this adds a new layer of cherry-picking, whereby even when the inflation data is relatively high, the Fed can dismiss it by calling it transient. This may be easy for central planners to say, but it is difficult for the general public to live through high inflation, even if it is transient....
At the conclusion of the FOMC meeting, we are assured that no rate hikes or decreases to the Fed's asset purchase programs should happen within the next several years. However, between achieving that elusive maximum employment figure or accepting inflation data that is not transient, we should start to wonder if the Fed has any intentions of becoming less accommodative ever again."
Gross Profits For House Flippers Hits Record As Fed Turbocharges Real Estate Bubble -ZeroHedge
"The housing boom unleashed by the Federal Reserve during the virus pandemic was built on historically low mortgage rates, low inventory, city-dwellers moving to rural areas, and remote-work phenomenon. Housing prices in all 20 major US cities have been rising at the fastest pace since 2014. A red hot market has lured house flippers who are pocketing record profits.
Research firm Attom Data Solutions' latest note specifies homes flipped in 2020 generated a gross profit of $66,300 nationwide (the difference between the median sales price and the median amount initially paid by investors). 2020's gross profits were up 6.6% from a year earlier and were at the highest levels since the housing boom in 2005.
Average home prices across the 20 cities rose a stunning 10% year-over-year in December, its fastest acceleration since 2014. On top of soaring home prices, flippers found out everything from lumber to copper prices increased build costs and squeezed margins. The National Association of Home Builders recently said soaring lumber prices added an extra $24k in costs to builders for the average home in 2020....
There's an issue of speculation in the real estate market. As we've previously outlined, home prices are rising faster than personal incomes - the last time this happened was in the mid-2000s. We all know what happened next.
Fears are mounting the housing boom is not just overheating but there could be a cooldown as 30-year mortgage rates jump and are no longer under 3%."
Capitalism Is What Will Defeat Covid -Wall Street Journal
"Behold the paradox of this pandemic moment: Large corporations are political villains, derided on the left and right. Yet the main, and perhaps only, reason the Covid-19 scourge is easing is vaccines developed by Big Pharma.
Few are more acutely aware of this paradox than Alex Gorsky, CEO of Johnson & Johnson, the healthcare device, pharmaceutical and consumer-goods company best known for products like Band-Aids and Tylenol...
J&J is a household name in the best way for developing its single-shot Covid vaccine, which the Food and Drug Administration approved for emergency use last month. The vaccine is increasing the U.S. supply of shots at a critical time and will enable a billion people world-wide to be vaccinated this year....
'We would never be in the position where we are today if we had not invested billions of dollars over decades so that we could respond,' Mr. Gorsky, 60, says in an interview the Monday morning after the FDA authorized its Covid vaccine....
J&J’s vaccine was found to be 72% effective at preventing moderate to severe Covid symptoms (meaning two or more symptoms that don't require hospitalization) in U.S. trials. That's less than the 95% of the Moderna and Pfizer -BioNTech vaccines, which received emergency-use authorization earlier, and which are followed by a booster a few weeks after the initial shot....
It seems like an incredible stroke of luck and science that we have so many Covid-19 vaccines so soon. But it's more than that. Credit years of research and investment by drug makers, as well as government collaboration during the pandemic, which Mr. Gorsky hopes will outlast the pandemic.
'I think this is a golden moment, not only for Johnson & Johnson, but the biopharmaceutical industry,' he says. 'We fundamentally believe that having a market-based, innovation-based, biopharmaceutical as well as a medical-technology environment, is critical long term to produce the best overall outcomes for healthcare.'"
Real Money Podcast
Mar 22, 2021
3.22.21 - Fed's Digital Dollar Worries Wall St.
Gold last traded at $1,740 an ounce. Silver at $25.75 an ounce.
NEWS SUMMARY: Precious metal prices steadied Monday as bond yields eased and the dollar fell. U.S. stocks rose as investors hoped for a bounce back as tech stocks were boosted by Tesla's price rebound.
Asian Shoppers Snap Up Gold -Bloomberg
"Gold prices are near a nine-month low, which is drawing jewelry shoppers in Asia to hunt for bargains...Retailers are buying more of the precious metal to cater to people like Seema B, a 35-year-old housewife who ventured to Mumbai’s Zaveri Bazaar to get new bangles after months of putting it off. 'The prices have come down a bit and the general worries about the virus have also eased,' she said.
Seema joins others in India and Malaysia who are stocking up for weddings and investment. Retail investors in South Korea are amassing bullion while Chinese demand drove sales higher over the Lunar New Year....
When financial investors aren't buying, 'the physical market becomes increasingly important in setting the floor for prices,' said Suki Cooper, a precious metals analyst at Standard Chartered Bank. 'The gold price floor is starting to look well cushioned.'....
Jewelers in India see the momentum lasting until the auspicious gold-buying day of Akshaya Tritiya in May. Kumar Jain, owner of U.T. Zaveri store in Mumbai, expects his sales to almost double in the January-March period from a year earlier and is optimistic about the coming quarter too.
'We have seen the best demand in the past month since the virus fear emerged in March last year, as customers came out to buy for weddings thinking prices will go up further,' he said."
The Great Stock Market Crash of 2021 -Sjuggerud/American Consequences
"I've been pounding the table for years about the Melt Up - the massive, blow-off top in stocks at the end of a major bull market. And regrettably, what follows is the eventual Melt Down....
For the majority of investors today, how you handle the Melt Down could be the most important event of your financial life…
For example, if you are 55 years old and you play the Melt Down the wrong way, you might lose half of the money you have invested. That might cause you to work an additional 10 years before retirement… All because of a few bad decisions made in 2021....
Here’s how it will go: New investors will make a good amount of money on the way up. They will gain confidence. With that confidence, they will add even more money to their accounts, as they will believe they know how to succeed.
Then the market will turn against them… and they will start to lose money. At first, they will see it as a golden opportunity to invest even more money, as things are 'on sale.' Ultimately, they will lose even more money on the way down than they made on the way up.
It will take tremendous personal and emotional strength to avoid that path… to not end up like everyone else. Markets peak when there is nobody left to buy. That is all you need to know.
Your instincts will tell you to buy more. But your instincts will be wrong. In fact, you will need to do the opposite – you will need to sell, just when you feel like you want to buy....Unfortunately, we are getting close to that point right now. And that is exactly what makes this year different than previous years....
There is no foolproof signal for the start of the Melt Down. Stocks start to fall, and people get excited that they can buy more of their favorite names even cheaper. Most people will be extremely tempted to buy more when stocks start to fall. That is the wrong thing to do."
Fed's Digital Dollar Momentum Worries Wall Street -Bloomberg/Yahoo Finance
"The financial services industry, braced for what could be its biggest disruption in decades, is about to get an early glimpse at the Federal Reserve’s work on a new digital currency.
Wall Street is not thrilled.
Banks, credit card companies and digital payments processors are nervously watching the push to create an electronic alternative to the paper bills Americans carry in their wallets, or what some call a digital dollar and others call a Fedcoin.
As soon as July, officials at the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology, which have been developing prototypes for a digital dollar platform, plan to unveil their research, said James Cunha, who leads the project for the Boston Fed.
'Everyone is afraid that you could disrupt all the incumbent players with a whole new form of payment,' said Michael Del Grosso, an analyst for Compass Point Research & Trading LLC....
'The fire has been lit,' said Josh Lipsky, who has helped convene government officials from the U.S. and other countries working on digital currencies as director of the GeoEconomics Center at the Atlantic Council. 'The world is moving very quickly on these projects.'
At issue are forms of digital cash being considered by the U.S. and other governments. The growing popularity of Bitcoin, Ethereum and other cryptocurrencies, whose market value has grown to more than $1 trillion, inspired the projects. Unlike those privately created tokens, the new currencies would be issued by central banks as an alternative to paper bills. Cash wouldn't go away, but its use would likely decline."
What We Lose When We Don’t See Our Work Acquaintances -Wall Street Journal
"As companies start reopening offices, and perhaps give employees a choice as to whether to return, both companies and employees should consider that without a shared physical space, we will lose a kind of relationship we’re rarely aware of, and that barely has a word to describe it.
Somewhere between strangers and friends, these are people with whom we share moments of chats and check-ins. It’s easy to dismiss them as superficial. But the relationships we develop with such workplace acquaintances are much more important to our sense of connection and community than many of us realize.
Recent scholarship on human sociality...show that social interactions with acquaintances and even strangers also have the potential to alleviate loneliness and boost well-being. These studies recognize the abundance of potential locations for conversation: public transit, the gym, the coffee shop. The workplace is certainly a place to socialize as well.
Conventional wisdom tells us water-cooler talk strengthens workplace performance and cohesion. I would contend that the most important value of these conversations isn't for the workplace. Having someone to talk to enriches the lives we live at work.
In his book 'Someone to Talk To,' Stanford sociology Prof. Mario Small asserts that 'people are deeply responsive to the social interactions they encounter routinely.' He found that we are more likely to talk about important matters to people who are available than people we are emotionally close to; access transforms acquaintances and workmates into confidants.
Thinking of who we talk to routinely as the foundation of relationships - rather than relationships being the reason for routine talk - is a paradigmatic shift when thinking about what we might lose if we never go back to the office....
Being physically near people creates opportunities for conversation about work and personal matters alike. It also creates the opportunity for friendship."
Real Money Podcast
Mar 19, 2021
3.19.21 - The Big Con: Printed Dollar Stimulus
Gold last traded at $1,742 an ounce. Silver at $26.21 an ounce.
NEWS SUMMARY: Precious metal prices steadied Friday on bargain-hunting despite a firmer dollar. U.S. stocks fell as Fedspeak, which signaled an end of capital breaks for banks, stoked a rise in bond yields and a sell-off in financials.
Have Gold And Silver Bottomed Yet? -Seeking Alpha
"It makes no sense that shortages of physical have developed while the prices of gold and silver have been declining the past few months. But the aggressive price take-down that occurs in the paper markets is an effort by the banks to discourage buyers from investing in physical gold and silver in an effort to help alleviate the growing shortage of physical metal in NYC and London.
This bullion bank fire drill has occurred intermittently over the 20 years of my involvement in the sector. And yet, gold has been the best-performing asset from 2001 to present.
The fundamental factors that drive gold and silver keep getting stronger by the day. I don't know how much lower the sector will go from here - part of that will depend on whether or not a stock market accident occurs, something which I believe has a high probability. But at some point, the Fed is going to have to unleash another massive round of money printing to finance the coming flood of Treasury issuance or risk losing control of the long end of the yield curve, which in turn would devastate the financial markets."
The Big Con: Stimulating the Economy With Printed Dollars -Bonner/Rogue Economics
"Politicians make absurd promises to get elected; few are fool enough to follow through on them. But here is Joe Biden going coast-to-coast to remind voters that he actually did the dumbest thing he said he was going to do - passing one of the most ruinous laws in U.S. history… wasting 10% of U.S. GDP… one half of annual tax collections… in one reckless giveaway....
Just try to imagine an earnest White House aide gamely trying to explain it to an alert citizen.
'Look, our $1.9 trillion American Rescue Plan… it gives you dollars,' the admin guy might say. 'You can use them to buy stuff. Then, the economy will boom. It will give you a fighting chance.'
'A fighting chance of what? You sure you're not just pulling a fast one…? You know, advertising that you're the party that hands out free money?'
'No… no… of course not.'
'You talk about the money you're giving ordinary people like me, but doesn't most of the money go to special interests with lobbyists in Washington?'
'Well, we tried to address many of the problems in our country… so, we've designated certain sums for the organizations and groups that need it.'
'You mean, like bailing out union pension systems… and Amtrak? Isn't that what you call a 'boondoggle'?'
'That would be a very cynical way to look at it… Let's focus on what's really going on here. We're giving every eligible America $1,400.'....
'Where did you get all that money? I thought you fellows were broke. Some guy on the news said your deficit is going to be around $3.3 trillion.'
'That would be like me earning $60,000 and spending $100,000, wouldn't it? I couldn't do that for long. I'd lose my house, my car, my business…'....
'Yes, but the government can never go broke.'
'Because we can always create more money.'
'How do you do that?'
'Well, dollars represent real wealth - because you can use them to buy things. We have the power to create all the dollars we want. And they're just like the dollars in your wallet.'
'Why stop with a measly $1,400? Why not $2,000… or $20,000? And if you were right - that you can make people better off just by printing up more money - why didn't someone think of this sooner?'
'I'm gonna level with you. This whole thing smells like a con job to me.'"
What comes after the stimulus-fueled short-term economic boom? -The Hill
"Economists are tripping over each other in a race to upgrade their forecasts for U.S. GDP growth. Even the normally staid Organization for Economic Cooperation and Development (OECD) upped its GDP growth forecast for the U.S. to 6.5 percent in 2021. Others are even more optimistic, and if their projections were to be realized, it would mark the fastest annual economic growth rate attained by the U.S. since 1984. Some have even suggested that this may be the beginning of a new and more optimistic economic era....
Clearly, the near-term prospects for the U.S. economy appear very bright. There are, however, a few serious headwinds that are likely to pose a threat to the U.S. economy, especially over the medium to long run. In the near term, the biggest threat may arise from an unexpectedly sharp spike in average price levels, which may potentially generate higher inflation expectations.
In light of ongoing investment frenzy and market mania in pockets of the financial world, a sudden spike in market rates would inevitably create financial turmoil. The roaring housing market may also be adversely affected, which has the potential to create real pain for the broader economy....
The historical role of the U.S. dollar as the pre-eminent global reserve currency has allowed the federal government to ignore fiscal restraints for decades. There is, however, a growing realization in the international financial community that profligate spending and rising debt burden may force the U.S. to engage in gradual currency debasement in the coming decades....
The pandemic shock's impact on underlying drivers of inequality is also a source of lingering concern. In particular, the pandemic has sped up the trend towards automation and boosted the pace of deployment of Artificial Intelligence (AI). These technologies are skill-biased (they enhance the productivity of high-skilled workers even as they replace less-skilled jobs)... AI’s ability to displace white-collar jobs in the professional services sector may generate significant labor market dislocation over the next decade and further exacerbate inequality.
Even as we look forward to an early end to the pandemic and get ready for a rapid economic recovery, it is wise to keep in mind that longer term challenges still remain and need to be addressed."
A new law would force employees to contribute to their 401(k) -Marketwatch
"Auto-enrollment may be just what Americans need to save more for retirement - but perhaps only if the government makes it a requirement.
Only half of Americans participate in a workplace retirement plan, a staggering statistic considering how much of the responsibility for funding an adequate retirement now falls on individuals.
The problem: Without the financial education, encouragement or access, retirement savings isn’t always a top priority. Americans have so many other financial obligations to juggle as it is - such as rising costs of college and housing, or shorter-term goals like buying a home or starting a business, and trying to provide for their families. Instead of planning for their future financial stability, many are trying to stay afloat in the present.
That's where automatic enrollment comes in: it's one way to get Americans to stash money into a retirement account without thinking about it. With auto-enrollment, companies can sign up their new employees into their retirement savings programs, beginning with deferring a small percentage of their salaries, so that at the end of their careers their workers will have some sort of a nest egg waiting. Congress members have included this key provision in the Secure Act 2.0, the latest legislative proposal aimed at fixing retirement security for all Americans....
The Secure Act 2.0 is the latest proposed retirement security legislation, aimed at providing Americans with the ability to have a comfortable, financially stable future. It is built upon the Secure Act, passed in December 2019, which embraced annuities in 401(k) plans, encouraged small businesses to offer retirement plans to their employees with tax benefits, increased the ages for required minimum distributions and promoted transparency of account balances by translating those figures into projected monthly incomes.
If passed, the bill would not only require auto-enrollment in employer-sponsored retirement accounts but increase the age for required minimum contributions, which is when an individual is forced to take withdrawals from their 401(k) plans and individual retirement accounts."
Real Money Podcast
Mar 18, 2021
3.18.21 - Financial World Greenwashing the Public
Gold last traded at $1,736 an ounce. Silver at $26.01 an ounce.
NEWS SUMMARY: Precious metal prices eased back Thursday as rising interest rates boosted the dollar. U.S. stocks fell led by technology shares as a spike in bond yields fueled fears of lofty equity valuations.
2 Reasons Gold Is Set for Another Run Higher -Carr/Money & Markets
"Gold creates emotional reactions for many investors. Some believe gold is important to their financial security....and can help diversify a portfolio. Another reason to consider gold right now is an inflation hedge.
DoubleLine CEO Jeffrey Gundlach recently told investors that inflation will be above 3% within months. Gundlach is worth listening to since investors have entrusted over $141 billion to him. He said:
'The Fed chooses to be unconcerned about a period of time with inflation running above 3%,” “In my opinion, not only are they unconcerned, they welcome inflation being higher than interest rates. They like negative interest rates because they know that negative interest rates help to forestall the incredible deficit and unfunded liability problems the United States has. One could actually plausibly predict that headline CPI could go over 4% at some point in about four months from now.'
Gundlach is right that inflation is set to rise based solely on the economy being weak last year. This news could spook investors into buying gold. My colleagues Adam O'Dell and Charles Sizemore are both bullish on the future of gold."
Financial world greenwashing the public with sustainable investing practices -Fancy/USA Today
"The financial services industry is duping the American public with its pro-environment, sustainable investing practices. This multitrillion dollar arena of socially conscious investing is being presented as something it's not. In essence, Wall Street is greenwashing the economic system and, in the process, creating a deadly distraction. I should know; I was at the heart of it.
As the former chief investment officer of Sustainable Investing at BlackRock, the largest asset manager in the world with $8.7 trillion in assets, I led the charge to incorporate environmental, social and governance (ESG) into our global investments. In fact, our messaging helped mainstream the concept that pursuing social good was also good for the bottom line. Sadly, that's all it is, a hopeful idea. In truth, sustainable investing boils down to little more than marketing hype, PR spin and disingenuous promises from the investment community.
In many instances across the industry, existing mutual funds are cynically rebranded as “green” — with no discernible change to the fund itself or its underlying strategies - simply for the sake of appearances and marketing purposes. In other cases, ESG products contain irresponsible companies such as petroleum majors and other large polluters like 'fast fashion' manufacturing to boost the fund's performance. There are even portfolio managers who actively mine ESG data to bet against environmentally responsible companies in the name of profit, a short-selling strategy. Risk managers are focused on protecting their investment portfolios from potential damages done by a worsening climate rather than helping prevent that damage from occurring in the first place.
As disheartening as this reality is, claiming to be environmentally responsible is profitable. Last year alone, ESG mutual funds and exchange-traded funds nearly doubled....
In early March, my sentiments were echoed by the U.S. Securities and Exchange Commission (SEC), which announced it was creating a Climate and ESG Task Force to 'proactively identify ESG-related misconduct' such as inaccurate or incomplete disclosures by funds and companies - an unprecedented move that suggests there might be abuses that have gone unaddressed....
I believe we are doing irreversible harm by stalling and greenwashing. And all in the name of profits. We’re running out of time and need to accept the truth: To fix our system and curb a growing disaster, we need government to fix the rules."
The Powell Helicopter Money Timeline -Cosgrove/Issues & Insights
"Fed Chairman Jerome Powell thinks that he won't be able to mention changing the Fed's trajectory until at least February 2022. That's when his term is up, and he knows that if he hints the Fed may modify the central bank’s ultra-easy monetary policy he may not be reappointed.
Powell and others with their sights set on the Fed Chair position know that they could be cancelled by hinting at something other than full speed ahead with their helicopter money program. The Fed's balance sheet has increased by $3.4 trillion in the past year and is climbing by approximately $120 billion per month due to combined purchases of Treasury and MBS securities.
Market participants know this, which is why: 1) inflation expectations keep moving higher, 2) the yield curve continues to steepen, and 3) the commodity and cyclical reflation trade continues....
Investors know that Powell appears frozen in place for the next year and won't say or do anything to alter the course of ultra-easy monetary policy, suggesting that inflation expectations and commodity prices are heading higher....
More Federal outlays are planned, including an infrastructure program and a new Green deal. Team Biden has already created a large Federal deficit and will call for a second phase of huge tax increases to facilitate their income redistribution scheme. An ultra-easy money policy will be needed to help offset the adverse effects of tax increases....
The implication: equity and bond prices need to adjust downward to reflect higher inflation ahead."
We're Adrift In A Sea Of Inflation -Schiff/Zero Hedge
"Federal Reserve Chairman Jerome Powell insists inflation is anchored at 2%. But his assurances notwithstanding, a lot of the data signals inflation...Inflation isn't anchored at all. It's anchors aweigh. We are adrift in a sea of inflation....
The amount of bonds the Fed is buying right now pales in comparison to what the Treasury is trying to sell and what the rest of the world wants to unload. So, I think this is just wishful thinking that interest rates are going to start rising.
In February, retail sales fell 3%...which shows how much the spending slows down when you don't have government money to spend. Now, of course, there's a new round of checks that are going to be showing up in the mailbox or in people's accounts. So, that's probably going to spike the numbers....
The American economy, despite all the headlines, is very weak. That's why it can't produce. Anybody can spend if the government is handing out money. But it takes a real economy to produce stuff. So, America is more reliant than ever before on the stronger economies outside the United States because those are the economies that are producing the goods that Americans are incapable of producing. So, we’re buying those goods and paying for them with the money the Fed prints....
What they should be worried about is that the Fed will do nothing about it. And that's what’s worse. Because that means the higher inflation that they're concerned about is actually going to be much higher than they think for the precise reason that what they’re afraid of - the Fed doing something about it - won't happen because the Fed will do nothing about it, and so the real damage caused by inflation will be much worse."
Real Money Podcast
Mar 17, 2021
3.17.21 - Taking Stock of the $1.9T Stimulus Package
Gold last traded at $1,742 an ounce. Silver at $26.25 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on bargain-hunting and a flat dollar. U.S. stocks fell as investors awaited the outcome of the Fed's policy meeting and bond yields hit a 13-month high of 1.67%.
Taking Stock of the $1.9 Trillion COVID-19 Stimulus Package -Bonner/Rogue Economics
"In the world of money, everything is possible...Everything is subject to interpretation and manipulation, lies and humbuggery.
It's La Bubble Epoch. The best of times… and the worst of times. Grand and squalid. An information age, where nobody knows anything, and even the surest lessons of history are forgotten.
Over the weekend, the sober financial press began taking stock of Joe Biden's remarkable $1.9 trillion boondoggle. The Wall Street Journal, for example, notes that the giveaways are likely to become permanent. It is already fretting about the taxes that will be needed to pay for them....
The whole nation is edging away from Ronald Reagan's small government and back towards the big, fat budgets of Franklin Roosevelt and Lyndon Johnson.
And why not? With so much free money available, says Maya MacGuineas, of the Committee for a Responsible Federal Budget, lawmakers are 'almost numb' to fiscal restraints....
No, there's no theoretical reason to think that real output can be replaced with fake money. No, there's no example in history where money-printing has proven successful at creating sustained, real economic growth and prosperity.
No, there's no way to stop the money-printing. Households, businesses, and the government now rely on it....No, there's no plausible reason to think that this won't end in disaster, just like every other episode of runaway money-printing in history.
But heck… this is La Bubble Epoch… everything is possible… even things that are impossible."
Good Reasons to Go for Gold in 2021! -Bradshaw/Real Money Perspectives
"The key to successful investing is to maintain a long-term perspective. Gold prices flexed their muscles in 2020, rising above $2,000/oz. and silver prices crested $30/oz., but that's just a foretaste of what we could see in 2021.
And just in case you may be thinking you're a little late to join the precious metals bull market, according to Kitco.com; 'In real terms, gold has to rise over $700 to beat the all-time, inflation-adjusted high of $2,722.18 in 1980...To reach a real all-time-high, silver has to top $160.59.' No wonder many experts are calling for the next leg of the precious metals bull market to extend another 5-10 years.
In addition to the peace of mind that owning tangible assets offers during these times of 'extraordinary uncertainty,' below is a list of good, solid reasons why physical gold and silver should become an important part of your portfolio and retirement planning.
Ten Benefits of Physical Gold and Silver: 1. Real Money Worldwide, 2. Offer Long-Term Appreciation, 3. Have No Counter-party Risk, 4. Private and Confidential, 5. Liquid and Portable, 6. Easy to Store (home or vault), 7. Protection from Bad Political Decisions, 8. Hedges on Your Other Investments, 9. Portfolio Protection in a Crisis, 10. Protection from a Falling Dollar....
The only question now is what mix of precious metals will best accomplish your personal and retirement goals? For the answer to that question and any other questions you may have, I suggest calling your Swiss America representative at 800-289-2646 to discuss your individual situation."
The New New Deal Has Already Arrived. Thank the Covid Panic. -Mises Institute
"The new covid relief bill signals that whatever restraint on public spending existed before 2020 is now all but gone. And the bill represents the beginning of a new era: an era that can be likened to the New Deal. This has long been part of the plan according to social democrats and progressives.
After all, there's been a lot of talk from the Left for years about the need for a 'new new deal.' Whether it centers on environmentalism or on healthcare, everyone in these circles agrees on one thing: we need a new surge in the size and scope of the government sector.
And now it's happened. We're in a new era when an ongoing crisis justifies any number of drastic new measures enacted by governments. To question this, the media and the pundits insist, constitutes 'denying science' or 'wanting grandma to die.' The only question now is how long this new era of unbridled government expansion will last.
Moreover, just as the New Deal turned an ordinary downturn into a decade-long depression - and did nothing to 'end' the Depression - this new New Deal will only ensure that any real recovery is years away....
The most visible aspect of this all are the immense increases in government spending that have occurred over the past year. While it’s true the Biden administration is signing off on an immense $1.9 trillion 'relief' package, the fact is the Trump administration already approved $4 trillion in new spending for covid-19 stimulus and relief bills....
A second major change that has taken place has been the surge in executive and regulatory power across the nation. This also reflects what happened during the original New Deal...The transformation of the US into an executive-dominated regime is one of the primary characteristics of the New Deal....
Like the original New Deal, much of our new New Deal is built around cushy partnerships between the central government and immense corporate interests. Wall Street, for example, has already become accustomed to being bailed out repeatedly by outright cash transfers to big banks and other corporate players - as happened in 2008....
Don't expect this to end with covid. The first New Deal paved the way for the economic regimentation and rationing of the Second World War....When FDR told Americans to hand over all their gold via executive order, for instance, the overwhelming majority did so without complaint.
The naïve Americans of that age generally believed what their politicians told them. Much of America today appears less primed for compliance. Public trust in government institutions, the media, and public health officials has gone into steep decline."
Meeting the Multigenerational Moment -Stanford Review
"The United States began the 20th century as one of the most age-integrated societies in the world and ended it as one of the most age-segregated. This restructuring has left the country ill-prepared for a world with more Americans living longer lives and more generations living at the same time. It has also yielded a range of social problems, including wasted human resources, rampant ageism, and an epidemic of loneliness. Younger and older people are the most isolated groups in society—a reality made all the more evident by the COVID-19 pandemic.
As the United States crosses a demographic Rubicon - with more individuals over 60 than under 18 for the first time in history - it's time to turn the situation around in ways that both alleviate the problems created by age segregation, and help realize the benefits of greater cross-generational engagement and interdependence. The social sector must be as creative about bringing people of different ages together as previous innovators were about splitting them apart.
Fortunately, a vibrant, if fledgling, movement to bridge generational divides is already underway. This essay series, presented in partnership with Encore.org and The Eisner Foundation, explores some of the most promising innovations, shining a light on the breakthroughs, lessons, and barriers to both success and scale. Written by a mix of social entrepreneurs, academic researchers, and philanthropic leaders, the series aims to demonstrate how fresh thinking and new social arrangements hold the potential to make the most of an increasingly multigenerational society."
Real Money Podcast
Mar 15, 2021
3.15.21 - The Lockdowns Weren't Worth It -WSJ
Gold last traded at $1,730 an ounce. Silver at $26.23 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday on value buying despite a firmer dollar. U.S. stocks traded mixed amid optimism that Covid-19 vaccines will provide a swift economic comeback from the pandemic.
What's The Real Price Of Gold? -Rickards/Zero Hedge
"What's the price of gold? That seems like a ridiculously easy question to answer. I'm looking at a trading screen right now, and it displays a price of $1,733.80 per ounce....If only things were that simple. They're not. In fact, establishing prices for gold and silver is far more difficult than it sounds.
First off, the price I quoted above are not for gold in the traditional, physical sense. They are the one-ounce prices for COMEX gold and silver futures contracts. COMEX, a division of the Chicago Mercantile Exchange, is the world's largest futures and options trading market for metals....So we're talking about paper gold, not the actual metals....
In short, all of these trading venues - futures, LBMA forwards and the London Fix - have unique contract features that either have no physical bullion involved or have trading limited to big banks, which do business in large volumes and therefore are not accessible to everyday investors.
Even when the gold and silver are paper and not physical, the temptation to rig markets seems irresistible.
1) The cost of owning bullion coins or bars you can hold in your hand is materially higher than the official 'prices' you see listed on the exchanges. That tells you that actual bullion is considerably more scarce than paper bullion.
2) The second point is that the scarcity of physical bullion relative to paper gold and silver contracts will emerge with a vengeance in a buying panic resulting from any number of catalysts, including war, a new pandemic, a stock market crash, bank failures, or social disorder. The paper holders will try to convert to physical and find that it's too late. The vaults will be empty.
The lesson for investors is also clear. Get your physical gold or silver now while you still can. Don't sweat the commissions because that's the real price. Then rest easy. I predict gold will ultimately go to $15,000 an ounce. Commissions are nothing when you look at the big picture. The buying panic is just a matter of time."
Does the Fed's Monetary Policy Threaten Inflation? -National Review
"The central bank is headed back to the Seventies - a rerun that no one should want.
Does the Fed's monetary policy threaten inflation? By conventional measures, yes. But those conventional measures have failed in the past. I believe that the short-run danger is less than it appears, but the long-run danger is larger....
Macroeconomics since the 1970s has thought of monetary and fiscal policy as aiming to reduce economic volatility. The Fed is going back to the 1960s filling-valleys view....
The Fed now believes that there is a 'low sensitivity of inflation to resource utilization,' meaning that it can run the economy really hot for a long time without causing inflation, or that a little bit of extra inflation will do a lot of good....
If you add it up, it is hard not to see here the policy package of the late 1960s and early 1970s: deliberately running the economy hot in a vain attempt to raise employment permanently; a plan to let inflation run above target before doing anything about it; excuses for inflation when it comes; and a smorgasbord of numbers and goals to cherry-pick from....
Does the Fed really have the tools to 'carefully guide inflation down to target.'? I am doubtful. For ten years, interest rates were zero. For ten years, the Fed ran massive quantitative easing after quantitative easing. Inflation just sailed along slightly below 2 percent. This episode suggests the Fed has a lot less power than it thinks. But that is also a cheery view, as if the Fed’s interest-rate and bond-purchase tools are relatively powerless, then not much of what the Fed is doing will cause inflation either. In the current economy, fiscal policy and fiscal anchoring seem the greater danger to inflation than even the monetary mistakes of the 1970s."
Federal 'COVID' Spending Just Hit $41,870 Per Taxpayer -FEE
"For the same $6 trillion in expenditure, the government could have given every federal taxpayer a $41,870 check.
President Biden just signed his sweeping $1.9 trillion spending package into law. Once this bill hits the books, total taxpayer expenditure on (ostensibly) COVID relief will hit $6 trillion—which, roughly estimated, comes out to $41,870 in spending per federal taxpayer.
Did you see anywhere near that much in benefit?....The COVID spending bills have all lost huge sums of money to unrelated carve-outs, politician pet projects, corporate bailouts, fraud, waste, and worse.
In the latest $1.9 trillion package, more than 90 percent of the spending is not directly related to containing COVID-19. Only 1 percent of the money, about $15 to $20 billion, is spent on vaccines. Meanwhile, hundreds of billions go to bailing out poorly managed state governments’ budget holes that predate the pandemic and $86 billion rescues failing pension plans. Meanwhile, billions more go to Obamacare expansion and subsidizing public schools long after the pandemic.
And that's just scratching the surface....There's no such thing as a free lunch, and, much to the chagrin of spend-happy politicians’, Santa Claus is not real. Government spending doesn’t create wealth; it only transfers wealth, generally destroying a lot of it in the process.
So, unless Americans are actually seeing equal or greater benefit from spending compared to its cost, it’s a raw deal for taxpayers. And for the federal government's 'COVID' spending binge, it's not even close. Don’t believe me? Well, did you see $41,870 in benefit from these programs? For almost everyone, the honest answer is no."
The Lockdowns Weren't Worth It -Lemoine/Wall Street Journal
"There's a reason no government has done a cost-benefit analysis: The policy would surely fail.
More than a year after the pandemic began, vaccination is under way in both Europe and the U.S. Yet stringent restrictions are still in place on both sides of the Atlantic. Germany, Ireland and the U.K. are still in lockdown, while France is two months into a 6 p.m. curfew that the French government says will last for at least four more weeks. In many U.S. states, in-person schooling is still rare.
This time last year we had no idea how difficult it would be to control the virus. Given how fast it had been spreading, people made the reasonable assumption that most of the population would be infected in a few weeks unless we somehow reduced transmission. Projections by the Imperial College Covid-19 Response Team in London projected that more than two million Americans could die in a few months. A lockdown would cut transmission, and while it couldn't prevent all infections, it would keep hospitals from being overwhelmed. It would 'flatten the curve.'
We have since learned that the virus never spreads exponentially for very long, even without stringent restrictions. The epidemic always recedes well before herd immunity has been reached. As I argue in a report for the Center for the Study of Partisanship and Ideology, people get scared and change their behavior as hospitalizations and deaths increase. This, in turn, reduces transmission.
I've looked at more than 100 regions and countries. None have seen exponential growth of the pandemic continue until herd immunity was reached, regardless of whether a government lockdown or other stringent measure was imposed....
Sweden was the first to learn this lesson, but many other countries have confirmed it. Initially held up as a disaster by many in the pro-lockdown crowd, Sweden has ended up with a per capita death rate indistinguishable from that of the European Union. In the U.S., Georgia's hands-off policies were once called an 'experiment in human sacrifice' by the Atlantic. But like Sweden, Georgia today has a per capita death rate that is effectively the same as the rest of the country....
The coronavirus lockdowns constitute the most extensive attacks on individual freedom in the West since World War II. Yet not a single government has published a cost-benefit analysis to justify lockdown policies - something policy makers are often required to do while making far less consequential decisions."
Real Money Podcast
Mar 12, 2021
3.12.21 - Is True Inflation Being Hidden?
Gold last traded at $1,722 an ounce. Silver at $25.85 an ounce.
NEWS SUMMARY: Precious metal prices dipped Thursday as rising inflation boosted interest rates and the dollar. U.S. stocks fell as bond yields jumped and rising rates sapped the momentum of a tech stock rebound.
Why Investors Will Keep Up a 'Dash for Trash' -Institutional Investor
"Investors will keep reaching for riskier assets to get returns in a U.S. economy poised for growth this year, according to Natixis Investment Managers.
The 'dash for trash' will continue, Jack Janasiewicz, portfolio manager and strategist at Natixis Investment Managers, predicted Tuesday during the firm’s web event discussing markets amid the easing Covid-19 crisis. Financial conditions are 'highly accommodative,' he said, adding that 'it's tough to see anything but a continued stretch for risk assets.'
At the same time, some investors worry that massive fiscal stimulus and easy monetary policy could stoke high inflation, according to Janasiewicz. The Natixis portfolio manager said the concern often comes up in client conversations, particularly with the recent jump in Treasury yields, but that he isn’t expecting a meaningful rise anytime soon....
The jump in yields reflects a positive outlook for U.S. growth as the world moves closer to ending the pandemic, according to Dwek. She pointed to the accelerating rollout of Covid-19 vaccines, the $1.9 trillion coronavirus relief package, and expectations for higher company earnings as reasons for investor optimism....
Meanwhile, financial conditions remain 'very, very loose,' which means companies have access to capital to avoid default, according to Janasiewicz. 'When you look at this all rolled up, you can still get your hands on money if you need it and are willing to pay up for it.'
Janasiewicz said he expects the Federal Reserve’s monetary policy to remain easy, partly because of the slack that remains in the labor market. This, together with the fiscal support and a reopening of the economy, should bode well for investors, according to Dwek."
Inflation Is Being "Hidden" Because Belief In Our Whole Fantasy System Is Collapsing -Rabobank/Zero Hedge
"Today is going to be dominated by the market pricing in US fiscal stimulus for the nth time, unless we buy the rumor and sell the fact: and it's rumors and facts I want to address. US CPI yesterday saw headline inflation in line with consensus at 0.4% m/m and rising from 1.3% to 1.7% y/y....
Is inflation being 'hidden'? If so, let's not forget US CPI has long had 'hedonic adjustments' that presume goods such as clothing and books get 'cheaper' as their price goes up because they are 'better'; and since 1999 it has used a geometric not arithmetic mean to assume when beef goes up, consumers buy chicken, so inflation stays lower overall. Would they want to actively hide inflation though?....
Being cynical, there are only four logical options for the authorities if things go badly wrong in our fragile, asset-based, financialized economies (for example, if inflation rips higher): 1) Do nothing, or try to normalizse rates, and watch a crash happen; 2) Target bond yields - effectively making bond prices up; 3) Target equities - effectively making stock prices up; or 4) Target data - so market outcomes mean nothing blows up.
The point is, if you want people to go along with a particular version of reality it needs to be internally consistent, otherwise the whole thing rapidly collapses under its own contradictions....
The point here is that our authorities have the power to make things up: they can target bond yields if they want; they can target equities; they can tweak inflation data - and what are you going to do about it? However, they also have to maintain the appearance of consistent internal rules to suspend our collective disbelief - and they can't do both for long...We can already see that belief in our whole fantasy system is collapsing for the young, who don’t want to be told things must be the way they are 'because markets'."
Mortgage rates keep increasing - and the $1.9 trillion pandemic relief bill could push them even higher -Marketwatch
"Mortgage rates continued their uphill climb this week, and some analysts expect that interest rates could return to pre-pandemic levels in the coming weeks.
The 30-year fixed-rate mortgage averaged 3.05% for the week ending March 11, up three basis points from a week ago, Freddie Mac reported Thursday....
'Mortgage rates trended higher on the week as the market continues to gauge the economy's path forward,' said Zillow economist Matthew Speakman. 'By now, it's well known that mortgage rates are much higher than they were to begin the year, as a combination of increased inflation expectations and growing signals that the economy is recovering have propelled rates upward.'....
'If the $1.9-trillion economic stimulus package that's set to provide cash relief to Americans and get people back to work is successful, interest rates are likely to inch back up to pre-pandemic levels of about 3.5%,' Redfin chief economist Daryl Fairweather said in the report....
Some analysts expect the $1.9 trillion package to boost inflation, which in turn would lead to higher mortgage rates."
Silence Emerges as a Way to Boost Health -Wall Street Journal
"Writing in the mid-19th century, Charles Dickens described the soundscape of London as a 'distant ringing hum, as if the city were a vast glass, vibrating.'... But silence is mounting a comeback, as scientists, meditation advocates and even car makers begin to see it as a way to promote physical and mental health.
Urbanization and an ever encroaching digital life have spurred a need for sound-free respites, says Beth McGroarty, research director at the Global Wellness Institute, a Miami-based nonprofit. It has grown more acute since the coronavirus pandemic left millions of people juggling their private and professional lives in confined, noisy spaces, she says. 'People are desperate for silence,' she says.
Long-term exposure to aircraft and road traffic noise increases the risk of developing hypertension and cardiovascular disease, according to a 2008 study of 4,861 persons who had lived for at least five years near any of six major European airports, published in the Environmental Health Perspectives journal....
Relaxx, an app launched last year, offers guided meditation sessions centered on the concept of intermittent silence, 10-minute silent breaks that users incorporate into their routines. 'Eighty-six billion neurons in your brain will thank you for giving them some rest,' says Krishna Bhatta, a Maine urologist who created the app. Intermittent silence has the added benefit of making meditation less intimidating to non-practitioners, he says."
Real Money Podcast
Mar 11, 2021
3.11.21 - Dealing With Modern Money Madness
Gold last traded at $1,725 an ounce. Silver at $26.11 an ounce.
NEWS SUMMARY: Precious metal prices steadied Thursday amid upbeat jobs data and a weaker dollar. U.S. stocks rose led by the tech sector as investors chose to ignore inflation signals and rising interest rates.
Gold price is done falling -Gundlach/Kitco
"Gold has been disappointing investors this year, but the precious metal's luck is about to change, at least according to DoubleLine CEO Jeffrey Gundlach.
'Gold went down to $1,681 on Monday on the close. That might be the low in gold for a while,' Gundlach said in a webinar....'Long-term gold is pretty interesting. Our model shows that gold is at fair value at $1,761,' he said. 'We don't think the decline in gold is likely to continue.'....
Gundlach pointed out that he is also bullish on commodities and negative on the dollar in the long term.
Inflation was another key topic covered by the webinar, with Gundlach saying that the headline inflation will breach 3% this summer and remain above that level for a few months.
'The Fed chooses to be unconcerned about a period of time with inflation running above 3%,' Gundlach said. 'In my opinion, not only are they unconcerned, they welcome inflation being higher than interest rates. They like negative interest rates because they know that negative interest rates help to forestall the incredible deficit and unfunded liability problems the United States has'
There is even a chance that inflation could rise to 4%, which would 'really spook' the bond market. 'One could actually plausibly predict that headline CPI could go over 4% at some point in about four months from now,' he added."
Who Needs a Digital Dollar? -Eichengreen/Project Syndicate
"The idea of a digital dollar has been in the air for some time now. Recently, it descended from the ether to the lips of US Treasury Secretary Janet Yellen and Federal Reserve Chair Jay Powell. At an event in February, Yellen flagged the idea as 'absolutely worth looking at,' adding that the Federal Reserve Bank of Boston, in conjunction with academics at MIT, was already doing so. In Congressional testimony the following day, Powell called a digital dollar 'a high priority project for us.'
Some see this as another front in the technological cold war between the United States and China...The dollar's position as the dominant international currency will be eroded by the ease of using China's digital unit in cross-border transactions, and the US will squander a singular source of monetary and financial leverage.
In fact, such concerns are either overblown or flat-out wrong. The PBOC's main motivation for issuing a digital renminbi is to create a government-controlled alternative to two very large and loosely regulated digital payment platforms, Alipay and WeChat Pay....
The American government has no analogous worries. In the US, scores of different platforms, such as PayPal, Stripe, and Square carry out digital payments, which are ultimately settled by banks, and hence through Fedwire, the Federal Reserve's in-house system for clearing interbank transactions....
So, the decision to create a digital dollar would have to be justified on other grounds. The soundest justification is financial inclusion. Americans without credit cards and bank accounts, who rely entirely on cash, are denied not just financial services but other services as well....
Digital dollars could also address the exorbitant cost of cross-border money transfers. But foreign governments might be reluctant to permit their nationals to install the Fed’s digital wallet....
Ultimately, such advantages should be weighed against the costs and risks of digitizing the dollar. If people shift their savings from banks to digital wallets, banks' ability to lend will be hamstrung. Some banks will close, and small businesses that rely on banks for credit will have to look elsewhere.
Moreover, a Fed-run network of retail payments would be a rich target for hackers and digital terrorists. Security and financial stability are of the essence, and it is not obvious that they can be guaranteed. All this is to say that while the case for a digital dollar may be worthy of examination by Yellen and Powell, it is hardly a slam-dunk."
We're Dealing With Modern Money Madness -Bonner/Rogue Economics
"Our subject today is merely the wackiness… weirdness… and the wild-eyed wonders of a late-stage Bubble Epoch....
Checking, we find that the 10-year Treasury yield fell from 1.59% on the 8th of March to 1.55% on the 9th. That this 0.04% one-day drop would trigger a 3% rise in the Nasdaq is nutty enough. But when the money goes bad, everything gets a little nutty....
Last week, Injective Protocol - a blockchain company, according to CBS News - took a big step forward in the nuttiness of the late Bubble Epoch genre.
It bought a Banksy 2006 work entitled 'Morons (White)' for $95,000. The (master) piece shows a crowd at an art auction gawking at an ornate frame, in which it is written, 'I can't believe you morons actually buy this sh*t.'...Now, in its post-physical, digital form, 'Morons (White)' is supposedly worth $380,000.
As silly as it is, the 'silly season' is probably going to get sillier and sillier… as the feds add another $1.9 trillion to last year's $3 trillion 'stimulus'… to be followed by another trillion-dollar infrastructure boondoggle… and perhaps, another few trillion on a Green New Deal.
Prices – for Tesla… techs… cryptos… SPACs – might go much higher.
And all of the silliness - in the art world, as well as the financial world - must be financed by the Federal Reserve's 'printing' of its own fungible tokens, of equally mysterious worth....And then… some joker strikes a match, and it all goes up in smoke."
The Progressive Democratic Steamroller -Editors/Wall Street Journal
"Democrats on Wednesday passed their $1.9 trillion spending and welfare bill that would have been unimaginable even in the Obama years, and the big news is how easily they did it. The party is united behind the most left-wing agenda in decades, while Republicans are divided and in intellectual disarray. This is only the beginning of the progressive steamroller, and it's worth understanding why.
One lesson from the Covid non-fight is that there are no Democratic moderates in Congress. The party base has moved so sharply left that even swing-state Members are more liberal than many liberals in the Clinton years...A second lesson is that President Biden is no moderating political force. Democrats in the House and Senate are setting the agenda, and Mr. Biden is along for the ride....
Despite their sizable minorities, Republicans are a divided mess. They stayed united on the Covid vote but they had no consistent strategy or message. They're focused on the culture war over Dr. Seuss, while Democrats are moving legislation with huge economic consequences....
Politics is never static, and perhaps this momentum will ebb as Democrats lose the false cover of 'Covid relief' for their agenda. But it's no exaggeration to say the country is facing the most confident left-wing majority since 1965. This isn't what Joe Biden promised, but it is what we're getting."
Real Money Podcast
Mar 10, 2021
3.10.21 - What $1.9T In Relief Signals About Future
Gold last traded at $1,719 an ounce. Silver at $26.05 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying, rising inflation and a flat dollar. U.S. stocks rose after February consumer price index data was in line with expectations, easing investor worries about runaway inflation and interest rates.
Another gold price spike 'is coming'- Barrick Gold/Kitco
"There is an 'over-exuberance' in the financial markets right now with investors piling into assets that don't have any real value, said Barrick Gold CEO Mark Bristow, adding that gold price will see another spike higher....
'It is similar to post-2008, where the market wished everything would go back to normal but didn't know the full damage yet. The liquidity that was provided between 2009-11 was caught in the banks. This time around, it arrived at the market,' Bristow said.
One particular asset Bristow pointed to was cryptocurrencies and their quick ascent this year. 'Everyone is so desperate. They are not sure how things are going to work. They are buying things that have no real inherent value in the market. We saw this over-exuberance been 2009-10 and then a major crash,' Bristow said.
These developments benefited gold and will support the precious metal once again, he added. 'We saw a first spike in the gold price; there is another one coming,' Bristow said....
When asked about the silver squeeze trending on social media back in February, BlackRock's Hambro said that with lots of liquidity and great communication tools, people are searching for a better return.
'It is not surprising. When a crowd gets behind a theme, it tends to have an impact. We saw it play out in silver,' he said."
How the Pandemic Undermined Our Sense Of Risk -Schrager/City Journal
"We all have different tolerances for risk, and the pandemic has thrust these differences to center stage. Because the choices we make based on our personal risk profiles inevitably affect others, shaming and judgement have been prevalent.
I witnessed this firsthand at my weekly bridge game. My bridge partner, in her early forties and fully vaccinated, insisted that we play outside, in cold, damp weather. My opponent, in his sixties and also vaccinated, asked why we should suffer. She explained that the evidence was not yet established that indoor activities with vaccinated people were safe....The episode made me realize how the pandemic has undermined our sense of risk.
No doubt the government made many mistakes during the pandemic....In one area, however, we clearly have failed: how media and public-health authorities choose to communicate risk. At every turn, we have asked people to make sense of misleading and incomplete information and instructed them, variously, either to avoid all risks or to dismiss them altogether.
Despite the good news of not one, but several, miraculous vaccines coming online, we are communicating the nature of risk so poorly that it is threatening the credibility of our public-health institutions, which will leave us more vulnerable to future health crises.
It has become conventional wisdom that individuals are terrible at managing risk. Countless books and studies prove that human beings are burdened by behavioral biases that cause them to overestimate some risks, underestimate others, and make decisions not in their best interests or that are harmful to others. Awareness of these biases has given rise to policies that aim to 'nudge' us to make better decisions. (The British government even created a nudge unit.)
These nudging policies can sometimes induce better behavior. For example, automatically enrolling people in workplace pension accounts increases savings rates because it removes the hassle of signing up and picking investments yourself. But nudges also have limitations and can even backfire....
Perhaps most damaging, however, has been the idea arising in the last few years that people simply can't be trusted to make sensible risk assessments - that they must be guided or even manipulated into making smarter choices. The idea that we need to be 'tricked' into good behavior was pervasive throughout the pandemic....
The authorities should know better. The CDC's own website addresses the importance of communicating risks and uncertainties in a clear and honest way. We need to move beyond the idea that we are all flawed risk-takers who need constant nudging and manipulation by our betters."
What $1.9T In Relief Signals About Future -Linker/The Week
"With Joe Biden days away from signing a $1.9 trillion COVID-relief package, most Democrats are ecstatic. To paraphrase one liberal pundit, it feels like nothing less than the definitive end of the Reagan era and the start of a new one in which progressives act more boldly than they have since the 1960s.
For starters, the bill is enormous. Whereas the 2009 stimulus was 5.5 percent of 2008 GDP, the relief package that passed the Senate this past weekend is 9.1 percent of 2020 GDP - and it comes on the heels of the $900 billion relief bill that went into effect less than three months ago, which itself came just nine months after the massive $2.2 trillion CARES Act.
Then there's the fact that the bill was passed without much if any hand-wringing on the part of Democrats. Biden proposed $1.9 trillion, and that's what he got...Democrats just passed it on a party-line vote after a minimum of trivial adjustments to placate a handful of moderates in their own party....
Many Democrats have come to believe that the longstanding conventional wisdom about the limits of responsible deficit spending was wrong. That is having enormous - and unnerving - effects on how they think about policy.
Until recently, policymaking took place in a bounded world, with fiscal limits set by the assumption that the federal debt shouldn't be permitted to get too large as a percentage of the economy....It's not a feeling I share or believe we should be encouraging - for three distinct if interrelated reasons.
For one thing, we're blowing through limits based on current economic conditions, but those conditions could change rapidly at any time...Bloomberg economic columnist Noah Smith admitted that the U.S. is running a risk of inflation - and potentially even ruinous hyperinflation - from its spending habits....
I'm also concerned with scenarios in which circumstances change somewhat less suddenly, necessitating longer-term belt tightening. That's because spending creates constituencies that come to depend on it. What at first seems like a bonus - thousands of dollars arriving from Washington to supplement incomes...quite quickly becomes a new baseline and set of expectations....
My final concern is broader, having to do with what could happen in a society that grows accustomed, even briefly, to a politics without fiscal limits....Politics could turn ugly fast, as expectations rocket into the stratosphere and every failure to alleviate suffering or rectify injustice begins to look like an act of malice or outright indifference...Be worried about what it could portend for our economic and political future."
The Bitcoin Lottery -O'Neill/Project Syndicate
"The rising popularity of 'special purpose acquisitions companies' (SPACs) and cryptocurrencies seems to reflect not their own strengths but rather the excesses of the current moment, with its raging bull market in equities, ultra-low interest rates, and policy-driven rallies after a year of COVID-19 lockdowns...The fact that so many of these entities are being created should raise concerns about looming risks in the surrounding markets....
As for the cryptocurrency phenomenon, I have tried to remain open-minded, but the economist in me struggles to make sense of it. I certainly understand the conventional complaints about the major fiat currencies....
I can see why there is so much excitement behind Bitcoin, the modern version of gold, and its many competitors. Particularly in developing and 'emerging' economies, where one often cannot trust the central bank or invest in foreign currencies, the opportunity to stow one's savings in a digital currency is obviously an inviting one....
The standard economic textbook view is that for a currency to be credible, it must serve as a means of exchange, a store of value, and a unit of account. It is hard to see how a cryptocurrency could meet all three of these conditions all of the time.
True, some cryptocurrencies have demonstrated an ability to perform some of these functions some of the time. But the price of Bitcoin is so volatile that it is almost impossible to imagine it becoming a reliable store of value or means of exchange.
Moreover, underlying these three functions is the rather important role of monetary policy. Currency management is a key macroeconomic policymaking tool. Why should we surrender this function to some anonymous or amorphous force such as a decentralized ledger, especially one that caps the overall supply of currency, thus guaranteeing perpetual volatility?....
In the interest of transparency, I did consider buying some Bitcoin a few years ago, when its price had collapsed from $18,000 to below $8,000 in the space of around two months. Friends of mine predicted that it would climb above $50,000 within two years - and so it has...
Speculative bets do of course sometimes pay off, and I congratulate those who loaded up on Bitcoin early on. But I would offer them the same advice I would offer to a lottery winner: Don’t let your windfall go to your head."
Real Money Podcast
Mar 9, 2021
3.9.21 - Mother of All Stock-Market Bubbles, Says Buffet
Gold last traded at $1,717 an ounce. Silver at $26.00 an ounce.
NEWS SUMMARY: Precious metal prices rebounded sharply Tuesday on bargain-hunting and a weaker dollar. U.S. stocks rose as investors focused on buying beaten-up technology shares.
Investors haven't grasped inflation is dead ahead, Mark Zandi warns -CNBC
"Moody's Analytics Mark Zandi believes Wall Street is significantly underestimating the seriousness of an inflation comeback, and he warns it will affect every corner of the market - from big tech to cyclical trades.
'Inflationary pressures will develop very quickly,' the firm's chief economist told CNBC's 'Trading Nation' on Friday. 'I don’t think there's any shelter here.'....
Zandi contends the market is too sanguine about rising interest rates. He sees inflation 'dead ahead.'...'We've got the pandemic winding down, a boatload of fiscal support coming and we've got a lot of folks who have pent up demand and a lot of savings that they're going to unleash,' Zandi noted. 'Growth is going to be very, very strong – lots of jobs, falling unemployment [and] wage growth.'
As a consequence, he warns investors will have to get accustomed to wild market swings that last longer than two weeks. According to Zandi, not even stocks tied to the economic recovery will offer investors a safe haven.
'These are broad, macroeconomic forces that are going to affect all parts of the market equally,' said Zandi. His forecast calls for a sideways market for one to three years with bursts of volatility due to frothiness amid rising rates."
Hyperinflation Pushes Venezuela to Print 1,000,000-Bolivar Bills -Bloomberg
"Venezuela said it will introduce new large-denomination bolivar notes as hyperinflation renders most bills worthless, forcing citizens to turn to the U.S. dollar for everyday transactions.
The country's central bank posted a statement on its website Friday saying it would begin circulating the new 200,000, 500,000 and 1,000,000 bills to 'fulfill the current economy's requirements' without providing further details. The 1,000,000 note - the largest in the nation's history - is worth only $0.53 cents.
As Venezuela's economy shrank for a seventh straight year in 2020, the government turned a blind eye to a growing number of dollar transactions, kick-started by rolling power outages that prevented credit and debit card purchases and fostered the use of cash. About 66% of transactions across the country are estimated to be made in foreign currency, according to Ecoanalitica.
While the dollar has gained ground, Venezuelans continue to rely on bolivar bills for public transportation and to purchase subsidized fuel. The Caracas subway recently issued an electronic payment system after it routinely stopped charging passengers due to cash shortages.
President Nicolas Maduro has said he plans to move to a fully digital economy this year, following three years of hyperinflation that have prompted the nation's mint to issue higher-denomination notes that are quickly rendered all but useless. Inflation soared 3,000% in the last 12 months, according to Bloomberg News's Cafe con Leche Index."
Mother of All Stock-Market Bubbles, Says Warren Buffet -National Review
"By Warren Buffett's criteria, current stock prices are their most overvalued at least since World War II. In the chart below, the ratio of stock-market value, represented by the Wilshire 5000 index of all public stocks, to GDP is over 25 percent above the previous all-time high, the peak of the NASDAQ stock market bubble in 2000....
The seemingly relentless rise of the stock market coincides with central-bank balance sheets that have continued to balloon since the Great Financial Crisis. While the major central banks generally do not target stock-market levels directly, a goal of their policies has been to push financial markets towards riskier investments, which, of course, include stocks. Global financial markets are interlinked, so that the actions of international central banks can affect what goes on in the U.S. and vice versa....
Stocks' overvaluation is evident to experienced investors scouring markets for historically reasonable values. Meanwhile, the GameStop saga (and there are plenty of other examples to choose from) are uncomfortably reminiscent of some of the excesses of the dotcom bubble.
Just because the stock market is overvalued doesn’t mean it can’t get further overvalued....The biggest economic risk is financial instability, and, despite its great initial work stanching the pandemic panic, right now the biggest financial instability risk is. . . the Fed."
Forget What You Think Happiness Is -Wall Street Journal
"Think you know what it means to be happy? Think again.
Scientists are learning how to better measure and improve happiness, as the pandemic forces many to question what brings them joy. In the future, some experts believe, people will embrace a more complex definition of happiness that focuses less on uninterrupted bliss and involves everything from a person’s environment to exercises that train the brain in ways to be happy....
Happiness levels in the U.S. fell slightly between 2008 and 2019, according to the 2020 World Happiness Report, even though by many measures - wealth being the most notable - we are better off. 'The U.S. has gotten a lot richer but hasn't gotten happier on most gauges,' says Columbia University economist Jeffrey Sachs, who helped launch the report nine years ago....
Neuroscientists, economists, psychologists and biologists, among others, are exploring why and whether levels of happiness - which they prefer to call 'subjective well-being' - can be increased and sustained, and restored to people who have suffered trauma....
Happier people live longer and are more successful. A 2015 study found the risk of death was 14% higher among those who were not happy compared with those who were very happy. Happier people have greater earnings potential - earning 3% more - and are 12% more productive than less happy people, according to two studies....
Genuinely happy people are emodiverse, she says, meaning they can manage all different emotions. They are satisfied with the way their own life is going, which is a better way to define happiness.
Life events play a role in happiness. The pandemic darkened spirits, but also gave people a chance to rethink what is truly important and makes them happy. It remains to be seen whether a renewed sense of gratitude for simple things, like having a cup of coffee with friends, outlasts the pandemic."
Real Money Podcast
Mar 8, 2021
3.8.21 - Prepare for Inflation
Gold last traded at $1,680 an ounce. Silver at $25.15 an ounce.
NEWS SUMMARY: Precious metal prices trended lower Monday as rising bond yields boosted the dollar. U.S. stocks traded mixed as investors balanced rising interest rates with passage of a $1.9 trillion stimulus bill.
This is when gold price reverses: Goehring & Rozencwajg on $15K gold -Kitco
"Frustrated gold investors need to look at this specific metric when estimating a major price reversal in gold, according to Goehring & Rozencwajg managing partner Leigh Goehring....
It is not an easy task trying to pinpoint a trend reversal in gold, but it should happen at some point in the second half of this year, said Goehring. 'That is when the second leg of the bull market will start.'
The useful metric to look at when determining gold's price trends is the gold-oil ratio, Goehring highlighted. 'Over the last several years, gold has been trading expensive relative to oil. Gold will bottom when it becomes less expensive.'....
According to Goehring, inflation will be the catalyst to get gold back into its bullish mode, who described the current investment environment as 'a massive misallocation of capital flows.'
Inflation will be the trigger that undoes these new trends and shifts investors' attention back to gold, Goehring explained. 'Variety of economists out there are saying that inflation will not be a problem because we got too much debt. That belief is going to be unraveled by a black swan event that is perceived as being massively inflationary.'
The most likely shock to come is a global agricultural crisis, Goehring specified, noting that the grains market is in a huge boom right now....
Before the end of the current bull cycle, gold could reach $15,000 an ounce, and that is a conservative estimate, Goehring & Rozencwajg managing partner said.
'We still believe we will see a $15,000 gold price before this gold bull market is over. For patient investors with long-term horizons, we recommend aggressive accumulation of both gold and silver on any price weakness over the coming months,' he said."
Prepare for Inflation -Bonner/Rogue Economics
"One day, a share in Tesla costs $50. Flash forward to today, and it has risen to $653.
Or take bitcoin… Five years ago, you could buy it for $500. Now, it’s nearly $50,000....
Oil is now at $60 a barrel, up from near zero in April 2020. The U.S. gasoline index increased 7.4% in January. The United Nations says food prices are at a six-year high....
In the early stages, inflation seems benign… even agreeable. An investor, with no particular effort or insight on his part, suddenly becomes rich....And the economy, once so fulsome with progress and industry, turns to rank speculation...gambling....
It's a 'speculative frenzy,' says Berkshire Hathaway's Charlie Munger, who was born at the peak of Germany's hyperinflation. 'Wretched excess,' is how he describes trading in the likes of Tesla and bitcoin....
The trouble with inflation is that the useful learning comes not at the beginning, but at the end.
For, by then, the nation's fields and factories have fallen fallow… the economy is in desuetude… and fortunes have declined, too, if not disappeared altogether.
By then, the common man would kick his own derriere if he could reach it. How could he have failed to appreciate the delightful poetry of inflation… and how it made something out of nothing and then nothing out of something....
Inflation is a story whose moral only becomes clear at the end...By then, it is too late to make amends. Too late to say 'I'm sorry.' Too late to change course. Too late to avoid the awful catastrophe.
Yes, that is the problem with inflation. Like life itself, it waits too long to speak. It’s only when you approach the end that you hear it whisper:
'You damned fool… How could you believe that printing-press money would make you rich?'....Inflation is probably coming, no matter what the Federal Reserve does."
Powell Confirms Fed to Maintain Easy-Money Policies -Wall Street Journal
"Federal Reserve Chairman Jerome Powell reiterated his intention to keep easy-money policies in place but provided no sign the central bank will seek to stem a recent rise in Treasury yields, prompting them to rise further.
Stocks also sold off on Mr. Powell's remarks Thursday during an interview at The Wall Street Journal Jobs Summit. The appearance came a week after a jump in Treasury yields driven by forecasts of stronger U.S. economic growth and inflation this year, among other factors.
'Today we're still a long way from our goals of maximum employment and inflation averaging 2% over time,' Mr. Powell said Thursday during the interview.
'The market was looking for some more reassurance and didn't get it,' said Krishna Guha, head of global policy and central bank strategy at Evercore ISI. Fed officials 'don't appear particularly concerned about the current level of yields, which in both real and nominal terms is significantly higher than it was two weeks ago.'....
More than a decade of weak inflation led Fed officials last year to swear off raising interest rates in anticipation of rapidly rising prices. Mr. Powell said last week that the Fed doesn't foresee lifting its benchmark fed-funds rate from near zero until three conditions have been met: a broad range of statistics indicate that the labor market is at maximum strength, inflation has hit its 2% target, and forecasters expect inflation to remain at that level or higher.
Mr. Powell said it’s 'highly unlikely' that the Fed’s goal of maximum employment will be reached this year."
Oil Soars Above $69 After Goldman Hikes Price Target To $80 -Zero Hedge
"Even as the rest of the market continues to submerge with the now traditional rug-pull at the open which sent Nasdaq tumbling after a modestly green open as Kathy Wood is apparently hell bent on liquidating all of her most liquid 'growth' names to triple and quadruple down in her biggest losers, oil is surging on the back of yesterday's latest OPEC+ surprise which has set the stage for a $100 barrel of oil as well as a Goldman oil price target upgrade.
Late on Thursday Goldman's Damien Courvalin wrote that 'OPEC+ surprised once again by deciding to keep its production quotas unchanged for April, against our and consensus expectations for a 1.5mb/d hike (with only another small increase for Russia and Kazakhstan). In particular, Saudi Arabia will extend its unilateral 1 mb/d cut for one more month,guiding for an only gradual ramp-up afterwards.'
He adds that his key takeaway from the press conference is that 'the discipline of shale producers is likely behind this slower increase in production' and this is consistent with Goldman's own view that shale, Iran and non-OPEC supplies are likely to remain highly inelastic to prices until 2H21, allowing OPEC+ to quickly rebalance the oil market....
Today's surprise follows Saudi's January unexpected cut, with both working in Saudi's favor - since January 5, oil prices are up 25% and excess inventories down 56% with Saudi’s production down only 9% and with the US oil rig count up only 20% and still 33% below the level needed to stabilize output (without DUCs)....
According to Goldman - which was already quite bullish on oil prices ahead of the OPEC+ summit....Given the bank's revised demand forecasts remain unchanged and above consensus, OPEC’s decision led Goldman to raise its Brent forecast by $5/bbl, to $75/bbl in 2Q and $80/bbl in 3Q21."
Real Money Podcast
Mar 5, 2021
3.5.21 - Inflation Expectations Hit Decade High
Gold last traded at $1,701 an ounce. Silver at $25.28 an ounce.
NEWS SUMMARY: Precious metal prices traded mixed Friday as upbeat jobs data boosted the dollar. U.S. stocks traded mostly lower led by a continuing tech stock selloff.
Gold Is Immune to Asset Volatility -Dyson/Rogue Economics
"The last year has been a story of the greatest financial stimulus in history. This, of course, has stimulated the investment markets and caused an 'everything' rally. 'The greatest financial experiment in history,' we've been calling it...
If gold had responded to this stimulus like all the other assets, I would have found this a little disconcerting. I don't want my money exposed to this artificial stimulus. I want it immunized from it. So really, I'm relieved that gold has not participated in the everything rally.
It's just doing what it's supposed to be doing… protecting the long-term purchasing power of our savings. And when the everything rally falters, we'll be grateful we own gold.
Gold has clearly been in a bull market since 2018. And as the Great Financial Experiment runs its course, it's only going to keep rising...By the time this is all over, I expect gold will be far above $10,000 an ounce.
I don't trade gold. And I haven't sold an ounce of our gold over the last year. I bought more physical gold last week. And I'm poised to buy more if its price falls any further. If you haven't bought gold yet… or if you own a big basket of bonds or stocks… now would be a great time to trade them in for gold and silver."
U.S. Inflation Expectations Hit Decade High as Yields Resurge -Bloomberg/Yahoo Finance
"Benchmark 10-year Treasury yields surged as much as 10.3 basis points to 1.495%, a move reminiscent of last Thursday's startling selloff in government debt. Meanwhile, a market proxy for the anticipated annual inflation rate for the next half-decade exceeded 2.5% for the first time since 2008 -- aided by climbing oil prices. At least part of the trigger for the fixed-income losses came from the U.K., which said it will sell more bonds than expected as its economy emerges from a deep recession.
Also in the background was Joe Biden’s announcement that enough doses of virus vaccine should be available to every American adult by the end of May, and a report Wednesday that the president would moderate certain stimulus demands to try to win support for his virus-relief bill. Rising yields have started to draw the attention of Federal Reserve officials, leaving all eyes on an appearance Thursday by Chair Jerome Powell.
Among other things, 'the stimulus package is likely to go through and the economy is reopening,' said Michael Franzese, managing partner at MCAP LLC in New York. 'The battle is on between rates going higher super-fast and a Federal Reserve that's trying to keep the market stable and may try to slow the momentum of the reflation and economic-rebound trade into something more manageable.'....
The rates market is not yet done fully pricing in robust U.S. economic growth, which would entail a 10-year yield trading around 1.90%, said Mark Heppenstall, chief investment officer of Penn Mutual Asset Management in Horsham, Pennsylvania. That’s the level last seen in January 2020, two months before pandemic fears started prompting forced shutdowns in the U.S.
Beyond rising nominal and breakeven rates, 'the dynamic rise in the 10-year real, inflation-adjusted yield we've seen is the market partly adjusting to a faster-than-anticipated pace of rate normalization by the Fed,' he said."
Fed Has Left Us With A Bond Market That's 'All But Destroyed' -Grant/Zero Hedge
"Jim Grant of Grant's Interest Rate Observer recently made an appearance on WealthTrack with Conseulo Mack to talk 'Financial Bubbles of Historic Proportions'. Grant covered numerous topics on the macroeconomic picture.
On Interest Rates - 'Basic rate of interest does the following: it helps us to connect the present with the future, it discounts future cash flows. They connect past present and future. And they help us calibrate credit risk - the chances of somebody not getting paid. They help corporate managers decide whether a certain investment is worthwhile,' Grant says. 'They're prices, and prices in general I think are better discovered in the marketplace.
Worldwide, we have a regime of price administration and suppression. Which, I think, is trouble.'
On The Fed's Power - 'The Fed is the first Vice President in charge of everything,' Grant says. 'It is astounding to me that we know so much about Jerome Powell. But the Fed gradually and by degree has gathered, with the encouragement of Congress, these powers that the founders did not anticipate. So we have an omnipresent, ubiquitous and all powerful institution.'....
On The Bond Market - The Fed has 'left us with a bond market that all but has been destroyed with respect to the proper functioning of a bond market'....
On The Stimulus And Inflation - 'We have a broad money supply growing 26% year over year and we have fiscal stimulus upon stimulus well in excess, in dollar terms, well in excess of the lapse in GDP owing to the lockdown. These monetary actions are truly gigantic. If in a year, if inflation isn't 2.5%, 3% or 4%, people are going to say 'What did you expect?'"
The Covid-19 Baby Bust Is Here -Wall Street Journal
"A year into the pandemic, early data and surveys point to a baby bust in many advanced economies from the U.S. to Europe to East Asia, often on top of existing downward trends in births.
A combination of health and economic crises is prompting many people to delay or abandon plans to have children. Demographers warn the dip is unlikely to be temporary, especially if the pandemic and its economic consequences drag on.
'All evidence points to a sharp decline in fertility rates and in the number of births across highly developed countries,' said Tomas Sobotka, a researcher at the Wittgenstein Center for Demography and Global Human Capital in Vienna. 'The longer this period of uncertainty lasts, the more it will have lifelong effects on the fertility rate.'....
In the U.S., a survey by the Guttmacher Institute, a research organization, found that one-third of women polled in late April and early May wanted to delay childbearing or have fewer children because of the pandemic.
The Brookings Institution estimated in December that, as a result of the pandemic, 300,000 fewer babies would be born in the U.S. in 2021 compared with last year. That estimate is based on survey evidence and the historical experience that a one-percentage-point increase in the unemployment rate reduces the birthrate by roughly 1%.
For many countries, detailed data on births in late 2020 are still months away. Where numbers are available, they aren’t encouraging."
Real Money Podcast
Mar 4, 2021
3.4.2 - How to Preserve Future Buying Power
Gold last traded at $1,696 an ounce. Silver at $25.34 an ounce.
NEWS SUMMARY: Precious metal prices rose Thursday on bargain-hunting despite a stronger dollar. U.S. stocks fell for a third straight session as investors continued to dump high-flying tech shares amid fears about rising interest rates.
Preserve Your Future Buying Power in the America We Now Have -Bellinger/Real Money Perspectives
"To date, tried and true monetary parlor tricks are impressive in their success at protecting the dollar; for a very long time the Fed’s money magicians have stalled any massive shift away from the dollar and toward non-dollar denominated assets such as precious metals.
And that is precisely why you may count on federal money magicians to double down on their work – especially now – to aggressively manage the dollar’s downward spending power while beating back a massive monetary debt crisis. The stakes for millions of financially strapped seniors are almost unthinkable. Without these massive spending fixes, social security and Medicare would be kaput.
And so, a state of frantic urgency pervades Treasury and Federal Reserve experts…driving their considerable best efforts to confuse and break gold’s upward trend. To these faceless, powerful insiders, gold is an existential threat to unrestrained public spending.
They know that if too many investors bid up the price of gold too much, the government’s longstanding money creation bubble might just abruptly 'pop.'
Unfortunately, few investment advisors with 'credentials' teach and recommend these time-tested defenses against dollar debasement your family needs and deserves.
So, expect this: Extreme gold suppression tactics to fend off America’s financial reckoning. Just please do your level best to not be distracted by dramatic price-depleting selloffs and counter gains for gold in the coming months.
The coming gold price gyrations are but noise…just do your best to pay attention to what happens behind the drama and mayhem. It’s not going to be easy but you’ll be fine if you focus on the fundamentals in this story and recent editions....
This is a moment for patience and study – all to hedge your financial resources more smartly against social chaos and what are now obvious dollar destruction tactics. Read on to see how sophisticated investors keep accurate track of their future purchasing power."
(Register for a FREE copy of Real Money Perspectives 2021 Gold Report)
Inflation Comes for the Profligate -Pollock/Law & Liberty
"Printing money to finance wars with resulting inflation is the most time-honored monetary policy. It can also be used for other crises thought of as analogies to wars, like to finance the massive expense of bridging the Covid 19-triggered bust of 2020.
Now, as the economic recovery from the Covid bust strengthens, soaring government debt is still being heavily monetized in the Federal Reserve’s balance sheet, which has now expanded to a previously unimagined $7.6 trillion, in a classic Treasury-Fed cooperation. The printing (literal and metaphorical) continues and the new administration wants to expand it even more. Isn't accelerating inflation on the way?....
'There is the risk,' former Secretary of the Treasury, economist Larry Summers writes, 'of inflation expectations rising sharply.' Well, inflation expectations are already rising among bond investors and analysts....
At 3 percent inflation, prices would multiply by 11 times in the course of a lifetime. We are always a little surprised at the result over time of relatively small changes in a compound growth rate like the average rate of inflation....Economics is so little a science that economists can always be found on both sides of any question. This is certainly true of the debate about escalating debt, monetization, and the risk of accelerating inflation....
Should the federal government's power be limited or expansive and dominant? What the proponents of Modern Monetary Theory really long for is a vastly expanded and more powerful government, with themselves in charge. If debt can be indefinitely expanded by bloating the central bank, then you don’t have to tax much in order to spend forever. Thus one of the most important limits on the power of Leviathan to dominate the society can be removed. We see that much more is involved than a monetary theory.
Are those desiring to wield the expanded power willing to cause much higher inflation to get it? This is the political meaning of the monetary question."
Don't want to retire? Here's how to maintain a fulfilling career into your 80s and beyond. -Washington Post
"Joan Virginia Allen of Ojai, Calif., practiced elder law before switching jobs at age 60 - and deciding to try to work another 60 years. 'I wanted to challenge what society says about getting old,' she said. Now, at 82, she's a fully booked life coach. She's also part of a trend. People age 75 and over, including our fresh-on-the-job president, are the fastest-growing group in the labor force, even though 'age discrimination is very real,' said Susan Weinstock, vice president of financial resilience at AARP.
I interviewed eight older workers about the wellness habits that have helped them achieve career longevity and found several commonalities that are backed by research. Over the decades, these workers have embraced healthy living in terms of diet, exercise and mindfulness. They have also relished challenges, maintained a sense of purpose and continued to learn from job experiences. All of these habits have positioned them to add value at work by sharing wisdom gained over their long careers with younger colleagues. It's a virtuous circle; their approach to work and living leads to their job success, and their job success reinforces their approach to work and life....
When he was 71, Eric Kandel won the Nobel Prize for discovering the role of neurons in storing memories. Had personal achievement been his priority, he might have retired, with no higher honors to chase. Instead, at 91, he still runs his lab at Columbia University's Zuckerman Institute, supervising a team of researchers, some of them six decades his junior....
The older workers I spoke with rely on exercise for body and brain health....They take few or no supplements, but some do consume one item that might have anti-aging properties: coffee. Donald Weaver, a neurologist and chemist at the Krembil Brain Institute in Toronto, found that roasted coffee beans release compounds that may break up proteins linked to Alzheimer's....
All of my interviewees cited their ability to relax as key to avoiding burnout...Music and other forms of de-stressing promote long-term cognition and boost memory and creativity. They also improve sleep, which is especially important for older people....
Historically, elders found utility in nurturing their grandkids. Today, with families more geographically dispersed, 'there's less opportunity in your backyard,' said Chip Conley, founder of the Modern Elder Academy, which helps mostly middle-aged workers - but a number of older people, too - reinvent their careers, often to influence younger generations. Many seniors still find meaning and community in retirement, but others find it by prolonging their careers."
Democrats' Stealth Plan to Enact Universal Basic Income -Wall Street Journal
"Universal basic income is about to arrive in America. Congressional Democrats' $1.9 trillion stimulus bill provides for no-strings attached checks, limited only to parents of children under 18. This UBI for parents is billed as pandemic relief, but its real purpose is to put a stake in the heart of work-based welfare reform.
Supporters blandly describe their plan as 'Child Tax Credit improvements for 2021.' It would replace today's annual child tax credit, which tops out at $2,000, with more-generous 'child allowances,' payable monthly. Those allowances are federal payments of $3,600 (or $300 a month) for each child under 6 and $3,000 ($250 a month) for older children. The current credit increases with income from work; the new one would provide the same large payments to all.
Under the guise of pandemic relief, the federal government would give a nonworking single parent with two preschool-age children and one in grade school $850 a month. This would come on top of other government benefits, including $680 a month in food stamps, amounting to $18,360 in combined annual income....
Under current law, federal cash assistance to poor families flows through state social-services agencies, which require recipients to work, look for work, or at least engage in some activity designed to help them become employed. UBI for parents is designed to circumvent these requirements. If enacted it will more than double the government-provided cash assistance to households headed by single mothers, creating a perverse incentive for the unmarried poor to have more children. That would lead to more poverty, not less....
Some conservatives and libertarians have argued for UBI, but only as a replacement for the rest of the welfare state. That is most definitely not what the Democrats are proposing - they want the UBI, and food stamps and Medicaid and all of the rest."
Real Money Podcast
Mar 3, 2021
3.3.21 - There Are Only Three Ways This All Ends
Gold last traded at $1,718 an ounce. Silver at $26.30 an ounce.
NEWS SUMMARY: Precious metal prices declined Wednesday on technical selling and a firmer dollar. U.S. stocks fell as tech dragged down the S&P 500 amid rising bond yields.
Jim Rogers warns of 'bubble stocks,' predicts a gold-and-silver boom -Business Insider
"The hype around 'hot' stocks, the retail-investing boom, and the surge in listings of special-purpose acquisition vehicles (SPACs) are all signs of an expanding stock-market bubble, veteran investor Jim Rogers said in a RealVision interview released on Monday.
Here are Rogers' best quotes from the interview, lightly edited and condensed for clarity:
'We've had bubbles before, we're going to have them again, and they always end badly. If you buy the bubble stocks, you're probably never going to make money.'....
'You see a lot of new investors piling in, talking about how easy it is to make money, how much fun it is to make money. You see SPACs coming in, which often come in at the end of big bull markets. Remember the Mississippi Company, the South Sea Company, that was 300 years ago, same thing. All this has happened before, and it is happening again now.'....
'Bonds have never been this expensive in the history of the world. So, bonds are definitely in a bubble. Unless you have a special-situation bond, I would not own bonds anywhere in the world.'....
'Both gold and silver are going to go through the roof. History shows that whenever people lose confidence in governments and money, all of us peasants buy gold and silver. Peasants like me have some gold in the closet. We like to have some silver under the bed.'....
'If bitcoin ever becomes a viable currency instead of a trading vehicle, they can outlaw it. Governments don't want to lose control, they like their monopoly.'"
There Are Only Three Ways That This All Ends -Rabobank/Zero Hedge
"Central banks are going to have to do something other than just expect markets to retreat at their verbal command like King Canute, whom popular British legend says believed the tides would obey him as he sat on his throne on the seashore....
Our good King Canute and the central banks differ: the latter *do* have the ability to control the curve if they really want to; they *can* peg yields wherever they want them to be....There are only three ways that this all ends up: the tide is either coming in or going out, so to speak. Either:
1) Central banks refuse to step in; longer yields rise sharply, and probably overshoot; stocks are dragged down; the US Dollar is pushed up; commodities are dragged down; markets start to panic; governments start to panic; corporations start to panic; and everyone ends up in rags...
2) Central banks step in; longer yields are crushed, as we saw Monday in Australia; stocks rally further; the US Dollar is pushed down (assuming the Fed is doing this); commodities are pushed up; markets are on fire; governments are free to spend – if they can bothered, which still looks unlikely...
3) Central banks and governments step in; and they focus on the labor market *directly*, which will have to involve building a whole series of dykes to keep liquidity in and other fishers out, in a proletarian version of The World islands in Dubai where everyone has rolled up trousers and wears a white hankie on their head...
So which of the above is really nautical, and which is nice? That's our problem in a Canute shell.”
A reckoning in markets as the economy recovers -White/Politico
"Giant bubbles are once again inflating all over the financial world - creating a potential problem for Washington in the coming months. From meme stocks to cryptocurrencies, tech stocks and the rage for 'Special Purpose Acquisition Companies,' or SPACs, risks are clearly rising.
Wall Street pros and Washington policymakers know that some or all of these bubbles could explode in spectacular ways. But nobody really knows what to do about it.
The Covid-racked economy still needs infusions of stimulus cash to keep millions of Americans afloat, and around $2 trillion in additional aid is likely to clear Congress in the coming weeks. The Federal Reserve also continues to press its foot firmly on the gas, shrugging off worries in the bond market that inflation could pop higher later this year when vaccines start to unlock the full power of the U.S. economy. Higher market-based interest rates, in turn, could pop some of those bubbles that inflated thanks to rock-bottom borrowing costs....
Fears about bubbles are percolating throughout the financial world. Results of a recent survey by investment management firm Natixis of institutional investors found that 41 percent expect a correction in real estate prices and 39 percent foresee corrections in tech stock and cryptocurrency values.
Powell and other Fed officials, meanwhile, are eager to see slightly higher inflation and continue to believe a spike in prices as Covid-19 wanes will only be temporary. They remain far more focused on healing a damaged labor market than they are worried about inflation."
New York attorney general issues warning to cryptocurrency industry -CNBC
"New York Attorney General Letitia James sent a blistering warning to investors and industry members about the dangers of cryptocurrencies on Monday.
'We're sending a clear message to the entire industry that you either play by the rules or we will shut you down,' she said in a press release.
The warning from James, which addressed individual investors and crypto industry members, comes amid a major start to 2021 for digital assets such as bitcoin.
The cryptocurrency surged to a new all-time high above $58,000 earlier this month, after garnering attention from Wall Street banks, companies such as Tesla and even the U.S. government....
James told members of the crypto industry in New York they must be registered with the Office of the Attorney General’s Investor Protection Bureau. Parties who are obligated to register but fail to do so are subject to civil and criminal enforcement, the office said in a statement.
Monday's alert comes two weeks after the attorney general filed a lawsuit against Coinseed, a trading platform for digital currency....
'All investors should proceed with extreme caution when investing in virtual currencies. Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains,' James said."
Real Money Podcast
Mar 2, 2021
3.2.21 - A Titanic Indicator for Gold's Rising Future
Gold last traded at $1,737 an ounce. Silver at $26.81 an ounce.
NEWS SUMMARY: Precious metal prices rose Tuesday despite rising interest rates and a firmer dollar. U.S. stocks fell, giving back some of the strong gains from the previous session.
The Fed Can't Force Outcomes That Market Forces Reject -Tamny/Forbes
"Money moves around the world with a click of a mouse....Longtime Citibank CEO Walter Wriston explained money much better. He observed decades ago that 'Capital goes where it's welcome and stays where it is well treated.' That's why all those billions that Congress has sent to West Virginia over the decades haven't resulted in economic growth for the Mountain State....
Government spending quite simply cannot stimulate economic growth. Wealth redistributed isn't growth, and it isn't precisely because 'Capital goes where it's welcome and stays where it is well treated.' More specifically, capital goes to where there are talented people and talented people have for the most part been exiting West Virginia for decades. The Fed could quite literally helicopter tens of billions into West Virginia, its citizens could do what is unlikely whereby they would spend it all there, but the billions would still exit the state....
The Fed, like the government that created it, has no resources. In vainly attempting to centrally plan good times as though the 20th century never happened, it's not as though the Fed can pull capital from Pluto, or Jupiter, or from vaults at the New York Fed in lower Manhattan. Wealth is created, which means that the Fed can at best redistribute wealth already created in the private sector. Check out West Virginia to see how that’s worked in the past....
Keyensianism doesn't work. What works is investment, and investment follows people. This blinding glimpse of the obvious has long eluded politicians eager to use redistribution as a growth tool, or eager to ask the Fed to plan it. If it worked, it already would have.
Which is why Powell's 'vows to support the labor market' are Grand Canyon empty. He can do no such thing. Jobs are a consequence of investment, and investment goes where it's treated best. Powell says 'We won't tighten monetary policy just because of a strong labor market,' but what he misses is that it doesn't matter what the Fed does. If investors don't agree with the Fed, they'll 'tighten' with a click of a mouse and there's nothing the Fed can do about it."
A Titanic Indicator for Gold's Rapidly Rising Future -Piepenburg/Gold Switzerland
"I've often joked that fretting over delusional price moves in individual stock names in a market Twilight Zone is akin to fretting over the desert choices on the Titanic’s dinner menu. In short, the real issue is the obvious iceberg ahead, not chocolate vs. vanilla eclairs, Amazon vs. Tesla or even Bitcoin vs. gold.
Historically unpresented (as well as unpayable) debt levels, openly absurd risk-asset bubbles and the artificial measures central bankers and politicos will and must employ to postpone the inevitable....Deficits, of course, matter. They are like credit ice cubes which turn into debt icebergs. We can also assume, quite confidently, that the money printing needed to purchase those otherwise unloved sovereign bonds will continue....
A key variable for gold forecasting is negative real yields - that is, the 10-Year Treasury yield minus the official CPI inflation rate. More simply stated: Gold has a very close inverse relationship with negative real yields: Gold's price rises as real (i.e. inflation-adjusted) yields fall deeper and faster into negative territory.
From mid-2018 to mid-2020, gold was once again rising dramatically because real yields were collapsing from +1% to negative 1%. This rapid rate of change toward negative real yields was a clear tailwind for gold....
Gold rises when inflation adjusted Treasury yields sink into negative territory with increasing speed. This happens whenever the inflation rate is greater than Treasury yields, and can certainly occur when rising inflation collides with increased yield suppression.
I think the near-term conditions are ripe for this type of iceberg-like collision....Looking forward five years out and more, this trend of negative real yields will likely increase, and to see gold double in price from its recent highs."
U.S. Policies Will Create Temporary Prosperity -Bonner/Rogue Economics
"There are two tried-and-true ways to blow up a great empire: War and inflation....Most Americans have no interest… and no reason to have an interest… in the tribal conflicts of the Mideast. But for the people who make bombs, it is a big deal. It's the difference between a modest beach house on the Maryland shore… or a real Obama-style mansion in Martha’s Vineyard....
The only proven path to wreck a nation is the old-fashioned way: killing and stealing… war and inflation… mass homicide and industrial-scale counterfeiting - that's how to get the job done. As Hemingway reminds us, they produce a 'temporary prosperity' and a more 'permanent ruin.'....
We're now looking at a deficit for this year that is more than the entire federal budget just 10 years ago. And what's the point? It's billed as a 'COVID relief' package. But relief against what?
The coronavirus doesn't care how much fake money you pass out. And incomes are already at their highest point ever - thanks to previous federal giveaways. Adding more giveaways is merely digging a deeper hole for the giver to get into.
Already, the hole is so deep, there is no honorable or honest way out. Which leaves the dishonest, shameful escape tunnel - inflation. Critics say it is far too early to worry about inflation. Perhaps they are right.
But you don't want to wait until the last minute, either."
Big business backs a $15 minimum wage because it will crush Main Street competitors -Close/USA Today
"A growing number of major corporations and their trade groups are backing the current legislative push to dramatically raise the federal minimum wage. President Biden has called for more than doubling the federal minimum wage to $15, and Congress is trying to mandate this massive increase in the upcoming pandemic relief package.
It's framed as a matter of supporting workers, but while many big businesses are already paying $15 to all their workers, most small businesses cannot. Passing a wage hike right now would also worsen the pandemic trend of many big businesses thriving while millions of small businesses suffer.
Small businesses know a minimum wage hike is a guaranteed job killer. Congress's own Congressional Budget Office says a $15 minimum wage would lead to 1.4 million jobs lost. The consequences could actually be worse: In 2019, the NFIB Research Center found that a federal $15 minimum wage would kill 1.6 million jobs. More than 55% of the job losses would be at small businesses, and nearly 45% would be at the smallest firms.
Small business owners care about their employees. Employees are like family, and owners want to help them get ahead. But requiring small businesses to pay a wage they cannot afford is dangerous. That money has to come from somewhere...For some small businesses, a more than doubling of labor costs would force them to shut down - a blow to Main Streets across the country.
The damage would be even greater after the financial difficulties created by the pandemic. Small businesses have been disproportionately harmed by one-size-fits-all government lockdowns. Hundreds of thousands have already closed forever.
The story is different for big business. Many large corporations have done comparatively well during the pandemic - see companies like Amazon, Walmart, Target, and many more. Most had the resources to quickly adapt to lockdown life, while some had business models primed for success when families were forced to stay home. Amazon, for instance, made more profit in the first nine months of 2020 than it did in all of 2019....
Since the last economic crisis ended in 2009, small businesses have accounted for over 65% of net new private-sector job creation, and they employ nearly half of all private sector workers. Now is the time to build on that record, not stifle job growth where it is needed most. On the minimum wage, policymakers should listen to the small businesses that have the most to lose."
Real Money Podcast
Mar 1, 2021
3.1.21 - Gold's Portfolio Role Differs From Cryptos
Gold last traded at $1,724 an ounce. Silver at $26.59 an ounce.
NEWS SUMMARY: Precious metal prices traded mixed Monday as interest rates softened and the dollar firmed. U.S. stocks rallied as retreating Treasury yields eased concerns about inflation that would undermine equity valuations.
How gold's role in a portfolio differs from cryptos -GoldHub
"The rapid ascent of cryptocurrencies over the past year has drawn the attention of investors. Often, investments in cryptos are equated to investments in gold. Despite some apparent similarities, we believe that gold stands apart from cryptocurrencies, both fundamentally and practically.
The advent of blockchain and cryptocurrencies has catalyzed innovation in the financial industry. Their proliferation and recent exponential price increase have captured investors’ imaginations. However, the recent developments in blockchain and cryptocurrencies do not imply that cryptocurrencies are a substitute for gold.
The argument that gold and cryptocurrencies are similar appears to stem from perceptions of: their limited supply and their role as alternatives to fiat currencies.
However, this comparison is simplistic and overlooks fundamental differences between gold and cryptocurrencies – not only in terms of their market dynamics but also in terms of their performance and the role they play in portfolios.
The sources of demand for gold are very different from those for cryptocurrencies. For more than 2,000 years, gold has served as means of exchange and been used as a store of value. Gold is owned by institutional and individual investors, as well as by central banks."
The wave of covid bankruptcies has begun -Washington Post
"Nearly a year since coronavirus-related shutdowns began affecting large swaths of the American economy, more businesses are filing for bankruptcy as Chapter 11 filings were up nearly 20 percent in 2020 compared with the previous year, court records show....
Data on a subset of businesses - those registered as corporations - show that some sectors are faring much worse than others, with restaurants, retailers, entertainment companies, real estate firms and oil and gas ventures filing for protection in far greater numbers than in previous years, according to New Generation Research.
Bankruptcies filed by entertainment companies in 2020 nearly quadrupled, and filings nearly tripled for oil and gas companies, doubled for computer and software companies and were up 50 percent or more for restaurant owners, real estate companies and retailers, compared with 2019, data from the research firm show.
Economists are predicting strong economic growth this year overall. But the bankruptcy data show that despite $3.7 trillion in federal stimulus spending to combat the recession triggered by the pandemic, and another $1.9 trillion being proposed by President Biden, businesses in certain industries have become particularly vulnerable and may take years to recover enough to pay their bills. Others will not recover at all. Because bankruptcy filings lag other signals of economic distress, experts say the worst may be yet to come....
As working from home became the norm during the pandemic, the need for office space dissipated, and the company filed for bankruptcy last month. 'The pandemic created a uniquely challenging operating environment,' Sarva said. Knotel is being acquired by the real estate services firm Newmark Group.
As the value of retail and office space has plummeted during the pandemic, it has plunged development projects underwater, meaning the values of the properties are lower than the amount the owners owe. Jim Hammond, chief executive of New Generation Research, said real estate companies with heavy debts will be at risk. 'Even a return to normal may not be enough to save them,' Hammond said.
Despite the increase in business Chapter 11 filings, there is good news. Because this category of bankruptcy provides filers with protection from creditors for a limited time, it allows them to reorganize and sometimes remain in business."
Amid COVID-19 pandemic, flu has disappeared in the US -Associated Press
"February is usually the peak of flu season, with doctors' offices and hospitals packed with suffering patients. But not this year. Flu has virtually disappeared from the U.S., with reports coming in at far lower levels than anything seen in decades.
Experts say that measures put in place to fend off the coronavirus - mask wearing, social distancing and virtual schooling - were a big factor in preventing a 'twindemic' of flu and COVID-19. A push to get more people vaccinated against flu probably helped, too, as did fewer people traveling, they say.
Another possible explanation: The coronavirus has essentially muscled aside flu and other bugs that are more common in the fall and winter. Scientists don’t fully understand the mechanism behind that, but it would be consistent with patterns seen when certain flu strains predominate over others, said Dr. Arnold Monto, a flu expert at the University of Michigan.
Nationally, 'this is the lowest flu season we've had on record,' according to a surveillance system that is about 25 years old, said Lynnette Brammer of the U.S. Centers for Disease Control and Prevention....
Some doctors say they have even stopped sending specimens for testing, because they don't think flu is present. Nevertheless, many labs are using a CDC-developed 'multiplex test' that checks specimens for both the coronavirus and flu, Brammer said."
Can America Escape the Stimulus Trap? -Wei/Project Syndicate
"The United States risks locking itself into a recurring cycle of expansionary monetary and fiscal policies, rising asset prices, and redistributive measures that weaken investment and job growth. Avoiding this scenario will require three complementary reforms to accompany future economic stimulus packages.
As US President Joe Biden’s proposed $1.9 trillion economic stimulus package works its way through Congress, former Treasury Secretary Lawrence Summers (a Democrat) and many Republicans argue that the plan is too big. But perhaps a more important question is whether the United States is falling into a 'stimulus trap,' and, if so, how to get out of it.
Rising inequality will spur demands to address it - including through higher tax rates, higher legally mandated minimum wages, and more generous social-transfer programs.....
Additional expansionary measures will fuel another wave of asset-price appreciation that outpaces average wage growth, further widening the wealth gap – and prompting calls for still higher taxes and minimum wages, and more social transfers, which would again weaken investment and job growth, justifying continued economic stimulus. In other words, the US could become stuck in a stimulus trap.Such a scenario is not inevitable. But avoiding it will require three complementary reforms to accompany any economic stimulus.
First, America must upgrade its education system and strengthen the skills base, so that more workers can move into higher-paid jobs....Second, policymakers should aim to make labor markets more flexible while maintaining decent living standards for all Americans....The third priority is to encourage US households in the middle and low-income brackets to save more by ensuring greater financial literacy and providing easier access to low-cost money management tools....
The problem is that Americans in the bottom 40% of the income distribution are hardly saving anything, which means their relative wealth lags further behind each time asset prices increase faster than wages. To skeptics who think that low-income households are not making enough money to save, research suggests that they can and want to if they have the right knowledge and tools."