6.29.22 - Goldman Sachs Raises Gold Target To $2500/Oz
Gold last traded at $1,816 an ounce. Silver at $20.76 an ounce.
News Summary: Precious metal prices remained stable Wednesday on bargain hunting and stronger U.S. dollar. Stocks wobble as investors tune in to remarks by central bankers at forum in Portugal.
Goldman Sachs Raises Gold Target Yet Again To $2500/Oz By Year-End Signaling Boost To Gold Industry - Seeking Alpha
"Goldman Sachs has recently raised its year-end 2022, gold price target to $2500/oz, signaling a strong 2022 after gold prices ended 2021 down approximately 4%.
Last year’s strong economic recovery and growth created conditions for the decline in gold, as investors moved to riskier assets. However, the coming year could bring increased concerns of a US recession, which would lead to higher gold prices....
Goldman Sachs has long been bullish on gold, and this latest price target increase is yet another sign that the investment bank sees strong upside potential for the precious metal.
The bank also believes that the risk of inflation is likely a strong factor to influence gold prices this year. Goldman has said that inflation expectations may become 'unhinged', as inflation has become quite persistent, and has proven not to be transitory as previously expected by the Fed.
In any scenario where inflation increases rapidly and sustainably, gold will likely outperform other assets. This is due to the fact that gold is a physical asset with no liabilities, and therefore its value cannot be eroded by inflation like other assets such as bonds and equities.
2022 may also see a bump in gold-related and gold-adjacent equities like gold mining stocks and ETFs. These are both vehicles that will likely rise in value alongside the precious metal, as investors seek to gain exposure to gold’s upside potential."
Who's right about a recession — markets or the Fed?- CNN Business
"A growing number of investors have come to the conclusion that a recession in the United States is probably looming, fueling a sharp sell-off in stocks and bonds as Wall Street braces for impact.
What's happening: A shallow recession late this year or early next year is 'becoming the consensus view,' David Bianco, DWS chief investment officer for the Americas, told reporters this week.
While there's agreement that the Federal Reserve needs to continue to aggressively pull back support for the economy to tamp down decades-high inflation, traders have been increasingly concerned that the central bank could accidentally go too far, triggering a new wave of job losses and throwing growth into reverse.
But Fed officials themselves don't see this outcome as inevitable. Even as the market churns, they maintain that a so-called 'soft landing' - where the central bank succeeds in bringing down inflation without tipping the economy into recession — remains possible...
My thought bubble: The next 12 months will produce a lot of debate about what technically constitutes a recession (the official designation would come from the National Bureau of Economic Research). It's a loaded term, especially ahead of elections in November.
But what matters the most right now is the magnitude of any downturn. We know the economy is likely to slow sharply as the Fed tries to put a lid on price increases. But will we actually see the US economy shrink? And if so, by how much? The size and duration of any contraction — and whether that has knock-on effects, like loan defaults —will be significant."
'There is no more retirement': Retirees are heading back to work amid soaring inflation — here's what you need to know- Yahoo! Finance
“'Unretirement,' or the act of going back to work after retiring, isn’t just for young Buccs like Tom Brady.
About 3.2% of workers, about 1.7 million people, who were retired a year ago are rejoining the workforce as of March 2022.
An April report from the Indeed Hiring Lab shows that the number of retirees heading back into the labor force is returning to pre-pandemic levels.
Yet John Tarnoff, a reinvention career coach based in L.A., says unretirement is an underreported phenomenon that has been going on for years.
'The costs of living were going up even before the current inflationary cycle that we're in now — costs were rising, fixed incomes were no longer good for people, Social Security as an institution is under threat,' says Tarnoff....
'Retirement is a misnomer — there is no more retirement,' says Tarnoff. 'I think that older workers are going to be caught in a tight squeeze, because they don't have the income overall to keep up with inflation.'
He adds that plenty of older workers may have been pushed out of the workforce during pandemic-related layoffs but didn’t voluntarily choose to retire.
Inflation hit a 40-year-high of 8.6% in May, and everything from groceries to gas is rapidly ballooning in price."
Wall Street braces for turmoil- The Hill
"The stock market is set to close out a brutal month of losses as Wall Street braces for a rocky second half of the year.
All three major U.S. stock indexes — the Dow Jones Industrial Average, the S&P 500 and the Nasdaq composite — reached bear market status in June, falling at least 20 percent from record highs set toward the start of the year. While stocks sank gradually for much of 2022, the sell-off accelerated in June amid deepening concerns about the economy.
'We were just kind of finding our way along the bottom, and then in June that semblance of a bottom fell out. I think that was a real psychological turn for investors,' said Callie Cox, an investment analyst at eToro, an online investing platform. 'Inflation isn’t under control and markets haven’t quite found their footing yet. June felt like a reality check in a way, and it was a reality check for a situation we didn’t fully understand,' she continued....
'The June sell-off was largely driven by more aggressive rhetoric from the Fed, rising oil prices and inflation that is remaining sticky,' said Lindsey Bell, chief markets and money strategist at Ally. "
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6.28.22 - Consumer confidence falls to 16-month low
Gold last traded at $1,820 an ounce. Silver at $20.82 an ounce.
News Summary: Precious metal prices remained steady Tuesday amid quiet summertime trading. U.S. stocks fell after disappointing economic data.
Zimbabwean central bank introduces gold coins as store of value - The Print
"The Reserve Bank of Zimbabwe (RBZ) on Monday announced the introduction of gold coins into the market as a store of value.
In a statement following a meeting of the bank’s Monetary Policy Committee (MPC) on June 24, RBZ governor John Mangudya also announced some measures meant to curb inflation.
'The MPC resolved to introduce gold coins into the market as an instrument that will enable investors to store value. The gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels,' Mangudya said.
He said that the MPC had expressed great concern over the recent rise in inflation, which increased to 30.7 percent on a month-on-month basis for June 2022, thereby increasing the year-on-year inflation for June to 191.6 percent.
'The committee noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over thepast two years,' he said.
In that regard, the MPC resolved to put in place measures to align the interest rates with the inflation developments and enhance the circulation of foreign exchange, on top of the introduction of gold coins."
Inflation Hits July 4 Cookouts With Food Prices Up as Much as 36% - Yahoo! Finance
"Add Fourth of July cookouts to the list of what Americans will pay more for this year — a lot more.
Ground beef prices are up 36% from a year ago, while chicken breasts gained by a third, according to a survey from the American Farm Bureau Federation. Overall, revelers can expect to spend 17% more on food for a barbecue, marking the biggest increase since the lobbying organization began tracking data a decade ago.
In 2021, the cost of an Independence Day cookout declined by less than 1%, according to the group. But much has changed since then. Costs for fuel, labor and key farming inputs like fertilizer have soared. Russia’s invasion of Ukraine has worsened the situation by disrupting global agriculture supply chains, according to Roger Cryan, chief economist for the Farm Bureau.
Paying more for burgers and lemonade (up 22%) hits just as one measure of US consumer sentiment fell to an all-time low. How that will impact spending remains to be seen, but the shoppers did pull back in May, and there are more predictions of a looming recession..."
Consumer confidence falls to 16-month low on worries about inflation and economy- Market Watch
A survey of U.S. consumer confidence dropped in June to a 16-month low of 98.7, as Americans grew more worried about high gas and food prices and the possibility of another recession....
Big picture: The U.S. economy has slowed and is likely to keep slowing with the Federal Reserve raising interest rates to try to tame the highest inflation in 40 years. Gas prices have soared, the cost of groceries have risen the most in decades and housing is very expensive.
Higher rates raise the cost of borrowing and tend to make consumers and businesses spend less....
'Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices,' said Lynn Franco, senior director of economic indicators at the board.
Looking ahead: 'It looks like this is another piece of evidence showing concerns about a recession are rising among consumers,' said Thomas Simons, money market economist at Jefferies LLC."
S&P 500 heads to worst first half since 1970s- Fox Business
"Stocks are about to turn in the worst first half in fifty years when the second quarter wraps on Thursday as inflation sits at a 40-year high.
The S&P 500, the broadest measure of stocks, is down nearly 18% this year the worst since 1970, as tracked by Dow Jones Market Data Group. That makes 2022 the fifth-worst half performance on record.
Stocks are falling as the possibility of a recession rises.
‘I think there is a very real risk of a recession, it is perhaps inevitable we do have an economic downturn before 2024,’ said John Lonski, president of economic forecasting firm Thru the Cycle.
The Federal Reserve, which hiked interest rates this month by 0.75 basis points, has failed to contain inflation thus far as critics, including former U.S. Treasury Secretary Larry Summers, continue to also predict a forthcoming recession.
The U.S. Central Bank is on pace to hike rates again in July by another 0.75 basis points, as tracked by the CMEs Fed watch Tool."
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6.27.22 - Stagflation is ‘Perfect Storm’ for Gold
Gold last traded at $1,823 an ounce. Silver at $21.13 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday on bargain-hunting and a weaker dollar. U.S. stocks struggled to make a comeback from Bear market territory.
Stagflation is a ‘perfect storm’ for gold to reach new heights -Marrone/Kitco
"We are on the 'cusp of a recession with certain stagflation, breeding a perfect storm for gold’s price to rise,' said Peter Marrone, Executive Chairman and Founder of Yamana Gold Inc.
'It’s difficult for me to predict gold’s price in terms of precision and certainly timeframe,' he said, 'but I go back to first principles. I do not believe that we have seen the all-time high gold price.' ....
'[In 1980], we were in a recessionary period, in the middle of an inflationary period,' he explained. 'We were in the middle of a war, the invasion of Afghanistan by the Russians. The Americans were calling the Russians, ‘the evil empire.’ So there’s a lot of similarity happening in the world today to what happened then.'
Marrone went on to suggest that recent events, with high inflation, a looming recession, and war in Ukraine, are like what happened in 1980.
'In the context of [what was happening in 1980], gold’s price went to around $840 per ounce.In terms of adjusted dollars, what does $840 mean today? That number is roughly $2,700-$2,800. And I certainly think that there is an excellent opportunity for gold’s price to go up to those levels again.'"
G7 Looks to Widen Curbs on Oil, Gold -Wall Street Journal
"The Group of Seven club of wealthy democracies is inching toward an agreement on expanding its sanctions against Russia by looking for a mechanism to cap the purchase price of Russian oil, officials said, but the details are still being worked out.
The move, under discussion at the three-day G-7 summit in the Bavarian Alps that began Sunday, would come on top of a ban on the purchase of Russian gold, officials said. They said oil is the most lucrative export for the Kremlin, while gold makes up a significant part of the state revenues that fund Russian President Vladimir Putin’s war.
The details of the oil purchase price cap, which would create a buyers’ cartel of Western nations and their allies, and the gold import, both proposed by the U.S., were currently being finalized ahead of the summit’s conclusion on Tuesday, according to three officials. The leaders of the U.S., Canada, Britain, Germany, France, Italy and Japan discussed the oil cap on Sunday afternoon, according to one senior official.
Italian Prime Minister Mario Draghi told the meeting that the price cap would be effective against Russia because it would cut financial flows to Moscow while reducing inflation, which has surged across the West partly driven by energy prices, one official familiar with the talks said.
The West’s sanctions against Moscow’s energy exports, in a context of rising inflation that predated the war in Ukraine, have had serious side effects on Europe and the U.S., driving prices even higher, eating into voters’ incomes, and fueling popular discontent."
The Return of the Anguish of Central Banking: Why the Fed and Inflation Go Hand in Hand -Mises
"The recent outbreak of price inflation with the jump to an annual rate of 8.6 percent in May 2022 came as a surprise to the US central bank (the Federal Reserve). Having ignored the warnings of the Austrian school economists, the policy makers were paralyzed in the face of a phenomenon they deemed impossible to happen. None of their forecasting models had triggered an inflation alert....
Failing to apply countermeasures in time, the Fed is now faced with the hard job of bringing down the price inflation rate without causing a recession. Prolonged stagflation may characterize the next decade. Are we back in the 1970s? During the stagflation at that time, Arthur Burns was the chairman of the Federal Reserve.
After having left his job in 1978, he held an alarming speech at the meeting of the International Monetary Fund in Belgrade, on September 30, 1979. His presentation bore the title ;The Anguish of Central Banking.' In his talk, the former chairman of the American Federal Reserve explained why central banking and price inflation go hand in hand.
In his presentation, Burns offered little hope for an escape from secular inflation. Current worldwide philosophical and political trends, Burns diagnosed, would continue to undermine wealth creation. These modern cultural trends spilled over to politics, produced permanent budget deficits, and introduced 'a strong inflationary bias;' (p. 13) into the economy.
Burns ended his speech by saying: My conclusion that it is illusory to expect central banks to put an end to the inflation that now afflicts the industrial democracies does not mean that central banks are incapable of stabilizing actions; it simply means that their practical capacity for curbing an inflation that is continually driven by political forces is very limited. (p. 21)"
How to scrub yourself from the internet, the best that you can -Washington Post
"Data brokers collect detailed information about who we are based on our things like our online activity, real world purchases and public records. Together, it’s enough to figure out your political leanings and health status, even if you’re pregnant. Friday’s news that the Supreme Court had overturned Roe v. Wade, and abortion could become illegal in at 13 states within a month, highlight concerns about ways these piles of information could be used.
You can’t fully scrub yourself from the internet. A little bit of you will always linger, whether it’s in data-broker databases, on old social media you forgot about or in the back of someone else’s vacation photos on Flickr.
That’s no reason to give up! You can absolutely take steps to protect your privacy by cleaning up things like your Google results. For the best results you’ll need time, money, patience, and to live in a country or state with strong privacy laws.
Start with Google - Google is what most people think of when they worry about their data online. The search engine is the largest index of websites, but it’s often just the messenger. Know that anything you manage to remove from a search result will likely still live on the site hosting it unless you also get them to take it down. You’ll want to ask those sites to remove it as well.
First, Google yourself. Keep a list of where your information is popping up and specifically look for anything personal, like your address or phone number, any kind of identification details (driver’s license number) or other information you find inappropriate. Combine your name with your address or phone number in the search field.
Google recently added a form where you can request it take down certain results or information, including explicit photos if they are fake, posted without your consent, or just randomly showing up for your name and don’t depict you. There’s an option to take down info that could be used for doxing you, such as ID numbers, financial information, medical records, your physical address and other contact information....
Opt out, opt out some more - Now that the cosmetic requests are done, its time for data brokers. There are hundreds of data brokers in the United States, and you can find lists at organizations like Privacy Rights Clearinghouse. To start, let’s practice on big names such as Acxiom, CoreLogic, Epsilon Data Management, Equifax, and Experian....
Limit what you put online - The best move is to limit what information about you exists online to begin with. Use our Privacy Reset Guide to turn on strong privacy settings for the main apps or devices you use regularly, including your smartphone, banking and social media sites."
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6.24.22 - Stagflation threat level is 'highest in a long time'
Gold last traded at $1,828 an ounce. Silver at $21.17 an ounce.
News Summary: Precious metals prices remained stable Friday with trading tepid amid inflation concerns. Stocks higher as markets looked to snap three-week losing streak.
Billionaire Seth Klarman sees value in gold; nobody should own cryptocurrencies - interview with Harvard Business School - Kitco
"Billionaire investor Seth Klarman and head of the Baupost Group, said he sees the value of holding some gold as uncertainty continues to dominate the marketplace. At the sametime, he touted cryptocurrencies as pointless.
In a recent interview with Das Narayandas, a professor at the Harvard Business School, Klarman warned that the U.S. economy faces a challenging environment of slower economic growth and rising inflation. He added even with the current selloff, equity markets are still too elevated. The comments come as the S&P 500 has dropped roughly 23% this year, entering bear-market territory.
He added that equity markets will continue to slide as interest rates move higher. He said that the bond market has been in a bull market for 35 years, and the current selloff could be a big shock for investors who have been forced to take more risks to find better yields....
Although rising interest rates and a strong U.S. dollar are strong headwinds for gold, Klarman said that he is still a fan of the precious metal. He said that it remains a store of value and a safe-haven hedge.
'I think gold's valuable in a crisis. If the world turns to hell, the war expands and gets worse, God forbid a nuclear weapon is used, I think people are going to say: 'How do I know what anything's worth anymore? I'm going to make sure I have some gold because I don't want to not have money at a time of desperation.' It may never come to that, but I think it's prudent to have a little bit of your portfolio in gold,' he said."
Former Obama economist warns stagflation threat level is 'highest in a long time'- Fox Business
"The danger of the U.S. economy returning to a 1970s-style stagflation scenario is the highest it's been in decades, according to former President Barack Obama's top economic adviser.
Jason Furman, a Harvard University professor who previously served as chair of the Council of Economic Advisers, warned that an aggressive Federal Reserve, rising interest rates and persistently high inflation have raised the possibility of a period of stagnant economic growth and high consumer prices.
'It's a real risk,' Furman said during an interview with FOX Business. 'It's the biggest risk of stagflation we've had in a long time. But it's not a guarantee that the economy goes into recession. Consumers still have a lot of money. They're still spending. So there's still some hope for the U.S. economy.'
Stagflation is the combination of slowed economic growth and high inflation, characterized by soaring consumer prices as well as high unemployment. The phenomenon ravaged the U.S. economy in the 1970s and early 1980s, as spiking oil prices, rising unemployment and easy monetary policy pushed the consumer price index as high as 14.8% in 1980, forcing Fed policymakers to raise interest rates to nearly 20% that year....
Scorching hot inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food, gasoline and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations."
Consumers are feeling even worse about the US economy thanks to inflation - CNN Business
"US consumer sentiment hit a new record low in June amid growing concerns about inflation, according to a closely followed University of Michigan survey released Friday.
The final index reading of 50 in the monthly Surveys of Consumers was just below the preliminary reading of 50.2 released two weeks ago. The final June index -- a 14.4% drop since May -- represents the lowest recorded level since the university started collecting consumer sentiment data in November 1952.
'Consumers across income, age, education, geographic region, political affiliation, stockholding and homeownership status all posted large declines,' said Joanna Hsu, Surveys of Consumers director, in a statement. 'About 79% of consumers expected bad times in the year ahead for business conditions, the highest since 2009.'
Inflation remained the biggest concern for consumers, she noted, adding that 47% of consumers blamed the sharp increase in prices for eroding their living standards. That is 1 percentage point below the all-time high reached during the Great Recession, according to the report.
'As higher prices become harder to avoid, consumers may feel they have no choice but to adjust their spending patterns, whether through substitution of goods or foregoing purchases altogether,' Hsu said. 'The speed and intensity at which these adjustments occur will be critical for the trajectory of the economy.'"
4 Million Americans Priced-Out As Home Rents Rise Significantly, Home Loan Qualifications ‘Skyrocket’- Invesbrain
"As costs of home ownership rise, millions of Americans have been pushed out of the housing market, according to Harvard University’s annual State of the Nation’s Housing Report released Wednesday.
At today’s home prices, a first-time buyer would have had to shell out $27,400 (7 percent of the sales price) as a down-payment in April on a median-priced home, said the report. This rules out 92 percent of renters, who only have a median of $1,500 in savings. If the downpayment is halved to 3.5 percent, the monthly mortgage payment on a median-priced home would be $2,020.
Between December 2021 and mid-April 2022, mortgage interest rates rose by 2 percent, which is equivalent to a 27 percent jump in home prices. As prices increased along with interest rates, the income and savings required to qualify for a home loan 'skyrocketed.' This presents a financial burden on middle-income and first-time buyers....
A recent Goldman Sachs note says the company expects houses to become much less affordable for average Americans despite home price growth slowing down sharply, according to Business Insider. An average American is now much less likely to be able to afford a home when compared to just a few months ago."
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6.23.22 - Retirement accounts lose trillions
Gold last traded at $1,826 an ounce. Silver at $21.03 an ounce.
News Summary: Precious metal prices rose Thursday as economic fears returned to center stage. U.S. stocks rose as market tried to recover some of the steep losses suffered in 2022, despite recession concerns.
Gold firms as economic fears return to center stage- CNBC
"Gold rose on Wednesday as renewed fears of a recession bolstered bullion’s allure as a safe haven and countered pressure from a firmer dollar, while investors awaited monetary policy cues from the Federal Reserve....
World stocks fell as concerns of rising interest rates and recession persisted. Adding to this, soaring food prices pushed British consumer price inflation to a 40-year high of 9.1% last month.
'You have all the fears of rising recession risks and inflation providing quite a sound backdrop in terms of safe haven demand; not that everybody’s rushing into gold, but people are clearly sticking to gold positions at the moment,' said Carsten Menke, head of Next Generation Research at Julius Baer...
Powell is scheduled to testify before Congress on Wednesday and Thursday after the central bank lifted its benchmark interest last week by 75 basis points (bps) to try to tame inflation.
If Powell clears the way for another 75 bps rate hike in July, it would likely trigger further dollar strength and rises in yields, resulting in downside for gold, said Ricardo Evangelista, a senior analyst with ActivTrades.
'Otherwise, and this is the most likely scenario, should the chairman avoid such bouts of hawkishness, gold prices are likely to remain relatively stable,' Evangelista added."
Fed’s Powell facing rising criticism for inflation missteps- AP News
“Federal Reserve Chair Jerome Powell won praise for his deft leadership during the maelstrom of the pandemic recession. As threats to the U.S. economy have mounted, though, Powell has increasingly struck Fed watchers as much less sure-footed.
Inflation has proved higher and far more persistent than he or the Fed’s staff economists had foreseen. And at a policy meeting last week, Powell announced an unusual last-minute switch to a bigger interest rate hike than he had previously signaled — and then followed with a news conference that many economists described as muddled and inconsistent...
Now, as he confronts chronically high inflation, plunging financial markets and the growing threat of a recession, Powell is facing questions — and criticism — surrounding his stewardship of the Fed at a time when its challenges are multiplying.
Thanks to a once-in-a-century pandemic, the first major European war in decades, and soaring gas and food prices that the Fed has limited power to affect, Powell could become the first Fed chair since Paul Volcker in the early 1980s to grapple with 'stagflation,' a miserable combination of slow economic growth and high inflation."
Retirement accounts lose trillions in stock rut - Fox Business
"When investors get their quarterly 401(k) statements in the next few weeks they’ll be hit with some bad news.
The S&P 500, the broadest measure of U.S. stocks, is down 21%, the Nasdaq nearly 30% and the Dow 16% so far this year, and Americans are seeing the value of their retirement accounts dwindle along with the drops.
Alicia Munnell, director of the Center for Retirement Research at Boston College, wrote in a blog post this week that retirement plans have collectively lost upwards of $3 trillion since the beginning of January.
According to Munnell's latest data, 401(k) plan participants have lost about $1.4 trillion from their accounts and IRAs have lost $2 trillion since the end of 2021.
Main Street is feeling it, too.
One woman told FOX Business her 401(k) has 'been decimated' to the point that she is now wondering if her plans for starting her golden years might need to be delayed....
Multiple people told FOX Business they are scared to even take a peek at where their accounts stand....
The losses coupled with inflation sitting at a 40-year high, means Americans are hemorrhaging money. That has also caused some people to make tough decision regarding retirement.
'It's been painful,' another person said. 'I honestly had to take out some funds out of my 401(k) to, you know, support myself and my family with the inflation and everything else that's happening.'"
US could face more inflation 'surprises': Fed's Jerome Powell - Economic Times
“The US economy is strong but faces an 'uncertain' global environment and could see further inflation 'surprises,' Federal Reserve Chair Jerome Powell said Wednesday.
In the first of two closely-watched days of testimony to Congress, Powell again stressed that the Fed understands the hardship caused by rising prices and is committed to bringing down inflation, which has reached a 40-year high.
The US central bank last week announced the mot aggressive interest rate increase in nearly 30 years and promised more action to come to combat the price surge, with gas and food costs soaring and millions of Americans struggling to make ends meet....
'Inflation has obviously surprised to the upside over the past year, and further surprises could be in store,' the Fed chief told the Senate Banking Committee in his semi-annual appearance.
Policymakers 'will need to be nimble' given that the economy 'often evolves in unexpected ways,' he said."
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6.22.22 - Woke Mandate for the Fed Reserve
Gold last traded at $1,840 an ounce. Silver at $21.50 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and a weaker dollar. U.S. stocks declined, giving up some of the previous session’s gains.
Global gold supply to fall after 2022 -Kitco
"According to the data by the Department of Industry, Science, Energy and Resources of the Government of Australia (DISER), global gold supply to increase by 2.7% to 4,791 tonnes in 2022 compared to 2021, and then fall after 2022.
In 2022, lower global gold scrap supply will be more than offset by higher gold mine production, the study found. ...
According to the report, in Australia – the world's second largest gold producer - a solid pipeline of projects is expected to bring the country's gold mine production to 305 tonnes in 2022. Production in Canada and the US is forecast to increase by 19% and 9.8% to 225 and 201 tonnes in 2022, respectively.
Production in the PNG is forecast to increase by 31% to 55 tonnes in 2022, driven by a restart at Porgera gold mine, which has been in care and maintenance since April 2020."
How will it end? A recession is likely 'inevitable' -Washington Times
"Great inflations almost always end with a recession or depression. Some governments manage the end of inflation by creating policies to set the stage for a quick recovery and rapid growth, even though some months of pain are unavoidable.
The best example of this was the first two years of the Reagan administration, whose team understood that inflation was caused by the money supply growing faster than the supply of goods and services. The solution, though difficult, was obvious — reduce the growth in money and increase the supply of goods and services.
Inflation was running at over 13%, and the economy was in recession. Paul Volcker, the Fed chair at the time, raised interest rates sufficiently (at one point the prime rate was 21%) to extinguish the excess money growth.
At the same time, the Reagan administration undertook massive tax rate cuts, coupled with spending restraint, and the repeal of many unnecessary regulatory burdens to revive economic growth. It worked beyond the expectations at the time; so by the third year of the administration, real economic growth was more than 7% with greatly reduced inflation.
Unfortunately, the current Fed and Biden administration have been too slow in learning the lessons of history. The Fed is just now beginning to reverse money growth, and the Biden team is still proposing more spending, taxes and regulations, all of which are job and economic growth killers. Even if the Fed suddenly starts doing everything correctly, it will be some time before inflation drops, because there is typically a long lag between changes in money growth and the rate of inflation.
The seeds of the current inflation were planted in early 2020 when the economy was shut down because of the pandemic and the Fed tried to paper over the loss in production and income by literally giving everyone money - causing an explosion in money growth not matched by an increase in the supply of goods and services....
The worst-case scenario is if the Biden administration continues its anti-growth policies by pushing for higher taxes, more regulation and government spending, and the Fed becomes weak-kneed when it comes to necessary interest rate increases. Under this scenario, high inflation rates not only continue but rise, so eroding purchasing power that the people increasingly use foreign currencies, gold and silver, crypto-currencies, and digitized base metals in making contractual obligations and for spending on expensive items. In such a situation, the real value of the government debt is also eroded away, destroying wealth for both domestic and foreign bond-holders — but at the same time setting the stage for a new government-issued currency."
5 signs the housing market is starting to slow down -CNN
"After more than a year of soaring demand, exploding home prices and increasing real estate sales, the market finally seems to be cooling off.
'The housing market isn't crashing, but it is experiencing a hangover as it comes down from an unsustainable high,' said Taylor Marr, Redfin deputy chief economist.
Mortgage rates have increased more than two and a half percentage points this year. And the higher costs of financing a home have changed the calculations for many would-be homebuyers. As a result, year-over-year home sales have been dropping in recent months....
While the market is still very strong by historical standards, here are five reasons to believe the tide is turning.
1. The inventory of homes for sale is growing - With demand for homes outstripping supply, the inventory of homes for sale had been consistently declining year-over-year during the pandemic housing boom, said Danielle Hale, chief economist at Realtor.com....
2. More price cuts - If you've been looking at homes you may be noticing something you haven't seen in a long time: price cuts. For a while homes were selling so quickly, and often with bidding wars, that sellers would commonly get more than they asked for....
3. Real estate companies are laying people off - With less activity in the housing market, real estate companies are announcing layoffs. This week Redfin said it cut about 8% of its employees and Compass said it would reduce its workforce by 10%....
4. Mortgage applications are down - As mortgage rates have spiked, would-be homebuyers are applying for fewer loans. In the week ending June 10, mortgage purchase applications were down 16% from a year earlier, according to the Mortgage Bankers Association....
5. Fewer people are shopping for homes - With prices so high and mortgage rates still climbing, fewer people seem to be shopping for homes right now. An index from Redfin that assesses homebuyer demand -- by measuring the requests for home tours and other home-buying services from Redfin agents -- was down 14% year-over-year during the week ending on June 12."
A Woke Mandate for the Federal Reserve -WSJ
"President Biden recently promised in these pages not to interfere with the Federal Reserve. Yet last week he endorsed a House bill that would add racial equity to the Fed’s dual mandate of price stability and full employment. How does the White House square this contradiction?
The House bill passed last week 215-207 with little media notice. But it deserves attention because it reveals how the Biden Administration and Democrats plan to politicize monetary policy and financial regulation.
Recall that Candidate Biden advocated making reducing racial disparities a third monetary mandate. You have to wonder if one reason the Fed was slow to tighten policy was because the central bankers agreed with him. Several Federal Open Market Committee (FOMC) members promoted the goal of 'inclusive' employment even as inflation began to creep up.
Now House Democrats want to codify racial equity as part of the Fed’s mandate. Their bill would require the Board of Governors and FOMC to 'exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.'....
The bill would politicize monetary policy and financial regulation when the Fed’s focus should be slaying inflation while avoiding a recession. House Democrats who voted for the bill deserve to be called out for supporting racial favoritism and undermining Fed independence. As for the President, the progressive agenda is apparently a higher priority than controlling inflation."
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6.21.22 - Gold Rangebound on Rates and Inflation
Gold last traded at $1,831 an ounce. Silver at $21.68 an ounce.
NEWS SUMMARY: Precious metal prices steadied Tuesday on bargain-hunting and a weaker dollar. U. S. stocks rebounded as some investors decided to buy the dip despite bearish sentiment.
Gold Rangebound on Rates and Inflation Tug Of War -FX Daily
"Gold closed Friday witha small weekly loss for the first time in 4-weeks as rising global yields and a surging USD continues to weigh on the precious metal. However, price action remains somewhat choppy, which appears likely to persist between 1800 and 1880.
As I have said previously, I struggle get bullish on gold given the significant rise in real yields.
Although, what I would say is should yields begin to pullback with a return to 3% for the US 10yr (currently at 3.25%), then this will keep gold afloat. Ultimately, going forward price action is likely to remain rangebound in the short-term."
Stocks Historically Don’t Bottom Out Until the Fed Eases -WSJ
"Another week of whipsaw stock trading has many investors wondering how much farther markets will fall.
If history is any guide, the selloff might still be in its early stages.
Investors have often blamed the Federal Reserve for market routs. It turns out the Fed has often had a hand in market turnarounds, too. Going back to 1950, the S&P 500 has sold off at least 15% on 17 occasions, according to research from Vickie Chang, a global markets strategist at Goldman Sachs Group Inc. On 11 of those 17 occasions, the stock market managed to bottom out only around the time the Fed shifted toward loosening monetary policy again.
Getting to that point may be painful. The S&P 500 has fallen 23% in 2022, marking its worst start to a year since 1932. The index declined 5.8% last week, its biggest decline since the pandemic-fueled selloff of March 2020.
And the Fed has only just gotten started. After approving its largest interest-rate increase since 1994 on Wednesday, the central bank signaled that it intends to raise rates several more times this year so it can tamp down inflation.
Tightening monetary policy, combined with inflation running at a four-decade high, has many investors fearful that the economy might go into a downturn. Data on retail sales, consumer sentiment, home construction and factory activity have all shown significant weakening in recent weeks. And while corporate earnings are strong now, analysts expect they will come under pressure in the second half of the year."
How Long Does it Take For Stocks to Bottom in a Bear Market? -Wealth of Common Sense
"I’ve spent a lot of time here looking back at historical bear markets in terms of length and magnitude.
Maybe it’s just reassuring to know bear markets do come to an end even if you don’t know when it will be.
This chart shows every bear market since WWII along with the number of months they lasted peak-to-trough and then how long it took to make your money back from the bottom:
Add it all up and the average bear market has lasted a year and then taken nearly two more years to breakeven.
Some are longer and some are shorter....The 1973-74 which took 10 months to bottom once the bear took hold. The 2000-2002 crash took nearly 19 months until the nadir. The 2009 bottom was 8 months later.
As always you can find historical data that makes you feel better or worse about the current situation"
Sports betting ads are everywhere. Some worry gamblers will pay a steep price -NPR
"A new era of legalized betting is taking root across the U.S., one that is radically reshaping what it means to watch professional and collegiate sports.
For many fans, the days of the once-a-year Super Bowl office pool are a distant memory. Betting on sports in much of the country is now as easy as tapping an app on your phone.
Sportsbooks such as DraftKings and FanDuel - companies that set odds and take bets - have unleashed an advertising storm, intent on scooping up as many customers as possible. If you've driven past a billboard, turned on a TV or used the internet lately, odds are you've seen an ad for sports betting.
States regulate how sportsbooks can operate but give companies wide latitude over what they can say in advertisements - a break from the constraints on other industries where there is a risk of addiction, such as tobacco. And there are no advertising rules specific to the sports betting industry at the federal level....
Spectators now wager tens of billions of dollars each year on games they once watched with little or no financial interest. The boom in sports betting comes as there has been an increase in inquiries to the National Problem Gambling Helpline Network, which received 270,000 calls, texts and chats last year - a 45% jump over the prior year."
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6.20.22 - The Crypto Party Is Over
Gold last traded at $1,838 an ounce. Silver at $21.61 an ounce.
NEWS SUMMARY: Precious metal prices steadied Monday on a weaker dollar. U.S. stocks traded mixed as investors tried to shake off the worst week of losses in two years.
Gold’s Floor Price Is Getting Higher, Top Producer Newmont Says -Bloomberg
"As global markets wilt on fears of stagflation, gold has stayed relatively resilient given its haven status.
Prices are set to stay around current levels of about $1,800 an ounce, or even a little higher, amid inflationary, economic and geopolitical uncertainties, said Newmont Corp.’s chief executive officer.
That’s a downright conservative view among industry peers who have been predicting much higher prices after an unprecedented period of fiscal and monetary stimulus."
The Crypto Party Is Over -WSJ
"The cryptocurrency industry was built in part on swagger, enthusiasm and optimism. Bitcoin backers’ rallying cry to rebuff skeptics was, 'Have fun staying poor.' Those who didn’t buy in were letting the future pass them by.
Now, with markets sliding and inflation plaguing the global economy, cryptocurrencies have been among the first assets sold. Since bitcoin hit an all-time high in November, roughly $2 trillion of cryptocurrency value—more than two-thirds of all the crypto that existed - has been erased. Bitcoin itself has plunged to $21,206, roughly 69% off its all-time high of $67,802.30. Crypto exchanges are bleeding users, crypto companies are laying off workers with at least one contemplating restructuring.
The crypto world is no stranger to booms and busts, which many in the industry refer to as 'winters.' But many investors and workers are feeling this crypto crash more acutely than previous ones. When the dust settles, some crypto products and companies may no longer exist.
'The reality is that like stock, with crypto, everyone is a genius in a bull market,' said Mark Cuban, who became a billionaire during the dot-com boom in the ’90s and has more recently invested in a number of crypto projects. 'Now that prices are falling for both, those companies that were unnaturally sustained by easy money will go away.'....
In early May, persistent downward pressure in the crypto market broke something big: the stablecoin terraUSD, a cryptocurrency meant to hold a steady $1 value, collapsed due to what was essentially a run on the bank, taking along with it its sister coin, Luna. Almost overnight, $40 billion worth of the two cryptocurrencies were gone.
That collapse has had downstream effects. Earlier in June, a large crypto-lending service called Celsius Network LLC, which had about $12 billion in user assets, froze withdrawals. The money is currently still locked up and the company has hired a law firm to try to work through its obligations and debts. Another lender, Babel Finance, on Friday suspended withdrawals and redemptions."
Fixing Our Current Economic Woes Is as Easy as Looking to the Past -Reason
"Skyrocketing inflation, a historic Fed interest rate hike, rock-bottom unemployment, employers begging for workers—and just about everyone else scared to see what the stock market has in store tomorrow. It's unclear whether the economy is just suffering from a case of monetary and fiscal policy indigestion or if something deeper is going on.
Can the Fed thread the needle and gear down the economy to cool inflation while avoiding a recession calamity? Will its 75-basis-point interest-rate increase provide any relief? Or has America's free market economy become so bruised by constant political tinkering that it cannot respond predictably to yet another change in monetary policy?
When looking for feasible answers to these questions, our political leaders place the blame elsewhere and point to things outside of their immediate control. These excuses include uncertain recoveries from past recessions, COVID-19 shutdowns, supply chain breakups that require time to heal, and a war-loving Russian president's invasion that has disrupted one of the world's major energy filling stations.
While each of these scenarios does contribute to economic chaos, decisions by past and present administrations—including Barack Obama's, Donald Trump's, and Joe Biden's - to subsidize economic sectors and to deposit freshly printed money into taxpayers' bank accounts are perhaps most responsible.
After unleashing trillions of stimulus dollars that chase a limited supply of goods, services, and travel opportunities and drive prices up, our political leaders doubled down. They produced, defended, and left intact regulations, tariffs, and subsidies that raise protective walls around America and offer special benefits to important interest groups....
The economy is running entirely too hot, but there are still viable ways to cool it off. A situation like this is not novel. As unlikely as it may seem at the moment, breaking the economy's fever will require national leadership with a clear, principles-based vision. Those who think less in terms of politics and more in terms of real-world outcomes know what can happen when restrictions on trade and economic activity are reduced or made more flexible, when property rights are protected, when the tax disparity between what one produces and what one gets to keep is made smaller, and when the actions of monetary authorities clearly and closely reflect the relationship between money and the economy.
It wasn't all that long ago that both former presidents Ronald Reagan and Bill Clinton chose to reduce the economy's size, scope, and temperature to more bearable levels. The record achieved by their inspired changes speaks for itself: low inflation, sound GDP, and employment growth. Yes, between inflation, a swooning stock market, wondering what the Fed will do next, and the dread that comes with filling your gas tank—there's plenty to worry about. But if we only focus on these financial measurables, we lose sight of a still-productive economy where people go to work each day and produce real goods and services that we all welcome and enjoy. "
The Greatest Paradox in Markets -Compound Advisors
"Stocks go up and stocks go down. Most of the time there’s nothing interesting or exceptional to say about it.
But from time to time, notable extremes occur, both on the downside and the upside. The driving force? The most powerful human emotions: fear and greed.
In the past few years we’ve seen both sides…
1) Fear: March 12, 2020 - On March 12, 2020, just 1% of stocks in the S&P 500 closed above their 50-day moving average, one of the most oversold readings in history.
The S&P 500 was in the midst of a crash, down 27% from its February high, and nearly all of the stocks in the index were moving lower.
What happens when stocks are extremely oversold? They tend to bounce back, with above-average forward returns…
2) Greed: May 28, 2020 - And bounce they did.
Just two and half months later, an astounding 96% of stocks in the S&P 500 would close above their 50-day moving average, which at the time was the highest reading ever recorded. The S&P 500 had rallied 40% from its lows in March, and by all accounts was extremely overbought....
It’s likely because extreme strength begets strength (momentum) while extreme weakness does the same (mean reversion). Momentum and Mean Reversion are the most powerful forces in markets, and they exist due to the most powerful human emotions: greed and fear. These emotions cause investors to overreact and underreact to information, again and again.
What will happen from here? There are many possibilities as every bear market is different. The best we can say is what’s more or less likely to happen, and those odds are forever changing.
When the market has been this extremely oversold in the past, it has tended to bounce with above-average short-term performance. But alas, tends to is far from always."
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6.17.22 - The Bear Is Here
Gold last traded at $1,839 an ounce. Silver at $21.66 an ounce.
News Summary: Precious metal prices remain stable Friday as traders take a step back to assess the latest major central bank developments. U.S. stocks volatile as S&P 500 heads for worst week since the start of the pandemic.
Gold bounces 1% as dollar hastens retreat- CNBC
"Gold rose 1% in volatile trade on Thursday as the dollar pulled back sharply on the U.S. central bank’s aggressive policy outlook, bringing some of the safe-haven lure back to the metal....
Bolstering gold’s appeal among overseas buyers, the dollar fell 1.6% to retreat from recent two-decade highs.
'Gold is now starting to look pretty attractive as the bet on the U.S. economy is dwindling,' said Edward Moya, senior analyst with OANDA.
'As the dollar rally has hit a peak and investors are right now looking for safe havens, the gold trade looks pretty attractive,' Moya added.
While gold has recently moved in tandem with stock and bond markets, rather than gaining from pure safe-haven flows, its rise on Thursday came despite a steep selloff on Wall Street that was driven by worries over recession."
The Bear Is Here - Commonwealth
"We hit a milestone just recently, although it’s certainly not one we wanted to hit. The S&P 500 stock index is now officially in a bear market, down more than 20 percent from its highs. The Nasdaq, of course, has been in a bear market for some time. It is down more than 20 percent, but that is primarily technology, which is notoriously volatile. The S&P 500, which includes the largest and best-known companies across all industries, is a better indicator of market stress overall. The fact that it has moved into the bear phase signifies significant market and economic stress.
The stress is real, as we can see in the headlines. Inflation is at 40-year highs, gasoline is at unprecedented prices, we have a war in Europe for the first time in 80 years, and that is not all. This is a difficult time. If you think about it, a substantial market reaction makes sense.
Despite the very real risks out there, however, the current bear market is not really about the headlines. Rather, it reflects what is happening in the economy and in economic policy, which is related to—but different from—those headlines. So, to understand what is really happening and where we are likely going, we need to take a step back from the headlines.....
Right now, the major factor is inflation. While the economy continues to grow, inflation is slowing that growth. This round of price inflation started in the pandemic, with stimulus payments driving more spending, even as supply chains contracted. More recently, however, inflation has shifted to a more permanent—and more threatening—trend, driven by housing and services. That has made it a much higher risk than it appeared even a month or two ago.
On top of that, we have other factors keeping inflation high. The war in Ukraine has driven oil and food prices higher around the world, and that will continue as long as the war does. Higher energy prices affect everything else. In conjunction with everything else, it suggests the inflation risk is much higher than many had thought....
Despite the good long-term intentions, however, the potential economic damage right now is real, and markets are reflecting that. Beyond slowing the economy and potentially reducing corporate earnings, higher rates directly reduce the prices investors pay for stocks. This is a double whammy that has resulted in the fast market drawdown this year. And that is how we got to today: high inflation has caused high interest rates that have slowed the economy and taken stock valuations down."
Recession Fears Surge Among CEOs, Survey Suggests - The Wall Street Journal
"Most top executives say they think a recession is looming or already here, according to a new survey, reflecting a rapid deterioration of the economic outlook among business leaders.
More than 60% of CEOs expect a recession in their geographic region in the next 12 to 18 months, according to a survey of 750 CEOs and other C-suite executives released Friday by the Conference Board, a business research firm. An additional 15% think the region of the world where their company operates is already in a recession....
The survey, which is based on data collected in May, was conducted before the Federal Reserve on Wednesday approved its largest interest-rate increase since 1994 and Fed officials said it was becoming more difficult to tame inflation while avoiding a recession.
'We need to be prepared for tougher times,' said Ilham Kadri, CEO of Solvay SA, a Brussels-based chemical maker, who added that rising inflation could hurt demand for products.
The usual sources of difficulty in today’s economy are driving growing fears of a recession, executives say.
The fallout from Russia's invasion of Ukraine, supply-chain challenges and Covid-19 lockdowns in China, not to mention rising interest rates, are all 'creating some uncertainty in terms of the outlook,' said Paul Knopp, chair and CEO of accounting and advisory firm KPMG U.S.
Higher energy prices are a particular concern, some executives say, with rising transportation costs making it more expensive to produce goods."
After months of promising lower gas prices, Biden gives up- Washington Examiner
"With people rightly fuming at the pump over record-high gas prices, President Joe Biden recently announced his latest plan for fighting inflation, including elevated prices at the pump. But after months of failed promises that his administration’s actions would yield lower gas prices, he admitted that 'we’re not going to be able to click a switch' and 'bring down the cost of gasoline.'
The White House first responded to high gas prices on Nov. 23, when the average U.S. retail price for all grades was $3.49 per gallon, up over a dollar from $2.46 when the president was inaugurated in January 2021. The administration argued that the increase was because 'oil supply has not kept up with demand as the global economy emerges from the pandemic.' Its response? Releasing 50 million barrels of oil from the Strategic Petroleum Reserve, which the White House said would 'lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.'...
In his recent inflation plan, as he has done since late February, the president continued to point the finger of blame for higher pump prices at Russian President Vladimir Putin: 'The price at the pump is elevated in large part because Russian oil, gas and refining capacity are off the market.' Biden dropped the 'in large part' qualifier in subsequent comments, saying simply that 'food and gas prices' are 'elevated by Putin’s price hike.'
But the president’s latest statements also do something new. They throw in the towel on previous administration claims of being able to lower gas prices. The best the president could recently muster was a lame statement that 'we must mitigate' the effects of price hikes on American consumers, which is entirely different from prior White House promises to straight-up 'lower gas prices.' And that supposed mitigation would not result from some new action. Instead, the president defensively reminded readers, 'That is why I led the largest release from global oil reserves in history.” That’s a reference to the March action the White House said would lower gas prices but has done nothing of the sort.....'"
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6.16.22 - Time to Panic?
Gold last traded at $1,852 an ounce. Silver at $21.92 an ounce.
NEWS SUMMARY: Precious metal prices held firm Thursday following the latest Fed rate hike. U.S. stocks extended further into the red as investors worried the Fed may drive the economy into recession.
Gold retreats from highs of the day after Federal Reserve hikes rates -CNBC
"Gold prices pulled back from their highs of the day after the Federal Reserve opted for one of the sharpest U.S. rate hikes since 1994.
Uncertainty regarding the outcome of Wednesday’s FOMC meeting had prompted some buying interest in safe-haven metals, said Jim Wyckoff, senior analyst at Kitco Metals....
Investors also took stock of data showing an unexpected fall in U.S. retail sales in May amid record high gasoline prices.
Meanwhile, Goldman Sachs said a 'wealth shock' due to lockdowns in China merely delayed rather than derailed its upside view for bullion.
A rebound in emerging market demand, strong ETF inflows, central bank buying amid U.S. growth weakness into 2023 all augur well for gold, the bank said, projecting a three-month price target of $2,100 an ounce."
Time to Panic? -Bonner Private Research
"If you think the feds will really stick with their ‘tightening’ program… you should panic now. Sell stocks, bonds, collectibles, the house, the kids - everything. They’ll all soon be available at much lower prices. But be ready to buy back in when the bottom is reached. Maybe in 6 months. Maybe 24. Maybe 50.
But if the feds flinch and begin another loosening, stimulating cycle… well… you’ll have more time. Prices will go up… in nominal terms, but down in real, inflation-adjusted value. It will be confusing. Ambiguous. The bottom won’t come for maybe 10 years… maybe 20. And be sure to renew your passport. When the end comes, it will be a horror show of poverty, hunger, chaos, corruption and revolution....
Back in the 1970s, the inflation numbers were worse. But John Williams at ShadowStats still calculates the rate the same way they did back then; he gets 13.5% for today’s inflation – almost exactly what it was in 1979.
But in 1979, conditions were much different. The beer from the last party had already gone flat. Stocks had hit a peak in 1968. By 1979, the froth was gone; adjusted for 11 years of inflation, they were already near the very bottom of their range. They would not go much lower, no matter how high the Fed raised its lending rate....
Today’s stocks are coming off an all time high. So far, they have lost about 15% of their value – which leaves another 30% to 40% more to go. And the federal debt in 1979 was still under $1 trillion… less than a third of GDP. Now it has crested $30 trillion… which is about 130% of GDP.
As for a traditional portfolio – 60% S&P 500 stocks, 40% US Treasury bonds – it’s already lost 15% of its value. Not since 1937 has it done so badly.Readings of consumer sentiment have never been lower – ever. Or at least not since the University of Michigan began tracking it in 1952.
Most people don’t own many stocks or bonds. What they care about is how much they earn each week and what they can buy with it. And for the last 63 weeks they’ve been getting poorer as wage hikes lag consumer price increases."
Behind almost every shortage and price spike is a bungled government policy -Washington Times
"In a market economy, persistent shortages of goods and services are not supposed to occur, unlike in socialist economies. In free markets, if demand begins to exceed the supply for something, producers will raise prices until the point where supply and demand are in equilibrium.
The higher prices serve to motivate sellers to produce more, and to allocate scarce resources to avoid shortages. There can be temporary supply shocks, where a critical raw material becomes scarce because of a flood, drought, earthquake, war or what have you. But normally producers quickly adjust and find ways to meet demand.
How then can we have persistent shortages in toilet paper — a product invented more than 150 years ago — when there is no shortage of trees? Insulin was invented a century ago and is critical for the world’s 537 million diabetics (37 million in the U.S. alone), and the price has been soaring and now costs 10 times more in the U.S. than in any other developed country.
The world, and particularly the U.S., is awash with oil and gas, yet prices have tripled in the last couple of years and are at record highs. There has been a global shortage of semiconductor chips — particularly, high-end chips. Baby formula — a product made for decades — is suddenly all but unobtainable in many places.
In communist and socialist countries, production decisions are made by state bureaucrats, who often make incorrect forecasts, resulting in shortages of things people need and want and surpluses of things for which there is little demand.
In a market economy, a lack of competition - too few competitors or competitors that collude with each other — can lead to higher prices and less innovation. This is why monopolies, and many organized collusive oligopolies, are often deemed illegal. A large body of “antitrust” law has developed to deal with the perceived problem. The government antitrusters have often missed the mark by attacking companies that posed little or no danger, while totally missing real dangers to the system."
Inflation: Return of a Plague -City Journal
"You do not need to have read the works of John Maynard Keynes to know, if only approximately, the famous conclusion of his General Theory. He argues, essentially, that all government policies are derived, usually unknowingly, from long-dead economists, whose very names are often ignored.
Economic policies are indeed determined today by many people who have not read Keynes, or Friedrich von Hayek, or Milton Friedman, which does not prevent them from applying the Keynesian theory, or its opposite, the Hayek-Friedman approach. Current world economic developments demonstrate this; inflation, which is breaking out everywhere, especially intensely in the U.S., is indeed the consequence of strategies inspired by theories unknown to those who have internalized them.
As Keynes argued, theories are decisive. If only governments could choose the right ones! But the Biden administration mistakenly decided to apply the statist Keynesian theory, whereas it should have followed Hayek and Friedman. In a recession, Keynes argued, one should stimulate the economy by boosting demand - that is, by spreading purchasing power, which requires direct subsidies or easy credit at low rates. Greater production, according to Keynes, would necessarily follow the boosted demand.
With the Covid crisis, as after the recession of 2008, Western governments adopted this strategy in the form of direct aid to consumers and an interest rate of zero. The result: a rise in prices, with production unable to keep up with demand. The price hikes that result from these political errors in turn provoke demands for wage hikes, setting off an inflationary spiral from which it is difficult to escape....
To get out of the inflationary spiral in which the amnesia of central banks and governments has put us will require great political courage. It will be necessary to explain the disappearance of near-zero interest rates as well as the risk of short-term recession brought on by raising interest rates. It was because of his pedagogical gifts that Ronald Reagan, early in the 1980s, was able to persuade the American people to tolerate this cure called austerity:
inflation disappeared, and growth resumed, but only after two years of widespread pain. This policy, which at the time was called 'neoliberal,' was later adopted across Europe, because its success was evident. The present lack of political courage and moral legitimacy in the U.S. and in Europe will, I fear, make it necessary in the coming years for us to live with inflation, which means to live badly."
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6.15.22 - Market Rout: Lehman Blowup Memories
Gold last traded at $1,829 an ounce. Silver at $21.64 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and a weaker dollar. U.S. stocks attempted to rally as investors anxiously awaited the Federal Reserve’s aggressive action to tame surging inflation.
Wholesale prices rose 10.8% in May, near a record annual pace -CNBC
"The producer price index, a measure of the prices paid to producers of goods and services, rose 0.8% for the month and 10.8% over the past year. The monthly rise was in line with Dow Jones estimates and a doubling of the 0.4% pace in April.
Excluding food, energy and trade, so-called core PPI rose 0.5% on the month, slightly below the 0.6% estimate but an increase from the 0.4% reading in the previous month. On a year-over-year basis, the core measure was up 6.8%, matching April’s gain.
The two PPI measures remained near their historic highs — 11.5% for headline, and 7.1% for core, both hit in March.
The data is significant in that prices at the wholesale level feed through to consumer prices, which are running at their highest levels since December 1981. The consumer price index increased 8.6% annually in May, defying hopes that inflation had peaked in the spring.
Federal Reserve officials are watching the inflation numbers closely. Markets now expect the central bank to raise benchmark short-term borrowing rates by 75 basis points when their two-day meeting concludes Wednesday.
For wholesale prices, energy made up much of the May gains. The index for final demand energy rose 5% on the month, part of a 1.4% surge in final demand goods."
Powell Facing Choice Between Elevated US Inflation and Recession -Yahoo Finance
"Federal Reserve Chair Jerome Powell is facing an increasingly grim calculus after yet another hot inflation reading last week: He probably has to push the economy into recession in order to regain control of prices.
After spending much of last year sounding a bit like the inflation-tolerant, former central bank chief Arthur Burns, Powell has increasingly taken on the mantle of inflation-slayer -- and Fed icon -- Paul Volcker. It’s a role he’s likely to embrace with relish on Wednesday, when he speaks with reporters after a widely-expected decision by the Fed to raise interest rates by another half percentage point.
But so far at least, he’s shied away from endorsing the tough monetary medicine -- and punishingly deep recession -- that it took for Volcker to break the back of inflation four decades ago. While Powell has recently acknowledged that getting price pressures under control could require some pain -- and maybe even higher unemployment -- he’s steered clear of talking about a recession....
'The chairman of the Fed doesn’t want to let the ‘r’ word slip out of his mouth in a positive way, that we need a recession,' former US central bank policy maker Alan Blinder said. 'But there are a lot of euphemisms and he’ll use them.'
An increasing number of economists -- including ex Fed Vice Chair Blinder -- say it may take an economic contraction and higher unemployment to bring inflation down to more tolerable levels, much less back to the Fed’s 2% price target.
'I’ve become more pessimistic about the opportunity of stabilizing inflation at an acceptable level without a recession,' said JPMorgan Chase & Co. chief economist Bruce Kasman. He sees a dynamic developing in which a protracted period of high inflation and a tight labor market leads to elevated wage demands and more costs for companies.
In research published on June 6, Bloomberg Economics Chief US economist Anna Wong and her colleagues put the chances of a recession this year at one in four and of one next year at three in four. 'A downturn in 2022 is unlikely, but recession in 2023 will be tough to avoid,' they wrote."
Market Rout Evokes Memories of Trading Before Lehman Blowup -WSJ
"Even by the standards of this volatile year, Monday’s wild ride throughout financial markets stands out. Two-year US Treasury yields surged 29 basis points as bond prices tanked. The yield jumped 54 basis points since Thursday night, the biggest two-day increase since 2008, a sign of just how rapidly traders are adjusting where they think the Federal Reserve will take interest rates.
All but five stocks in the S&P 500 tumbled, and the benchmark posted a more than 20% loss since its January peak, crossing into a bear market. On Tuesday morning in Asia, stocks extended the selloff as investors continued to process the possibility of more rapid Fed tightening, with MSCI’s Asia-Pacific share index falling more than 1.5%.
Cryptocurrencies plummeted so violently that a popular lending platform froze withdrawals to prevent a very modern kind of bank run. Over in old-school currencies, the U.S. Dollar Index roared to the highest level in almost two decades as investors sought safety.
It was enough, for some, to resurface scary memories of the global financial crisis more than a decade ago. Christian Hoffmann, a portfolio manager for Thornburg Investment Management, said market liquidity has deteriorated so much that he’s thinking about the dark days of 2008.
'Liquidity in the market is worse than it was leading up to Lehman,' said Hoffmann, who worked at the firm that imploded back then, triggering the worst financial crisis since the Great Depression. It’s the kind of problem that can exacerbate losses in a big way. 'That creates even more risk, because if the market doesn’t have liquidity, it can gap down very quickly.'"
World's Richest Have Lost $1.4 Trillion In 2022 After Rapid Gains -BJTV
"The 500 wealthiest people in the world have lost a combined $1.4 trillion this year, including $206 billion on Monday alone, according to the Bloomberg Billionaires Index, as global financial markets buckle under the weight of higher interest rates and inflation anxiety.
The data show that the ranks of the wealthy in Asia-Pacific increased just 4.2% -- trailing Europe and falling further behind North America after dominating the growth of rich people for the past decade.
China's crackdown on technology companies and a cooling real estate market was partly the cause, but it also reflected the ferocious gains in the US stock market, which helped inflate everything from cryptocurrencies to property values. That's now rapidly reversing as inflation has spiraled, prompting concerns over how sharply the Federal Reserve will raise rates....
The US, Japan, China and Germany remain among the top countries where most of the world's wealthy live. The four are home to almost 64% of high-net-worth individuals globally, Capgemini's report showed.
What's more, even among the world's high-net-worth individuals, the very rich saw the most benefits. People with investable assets of $30 million or more saw their wealth expand 9.6% compared with 2020, the fastest pace among the cohorts studied by the report. Those with $1 million to $5 million - defined as 'millionaires next door' - had the slowest wealth growth at 7.8%.
The report also highlighted how women across all brackets are set to inherit 70% of global fortunes over the next two generations. The massive wealth created from sky-high valuations of tech companies and startups also gave rise to more young and rich individuals, including in the crypto space."
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6.14.22 - US Inflation to Continue
Gold last traded at $1,811 an ounce. Silver at $21.02 an ounce.
NEWS SUMMARY: Precious metal prices steadied Tuesday on a hot inflation report and a weaker dollar. U.S. stocks traded mixed as the S&P Index fell back into a bear market.
Hedge funds still bullish on gold but market faces challenging environment -Kitco
"Although volatility has picked up in the last few days, market analysts say that, in general, the gold market is waiting for a catalyst to push the precious metal out of its narrow trading range.
The latest trade data from the Commodity Futures Trading Commission shows that hedge funds remain relatively neutral on gold and are not taking any significant bullish or bearish positions. Analysts have said that gold remains caught in a tug of war between rising inflation and aggressive interest rate hikes from the Federal Reserve.
The Federal Reserve is on track to raise interest rates by 50-basis points later this week and make another similar move in July. However, inflation remains a major threat to the economy. The U.S. Consumer Price Index rose 8.6% for the year in May, a new 40-year high.
'The macro picture - with the Fed and BOE set to hike rates and the hawkish spin from the ECB - might be expected to weigh on gold, but the inflation story may keep the gold bears at bay," said Marc Chandler, Managing Director Bannockburn Global Forex, in a recent comment to Kitco News....
Although gold prices could trend lower, many analysts remain optimistic that gold can move higher in the long term. There is growing doubt that the Federal Reserve will be able to get inflation under control.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, said that rising stagflation fears and further weakness in equity markets will continue to support gold prices. 'Gold is relatively unchanged on the year, but it continues to outperform equities, so I am happy with its performance,' he said."
U.S. Inflation Likely to Continue Into 2023 -Reason
"The Consumer Price Index (CPI) went up again in May. Over the last year, prices across the economy increased an average of 8.6 percent, up from 8.5 percent in April's year-over-year reading....
When COVID hit, the Federal Reserve tried to stimulate the economy with a massive bond-buying program. Its balance sheet more than doubled over the next two years, from $4.1 trillion to $8.9 trillion, which increased the M2 money supply measure by a third. The Fed's actions have lag times ranging from six to 18 months, which is why inflation started increasing last year.
Now, a little more than two years later, we are seeing a slight tick down in Core CPI as that torrid monetary growth begins to slow. When the Fed realized it overshot the mark, it eventually stopped the bond-buying program and began increasing the federal funds rate - though this was too little, too late to tame inflation in 2022.
As a result, high inflation should last at least into next year. Republicans are trying to blame President Joe Biden. Democrats are trying to blame everything from Putin to corporate greed. Both are misguided, which is leading them to make misguided policy proposals that threaten to make things worse.
Inflation is not a Red Team vs. Blue Team issue; it is a monetary issue. The Federal Reserve started this fire, and they have barely begun putting it out."
How the Fed and the Biden Administration Got Inflation Wrong -WSJ
"Officials applied an old playbook to a new crisis. ‘We fought the last war.’
‘If you look back in hindsight then, yes, it probably would’ve been better to have raised rates earlier,’ Federal Reserve Chairman Jerome Powell said.
In recent weeks, top officials in the Biden administration and Federal Reserve have publicly conceded that they made mistakes in their handling of inflation.
Behind their errors was a misreading of the economy.
Advisers to President Biden and Fed officials worried the Covid-19 pandemic and related restrictions would bring similar consequences to the 2007-09 financial crisis: weak demand, slow growth, long periods of high unemployment and too-low inflation.
So they applied the last playbook to the new crisis. The Fed redeployed low-interest-rate policies that it believed had been effective and generally benign, and promised not to pull back prematurely. Elected officials concluded they had relied too heavily on the Fed previously, and decided to spend more aggressively this time....
Moreover, many Democrats saw their control of the White House and Congress as a rare opportunity to shift Washington’s priorities away from tax cuts favored by Republicans and toward expansive new social programs.
But the pandemic economy turned out to be fundamentally different. While the financial crisis primarily dented demand by businesses and consumers, the pandemic undercut supply, resulting in persistent shortages of raw materials, container ships, workers, computer chips and more.
Unemployment fell and inflation rebounded more quickly than policy makers expected—yet they stuck with the old playbook. That exacerbated the supply-and-demand mismatches and helped drive inflation up, reaching 8.6% in May, its highest in 40 years."
The Era of Free-Lunch Economics Is Over -City Journal
"In American foreign policy, the period from 1990 through the summer of 2001 has been called the “holiday from history.” Between the collapse of the Soviet empire and the 9/11 attacks, the United States drastically reduced defense spending and celebrated what was optimistically assumed to be a permanent end to significant security threats. September 11, 2001, shattered that peace and returned America to its familiar posture of vigilance against security threats.
We may soon look back on the 2009–2021 period as the era of 'free-lunch economics,' when hubristic politicians and economists declared that traditional fiscal and monetary trade-offs no longer existed in any meaningful form. Advocates portrayed a new economy liberated from restraints, one in which money-supply expansions and congressional deficit spending could finance benefits that would make even Western Europeans envious, with no economic drawbacks. As in foreign policy, this utopian vision proved to be an illusion. Reality has intruded.
The precipitating event of the free-lunch era was the massive 2009 federal response to the Great Recession. At the time, an $800 billion stimulus bill and $1.3 trillion expansion of the Federal Reserve balance sheet represented a radical (and to many, reckless) divergence from Washington’s typical modest recession responses. And yet the warnings of rampant inflation, spiraling interest rates, and a fiscal crisis did not come to pass. In fact, inflation remained low, and interest rates continued to fall for a decade....
Economists like former International Monetary Fund chief economist Olivier Blanchard updated earlier, more cautious, research and now claimed that low interest rates provided substantial fiscal room for spending. Many progressives embraced a fringe concept called Modern Monetary Theory (MMT), which argued that simply printing trillions of dollars could magically finance the progressive wish list without inflation.
Right on cue, progressive analysts developed proposals to borrow tens of trillions of dollars to spend on Universal Basic Income, the Green New Deal, a government-funded job guarantee, single-payer health care, and free public college. All this borrowing would be on top of the combined $112 trillion shortfall for Social Security and Medicare that the Congressional Budget Office projected over the next 30 years....
The 'free-lunch' experiment has collapsed. Inflation has jumped past 8 percent for the first time in 40 years—reaching 8.6 percent in May—interest rates are rising every month, real wages are falling, and economic growth is dipping. Budget deficits are now projected to soar past $2 trillion within a decade, even assuming peace, prosperity, and the scheduled expiration of most of the 2017 tax cuts.
This is not a coincidence. Economists such as Lawrence Summers warned that the ARP would worsen inflation, and research from the San Francisco Fed has confirmed it. America’s inflation rate has thus exceeded those of European countries with smaller fiscal responses."
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6.13.22 - How the FBI Uses Foreign Laws to Spy on You
Gold last traded at $1,828 an ounce. Silver at $21.27 an ounce.
NEWS SUMMARY: Precious metal prices retreated Monday on profit-taking as the dollar hit 20-year highs. U.S. stocks fell sharply - back into bear market territory - ahead of an anticipated Fed rate hike later this week.
Inflation threat is far from over, got gold? -Kitco
"After a relatively quiet week, the gold market saw some fireworks on Friday as investors reacted to rising inflation pressures.
Economists expected to see a further decline in consumer prices in May; however, the U.S. Labor Department said its Consumer Price Index rose 8.6% for the year in May, hitting a new 40-year high....
According to many market analysts, the Federal Reserve's credibility is now on the line as investors start to question if the central bank can actually bring down inflation. Although the Federal Reserve is expected to raise interest rates by 50 basis points next week and in July, they remain woefully behind the inflation curve and some significant investors are paying attention.
Thursday, David Einhorn, founder of Greenlight Capital and a long-time gold bull, said that gold will be an essential asset as the Fed is bluffing when it comes to taming inflation.
'The Fed doesn't really have the tools to stop the inflation. When the Fed has to choose between fighting inflation and supporting the Treasury, I think it has to pick the Treasury. At that point, it's best to have some gold,' he said in a presentation during the annual Sohn Investment Conference.
But it's not just investors who see gold as an essential asset in a portfolio. Wednesday, the World Gold Council released its annual central bank gold survey. Fifty-seven banks participated in this year's survey, and 25% said they wanted to increase their gold reserves in the next 12 months."
The Boiling Over of America -Noonan/WSJ
"San Francisco’s progressive District Attorney Chesa Boudin was recalled this week in a 60-40 landslide. Los Angeles saw a surge of support for a moderate mayoral candidate, Rick Caruso, who campaigned on crime, homelessness and social disorder. None of this necessarily marks a sea change; the people of both cities have long been happy to be liberal Democrats. What they won’t accept is being ruled by progressives. (San Francisco has made this clear twice; in February, when voters fired as many progressive members of the school board as they could, we called it the beginning of a serious rebuke.)
An aspect that is potentially promising for the Republicans is that the shock and trauma of the past few years of misgovernment, and the recall fights, have, for the first time in at least a generation, reminded Democrats that there are options beyond their party and that on the issues of crime and public disorder, Republicans have demonstrated the greater wisdom. So yes, there could be long-term implications.
Early reports suggest, unsurprisingly, that minority voters backed the recall in greater numbers than college-educated whites. This is because they suffer more and have fewer protections when crime spikes and homeless encampments seize new ground.
This is what the foes of progressives are saying: We won’t let our city go down. We won’t accept the idea of steady deterioration. We will fight the imposition of abstract laws reflecting the abstract theories of people for whom life has always been abstract and theoretical. We can’t afford to be abstract and theoretical, we live real lives. We wish to be allowed to walk the streets unmolested and with confidence. This isn’t too much to ask. It is the bare minimum.
Progressive politicians have been around long enough running cities that some distinguishing characteristics can be noted. One is they don’t listen to anybody. To stop them you have to fire them. They’re not like normal politicians who have some give, who tack this way and that. Progressive politicians have no doubt, no self-correcting mechanism....
The lesson of this political moment: Don’t be radical, don’t be extreme. Our country is a tea kettle on high flame, at full boil. Wherever possible let the steam out, be part of a steady steam release before the kettle blows."
How the FBI uses laws to spy on foreign terrorists to spy on you -The Hill
"The FBI searches through databases of foreign communications in a program that Congress created specifically to catch foreign terrorists and spies. But the FBI uses this same program to glean private information about American citizens and our communications.
These so-called 'U.S. person queries' are transforming one of the most powerful and invasive surveillance authorities - Section 702 of the Foreign Intelligence Surveillance Act - into a means for FBI agents to spy on Americans without a warrant, gutting the Fourth Amendment of the Constitution.
Section 702 has become increasingly controversial since its passage in 2008. Congress passed it only to authorize the surveillance of non-Americans outside the United States. It was promoted as an authority designed to counter terrorists. Instead, it is being used in Orwellian ways that make America a little more like Russia or China.
Through declassified Foreign Intelligence Surveillance Court (FISC) opinions and other government disclosures, the public has learned that Americans’ personal information is also swept up by what intelligence agencies call 'incidental' collection. After our information ends up in government databases, the FBI intentionally searches it to learn more about Americans, our communications, and what we’re up to. This means the FBI can warrantlessly obtain, review and use the private communications of Americans who are not suspected of criminal activity or any wrongdoing.
A declassified FISC opinion from 2020 reveals that FBI agents have used 702 information to snoop on individuals who asked to participate in the FBI’s 'Citizens Academies' - a program for business, religious, civic and community leaders to better appreciate the role of federal law enforcement in the community. (Yes, that joke writes itself.) Section 702 also was used without warrants to search the personal information of repair workers entering field offices, people providing tips, and victims reporting crimes.
The same FISC opinion describes the FBI’s systematic failure to obtain court orders before reviewing the contents of Americans’ communications....It is in the enlightened interest of the FBI to cooperate on transparency. Another surveillance authority, Section 215 of the USA Patriot Act — which allowed for the collection of personal information from business transactions — was so routinely abused that Congress allowed it to expire in 2020."
Even Deep-Pocketed Buyers Are Starting to Back Away From the U.S. Housing Market -WSJ
"After an epic two-year run - not just in Austin but in major cities around the country - the luxury real-estate market is finally cooling.
Real-estate agents in places like New York, Los Angeles, and the Hamptons say the frenzied deal making and record-setting prices that characterized the past few years has eased, thanks to a growing disconnect between what sellers want and what buyers will pay. Meanwhile, buyers are grappling with inflation, this year’s interest-rate hike and the volatile stock market. Gas prices and the war in Ukraine are adding to feelings of economic uncertainty, effectively throwing cold water on luxury sales.
The number of luxury homes—defined as the top 5% of the market—that sold during a three-month period from Feb. 1 to April 30, 2022, dropped 18% compared with the number of sales during the same period in 2021, according to a new report from the real-estate brokerage Redfin. That is the biggest decline since the pandemic started, when the number of luxury sales plunged 23.6% during the three-month period between April 1 and June 30, 2020, compared with the same period in 2019....
'There’s a sense that prices are frothy in many markets across the country,' said Ryan Serhant, CEO of real-estate brokerage Serhant, who says the market is normalizing after a period of rapid appreciation, fueled by heightened demand. 'You’re now starting to see buyers become a little hesitant to be caught at the top,' he said."
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4.27.22 - Twitter's reaction to Elon Musk
Gold last traded at $1,889 an ounce. Silver at $23.39 an ounce.
NEWS SUMMARY: Precious metal prices extended losses Wednesday on profit-taking and continued dollar strength. U.S. stock struggled to come back from worst rout since 2020.
Gold edges higher after falling to 2-month low -MarketWatch
"Gold prices edged higher Tuesday, a day after finishing at its lowest since late February as a flight to quality left the yellow metal behind....
Global equities slumped Monday as investors reacted to fears of a potential lockdown of Beijing as Chinese authorities responded to a rise in COVID-19 cases, though U.S. stocks later bounced back to end the day in positive territory. Gold, often viewed as a haven during periods of market volatility, failed to find support as investors piled into Treasurys and other havens.
But Daniel Briesemann, analyst at Commerzbank, argued that the Monday slump was likely the result of forced selling as well as a stronger U.S. dollar.
'During such market phases in the past, gold would often come under pressure because gold would be sold to offset losses elsewhere,' he said, in a note. 'Yesterday, for example, saw considerable pressure on stock markets for some of the time. Gold has at least regained the $1,900 per troy ounce mark this morning.'
Briesemann said gold is likely to be well supported and will reassert its status as a safe haven and an inflation hedge."
I Don't Know -Compound Advisors
"I Don’t Know. Three words that are rarely heard in the investment business and at the same time the most important to long-term success.
Why?
Because the future is unknown and having the humility to admit that is very hard for us to do. We’re wired instead with overconfidence – we tend to overestimate our abilities when it comes to sports, driving, investing and many other areas of life (Dunning-Kruger effect).
While a little bit of confidence can be a good thing in many areas of life, overconfidence, particularly in the investment world, can be disastrous. With overconfidence comes the tendency to overtrade and make highly speculative, concentrated bets on the future.
Many studies have shown that these attributes tend to lead to lower overall returns. The more confident you are, the more you trade, and the worse your returns are on average….
What’s the best way for investors to manage their overconfidence bias?
1) Diversification: not putting all of your eggs in one basket.
2) Resisting the urge to trade (first, do no harm).
3) And sticking with a broad-based asset allocation plan.
By diversifying, you’re removing your ego from the equation and accepting the fact that you’re not likely to pick the next Apple/Amazon or make the next Big Short.
To the contrary, you are saying three important words when it comes to making precise predictions about the future: I Don’t Know.
Let’s practice this concept in response to some standard questions you hear on financial TV every day:
-Where will the S&P be at the end of the year? I don’t know.
-Where will the 10-year yield be at the end of the year? I don’t know.
-Will Crude Oil be higher or lower a year from now? I don’t know....
So the next time someone ask you where the markets are headed, don’t be afraid to say “I don’t know.” In the business of investing, it’s the most honest and helpful thing you can say.
'It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.' - Anonymous (often misattributed to Mark Twain)"
Twitter's reaction to Elon Musk only proves change is needed -Fox Business
"Twitter bans hate speech – specifically, speech it hates. If Elon Musk is successful in his mission to acquire Twitter – which he will be – he will pull back the curtain. We will finally be privy to the process the company uses to decide which ideas they deem suitable for us to hear.
Musk’s takeover bid is a classic example of the free market at work. He is exercising what essentially amounts to a personal antitrust action, taken in the name of free speech.
The reaction from Twitter proves he’s onto something. They are shaken to the core at the idea of having to be more transparent about how they conduct business at what has become the world’s virtual public town square.
Musk’s takeover is doable. Twitter, in spite of its enormous societal impact, is a relatively small company compared to other tech firms. Apple is estimated to be worth $2.7 trillion. Google parent Alphabet is $1.7 trillion. Musk is the richest man in the world. He has a personal net worth several times greater than the $50 billion or so he would probably have to pay for outright ownership of Twitter. However, that is not the same thing as cash. Nonetheless, he will find a way to put together a take-over syndicate. He will find a way to snare his prey.
Musk is clear about why he wants the company. In a recent TED forum after the announcement of his takeover plan, he said 'My strong, intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization.' He is right, and he has laid out some of his plans to change the way Twitter operates.
Musk has made clear he would be reluctant to delete things and more open to 'time-outs' than permanent bans. He acknowledges that there are limitations to free speech and Twitter must obey the law, but if a tweet is in a gray area, he would let it exist. He would also insist that the algorithm Twitter uses to rank content be made public and open to user audits."
Modern Monetary Theory: The End of Policy Norms As We Know Them? -Progressive Policy Institute
"Modern Monetary Theory (MMT) gained popularity at a time when U.S. inflation was benign, income and wealth inequality was on the rise, and progressive politicians saw a political opportunity to pass big-ticket spending programs. To the nagging perennial question, 'How do we pay for it?,' MMT serves up a tasty answer. You don’t need to raise taxes or reduce other spending. You don’t need to secure low-cost borrowing. A monetarily sovereign nation, like the United States, can create more currency to buy the goods and services that the programs require.
Large new spending programs often invoke in U.S. voters fears of persistent budget deficits and rising inflation. MMT delivers the reassuring message that those fears are grounded in defunct 'orthodox' economic reasoning that limits the federal government’s capabilities: we have nothing to lose but our outmoded fiscal bromides and much to gain by replacing historic policy norms with fresh ideas.
MMT explicitly ties itself to populist policies, self-labeling their plans 'the birth of the people’s economy' [subtitle of Kelton (2021)]. Any sensible elected leader, whose vision is not impaired by conventional economic thought, would happily gobble up such a fiscal banquet.
MMT is the progressive counterpoint to supply-side economics. It supplants the claim that tax cuts pay for themselves with the claim that '…[federal] spending is self-financing' [Kelton (2021, p. 87), emphasis in original]. Both claims contain a germ of economic substance. Both claims are carefully crafted to provide elected officials seemingly plausible economic grounds to support their preferred fiscal policies (though at opposite ends of the political spectrum). Both offer policy makers an ideology freed of trade offs.
Because economic policy is too important to be reduced to catchy phrases and clever marketing, this essay analyzes MMT economics dispassionately. It does not assess the worthiness of MMT’s goals. Instead, it asks if MMT can achieve its goals without doing grave damage to America’s fiscal standing and, quite possibly, its economy. The answer: probably not. MMT suffers from several flaws.": (Full story)
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6.10.22 - Wall Street's Blank-Check Boom Gone Bust
Gold last traded at $1,871 an ounce. Silver at $21.94 an ounce.
NEWS SUMMARY: Precious metal prices shot up Friday on red-hot consumer inflation data, despite a stronger dollar. U.S. stocks fell after a highly anticipated inflation report showed a faster-than-expected rise in prices and consumer sentiment hit a record low.
The U.S. and Europe have enough gold for a gold standard; This is why it can work -Larry White/Kitco
"The United States and Europe have enough gold to return to the classical gold standard, said Lawrence (Larry) White, professor of economics at George Mason University. He further explained that the gold standard can work in today's world.
White is an expert on the gold standard and free banking. He has a new book out next year, Better Money: Gold, Fiat, or Bitcoin? He spoke with David Lin, Anchor and Producer at Kitco News....
'The classical gold standard was a self-regulating system,' said White. 'During [World War I], all the major nations went off the gold standard with the partial exception of the U.S., and didn't' really resume it in the old-fashioned way'....
He added that central banks are not necessary in such a system. '[One] of the great attractions of a gold standard is it can work through market forces. We don't need a central bank. We don't need any kind of central planner in the market for money balances or in financial markets.'....
A classical gold standard requires every dollar in circulation to be backed by gold. Some analysts claim that a return to the gold standard is impossible, since there is not enough gold.
White demurred. 'I think a fractional gold system will work,' he said. 'It worked in the classical gold standard period. Banks did not have 100 percent reserve requirements… And yet prudence dictated that they hold enough gold to actually meet the redemption demands that are made on them.'
White went on to say that the United States and Europe have enough gold reserves to return to the gold standard. However, he cautioned that while the gold standard is economically feasible, it may not be politically practical."
The Big Bull Market in Commodities Has Only Just Begun -The Market
"Commodity prices are on the rise. Leigh Goehring and Adam Rozencwajg say why they expect prices to continue to climb and how investors can best gain exposure to resources such as energy, metals and agricultural commodities in today’s inflationary environment.
While inflation and worries about the health of the global economy are unsettling the stock markets, prices of resources such as oil, gas and grain are trending upward. The S&P Global Natural Resource Index, which includes a broad range of companies from the sector, has advanced 15% since the beginning of the year.
'This rally hasn’t even started yet,' Mr. Rozencwajg says. 'Huge changes in investment flows are about to take place with large implications. Investors should use any pullback as an opportunity to increase their exposure,' Mr. Goehring adds.
In this in-depth interview, which has been edited and condensed for clarity, the two investment professionals explain why commodities and commodity stocks can play an important role in weatherproofing a portfolio, why they are bullish on the sector from a fundamental perspective, and how investors can best gain exposure....
Mr. Goehring: This will be the decade of shortages. For over thirteen years, huge amounts of the global economy have been starved of capital. Obviously, this trend was showing up first in the global oil and gas industry which is hugely capital intensive. Investments in these areas were cut back drastically, and two forces were responsible for that. One is that oil and gas prices on average declined almost 80% from peak to trough. In the US, oil prices went even severely negative. Prices got so low in many areas of the extractive industries that it made little sense to go forward with investment projects....
Mr. Rozencwajg: Today’s inflationary pressures are neither transitory nor moderate. Given the significant amount of money printed and the huge amount of debt accumulated throughout the world, we believe Inflation will intensify as we progress through the decade. The surge in commodity prices is basically causing the first stage in this inflationary cycle. Although inflation-sensitive assets have already begun to radically outperform bonds and the general stock market, investors’ interests in these assets remain subdued. Very few investors have taken serious steps to protect themselves from the massive trend change. This means there is still plenty of opportunity to not only protect yourself from the ravages of inflation, but to profit by it as well."
Wall Street's blank-check boom has gone bust -CNN
"The once hot blank-check merger trend is fading fast.
The stock market has been cratering so far this year - leaving special purpose acquisition companies, which buy private firms in order to take them public without the need for a traditional initial public offering, with difficulty finding targets.
SPACs, also known as blank check companies, are facing the same concerns about inflation and a looming recession on the horizon that are plaguing the rest of Wall Street.
So with stocks tumbling, the IPO market drying up and increased regulation around the corner, several high-profile SPACs have recently pulled the plug on their merger plans.
Expect more firms that hoped to go public through this once-trendy fad to put the kibosh on those plans. Several other startups have already scrapped their SPAC plans for this year, including homebuying service Knock, corporate ridesharing firm Gett and investing app Acorns"
Dotcom 2.0 bubble has burst. What is next? -Contrarian Edge
"Over the last few years, I killed a forest of good-looking trees writing about the insanity of what was going on in the stock market. These trees did not die in vain. Rising interest rates and inflation making multi-decade highs served as a bucket of cold water, waking investors up to the fact that a vivid imagination is not the only skill required to be an investor. Until recently, the investors who had the richest imaginations seemed to make the most money – until they lost years of gains in months.
Let’s take the ARK Innovation ETF (ARKK) – the poster child of the recent hysteria and until last year one of the best-performing funds in the market. It more than quadrupled from the pandemic lows to its peak in February 2021. Some companies it owned had business plans that looked like they were from sci-fi novels; many were going to revolutionize the world; most came with sci-fi-like (out of this world) valuations.
Cathy Wood, ARK’s fund manager, turned into an instant celebrity. The media and Wall Street did what they usually do - they hailed her as the next Warren Buffett....
This movie is ending in a very predictable way. Higher interest rates activated a dormant gravitational field in the market. ARK stocks turned into horror stories, crashing down to mother earth. Investors who bought the fund at the peak are down more than 70%. All investors who bought ARK after mid-April 2020 and held on to the fund are down on their purchase. Since the majority of inflows to the fund occurred near the peak, most ARK investors got annihilated.
There is an interesting parallel between the run-up and crash in 'digital' stocks during the pandemic and the Y2K bubble of 1999.
The market was already frothy in the late 1990s, full of dotcom speculation. In 1999 corporations were concerned that at the turn of the century, computer clocks, instead of taking us forward from 1999 to 2000, would take us back to 1900. Though this was a true risk only for old mainframes, it triggered a tsunami of upgrades for everyone. It seemed like every Fortune 10,000 company upgraded its computers to a new system."
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6.9.22 - What To Do When the Stock Market Crashes?
Gold last traded at $1,848 an ounce. Silver at $21.78 an ounce.
NEWS SUMMARY: Precious metal prices eased back Thursday on a firmer dollar. U.S. stocks extended losses ahead of Friday inflation data.
Gold to trend higher as world faces several years of stagflation -Commerzbank/FX Street
"Gold climbed slightly to a good $1,850 yesterday and is still trading at roughly this level on Wednesday. On Tuesday, the World Bank lowered its 2022 global growth forecast to 2.9% from 4.1% in January. What’s more, global inflation will likely remain above target in many economies, lending support to the yellow metal, economists at Commerzbank report....
'Gold was lent support by the World Bank’s report on the economic situation and outlook. In it, the World Bank has further lowered its forecast for this year’s global economic growth to +2.9%. At the same time, it warned that we could be facing several years of below-average growth and above-average inflation. We believe this will benefit gold in the long term, as it is likely to come into its own as a store of value in such an environment.'
'The World Gold Council (WGC) published figures yesterday for the gold ETFs it tracks. They show outflows of 53 tons in May, bringing a series of four consecutive monthly inflows to an end.'
'The ETF outflows accompanied the downward trend of the gold price that began in April and continued until mid-May. In our view, the price slide was due chiefly to the appreciating US dollar and rising bond yields.'"
What Should I Do When the Stock Market Crashes? -InvestorPlace
"Stock market crashes are many investors’ worst nightmare - or they’re a dream come true if you have the right approach. Investors can view a crash as a chance to go bargain hunting, and they should take steps ahead of time to prepare for this eventuality.
When I give you the years 1929, 1987, 2008 and 2020, what’s the first thing that pops into your mind? Seasoned investors should immediately think of the collapses that happened in the stock market during those years.
Sudden stock market drawdowns of 20%, 30%, 50% or more can be scary if you’re not prepared. Knowing what to expect, and how to capitalize on the opportunities involved, can help investors make the most of a very challenging situation.
With all of that in mind, let’s explore the three steps you need to take to protect your investments when the market crashes
1. Stay Calm, but Be Aware of Macro Conditions - Stocks fall for many different reasons, but there’s a common theme: a negative surprise....
2. Look for Opportunities - History shows that buying when most investors are complacent, and selling when investors are panicking, is a recipe for disaster....
3. Extend Your Time Frame - What if you already owned stocks and the market collapses? Rather than panic-sell your stocks, you can choose to extend your investment time frame....
For what it’s worth, it’s practically assured that the stock market will recover at some point. In the meantime, feel free to build your wish list — and, when your favorite companies’ stocks get down to an irresistible price point, make a move and turn that crash into cash."
Mortgage demand falls to the lowest level in 22 years -CNBC
"Mortgage rates are back on the upswing, after a brief decline in May, and the housing market is still suffering from a lack of listings. As a result, mortgage demand continues to drop.
Total mortgage application volume fell 6.5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand hit the lowest level in 22 years.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40% from 5.33%, with points rising to 0.60 from 0.51 (including the origination fee) for loans with a 20% down payment.
Refinance demand, which is most sensitive to weekly rate moves, fell another 6% for the week and was 75% lower than the same week one year ago. The vast majority of mortgage holders now have rates considerably lower than the current one, and even those who would like to pull cash out of their homes are choosing second mortgages, rather than refinancing their first liens....
'There’s some chance that the upper boundaries of that range end up being a ceiling for rates, but that will depend on inflation and other incoming economic data,' wrote Matthew Graham, chief operating officer at Mortgage News Daily. 'With a key inflation report set to release on Friday morning, the potential for volatility remains high.'"
Central Bank Digital Money Risks Being an 'Expensive Failure' -BNN Bloomberg
"Central-bank-issued digital currencies run the risk of turning into a costly waste of time, according to the Center for European Reform.
Europe - one of the most advanced economies considering the initiative -- should instead use regulation to make payments cheaper and more competitive, the London-based think-tank said Tuesday in a report. It warned that the cost benefits and privacy incentives of a so-called CBDC are unlikely to be sufficient to entice consumers to use it.
'Without widespread adoption, a CBDC will be an expensive failure, and will do little to advance central banks’ goals,' senior research fellow Zach Meyers said. 'The EU shouldn’t be distracted by the prospect of a digital euro - which may sound impressive and exciting, but may give Europeans few benefits they can’t enjoy already.'
The payment initiative is being explored in about 100 countries across the globe, with backers touting various advantages -- from boosting financial inclusion to lowering the cost of electronic payments.
Pioneers like the Bahamas and Nigeria have already started allowing the public to use CBDCs, and policy makers in Europe say they will ensure that a future digital euro would be attractive enough not to be swept aside by other private means of payment. The European Central Bank says it may roll out its own CBDC in the coming years."
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6.8.22 - 12 Months of No Progress
Gold last traded at $1,854 an ounce. Silver at $22.09 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on bargain-hunting and a flat dollar. U.S. traded mixed as investors weighed rising yields, economic growth concerns.
When Thoughts Turn to Gold -FEE
"Henry Hazlitt was an infinitely better economist and closely associated with FEE for decades. He picked Keynes apart virtually line by line in his definitive 1959 tour de force, The Failure of the New Economics. If you’re an economics major and your professors never told you about it, consider demanding a tuition refund.
Keynes and Hazlitt knew each other but agreed on little. In 1931, in fact, Hazlitt invited Keynes to participate in a series of articles around the theme, 'If I Were a Dictator.' You can see the reply from Keynes here.
I knew Hazlitt personally and called him by his nickname, 'Harry,' as did others among his many friends. I cherish the letters from him in my personal files. He was so much more than a fine economist—an exceptional journalist, a scholarly but accessible gentleman, and a brilliant moral philosopher as well.
Hazlitt authored more than two dozen books, most notably the classic Economics in One Lesson, available free from FEE. In his 1978 volume, The Inflation Crisis and How To Resolve It, he noted that far from barbarous, gold served many nations extraordinarily well. It was the world’s chosen money for centuries.
The unprecedented explosion of economic growth in the 19th Century was accompanied by sound money tied to gold, punctuated by brief calamities when politicians abandoned it. Governments don’t like it because they can’t print it, pure and simple. As Hazlitt wrote in The Inflation Crisis,
'It is the outstanding merit of gold as the monetary standard that it makes the supply and the purchasing power of the monetary unit independent of government, of office holders, of political parties, and of pressure groups. The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice. It is precisely the merit of the gold standard, finally, that it puts a limit on credit expansion.'
In the long run, just as Keynes predicted, Keynes himself was indeed dead. But gold as a reliable medium of change lasted far longer than he ever did. It may re-emerge one day to replace the barbarous paper inflation his legacy helped to create. Wouldn’t that be ironic, if not entirely predictable?
Americans are once again feeling the pain of runaway expansion of money and credit that a gold standard would never have allowed...Jerome Powell, chairman of the inflation factory known as the Federal Reserve, took a short break from the printing press to assure us that the Fed 'understands the hardship it is causing' and that his paper money machine is 'moving expeditiously' against it. He’s counting on us being sufficiently gullible and miseducated to thank him for his “inflation-fighting” efforts. Count me out, please....
As price inflation eats away at our savings and livelihoods, it’s time we re-think money and monetary policy. We should compare the record of the gold standard with that of our present tree standard."
Yellen Tells Lawmakers She Expects Inflation to Remain High -WSJ
"Treasury Secretary Janet Yellen warned that the U.S. is likely facing a prolonged period of elevated inflation, while the World Bank sharply lowered global growth forecasts and flagged a risk of recession in many countries.
The World Bank, in a report, projected several years of high global inflation and tepid growth reminiscent of the stagflation of the 1970s. Ms. Yellen told lawmakers that the White House would likely revise upward its U.S. inflation forecast - which already showed prices rising this year at nearly twice the prepandemic rate.
'I do expect inflation to remain high, although I very much hope that it will be coming down now,' Ms. Yellen said, adding that the Biden administration was updating its forecast from March that inflation would average 4.7% this year. In recent months, consumer inflation has trended above 8%...
'Several years of above-average inflation and below-average growth now seem likely,' David Malpass, president of World Bank Group, told reporters. 'The risk from stagflation is considerable.'
Meanwhile, a Commerce Department report Wednesday showed imports into the U.S. fell in April for the first time since July, suggesting domestic demand eased in the face of higher prices. Falling imports and rising exports caused the trade gap in goods and services to fall 19.1% from the prior month."
12 Months of No Progress -All Star Charts
"With everyone so certain about the upcoming recession, even Cardi B, why don’t we take a step back and look at what the actual prices of stocks are doing.
The Dow Jones Industrials and Dow Jones Transports have done absolutely nothing for over a year.
For perspective, stocks first peaked in January of 2018, then went nowhere for 3 years, and finally broke out:
After a historic rally, everything changed in the first half of last year.
You can even argue that stocks peaked 16 months ago in February. In fact, I have been arguing that.
The question is not whether or not we’re going into a bear market. What we’re really interested in is how much longer we’re going to be in one."
Don't grovel abroad, President Biden: Drill at home -NY Post
"President Joe Biden is walking back all his tough talk on the Saudis in hopes the perfidious princes will pump more oil to alleviate the global crunch that has America suffering $5-a-gallon prices. But rather than grovel in Riyadh, he should take his foot off the neck of the US energy sector....
Yet the prez won’t drop his war on US energy production, even as surging prices are one reason inflation is at 8.3%.
To please his party’s green extremists, Biden on his first day in office canceled the Keystone XL pipeline (which would have transported 800,000 barrels of oil per day from Canada to the Gulf Coast). Then he put a moratorium on leasing federal lands to oil and gas drillers, increased restrictions on fracking and smiled on moves to choke off drillers’ access to capital.
America was a net energy exporter under the last president, and should still be. But Biden left us (and our allies) prey to the likes of MBS, Vladimir Putin and the tyrannies in Colombia and Iran — whose industries are all far dirtier than US producers.
Say no to groveling, Joe - and yes to drilling at home."
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6.7.22 - The "Super Bad" Paradox
Gold last traded at $1,854 an ounce. Silver at $22.26 an ounce.
NEWS SUMMARY: Precious metal prices rose Tuesday as bulls stepped up to buy the dip despite a firmer dollar. U.S. stocks extended their 6-week slide after Target profit warning.
Gold eyes $1,863 and $1,867 on road to recovery -FX Street
"Gold Price is on a recovery mode this Monday, kicking off a new week on the right footing, as bulls reverse Friday’s deep losses. The upbeat US labor market report lifted the bids for the dollar alongside the Treasury yielding, weighing heavily on the bright metal.
Bulls are attempting a comeback, as USD bulls take a breather ahead of the all-important US inflation release. The persistent strength in oil prices has helped gold price find a floor, reviving its demand as a hedge against energy costs-driven inflation worries. Let’s take a look at how the yellow metal is positioned on the various timeframes, technically....
The next relevant upside target is seen at the Fibonacci 61.8% one-month at $1,863, above which the immediate barrier at $1,865 will be put to test. That level is the confluence of the Fibonacci 61.8% one-day and SMA200 four-hour.
Further up, the pivot point one-day R1 at $1,867 will guard the bearish interests, with the last line of defense for sellers seen at $1,874. That level is the meeting point of the previous week’s high and the pivot point one-week R1."
The "Super Bad" Paradox -Bonner Private Research
"We never know what will happen. All we know is what ought to happen.
Elon Musk, bless his heart, has a 'super bad feeling' about the months ahead. So do we. Something bad ought to happen.
But bad things are sometimes good things. Musk explained the paradox two weeks ago. Referring to the unhappy part of the business cycle, he said: 'Yes, but this is actually a good thing. It has been raining money on fools for too long….'
'Some bankruptcies need to happen. Also, all the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard...'
Yes, things happen that ought to happen. But not always what you want, or when you expect, or how you think it should go. We’ve spent years waiting for a major stock market correction, for example. By our reckoning, stock prices ought to get cut in half before we can be confident of a genuine new bull market. And we have our ‘I told you so’s at-the-ready.
Remember, beneath the chop of up and down stock price movement are deep tides. By our reckoning, stocks go up for decades. Then, the tide turns… and for decades the ‘primary trend’ is down. We wait for a low – when you can buy all 30 Dow stocks for the equivalent of 5 ounces of gold or less – then, we will be reasonably sure the tide is ready to flow again.
In the meantime, the years go by… and imagine our disappointment! It is like being a lifeguard in a wading pool....
Sensible people have had a ‘super bad feeling’ for years. ‘There must be some price to pay for counterfeiting money and rigging the credit markets,’ say the sages. ‘If not, everyone would do it… all the time.’
The two obvious consequences: more debt and more inflation. The details are being filled in now.
America’s debt burden grew by more than $50 trillion this century… to a total of more than $88 trillion, including households, businesses and the government. And inflation? Who could have seen that coming?
And now, what ought to happen? Higher prices ought to bring more output. More output ought to lower prices. Inflation ought to go back whence it came. Those bad feelings ought to go away. Will they?"
Fossil-Fuel Shares Lead the Stock Market. How Awkward. -NYT
"It is no secret that the stock market has been rocky since the start of the year. Tech giants like Apple, Microsoft, Google and Amazon have been no help at all. Their shares have all had double-digit percentage declines.
So far in 2022, the S&P 500 is down more than 13 percent, and it briefly dipped more than 20 percent below its peak, putting stocks in bear market territory....
In fact, when I looked at a performance table of the top companies in the S&P 500 for 2022, I found that 19 of the top 20 spots belonged to companies connected, in one way or another, with fossil fuel. The best performer was Occidental Petroleum, with a gain of 142 percent....
This poses a classic dilemma for investors who want to follow the guidance of much academic research and be fully diversified. I try to do this by putting my money into low-cost index funds that track the entire stock and bond markets. These funds are marvelous in many ways. They reduce the risks of specific stock selection - owning the wrong stock at the wrong time - and of emphasizing the wrong sectors at inopportune moments.
There is an important catch, though. Complete diversification means owning all sectors and companies, and, in the current environment, that definitely includes traditional fossil fuel companies."
Why Joe Biden thinks you can fight inflation by reducing the deficit -Vox
"Fuel prices are rising, rent is too damn high, and elections are coming. As inflation and high costs of living spoil the country’s economic mood, President Joe Biden has revived a recent talking point to get across how seriously he takes the country’s economic situation: 'I reduced the federal deficit.'
Cutting government spending isn’t really top of mind for most American voters, and balancing federal budgets is certainly not going to be enough to motivate Democratic voters to turn out in midterm elections. The federal budget deficit hardly registers in Gallup’s recent polling on the country’s most pressing problem, but inflation is at the top of the list.
With midterms coming up and a new inflation estimate scheduled to be released next week, the White House is now making deficit reduction a core part of its intense efforts this month to convince voters the economy is getting better - and reset public opinion on its biggest political challenge.
It marks a pivot: Biden campaigned on wanting to be a transformative president, pushed for massive spending packages throughout 2021, and played down concerns of inflation to boost those proposals. But the president now sounds more cautious about big government spending....
'I’ve heard the president and his administration say over and over again, things like ‘we have reduced the deficit because of our actions.’ That is only true in a very backward sense,' Marc Goldwein, a senior vice president at the Committee for a Responsible Federal Budget, a fiscally conservative group, told Vox. 'The deficit is coming down year over year overall despite their actions.'"
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6.6.22 - Bitcoin Falters, Crypto Miners Brace for Crash
Gold last traded at $1,841 an ounce. Silver at $22.08 an ounce.
NEWS SUMMARY: Precious metal prices remained stable Monday as U.S. dollar, oil prices rise. Stocks pulled back from gains as 10-year Treasury yield breached 3%.
Russia's Gold Standard a "Pipe Dream"; Why a Gold Standard Is Not Happening -Kitco
"According to Jeff Christian and Gary Wagner, Russia did not return to a gold standard after the Ukraine war. And even if they had, a gold standard won't work.
Jeff Christian is the Managing Director of CPM Group, while Gary Wagner is the Editor of TheGoldForecast.com. They spoke with David Lin, Anchor and Producer at Kitco News.
Central banks around the world have been hiking interest rates. The Bank of Canada recently increased its key policy target to 1.5 percent. However, gold's price has remained relatively flat despite such monetary tightening.
Christian is unsurprised that the price has not moved much.
'You still have historically low interest rates,' he said. '… And you also have negative interest rates on an inflation-adjusted basis… In addition to that, the increase in interest rates reflects concerns about inflation, which are positive for gold prices.'
He remarked that increasing 'volatility and uncertainty' are bullish for gold. ...
In March of 2022, the head of Russia's parliament Pavel Zavalny said that countries can pay for Russian resources with gold. Yet the claim that this implies a return to a gold standard is a 'Russian pipe dream,' according to Christian. '… The reality is that nobody is actually paid in gold, or in fact in rubles, for the most part.'
Christian opined that Russia's rhetoric around gold was a 'face-saving' measure, and that the Russian energy company Gazprom was simply accepting payment in Euros and converting them to rubles....
Wagner said that a return to a gold standard would be a 'hard to an impossible task.' He added, 'Can we go back to some kind of modified gold standard? Possibly. But an actual gold standard? I don't believe that any country has the ability to back their currency dollar-for-dollar with gold. That would take way too much gold, when you look at the amount of currency in the system.'"
As Bitcoin Falters, Crypto Miners Brace for a Crash -Wired
"Last year, as bitcoin’s price rose as high as $68,000, miners were having a blast. Their profits, according to some estimates, were hovering just under 90 percent, and many of them decided to expand their operations at a frantic pace, bracing for an even larger 2022 bonanza.
That windfall has not come to pass. Over the past few months, cryptocurrency markets have slid, with bitcoin’s price hovering at $30,630 at the time of writing. At the same time, the price of electricity shot up across the world because of a bounce-back in demand and the war in Ukraine.
That is a problem for bitcoin miners, who use energy-chugging mining computers, called ASICs, to coin cryptocurrency by solving complex mathematical problems. Energy can account for up to 90 to 95 percent of a miner’s overhead, according to Bitfury CEO Valery Vavilov in an interview with Reuters in 2016....
'The problem now is the price of energy on a gross basis, but also the volatility in energy price,' says Alex Brammer, vice president for business development at crypto-mining infrastructure company Luxor Mining. 'It's really hard to model forward what energy prices are going to be.'
That problem is compounded by a growing number of miners joining the network since last summer, which in turn has reduced individual miners’ outputs. In short, miners are paying more to mint fewer bitcoins, and their coins are less valuable. While miners are still turning a profit, it is shrinking, says Sam Doctor, chief strategy officer at digital asset investment bank BitOoda...
In the wake of the crypto crash, there are signs that miners need cash, and quickly - and given the current market sentiment they cannot just turn to investors for help."
Jamie Dimon: An Economic Storm Is Coming -National Review
"JP Morgan’s Jamie Dimon may be one of those who pushed ‘stakeholder capitalism’ to the forefront of the C-suite agenda (and he still is doing what he can to advance it), but he does have a way of occasionally letting his understanding of finance and economics override his more usual corporatist game.
The world is facing an economic 'hurricane' as the war in Ukraine combines with surging inflation and rising interest rates, top US banker Jamie Dimon has warned.
Oil prices are in danger of rising to $175 per barrel in the years ahead, the chairman and chief executive of JP Morgan predicted, with a potential recession on the way in the US.
He upgraded his warning from previous predictions of a 'storm', saying that unprecedented risks are combining with unpredictable consequences.
Speaking at a conference hosted by Alliance Bernstein, Mr Dimon said: 'I said they’re storm clouds, they’re big storm clouds here. It’s a hurricane. Right now, it’s kind of sunny, things are doing fine. Everyone thinks the Fed can handle this'....
I’m not convinced how 'sunny' large numbers of Americans feel when they leave the gas station or grocery store, but I get Dimon’s broader point, both on conditions now, and what may lie ahead....
Beyond what JP Morgan (and, I assume, other banks) may be doing (or will be doing) to cut back, is the reality that ultra-low rates have been an invitation to malinvestment, an invitation that has been all too frequently accepted. Not only have people and businesses borrowed more than they should, they have also been bidding up the price of anything remotely investable. That generally doesn’t end well."
How The White House Fumbled The Inflation Football And Lost The Game -Issues & Insights
"Wasn’t it not even a year ago we were told that inflation would, in fact, be a 'good' thing? That it was 'transitory'? Not a serious threat. Now we’re finding that the media, Wall Street economists, Fed officials, but most of all, the Biden administration, were all wrong. Does anyone pay a price for gross incompetence anymore?
Last year, headlines were filled with inflation cheerleaders. We searched the term 'inflation is good' and got back 508 million hits. What’s troubling about this expert consensus is that inflation, now at a 40-year-high, isn’t good for anyone.
It skews business and personal decisions, wrecks family budgets, makes millions of low-income families even poorer, destroys personal thrift and wealth, undermines faith in the economy, distorts financial markets, and discourages investment and innovation.
And, eventually, it destroys real economic growth, undermining the very underpinnings of our prosperity and standard of living. We’re on the way to that now.
Which brings us to our main point: The failure of our 'experts,' 'elites' and elected officials to attack the root causes of inflation, namely runaway government spending and the Fed’s relentless money printing, based on bogus Modern Monetary Theory, that makes the spending possible.
No one in the Biden administration wants to step forward and accept responsibility for the inflation mess. That’s why it looked almost brave as one person finally stepped forward this week to admit there was a miscalculation.
'I think I was wrong then about the path that inflation would take,' Treasury Secretary Janet Yellen told CNN’s Wolf Blitzer this week, after he asked about her calling inflation a 'small risk' just last year."
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6.3.22 - Employers Have Essentially Stopped Firing People
Gold last traded at $1,849 an ounce. Silver at $21.93 an ounce.
News Summary: Precious metal prices eased back Friday as trader digested the latest jobs data. Stocks fell with the technology sector leading the way after a report that Tesla Inc may be considering job cuts.
Is global 'slavery' coming? Gold guards against 'total control' - Bob Moriarty - Kitco
"Gold is a safe bet as food shortages, inflation, and geopolitical turmoil rile the global economy, according to Robert Moriarty, Founder of 321gold.com.
'Gold is an insurance policy against government stupidity,' he said. '… Gold never changes its value.'
Moriarty spoke with David Lin, Anchor and Producer at Kitco News.
When asked why an investor should consider gold, Moriarty responded, 'Because the alternatives are far worse.' He referenced the selloffs in stocks and cryptocurrencies....
Moriarty is skeptical of cryptocurrencies and has previously compared Bitcoin to 'tulip bulbs' and 'Florida real estate.'
'I happen to be exceptionally negative on cryptocurrencies,' he said. 'There are 10,000 cryptocurrencies. None of them are going to work.'
He also suggested that Central Bank Digital Currencies (CBDCs) would not work out.
'It's a popular theme now to believe that governments are going to Central Bank Digital Currencies, but I don't believe so,' he opined. 'It's a solution for a problem that does not exist. Gold currencies have always worked. They're a solution, they're not a problem.'"
Fed is in danger of losing control of public expectations of future inflation, Bullard says- Market Watch
"The Federal Reserve is in danger of losing control of how much inflation American households are expecting, said St. Louis Fed President James Bullard on Wednesday.
'I think we’re on the precipice of losing control of inflation expectations,' Bullard said, in a speech to the Economic Club of Memphis.
'That’s why it is important for the Fed to take action today that’s credible, that will keep inflation expectations low and stable,' he said.
The Fed watches inflation expectations closely. Although difficult to measure, a basic tenant of Fed policy is that keeping inflation expectations low and stable will make it easier to bring inflation down....
Inflation has surged over the past year as the U.S. economy has recovered from the pandemic. The Fed’s favorite inflation measure, the personal consumption expenditure index, was running at a 6.3% annual rate in April, well above the Fed’s 2% target.
In a subsequent interview with reporters, Bullard said that inflation expectation measures over one and two years are a better gauge of inflation expectations and are 'pretty high.'
Longer-run inflation expectations are misleading because they just signal that markets and survey participants have some faith that the Fed will do 'the right thing and get inflation under control.'
'It seems to me we want to move as quickly as we can…to get downward pressure on inflation and make sure we keep inflation under control so we don’t have a decades long problem on our hands,' he said."
It's so hard to find workers that employers have essentially stopped firing people- CNN Business
"The number of workers being fired or laid off has hit the lowest point on record, the Labor Department reported Wednesday. The Job Openings and Labor Turnover Survey showed only 1.25 million people lost their job in April, breaking the previous record low of 1.26 million recorded in December.
With job openings still near record levels and with nearly two openings for every unemployed job seeker, employers are desperate to hang on to the workers they have.
The same report showed that the number of job openings fell slightly to 11.4 million from a revised reading of 11.9 million in March, which was a record high. The number of workers who quit their jobs in April was essentially unchanged from March at 4.4 million and only slightly below the record 4.5 million who quit in November....
Because it has become so difficult to find workers to fill openings, employers have essentially stopped laying off or firing people.
The Labor Department has been tracking job openings and the number of workers quitting or being let go from jobs since the end of 2000. Through the end of 2017, the number of job openings was always lower than the number of unemployed people looking for work. On average there were about two job seekers for every job opening during those 17 years.
But since early 2018 the balance has for the most part switched, with the number of openings most often being greater than the number of unemployed people looking for work.
After the rebound in hiring in mid-2020, the ratio of job openings to job seekers has swung increasingly in favor of job seekers. Wednesday's report showed there are a record 1.92 openings for every unemployed person seeking work."
Some hedge funds face steep losses after betting on hot sectors - Reuters
"Hedge fund investors are bracing for a river of red ink as firms begin reporting returns for May when the stock market hovered near bear territory on disappointing earnings and worries about aggressive rate hikes, investors and fund managers said on Thursday.
Data from Hedge Fund Research shows the HFRX Global Hedge Fund Index slipped 1% in May, leaving it down 3.31% for the first five months of 2022. But preliminary numbers from some firms show far bigger losses, especially at funds that had invested heavily in technology and biotechnology stocks.....
For many fund managers the damage began long before May when former market darlings reported unexpectedly poor returns. Netflix in April said it lost subscribers for the first time in a decade, sending its share price tumbling 35% in one day.
Billionaire investor William Ackman, who banked three years of very strong returns, was caught in the drop and made an abrupt U-turn by liquidating a three month-old $1.1 billion bet on Netflix and locking in a $400 million loss. In May, Ackman's Pershing Square Holdings portfolio lost 9.5%, leaving the fund down 18.2% for the first five months of 2022.
It was also the month where Melvin Capital, once one of the industry's best performers, announced that it was going out of business after being skewered by wrong-footed bets on meme stocks like GameStop in early 2021....
Investors said it might take longer than usual to get numbers for May as firms are pricing illiquid securities. As the market turned against them, equity hedge fund managers cut their use of borrowed money, or leverage, to try to insulate against steep falls, investors said.
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6.2.22 - U.S. Mint sells 147k oz of gold in May
Gold last traded at $1,869 an ounce. Silver at $22.30 an ounce.
News Summary: Precious metal prices jumped Thursday as Treasury yields and the U.S. dollar retreated. Stocks turned higher as investors shook off a weak Microsoft outlook and Fed hike fears.
U.S. Mint sells 147k ounces of gold last month, a sign of growing investor anxiety - Kitco
"While gold prices appear to be trapped in neutral below $1,850 an ounce, physical demand for the precious metal appears to tell a different story, one of growing investor anxiety, according to some market analysts.
In its monthly sales data, the U.S. Mint sold 147,000 ounces of gold in various denominations of its American Eagle Gold bullion coins, the best May performance since 2010. Compared to April, sales are up 67%. For the year, bullion demand is up a massive 617%.
Even taking COVID-19-related production issues out of the equation, U.S. gold bullion sales are up more than 400% from the five-year average between 2015 and 2019....
'Bullion sales better reflects the anxiety investors are feeling right now. When you hear economists talk about a recession, it starts to make sense why bullion sales are so strong,' he said. 'Gold will always be a long-term store of value.'
Daniel Pavilonis, Senior Commodities Broker with RJO Futures, also said bullion sales better capture the current sentiment in the marketplace....
'Gold futures are capped by rising interest rate, but people having been going out to buy the physical metal to have some 'real money stashed away,' he said.
Pavilonis added that he is ultimately bullish on gold as there is solid demand for the precious metal. He said that he sees gold as undervalued given where inflation is and how persistent it will be through 2022."
Here’s How The Stock Market Performs During Economic Recessions- Forbes
"The stock market has had its worst start to a year in recent history and things could get worse as recession fears loom. Since World War II there have been 13 recessions—defined as two consecutive quarters of GDP decline–and there have been 3 in the 21st century (2001, 2008 and 2020), according to the National Bureau of Economic Research. Some experts say another one could be on the way.
It’s no wonder, then, that investors are worried about the Federal Reserve’s ability to achieve a 'soft landing'—bringing down inflation without hurting economic growth—as it tightens monetary policy. The S&P 500 briefly plunged into a bear market last month as investors were whipsawed between inflation concerns and rising rates.
'Historically, when inflation is high and the Federal Reserve is working hard to quell it, recessions happen more often than not,' as rate-hiking campaigns often precede economic downturns, says Moody’s Analytics chief economist Mark Zandi. He puts the odds of a recession at 50% within the next two years.
So, how do stocks perform when the economy is faced with a recession? The S&P 500 surprisingly rose an average of 1% during all recession periods since 1945. That’s because markets usually top out before the start of recessions and bottom out before their conclusion.
In other words, the worst is over for stocks before it’s over for the rest of the economy. In almost every case, the S&P 500 has bottomed out roughly four months before the end of a recession. The index typically hits a high seven months before the start of a recession....
Adding to the already considerable amount of uncertainty this year is the midterm election in November. The second year of a presidential cycle often tends to have weaker stock market returns overall, producing the lowest average S&P 500 return of just 4.9%. The second and third quarter of midterm years have the worst returns, declining on average 1.8% and 0.5%, respectively, with more volatility than at any other times during the presidential cycle.
Amid the heightened market volatility facing investors this year, ‘with midterm elections looming and inflation at 40-year highs, we believe this trend is likely to continue in 2022,’ according to analysts at Baird Private Wealth Management."
Private payrolls increased by just 128,000 in May, the slowest growth of the recovery, ADP says - CNBC
"Job creation at companies decelerated to the slowest pace of the pandemic-era recovery in May, payroll processing firm ADP reported Thursday.
Private sector employment rose by just 128,000 for the month, falling well short of the 299,000 Dow Jones estimate and a decline from the downwardly revised 202,000 in April, initially reported as a gain of 247,000.
The big drop-off marked the worst month since the massive layoffs in April 2020, when companies sent home more than 19 million workers as the Covid outbreak triggered a massive economic shutdown...
May’s slowdown in hiring comes amid fears of a broader economic pullback. Inflation running around its highest level in 40 years, the ongoing war in Ukraine and a Covid-induced shutdown in China, which since has been lifted though with conditions, have generated fears that the U.S. could be on the brink of recession.
Small business took the biggest hit during the month, as companies employing fewer than 50 workers reduced payrolls by 91,000. Of that decline, 78,000 layoffs came from businesses with fewer than 20 employees.
'Under a backdrop of a tight labor market and elevated inflation, monthly job gains are closer to pre-pandemic levels,' ADP’s chief economist, Nela Richardson, said. 'The job growth rate of hiring has tempered across all industries, while small businesses remain a source of concern as they struggle to keep up with larger firms that have been booming as of late.'...
The biggest change in the ADP count came in leisure and hospitality, the sector most hit most by restrictions and which has been a leader throughout the recovery. May saw new hires of just 17,000, even as the summer tourism season gets set to hit full swing."
OPEC agrees to pump more oil as Russian output drops - CNN Business
"OPEC has agreed to pump more crude oil over the next two months as Russian production begins to drop because of Western sanctions.
The oil exporters' cartel said it would increase supply by 648,000 barrels per day in July and August, 200,000 barrels per day more than scheduled under a supply agreement with other producers, including Russia, known as OPEC+.
The Biden administration welcomed the 'important decision from OPEC+,' and highlighted Saudi Arabia's role as the group's largest producer in achieving consensus.
'This announcement accelerates the end of the current quota arrangement that has been in place since July of last year and brings forward the monthly production increase that was previously planned to take place in September,' White House Press Secretary Karine Jean-Pierre said in a statement.
The Wall Street Journal reported Tuesday that some members of OPEC were exploring the idea of suspending the OPEC+ supply agreement to allow countries such as Saudi Arabia and the United Arab Emirates to step in and ease a supply crunch that pushed global oil prices above $120 a barrel this week. The Financial Times and Reuters carried similar reports.
Saudia Arabia has previously dismissed US requests to increase production beyond the long standing quota agreed with Russia and other non-OPEC producers. But concerns that sky-high prices could tip the world into recession appear to have prompted a rethink. Reuters, citing two OPEC+ sources, reported earlier that Russia's output had fallen by around 1 million barrels per day in recent months because of the sanctions imposed over its invasion of Ukraine."
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6.1.22 - Treasury secretary concedes she was wrong
Gold last traded at $1,848 an ounce. Silver at $21.88 an ounce.
News Summary: Precious metal prices remained stable Wednesday on bargain hunting and rising U.S. Treasury yields. Stocks started June in a slump as worries mount over economic growth.
Central Banks Buying Gold Could Be Catalyst for $3,000 Gold Price- Lombardi Letter
"If you’re trying to figure out where gold prices are headed next, you can’t ignore central banks. They could be one of the biggest catalysts to take gold prices to $3,000 per ounce much sooner than expected.
Central banks have been buying gold for years, and it doesn’t look like they'll stop anytime soon. Here’s the kicker: it’s not the major central banks that have been buying the yellow precious metal lately; it's the smaller ones. The major central banks already own a lot of gold.
Central banks don't make an announcement before buying gold for their reserves. They buy it first and announce it later.
Central banks' actions have been speaking louder than words, saying they want more gold. They've been net buyers of the yellow metal since 2010. In the first quarter of 2022, they bought gold again, 84 tonnes of it. That's a slightly lower amount than during the same period a year ago, but they remain buyers....
Dear reader, what central banks are doing these days when it comes to purchasing gold is grossly underreported in the mainstream media. It doesn't get reported much because the gold market is considered boring, not like hot technology stocks or cryptocurrencies.
Central banks need gold as the world becomes more polarized and currencies get questioned. The yellow precious metal has a history of preserving wealth in times of currency devaluation and crisis. Central banks know this well. They hold a lot of currency in their reserves and will need a lot of gold to hedge against volatility. This will help gold prices get to $3,000 per ounce.
Given what central banks did in the first quarter of 2022, my stance on gold is as bullish as ever. Over the past few months, gold prices have held at the level between $1,800 and $1,900. There could be a solid base building, and I wouldn’t be surprised if, in a few years, we look back at these prices and say, 'Wow, gold was cheap.'”
Treasury secretary concedes she was wrong on 'path that inflation would take'- CNN
"US Treasury Secretary Janet Yellen admitted Tuesday that she had failed to anticipate how long high inflation would continue to plague American consumers as the Biden administration works to contain a mounting political liability.
'I think I was wrong then about the path that inflation would take,' Yellen told CNN's Wolf Blitzer on 'The Situation Room' when asked about her comments from 2021 that inflation posed only a 'small risk.'
The admission was the latest indication that the administration's expectations of a normalizing economy were thrown into disarray by the continuing pandemic and the war in Europe.
'As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn't -- at the time -- didn't fully understand, but we recognize that now,' she said.
Yellen and other White House officials once framed inflation as a temporary side effect of the economy returning to normal following the pandemic, pointing to snags in supply chains and demand outstripping supply.
Yet months later, inflation is running at a near-four-decade high....
The Powell-led Fed has been criticized as slow to address high inflation by ending emergency support for the economy and beginning interest rate hikes. However, the Fed has vowed to swiftly raise interest rates and earlier this month increased rates by half a percentage point for the first time since 2000. The US central bank has signaled further aggressive rate hikes in the months to come."
Jamie Dimon says ‘brace yourself’ for an economic hurricane caused by the Fed and Ukraine war - CNBC
"JPMorgan Chase CEO Jamie Dimon says he is preparing the biggest U.S. bank for an economic hurricane on the horizon and advised investors to do the same.
'You know, I said there’s storm clouds but I’m going to change it… it’s a hurricane,' Dimon said Wednesday at a financial conference in New York. While conditions seem 'fine' at the moment, nobody knows if the hurricane is 'a minor one or Superstorm Sandy,' he added.
'You better brace yourself,' Dimon told the roomful of analysts and investors. 'JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.'
Beginning late last year with high-flying tech names, stocks have been hammered as investors prepare for the end of the Federal Reserve’s cheap money era. Inflation at multi-decade highs, exacerbated by supply-chain disruptions and the coronavirus pandemic, has sown fear that the Fed will inadvertently tip the economy into recession as it combats price increases.
While stocks bounced from a precipitous decline in recent weeks on optimism that inflation may be easing, Dimon seemed to dash hopes that the bottom is in.
'Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,' Dimon said. 'That hurricane is right out there, down the road, coming our way.'
There are two main factors that has Dimon worried: First, the Federal Reserve has signaled it will reverse its emergency bond buying programs and shrink its balance sheet. The so-called quantitative tightening, or QT, is scheduled to begin this month and will ramp up to $95 billion a month in reduced bond holdings....
The other large factor worrying Dimon is the Ukraine war and its impact on commodities, including food and fuel. Oil 'almost has to go up in price' because of disruptions caused by the worst European conflict since World War II, potentially hitting $150 or $175 a barrel, Dimon said."
Inflation will force 25% of Americans to delay retirement: survey- New York Post
"Rampant inflation will result in a delayed retirement for a large swathe of Americans who are concerned about dwindling savings accounts and tight budgets, according to the results of a new survey published this week.
With the costs of daily necessities such as food and fuel hitting record highs, 25% of Americans will need to delay their retirement to account for the reduced savings, according to the quarterly BMO Real Financial Progress Index.
'Prices across the board – from cars and gasoline to groceries and other everyday essentials – are rising at the fastest pace since the 1980s,' said Paul Dilda, the head of consumer strategy for BMO Harris Bank. 'Consumers must think differently about their finances in this inflationary environment.'
The impact to retirement plans is just one of several signs of the way inflation has affected American households. Nearly 60% of respondents said inflation was having a negative impact on their personal finances, while 21% said economic conditions had cut into their retirement savings.
More than 60% of Americans aged between 18-34 said they were saving less money while paying more for staple items....
Food and fuel prices are two of the largest factors in inflation that hit 8.3% in April. The cost of food rose 9.4% in April compared to the same month one year earlier, while energy costs rose a whopping 30.3%.
Gas surged to all-time highs in May as the Russia-Ukraine war further disrupted shipments – a sign that the upcoming Consumer Price Index could show even higher energy prices when it is released next week."
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5.31.22 - The stock market ‘casino’ is closed
Gold last traded at $1,837 an ounce. Silver at $21.55 an ounce.
News Summary: Precious metal prices saw a slight pullback Tuesday as bond yields rose. Stocks seesawed as investors closed out a rocky month of trading.
Tennessee removes sales tax on gold and silver, only eight states to go- Kitco
"Gold and silver made another important step to becoming legal tender in the United States. Ahead of the Memorial Day long weekend, Tennessee Governor William Lee signed into law House Bill 1874, removing sales taxes on gold, silver and platinum bullion coins.
Tennessee becomes the 42nd to pass laws that will make gold and silver hard currencies.
'The victory puts a capstone on long-running efforts by the Sound Money Defense League, Money Metals Exchange, Campaign for Liberty, and grassroots activists and coin dealers in Tennessee. Tennessee investors, savers, and small businesses can now acquire gold, silver, platinum, and palladium bullion and coins without being slapped with taxes as high as 10%, depending on the purchaser's specific location,' the Sound Money Defense League, a national organization dedicated to making precious metals recognized money in the U.S.
According to reports, the legislation passed the state's house and senate with ease, but has been a long-time in the making....
There are still eight states that still tax precious metals bullion as investment assets. However, in a comment to Kitco News, Jp Cortez, Policy Director for the Sound Money Defense League, said that they are helping to develop proposed bills to be introduced in the remaining states....
Cortez added that rising inflation pressures make gold and silver more attractive for consumers looking to preserve their wealth. Friday, the U.S. Department of Commerce said its core Personal Consumption Expenditures Index saw an annual rise of 4.9% last month, down from February's peak of 5.3%.
Although inflation appears to have peaked, it remains elevated at unprecedented levels. Last week, the Federal Reserve also said inflation threatens to erode consumer wealth.
'At a time of record-high inflation, Tennessee shouldn't be punishing citizens with sales taxes for choosing to protect the purchasing power of their savings with sound money,' Cortez."
Inflation has been pummeling the middle class for decades, but the out-of-touch CPI masks this reality - Market Watch
"For several years now, many of us have focused on the scourge of 'fake news.' But much as we may blame avaricious social platforms and conniving public figures for driving widespread cynicism, we need to consider the role played by another more innocuous reality: misleading statistics.
Flagging confidence in both government and the mainstream media tracks decades in which official economic indicators—most notably those that purport to gauge the cost of living—have fundamentally failed to mirror middle-class reality.
Perhaps 'fake' is too strong a term to describe the data-driven consumer price index (CPI), which serves as the U.S. government’s proxy for inflation. But the narrative the CPI has long burnished—namely that, since 2000, ordinary expenses have been fairly manageable amid rising wages—is entirely debunked by new research.
Over the 20 years that preceded the present crisis, prices for things middle- and low-income Americans must purchase rose 40% beyond what CPI would indicate, more than wiping out a median earner’s income gains. In short, the CPI-driven narrative is something akin to 'fake news.'
The implications are dire. Not so long ago, a family of four earning the median income in the United States could make ends meet with a little left over....
That’s not to insinuate that the government is purposely misleading the public. Rather, it suggests that the prevailing statistical methodology produces tragically misleading information for one clear reason: Prices for yachts, luxury hotel rooms, and other high-end items have risen much more modestly than the everyday items—food, housing, medical bills—that middle-class families are compelled to cover.
So the CPI’s heavy weighting of those luxury goods divorces it from the inflationary reality it purports to track."
In big bid to punish Moscow, EU bans most Russia oil imports- AP News
"In the most significant effort yet to punish Russia for its war in Ukraine, the European Union agreed to ban the overwhelming majority of Russian oil imports after tense negotiations that tested how far the bloc is willing to go to ostracize Moscow.
From the moment Russia invaded on Feb. 24, the West has sought to make Moscow pay economically for its war. But targeting its lucrative energy sector was seen as a last resort in Europe and has proved hardest, since the bloc relies on Russia for 25% of its oil and 40% of its natural gas. European countries that are even more heavily dependent on Russia have been especially reluctant to act.
In a move unthinkable just months ago, EU leaders agreed late Monday to cut around 90% of all Russian oil imports over the next six months.
Belgian Prime Minister Alexander De Croo called the embargo a 'big step forward,' and Irish Prime Minister Micheal Martin hailed it as 'a watershed moment'
“The sanctions have one clear aim: to prompt Russia to end this war and withdraw its troops and to agree with Ukraine on a sensible and fair peace,” German Chancellor Olaf Scholz said.
Ukraine estimated the ban could cost Russia tens of billions of dollars.....
The EU estimated around 90% of Russian oil will be banned by the end of the year. That figure includes a ban on all Russian oil delivered by sea — which accounts for two-thirds of the EU’s imports from Russia — plus a decision by Germany and Poland to stop using oil from the northern branch of the Druzhba pipeline."
The stock market ‘casino’ is closed - CNN Business
"Investors have learned a bunch of hard lessons so far in 2022. The stock market doesn’t always go up. And factors such as the economy, earnings and valuations, which might sound like quaint relics of a bygone era, still matter even in a world seemingly dominated by memes and Reddit boards.
Picking winning stocks isn’t easy, especially at a time when the Federal Reserve is raising interest rates and inflation is staring to hurt consumers and the broader economy. Shares of many speculative tech companies are now tumbling due to worries about weakening fundamentals and unsustainable stock prices...
'The casino is closed,' said Peter Mallouk, president and CEO of Creative Planning, a wealth management firm.
'The days of stimulus are over. This is now more of a thinking person’s market. Total speculation is dead,' Mallouk said, adding that traders can no longer pass around blank check SPAC stocks, cryptocurrencies, unprofitable tech firms and other risky investments like hot potatoes and hope someone else will want to catch them.
Stock picking seemed a lot easier when the Fed was doing everything in its power to try to stimulate the economy. Many investors do not have experience navigating the market when the central bank is jacking up rates in a bid to cool things down.
'The world is waking up to the fact that zero percent interest rates are done,' said Max Wasserman, co-founder of Miramar Capital. 'Rates were real low and people took on excess risk because anytime the stock market pulled back, the Fed cut rates. The message was to buy the dips because the Fed has your back. But the party’s over.'
Some investors who were flush with Covid stimulus cash last year and chased meme stocks like GameStop and AMC may now be less bullish on individual stocks....
Wasserman said that stock picking isn’t dead per se. It’s just that now is a time for investors to look for quality companies that can perform well even as interest rates go up and the economy potentially slows as a result."
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5.27.22 -Gold Could Reach $5,000 by 2030
Gold last traded at $1,853 an ounce. Silver at $22.10 an ounce.
News Summary: Gold and silver rose Friday on a weakening dollar. Stocks attempted recovery as inflation reportedly cools.
Gold Could Reach $5,000 by 2030-ETF Database
"The gold market remains on track to end the year above $2,000 per ounce and rise to nearly $5,000 per ounce by the end of the decade, according to the latest In Gold We Trust Report from the European investment firm Incrementum AG.
Per the report, Incrementum's analysts are bullish on gold as rising inflation threatens to edge the global economy into a recession. The company warned that normalizing global monetary policies has revealed serious problems in the global economy that were papered over by loose monetary policies and huge amounts of liquidity.
'Just as in 2018, when we warned of the inevitable consequences of the attempted turning of the monetary tides, we are now issuing another explicit warning,' the report stated. 'In addition to wolfish inflation, a bearish recession now looms.'...
With inflation expected to hold above 5% through 2022, Incrementum said that equity markets could see further losses this year, adding that holding precious metals has proven to provide a cushion for those losses.
The S&P 500 has declined 18% so far this year, approaching bear territory. Meanwhile, gold prices are up 1% on the year as prices push back above critical resistance at $1,850 an ounce.
'The historical performance of gold, silver, and commodities in past periods of stagflation argue for a correspondingly higher weighting of these assets than under normal circumstances,' said analysts. 'But also, the relative valuation of technology companies to commodity producers is an argument for a countercyclical investment in the latter.'"
Top financiers and millionaires just met up in the Swiss Alps. And the mood was terrible. - CNBC
"The world's financial elite gathered in Davos, Switzerland, at the World Economic Forum this week, and a darkening global economic outlook was the number one talking point.
While some foresaw regional pockets of recession in countries or continents particularly exposed to the Russia-Ukraine war and global supply chain problems - with Europe a particular concern - others painted a far bleaker global picture.
Inflation has soared worldwide, with food and energy costs skyrocketing as the war and supply chain bottlenecks bite, along with the residual effects of the Covid-19 pandemic. This has forced central banks to start tightening monetary policy against a backdrop of slowing economic activity.
Recent data indicates that price increases have begun to spill into the underlying economy, posing further risks to global growth and causing headaches for central bank policymakers, who face the unenviable task of tightening monetary policy to rein in inflation without pushing economies into recession....
The surge in food prices was also raised as a central threat by International Monetary Fund Managing Director Kristalina Georgieva, who said during a panel on Monday that the economic horizon has 'darkened' due to the combination of the Russia-Ukraine war, tightening financial conditions, dollar appreciation and the slowdown in China.
'We have a commodity price shock in many countries, and the particular shock I want to bring your attention to is food price shock. Over the last week, because of that sense that maybe the economy is getting into tougher waters, the oil price went down but food price continues to go up, up, up, up,' Georgieva said.
'Why? We can shrink the use of petrol when growth slows down but we have to eat every day, and the anxiety about access to food at a reasonable price globally is hitting the roof.'"
Interest on the debt is a huge threat- The Hill
"The justifiable and unavoidable focus on the highest inflation in 40 years should look beyond its visible impact on the economy and the cost of goods and services. While the most noticeable sign of increased prices appears at gas stations, where they are reaching record highs every day, there are less noticeable but more destructive long-term consequences of higher costs that should be made clearer to the American people.
Over the past two years, $4.6 trillion has been provided by Congress in response to the COVID-19 pandemic. The impact on inflation.... is subject to some debate, but what cannot be denied is the impact this spending has had on the interest paid on the national debt. Between 2011-2018, interest on debt held by the public averaged $272 billion annually. Between 2019-2021, annual interest on the debt averaged $389 billion, an increase of $117 billion, or 43 percent. The president's fiscal 2022 budget, which is the first to project deficits of more than $1 trillion for 10 consecutive years, estimates that FY 2022 interest on debt of $26.3 trillion will be $305 billion and reach $941 billion in FY 2031, or more than triple the amount for the current fiscal year. By that time, interest payments will account for 59 percent of the projected $1.6 trillion deficit.
The projected interest payments in the budget were made with the assumption that 10-year Treasury interest rates would be 1.4 percent in FY 2022, then average 2.2 percent for the next four years and average 2.8 percent for the following five years. But the 10-year Treasury interest rate is already 2.8 percent and likely to go higher given the Federal Reserve Bank's plan to continue raising interest rates....
Overcoming Congress's lack of fiscal responsibility and preventing interest on the debt from becoming not only the largest federal expenditure, but also using up all tax revenue, will be difficult. Far too many members of Congress believe the answer to every problem is to create a program, and if that program does not work, they create another program rather than fixing what went wrong....
President Biden and Congress need to stop spending and start cutting before it becomes too late to stop interest on the debt from growing to become the government's largest expenditure, crowding out all other federal programs, and using up all tax revenue."
Great Resignation regret is sweeping the nation as workers who quit for more money quit again - Business Insider
"The Great Resignation hasn't been so great for everyone.
Even though a record-high 4.5 million Americans quit their jobs in March, fewer appear to be choosing to remain in their new positions, according to a LinkedIn study of 500,000 job changes in 2021 and first reported by Bloomberg.
LinkedIn found that among workers who started new jobs last year, the number who had been in their previous position for less than a year rose by 6.5% compared with the year before. That's the highest percentage of job migration the platform has recorded since it started tracking data in 2016....
LinkedIn's study backs up data from the Bureau of Labor Statistics indicating that a growing number of people who left their jobs to pursue better pay and opportunities are continuing to leave. Even among those who stay put in their new role, one in five polled in a March Harris Poll survey by USA Today said they regretted quitting in the first place.
Though the US economy has recovered about 93% of all the jobs it lost during the coronavirus pandemic, those employed workers are moving around a lot. March was the 10th consecutive month in which more than 4 million Americans resigned. A desire for higher pay, more benefits, and remote flexibility are among the reasons people have been quitting, especially Gen Zers and millennials. But if the LinkedIn study is any indicator, those perks don't necessarily mean they will love their new workplace.
'At the end of the day, you spend most of your life working,' Laurel Camirand, who quit her job for a better one only to leave the new position, told Bloomberg. 'It sucks to be miserable.'"
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5.26.22 - Gold price still on pace to push above $2,000
Gold last traded at $1,850 an ounce. Silver at $21.95 an ounce.
News Summary: Precious metal prices remained stable Thursday as investors weighed the latest U.S. economic reports and upbeat earnings. Stocks higher as Wall Street tried to rebound from a long string of declines.
Gold price still on pace to push above $2,000 as stagflation, recession risks rise - In Gold We Trust- Kitco
"While the gold market remains off its highs from the first quarter, it is still on track to end the year above $2,000 an ounce and push close to $5,000 an ounce by the end of the decade, according to the latest In Gold We Trust Report.
In its annual gold outlook, analysts at Incrementum AG remain bullish on gold as rising inflation threatens to push the global economy into a recession and create a stagflationary environment. The European investment firm issued a warning, saying that normalizing monetary policies worldwide is started to expose major issues in the global economy that were papered over by loose monetary policies and massive amounts of liquidity.
'Just as in 2018, when we warned of the inevitable consequences of the attempted turning of the monetary tides, we are now issuing another explicit warning. In addition to wolfish inflation, a bearish recession now looms,' the analysts said in the report...
With the threat of stagflation looming large, the analysts noted that most investors are inadequately positioned to protect their capital as the traditional 60/40 portfolio structure is expected to see negative returns for only the fifth time in 90 years.
With inflation expected to hold above 5% through 2022, Incrementum said that equity markets could see further losses this year. The analysts said that holding precious metals has proven to provide a cushion for those losses. So far this year, the S&P 500 has lost 18%, dropping below 4,000 points; however, gold prices are up 1% on the year as prices push back above critical resistance at $1,850 an ounce.
'The historical performance of gold, silver and commodities in past periods of stagflation argue for a correspondingly higher weighting of these assets than under normal circumstances,' the analysts said. 'But also, the relative valuation of technology companies to commodity producers is an argument for a countercyclical investment in the latter.'"
Recession, inflation fears creating 'complicated' market for investors to navigate: Citi exec - Fox Business
"Co-Head of Citi's Banking, Capital Markets and Advisory division Tyler Dickson stressed that U.S. investors are dealing with a 'complicated market to navigate' as stocks have experienced weeks of turbulence.
'We have to deal with three Rs on the risk side,' Dickson told 'Mornings with Maria' on Wednesday, noting that the U.S. is dealing with the risk of rates, Russia and recession 'that are weighing heavy on the markets.'...
'Certainly higher rates are creating complexities across various asset classes and from our perspective we do see pressure on housing just like we see pressure on energy and food,' Dickson told host Maria Bartiromo....
'We’re in an inflationary environment,' Dickson stressed. 'We have energy prices high. We have labor prices high. We certainly are seeing challenges with the supply chain.'
He then noted that he believes inflation 'is expected to continue' and that the situation is a 'challenge for the Fed.'
Stocks have had some rough weeks in anticipation of and following the half-point interest rate hike by the Federal Reserve. It was the second of several anticipated increases this year as the central bank seeks to combat soaring inflation, which is at a high not seen in four decades."
Fed minutes point to more rate hikes that go further than the market anticipates- CNBC
"Federal Reserve officials earlier this month stressed the need to raise interest rates quickly and possibly more than markets anticipate to tackle a burgeoning inflation problem, minutes from their meeting released Wednesday showed.
Not only did policymakers see the need to increase benchmark borrowing rates by 50 points, but they also said similar hikes likely would be necessary at the next several meetings
They further noted that policy may have to move past a 'neutral' stance in which it is neither supportive nor restrictive of growth, an important consideration for central bankers that could echo through the economy....
The May 3-4 session saw the rate-setting FOMC approve a half percentage point hike and lay out a plan, starting in June, to reduce the central bank’s $9 trillion balance sheet consisting mostly of Treasurys and mortgage-backed securities.
That was the biggest rate increase in 22 years and came as the Fed is trying to pull down inflation running at a 40-year high...
The minutes mentioned inflation 60 times, with members expressing concern about rising prices even amid confidence that Fed policy and the easing of several contributing factors, such as supply chain problems, combined with tighter monetary policy would help the situation. On the other hand, officials noted that the war in Ukraine and the Covid-associated lockdowns in China would exacerbate inflation...
Along with their resolve to bring down inflation came concerns about financial stability.
Officials expressed concern that tighter policy could cause instability in both the Treasury and commodities market. Specifically, the minutes cautioned about 'the trading and risk-management practices of some key participants in commodities markets [that] were not fully visible to regulatory authorities.'"
A Comfortable Retirement Appears Out of Reach for Most Americans- Bloomberg
"American workers say it will take $1.1 million on average to retire comfortably — but less than one in four figure they’ll be able to save that much.
Just 22% of people approaching retirement age said they’ll have enough money to maintain a comfortable standard of living, according to the 2022 Schroders US Retirement Survey, down from 26% a year ago. The survey of 1,000 workers was conducted in mid-February, when the S&P 500 Index was higher than it is now.
Many Americans expect a significant shortfall in their retirement savings. Fifty-six percent said they expect to have less than $500,000 saved by the time they retire, including 36% who anticipate having less than $250,000.
The leading concern among American workers about retirement was, not surprisingly, that inflation would shrink the value of their assets. The second most-feared event has likely become a reality, at least right now — 53% worried about 'a major market downturn significantly reducing assets.'....
For those already in retirement, a good chunk of people said they are comfortable, or described their situation as 'not great, not bad.' But 18% said they are struggling, and 5% said retirement is a nightmare."
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5.25.22 - Food Crisis Fuels Fears of Protectionism
Gold last traded at $1,852 an ounce. Silver at $21.95 an ounce.
News Summary: Precious metal prices pulled back Wednesday after a four-day streak of gains, as traders braced for the release of Fed minutes. U.S. stocks climbed despite the fact that Treasury yields were on the downswing.
The S&P 500 is headed lower, which is good for gold - Kitco
"After a one-day reprieve, the S&P 500 is once again seeing some intense selling pressure, and the gold market continues to benefit from the market volatility as prices hold above another critical resistance level at $1,850 an ounce.
As the broad-equity market index continues to struggle and flirt with bear-market territory, the chorus of negative sentiment among economists and market analysts grows. Many analysts are looking for significantly lower price prices through the end of the year....
In the current environment, some market analysts continue to see gold as an important market diversifier and risk hedge against falling equity markets. Gold prices are significantly outperforming the S&P 500.
The broad market index is down 18% this year; meanwhile, gold, trading above $1,850 an ounce, is up more than 1%.
In a recent interview with Kitco News, Axel Merk, President and Chief Investment Officer of Merk Investments, said that although gold faces some challenging headwinds as real interest rates turn positive, it continues to do its job.
He added that rising inflation and market instability will continue to support gold prices.
'The Federal Reserve has one tool and that is not good for risk assets,' he said."
‘Real wealth destruction’: This Deutsche Bank chart shows what could happen to assets in a repeat of the stagflationary 1970s.- Market Watch
"While the decade is still young, if inflation sticks around for the next few years, things could get pretty ugly for investors.
That’s according to this chart from Deutsche Bank, which shows how a range of assets performed during the disco and stagflation days of the 1970s.
While history never exactly repeats, Deutsche Bank strategists were aiming to offer a framework to clients on how to think about the next few years if inflation stays high even after a Fed-induced recession.
'The short answer is that for traditional financial assets like bonds and equities you would expect real wealth destruction rather than the massive real wealth creation seen over the last four decades,' the bank’s strategists Jim Reid and Henry Allen, told clients in a note on Tuesday.
Commodities would likely be a better bet, although given the run up already seen so far this decade, the easy gains have perhaps been made, they noted.
'However, gold and silver haven’t made much progress over the last two years so if the playbook follows the 1970s they are the standout cheap asset from this starting point,' said the strategists"
Food crisis fuels fears of protectionism compounding shortages- Reuters
"A growing world food crisis is precipitating protectionist moves by countries which are likely to compound the problem and could lead to a wider trade war, business leaders and policymakers at the World Economic Forum said.
In a sign of the escalating squeeze on food supplies and rising prices, a government source told Reuters that India could restrict sugar exports for the first time in six years to prevent a surge in domestic prices.
Meanwhile Indonesia, the world's biggest palm oil exporter, will remove a subsidy on bulk cooking oil and replace it with a price cap on the raw materials for local refiners.
'It is a major issue, and frankly I think the problem is even bigger ahead of us than it is behind us,' Gita Gopinath, first deputy managing director of the International Monetary Fund, told Reuters of rising food security concerns.
Protectionism is looming large at Davos, prompting calls for urgent negotiations to avoid a full-blown trade war.
'It's very important for the leaders of the world to sit at the table with calm and talk about how we will manage trade and food and investment,' Jay Collins, vice chairman of banking, capital markets and advisory at Citigroup told the Reuters Global Markets Forum in Davos....
Russia's invasion of Ukraine, which Moscow describes as a 'special military operation', has led to a sudden crunch in a crisis that was already in the offing.
'We were facing an extraordinary food crisis before Ukraine, food costs, commodity prices, shipping costs were already doubling, tripling, quadrupling,' David Beasley, Executive Director for the United Nations World Food Programme, said."
New home sales plunge nearly 17% in April - Fox Business
"Sales of new single-family houses in the U.S. dropped significantly more than expected last month to the lowest level in two years as rising construction costs, home prices, interest rates and supply chain woes continue to batter the industry.
The U.S. Census Bureau's latest data shows the pace of new home sales fell by 16.6% in April from the month before at a seasonally adjusted rate of 591,000. Analysts surveyed by Refinitiv anticipated a dip of 1.7%.
The drop is 26.9% lower than a year ago, and the lowest since April 2020. This is the fourth straight month new home sales have declined.
'April’s dismal new home sales data shows an industry besieged by higher construction costs, supply chain disruptions and by higher mortgage rates that are giving many potential buyers cold feet,' said Robert Frick, corporate economist at Navy Federal Credit Union.
'Given the pipeline for bringing new homes to market is stretched so thin, we shouldn’t expect home building to add much to housing stock for the foreseeable future,' he added."
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5.24.22 - 1 in 5 Will Change Jobs in the Next Year
Gold last traded at $1,865 an ounce. Silver at $22.08 an ounce.
NEWS SUMMARY: Precious metal prices continued their climb Tuesday - aiming for a fourth straight gain - as the U.S. dollar falls. U.S. stocks resume sell-off on fears of a recession following a brief sell-off reprieve.
Gold ticks higher, aiming for 4-day winning streak as dollar pulls back- Market Watch
"Gold futures ticked higher early Tuesday, aiming for a fourth straight gain, as the U.S. dollar continued to edge back from recent highs....
Gold, which bounced after hitting a three-month low in early May, has benefited as the 10-year Treasury yield pulled back from 3 1/2-year high above 3.2% in recent weeks as a selloff in equities spurred demand for safe-haven assets.
The dollar, as measured by the ICE U.S. Dollar Index, meanwhile, has retreated from a roughly 20-year high.
Gold 'is benefiting from the drop in Treasury yields together with some dollar weakness —- with which it has an inverted price correlation. The stabilization of Treasury yields and the dollar, which have retreated from peaks reached in mid-May, occurs as the markets appear to have priced-in the Fed’s hawkish tilt, and the appearance of some rays of hope for a brighter global economic outlook,' said Ricardo Evangelista, senior analyst at ActivTrades, in a note.
The expected easing of Covid lockdowns across China and a surprising statement from President Biden, hinting at a potential reduction of tariffs applied to Chinese imports on Monday, lifted the mood in the markets and created scope for further gold gains, as dollar demand decreases, he said."
Social Media Stocks Sink to Erase $180 Billion on Snap Warning -Yahoo! Finance/Bloomberg
"Social media stocks lost more than $180 billion in market value Tuesday after Snap Inc.’s profit warning, adding to woes for a sector that is already reeling from stalling user growth and rate-hike fears.
Shares in digital ad-dependent Snap tumbled as much as 41%, their biggest intraday decline ever to trade below its 2017 initial public offering price of $17. The selloff erased about $15 billion in market value. Added to the value of declines for peers including Facebook-owner Meta Platforms Inc., Google-owner Alphabet Inc., Twitter Inc. and Pinterest Inc., the group has seen $181.1 billion billion wiped out....
'At this point, our sense is this is more macro and industry-driven versus Snap specific,' Piper Sandler analyst Tom Champion wrote in a note.
Others on Wall Street agreed, with Citi analyst Ronald Josey saying 'a slowing macro is likely impacting advertising results across the broader Internet sector, although we believe platforms more exposed to brand advertising—like Twitter, Google’s YouTube, and Pinterest—are likely experiencing a greater impact overall.'
The owner of the Snapchat app, which sends disappearing messages and adds special effects to videos, reported quarterly user growth in April that topped estimates. But with the company saying just a month later that it won’t meet prior forecasts for revenue and profit, analysts noted a rapid deterioration of the economic environment."
Why Is It Normal For You To Worry About Retirement Before You Retire?- Forbes
"The clock is ticking towards your final day on the job. On the other side sits the promise of a proverbial pot of gold at the end of the rainbow.
Or so you have always been told. And you’ve always believed retirement would be just that.
If that’s all true, why are you so anxious?
'Change is inevitably hard for everyone, and the shift from working to not working is huge!' says Wes Moss, Managing Partner and Chief Investment Strategist at Capital Investment Advisors in Atlanta. 'For many people, they’ve been working since they were in their teens, and they know how to manage a steady incoming stream of income. We’re talking about decades of consistent habits and lifestyle. From a human and psychological level, the transition will nearly always create anxiety. Will I run out of money once there are no more paychecks? What will my purpose be once my career and steady work income stop? So, it’s completely understandable that the transition will create worry.'
Worry comes in many flavors. It exists for many reasons. As you might imagine, money stands as the taproot of this fear. The funny thing, though, is that money may merely be a symptom, or at the very least a metaphor for the real problem....
'Often, people don’t think they have ‘enough’ money,' says Christopher J, Mackin, Partner and Wealth Advisor at Bleakley Financial Group in Boca Raton, Florida. 'It comes from a common scarcity of money mindset where people focus on what is lacking versus how to grow. Shifting this mindset begins with having a plan for your money.'...
'Initially people seem most worried about whether or not they will have enough saved to have a comfortable retirement, where they can take care of themselves and not place any financial burden on their children,' says Matthew Grishman, Principal at the Gebhardt Group, Inc. in Roseville, California. 'Quite often, even when people know they have enough, they still worry about retirement...'"
The Great Resignation looks set to continue — 1 in 5 say they’ll change jobs in the next year- CNBC
"The Great Resignation is set to continue, according to a new global survey by PwC, with one in five saying they are likely to switch jobs in the next 12 months....
The consulting firm said in a press release that higher pay, more job fulfillment and wanting to be 'truly themselves' at work are the factors pushing workers to change jobs.
Some 35% of respondents are planning to ask their employers for more money in the next 12 months.
'The findings are very clear ... you see a significant number of employees concerned about their future employment and their job security,' Bob Moritz, global chairman of PwC, said at the forum.
However, 'the power is now, we would argue — in the hands of individuals that are employed.'
The pressure for more compensation is highest in the tech sector, where 44% of respondents who work in the industry said they plan to ask for a raise, according to PwC. Conversely, only 25% in the public sector said they plan to do the same....
More money is the biggest motivator for a job change, yet finding fulfillment at work is 'just as important,' according to PwC.
Some 71% of survey respondents said a pay increase would prompt them to change jobs, yet 69% said they would change employers for better job fulfillment too."
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5.23.22 - Small Business Owners Fear Economy Will Worsen
Gold last traded at $1,853 an ounce. Silver at $21.78 an ounce.
NEWS SUMMARY: Precious metals rose Monday as the U.S. dollar hit a four-week low. U.S. stocks higher as markets attempt rebound after eight-week losing streak.
Gold climbs over 1% on dollar sell-off- Kitco/Reuters
"Gold prices rose over 1% on Monday, boosted by a slide in U.S. dollar to its lowest in a month, while growth concerns in the economy kept bullion's safe-haven demand intact....
A weaker dollar makes gold cheaper for overseas buyers.
'Gold bugs are drawing strength from a weaker dollar, concerns over accelerating inflation, and global growth fears... In the near term, a weaker dollar could provide the precious metal a tailwind, lifting prices further away from the 200-day simple moving average,' FXTM analyst Lukman Otunuga said....
ANZ Research in a note said the rising risk of underperformance in equity markets has also enhanced gold's risk-diversifier appeal. Stocks hovered just above bear market territory as economic fallout from the war in Ukraine and persistently high inflation capped gains in equity benchmarks."
Inflation Will Lead Inexorably To Recession - Forbes
"Recession is in the cards and not because of the recent report of declining real GDP in the first quarter..... A real recession looms nonetheless some months out because of the tremendous inflationary pressure confronting this economy. Only in the extremely unlikely event that price pressures lift mysteriously of their own accord can the nation avoid this unwelcome prospect. And since inflation’s roots run deep in the economy’s fundamentals, such luck is far from likely.
The recession will have one of two causes. If the Federal Reserve (Fed) decides to exercise sufficient monetary restraint — restrict credit flows and raise interest rates considerably and rapidly — it would likely shock markets and precipitate recessionary conditions, perhaps brief and mild, but a recession, nonetheless. The Fed could, of course, avoid taking aggressive action. That might delay recessionary pressure, but eventually an unchecked inflation itself would produce sufficient economic distortions to bring on a recession anyway, probably more severe and longer lasting than one induced by anti-inflation policies. One way or another, recession looms....
Eventually unchecked inflation itself will make business planning so fraught with uncertainty that businesses will forgo investment projects that would otherwise enhance the economy’s productive potential and encourage job growth.... By eroding the value of dollar-denominated assets, like stocks and bonds, inflation will also cause a retreat in financial markets and in so doing further discourage investments in real productive capacities. At the same time the inflation would redirect what investment monies are available into inflation hedges, such as art and land purchases, instead more productive activities."
The bull market minted millions of day traders. They’re in for a rough ride- CNN Business
"In early 2021, in the midst of speculative stock market euphoria, a pair of day traders went viral on TikTok with a video explaining their winning strategy.
'I see a stock going up and I buy it. And I just watch it until it stops going up, and I sell it,' says the user known as Chad. 'I do it over and over and it pays for our whole lifestyle.'
Yes, Chad had discovered momentum trading. And it seemed to work out well for him. Like the millions of people who took up day trading during the pandemic, Chad was riding a thrilling bull market that was bingeing on ultra cheap money from the Federal Reserve.
For newbies, it was hard to go wrong. Pick a stock, any stock, and watch it go up. Now, of course, the joyride is coming to an end almost as rapidly as it began....
'Turns out investing is kinda difficult when the free money faucet is turned off,' wrote one user on the WallStreetBets Reddit page last week, alongside an apparent screengrab of a stock market data page showing a sea of red.
For traders who’ve only known the thrill of the bull market, 2022 has been a harsh pivot. On the WallStreetBets page — the epicenter of the 2021 meme stock mania — the mood is decidedly less party-like. The rally cries of 'diamond hands' and 'HODL' have been replaced by jokey memes about bottomless losses"
Most small business owners fear US economy will worsen over next year- Fox Business
"Small businesses are growing concerned about the fate of the U.S. economy as the nation deals with high inflation, supply-chain and labor shortages, and rising interest rates.
According to a poll conducted this month by business-coaching and peer-advisory firm Vistage Worldwide Inc., 57% of small business owners predict that the U.S. economy will only become worse in the next year, matching the April 2020 mark for lowest level of confidence. Last month, 42% of small business owners had the same grim outlook on the economy.....
Data showing that small business owners have a pessimistic view of the economy relies on responses from a variety of sectors, including manufacturing and consumer products and services.
Even large corporations are feeling the impact of supply-chain holdups, rising prices and worker shortages....
Small businesses, however, do not have the financial flexibility that larger businesses do, so they often struggle to manage economic woes. Many small business owners have said their companies have been hurt by the COVID-19 pandemic and by a number of economic challenges. Government aid programs that helped alleviate the economic burden for businesses have largely run out of funds."
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5.20.22 - Firm pays staff in gold to avoid impact of inflation
Gold last traded at $1,845 an ounce. Silver at $21.68 an ounce.
News Summary: Gold price were stable Friday, on track for a weekly gain. Stocks officially entered bear territory with the S&P 500 off 20% from its high.
Firm pays staff in gold to avoid impact of inflation- FT Adviser
"Staff at a financial services firm have been offered the chance to get paid in gold rather than pounds and pence to help them stay ahead of inflation.
TallyMoney, which is an app linking currency tied to physical gold ownership, is understood to be the first employer in the country to trial a gold payroll, though others have offered to pay staff in crypto.
Chief executive officer Cameron Parry, said: 'With the cost of living crisis going from bad to worse, it didn’t make sense to continue offering pay hikes in pounds when its value is being eroded further with every passing day. It was like putting a bandaid over an open wound.'
'We’re seeing the spending power of the pound continue to decline at an alarming pace whereas gold has been steadily rising in value throughout 2022.'"
U.S. may be barreling toward recession in next year, more experts say - MSN
"The U.S. economy could be heading for a recession in the next year, according to growing warnings from banks and economists, as a sudden bout of economic pessimism hammers financial markets that had been counting on sustained economic momentum.
Although major swaths of the economy — including the job market and consumer spending — remain robust, there are mounting worries that rising borrowing costs for consumers and businesses, after years of near-zero interest rates, could cause a sudden retrenchment. The Federal Reserve has raised interest rates by 0.75 percentage points so far this year, while officials are signaling more aggressive hikes could be necessary to cool the economy. Continued uncertainty from the coronavirus pandemic and Russia’s invasion of Ukraine are adding to the uneasiness.
'Recession risks are high — uncomfortably high — and rising,' said Mark Zandi, chief economist at Moody’s Analytics. 'For the economy to navigate through without suffering a downturn, we need some very deft policymaking from the Fed and a bit of luck.'...
Those concerns come amid new smatterings of data that point to economic cooling, particularly in interest rate sensitive sectors that are already feeling the brunt of the Fed’s promise to keep tightening monetary conditions."
Next big shoe to drop in financial markets: Inflation that fails to respond to Fed rate hikes - Market Watch
"Traders, investors and strategists are adding one more factor to the list of reasons why financial markets may be in for more volatility through at least the next three to four months: the likelihood that Fed rate hikes won’t put a dent in inflation by then....
Equities had already been roiled in the past two weeks since the Fed’s May 4 decision to deliver a 50 basis point hike, its biggest rate increase in 22 years. A day after the Fed’s move, Dow industrials dropped almost 1,100 points and, along with the Nasdaq Composite Index scored its worst daily percentage drop since 2020 on signs of panic selling on Wall Street. This year’s selloff in stocks has left all three major indexes nursing double-digit losses.
What has yet to be fully considered in financial markets is the notion that U.S. inflation, at 8.3% as of April but still near a four-decade high, may fail to respond to the Fed’s rate hikes through this summer, according to traders, strategists and investors. Typically, it takes anywhere from six to nine months, and even up to two years, for rate hikes to work their way through the economy. But that policy lag may be lost on markets accustomed to years of easy money and growing more uneasy by the day. Though the Fed’s effort to shrink its almost $9 trillion balance sheet adds an additional layer of tightening to financial conditions, it doesn’t start until June 1."
The true depths of our debt crisis - The Hill
"For over 50 years, both political parties have run up the national debt while ignoring warnings about the long-term unsustainability of federal budgets. Now, the Federal Reserve has quietly turned to inflation to lighten the nation’s debt burden through a policy of negative real interest rates.
Unfortunately, this policy path is reducing the value of Americans’ paychecks and savings accounts as devaluation is used to effectively default on obligations incurred over decades. While it is clear how decades of deficit spending, rising entitlement costs, off-the-books war spending, and massive stimulus packages got America into this situation, a new data project from Reason Foundation reveals the true depths of this debt crisis....
The Federal Reserve holds down federal borrowing costs by purchasing more federal debt securities, typically with newly created reserves. By competing with other buyers of U.S. Treasury securities, it can push down interest rates. The Federal Reserve typically remits most of the interest income it receives on its bonds back to the U.S. Treasury, further lowering the government’s effective borrowing costs. There’s a possibility that the Fed may need to step in more and more in the future if foreign demand for U.S. debt securities decreases....
The massive federal debt accumulation is going to force extremely tough political and policy choices in the coming decades, but political leaders should stop the bleeding and start to contain the damage by adopting a more prudent approach to federal spending."
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5.19.22 - Does inflation have you worried about retirement?
Gold last traded at $1,840 an ounce. Silver at $21.95 an ounce.
NEWS SUMMARY: Precious metals jumped Thursday amid a weaker U.S. dollar and bargain hunting. U.S. stocks extended their slump as traders continue to react to a severe drop in profits by America's major retailers.
Gold, silver look cheap as Fed rate hikes create threat of a recession - Degussa/Kitco
"The gold market continues to struggle to make material gains above $1,800 an ounce. Still, the precious metal remains cheap as investors continue to miss-price risk in the marketplace, according to one market analyst.
In his latest market commentary, Thorsten Polleit, chief economist of Degussa, said that both gold and silver are relatively cheap as investors ignore the growing risk that the Federal Reserve will push the U.S. economy into a recession as it raises interest rates....
However, he added that the U.S. central bank is walking a very narrow path, which has been made difficult because of massive government debt worldwide. Polleit noted that global debt levels represented 351% of global GDP.
'The risk that something could go wrong is enormous, especially given record levels of global debt,' he said.
Even if the Federal Reserve can avoid pushing the economy into a recession, Polleit said there is still potential for gold and silver once investors realize that inflation will remain elevated longer than expected."
Target posts a stunning drop in profit. Stock plunges - CNN Business
"Target’s earnings didn’t hit the mark. Far from it.
The retail giant reported a stunning 52% drop in profit for the first quarter, badly missing Wall Street’s forecasts. The company blamed higher expenses due to continued supply chain disruptions. Consumers also are holding back on nonessential purchases because of rampant inflation...
'We faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time,' said Target CEO Brian Cornell in the earnings press release Wednesday...
As prices soar, consumers aren’t splurging on bigger-ticket items, such as televisions and exercise equipment. The company noted that there were 'lower-than-expected sales in discretionary categories,' and Target was forced to write down the value of excess inventory that’s stuck in warehouses....
The continued problems in the supply chain are hurting retail profits. Target, like many other retailers, has needed to boost hourly pay to attract workers. The company said higher compensation costs for employees in its stores and distribution centers put a dent into earnings.
Big retail chains are also grappling with the fact that last year’s earnings were boosted by federal stimulus checks from the government, a phenomenon that has largely disappeared in 2022."
Does inflation have you worried about retirement? Here’s what experts say to do - CNBC
"Inflation may have you worried about your retirement.
Prices have been rising on everything from food to housing. In April, the consumer price index, which measures the prices of goods and services, notched an 8.3% increase from the year-earlier period....
Meanwhile, some older adults are choosing to put off retiring: Thirteen percent of Gen Xers and baby boomers said they’ve postponed or considered delaying plans to leave the workforce because of rising costs, a survey from the Nationwide Retirement Institute found.
Add a volatile stock market to the mix and those saving for retirement may start rethinking their investment plans....
Your portfolio should be a mix of different assets, like stocks and bonds, and the allocation should be determined by your risk tolerance, time horizon, cash-flow needs and taxes...
Then there are assets that are traditionally considered inflation hedges, like gold and other commodities, as well as real estate investment trusts. The decision to add them to your portfolio, and how much, again depends on your time horizon..."
This Could Be a Lost Decade for Stocks - Wall Street Journal
"U.S. stocks could well bounce back from their awful start to the year. How they do in the longer run is another matter.
Heading into 2022, expectations were great. A Natixis survey of individual investors in 24 countries in 2021 showed U.S. investors had the highest projections of the group at 17.5% annual returns going forward. The difference between that and historical experience is stark: Compared with long-term annual U.S. stock returns of around 9.8%, a $10,000 investment would grow to about $50,000 in 10 years instead of $25,000. But even stocks’ more restrained long-run returns seem aspirational now....
Guessing what prices investors will pay in the future, and when or whether they will revert to the mean, is notoriously hard. The recent selloff could be the early stages of that adjustment, though, according to Christopher Bloomstran, a value-investing veteran who is president of Semper Augustus. He wrote in an email interview that tightening monetary policy is likely to be the catalyst.
'The Fed has a perfect record popping bubbles. They aren’t likely to fail this time,' Mr. Bloomstran wrote.
Another prominent value investor, Jeremy Grantham, co-founder of the asset manager GMO, wrote in January that U.S. stocks had entered their fourth 'superbubble' of the past 100 years and that he expected them to drop by half. In addition to quantitative reasons such as statistical deviation from long-term trends, he cited a more subjective historical cue akin to ringing a bell near the top—'crazy' speculation, this time in meme stocks, EV makers, cryptocurrencies and NFTs."
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