2.10.20 - Coronavirus: Beijing Locked Down
Gold last traded at $1,579 an ounce. Silver at $17.79 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday as spreading coronavirus worries boosted safe-haven buying. U.S. stocks rebounded despite mounting concerns over how the coronavirus would impact China's economy.
Gold hits 1-week high as virus concerns boost safety demand -CNBC
"Gold rose to its highest in one week on Monday as the death toll from the coronavirus outbreak rose further and investors sought safe havens from the economic impact. 'The coronovirus fears continue to see safe-haven inflows heading into gold and that has been positive for prices,' said Daniel Ghali, commodity strategist at TD Securities....The death toll from the epidemic has surpassed that of Severe Acute Respiratory Syndrome (SARS) from 2002-2003 and the World Health Organization said the number of cases outside China could be just 'the tip of the iceberg'. Since late last month, the world's second-largest economy has suffered prolonged business closures, lockdowns and travel restrictions due to the outbreak that hit around the Lunar New Year holidays, a peak time for travel and business. Bullion, seen as a safe investment during crisis, is off to a solid start this year, gaining nearly 4% so far in 2020 after an annual rise of about 18% in 2019."
The case for Michael Bloomberg winning -Greenwich Time
"Back in 2016, a wealthy New Yorker got into a crowded presidential race and was immediately dismissed. Virtually nobody actually liked the candidate, polls showed, and there were also questions about how serious he was about the whole thing. Then that candidate won. Could it happen again in 2020? The results of the Iowa caucuses have fed speculation that former New York mayor Mike Bloomberg might actually have a shot at the Democratic nomination. He wasn't on the ballot, mind you, but the results - with a Democratic socialist senator and the young, former mayor of a relatively small American city finishing in the top two slots - seem to have cracked the door ajar to a wild card. Couple that with the 'gut punch' suffered by the leading 'establishment' candidate - Joe Biden's fourth-place finish - and it's not unreasonable to think a lane could open for Bloomberg....Super Tuesday, on March 3, is the first date on which Bloomberg will actually be on ballots, thanks to his late entry into the 2020 race and his unorthodox strategy of spurning the first four states....There are very few polls in the Super Tuesday states, but the few we have suggest he's a player. To wit, some recent polls: He's third in North Carolina at 14 percent. He's fourth in Texas at 9 percent. He's fourth in Utah at 10 percent....In the March 10 mini-Super Tuesday: He's second in Missouri at 14 percent. He's fourth in Washington at 12 percent. He's fourth in Michigan at 9 percent. And on March 17: He's second in Florida at 17 percent. He's fourth in Ohio at 10 percent....There's a lot of what-ifs built into the case for Bloomberg winning the nomination, but there remain a lot of questions about the 2020 Democratic field, and the party's unquenchable thirst for getting Trump out of the Oval Office could make for a unique campaign."
Sooner or Later This Fake Economic Boom Will End -Snyder/Real Clear Markets
"Most people remember the economic policies in 1971 because they were big things, or they had seemed to be. In August of that year, Bretton Woods finally died. To address growing instability in the dollar, the President cut all ties with gold money, the currency no longer convertible by anyone anywhere. On the advice of nearly every economist of the time, he was told a regime of floating currencies was the only way out. And that’s the way he went. It was not his only strike at the Great Inflation. The same day the dollar was defaulted, President Nixon told Americans in a nationally televised address that he was 'ordering a freeze on all prices and wages throughout the United States.'...It was as if Chairman Mao and President Nixon had swapped places several months before their historic February 1972 meeting. Nixon, however, hadn't won over everyone with his heavy handedness. Economist Milton Friedman said bluntly, 'Sooner or later, and the sooner the better, it will end as all previous attempts to freeze prices and wages have ended, from the time of the Roman emperor Diocletian to the present, in utter failure and the emergence into the open of the suppressed inflation.'....None of this is unfamiliar territory. It was just four years ago when an upstart no one thought had a chance grabbed the election and rode the deep, underappreciated well of economic dissatisfaction to campaign success. In February of 2016, then-candidate Trump deployed his typical grandiose, exaggerated style after his win in the New Hampshire primary. 'Don't believe those phony numbers when you hear 4.9 and 5 percent unemployment. The number's probably 28, 29, as high as 35. In fact, I even heard recently 42 percent.'....Donald Trump won by saying out loud what everyone else knew but wouldn't talk straight about...Like Nixon in '68, the message from Trump in '16 was, 'I'm here to clean up this huge mess.' He'd earned a ton of goodwill simply by admitting there was a mess....In my mind, there are so many parallels between this election and the one in 1972. The economy isn't close to being fixed and yet many people appear willing to see it play out the way it is now...Trump, like Nixon, can win in a landslide even with a 'boom' that deserves every bit the quotation markets around the word....2020 bears too much resemblance to 1972...To paraphrase Friedman, sooner or later, the sooner the better, it will end as all previous attempts to fake a boom have ended."
Beijing Lock Down, Virus Death Toll Tops 900; More Than 40,000 Infected -Zero Hedge
"Summary: -Virus death toll hits 902, vastly surpassing all of SARS (813) in only three weeks. -The number of global confirmed cases hits 40,553 in China (40,171) and offshore (382). -WHO Director-General warns 'we may only be seeing the tip of the iceberg'. -Exiled Chinese billionaire says true death toll closer to 50k, 1.5 million infected. -New cases confirmed in UK, Spain, Singapore. -Passengers aboard 'Diamond Princess' warn authorities aren't doing enough to protect them - and others. -Officials in Shenzen say they won't block Foxxconn factory reopening. -Cruise ship quarantined in Hong Kong allowed to leave after 4 days. And so the epidemic reaches China's capital Beijing. As gnews reports, as the coronavirus spreads from Wuhan, China has been implementing 'closed management' by putting 80 cities under lockdown, and on Monday, Beijing authorities also issued a 'Strict Closed Management of Residential Communities' in an epidemic prevention and control announcement. It is an official declaration that Beijing, the country’s capital city of China, is now under lockdown."
2.7.20 - China: 400 Million people on Lockdown
Gold last traded at $1,575 an ounce. Silver at $17.74 an ounce.
NEWS SUMMARY: Precious metal prices steadied Friday as upbeat jobs data boosted the dollar. U.S. stocks fell as worries over the impact of the coronavirus on the Chinese economy outweighed stronger-than-expected U.S. jobs data.
Gold Triggers A Buy Signal -Seeking Alpha
"Looking at the market's response to the coronavirus this past week, I can't help but see that the outbreak in China has exposed a seeming disconnect between the financial markets and science. We don't know how bad the crisis will get or how bad economically it will affect the world. However, stocks have figured out that, regardless of any unprecedented economic catastrophe or epidemic, the central banks can cap the economic impact by simply lowering interest rates in any type of crisis....This leads me to believe that the market has once again taken the position that central banks will save the day, regardless of the crisis. That is concerning, since there is only so much the federal reserve banks can do as we approach zero or negative interest rates. Not knowing the full extent of the damage economically, there is a very high risk in being complacent about the economic indicators, especially since we have never seen this kind of crisis develop before....In September, I published an annual report with gold targets for 2020, with the first target in the $1,655 area and the second target above $1,800....Gold triggered a buy signal for the weekly when it closed at $1,558....Gold is in a major area of support, which is validated by a number of independent indicators...The market appears ready to hold and a reversion to that $1,584 level, the weekly mean, is highly likely."
The Democrats' Unserious Week -Noonan/Wall Street Journal
"Democrats, when they're feeling alarmed or mischievous, will often say that Ronald Reagan would not recognize the current Republican Party. I usually respond that John F. Kennedy would not recognize the current Democratic Party, and would never succeed in it. Both men represented different political eras but it's forgotten that they were contemporaries, of the same generation...Both men valued certain public behaviors and the maintenance of a public face. It involved composure, coolness, a certain elegance and self-mastery...They knew they were passing through history at an elevated level, and part of their job was to hold high its ways and traditions. Their way is gone, maybe forever. Democrats blame this on Donald Trump...But this week Democrats joined him in the pit. Do they understand what a disaster this was for them? If Mr. Trump wins re-election, if in fact it isn't close, it will be traceable to this first week in February. Iowa made them look the one way a great party cannot afford to look: unserious....And what happened a day later in the House was just as bad. Speaker Nancy Pelosi shattered tradition, making faces, muttering, shaking her head as the president delivered his State of the Union address. At the end she famously stood, tore the speech up and threw down the pieces....The speech itself was shrewd and its political targeting astute....This was the president putting the Republican Party on the side of the nobodies of all colors as opposed to the somebodies....Republicans in the Reagan era used to say, and think, that we were the Main Street party, not the Wall Street one...Mr. Trump is saying he's for the people who live there, in Main Street's diaspora. Whatever happens with him, that is the party's future. Whatever happens with the Democrats they cannot afford another week like this."
A Stunning 400 Million People Are On Lockdown In China -Zero Hedge
"Guangzhou, the capital of China's southwestern Guangdong Province and the country's fifth largest city with nearly 15 million residents, has just joined the ranks of cities imposing a mandatory lockdown on all citizens, effectively trapping residents inside their homes, with only limited permission to venture into the outside world to buy essential supplies. The decision means 3 provinces, 60 cities and 400 million people are now facing China's most-strict level of lockdown as Beijing struggles to contain the coronavirus outbreak as the virus has already spread to more than 2 dozen countries. That's more than 400 million people forcibly locked inside their homes for 638 deaths? Just think about that: If there was ever a reason to believe that Beijing is lying about the numbers (and not just because Tencent accidentally leaked the real data), this is it....Yesterday, Beijing argued that the virus outbreak had 'peaked' as they cited a drop in the rate of new infections. However, others have suggested that the rate of new confirmed cases has more to do with Beijing's limited resources. The WHO said during a press conference on Thursday that it's too early to claim that the outbreak has peaked, even as the outlook for the global economy falls off a cliff."
How to Recession-proof Your Retirement -Wharton
"What are the best ways to make your retirement recession-proof and avoid the losses many people suffered during the last major economic downturn? Nearly three-quarters of economists surveyed by the National Association for Business Economics said the U.S. could enter a recession by 2021. With consumer debt nearing 2008 levels, uncertainties on the health insurance front, and predictions of slower economic growth in the coming years, experts at Wharton note that Americans preparing for retirement should pay down debt, build an emergency fund and look for big and small ways to save money. 'The first thing I would advise, given that it's the beginning of the year, is to start to think about getting your tax material together, and try to put together a summary budget,' said Olivia S. Mitchell, professor of business economics and public policy and executive director of Wharton's Pension Research Council....The next step would be to 'make sure you have an emergency fund,' Mitchell said. Most people suggest that emergency funds should have about six months' worth of income. 'That's not going to save your life if you lose your job and we have huge unemployment, but it will give you some options and opportunities to make the adjustments.'....Mitchell’s third nugget of advice was to try and pay down loans such as home mortgages. In the last recession, many people who faced a financial crunch 'had very expensive mortgages,' she pointed out. 'That’s why there were so many foreclosures. People lost their homes....Investments are less important than making sure you have enough money saved.'"
2.6.20 - Gold Prices Up on Coronavirus Worries
Gold last traded at $1,569 an ounce. Silver at $17.82 an ounce.
NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying amid ongoing coronavirus worries. U.S. stocks inched higher as investors digested a tariff cut from China along with a raft of earnings and economic data.
Gold prices up on marketplace coronavirus worries -Kitco
"Gold and silver prices are modestly up in early U.S. futures trading Thursday. The safe-haven metals bulls have stabilized their markets late this week, despite rallies in global stock markets this week, led by the U.S. stock indexes that are at record highs again....The coronavirus outbreak continues to spread, with over 500 reported dead in China and around 30,000 afflicted in the country. China's domestic commerce is being impacted, as is global commerce. The big drop in Tesla's stock price Wednesday is blamed at least in part on the coronavirus out break impacting Tesla's business in China. Many global companies doing business with China have been negatively impacted. It will not be surprising to this longtime market watcher to see the coronavirus outbreak back on the front burner of the marketplace next week, or sooner. Such a scenario would be bullish for gold, U.S. Treasuries and the U.S. dollar, and bearish for global equities. Reports overnight said China has moved to lower tariffs on $75 billion in U.S. imports, as part of its recent partial trade agreement with the U.S. Chinese officials also said the plan to cut domestic value-added taxes....Technically, the gold bulls have the overall near-term technical advantage and have worked to stabilize the market late this week."
"We Are Entering The Period Of Global Uncertainty..." -Zero Hedge
"The year 2020 could emerge as the start of the era of relative global chaos or major upheaval. It is the era we have been anticipating, as the impact of core population decline meets economic dislocation, and security and structural uncertainty. A broad-brush landscape view of 2020 must include at least the following: 1. The People's Republic of China and the BRI Framework: The Communist Party of China (CPC) should be expected to face unprecedented challenge in 2020-21, not only for its control of the economy of the People's Republic of China (PRC), but to its ability to project the PRC's physical power in its immediate region, and across its suzerain empire, expressed through the Belt & Road Initiative (BRI) network of states....The PRC was already on economic life-support by the time the coronavirus pandemic began to become known by the end of January 2020. It was clear that the CPC was already well aware of the reality that the coronavirus had begun its broad contagion - with the consequent impact on the PRC economy - when it signed the 'trade deal' with Pres. Trump....All of this, coupled with the economic impact of the revolt of Hong Kong against the PRC - effectively removing Hong Kong as one of the key economic contributors to the PRC's 'economic miracle' - meant that the PRC's already-delicate economic condition was now in an unavoidable and dramatic decline....US Pres. Trump, assuming he wins re-election in November 2020, may decide in 2021 to take the PRC off life support and re-start the trade war. The downstream ramifications are significant. 2. Western Europe After Brexit, and the Re-Shaping of the Heartland/Maritime Balance: The myth of the European Union (EU) was finally shattered when the United Kingdom left the EU on January 31, 2020. The EU was already in a delicate economic condition before that occurred, and would now lose significant traction as a result of the UK departure (Brexit)....The ongoing weakness of the EU, however, has significant ramifications for stability in the Mediterranean Basin, and particularly related to actions by Turkey toward Cyprus, Greece, Libya (and by stealth, toward Egypt), and the Levant. There is an increasing likelihood of France continuing to take a sovereign view of strategic issues, and work closely with the UK....3. The United States Moving To and Through Pivotal Elections: The US continues to be a nation divided at levels of polarization not seen since 1860. This is likely to worsen until (and beyond) the November 3, 2020, Presidential and Congressional elections....Of primary importance, then, is whether the US misses great opportunities in 2020 and possibly fails to start to regain unity in 2021, and whether the US can itself regain cohesion at all....A sense of 'social distress' is likely to become exacerbated in major urban societies as the economic decline of China begins to bite the global economy. This will further polarize societies and impact funding for technological evolution. We are entering the period of uncertainty."
There's a 70% chance of recession in the next six months -MIT/State Street/CNBC
"There’s a 70% chance that a recession will hit in the next six months, according to new research from the MIT Sloan School of Management and State Street Associates....The researchers analyzed four market factors - industrial production, nonfarm payrolls, stock market return and the slope of the yield curve - on a monthly basis. They then measured how the current relationship between the four metrics, assessed on a monthly basis, compares to historical readings. Looking at data back to 1916, the researchers said that the index was a reliable recession indicator since it rose leading up to every prior recession. They found that when the index topped 70%, the likelihood of a recession rose to 70%."
Senate Acquits Trump on Both Impeachment Articles -Wall Street Journal
"The Republican-led Senate acquitted President Trump of charges stemming from his efforts to press Ukraine to announce investigations that would benefit him politically, bringing to a close a bruising four-month battle fought almost entirely along party lines. The third presidential impeachment in U.S. history intensified the nation's sharp divide over Mr. Trump and previewed many of the arguments likely to be heard ahead of the election this fall. During the trial, Democrats said the Republican president was trying to cheat in the coming election by trying to damage a potential opponent. Republicans said that Democrats were improperly inflating missteps into impeachable offenses and trying to overturn the results of the 2016 election. The Senate vote to acquit marked a clear victory for the president, underscoring his primacy in the GOP and the end to a process that had hung over the past several months of his presidency....Mr. Trump, in a tweet after the vote, declared 'our Country's VICTORY on the Impeachment Hoax' and wrote that he would make a public statement about his acquittal on Thursday....'The verdict of this kangaroo court will be meaningless,' said Sen. Chuck Schumer of New York, the Democratic leader, on Wednesday. 'You cannot be on the side of this president and be on the side of truth.' Senate Majority Leader Mitch McConnell (R., Ky.) said Democrats used impeachment for political goals."
2.5.20 - New Terrifying Coronavirus Statistics
Gold last traded at $1,562 an ounce. Silver at $17.61 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying despite a firmer dollar. U.S. stocks traded mixed as a plunge in Tesla shares pushed the Nasdaq into negative territory.
Gold Could Reach $2,000 as Early as This Year -Yahoo Finance
"Behind Gold's growth is more than a momentary demand for safe-havens in fear of a coronavirus from China. In May last year, precious metal prices grew mainly due to the easing of the monetary policy of major global central banks. Lower interest rates, resuming of asset purchases on central banks' balance sheets - all these measures eventually spur inflation. The acceleration of price growth has become increasingly evident since the middle of last year, which against the backdrop of close to zero rates makes investors look for alternatives to bonds as a way to protect portfolios from inflation. This situation also explains the record volumes of assets at gold-related index funds. The inflow intensified at the end of the last year, along with the sharpest growth phase of stock markets....Besides, central banks are also building up gold reserves. Behind these steps is the desire to diversify reserves amid concerns over the increased debt burdens of the United States, Japan, and many eurozone countries....The Gold price rose by about a quarter in 2019, a repeat of the same dynamics this year opens the door to growth in the region of $2000 per troy ounce, which will be higher than the record levels of 2011...It is entirely consistent with the times of extremely cheap money at a relatively healthy rate of growth."
Trump Touts Economy in State of the Union Speech -Wall Street Journal
"President Trump used his annual State of the Union address Tuesday to paint an optimistic picture of the country's future and tout the strong economy nine months before Election Day. 'In just three short years, we have shattered the mentality of American decline and we have rejected the downsizing of America's destiny. We have totally rejected the downsizing,' Mr. Trump said in the House chamber....Washington's deep partisanship was on full display. The president handed House Speaker Nancy Pelosi (D., Calif.) a copy of his remarks, but turned away without shaking her hand as she extended it. Mr. Trump and Mrs. Pelosi haven't spoken in months; tension over impeachment has frayed their relationship. Moments later, Republicans began chanting, 'Four more years!' During the speech, Republicans repeatedly jumped to their feet and cheered, and Democrats sat stone-faced, standing rarely...At the end of the address, Mrs. Pelosi tore her copy of the president's speech in half. Asked by reporters why she ripped up the speech, Mrs. Pelosi said, 'Because it was a manifesto of mistruths.'....In the speech, Mr. Trump focused on election themes, such as his plans for health care, the impact of economic growth on the middle class and the wall along the southern border. With acquittal in the Senate on abuse of power and obstruction of Congress charges expected Wednesday afternoon, the speech comes at a moment when the president is feeling triumphant....Mr. Trump praised conservative talk radio host Rush Limbaugh, who attended the speech and revealed on Monday he is being treated for advanced lung cancer. First lady Melania Trump presented him with the Presidential Medal of Freedom in the gallery during the speech....The Democratic governor of Michigan, Gretchen Whitmer, gave the Democratic response to the speech...'It doesn’t matter what the president says about the stock market,' she said. 'What matters is that millions of people struggle to get by or don't have enough money at the end of the month after paying for transportation, student loans, or prescription drugs.'"
How we know that Tesla is a bubble that is going to pop -Marketwatch
"It hardly seems newsworthy to report that Tesla's stock is in a bubble. After all, it has more than quadrupled since last summer, and short sellers have been insisting ever since that a bubble is forming. But what is newsworthy is that Tesla's stock runup in recent days has now satisfied an objective criteria of a bubble that is about to burst. The probability of a crash is now more than 80%, according to a Harvard model....To be sure, bubbles - and the crashes that follow when they burst - are rarely defined by the armchair pundits who like to throw around these terms with abandon. The Harvard researchers employ the following definitions: A bubble is a sharp price run-up over a two-year followed by at least a 40% drop over the subsequent two years. The probability of that 40% or more price drop rises as a function of the magnitude of the prior two-year return. When the price run-up is 100% or more, they found the probability of a crash becomes 50%. When the price run-up is at least 150%, that probability becomes 80%, and as price run-ups become even bigger, a crash becomes 'nearly certain.'....Tesla's true believers no doubt will insist that the history on which the researchers based their model doesn't apply. They will tell a story that in essence boils down to the claim that there has been no company like Tesla before. That's just another way of saying that 'this time is different,' of course - the four most dangerous words on Wall Street."
Did China's Tencent Accidentally Leak The True Terrifying Coronavirus Statistics -Zero Hedge
"Ten days ago, shortly after China first started reporting the cases and deaths associated with the coronavirus epidemic, a UK researcher predicted that over 250,000 Chinese would be infected with the virus by February 4. And while according to official Chinese data, the number of infections has indeed soared in the past two weeks, at just under 25,000 (and roughly 500 deaths), it is a far cry from this dismal prediction, about ten times below that predicted by the epidemiologists. Is this discrepancy possible? Is the epidemic truly far less serious than conventional epidemiological models predicted? Or is China merely hiding the full extent of the problem?....The biggest hit to the narrative and China's officially reported epidemic numbers came overnight, when a slip up in China's TenCent may have revealed the true extent of the coronavirus epidemic on the mainland. And it is nothing short than terrifying. According to the report, late on Saturday evening, Tencent, on its webpage titled 'Epidemic Situation Tracker', showed confirmed cases of novel coronavirus in China as standing at 154,023, 10 times the official figure at the time...the death toll listed was 24,589, vastly higher than the 300 officially listed that day. Moments later, Tencent updated the numbers to reflect the government's 'official' numbers that day. This was not the first time Tencent has done this: as Taiwan Times notes, Chinese netizens have noticed that Tencent has on at least three occasions posted extremely high numbers, only to quickly lower them to government-approved statistics...This led many in the mainland to speculate that Tencent has two sets of data, the real data and 'processed' data.... In addition, there have been many reports of doctors being ordered to list other forms of death instead of coronavirus to keep the death toll artificially low. What is the truth?"
2.4.20 - Gold's Next Rally to Target $1,900
Gold last traded at $1,556 an ounce. Silver at $17.61 an ounce.
NEWS SUMMARY: Precious metal prices fell back Tuesday on profit-taking and a firmer dollar. U.S. stocks rebounded as the market recovered from a steep sell-off sparked by worries over the coronavirus.
Gold prices have formed a bottom; expect the next rally to target $1,900 -Kitco
"Gold prices have been consolidating for a few months already, and the next breakout could take prices to 2011 highs of $1,923, this according to Peter Reznicek, head trader at shadowtrader.net. 'For me, the target just has to be the prior all-time high in 2011. I'm just looking at the $1,923 level, that would be fine, and then reassess the situation from there,' Reznicek told Kitco News. Gold prices have been trading between $1,500 and $1,600 for quite some time, but Reznicek said that this consolidating movement is a very bullish sign. 'I like gold, I'm a long-term bull, I have been a long-term bull for quite some time. The way that I like to look at gold is simply to keep the technicals on as long of a time frame as possible, so for me, I always go out to the monthly and I trade gold contracts, ETFs, and options as well according to those monthlies,' he said. He added that since 2000, the market has been in a long-term uptrend that has just developed a bottom."
U.S. dollar could be dethroned internationally by digital currency -Washington Times
"Why is the USD used as the primary reserve currency by most countries - including non-allies such as China and Russia? The USD is the primary clearing currency for international transactions and investment. The answer is simple: The USD is a better store of value, unit of account, and medium of exchange (that is, money) than any other major country's currency....This gives the U.S. government enormous power to control the actions of other governments, businesses and individuals....The global market is what decides which currency is the best international currency. The Chinese have been particularly keen to make their currency a global currency and have set up banks in foreign countries where China has aid or investment programs to operate with the Chinese yuan rather than the USD....There is a growing belief that cryptocurrencies are going to serve as the money of the future, and, in fact, some governments like Singapore are experimenting with the idea. But government-sponsored cryptocurrencies will suffer the same problem that existing government currencies have, and that is because governments have proven that over time they debase the money and overregulate its use. Private cryptocurrencies with commodity backing are the wave of the future now that the invention of the blockchain has solved the double-spending (counterfeiting) problem....King dollar is unlikely to be killed by another competing government money, but most likely by digital technology - which should make the world both freer and more prosperous."
China's Economic Contagion -Wall Street Journal
"Some of President Trump's advisers may want to wall off the U.S. and China into separate spheres of influence, but the novel coronavirus is showing the futility of economic quarantines. Like it or not, the Chinese and world economies sniffle and cough together. Commodities prices sank on Monday amid news that the coronavirus and resulting economic contagion are spreading. U.S. crude oil prices have fallen 20% over the last three weeks as Chinese oil demand is expected to fall by two million barrels a day and global economic growth forecasts have plunged. Copper is down 13%, and iron and steel prices have tumbled. More than 20,000 coronavirus cases have been confirmed worldwide - an eight-fold increase over the last week - and experts say hundreds of thousands may not yet have been diagnosed. Two dozen or so countries have reported cases, and many have restricted travel from China to limit the contagion. Companies are evacuating employees from China. U.S. manufacturers such as Ford, Apple and Tesla have temporarily halted production. One-sixth of Apple sales and nearly half of chip-maker Qualcomm’s revenues come from China. So do 80% of active ingredients used by drug-makers to produce finished medicines. Because China is the world's largest manufacturer and an enormous consumer market, the economic freeze will disrupt supply chains and reduce corporate earnings. China's GDP growth was already almost certainly lower than the official figure of 6%, and it is likely to fall by a third or more."
Bracing for Bernie: Why Sanders could be a nightmare for Wall Street -Egan/CNN
"Bernie Sanders winning the White House would be Wall Street's worst political nightmare. Investors famously hate uncertainty. And it's hard to imagine something that would cause more uncertainty to the capitalist system than electing a self-proclaimed democratic socialist who is calling for a political revolution. Sanders wants to ban oil and gas fracking, break up big banks and institute a wealth tax. That's why Wall Street could feel the Bern - and not in a good way - if Sanders wins big in the Iowa caucuses and continues that momentum through Super Tuesday. Investors would be forced to confront the reality that Sanders, once seen as a long-shot candidate, could win the 2020 election....Jeff Gundlach, the billionaire investor who correctly predicted Donald Trump's 2016 victory, similarly warned Wall Street last month of a looming Sanders 'scare' for markets. Sanders has surged in the polls throughout January and is now viewed as the odds-on favorite to win the nomination by users on prediction market PredictIt. Sanders now has a 46% chance of winning the nomination, up from 18% in early December. The next closest Democrat is Joe Biden, with 27%, according to PredictIt....'The billionaire class is scared and they should be scared,' Sanders wrote on his Instagram page last month. Sanders vowed to 'end the greed' of various industries, including Wall Street, insurance and fossil fuels. 'We're prepared to be their worst nightmare and stand up for the working families of this country,' he wrote....Trump is viewed as the best-case scenario for Wall Street in 2020."
2.3.20 - Fed Pumps in Another $59.85 Billion
Gold last traded at $1,580 an ounce. Silver at $17.63 an ounce.
NEWS SUMMARY: Precious metal prices stabilized after reaching multi-year highs in previous session. U.S. stocks rose after brutal Friday selloff amid mixed economic data and continued concerns over growing coronavirus threat.
Gold continues to flirt with multi-year highs, and there’s more to it than coronavirus- CNBC
"Gold prices slipped slightly on Monday after China pumped cash into its economy, but the metal continues to flirt with multi-year highs. While stocks, oil, some base metals and other risk assets sold off sharply last week in response to demand fears arising from the rapid spread of the coronavirus, safe-haven gold gained just over 1% from Monday through to Friday. Gold has risen 4% so far this year already and hit its highest level since April 2013 early last month, as investors fled risk assets following a spike in tensions between the U.S. and Iran....The coronavirus outbreak has triggered further risk sell-offs, but is not alone in providing a lift to the gold price, according to BullionRock Managing Director Robin Newbould. 'In 2019, pre-virus, gold gained circa 20% thanks to low global economic forecasts, low-to-negative interest rates, expectations of a weaker U.S. dollar, trade wars and possible real wars. All pretty miserable stuff, now we think about it, but no barrier to generating positive, non-correlated returns that hold their own when compared to other assets,' he told CNBC via email on Monday. 'Little wonder then that central banks purchased a record $15.7bn of gold in the first six months of last year.'"
China to inject $173 billion into economy to cushion expected stock shock- Market Watch
"China’s central bank announced plans Sunday to inject 1.2 trillion yuan ($173 billion) into the economy to cushion the shock to financial markets from the outbreak of a new virus when trading resumes on Monday after a prolonged Lunar New Year holiday. The People’s Bank of China announced several measures over the weekend aimed at stabilizing the economy as the impact of the virus spreads with cancelled flights, stepped up quarantines and other controls. Beijing extended the usual week-long holiday by three days but markets are due to reopen Monday and many expect they will drop sharply. Elsewhere in the region, worries over the potential harm to businesses and trade from the outbreak have triggered wide swings in share prices...In a separate statement Saturday, the PBOC said that while markets would reopen, financial institutions should follow local quarantine regulations and try to minimize gatherings to reduce risks of spreading the virus, which has infected more than 14,000 people and killed more than 300....Regulators have also urged banks and other financial institutions to boost lending and avoid calling in debts in areas severely affected by the pandemic...A large share of the 1.2 trillion yuan to be injected into markets will go to meeting payment obligations falling due on Monday, analysts said. But it’s still a massive amount of funding. 'This is well beyond the band-aid fix, and if this deluge doesn’t hold risk-off at bay, we are in for a colossal beat down,' Stephen Innes of AxiCorp. said in a client note Sunday."
The global economic threat of the coronavirus- Axios
"The coronavirus has the potential to be as damaging to the global economy as the U.S.-China trade war, economists tell Axios, and if not contained could wreak havoc on businesses across the globe, with great uncertainty over how bad things could get...The epicenter of the virus is China, which is now the world's top trading nation and largest commodity buyer, and the no. 1 trading partner for many of the world's biggest economies, including Germany and Japan, which both are suffering already from anemic growth....'If this virus begins to mutate rapidly so that it becomes increasingly more difficult to find a cure for it, that would be extremely alarming,' Bernard Baumohl, chief global economist at the Economic Outlook Group, tells Axios. 'And if WHO declares it as a pandemic, that too will have a depressing effect on the global economy because countries will put in certain limitations on commerce, on trade, and that will obviously slow down growth.' The global manufacturing sector is already in recession in advanced countries like the U.S. and eurozone, and the coronavirus outbreak is threatening the services sector....Fed chair Jerome Powell demurred action from the U.S. central bank at last week's January policy meeting, but his hand (and that of other central bankers) may be forced, Joseph Brusuelas, chief economist at tax and consulting firm RSM, tells Axios. 'If this continues for another week or two, we will begin debating fresh central bank action to put a floor under asset markets.'"
Fed Adds $59.85 Billion to Financial Markets- Wall Street Journal
"The overall amount of temporary liquidity provided by the Federal Reserve Bank of New York rose on Monday. The central bank intervened in the market with a $59.85 billion overnight repurchase-agreement operation, or repo, in which eligible banks, known as primary dealers, took less money than the Fed was willing to offer. With the expiration of past operations, overall liquidity rose by $14.3 billion to $184.8 billion. Fed repo interventions take in U.S. Treasurys, agency and mortgage bonds from the dealers, in what is effectively a short-term loan of central-bank cash, collateralized by the bonds. Primary dealers are limited in the amount of liquidity they can take in exchange for their securities, and they pay interest to the central bank to get the funds....The Fed controls the fed-funds rate to influence the overall cost of borrowing in the U.S. economy as part of its efforts to achieve the job and inflation goals set for it by Congress. Monday’s intervention was the first such action of the new month. Market participants said there was no sign of money-market stress as January came to an end. But there was a warning about the prospect for rising short-term borrowing rates at the close of March."
1.31.20 - Gold Prices Poised to Hit 7-Year High
Gold last traded at $1,588 an ounce. Silver at $17.99 an ounce.
NEWS SUMMARY: Precious metal prices rise on continued safe-haven demand, set to post second monthly climb. U.S. stocks fell sharply lower after Delta and American suspended all flights between China and the U.S.
Gold Price Poised to Knock Out Another 7-Year High: 3 Reasons Why- CCN
"Bullion is outperforming the U.S. stock market this month. There are at least three reasons why the precious metal is likely to extend its rally for the remainder of the quarter. The renewed urgency to buy gold follows a worsening coronavirus outbreak that has infected thousands of people across at least 19 countries. After initial hesitation, the World Health Organization (WHO) has officially declared the coronavirus outbreak to be a global public health emergency....The flight to safety has been accompanied by sharp declines in global equity markets. Following a brief pause, stock prices are plunging again over fears of global pandemic. In an environment dominated by risk-off sentiment, gold and other safe havens are likely to rise in value. Gold’s rapid ascent is also being aided by technical traders who see renewed opportunity in longing the precious metal....The analyst believes prices are only now breaking out from a mid-cycle consolidation, which puts $1,700 on the immediate horizon. Bullion has already pushed north of the 10-period moving average, giving it a bullish bias over the short term. A takeout of $1,600 leaves the seven-year peak of $1,619.60 exposed.”
Has The Global Economy Finally Exhausted Its Good Luck? -Smith/Zero Hedge
"The past three decades of global growth are rarely attributed to luck: it's all the result of our brilliant fiscal, monetary and trade policies. Those in positions of wealth and power are delighted to take credit for this tremendous success, but as a general rule, the more knowledgeable you are and the higher up the food chain you are, the greater your awareness of the role of luck in any unbroken chain of success...I described how this worked in the Titanic disaster in Why Our Financial System Is Like the Titanic (March 15, 2016)....Unbeknownst to the era's designers and shipbuilders, the Titanic's hull plates were brittle due to high sulfur content in the steel, especially at cold temperatures (the water was near freezing at the time of the collision with the iceberg). Rather than deform as the iceberg scraped against the hull, the plates and rivets fractured, opening the irregular gash that sank the ship....The presence of lifeboats seemed to offer a guarantee of safety, yet outdated regulations only required enough lifeboats for half the crew and passengers....If the Titanic had narrowly missed the iceberg, everyone would have continued to be resolutely confident that the ship and all the life-safety systems were not just adequate but beyond adequate....Much of what we take for granted as essentially guaranteed by our fabulous technologies and systems is more akin to the Titanic than we care to admit....The global economy has been astonishingly lucky for 30 years - or even 75 years. Like the passengers on the Titanic, we have unquestioned confidence in our technologies and systems because they appear so 'guaranteed', so resilient and so redundant. All of these guarantees and redundancies are as illusory as the 'unsinkable' technologies of the Titanic."
Hackers ramping up attacks on retirement accounts - how to keep yourself safe -Marketwatch
"Bank accounts are a top target for hackers, and retirement accounts may not be far behind. Cybercriminals are moving toward retirement and loan accounts. Although the number of consumers affected by identity fraud has declined between 2017 and 2018, hackers are targeting new types of financial accounts - such as customer rewards programs and retirement plans, according to the 2019 Identity Fraud Study from Javelin Strategy & Research. Part of the problem is identity theft, which can provide hackers the keys to getting into important accounts. Data breaches have become common - Target, Sony and Microsoft were all targets of major data breaches in recent years - and provide scammers with credit card information and billing addresses. Capital One was also hacked in 2019, revealing information of more than 100 million of its customers - including dates of birth, income and payment history and Social Security numbers....There are many layers to stealing from retirement accounts - most financial institutions have numerous security measures in place before a withdrawal occurs - but if it were to happen, it could result in the loss of tens of thousands, if not hundreds of thousands, of dollars. Retirement accounts in particular can be a hacker's dream, as they're not checked nearly as often as other financial accounts and retailer sites. Here's what you can do to keep your accounts safe: Check your accounts for security purposes....Secure your accounts. Always be cautious with sensitive information, such as Social Security numbers, passwords, and addresses or phone numbers....Keep your devices updated. Don't click on unfamiliar links via email or web searches."
The War on Cash -The Independent
"There is global push by lawmakers to eliminate the use of physical cash around the world and this movement is often referred to as the war on cash and is imperative for few reasons, firstly, the elimination of cash will make it easier to track all types of transactions, including transactions made by criminals, secondly, large denominations of bank notes make illegal transactions easier to perform which will lead anonymity significantly, thirdly, the coercive elimination of physical cash will have potential consequences on the economy and social liberties, fourthly, if all the money is within the control of the government, they could levy negative interest/profit rates....Moreover, a cashless society is faster and more efficient and banks would incur less cost by not having to handle cash. It also makes compliance and reporting easier. According to some experts, the burden of cash might be up to 1.50% of GDP of a country. After all, cash is still used near about 80% of all transactions worldwide....Government and central banks have moved swiftly in some countries to eliminate cash i.e. South Korea (aims to eliminate paper money entirely by 2020), France (considering banning cash transactions over €1000), Sweden (banks have started removing ATMs from rural areas), India (demonetized 86% of its cash in 2016 which means that all the banknotes had to be first returned into the system and be exchanged with newer bank notes), and Greece (has levied a tax on withdrawal of money from the bank)....The war on cash and negative interest/profit rates are fundamental and insane measures. However, it will not always remain free from threats and financial security as well. Notable, with all wealth stored digitally, the potential risks and impacts of cybercrime increases, hacking or identity theft could destroy people's life savings. Holding paper cash lets you opt out of the financial system. Holding and using paper cash makes it much harder for governments to track, monitor, and control you. Also, prevents the government's ability to take money directly from your bank account via negative interest/profit rates. It's penning us in like sheep for a shearing. If all your money is in a digital bank account, you're helpless."
1.30.20 - Smart Move to Shift to Gold -Barrons
Gold last traded at $1,589 an ounce. Silver at $17.99 an ounce.
NEWS SUMMARY: Precious metal prices rose on safe-haven buying and a weaker dollar. U.S. stocks fell as the death toll from the coronavirus continues to rise in China, stoking fears over the impact on global economic growth.
Investors Are Shifting Back Into Gold. It Looks Like a Smart Move. -Barrons
"There has been a stealth move to gold in the past year, both by investors buying exchange-traded funds that hold the metal and central banks, which have been shifting a portion of their reserves from traditional paper currencies, notably the U.S. dollar, to the monetary metal, according to J.P. Morgan's global markets strategy team led by Nikolaos Panigirtzoglou. Despite the U.S. stock market’s ascent to records, mutual fund investors have been surprisingly cautious...They have also poured money into gold ETFs, boosting the ETFs’ assets back to their highs of 2012, shortly after bullion peaked near $1,900 an ounce. Since late 2018, when Barron's published a bullish cover story on gold investing, the metal is up more than 30%...settling Tuesday at $1,569.20. Panigirtzoglou's team sees gold as an underowned asset, both by individual as well as institutional investors, despite the inflows into the metal in the past year or so. They see further scope for increased allocation to gold in their asset mixes....Gold retains its intrinsic value, something no paper currency has managed to do over history. Gold is insurance. Insurance isn't supposed to make you rich; it's supposed to keep you from being poor. The best thing to happen is your insurance never pays off because nothing bad happens. Hope for the best, but better to prepare for the worst."
Fed official: "If there’s a recession, don't worry" -Black/Sovereign Man
"Earlier this week I sent one of my team members to a banking conference here in Puerto Rico hosted by the Federal Reserve....Aside from the investment projects, the really interesting part about the event was what the keynote speakers from the Federal Reserve had to say about the economy, and the Fed itself. One very senior Fed official, for example, told the audience, 'if there's a recession, don't worry,' because 'the Fed is very powerful' and has all the tools it needs to support the economy. My colleague was astonished at what had just been uttered, and texted me immediately. I was dumbstruck. 'Don't worry…???' That's a bold statement. Former US Treasury Secretary Larry Summers summed it up recently when he wrote that 'the United States is one recession away' from joining Europe and Japan in 'monetary black hole economics. . . interest rates stuck at zero and no prospect of escape.' In every single recession since the 1970s, the US Federal Reserve slashed interest rates by an average of 5%. At this precise moment the Fed's key benchmark interest rate is just 1.55%. Do the math - if the Fed reduces interest rates in the next recession by this average 5% cut, that would make interest rates NEGATIVE. Summers calls this the 'Black Hole,' because once the economy hits zero or negative rates, there is no escape....I appreciate the Fed official trying to put on a brave face yesterday when he told the audience not to worry. But the reality is they're simply not equipped to deal with what's coming next."
U.S. Economy Grew at 2.1% Rate in Fourth Quarter -Wall Street Journal
"The U.S. economy grew at its slowest pace since 2016 last year, after posting a 2.1% advance in the fourth quarter. Gross domestic product - the value of all goods and services produced across the economy - rose at a seasonally and inflation-adjusted annual rate of 2.1% from October to December, the Commerce Department said Thursday, with full-year growth in 2019 at 2.3%....The economy's expansion last quarter reflected a boost from trade as exports increased and imports dropped sharply. The pace of consumer spending slowed, and business investment dropped for the third quarter in a row, while residential investment picked up....The current expansion, which began in mid-2009, became the longest on record in July. Still, the average pace of growth hasn't managed to rise much above 2%, slower than the 2.9% rate during the 2001-2007 expansion and the 3.6% rate from early 1991-2001."
Congressional Budget Office projects trillion-dollar deficits indefinitely -Horowitz/Conservative Review
"According to the 2020 budget outlook released on Tuesday, the deficit for this year is projected to reach $1.015 trillion. There will be no turning back from there, as deficits are slated to grow every year for the remainder of the 10-year budget window, topping $12.4 trillion of cumulative new deficits by the end of the decade. Perhaps the most shocking element of this report is the fact that unemployment is so low, yet deficits are as bad as they were during the worst times of the Great Recession. 'Not since World War II has the country seen deficits during times of low unemployment that are as large as those that we project - nor, in the past century, has it experienced large deficits for as long as we project,' said CBO Director Phillip L. Swagel in a press conference on Tuesday....The time for growing our way out of the debt bomb seems to have long passed, as the debt itself is acting as a wet blanket on economic growth and efficient investments, even during a period of job creation. What's the number-one driver of the debt? While Social Security is the single biggest expenditure for an individual program, federal spending on all health care programs together tops even the price tag of America's iconic retirement program. The CBO projects spending on health care, which largely funds third-party and fourth-party vendors who interfere between the patient and the doctor, will cost $1.3 trillion this year."
1.29.20 - The Coronavirus Is A Black Swan Event -Forbes
Gold last traded at $1,569 an ounce. Silver at $17.46 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying despite a firmer dollar. U.S. stocks fluctuated as chipmakers declined while investors looked ahead to the latest policy decision from the Fed.
Gold Would Explode With A Bernie Sanders Presidency -Schiff/Zero Hedge
"Bernie Sanders has gained in the polls of late and only trails Joe Biden by about three percentage points, according to the latest Fox News poll. On top of that, Sanders matches up against President Trump. He leads 48% to 42% in a head-to-head matchup. Peter Schiff told Fox Business that said a Sanders presidency would be an economic disaster for the US, but it would be good for gold. 'If Sanders becomes president in 2020, the price of gold will be well above $2,000 on the day after election night.' In fact, Peter said gold could rise to $2,000 before the election if the market thinks Sanders is going to win...'What a Sanders win means is much bigger government deficits, and much more money printing by the Fed because there is no way to finance all of the spending that will happen with tax hikes on the rich. We'll get tax hikes on the rich, but they're not going to provide the revenue to pay for the programs.'....Peter said even though the Fed has paused rate cuts, for the time being, he thinks the central bank will ultimately cut all the way back to zero and the Fed's balance sheet will 'explode to a much higher than the four-and-a-half trillion that they tapered from.' And a Sanders presidency would do nothing but exacerbate this and speed up the dollar's demise."
The Coronavirus Is A Black Swan Event That May Have Serious Repercussions For The U.S. Economy And Job Market -Forbes
"A black swan event is a term used on Wall Street that refers to a rare and unpredictable occurrence that is beyond what is expected and has severe consequences....The coronavirus is a black swan event, which may have serious consequences for your job, the stock market and global economy. Historically, when the stock market goes relatively straight up, there is an expectation of a correction somewhere down the road. A correction is about a 5 to 10% drop in value of stocks. It's viewed as necessary, like clearing out the dead brush in a forest to prevent a future fire. Even the wisest minds on Wall Street admit that they can't anticipate where the next correction will come from and what damage it may bring. It now seems that the coronavirus is that black swan event....Major shops, restaurants and tourist destinations are shuttering their doors across China. To avoid spreading the coronavirus, companies in China have advised staff to work from home. Employees returning from impacted areas are being told not to show up to work. Global stock and bond markets have been hit by mounting worries. Investors are afraid of how this will play out. China's growth will surely stagnate, they contend. International commerce will slow down....It's reasonable to believe that for the near-term period of time, stocks will fall in value, hiring will temporarily slow down, new corporate initiatives will be placed on hold and the overall business climate will be fearful....With courage, ingenuity and global cooperation, the fear will subside, cures will be found and things will go back to normal."
Act Now to Prevent an American Epidemic -Wall Street Journal
"The novel coronavirus now epidemic in China has features that may make it very difficult to control. If public-health authorities don't interrupt the spread soon, the virus could infect many thousands more around the globe, disrupt air travel, overwhelm health-care systems, and, worst of all, claim more lives. The good news: There’s still an opening to prevent a grim outcome. China failed to contain the virus early. More cases in the U.S. are inevitable. Experience with the 2009 H1N1 flu pandemic suggests that emergency measures such as school closures and border screening - in place at 20 U.S. airports - can at most buy time....As more U.S. cases develop, the strategy needs to incorporate another goal: preventing transmission of the coronavirus within the U.S. Four important steps now could help. First, the most important public-health tool for containment is the identification and isolation of cases to break the chain of spread....Second, focus on the flu. The incidence of flu and other respiratory viral infection cases is high right now in the U.S....Third, hospitals need to prepare for an influx of patients who will need to be isolated....Finally, government agencies, medical product developers, and public-private partnerships such as the Coalition for Epidemic Preparedness Innovations have started to develop vaccines and therapies....Even if this novel coronavirus is brought under control, it is only a matter of time before another pandemic threat."
Junk debt hits new record, posing elevated default risks -Moody's/CNBC
"Corporate America is awash in junk debt, and the situation could deteriorate substantially in the next five years as a record amount of issuance comes due. Moody's Investors Service warned Thursday that default risk is on the rise for the nearly $1.2 trillion of speculative-grade loans, bonds and various related instruments maturing from 2020-24. That total is a record for maturities coming due over a five-year period, up 14% from 2019. A bigger issue may be that so many companies are slowly sliding down the rating scale. Moody's notes that 36% of the total bank maturities in the speculative sphere are rated B3 or lower, up from 33% a year ago. That B3 rating is at the bottom of the 'highly speculative' ladder and just above the level considered to carry substantial risk. In all, single B-rated loans now constitute more than half of the issues maturing in the next five years, also a record....Oil and gas had the highest default rate in 2019 and holds 8% of the speculative-grade debt."
1.27.20 - Gold Prices Pop Near 6-Year Peak
Gold last traded at $1,580 an ounce. Silver at $18.14 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying amid market jitters. U.S. stocks fell after more cases of the coronavirus were confirmed, ratcheting up worries over the impact on the world economy.
Gold prices pop to 6-year peak as China virus fears fuel market unease -Marketwatch
"Gold prices on Monday headed to a more than six-year high, as fears of the economic impact of a fast-moving viral outbreak hurt appetite for stocks and powered buying in assets perceived as havens. 'The anticipated Wuhan flu contagion triggered sell-off in equity markets will likely drive gold demand out of the gates today, and long-term strategic buyers could compound the move higher as they start to position for the 'Wu-flu' to spread at a faster pace in the coming weeks,' wrote independent trader Stephen Innes, in a daily research note....Gains for bullion are putting the precious metal on track to top its highest closing level since 2013, according to FactSet data. Stocks are under pressure, supporting gains precious metals and bond prices, with the 10-year Treasury note yield, that moves in the opposite direction of prices, down at 1.62% from 1.68% late Friday. Silver prices were up 13 cents, putting the commodity on pace for its highest close in about three weeks."
Virus death toll in China rises as US prepares evacuation -Associated Press
"A new viral illness being watched with a wary eye around the globe accelerated its spread in China with 80 deaths so far, while the U.S. Consulate in the city at the epicenter announced it will evacuate its personnel and some other Americans aboard a charter flight. China's health minister said the country was entering a 'crucial stage' as 'it seems like the ability of the virus to spread is getting stronger.' President Xi Jinping has called the outbreak a grave situation and said the government was stepping up efforts to restrict travel and public gatherings while rushing medical staff and supplies to the city at the center of the crisis, Wuhan, which remains on lockdown with no flights, trains or buses in or out. The epidemic has revived memories of the SARS outbreak that originated in China and killed nearly 800 as it spread around the world in 2002 and 2003. Its spread has come amid China's busiest travel period of the year, when millions crisscross the country or head abroad for the Lunar New Year holiday. The government said early Monday the death toll had risen to 80, with 2,744 confirmed cases....The U.S. has confirmed cases in Washington state, Chicago, Southern California and Arizona....A notice from the U.S. Embassy in Beijing said there would be limited capacity to transport U.S. citizens on a Tuesday flight from Wuhan that will proceed directly to San Francisco."
The Fed Won't Take Away Markets' Punch Bowl -Wall Street Journal
"The Federal Reserve has taken away, for now, one of the biggest uncertainties that investors face. When they meet this week, Fed officials are all but certain to leave their target range on overnight rates on hold. Nor do they seem likely to do much of anything in the months ahead....They now have another worry - the dangers of inflation remaining persistently below its 2% target...This opens the economy to the kind of low inflation, low-rate regime to which Japan has succumbed....So the Fed's commitment to low rates will likely remain in place until inflation is clearly above its 2% target, giving investors a green light to not worry about the central bank tightening policy for a very long time. It is a party that might end badly, but it could keep raging for a while."
Retired Or Retiring Soon? Yes, Worry About A Correction -Zero Hedge
"One of the biggest reasons why investors consistently underperform over the long-term is due to flawed investment advice....In 2000, the average 'baby boomer' was around 45-years of age. The 'dot.com' crash was painful, but with 20-years to go before retirement, there was time to recover. In 2010, following the financial crisis, the time to retirement for the oldest boomers was depleted, and the average boomer only had 10-years to recover. With the majority of 'boomers' now faced with the implications of a transition into the distribution phase of the investment cycle, such has important ramifications during market declines....While it only requires a non-withdrawal portfolio an 11.1% return to break even, it requires nearly a 20% return for a portfolio in the distribution phase to attain the same level. Impairments to capital are the biggest challenges facing pre- and post-retirees currently....In other words, if you are banking on some advisor's promise of 10% annual returns for retirement, you aren't going to make it. What this analysis reveals is that 'retirees' SHOULD be worried about bear markets....With debt levels rising globally, economic growth on the long-end of the cycle, earnings growth weak, valuations high, and potential risk of a recession, the uncertainty of retirement plans has risen markedly."
1.24.20 - Gold Rises as China Virus Spreads
Gold last traded at $1,570 an ounce. Silver at $18.07 an ounce.
NEWS SUMMARY: Precious metal prices rose sharply Friday on safe-haven buying despite a firmer dollar. U.S. stocks turned negative after the second U.S. case of the deadly coronavirus in the U.S. was confirmed and World Health Organization called the outbreak an 'emergency in China.'
Gold rises as China virus scare spurs safe-haven bid -CNBC
"Gold prices rose on Friday as the China coronavirus stoked fears of a wider epidemic that could hamper economic growth. The Center for Disease Control and Prevention announced a second case of the deadly coronavirus in Chicago on Friday. The CDC also said 63 patients in 22 states are under investigation for coronavirus infection. The spread of the virus ahead of the Lunar New Year, a peak period of travel and gold demand in China, kept investor concerns heightened....'With a low interest rate environment, geopolitical risks and uncertainties such as U.S. President’s impeachment, the conditions are still quite conducive to further upside in gold,' ANZ analyst Daniel Hynes said. After the European Central Bank left rates unchanged on Thursday, investors are looking to the U.S. Federal Reserve's first meeting of the year scheduled on Jan. 28-29."
Meet the Spendthrifts -Mises Institute
(Sing along to the theme song from the Flintstones.)
'Spendthrifts, meet the Spendthrifts, They're the modern wasteful family. From the town of DC, The most reckless house in history. Their massive outlays are so darn carefree, They have no concept of reality. When you're with the Spendthrifts, Common sense, restraint and honesty are all a joke. Soon we will all be broke.' Meet the Spendthrifts; but they're not from the Stone Age. They are an American family who spends a lot more money than it earns each year. Last year, the Spendthrifts made just over $34,000 but spent more than $44,000. Nearly $10,000 of their spending came from borrowing - they put the excess spending on their credit cards. The problem is that their credit card debt was over $215,000 at the start of the year, bringing it to over $227,000 at year-end. Oh, and they weren't making any monthly credit card payments. How could they continue to add to their credit card balances without making monthly payments? They couldn't. Why would the credit card companies allow them to accrue that much debt with their income? They wouldn't. But the Spendthrifts are not an actual family. Rather, they represent the federal government - and it can spend without restraint because it is the credit card company. Just add nine more zeroes to all the above numbers and you end up with the federal budget and debt as of September 28, 2019, the end of the federal fiscal year. Specifically, the feds spent $4.4 trillion but only raised $3.4 trillion in revenue. The shortfall of nearly $1 trillion was borrowed, along with some unpaid interest, which resulted in debt of nearly $23 trillion....It all comes back to common sense. The feds cannot continue to add more gargantuan programs that will require lots of taxing and borrowing without bankrupting the country...The Spendthrifts would not exist in the private sector, as the lenders would never allow them to borrow that much on their income. We need to do the same with the feds, although that is much easier said than done."
The Boom-Bust Cycle Is Over -Bridgewater/Zero Hedge
"Just in case anyone was worried that the smart money was quietly getting ready to stop dancing after Bridgewater's Co-CIO Greg Jensen told the FT in an interview last week that it's time to buy gold (which he sees rising to $2,000 because the Fed and other central banks would let inflation run hot for a while and 'there will no longer be an attempt by any of the developed world's major central banks to normalize interest rates') ahead of the Fed cutting rates to zero and that 'equities are frothy' as 'most of the world is long equity markets', today Bridgewater's other Co-CIO came out with a controversial statement that appears to convey a polar opposite message to Jensen's warning. Bob Prince, who alongside Greg Jensen helps oversee the world's biggest hedge fund at Bridgewater Associates as its other Co-CIO, said 'the boom-bust economic cycle is over.'....Prince was referring not only to the boom-bust cycle created by central banks, which first ease then tighten, resulting in bubbles and eventually crashes...but also to the broader cycle of economic expansion and contraction that repeats itself. And as a result of central bank intervention since the financial crisis and monetary easing, that cycle has effectively been disrupted and has helped fuel the longest-running bull market in stocks....Ray Dalio, rehashed his warning from Jan 2018 - just before the market cracked - when he urged investors not to miss out an opportunity to benefit from strong markets. 'Cash is trash,' he said in a CNBC interview in Davos on Tuesday. 'There's still a lot of money in cash.'"
The Long and Winding Road to Bankruptcy -Bonner/Bonner And Partners
"'This reminds me of the early '70s,' said an old-timer yesterday. Do you remember what happened, Dear Reader? We do....Life back then wasn't so expensive. With $120 you could buy three whole ounces of gold. Or, you could invest in stocks; with seven weeks' worth of wages ($840), assuming we spent nothing, we could buy all 30 of the Dow stocks. Gold was the better bet. Over the next 10 years, the Dow went nowhere. In 1981, it was about where we found it in 1971. The old money was gone. In its place was new money, a new dollar from which the gold link had been removed. Now it was called a 'Federal Reserve note,' meaning that it was a liability - a debt - owed to you by the central bank. Most people barely noticed the difference. The new dollars looked almost exactly like the old ones. They spent like the old ones, too. What difference did it make if the foreigners could no longer redeem them for gold as promised? Well, it made a difference to the Arabs. Oil producers noticed that getting new dollars for their oil was not the same as getting old dollars. The price of gold rose from $35 in 1970 to over $100 in 1973. Arab exporters were still taking $3 for a barrel of oil. In real terms, their incomes had been cut by two-thirds....The first oil shock set off the Great Inflation. The Consumer Price Index was at about 4% in early ’73. By 1975, it rose to a peak of 10%, eased off, and then rose again to end the decade at 14%. People blamed the Arabs. But the real price of oil - in gold - merely went back to 1970 levels, before the new money was put in place. And the real villains weren't in Riyadh. They were in Washington. As for investors, they thought they went nowhere in the '70s. But that was just another illusion caused by the new dollars. In real money, they lost 92% of their stock market wealth. Prices held steady in nominal, new dollars. But in old-dollar terms, they collapsed. So what do you think? What would you tell a young man just starting out today? Buy stocks? Or buy gold? Or let's put the question another way. Are the feds likely to inflate more or less than in the 1970s?"
1.23.20 - Coronavirus Emphasizes the Need to Buy Gold
Gold last traded at $1,566 an ounce. Silver at $17.85 an ounce.
NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying despite a firmer dollar. U.S. stocks retreated as investors reviewed the latest corporate earnings results and grappled with fears of the coronavirus spreading.
Coronavirus Epidemic Emphasizes the Need to Buy Gold -CCN
"This Coronavirus outbreak, coupled with the several other risks that lie ahead, can cause gold price to soar in 2020. China delayed the reporting of the SARS outbreak to the World Health Organization (WHO) in 2003. By the time they reported the illness, it had already claimed 774 lives and infected 8,098 people in 30 countries. China even hid patients from WHO authorities. The disease caused Chinese GDP to shrink by 0.8 percentage point in 2003. You can bank on China doing the same with this new strain, which has never been identified and has no vaccine. The disease has already made its way into the U.S., as confirmed by CDC. Thousands could already be infected. The mystery illness couldn't have come at a worse time as 2020 is shaping up to be a year of economic and geopolitical uncertainties. Now, it looks like a perfect recipe for a global meltdown is forming, and it makes a strong case for the gold price to soar....The world's biggest hedge fund, Bridgewater Associates, recently slapped a $2,000 price target on gold, citing global uncertainties."
FICO Changes Could Lower Your Credit Score -Wall Street Journal
"Changes in how the most widely used credit score in the U.S. is calculated will likely make it harder for many Americans to get loans. Fair Isaac Corp., creator of FICO scores, will soon start scoring consumers with rising debt levels and those who fall behind on loan payments more harshly. The changes will create a bigger gap between consumers deemed to be good and bad credit risks, the company says. Consumers with already-high FICO scores of about 680 or higher who continue to manage loans well will likely get a higher score than under previous FICO versions. Those with already-low scores below 600 who continue to miss payments or accumulate other black marks will experience bigger score declines than under previous models....The new FICO changes reflect a shift in U.S. lenders' confidence in the economy, which has been expanding for more than 10 years. Consumer loan losses remain low compared with during the last recession, but consumer debts are at record highs, with many Americans forced to rely on debt to help fund their everyday lives."
Global Stocks Slide, China Plunges Most Since May As Optimism Virus Is Contained Mutates To Pessimism -Zero Hedge
"Yesterday's optimism that China's coronavirus epidemic is contained (supposedly because Beijing was 'transparent' with the fiasco and Trump was convinced by Xi) which sent S&P futures to an all time high of 3,333 has mutated into pessimism that it isn't...after China quarantined two cities (one with 11 million, the other with 6 million people), which sent US equity futures and global markets sliding and Chinese stocks tumbling. The global risk off mood, was led by the biggest decline in Chinese stocks in more than eight months, as concerns mounted that the spread of a deadly virus in China is now beyond Beijing's control and will affect everything from tourism to corporate sales and economies. With millions of Chinese preparing to travel for the Lunar New Year which begins on Saturday, the potential the disease to spread, along with the tendency of traders to reduce their exposure before holidays, left markets struggling. Deaths in China from the coronavirus rose to 17 on Wednesday, with nearly 600 cases confirmed.... 'The coronavirus has introduced some caution,' said Michael McCarthy, chief market strategist at CMC Markets in Sydney. 'There is no reason to expect a global pandemic now, but there is some repricing in financial markets.'"
The Year of the Demock Rat -Ponte/WND
"This Jan. 25 is Chinese New Year - year 4718 - for the quarter of humankind with historic roots in China. The Chinese lunar calendar is based on a 12-year cycle of a dozen animals – rat, ox, tiger, rabbit, dragon, snake, horse, sheep, monkey, rooster, dog and pig. We are entering a Year of the Rat...Chinese 'Ruler for life' Xi Jinping was born June 15, 1953, in an unfortunate 'year of the snake.' Such 'snake people,' are purported to be skilled, bright and motivated, but also proud, materialistic, vain, venomous, scheming, cunning and can speak with a 'forked tongue.' Democratic presidential aspirant Sen. Bernie Sanders, I-Vt., born Sept. 8, 1941, is also a snake person. So is fellow socialist Rep. Alexandria Ocasio-Cortez, D-N.Y., born Oct. 13, 1989....Are we more bothered by the politically promoted 'global warming' propaganda to scare infantile ignoramuses into socialism - or by the fact that Australia has just arrested 180 people, including leftist activists, some of whom had fire accelerants in their possession and as arsonists may have started the infernos of unwisely planted 'gasoline tree' eucalyptus forests, like those in California?....Popular socialist Sen. Bernie Sanders...as of this writing has refused to fire his paid state presidential campaign field organizer Kyle Jurek. Jurek was videotaped saying that Milwaukee will be burned down this summer if Sanders is not given the Democratic convention's nomination....In this year of the Demock Rat, one of America's two political parties has repudiated democracy, which means that those who lose elections are to let the winners govern. Instead, Democrats have used their partisans in the bureaucracy, judiciary and media to 'resist' President Donald Trump, to roadblock his policies from undoing leftist government....These glazed-eyed 'woke' partisans have made clear that whatever they cannot rule, they will ruin. As one of their revealing mob chants goes: 'No Trump, no wall, no USA at all!' They aim to steal and dismantle the USA and replace it with a socialist global government."
1.22.20 - The Bernie Sanders Fallacy -Brooks/NYT
Gold last traded at $1,556 an ounce. Silver at $17.82 an ounce.
NEWS SUMMARY: Precious metal prices traded mixed Wednesday on a flat dollar. U.S. stocks rebounded from the previous session's losses after the release of strong quarterly numbers from IBM.
Shocking Warning About The Coming Global Collapse -Egon von Greyerz/King World News
"Physical gold is eternal and paper gold ephemeral...With a paper market in gold that totally dominates gold trading and distorts the price of gold, it is easy for most people to forget what gold is all about...Take heed of this before the collapse of the fake gold paper market together with most paper assets....Stocks continue to make new highs, reacting to renewed money printing. Technically stocks are still likely to top within the next couple of weeks and start its long term decline. There are of course different opinions without which there would be no market. The biggest online financial publisher in the world just sent out an invitation to subscribe to yet another service which predicts: 'The final stage of biggest financial market explosion in US history.' In markets anything is possible short term but this seems very unlikely to me....Gold's correction since August 2019 is now finished and the uptrend is ready to resume. Next short term target is at least $1,700, but the old high in US dollars of 1,920 should not be difficult to attain...The best protection is to own an eternal asset like physical gold."
'Absurd' Davos has become an 'international bunfight' -Financial News London
"The World Economic Forum - the annual summit attended by world leaders, billionaires and celebrities - has lost its charm. That is the damning verdict from Sir Martin Sorrell, who has been attending the event at the Swiss ski resort for more than three decades...'When it was smaller, it used to be a learning experience,' said the former boss and founder of WPP....The summit, now in its 50th year, has come under fire for being 'out of touch' and 'too commercial', and critics have questioned how the number of private planes flying in can be justified at a time when climate change is top of the agenda....Nearly 3,000 official guests will attend Davos this year. They will pay an admission fee of 27,000 Swiss francs (£21,400), for access to events, panel discussions and speeches. 'I profoundly disapprove of this international bunfight where the world's executives and the glitterati press the flesh at enormous expense of either their respective taxpayers or shareholders, achieving very little of note in almost 50 years. Absurd, in fact, disgraceful,' said longtime City commentator David Buik....Private equity tycoon Jon Moulton said he has not been to Davos in 15 years. 'The only likely consequence of it closing would be that some oversized egos would need to find alternative routes to gratification,' he said."
Central Bank-Driven ‘Ponzi Scheme’ Must Collapse -Bloomberg Quint
"Scott Minerd has a message for his fellows at Davos who are applauding rallying markets: Things aren't as good as they seem. The Guggenheim Partners investment chief likened the inflation of asset prices caused by the loose money policies of central banks to a 'ponzi scheme' that eventually must collapse. 'We will reach a tipping point when investors will awake to the rising tide of defaults and downgrades,' he wrote in a letter from the World Economic Forum meeting. 'The timing is hard to predict, but this reminds me a lot of the lead-up to the 2001 and 2002 recession.' Minerd cited rising defaults despite a rally in riskier assets, and reiterated a warning that BBB-rated bonds risk further downgrades. He said that type of debt is at a greater risk of deterioration than it was in 2007."
The Bernie Sanders Fallacy -Brooks/New York Times
"This is a golden age for 'Theyism.' This is the belief that there is some malevolent, elite 'they' out there and 'they' are destroying life for the rest of us. There is Donald Trump's culture-war Theyism: The coastal cultural elites hate genuine Americans, undermining our values and opening our borders. And there is Bernie Sanders's class-war Theyism: The billionaires have rigged the economy to benefit themselves and impoverish everyone else. Each of these stories takes a genuine tension in society and blows it up into an all-explaining cartoon in which one part of America is trying to destroy the other part....Democrats seem to be rushing to join Sanders's class war...even though it's political suicide. Class-war progressivism always loses to culture-war conservatism because swing voters in the Midwest care more about their values - guns, patriotism, ending abortion, masculinity, whatever - than they do about proletarian class consciousness...The Sanders class-war story is wrong....Sanders starts with a truth: Workers need more bargaining power as they negotiate wages with their employers. But then he blows this up into an all-explaining ideology: Capitalism is a system of exploitation in which capitalist power completely dominates worker power. This ideology crashes against the facts. In the first place, over the past few years wages for workers toward the bottom of the income stream have been rising faster than wages for those toward the top....The core problem is not capitalists exploiting their workers; it's the rise of productivity inequality. It's the companies and individuals who don't have the skills to take advantage of new technologies. The real solution, therefore, is not class war to hammer successful businesses. It's to boost and expand productivity for everybody else. That's done the old-fashioned way - by having better schools and better vocational training, by having more open competitive markets, by creating incentives to expand investment, by making sure superstar businesses don't use lobbyists to lock in their advantages...If you want to deal with our real problems, stop the us/them warfare and start dealing with productivity inequality...Every time we increase productivity for one person, we all thrive a little more, together."
1.21.20 - Fed: QE by Any Other Name is Still QE
Gold last traded at $1,558 an ounce. Silver at $17.83 an ounce.
NEWS SUMMARY: Precious metal prices paused Tuesday awaiting fresh economic and geopolitical news. U.S. stocks fell as concerns around U.S.-China trade relations and a virus outbreak in China halted the market’s rally.
The Debate Over Whether to Call It QE Is Over, and the Fed Lost -Bloomberg
"In the court of investor opinion, the verdict is in. The Federal Reserve is guilty of quantitative easing. Never mind that Chairman Jerome Powell tells everyone his efforts to shore up funding markets are 'in no sense' QE. Try as policy makers may, they’ve lost the ability to convince people that Treasury purchases aren’t at least partially why the Dow Jones Industrial Average is up almost 4,000 points since late August. Sure, it's all labels. If you want to call it QE, you can. Or not. If you want to ascribe the rally to Powell, that's up to you. Certainly the Fed thinks it's on solid ground. The problem for policy makers is that perceptions matter in shaping sentiment. If everyone believes central bank largess is pushing up prices, what happens in the market when it's turned off? 'Whether the Fed's liquidity injection impacted directly the economy or the pricing of assets or not, it's certainly true that a lot of people think it did,' said Jim Paulsen, Leuthold Group Inc.'s chief investment strategist....The wind-down of monthly purchases is the biggest risk facing investors face in 2020, strategists at John Hancock Investment Management said in December. 'Powell went out of his way to explain that it wasn't QE, but it doesn't really matter,' said Krishna Memani, former vice chairman of investments at Invesco. 'The Fed is in a bind. Effectively with policy initiatives they have, they have to increase reserves, and investors are aware of that. They will be in that mode for the foreseeable future.'"
Money managers retain bullish gold positioning -Kitco
"Large speculators mostly held onto their net-bullish positioning in gold futures during the most recent reporting week for data compiled by the Commodity Futures Trading Commission (CFTC)....Net long or short positioning in the CFTC data reflect the difference between the total number of bullish (long) and bearish (short) contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections...The fresh buying (increase of 1,319 total longs) exceeded the fresh selling (increase of 617 gross shorts). TD Securities commented that the U.S. Federal Reserve policymakers may be about to provide a structurally 'more dovish lean' to policy, which propelled gold prices higher just ahead of the long holiday weekend in the U.S. 'The yellow metal rose, even as the greenback and equities rallied, which suggests that positioning may again tilt toward length in the days to come,' TDS said. In silver, money managers' net-long position also rose slightly, coming at 57,179 futures contracts, compared to 57,014 in the prior week. As was the case with gold, the fresh buying (rise of 2,763 total longs) outpaced the fresh selling (increase of 2,598 gross shorts)."
40% of the world's countries will witness civil unrest in 2020 -CNBC
"There are 195 countries in the world, if the Vatican and Palestine are included, and a newly released index of civil unrest has claimed that 47 of those states witnessed a rise in civil unrest in 2019. The data model, published Thursday by socio-economic and political analysis firm Verisk Maplecroft, has also predicted that in 2020, the number will balloon to 75 countries. Maplecroft's predictions for 2020 are bleak with both the number of countries witnessing protest and the intensity of unrest tipped to rise. The index predicts that 75 out of the 125 countries examined will see a deterioration in stability. That figure means almost 40% of all the world’s 195 nations will witness disruption and protest to some degree....Countries identified in this troubling bracket include the highly influential nations of Russia, China, Saudi Arabia, Turkey, Thailand and Brazil."
Impeachment Moves Forward to Nowhere -Noonan/Wall Street Journal
"Impeachment is moving forward and going nowhere. There is new information but it doesn't really tell those who've paid attention anything they didn't know....The president will be acquitted for a host of reasons, from partisanship to a prudential judgment that his actions don't warrant removal with a presidential election 10 months away....Impeachment has now been normalized. It won't be a once-in-a-generation act but an every-administration act. To the Democratic debate Tuesday night in Des Moines....I found myself watching Elizabeth Warren. She has proved she can take a punch and throw one...Her challenge is not that she's a woman, it is her policies, and maybe something else...Ms. Warren was doing her magical thinking about how universal Medicare won't cost people a thing, it's all savings with a few small tax increases on people we don't like. I asked aloud, 'Does she believe what she says or does she know it's make-believe?'”....Bernie Sanders has the same magical thinking about the cost of things, who'll pay, and what effect that will have on the nation's life. But he gets away with it because he's a declared socialist....There was also in the debate a kind of detachment from real life. A voter asked: 'How will you prioritize accessing quality affordable child care?'...No one spoke with compassion for parents, for mothers who forgo the earnings and status ('I have a job') and relationships ('I'm not lonely all day') of having a job to stay home with kids under 4....Meanwhile in full-employment America, Donald Trump is taking out terrorists with drones and announcing trade deals with China and seemingly weathering every storm. In the China ceremony Tuesday, in the East Room, after a booming .'Hail to the Chief,' with a palpable sense of triumph filling the room, with the golden frames of the great portraits shining, Mr. Trump rolled off the names of the CEOs in the audience...It was reminiscent of the scene in 'The Godfather: Part II' where Fulgencio Batista hands around the solid gold telephone. 'I'd like to thank this distinguished group of American industrialists for continuing to work with Cuba for the greatest period of prosperity in her entire history. We all think our breathless recitations of the latest revelations matter but I don't know, it keeps feeling like 2016. Only this time with full employment."
1.17.20 - College Degrees No Longer Create Wealth
Gold last traded at $1,559 an ounce. Silver at $18.07 an ounce.
NEWS SUMMARY: Precious metal prices rose Friday on bargain-hunting despite a firmer dollar. U.S. stocks rose as strong global economic data and a solid start to the earnings season led to another week of gains.
Your pension is being robbed, gold is only salvation -Kiyosaki/Kitco
"A ballooning retiree population over the coming years is likely to force the government to print more money in order to support pensioners, and this will create a good environment for gold, said Robert Kiyosaki, author of Who Stole My Pension? How You Can Stop the Looting. 'In the next ten years, two billion old guys like me will retire. Two billion, all over the world. This is a global crisis,' Kiyosaki told Kitco News. 'I'm buying gold and silver, I love silver, because it's cheap.' He added that the government will have to print more money to cover a massive shortfall of money for retirees."
The Federal Reserve is stuck in quantitative-easing hell -Marketwatch
"Imagine doing the same thing over and over again, with little progress and no relief. Sounds like most people's vision of hell - or the Federal Reserve's current predicament. Since September, the central bank, through the Federal Reserve Bank of New York, has been purchasing securities hand over fist to alleviate short-term pressures in the overnight money markets. It has used repurchase ('repo') and reverse repurchase ('reverse repo') agreements to provide liquidity and keep overnight borrowing rates from spiking...Powell and the Fed have repeatedly denied this is a new phase of 'quantitative easing (QE),' three rounds of which added $3.6 trillion to the Fed's balance sheet in the years after the financial crisis....Danielle DiMartino Booth, CEO of Dallas-based research firm Quill Intelligence, says the Fed is on the cusp of enacting QE4, or may already be there....'The Fed will tell you it's all technical in nature,' she said. 'In their last minutes, they said that if they had to move into [longer] coupons, they would. So the table has been set.' This all comes, Booth believes, amid a weakening economy....Booth points out that by several measures, 'outside of the year 2000 the stock market has never been as overvalued,' which means stock markets more than ever hinge on the Fed's every move. 'We have certainly started to see some signs of slowing, and I think Jay Powell is trapped,' said Booth. 'The Fed is trying to keep a bucket full that's filled with holes.' Welcome to QE - or not QE - hell."
Political Turmoil to Be 'New Normal' for 2020 -Yahoo News
"'We all need to buckle up for 2020,' said Miha Hribernik, the Singapore-based head of Asia risk insight for Verisk Maplecroft. 'The rage that caught many governments off-guard last year isn't going anywhere and we'd all better adapt.' Many governments were caught by surprise by the scale and ferocity of the protests and ended up attempting to crackdown on the movements, deploying what human rights group have said were arbitrary arrests and indiscriminate violence. That response has ended up further radicalizing protesters and provoking more violent demonstrations, Verisk Maplecroft said in its Political Risk Outlook 2020....Hong Kong similarly rose from 117th to 26th after seven months of pro-democracy street protests, the firm said. Although prompted by a since-withdrawn bill that would have allowed extraditions to mainland China, Verisk Maplecroft added that the 'root cause of discontent has been the rollback of civil and political rights since 1997.' India and Iraq, which have both seen determined protests recently, ranked much lower on the list of worsening hot spots because they began last year with heightened levels of unrest."
College Degrees Used to Make Families Wealthier. That's No Longer True -Worth
"The conventional wisdom is that a college education all but guarantees access to the middle class and a higher standard of living for each successive generation. Yet new research from the Federal Reserve Bank of Saint Louis calls this equation into question. The numbers are stark. The college income premium still exists. But the wealth premium - the difference in net worth between college and non-college graduates - has plunged since 1940. Put simply: College graduates today are experiencing a profound struggle to generate wealth. The biggest culprit is likely the surging cost of higher education and an accompanying increase in student loan debt...This is a 'striking divergence between the income and wealth outcomes.'....'While the overall level of consumer prices has increased by a factor of four since 1978,' the report says, 'the cost of college tuition and fees has increased by a factor of almost 14 - more than triple the overall increase in consumer prices.' These two trends, the slump in household net worth and the drastic rise in student loan debt, are becoming increasingly acute...Total student loan debt has reached $1.46 trillion, compared to $870 billion for credit card debt and $1.27 trillion for automotive debt."
1.16.20 - Bridgewater Sees Gold Price Spiking 30%
Gold last traded at $1,551 an ounce. Silver at $17.97 an ounce.
NEWS SUMMARY: Precious metal prices eased Thursday as upbeat economic data boosted the dollar. U.S. stocks rose after Morgan Stanley’s quarterly figures topped analyst expectations as investors cheered solid economic data.
Bridgewater sees gold spiking 30% to a record high -Markets Insider
"Gold could spike 30% to a record high of over $2,000 an ounce as central banks allow inflation and political fears mount, Bridgewater Associates boss Greg Jensen told the Financial Times. The Federal Reserve and other central banks won't clamp down on inflation or raise interest rates in the near term, supporting a higher gold price, said Ray Dalio's co-chief at the world's largest hedge fund. 'That's a big deal.' Gold could also benefit from the widening gap between rich and poor Americans, and rising tensions between the US and China, Iran, and others, Jensen told the Financial Times. 'There is so much boiling conflict, that gold being part of a portfolio makes sense to us.' In fact, rising inflation and soaring budget and trade deficits could lead to gold eventually replacing the US dollar as the world's reserve currency, Jensen told the newspaper. 'When you look at the geopolitical strife, how many foreign entities really want to hold dollars?' he said. 'What are they going to hold? Gold stands out because it's nobody else's liabilities as a possibility.'....US stocks are also 'frothy' after a decade of outperformance, Jensen told the newspaper, providing another reason to favor gold."
$95 Billion Centerpiece of the Trade Deal Is Already In Doubt -Bloomberg/Yahoo Finance
"China has pledged to buy almost $95 billion worth of additional U.S. commodities as part of a phase one trade deal. The market is not so sure. Prices fell for most raw materials that are part of the agreement...Traders said evidence of increases in shipments is needed for market gains. The pessimism was in contrast to comments at the White House by President Donald Trump, who said U.S. energy producers and farmers would benefit....'Signing the deal is the easy part,' said Ken Morrison, a St. Louis-based independent commodity trader. 'I have yet to hear a sound argument on how China will execute this deal.' China pledged to buy a total of $32 billion in additional agricultural products over the next two years, while it said it will also 'strive' for another $10 billion of purchases. That includes oil seeds, meat, cereals, ethanol and cotton. It also promised $52.4 billion in further purchases of American energy such as LNG, crude oil and coal over 2020 and 2021. However, the so-called phase-one deal that was signed in Washington Wednesday didn't specify whether the Asian nation will lift retaliatory duties it imposed on American goods such as oil, soybeans and LNG....'Without more concrete details, we are deeply concerned that all of this pain may not have been worth it,' the National Farmers Union, which represents almost 200,000 American farmers, said in a statement. 'Given the numerous deals that have been reached and then breached in the past two years, we are also skeptical.'"
The Fed Admits Being Forced To Fuel Asset Bubble -Zero Hedge
"The worst kept secret in the financial world is now not only accepted orthodoxy, but finally being discussed openly by, at least some, authorities. Central bank policies are directly driving asset prices and the bubbles therein. It's what they do. It has been so stunningly obvious that, at this point, it makes a mockery of things to deny it as an ongoing, and essential, part of how their strategy is implemented....In some ways it was refreshing that Dallas Fed President Robert Kaplan openly talked about it in an interview Wednesday. Although he did couch it in terms that implied it was a matter of some concern to him. But, of course, he went on to say, 'we've done what we need to do up until now.' 'My own view is it's having some effect on risk assets,' Kaplan said. 'It's a derivative of QE when we buy bills and we inject more liquidity; it affects risk assets. This is why I say growth in the balance sheet is not free. There is a cost to it.'...Their ability to drive investor behavior is so well established that what is going on in the markets can't remotely be seen as an unintended, or even unwanted, consequence....Stocks act as if they are bullet-proof. Stock buy-backs look like they are front-running the inevitable rather than being the cause of it. Reports of new all-time highs, need to include the word 'again.'....Most worryingly, I keep hearing from people who are sure that it's obvious where we go from here."
Trump Impeachment Trial Begins -Wall Street Journal
"The impeachment trial of President Trump on charges of abuse of power and obstruction of Congress will begin in the U.S. Senate on Thursday with a ceremonial reading of the House-passed articles and a solemn swearing-in of all 100 senators, who will pledge to do 'impartial justice.' The moment will mark the official start of the trial - only the third such proceeding against a U.S. president in history. At least two-thirds of the senators would have to vote to convict Mr. Trump to remove him from office. Mr. Trump has denied wrongdoing. At 2 p.m., Chief Justice John Roberts, who will preside, will arrive at the Capitol to be sworn in by Sen. Chuck Grassley (R., Iowa), the Senate's president pro tempore....'We will pledge to rise above petty factionalism and do justice for our institutions, for our states, and for the nation,' Senate Majority Leader Mitch McConnell (R., Ky.) said on the floor on Wednesday evening. After the swearing-in, the Senate will formally notify the White House of the pending trial and summon Mr. Trump, but he will be given time to reply....During the trial, all senators will be warned by the Sergeant at Arms to remain silent 'on pain of imprisonment' and will be expected to be present and seated at their assigned desks. 'It's a place apart from the normal Senate business,' said Sen. Dianne Feinstein (D., Calif.), who also was a senator during the Clinton trial. 'The minute you walk in, it's electric with significance,' she said."
1.15.20 - 2020 Outlook: America At The Crossroads
Gold last traded at $1,544 an ounce. Silver at $17.80 an ounce
NEWS SUMMARY: Precious metal prices rose Wednesday on bargain-hunting and a weaker dollar. U.S. stocks rose ahead of the U.S. and China signing a so-called phase one trade deal amid upbeat corporate earnings.
Central Banks Continue "Remarkable" Gold-Buying Spree -Zero Hedge
"Central banks continued their remarkable gold-buying spree...and remain on pace to eclipse 2018's near-record purchases....In 2018, central banks purchased just over 650 tons. According to the WGC, that was the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record....For the second month in a row, the People's Bank of China did not report any gold purchases. It's not uncommon for China to go silent and then suddenly announce a large increase in reserves. The World Gold Council called the scale of central bank gold purchases in 2019 'remarkable.' The central bank gold-buying spree is expected to continue into 2020 as countries continue to create a hedge against geopolitical risk and diversify their reserves away from the US dollar."
America At The Crossroads -Real Money Perspectives/Swiss America
"America was founded upon sacred principles, which built the world's strongest economy; but today our position as the world's leader is at risk. Our nation's social and economic divide is approaching a boiling point. Unless cooler heads prevail, we may soon face an even more disunited United States. Solutions demand unity and clarity of vision. In 2020 it will be important for investors to remove their rose-colored glasses and take a hard look at what is going on in the economic and political world. The problem with looking at the world through rose-colored glasses is all of life's red flags look just like ordinary flags. The truth is, no one can predict the economic or political outcome of 2020, which is precisely why wise investors cover all the bases; regardless of which way the political winds blow. Our goal in this 38th Anniversary Issue of Real Money Perspectives is to elevate your perspective so you may better navigate the future. CLICK HERE to request a free copy.
Weakening Dollar Could Lift Commodities in 2020 -Wall Street Journal
"A softening U.S. dollar could give commodity prices a boost this year. After a year in which a strong dollar weighed on commodity prices, some banks now predict the U.S. dollar is set to weaken in 2020, dragged lower by expectations that the Federal Reserve will keep interest rates steady after recent cuts. Lower interest rates make a currency less attractive to investors, as they offer lower rates of return. That could herald good news in 2020 for investors already betting that easing trade tensions between the U.S. and China and a pickup in global growth will lift demand for commodities like metals and crude oil....'When there's weakness in the dollar, the usual response is to pick up things that are priced in dollars,' said Tai Wong, head of base and precious metals derivatives trading at Bank of Montreal."
Bernie's Senior Economic Advisor Sees No Problem in Printing Unlimited Money -Youngberg/FEE.org
"Much like I can create as many strong recommendations [for my economics students] as I want, Modern Monetary Theory notes that a country has a god-like power to create its own currency. Therefore, they argue, countries that control their own currency shouldn't bother budgeting. Budgeting is for us mere mortals. The theory turns out to be little more than a recipe for hyperinflation, but that didn't stop Stephanie Kelton, Bernie Sanders's senior economic advisor, from sending out this tweet: 'The carpenter can't run out of inches, The stadium can't run out of points, The airline can't run out of FF miles, And the USA can't run out of dollars.' Kelton conveniently does not mention that carpenters can run out of wood, the stadium can run out of seats, and the airline can run out of fuel. The ability of a country's economy to grow restrains the government's ability to print money without causing inflation. Money is spent to buy resources; if money far exceeds resources, inflation follows....And if a country created more money than its economy could possibly justify, its money would mean nothing (something too many countries have learned the hard way)....So it's true that the US can't run out of dollars. It is also true that you can't run out of zeros, which will be important if the nation has to measure inflation under MMT."
1.14.20 - A Trade Deal Neither US/China Wanted
Gold last traded at $1,544 an ounce. Silver at $17.80 an ounce.
NEWS SUMMARY: Precious metal prices drifted lower Tuesday on profit-taking and a firmer dollar. U.S. stocks traded mixed despite J.P. Morgan Chase and Citigroup posting stronger-than-forecast quarterly results.
World's super-rich are hoarding physical gold -RT Business News
"The strategic case for owning gold remains strong, according to analysts at Goldman Sachs. They point to such factors as political uncertainty, recession fears and other worries among the global elite. Data from Goldman research showed that owning the physical metal seems to be the global elite's preferred way to hedge against tail events. Physical buying of gold has increased at a rapid pace in the past three years, statistics showed. 'Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs (Exchange-traded funds),' Goldman said in a note sent to clients and seen by Yahoo Finance....'Political risks, in our view, help explain this, because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault - where it is more difficult for governments to reach them - makes sense.' The investment bank added: 'Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counter-party credit risk involved.'"
"This Is Insanity!" - Jim Rogers Warns Of "Horrible Time" Ahead -Zero Hedge
"The Fed has increased its balance sheet over 500% in the past decade; The Bank of Japan is printing money to buy bonds and stock ETFs; and The European Central Bank is mired in insane negative interests. And, according to legendary investor Jim Rogers, they will continue this 'madness' as long as its necessary. In an interview with RT's Boom Bust, Rogers exclaims, that interest rates around the world have never been this low: '... this is insanity, that's not how sound economic systems are supposed to work.' In 2008, Rogers notes that we had problems because of too much debt, however, 'since then the debt has skyrocketed everywhere and it's going higher and higher. We are going to have a horrible time when this all comes to an end.'...Rogers warns that central banks will print even more and buy even more assets. 'And that's when we will have very serious problems... We all are going to pay a horrible price someday but in the meantime it's a lot of fun for a lot of people.' When it comes to an end, Rogers laments, 'it will be the worst of my lifetime.'"
How the U.S. and China Settled on a Trade Deal Neither Wanted -Wall Street Journal
"U.S. talks with China to complete a first-stage trade deal had hit an impasse around Thanksgiving, raising fears a nascent accord would collapse again - and with it, hope for a halt to the nearly two-year-old trade war. Looking for a direct route to the president, Chinese Ambassador Cui Tiankai spoke with President Trump's son-in-law and adviser, Jared Kushner, say people familiar with the episode. The U.S. offer didn't roll back enough tariffs, he told Mr. Kushner. It was time to settle, Mr. Kushner responded...The agreement wouldn't force China to make economic-policy changes Washington had long insisted on. About two weeks later, both sides announced the compromise set to be signed at a White House ceremony Wednesday. The accord promises increased purchases of U.S. goods and services, greater access for American firms to China's banking, insurance and other financial sectors, an end to tariff threats - and a chance to reset relations between the world's largest economies. Even so, the deal isn't what either side said it had wanted. The U.S. doesn't get the fundamental reforms in Chinese economic policy it sought to help American businesses. And levies remain on about $370 billion of China’s exports....Chinese officials feel they have little to gain from a phase-two deal forcing Beijing to ease state control of the economy, and Mr. Trump recently said that a phase-two agreement probably wouldn't conclude until after the Nov. 3 election."
Yes, Democrats will 'debate' each other. But Trump (and his rivals) should be asked about THIS -Thomas/Fox News
"As high-minded as most Democrats try to sound when trying to remove President Trump from office, their real motives appear transparent. Out of touch doesn't begin to describe most people running for, or seeking to remain, in office. They consult pollsters for what people want to hear, instead of telling them what they need to hear. It's like gratifying children by allowing them to eat their dessert first and if they have no room or interest in vegetables, it's OK. Politicians, including the president, should be asked serious questions during this year's election campaign, instead of the media's fixation on impeachment, polls and the horse race. Here are a few that come to mind: 1. Government is bigger than ever, far larger and more intrusive than our Founders anticipated and warned us about...Would you be willing to identify them and if elected (or reelected) terminate them? 2. The national debt is $23 trillion and the deficit is at record highs...Do you have the courage to lead on this issue? 3. President Trump has wanted to pull American troops out of areas where wars never seem to end, but circumstances have prevented him from fully doing so...Should the U.S. be policing the world and if so, why? If not, why not?....There are other questions you might think of, but the answers to these would get the attention of voters, unlike the bad drama that is about to play out in Washington this week and who knows for how many more days and weeks to come?"
1.13.20 - Extreme Greed Fuels Market Bubble
Gold last traded at $1,550 an ounce. Silver at $18.01 an ounce.
NEWS SUMMARY: Precious metal prices eased Monday on profit-taking and a firmer dollar. U.S. stocks rose as geopolitical tensions dissipated while investors felt optimistic about U.S.-China trade relations.
Gold may gain up to 10% this year as geopolitical risks, lower US interest rates push price to $1,700 -Analysts/South China Morning News
"The tentative easing of tensions in the Middle East in the second half of last week caused the price of gold to pull back from a seven-year high. But analysts see further gains in store for the yellow metal this year, with $1,700 per ounce achievable on the back of sustained geopolitical risks and lower US interest rates....Fueling gold's spike early last week was a rush to the traditional safe haven asset after Iran fired at least a dozen missiles at military bases in Iraq that hosted American personnel, in retaliation for the US’ assassination of its top general, Qassem Soleimani, on January 3....ING expects the US Federal Reserve to cut the short-term federal funds rate in April, which will send the real yield of US treasuries lower. This will provide further support for gold, because as short term real interest rates decline, the opportunity cost of holding gold also drops. Jasper Lo, an independent market commentator, said he would not be surprised to see gold hitting $1,700 per ounce in 2020, echoing a call made earlier last year by billionaire investor Paul Tudor Jones, founder of macro-trading hedge fund firm Tudor Investment. Uncertainty stemming from the geopolitical tension in the Middle East is further compounded by the US-China trade war...'It appears that Chinese officials are reluctant to start the second round any time soon, this means that the outlook for US-China trade negotiations beyond January would still remain bumpy,' said Lo."
Negative Interest Rates: The Logical Absurdity -Kalinowski/Enterprising Investor
"It is not uncommon for the word 'absurd' or its derivatives to accompany discussions of negative nominal interest rates. A healthy proportion of financial opinion makers describe the phenomenon as a fundamental violation of the first principles of finance....Here is the problem: There is not enough collateral. So financial institutions will pay 'anything' for it, including 'guaranteed' losses on sovereign debt, assuming the government obligation is held to maturity, which it is not. These negative-yielding bonds are not investments but balance-sheet management tools....The example of It's a Wonderful Life should lend itself to your analyst's mind. George and Mary Bailey sacrificed their honeymoon savings on an unsecured basis to keep Bailey Bros. Building & Loan Association solvent until the bank run panic ended. But outside of their town of Bedford Falls and after 2008, banks need to put up collateral to access honeymoon savings - or any other kind of short-term funding. They do so to meet obligations and regulatory requirements without being forced to sell their long-term investments. Thus, the hamartia (fatal flaw) is exposed. A global monetary order, organized over the course of five decades around access to unsecured, interbank short-term funding, is now obliged to secure its funding. At the same time, the expectations of politicians, monetary technocrats, and the public are unchanged. The whole creaking locomotive is all supposed to puff along as it always has....It is no wonder then that those who have access to the most liquid, fluid, and important collateral are hoarding it like the past holiday season's most popular children's toy. Except that in this sempiternal season, 'It is always winter, never Christmas,' to quote C. S. Lewis. It is a self-reinforcing cycle: no trust, not enough new collateral, hoarding of existing collateral, impeding economic potential, further reducing trust, further dimming economic potential, etc. Negative interest rates are a 'logical' consequence of the larger, absurd picture: an unacknowledged, silent depression...By rearranging the letters of 'depression,' a solution to the problem is revealed: 'I pressed on.'"
Popping The Bubble -Zero Hedge
"Now that we have an open admission from the Fed that their balance sheet expansion is exacerbating asset prices and creating excess and imbalances, the term bubble can no longer be dismissed as some fringe rantings by cranks like me, but rather a recognition for what any bubble is: An overpricing of asset prices far above where they should be based on earnings, fundamentals or the growth basis of the economy. The question on everybody's mind of course: When does the rally end, when will the bubble get popped? You know it's bad when even bulls call for corrections but can't get any. In December what seemed an aggressive call for 3,333 $SPX by March 3rd by BAML already looks overly conservative as $SPX got within a stone's throw of 3,300 on January 10....None of this is new. We've seen bubbles before that brought about major pain when the excess and imbalances were wrought out following a period of extreme greed and complacency. And it's fair to say that this the environment we're in now as CNN's fear and greed model appears to now have settled into what seems an unprecedented permanent full greed mode."
The End of Retirement -Wall Street Journal
"People spend a lot of time wondering if they'll have the means to retire, often ignoring the equally important calculation: Do they have the will to retire? A job, historically seen as simply a way to make money, is increasingly the source of the types of friendship and stimulation that are hard to find in bingo halls, on beaches or riding a golf cart....'When people leave school it's not going to be for 25- or 30-year careers, it's going to be for a 50-year career,' says economist Olivia Mitchell, a professor at the University of Pennsylvania's Wharton School of Business....Patagonia, the outdoor clothing maker, is among an army of companies analyzing how it will deal with a rising tide of older employees. Dean Carter, the California company's human-resources chief, says the company is intent on providing a 'glide path' for people nearing retirement who don't want to simply fall off a 'cliff.'...The company realized it would be a mistake to see its 'elders' walk out the door because there wasn't a way for them to work less formal schedules, and began to implement changes. The company's longtime editor, for instance, has left her day-to-day role editing company materials, but she is teaching younger charges how to write in the 'Patagonia voice,' Mr. Carter says. Other elders are spending time in the lunchroom at the Ventura, Calif., headquarters passing down stories; traveling the world lecturing on the company's culture; or conducting sessions on the environment."
1.10.20 - One major reason you shouldn’t sell gold right now -CNBC
Gold last traded at $1,559 an ounce. Silver at $18.12 an ounce.
NEWS SUMMARY: Precious metal prices rose Friday on bargain-hunting and a flat dollar. U.S. stocks hit record highs despite weaker-than-expected jobs data as Wall Street concluded a volatile week chock-full of geopolitical concerns.
One major reason why you shouldn’t sell gold right now -Longview/CNBC
"Gold is often used as a hedge against inflation, in other words, to protect the decreased purchasing power of a currency resulting from its loss of value due to rising prices....Longview Economics CEO Chris Watling suggested that the one key reason not to bet against gold prices continuing to climb would be the Fed's repo program, an ongoing operation to soothe the overnight lending market. 'It is putting a lot of liquidity, a lot of dollar money, into the system, and that is supporting the price,' he added. Analysts have been broadly bullish on gold of late, with Goldman Sachs expecting a base case for it to trade at $1,600 per troy ounce...Goldman's Global Head of Commodities Research Jeff Currie told CNBC's 'Street Signs' on Friday that with the right combination of circumstances, gold could push even higher through 2020. 'Gold is a hedge against debasement and what we saw in 2011 was debasement, printing too many dollars and the real rate goes down, down, down, which then pushes up the price of gold,'....'If you do see that, the potential to push gold back up into that $1,800-$1,900 range becomes pretty realistic,' he added."
77% Of CFOs Say Stock Market Is Overvalued Even As They Order Record Stock Buybacks -Zero Hedge
"Over the past two years, a dramatic, profound divergence emerged between consumer and CEO (or corporate professional) confidence, with the former soaring to record highs while the latter tumbling to financial crisis levels....The biggest paradox is CFO sentiment toward the market: as the S&P hits new record highs on an almost daily basis every day since the Fed launched QE4 last October, 77% of respondents said stocks are overvalued, the highest level in nearly two years. Just 4% said equities are undervalued, down from 10% in the last reading. Why is this a paradox? Because while over three-quarters CFOs lament just how expensive the market has become, virtually all of them are scrambling to repurchase their 'overvalued' stock, with total buybacks in 2018 and 2019 hitting record highs on largely thanks to Trump's tax law, which allowed US corporations to repatriate about $1.5 trillion in offshore cash, much of which was then used by companies to buy back their stock....So while most corporate Corner Suites are now convinced all stocks are overvalued, they keep a special place in their heart for their own stock... as the higher their own stock goes, the greater their equity-linked comp. In other words, while most agree stocks are overvalued, they will keep buying (back) these overvalued stocks as their pay literally depends on it. Meanwhile, as everyone rushes to buyback their own stock, the entire market just gets even more overvalued, and it is up to the Fed to make sure not even a modest market correction takes place, or else the correction will promptly transform into a full-blown crash."
Dow crosses 29,000 for first time -Fox Business
"The Dow Jones Industrial Average climbed above 29,000 for the first time despite the December jobs report falling short of expectations. All three of the major averages were trading in record territory. The U.S. economy added 145,000 nonfarm jobs in December, the Labor Department said on Friday, missing economists' estimates of 164,000. 'The number was a touch lighter than expectations but showed solid payrolls and wage growth, which should be enough to keep the consumer spending and the economy muddling along,' said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. The unemployment rate held at 3.5 percent. The Dow crossing 29,000 is a 'signal that investors are more comfortable with the economy, the decrease in trade tensions and now the decrease in Middle East tensions,' said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance...Looking at commodities, West Texas Intermediate crude oil was little changed at $59.50 a barrel and gold was up 0.1 percent at $1,556 an ounce."
Be Prepared for President Sanders -Wall Street Journal
"Bernie Sanders significantly outraised his Democratic presidential rivals in the final three months of 2019. He is very much in the hunt for the first three contests of the primary season. He has run second, behind Joe Biden, in national polls for most of the past year and matches up better head-to-head against President Trump than either Elizabeth Warren or Pete Buttigieg. When Sanders supporters complain that the political press isn’t giving their guy the attention he deserves, they have a point. Odds are that the Vermont senator won't be the next president, but it isn't out of the question. The RealClearPolitics polling average has him leading in Iowa and New Hampshire and less than a point out of second place in Nevada, the third contest....Four years ago, Mr. Sanders virtually tied Hillary Clinton in the Iowa caucuses and easily won the New Hampshire primary....This year, Michael Bloomberg will be on the Super Tuesday ballots, and whatever votes he garners likely will come at the expense of fellow moderate Joe Biden, which could help Mr. Sanders. If his campaign starts strong, it's possible that the Democratic establishment could turn on Bernie like it did four years ago. But that runs the risk of alienating his large and enthusiastic base of supporters, and it's hard to see Democrats beating Mr. Trump without the Sandernistas chipping in....Mr. Sanders's socialism is the last thing America needs, and let's hope Democrats reject it. But in a country this divided, and with voters on both sides this motivated, the plain truth is that the president is vulnerable to anyone his opponents nominate."
1.9.20 - Gold Prices Could Hit $3,000 by 2025
Gold last traded at $1,554 an ounce. Silver at $17.95 an ounce.
NEWS SUMMARY: Precious metal prices eased back Wednesday as Iran war fears faded and the dollar firmed. U.S. stocks hit fresh highs as geopolitical fears eased and tech shares outperformed.
Gold could hit $3,000 by 2025: expert -Yahoo Finance
"Gold prices pulled back on Wednesday after climbing above $1,600 for the first time in seven years as tensions between Iran and the United States simmered. Still, the commodity has been one of the best performing assets in the world and one strategist says it's only getting started. 'I think by 2025 gold will be at least $2,500 to $3,000 an ounce,' Heritage Capital's Paul Schatz told Yahoo Finance's On the Move. 'I don't think the rally is over in gold by any means.' Gold prices are up nearly 4% in just the first few weeks of 2020. Earlier this week, the commodity jumped as much as 2.4% after Iran attacked U.S.-led forces in Iraq in retaliation for a U.S. drone strike that killed an Iranian military commander last week. 'Gold sentiment's really hot right now - everybody loves gold,' Schatz said."
A New Gold Standard: Orderly Or Chaotic? -Rickards/Daily Reckoning
"Over the past century, monetary systems change about every 30 to 40 years on average. Before 1914, the global monetary system was based on the classical gold standard. Then in 1945, a new monetary system emerged at Bretton Woods...Under that system, the dollar became the global reserve currency, linked to gold at $35 per ounce. In 1971 Nixon ended the direct convertibility of the dollar to gold. For the first time, the monetary system had no gold backing. Today, the existing monetary system is nearly 50 years old, so the world is long overdue for a change. Gold should once again play a leading role....Slippage in the dollar's role as the leading global reserve currency is not necessarily something that would happen overnight, but is more likely to be a slow, steady process. Signs of this are already visible. In 2000, dollar assets were about 70% of global reserves. Today, the comparable figure is about 62%. If this trend continues, one could easily see the dollar fall below 50% in the not-too-distant future....Gold reserves at the People's Bank of China (PBOC) increased to 1948.31 tons in the fourth quarter of 2019. For comparison, it held 1,658 tonnes in June, 2015...Gold's been flowing to China in recent years, just as gold flowed to the U.S. before Bretton Woods. China is not alone in its efforts to achieve creditor status and to acquire gold. Russia has greatly increased its gold reserves over the past several years and has little external debt....Iran has also imported massive amounts of gold, mostly through Turkey and Dubai...The dollar collapse has already begun and the need for a new monetary order will need to emerge. The question is whether it will be an orderly process resulting from a new monetary conference, or a chaotic one. Unfortunately, it'll probably be chaotic."
Doubts over phase one trade deal as US-China ties 'still in deep trouble' -South China Morning Post
"The 'phase one' trade deal between China and the United States is unlikely to lead to a broader pact because 'excessive' demands by Washington have left Chinese officials feeling it is 'useless' to engage. That is the view of Jia Qingguo, one of Beijing's top foreign policy experts and a professor of international studies at Peking University. 'Despite the recent announcement that we are going to have the first phase agreement, [the] relationship between China and the US is still in deep trouble and is heading south rather than north. It is getting worse,' Jia told the Regional Outlook Forum 2020 hosted by the ISEAS-Yusof Ishak Institute in Singapore on Thursday. His comments came as plans were announced for a Chinese trade delegation, led by Vice-Premier Liu He, to travel to Washington on January 13 for the signing of an interim deal in the costly trade war between the world's two largest economies....A 'whole deal' might not be hammered out, as the Chinese believed the US demands were 'not about money but about life'. 'China's patience is wearing thin. US wants not just some concession from China, but to topple the Chinese government and contain China,' he said."
Top Repo Expert Warns Fed Is Now Trapped: "It Will Take Pain To Wean The Repo Market Off Easy Cash" -Zero Hedge
"Curvature Securities' Scott Skyrm writes in his daily Repo Market Commentary note, 'the total overnight and term Fed RP operations on Friday were greater than on year end! On year-end, the Fed had pumped a total of $255.95 billion into the market verses $258.9 billion on Friday.' The problem with the broken repo market and the Fed's respective Repo operations, similar to the problem observed with QE and the Fed's balance sheet in general over the past decade, is that the market had gotten addicted to the easy Fed liquidity unleashed in September (via temporary repo ops), and then again in October (via permanent T-Bill purchases). As Skyrm writes, 'it's easy to see how the Repo market can get addicted to easy cash from the Fed when the stop-out rates for the RP operations are 1.55% - behind the offered side of the market.' But, as the repo strategist adds, as the Fed keeps injecting cash, the market gets used to it....Skyrm cautions that 'it will take pain to wean the Repo market off of cheap Fed cash'....The longer the Fed avoids pulling the repo liquidity band-aid, the bigger the market fall when (if) it finally does. The question then becomes whether Powell can keep pushing on the repo string until the November election, because a market crash in the months preceding it, especially since it will be of the Fed's own doing, will result in a very angry president."
1.8.20 - Gold Touches $1,600 on Iran Attack
Gold last traded at $1,559 an ounce. Silver at $18.17 an ounce.
NEWS SUMMARY: Precious metal prices steadied Wednesday after a spike following an overnight Iran attack. U.S. stocks opened flat as investors recovered from a steep overnight decline after Iran fired rockets at an Iraqi airbase that hosts American troops.
Gold retreats from $1,600 as markets eye US reaction after Iran attacks -CNBC
"Gold prices surged past the $1,600 level for the first time in nearly seven years earlier on Wednesday after Iran conducted retaliatory attacks against U.S. forces in Iraq, but the metal pared gains as investors awaited reaction from the White House. 'Gold is paring some gains right now as the retaliation was not seen as aggressive as the markets thought it would be and investors are booking profit for that reason,' Saxo Bank analyst Ole Hansen said. 'How gold will move from here is pinned on what U.S. President Donald Trump says when America wakes up,' Hansen added....The metal, considered a safe investment in times of political and economic uncertainties, was still supported as fears of a military lockdown in the Middle East remained. Gold further got a boost from a dip in equities markets."
Iran Threatens Further Retaliation After Missile Strikes Against U.S. -Wall Street Journal
"Iranian Supreme Leader Ayatollah Ali Khamenei vowed further retaliation for the U.S.'s targeted killing of an Iranian commander, hours after striking military bases in Iraq that house U.S. forces...Ayatollah Khamenei, Iran's top spiritual and political authority, said Iran's end goal was to expel U.S. forces from the region. 'Last night, they were given one slap,' he said in a speech in the holy city of Qom broadcast live on state television. 'Such military actions are not enough as far the importance of retaliation is concerned. What's important is that their corruption-creating presence should end.'....A U.S. official said the attacks left no casualties but that a damage assessment was still under way. Iraqi security forces said 22 rockets fell on sites housing coalition forces, including two that didn't explode, but there were no casualties....The attacks were the latest blow in a rapidly escalating conflict between Tehran and Washington that has opened a new chapter in U.S.-Iranian hostilities and raised the risk of an outright military conflict....President Trump seemed to play down the Iranian attack. 'All is well! Missiles launched from Iran at two military bases located in Iraq. Assessment of casualties & damages taking place now. So far, so good!' Mr. Trump said on Twitter."
How Money Printing Contributes to America's Downward Spiral -Bonner/Bonner And Partners
"In a prosperous, civil society, win-win-deals between consenting adults add to the wealth of the country...And the government - with its naked, win-lose power - is held in check by culture, constitutions, checks and balances...and most important, by a scarcity of resources. A war society is a different matter. It is win-lose all the way… and claims almost unlimited resources for the war effort....Today, we take up another bone-headed, society-destroying mistake of the 21st century...We're talking about money. When the money goes, everything goes. You can quote us on that....Stocks are at all-time highs, but only because of front-running by speculators and buy-backs by corporate insiders. Real, pre-tax earnings growth is falling. Unemployment is near all-time lows, but only because people are forced to take low-paying 'gigs' in the service economy. Real, 'bread-winner' jobs continue to disappear. GDP growth is still positive, but only because the Fed lends money below the rate of consumer price inflation....In a world of free money, conservatism no longer makes sense. Why worry about wasting money… when you can print more? Over a nearly 50-year period since the fake money was introduced in 1971, the old conservatives disappeared, died, or became new conservatives - who joined the Liberals as supporters of Big, World-Improving Government."
'Buffett Indicator' Warns Stocks Doomed for Worse Crash Than 2008 -CCN
"Named after the widely-venerated 'Oracle of Omaha,' the Buffett indicator reflects Warren Buffett's characteristically simple thinking about stock values. It's the total stock market capitalization of the United States relative to U.S. GDP. If the indicator gets too top heavy, with the total market value of stocks significantly exceeding the productivity of the underlying companies, Buffett would say stock prices are due for a correction. The historical returns of the stock market back him up on that. Today the indicator is soaring at a harrowing record high. Just before the Dot Com Bubble collapsed, total U.S. market cap stood at 146% of GDP, according to the Federal Reserve's books. Right before the Great Recession that began at the end of 2007, the U.S. market cap was 137% of GDP. On the first day of trading in 2020, the Buffett indicator charted an ominous high of 153%, according to Wilshire data. As the stock market set records in the final quarter last year, the indicator rose 14% in one quarter. And corporate earnings growth is flat....If you go by the Buffett indicator, Wall Street is partying like it's 1999."
1.7.20 - Is America Vulnerable to Iran Cyberwar?
Gold last traded at $1,574 an ounce. Silver at $18.42 an ounce.
NEWS SUMMARY: Precious metal prices rose again Tuesday on safe haven buying amid ongoing market jitters. U.S. stocks drifted lower as Wall Street assessed the growing geopolitical risks stemming from U.S.-Iran tensions.
'Endless buying for gold' could signal a shift to real fear in the stock market -Cramer/CNBC
"The investment community seems to be underestimating the potential fallout from rising tensions between the United States and Iran, CNBC's Jim Cramer warns. Just after Monday's opening bell on Wall Street, Cramer said on 'Squawk on the Street' that the key to the stock market is: 'Gold, gold, gold,' which was up for the ninth straight session. 'When I see this endless buying for gold it makes me think for the first time people are just saying, 'I'm really fearful,' said Cramer. He pointed out that the gold buying started even before Thursday night's U.S. drone strike in Iraq that killed top Iranian commander Gen. Qasem Soleimani as he was leaving Baghdad's airport....'The gold buying has been endless; over and over and over. It feels like gold wants to go to $1,700 to $1,800. Now that would be very negative for the [stock] market,' Cramer added."
Cyberwar with Iran: How vulnerable is America? -USA Today
"The U.S. airstrike in Baghdad that killed Iranian General Qassem Soleimani on Friday will likely lead to retaliatory cyberattacks against America, security authorities say. That means the power and electricity you use, the smart devices you carry and your bank accounts could be more vulnerable than ever to bad actors looking for revenge....A cyber conflict between the U.S. and Iran has been silently raging for years, with hacking attempts from the Middle East being made every single day....Private-sector corporations, which include banking, health care and energy services, would be the primary targets, according to Paul Martini, co-founder of the network security platform iBoss. In the worst-case scenario, Iranian hackers 'could instantaneously shut down an entire power grid,' Martini said. 'It's not just the lights, it's also the internet which shuts down communication systems. Without shooting a single bullet or missile, you can shut down an entire county or nation.'....How can you protect yourself?...Use secure passwords. Save hard copies of information and write down phone numbers rather than relying on internet connectivity or devices."
Iran Evaluating 13 Retaliation Scenarios To Inflict "Historic Nightmare" On US -Zero Hedge
"Breaking a 5-day silence over its response for the US killing of General Qassem Soleimani, on Tuesday Iran said it was assessing 13 scenarios to inflict a 'historic nightmare' on the US. 'Even if the weakest of these scenarios gain a consensus, its implementation can be a historic nightmare for the Americans,' Ali Shamkhani, the head of Iran's national security council, was cited by Fars news agency, adding that, 'For now, for intelligence reasons, we cannot provide more information to the media.'....In response, the U.S. issued a warning to shipping in the Middle East over the possibility of Iranian action against U.S. maritime interests, the Associated Press reported, citing a statement. Soleimani's death has rippled through the Middle East, with the U.S. and its allies on high alert for a retaliation attack by Iran. Mohammad Javad Zarif, Iran's foreign minister, said Tuesday that the U.S. would suffer consequences for the killing of Soleimani 'at a time and place of Iran's choosing.' Zarif added the U.S. must leave the Middle East and warned that if they don't, a new multi-generational war could erupt....'We will surely take revenge, but if America dares takes any action, we will set alight those places Americans hold dear."....Earlier, President Trump outlined 52 Iranian sites that U.S. forces would attack if Iran dares to retaliate. And while the world awaits for Iran to pick one or more of the 13 scenarios, on Monday the Pentagon dispatched additional forces to the Middle East."
Triggering A Recession Tops The Dems’ Presidential Agendas -Issues and Insights
"The 2020 Democratic presidential field is in near unanimous agreement that fracking has to be banned or at least regulated to death over time. It plays well to the party's base, especially its green fringe. It's also an endorsement of recession. Joe Biden, currently atop the Democratic primary polls, recently said he would 'love to 'ban fracking right now,' and would also 'love to make sure we can't use any oil or gas, period,' reports Common Dreams, a website that caters to leftist and socialist devotees....'If the U.S. imposed a fracking ban, the supply disruption would trigger the biggest oil and natural gas price spikes in history - almost certainly by more than 200% - which would, in turn, tip the world into recession,' Manhattan Institute Senior Fellow Mark Mills wrote last month in a policy brief.....A fracking ban appeals not only to the eco-radicals of the left, it would satisfy the Democrats' 'recession lust.' They, as well as their supporters touched by Trump Derangement Syndrome, need a downturn to 'get rid of Trump.' 'We see Democratic leaders and the 'unbiased' media openly rooting for a recession,' economist Stephen Moore wrote in late August in the Washington Times. 'The drumbeat for an economic contraction has been nonstop for the last two weeks.'"
1.6.20 - Gold Price Hits Highest Since 2013
Gold last traded at $1,565 an ounce. Silver at $18.13 an ounce.
NEWS SUMMARY: Precious metal prices rose sharply Monday on safe-haven buying amid rising geopolitical worry. U.S. stocks fell again on growing worry of retaliation by Iran for recent U.S. assassination of a top Iranian military leader.
Gold Hits Highest Since 2013 as Goldman Backs Bullion in Crisis -Bloomberg/Yahoo Finance
"Gold surged to its highest since 2013 as rising tensions in the Middle East stoked demand for havens, with Goldman Sachs Group Inc. seeing more room to run. Bullion neared $1,600 an ounce after Tehran said it would no longer abide by any limits on its enrichment of uranium following the killing of General Qassem Soleimani. President Donald Trump said he's prepared to strike Iran 'in a disproportionate manner' if it retaliates against any U.S. target. Gold may prove a better bet than oil amid rising tensions, according to Goldman analysts. 'History shows that under most outcomes gold will likely rally to well beyond current levels,' analysts including Jeffrey Currie and Damien Courvalin said in a note. That's 'consistent with our previous research, which shows that being long gold is a better hedge to such geopolitical risks.'....Bullion is building on the largest annual climb since 2010, which was driven by the U.S.-China trade war's drag on global growth, easier monetary policy across the world's leading economies and sustained buying from exchange-traded funds and central banks. 'Negative real rates in the U.S. and a weaker U.S. dollar favor stronger precious metal prices in general,' said Giovanni Staunovo, a commodity analyst at UBS Wealth Management. 'Thus, we see value in staying long the metal.'"
One Essential Insight For The Year Ahead -Gordon/Zero Hedge
"Make no mistake, 2020 will be the year that everything happens precisely as it should. Some good. Some bad. Each day shall unfold before you with reciprocal imbalance. You can take that to the bank....The late Marty Zweig, in his book Winning on Wall Street, which was published in 1970, included the following observation: 'The monetary climate - primarily the trend in interest rates and Federal Reserve policy - is the dominant factor in determining the stock market's major direction.' Zweig is also credited with taking this observation and simplifying it in a way that Wall Street zealots can repeat with mindless refrain: 'Don’t Fight the Fed.' Without question, this is sage advice…most of the time....There are occasions to fight the Fed. And 2020 is one of them. Hence, our essential insight for the year ahead is this: 'Fight the Fed in 2020.'....Policy makers are humans too. They're likely to miss the mark from time to time. By our estimation they already have. With this as our premise, we predict the following for 2020: The S&P 500 will close out the year down precisely 32 percent. The yield on the 10-Year Treasury note will rise to 3.19 percent. And gold will sparkle to a new all-time high, eclipsing $1,900 per ounce."
Fed Admits It Pumped More than $6 Trillion to Wall Street in Recent Six Week Period -Wall Street On Parade
"If the Federal Reserve was looking for a media lockdown on news about the trillions of dollars in cumulative repo loans it has funneled quietly to Wall Street’s trading houses since September 17 of last year, it could not have found a better cloud cover than Donald Trump....The Fed's minutes revealed that after multiple expansions of this vast money spigot, which was previously set to lapse in January after getting the Wall Street trading houses through the year-end money crunch, instead it may be extended through April....The Fed's minutes also acknowledge that its most recent actions have tallied up to 'roughly $215 billion per day' flowing to trading houses on Wall Street. There were 29 business days between the last Federal Open Market Committee (FOMC) meeting and the latest Fed minutes, meaning that approximately $6.23 trillion in cumulative loans to Wall Street's trading houses had been made in that short span of time. During the 2007 to 2010 financial collapse on Wall Street - the worst financial crisis since the Great Depression, the Fed funneled a total of $29 trillion in cumulative loans to Wall Street banks between December 2007 and July 21, 2010. At the pace it is currently going, it would eclipse that $29 trillion before the middle of this year."
Central Banks Are the Biggest Risk to the Economy in 2020 -Yahoo Finance
"For the first time since the signing of the Declaration of Independence in 1776, the U.S. just completed the first calendar decade without even one day of a recession. There are a few key reasons why this is happening, and one clear risk that could bring the expansion to an end....As of November, the collective balance-sheet assets of the Federal Reserve, European Central Bank, Bank of Japan and Bank of England stood at 35.9% of their countries' total gross domestic product, up from about 10% in 2008, according to data compiled by Bloomberg. At the same time, the latest World Bank data show that developed country GDP expanded to $54.2 trillion at the end of 2018 from $46.1 trillion a decade earlier. Restated, central bank balance sheets grew at a faster rate, by $9.9 trillion, than their underlying economies....So, what happens when central banks pull back from this stimulus?....It will be extremely hard for central banks to reverse 'money printing.'....Should policy makers get their wish and some inflation returns, then it would be time to worry."
1.3.20 - Safe-Haven Buying Lifts Gold Nears 6-Year High
Gold last traded at $1,552 an ounce. Silver at $18.16 an ounce.
NEWS SUMMARY: Precious metal prices rose sharply Friday amid geopolitical anxiety. U.S. stocks fell after the U.S. confirmed that an airstrike killed Iran’s top military commander, sending oil prices surging and hiking geopolitical concerns.
Gold Nears Six-Year High as Traders Rush to Buy Haven Assets -Bloomberg/Yahoo Finance
"Gold advanced toward a six-year high after a U.S. airstrike killed one of Iran's most powerful generals, ratcheting up tensions in the Middle East and driving demand for havens...The strike in Baghdad ordered by President Donald Trump killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards' Quds force. Iran's supreme leader vowed 'severe retaliation.' The news helped gold to build on the biggest annual gain in almost a decade, a rally that was driven by a weaker dollar, lower real rates and geopolitical concerns. 'Today's event has probably only brought forward the inevitable test of the September high,' said Ole Hansen, head of commodity strategy at Saxo Bank A/S. 'Rising inflation concerns through higher input prices - oil and food - combined with geopolitical uncertainty is a potent cocktail which supports a market already on the move.'"
A Crisis Has Already Begun... We Just Don't Know It Yet -Maulden/Zero Hedge
"Let's address an elephant in the room: the rapidly expanding federal debt. Each annual deficit raises the total debt and forces the Treasury to issue more debt, in hopes someone will buy it...The Fed now has also become a big part of the monetization process via its purchases of T-bills which also drives banks into buying notes. The Fed's balance sheet is now $335b higher than it was in September at $4.095 trillion. Again, however the Fed wants to define what it's doing, market participants view this as QE4 with all the asset price inflation that comes along with QE programs....It will be real interesting to see what happens in 2020 to the repo market when the Fed tries to end its injections and how markets respond when its balance sheet stops increasing in size....It sure looks like, through QE4 and other activities, the Fed is taking the first steps toward monetizing our debt. If so, many more steps are ahead because the debt is only going to get worse. As you can see from the chart, the Fed is well on its way to reversing that 2018 'quantitative tightening.'....Sometime in the middle to late 2020s, we will see a Great Reset that profoundly changes everything you know about money and investing. Crisis isn't simply coming. We are already in the early stages of it. I think we will look back at late 2019 as the beginning. This period will be rough but survivable if we prepare now."
America Is Now the Divided Republic the Framers Feared -The Atlantic
"John Adams worried that 'a division of the republic into two great parties … is to be dreaded as the great political evil.' And that's exactly what has come to pass. America has now become that dreaded divided republic. The existential menace is as foretold, and it is breaking the system of government the Founders put in place with the Constitution. Though America's two-party system goes back centuries, the threat today is new and different because the two parties are now truly distinct, a development that I date to the 2010 midterms. Until then, the two parties contained enough overlapping multitudes within them that the sort of bargaining and coalition-building natural to multiparty democracy could work inside the two-party system. No more. America now has just two parties, and that's it....By separating powers across competing institutions, the Framers thought a majority party would never form....Triple developments - the nationalization of politics, the geographical-cultural partisan split, and consistently close elections - have reinforced one another, pushing both parties into top-down leadership, enforcing party discipline, and destroying cross-partisan deal making. Voters now vote the party, not the candidate. The consequence is that today, America has a genuine two-party system with no overlap, the development the Framers feared most. And it shows no signs of resolving....The country must break the binary hyper-partisanship so at odds with its governing institutions, and so dangerous for self-governance. It must become a multiparty democracy."
Warren Zevon’s Wisdom for the 2020s -Noonan/Wall Street Journal
"Every year at this time I think of two things. One is what the musician Warren Zevon said on the 'Late Show With David Letterman.' I watched it, live, in 2002. Zevon was dying of mesothelioma, and Mr. Letterman asked how his illness had changed him. Zevon's answers suggested he'd come to feel awe for the barely noticed gifts we're given each day. Mr. Letterman asked, 'Do you know something about life and death that maybe I don’t know now?' Mr. Zevon answered: 'I know how much you're supposed to enjoy every sandwich.' That is a gift, to know how good the sandwich is. The other is a quote I read 40 years ago, from the writer Laurens van der Post in 1961: 'We live not only our own lives but, whether we know it or not, also the life of our time.' We are all making history together, we are part of an era, and we are responsible to each other and to this great project....Now, my sense of where we are. On the impeachment of the American president, the story's already been written, hasn't it? It didn't quite work, did nothing to help and little to hinder his position....On to the real action, the presidential election 10 months away. The Democratic primary field is still flailing and doesn’t see it’s flailing. At the moment their theory of the country is wrong, and it’s wrong because it’s a theory, not a cold-eyed look at circumstances and facts on the ground...If there is a grinding war or an economic downturn people will want change and the out party has a good shot. If the economic downturn is severe they will consider deep structural change, even radical change such as socialism....In the 2020s, the American position on China will harden - not the government's but the country's. Whatever happens with the administration and China, Mr. Trump will think it’s about him and lose interest when it appears not to be. Among the people, especially the business class, the perception will deepen that China is not our friend....The belief that big tech needs to be corralled - to be broken up or declared public utilities - will grow on the left and right....The past decade saw the rise of the woke progressives who dictate what words can be said and ideas held, thus poisoning and paralyzing American humor, drama, entertainment, culture and journalism. In the coming 10 years someone will effectively stand up to them...Who? How? That will be a story of the ’20s, and a good one."
1.2.20 - Recession on List of CEO Fears for 2020
Gold last traded at $1,528 an ounce. Silver at $18.04 an ounce.
NEWS SUMMARY: Precious metal prices rose Thursday on safe haven buying despite a firmer dollar. U.S. stocks rose to all-time highs on the first trading day of the new year.
Gold Prices Could Climb to Another Record High in 2020 -Barrons
"Investors who didn't own gold in 2019 could be kicking themselves after an 18% rise in prices for the year. But it might not be too late to join the rally. Robust buying by central banks, a weakening of the U.S. dollar, and growing political tensions could combine to fuel further gains. 'If we think about it in percentage terms, to imagine gold making a new all-time high sometime in 2020 doesn't seem like such a stretch,' says John Roque, a technical analyst with Wolfe Research in New York City....'We believe gold will (a) break out above resistance at $1,557, (b) work to $1,650, and then (c) make a new all-time high,' says a recent Wolfe Research report....A big part of the bulls' case is that buying by central banks will continue to absorb a lot of the metal....The U.S. election, trade tensions between the U.S. and China, and the pending impeachment trial of President Donald Trump could also act as catalysts for movements in the price of gold. 'There will be a lot of volatility in markets ahead of the elections, and that will be helpful for gold' says Rohit Savant, director of research at CPM Group."
2020 all about Federal Reserve interest rates -Crudele/New York Post
"This is the time of year when columnists get to show how smart they aren't by making predictions....I'll make a prediction about the Federal Reserve....This is the most important question for everyone - home buyers, credit card users, savers, banks and stock market investors: What will the Fed do to interest rates in 2020? The Fed will try to keep interest rates at current levels...If the Fed cut interest rates, the Democrats would howl that Chairman Jerome Powell was trying to fix the election for President Trump. If the Fed raised rates, it would go the other way, with the Republicans crying foul and accusing Powell of getting even with Trump, who has been a critic of the Federal Reserve. But there is always the chance that the Fed will have to do something. What do I mean? Well, if the stock market collapses after its remarkable 30 percent-plus rise in 2019, the Fed might have to cut rates to counteract the loss of wealth the country would feel. The opposite could also be true. Inflation could start flaring up and the Fed might have to raise rates - maybe even steadily and quickly. This would send Trump into a Twitter fit. But sharply rising prices would have to be dealt with swiftly....What will the stock market do in 2020? It all depends on whether interest rates go up. If they do, the stock market will fall."
Recession Rises on List of CEO Fears for 2020 -Wall Street Journal
"U.S. chief executives are getting worried about a recession. Fear of an economic decline topped the list of their concerns going into 2020, according to a survey from the Conference Board, a business research group...Last year, growth in gross domestic product globally slipped to 2.3% from 3% in 2018, and executives felt the pressure, said Bart van Ark, chief economist at the Conference Board....The Conference Board projects that global growth will accelerate slightly this year to 2.5%....Concerns about global trade linger, even after the announcement last month that China and the U.S. had reached a first-stage trade deal....'As long as we don't have any guidance about where it's going to go next, it's very hard to make big investments,' Mr. van Ark said. 'I don't think the stress of this is going to go away.'....Other top concerns for U.S. CEOs as the new decade dawns include more intense competition, the tight labor market and global political instability."
As China Anxiety Rises in U.S., Fears of New Red Scare Emerge -BloombergQuint
"The setting was inauspicious: an auditorium at Stanford University, founded by a railroad tycoon who made his fortune off the backs of Chinese immigrants. The subject: a report describing China's efforts to manipulate American universities, corporations and media 150 years after Leland Stanford celebrated the completion of the first transcontinental line....Christopher Wray, director of the Federal Bureau of Investigation, has called China 'the broadest, most challenging, most significant' counterintelligence threat the U.S. faces and says his agency is investigating more than 1,000 cases of suspected theft of U.S. intellectual property, with 'almost ' of them leading back to China. 'China has pioneered a societal approach to stealing innovation,' says Wray. The Hoover-Asia Society report, originally titled 'Chinese Influence & American Interests: Promoting Constructive Vigilance,' constitutes the most audacious attempt to date to address a fundamental challenge: How to confront China's global ambitions and avarice for U.S. technology without inciting a backlash against 5 million U.S. citizens of Chinese ancestry....The Hoover-Asia Society report argues that Beijing is devoting enormous resources to controlling what Americans write, say, learn and think about China."
12.31.19 - 2020: Another Global Roaring 20s?
Gold last traded at $1,525 an ounce. Silver at $17.97 an ounce.
NEWS SUMMARY: Precious metal prices ended 2019 at a 2-month high as uncertainty weakened the dollar. U.S. stocks fell into 2020 as Wall Street wrapped up a banner year that saw equities surge to record highs.
2020 Outlook: A Marshmallow World -Seeking Alpha
"'It's a marshmallow world in the winter. When the snow comes to cover the ground. It's time for play, it's a whipped cream day. I wait for it the whole year round.' -A Marshmallow World, Bing Crosby, 1950. It's a marshmallow world for capital markets as we enter 2020. Name the asset class, and it had a stellar year in 2019. U.S. stocks? Up over +30%. Stocks across the rest of the world? Higher by more than +20%. Investment grade corporate bonds? Up nearly +20%. High yield bonds? +14%. Long-Term US Treasuries? +15%. Gold and silver? +16% each....Stocks...Expect the S&P 500 to squeeze out a low to mid single-digit gain in 2020 assuming liquidity conditions remain sufficiently abundant...Expect 2020 stock market returns to come with greater volatility and more violent swings along the way including the potential for a decent short-term correction early in the year. Bonds...I have virtually no interest in owning riskier spread product in 2020. BBB-rated investment grade corporate bonds, high yield bonds, convertible bonds, bank loans - I want none of it. Precious Metals...I remain bullish on the precious metals complex...Why? The unabashedly dovish U.S. Federal Reserve, along with its global central bank cohorts, continue to make an absolute debauchery of the still relatively new global fiat currency system at age 48 years and counting (for how much longer, I'm not necessarily sure). Such absolute dovishness is gold and silver bullish."
2020: Another roaring 20s for world markets? -Reuters
"Helicopter cash, climate crises, smart cities and the space economy - investors have all those possibilities ahead as they enter the third decade of the 21st century. They go into the new decade with a spring in their step, after watching world stocks add over $25 trillion in value in the past 10 years and a bond rally put $13 trillion worth of bond yields below zero. Could we see a repeat of the roaring twenties, as the 1920s were known - years of prosperity, technological innovation and such social developments as women winning the right to vote? Possibly. But there's unease, along with all the euphoria. The current economic cycle is already the longest in U.S. history and a recession looks inevitable in the new decade - which also will mark 100 years since the Wall Street crash of 1929. And solutions may need to be unconventional, even more so than the extraordinary policies of negative interest rates and bond-buying that eased the post-2008 global funk. With those policies maxed out, 'in the 2020s it seems inevitable that a world of helicopter money awaits,' Deutsche Bank predicts. Another radical option under discussion is modern monetary theory, when governments create and spend as much money as needed, so long as inflation stays low...The result is a de-globalising world, or as Morgan Stanley puts it, 'slow-balisation'."
Will Recession Strike in 2020? -Wall Street Journal
"Even the best indicators of downturns are unreliable, but investors can take steps to prepare either way. Year-end is the traditional time to forecast the economy and ensure that your investment portfolio can handle future shocks....The most reliable indicators have been the shape of the yield curve, business and consumer confidence, durable-good purchases and housing starts, and the health of the labor market. These measures have also correctly signaled stock-market downturns. (The biggest exception is consumer spending, which has risen before nearly every past recessions, falling only after the recession starts.)....Our view is that the best course of action is to be agnostic about future economic activity and the direction of the stock market. We subscribe to the wisdom of John Kenneth Galbraith, who once said, 'There are two kinds of forecasters: those who don't know, and those who don't know they don’t know.' If accurate forecasts of the economy and the stock market are impossible, how should investors assess their portfolios at year-end? There are three steps every investor should take, none of which require futile attempts to forecast the future. First, ensure that their asset holdings are broadly diversified....Second, maintain the balance of their portfolios to suit their retirement timeline and risk tolerance....Third, be sure to harvest tax losses and keep costs minimal. "
Re-learning What's Important in a Tech-Obsessed World -Bonner/Bonner And Partners
"Why get the electronics out of your life? There are two reasons... maybe more. One is simple: There are only 24 hours in a day. As electronic communications and entertainment take up more and more of your time, they take over your life....Much of the 'information' you receive is fraudulent, foolish, or just plain wrong. Only some of it is true. But how do you know which is which? Again, it takes time. Real truth. Fake truth. Kinda, partial, virtual truth? With so much of it coming at you, you can't possibly take the time to know how much truthiness is in each bit. And yet, each little fragment takes time to receive and process. Then, it is stored somewhere in your brain, like an old pair of boots you put up in the attic. You may not ever think of it again. But it is still there somewhere, taking up space. And your brain space - while remarkably elastic - is not infinite. In order to make space for the old boots, you might have tossed out your grandmother's diary and forgotten your phone number. Not only do electronic messages capture your attention and devour your time, they also take over your emotional life. Little by little, you come to care about people you've never met… battles you will never fight... and issues that don't really matter. The next thing you know, you will find yourself not just a spectator ogling the on-line circus, but an actor… another clown… voicing an opinion, taking polls, leaving comments, and joining 'chat' groups. The internet has gotten a tighter grip on you than heroin on a dope addict. That world - the fake one that takes place in digital space - has become your world. That is where you live… where your time - your physical life (sitting in front of a computer screen) - and your emotional life, too, will be spent."
12.30.19 - 50% Market Plunge Inevitable -Strategist
Gold last traded at $1,518 an ounce. Silver at $18.00 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday on geopolitical uncertainty and a weaker dollar. U.S. stocks retreated from their all-time highs on year-end profit taking.
Gold prices to hit $2,000 in 2020 -City Index/Kitco
"Gold is preparing to ring in the new year above the psychologically critical $1,500-an-ounce level and if this past year is any indication, gold's fortunes will continue to favor the bold, according to one analyst. As part of City Index's bold prediction, technical analyst Fawad Razaqzada said that he is looking for gold to hit a new all-time high in 2020, with prices pushing to $2,000 an ounce. Razaqzada said that his extremely bullish gold outlook comes as he expects to see global coordination among central banks to loosen monetary policy next year. He added that looser monetary policy will push bond yields further into negative territory, thereby 'boosting the appeal of noninterest-bearing precious metals.' Razaqzada said that even if gold doesn't hit his bold target, he expects the precious metal to remain in an uptrend through 2020. 'I think gold has everything going for it in 2020,' he added....'Bond yields are likely to remain depressed as global central banks try to combat slowing economic growth and subdued inflationary pressures with extraordinary loose monetary policy,' he said. However, the spark that could kick the gold rally into a higher gear is a correction in equity markets... 'As the U.S. equity market bubble finally bursts, safe-haven demand could nudge gold past its 2011 peak of $1920, before tagging the $2,000 psychological hurdle.'"
Can Trump Put Humpty-Dumpty (the USA) Back Together Again? -Simon/Epoch Times
"I'm no Nostradamus...But I'm certain 'beyond a reasonable doubt' that President Donald Trump, despite the inevitable hiccups, won't be removed from office by the Senate and will win reelection next November. But as much of a rough ride as the two hurdles might be, they are far from his most significant challenge. His real challenge, and it will be an extraordinarily difficult one, close to a 10 on the Richter scale, will be to put Humpty Dumpty - aka the United States of America - back together again. Our society is divided as it hasn't been since the Civil War. Families, friendships, and workplaces are all fractured....America, right now, despite the affluence and peacefulness, is a truly unpleasant place to live. We aren't loving our neighbors. The unfortunate result of this is that Trump alone can and must lead the way in curing the condition....He should be 'the good father,' which he evidently is to his own children, not the angry or cheated man, which he is to his political opponents, justifiably or not. This will be problematic for Trump, who thrives on confrontation, but he must do it. He could even begin that at his State of the Union address, lowering the temperature of the rhetoric....Trump should keep Humpty Dumpty always at the forefront of his mind. The nursery rhyme character has clearly fallen from the wall. The president's biggest job in his second term is to put him together again."
Don't expect Fed Chairman Jerome Powell to play nice with Trump -Crudelle/New York Post
"The relationship between Trump and Fed Chairman Jerome Powell can best be described as strained - with all the strain coming from the president's side. 'Jay Powell and the Federal Reserve Fail Again. No 'guts,' no sense, no vision! A terrible communicator!' Trump tweeted out in September after the Fed cut interest rates but not by as much as Trump wanted. That was just one in a string of harsh criticisms by Trump of Powell and the Fed. The pressure on Powell was so intense that rumors abounded that he was about to be fired. But more recently, the president tried to be nicer. There was a meeting with Powell last month after which Trump said: 'Just finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve.' The Fed, in a statement shortly afterward, was quick to stress its political independence...'Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.'...So, it is pretty clear that Powell isn't going to be Trump's patsy like Greenspan was Clinton's. And that could become a problem if the economy starts to turn down during or after the impeachment....Meanwhile, stocks should continue to do well as long as it looks likely that Trump will survive impeachment, and interest rates don't rise. But if there is some odd political turn of events, or if the economy suddenly slows or Trump's trade deals sour, then the president will be in trouble."
Stock market bubble is forming and a 50% plunge is inevitable: strategist -Yahoo Finance
"One can't help but to think the 'everything rally' that is engulfing Wall Street right now is a classic asset bubble just waiting to explode sometime in 2020. 'I think so,' AdvisorShares CEO Noah Hamman told Yahoo Finance's The First Trade, referring to whether we are witnessing a bubble form across asset classes. 'It will continue on for a while for as long as we see we have an indication that we could have lower rates ahead possibly though with a pause, but with an increasing Fed balance sheet.' By 'everything rally,' we mean assets of all kinds are in major rally mode almost in unison. It's as if investors - which are being hyped up on a steady dose of Fed rate cuts in 2019 and the signing of a phase one trade deal between the U.S. and China - are beginning to completely misprice asset risk amid fear of missing out on rising markets. Oftentimes that ends up badly for investors....'With a drop in extreme bullish sentiment and now a breakout above resistance, we think in the early days of 2020, gold and silver are poised to challenge their highs from September. As momentum begins to build in gold and silver, we are comfortable chasing strength and would absolutely be buying dips,' said Renaissance Macro strategist Jay deGraaf....Hamman thinks the Fed'’s actions are 'driving up prices everywhere.' He does caution that if the Fed signals a change in interest rate policy by mid-2020, the bubble could explode. 'It could be a huge bubble, and we could see huge declines - 50% and 60% declines that happen quickly before you have a chance to react to them.'"
12.27.19 - The Crisis of 2020
Gold last traded at $1,518 an ounce. Silver at $17.99 an ounce.
NEWS SUMMARY: Precious metal prices rose to 7-week highs Friday on safe haven buying. U.S. stocks touched fresh records as year-end optimism continued to drive the rally.
Gold off to the races -Kitco
"Gold and silver are taking off to the upside. After struggling for months, the metals seem to have found their bullish footing. For the past three to four weeks, gold and silver were showing some bullish footing. This week, they finally broke out and look to be ready to test the highs. Markets trade in three basic phases - consolidation, trend and blow off. After sitting in a downtrend for months, the metals found the consolidation pattern and now have broken out, forming what appears to be a new uptrend. The power of the breakout should certainly take the metals to the recent highs we saw in late August. Based on algorithms and the chart formation, gold and silver could have a long way to run. The trend is now higher, and this rally could gather steam going into the New Year. We are long gold and silver and expect an extended run higher."
The Millennials-Versus-Boomers Fight Divides the Democratic Party -The Atlantic
"The United States is a fortress of gerontocracy besieged by a youth rebellion. America's leaders are old - very old. The average age in Congress has never been higher, and our national leaders are all approaching 80...Americans 55 and up account for less than one-third of the population, but they own two-thirds of the nation's wealth...Americans under the age of 40 are historically well educated, peaceful, and law-abiding. But this impressive resume of conscientiousness hasn't translated into much economic or political power....Young Americans demanding more power, control, and justice have veered sharply to the left. This lurch was first evident in the two elections of Barack Obama, when he won the youth vote by huge margins. But upon closer examination, the Democrats aren't really the party of the young - or, for that matter, of social-justice leftists. In the most sophisticated poll of the Iowa caucus, Joe Biden polled at 2 percent among voters under 30, within the margin of error of zero. Bernie Sanders, by contrast, leads all candidates among voters under 30 and polls just 5 percent among voters over 65....It might be most useful to think about young progressives as a third party trapped in a two-party system.....This group's support for Medicare for All, free college, and student-debt relief is sometimes likened to a 'give me free stuff' movement....'This is only the halfway point of an epochal change in Western politics following the Great Recession,' Keir Milburn says. The far right has responded with calls for xenophobic nationalism to preserve national identity, while the left has responded with calls for social democracy to restore socioeconomic justice. Assuming Milburn's analysis is correct, the young progressive movement will have to shed its first adjective in order to gain power. In 2016, voters older than 40 accounted for nearly three-fifths of all primary voters. It is impossible to win a national election by running a campaign of generational warfare that runs counter to, or directly indicts, a majority of the electorate. One way or another, America’s third party will have to grow up."
The Crisis of 2020 -Roach/Project Syndicate
"It doesn't take much to spark corrections in vulnerable economies and markets, and big shocks to highly vulnerable systems are a recipe for crisis...Predicting the next crisis - financial or economic - is a fool's game. Yes, every crisis has its hero who correctly warned of what was about to come...But the record of modern forecasting contains a note of caution: those who correctly predict a crisis rarely get it right again. The source of vulnerability that I worry about the most is the overextended state of central-bank balance sheets...which is essentially a failed policy experiment...Steeped in denial, central banks are once again upping the ante on balance-sheet expansion as a means to stimulate flagging economic recoveries....According to the widely cited metrics of Nobel laureate economist Robert Shiller, equity prices relative to cyclically adjusted long-term earnings currently are 53% above their post-1950 average and 21% above the post-crisis average since March 2009. Barring a major reacceleration of economic and earnings growth or a new round of Fed balance-sheet expansion, further sharp increases in US equity markets are unlikely....The problem also lies in weak real economies that are far too close to their stall speed. The International Monetary Fund recently lowered its estimate for world GDP growth in 2019 to 3%....In such a vulnerable world, it would not take much to spark the crisis of 2020...Three 'Ps' are at the top of my list of concerns: protectionism, populism, and political dysfunction....The diagnosis of vulnerability needs to be taken seriously, especially because it can be validated from three perspectives - real economies, financial asset prices, and misguided monetary policy. Throw a shock into that mix and the crisis of 2020 will quickly be at hand."
The Key to Solving the Climate Crisis Is Beneath Our Feet -Brown/TruthDig
"The Green New Deal resolution that was introduced into the U.S. House of Representatives in February hit a wall in the Senate, where it was called unrealistic and unaffordable....The problem may be that a transition to 100% renewables is the wrong target. Reversing climate change need not mean emptying our pockets and tightening our belts. It is possible to sequester carbon and restore our collapsing ecosystem using the financial resources we already have, and it can be done while at the same time improving the quality of our food, water, air and general health. Contrary to popular belief, the biggest environmental polluters are not big fossil fuel companies. They are big agribusiness and factory farming, with six powerful food industry giants - Archer Daniels Midland, Cargill, Dean Foods, Dow AgroSciences, Tyson and Monsanto (now merged with Bayer) - playing a major role. Oil-dependent farming, industrial livestock operations, the clearing of carbon-storing fields and forests, the use of chemical fertilizers and pesticides, and the combustion of fuel to process and distribute food are estimated to be responsible for as much as one-half of human-caused pollution....There is a much cheaper and faster way to sequester carbon from the atmosphere that doesn't rely on these corporate giants to transition us to 100% renewables. Additionally, it can be done while at the same time reducing the chronic diseases that impose an even heavier cost on citizens and governments. Our most powerful partner is nature itself, which over hundreds of millions of years has evolved the most efficient carbon sequestration system on the planet....David Perry writes on the World Economic Forum website: 'This solution leverages a natural process that every plant undergoes, powered by a source that is always available, costs little to nothing to run and does not cause further pollution. This power source is the sun, and the process is photosynthesis.'....Perry observes that before farmland was cultivated, it had soil carbon levels of from 3% to 7%. Today, those levels are roughly 1% carbon. If every acre of farmland globally were returned to a soil carbon level of just 3%, 1 trillion tons of carbon dioxide would be removed from the atmosphere and stored in the soil - equal to the amount of carbon that has been drawn into the atmosphere since the dawn of the Industrial Revolution 200 years ago. The size of the potential solution matches the size of the problem....One proposed solution is to transfer the $20 billion in subsidies that now go mainly to Big Ag into a fund to compensate small farmers who transition to regenerative practices. We also need to enforce the antitrust laws and break up the biggest agribusinesses, something for which legislation is now pending in Congress. At the grassroots level, we can vote with our pocketbooks by demanding truly nutritious foods....The bottom line is that saving the planet from environmental destruction is not only achievable, but that by focusing on regenerative agriculture and tapping up the central bank for funding, the climate crisis can be addressed without raising taxes and while restoring our collective health."
12.26.19 - George Bailey Saw The Miracle of Capitalism
Gold last traded at $1,514 an ounce. Silver at $18.00 an ounce.
NEWS SUMMARY: Precious metal prices rose Thursday on momentum buying and a weaker dollar. U.S. stocks rose as record holiday spending boosted the 2019 market rally.
Gold Makes Headway Above $1,500 as 2020 Comes Into Closer Focus -Bloomberg/Yahoo Finance
"Gold firmed up a foothold above $1,500 an ounce as investors positioned for 2020, with post-Christmas gains coming even as global equities inched higher and U.S.-China trade concerns eased. Silver rose along with platinum in what's been a banner year for precious metals. Spot bullion advanced for a fourth day, the best run since October, and headed for the highest close in more than seven weeks. The metal is on pace for biggest annual gain since 2010. The break through $1,500 in the face of new highs in U.S. equities, a rebound in U.S. Treasury yields and a strong dollar 'leads to an assumption that bulls will buy in the New Year, so the market is trying to position ahead of time,' said Tai Wong, the head of metals derivatives trading at BMO Capital Markets. 'It has momentum that is a little mysterious and no one wants to stand in the way.'....Gold is up about 18% this year as investors weigh the benefit of havens amid the to-and-fro of the U.S.-China trade war and a run of central-bank easing. The latest tick higher came even as Donald Trump said Tuesday a deal with Beijing is 'done.'"
George Bailey Saw the Miracle of Capitalism -Wall Street Journal
"Frank Capra's 'It's a Wonderful Life' rose from commercial failure after its 1946 release to Christmas fixture starting in the 1970s. The film tells a story offering insight into how Americans perceive our economy and their role in it....The film's antagonist is the banker Henry Potter (Lionel Barrymore), who epitomizes the Democrats’ caricature of unredeemable capitalism. Peter Bailey (Samuel Hinds) defends capitalism in an often overlooked dialogue when he asks his son George (Jimmy Stewart) to join his building-and-loan business. George dreams of adventure and wealth and wants no part of 'this business of nickels and dimes and spending all your life trying to figure out how to save 3 cents on a length of pipe.' His father, being older and wiser, responds: 'I feel that in a small way we are doing something important. Satisfying a fundamental urge.'....What the Baileys' penny pinching accomplished in moving Bedford Falls families out of Mr. Potter's slums has been achieved by real-life Baileys throughout our nation's history. Those who were able to save pennies enriched all mankind. Henry Ford saved pennies and put America on wheels, Thomas Edison cheaply electrified the world and Sam Walton's cost savings brought quality goods to working-class families at prices they could afford....Peter Bailey's insight reflects a vision originating in the Enlightenment, which set people free to promote their interest, and in the process, through Adam Smith's invisible hand, promote the interests of mankind....Capitalism alone respects life's greatest gift: the freedom to choose how you live your life, where you discover meaning, and what you sacrifice for...The film's rebirth suggests that when the Baileys of America fully understand the choice they face, they will choose the hard work and fulfillment of economic freedom over the economic suicide of socialism."
How It's a Wonderful Life went from box office failure to Christmas classic -The Independent
"Before James Stewart was sent off to fight in the Second World War, he was one of Hollywood's biggest movie stars. He'd appeared in 28 films, had been nominated for an Oscar for Mr Smith Goes to Washington, and even won one for Best Actor a year later for The Philadelphia Story. He was riding high. But after spending three years fighting the Nazis in the US Air Force, the 37-year-old returned home in 1945 to find that everything had changed. His contract with MGM had run out, his agent had left the movie business, and he was suffering from what would later be recognized as post-traumatic stress disorder. Capra - who had directed Stewart twice before, including on Mr Smith Goes to Washington - wanted to pitch a film called It's a Wonderful Life....Stewart plays George Bailey, a young man with dreams of 'shaking off the dust of this crummy old town', becoming an architect, and traveling the world. But, gradually, he feels the walls of Bedford Falls closing in on him. Driven to the brink of suicide after a lifetime of sacrificing his own dreams for others, Bailey is visited by an angel called Clarence, who shows him what the world would have been like without him. 'Each man's life touches so many lives,' says Clarence. 'When he isn't around, he leaves an awful hole, doesn't he?'....'I'm not a praying man,' Stewart says, 'but if you're up there and you can hear me, show me the way. I'm at the end of my rope. Show me the way, God.' As he rubs a clenched, trembling hand against his mouth, he starts to cry. That moment, which actor Carol Burnett later described as 'one of the finest pieces of acting anyone has ever done on the screen', wasn’t in the script. 'As I said those words' Stewart said in 1977, 'I felt the loneliness, the hopelessness of people who had nowhere to turn, and my eyes filled with tears. I broke down sobbing. That was not planned at all.' By the time the film was complete, almost everyone involved was convinced of its inevitable success. 'I thought it was the greatest film I ever made,' said Capra. 'Better yet, I thought it was the greatest film anybody ever made.' The world didn’t agree. When it opened in 1947, It's a Wonderful Life fell well short of breaking even....The film placed 26th in box office revenues for the year. 'By the end of 1947,' said Stewart, 'the film was quietly put on the shelf.' For a few decades, that's where it stayed. But then, slowly and surely, the film was reassessed....Republic Pictures, who owned the film's copyright, had such little faith in it that they failed to renew the rights for a second term in 1974. American television channels, grateful for the free content, started showing it on repeat...It's a Wonderful Life has hardly been off TV and film screens since, and has come to be considered one of the greatest films Capra ever made...'The movie simply refused to stay on the shelf,' Stewart said. 'Those who loved it, loved it a lot, and they must have told others. They wouldn’t let it die any more than the angel Clarence would let George Bailey die.'"
The Future's So Bright, I Gotta Wear Shades -P.J. O'Rourke/American Consequences
"Predictions often tell you more about the predictor than the predicted. There's a fine line between making prognostications and drawing up a wish list… And I'm going to cross it. No, I can't tell you what's going to happen in the 2020s...The future always contains a large measure of 'unknown unknowns.' My predictions may not be useful, but at least they're cheerful instead of just right or wrong. Thus, my forecast for the next decade is… sunny weather! Starting with climate change… It's happening. But what if it turns out to be a good thing? I live in rural New Hampshire. We could use a month less of winter. In fact, we could use six months less. True, rising sea levels may put New York and Los Angeles under six feet of water… But let's accentuate the positive - New York and Los Angeles under six feet of water. And global warming may make Iraq, Iran, and Saudi Arabia too hot to be inhabited. Bonus. The cultural climate will change, too. The social media fad will pass. One day we'll all wake up thinking, 'Whose bright idea was it to put every idiot in the world in touch with every other idiot?' Facebook, WhatsApp, WeChat, and Instagram will be the mood rings, Nehru jackets, Cabbage Patch dolls, Pet Rocks, hula hoops, and attempts to stuff a record number of people into a Volkswagen Beetle of the 2020s...As a result, Big Tech will go the way of the Big Three automakers, and Michael Moore's 2029 feature film will be about lives of economic desperation in Cupertino, California. Speaking of automakers, the self-driving car will turn out to be a flash in the pan. By the time self-driving car software gets smart enough to know how to negotiate America's traffic jams, it will be smart enough to know that only an idiot wants to negotiate America's traffic jams. The self-driving car will refuse to leave your driveway. A great excuse to - always - work from home!....Mike Bloomberg was accused of attempting to buy the 2020 U.S. presidency. In 2024, he actually does…although he only has to pay $9.95 because that's all the office is worth after the Democrats get done trashing it - one way or another."
12.24.19 - How Congress & the Fed Stole Christmas
Gold last traded at $1,502 an ounce. Silver at $17.80 an ounce.
NEWS SUMMARY: Precious metal prices rose sharply Tuesday amid weak economic data and trade tensions. U.S. stocks backed off from recent highs in a shortened Christmas Eve session.
Gold set for best year since 2010 -Yahoo Finance
"Gold prices are set for their best year of gains since 2010, as global trade tensions have spooked markets and sparked a rush for the 'safe haven' asset...Analysts said weaker data on the US economy had sparked the rally. Data on Monday showed growth in new orders for key capital goods production almost grinding to a halt, according to Reuters. Uncertainty remains high over the US-China tariff war, despite recent announcements of progress towards an agreement by both sides. 'We are still not 100% clear if the 'phase one' deal will go through or not, it has not been signed yet,' Stephen Innes, a market strategist at AxiTrader, told Reuters. 'We then pivot to 'phase two' that suggests you need some gold, because we don't know what the next phase is all about, how contentious of a deal that is going to be.' He added that concerns remained about how big of a toll the current Chinese tariffs hitting US firms would continue to impose on the US economy in 2020. The tensions over the past year have rattled investors. Despite more recent stock market recoveries, gold remains on track for its best year in nine years, up 16%."
Christian and Jewish congregations share seasonal holiday customs -Pittsburgh Post Gazette
"The pews of Calvary Episcopal Church in Shadyside were filled on Sunday morning for one event that happens every year, to be followed by one it had never hosted before. The usual: Since it was the fourth Sunday of Advent, the one closest to Christmas, the church hosted its annual pageant in the historic Gothic sanctuary, where children who were dressed as Mary, Joseph, shepherds, angels and wise men re-enacted the story of the birth of Jesus...The new: Joining the Calvary congregants in the pews were numerous guests from Tree of Life / Or L'Simcha Congregation, who then returned the courtesy. Members of the synagogue afterward hosted a party celebrating Sunday's start of Hanukkah, serving up signature foods of the holiday such as potato pancakes and jelly doughnuts, along with songs about dreidels and more...It was an interfaith exchange that might happen between any two Jewish and Christian congregations....Alan Hausman, a vice president at Tree of Life, said the two congregations formed a fast bond. 'The reality is, everyone should share like this, so we all learn to get along and learn about each other...' he said....Rabbi Myers said there was much familiar in the church's liturgy, such as prayers and Scriptures rooted in Jewish tradition. 'So you see that there's so much more we have in common with each other,' he said. 'Let's work on those commonalities to guide future choices that we make.'"
The IRA Bait and Switch -Editorial Board/Wall Street Journal
"The trouble for retirement accounts begins on page 643 of Congress's behemoth spending bill, under the always ominous heading: 'Title IV - Revenue Provisions.' That’s where lawmakers upended the meticulous estate planning of who knows how many Americans. Soon many people who inherit an Individual Retirement Account will be required to empty it within 10 years. Under the old rules, an heir - say, a 5-year-old grandchild - could stretch the required distributions over his lifetime. That meant longer tax-free growth to build family wealth. Smaller distributions also could prevent the heir from vaulting into a higher tax bracket. No more. The new rule is 10 years, with exceptions for spouses, minor children and heirs who are disabled or chronically ill....The provisions at issue here are part of the Secure Act, which was a 124-page bill before being wrapped into the spending package. Some of its changes to retirement rules are modest updates. The age limit on contributing to a traditional IRA will be eliminated. Mandatory distributions will start at 72, not 70½. Given longer lifespans, these are prudent tweaks. The rub is that they reduce revenue. To help pay for the bill, Congress killed the 'stretch IRA' for heirs....Changes should be gradual, with grandfather clauses. In its hurried Christmas spending spree, Congress has shown how carelessly it is willing to break its end of the bargain. Today stretch IRA investors and heirs are being betrayed."
How Congress & The Fed Stole Christmas -Paul/Zero Hedge
"The bickering over impeachment did not stop the president and Congress from coming together last week to avert a government shutdown by passing a 1.4 trillion dollar spending package....Both bills were unveiled last Monday afternoon. The bills passed the House on Tuesday, so only the House leadership and the members of the Appropriations Committee (and their staffs) who helped write the over 2,000-page deal had any idea what was in the bills. The modern practice of funding the government via gigantic omnibus bills that are rushed into law puts the growth of government on autopilot. Meanwhile, the Federal Reserve continues pumping billions into the repurchasing market. When the Fed began injecting money into the market in September, it said intervention was a temporary measure to address a short-term liquidity shortage. Three months later, the Fed is not only continuing to bail out the repurchasing market, it is preparing for other bailouts. This is further evidence that we are on the verge of another Fed-created economic crisis....The Federal Reserve's manipulation of interest rates depreciates the dollar's value, enabling the growth of the welfare-warfare state while enriching the insiders who receive the new money before prices rise. The brunt of dollar depreciation is felt by middle- and working-class Americans whose paychecks do not keep up with the rising cost of living...Auditing and ending the Fed should thus be a top priority of those concerned about rising income inequality and poverty."
Swiss America will be closed Wednesday for Christmas. Happy Holidays from our family to yours!
12.23.19 - Inside China's Plan to Become No. 1
Gold last traded at $1,487 an ounce. Silver at $17.49 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying in thin, pre-holiday trading. U.S. stocks rose after China said it will cut import tariffs on a wide range of goods.
Money managers hike bullish gold positioning -Kitco
"Large speculators rebuilt bullish positioning in gold futures during the most recent reporting week for data compiled by the Commodity Futures Trading Commission (CFTC)....The commission issues two reports each Friday - a so-called 'legacy' report and a 'disaggregated' report, started in 2009 and meant to offer more detail. The disaggregated report shows that in the week to Dec. 17, money managers' net-long position rose to 201,721 futures contracts from 183,648 the week before....'With central banks keeping interest rates low, we are seeing gold buying on expectations we will get more demand in the New Year,' said Phil Flynn, senior market analyst with at Price Futures Group. '“Some people are also using it as a hedge against a rising stock market.' He explained that they also are looking at gold as a safety play in case stocks suddenly fall sharply from their recent record highs."
Keeping Stock Market Returns In Perspective -Global Macro Monitor
"We just want to pass on some data to keep this year's stock rally in perspective. We are seeing a lot super giddy behavior out there as the S&P500 makes a new all-time high but…wait for it…at record high valuations by almost any measure....We are back to the '“old school' of buying low and selling high, or selling high and buying low though we do put on an occasional trade. Buying high and trying to sell higher, aka the 'greater fool theory' is too risky in an algo driven market."
"The data show that the S&P500 index is up 28.50 percent this year, 29.44 percent annualized and up 37 percent from the 2018 Christmas Eve closing low. But… up only 7.85 percent on an annualized basis from the September 2018 local high and just 6.21 percent annualized from the January 2018 local high. The upshot here is all about the price points of your buys. We just can't see how buying the indices at today's levels is going to make you much money over the next, say ten years...The S&P500 is up an annualized 12.70 percent since President Trump took office versus an annualized 13.83 percent return for President Obama's entire two terms."
Inside China's Plan to Become the World's Leading Economy -CNBC
"China is on the cusp of keeping a big promise - a vow to double its GDP and income in a decade and take the country to the forefront of the global economic power structure....The country now seems on a inexorable path to No. 1. China has climbed to No. 2 in the world, with a GDP of $13.1 trillion that, while still trailing the U.S., keeps getting closer. Forecasters expect that growth just north of 6% in 2020 will get to the stated goal of doubling the economy from 2011-20....Growth peaked at 14.2% in 2007 but has declined to below 7% annually each year since 2015, according to World Bank figures....'Going forward, China is going to continue to be very competitive,' said Michael Yoshikami, founder of Destination Wealth Management. 'China is still going to be a global player. But it's a matter of managing expectations relative to what you think is going to happen.' 'The average person believes that the trade tariffs are hurting,' Yoshikami said. 'Inflation is up. The cost of basic foodstuffs has gone up 10% to 15%. The cost of pork has gone up 100%. So you literally have people changing their diet because they simply can't afford the product anymore.'....But for Yoshikami, the picture is still a bit cloudy as some of the more immediate issues remain largely unresolved. 'Investing in China is a dangerous game, because they are in between being an emerging market and a developed market,' he said. 'I'm not sure the valuation is worth it at this point.'"
President Trump Is Impeached. Or Is He? -Dershowitz/Wall Street Journal
"Suddenly, impeachment can wait. Speaker Nancy Pelosi said Thursday she'll delay transmitting the two House-approved articles to the Senate, in an obvious ploy for partisan advantage. For anti-Trump legal scholars Noah Feldman and Laurence Tribe, that has created a Schrodinger's Cat scenario. They disagree on whether President Trump has been impeached at all. Mr. Feldman says no: 'If the House does not communicate its impeachment to the Senate, it hasn't actually impeached the president.' Mr. Tribe says an affirmative vote on an article of impeachment is sufficient to impeach - but he also claims it's proper to leave it at that. By declining to transmit the articles of impeachment, he argued in an op-ed that Mrs. Pelosi evidently found persuasive, the Democrats would get a win-win. Mr. Trump would carry the stigma of impeachment and be denied the opportunity to erase it via acquittal. Messrs. Feldman and Tribe are both wrong. Mr. Tribe errs in asserting that the House can deny an impeached official a trial. Mr. Feldman errs in denying that the approval of articles of impeachment is sufficient to constitute an impeachment. The Senate need not wait for the articles to be 'transmitted.' The Constitution grants the House the 'sole power of impeachment,' and the Senate the 'sole power to try all impeachments.' Now that the House's job is done, it is up to the Senate to schedule a trial and make the rules for it. My view - which I suspect much of the public shares - is that Mr. Trump was impeached by a partisan vote and deserves to be acquitted by a partisan vote. The representatives who impeached him along party lines after devising partisan rules of inquiry have no principled argument against a party-line acquittal."
12.20.19 - Crazy Won't Beat Trump -Noonan/WSJ
Gold last traded at $1,479 an ounce. Silver at $17.16 an ounce.
NEWS SUMMARY: Precious metal prices traded steady Friday on a firmer dollar. U.S. stocks reached fresh record highs as investors perceived the year ending with easing geopolitical risks.
The Worst Global Depression is Nigh -Gold Switzerland
"Here we are at the end of the second decade of this century. In the last twenty years we have seen the collapse of a tech bubble and we have experienced the implosion of fake debt aka (also known as) the sub prime debt collapse...But I doubt they will be third time lucky. This time, printing unlimited free money will be recognized for what it is, namely Modern Money Trickery that can't fool the world a third time in the 2000s. The effect of that will be that buying the dips will fail this time because stocks will soon start their journey to the bottom which is likely to be at least a 75% fall but more probably a 95% fall in real terms....Fundamentally and technically we are now at the end of the end of this incredible bull market. It is ending with a bang and does not have far to go. The market could top at any time between the second half of December and first half of January....The world will soon experience the start of the most dramatic bear market in history. It could start slowly but is more likely to quickly accelerate to ever lower lows with the normal fake-out rallies that will suck investors in before the next leg down. When stocks turn down, precious metals will surge. Gold is already up 15-20% in 2019 depending on the currency...Once the metals turn up, silver will be gold on steroids. The gold silver ratio will start crashing from 87 currently down to 30 initially where it was in 2011. This means that silver will go up three times as fast as gold....So 2020 seems to be the very early beginnings of the worst global depression that the world has ever experienced. It will be devastating for everybody. We can all prepare financially by holding some physical gold and silver which is the best insurance anyone can buy against what is coming."
The Strongest Seasonal-Advance In Precious Metals Begins Now -Zero Hedge
"The turn of the year will soon be here - an occasion to review the past year and make plans for the new one. Many people are doing just that - and their behavior is creating the strongest seasonal rally in the precious metals markets. First let us look at the seasonal chart of silver. The chart shows the average moves in silver prices in the course of a calendar year over the past 69 years. The horizontal axis shows the time of the year, the vertical axis depicts price information. With the help of this chart, seasonal trends can be identified at a glance. As the chart illustrates, on average silver tends to post the by far strongest price gains early in the year until peaking close to the end of February. This rapid advance actually begins in mid December (blue arrow). Thereafter the price typically retreats again. Thus silver makes a move in excess of its total annual seasonal gain over the coming two months! The strong seasonal advance is very likely driven by purchases from the manufacturing industry. Many industrial silver processors/users place the bulk of their purchase orders at the beginning of the new financial year once annual planning has been completed and new orders can be booked."
One Nation Tracked, Zero Privacy -New York Times
"Every minute of every day, everywhere on the planet, dozens of companies - largely unregulated, little scrutinized - are logging the movements of tens of millions of people with mobile phones and storing the information in gigantic data files. The Times Privacy Project obtained one such file, by far the largest and most sensitive ever to be reviewed by journalists. It holds more than 50 billion location pings from the phones of more than 12 million Americans as they moved through several major cities, including Washington, New York, San Francisco and Los Angeles....After spending months sifting through the data, tracking the movements of people across the country and speaking with dozens of data companies, technologists, lawyers and academics who study this field, we feel the same sense of alarm....It doesn't take much imagination to conjure the powers such always-on surveillance can provide an authoritarian regime like China's. Within America's own representative democracy, citizens would surely rise up in outrage if the government attempted to mandate that every person above the age of 12 carry a tracking device that revealed their location 24 hours a day. Yet, in the decade since Apple's App Store was created, Americans have, app by app, consented to just such a system run by private companies....Today, it's perfectly legal to collect and sell all this information. In the United States, as in most of the world, no federal law limits what has become a vast and lucrative trade in human tracking....The companies profiting from our every move can't be expected to voluntarily limit their practices. Congress has to step in to protect Americans' needs as consumers and rights as citizens. Until then, one thing is certain: We are living in the world's most advanced surveillance system. This system wasn't created deliberately...The greatest trick technology companies ever played was persuading society to surveil itself."
Crazy Won't Beat Trump -Noonan/Wall Street Journal
"The Democrats think they've just had a big triumph. The president's been impeached. But Republicans see themselves as gaining the upper hand. The House couldn't lift the event into an air of historical gravity. They dressed in dark clothes and never smiled, as at a wake, but the deceased was making kicking sounds from the casket and appeared to be tweeting, so it was incongruous. The revealing moment was when Speaker Nancy Pelosi announced the first article had passed and some Democrats apparently began to clap....What felt like news came the day after, when Senate Majority Leader Mitch McConnell, who throughout the crisis had been relatively quiet and oblique, and who is never interesting by accident, suddenly became fiery. 'The Senate exists for moments like this,' he said, rather menacingly. 'Transient passion and violent factionalism' have swept the House....A Quinnipiac poll this week shows support for President Trump's impeachment and removal from office has gone down since October, to 45%....Here is how the Democratic party's lurch left has improved the president's position. It makes the 2020 race not 'Trump vs. the Democrat,' a race he can lose, but 'Trump vs. Lefty Madness,' which he can win. The left is turning Donald Trump into a savior. He was not a savior before AOC. He was not a savior before Elizabeth and Bernie said they'd ban your health insurance. But the past year has allowed the president's supporters, and independents, to see him that way....After so disastrously branding their party throughout 2019, is it possible for Democrats to turn it around in 2020?"
12.19.19 - This Impeachment Folly -WSJ
Gold last traded at $1,484 an ounce. Silver at $17.14 an ounce.
NEWS SUMMARY: Precious metal prices inched up Thursday in quiet, pre-holiday week trading. U.S. stocks rose as investors looked past the news of President Trump's impeachment as well as mixed U.S. economic data.
Gold edges up after Trump’s impeachment, as traders await details on China-U.S. trade pact -Marketwatch
"Gold prices climb on Thursday in the wake of President Donald Trump's impeachment by the U.S. House of Representatives, but price moves are modest as benchmark bond yields push higher amid an easing of U.S.-China trade tensions. 'The gold market has lacked definitive direction this week as safe haven issues have been moderated at the same time that some signs of demand have surfaced, thereby limiting the market in both directions,' analysts at Zaner Metals wrote in daily note. 'Certainly, the potential for flight to quality buying from the U.S. impeachment remains in play'....Some gold bulls say that bullion's price has been kept afloat due to some lingering anxieties around a trade deal between Beijing and Washington which has been announced but hasn't been signed by the parties yet...'There’s a sense of nervousness and impatience among investors as until the agreement has been signed and sealed, the risk that the deal could still fall through will persist,' wrote Raffi Boyadjian, senior investment analyst at brokerage XM."
This Impeachment Folly -Wall Street Journal
"House Democrats voted Wednesday evening to impeach Donald Trump but, media high-fives aside, what have they accomplished? They have failed to persuade the country; they have set a new, low standard for impeaching a President; Mr. Trump will be acquitted in the Senate; and Democrats may have helped Mr. Trump win re-election. Congratulations to The Resistance. Democrats Nancy Pelosi and Jerrold Nadler have said in the past that impeachment must be bipartisan to be credible, and they have achieved their goal - against impeachment....On the substance, Democrats have taken an episode of Mr. Trump's reckless foreign-policy judgment and distorted it into broad claims of bribery and extortion. The evidence of weakness is that their own articles of impeachment include no allegations of specific crimes. Instead they watered them down to 'abuse of power' and obstruction of Congress....Democrats are impeaching Mr. Trump not for Ukraine, but because they believe he is simply unfit to be President...Where is that in the Constitution?....As for the politics, Mr. Trump is now likely to be the first impeached President to run for re-election. Democrats clearly hope the Scarlet 'I' will work against him, but Mr. Trump will tout the partisan vote as illegitimate and his Senate acquittal as vindication.... If Mr. Trump wins re-election, the folly of this impeachment will be a major reason."
Trump's China deal won't win many voters -Yahoo Finance
"President Trump called his new trade deal with China 'tremendous' and 'phenomenal.' It's not. The '“phase one' deal - still not finalized - may reduce the threat of new tariffs and other protectionist measures that hurt economic growth. But it leaves in place most of the new tariffs Trump has imposed on Chinese imports....China has been cagey about what it actually agreed to, and may never ramp up purchases of U.S. food, energy and other exports to the record levels Trump's negotiators promised. A key factor here is how much China wants to help Trump get reelected in 2020. If they'd prefer to roll the dice on a Democratic successor, they could string Trump along, do the bare minimum and then do something to embarrass Trump next fall, right before the election....Oxford Economics warned clients in mid-December that 'trade war re-escalation is a key market threat.' The forecasting firm pointed out there have been several other instances when apparent breakthroughs evaporated, and both sides retaliated with tougher trade impediments. 'Equity markets appear particularly vulnerable,' the forecasters wrote, arguing that investors have not priced in the substantial risk of another impasse. As a candidate in 2016, Trump said he'd go after China in order to bring back jobs that have left the United States. There's no sign that will ever happen."
All tulips must wilt -Techcrunch
"It's a bad day in the world of cryptocurrency. After recovering some during the summer, the value of bitcoin and other cryptocurrencies are sharply down over the last several weeks. Looking back a month, bitcoin was worth around $8,500 a coin. Today it's worth nearly $2,000 less. None of this will phase bitcoin advocates. Peruse any crypto-focused forum and the narrative you'll find is that bitcoin is merely on sale for a minute, and will rise again later. That may be true! Even if the impending 2020 halvening may not have a bullish impact. As 2019 comes to a close, however, things aren't super great for bitcoin and its friends. And thus in the immortal words of The Alan Parsons Project: What goes up must come down, What must rise must fall, And what goes on in your life, Is writing on the wall!"
12.18.19 - Gold Headed to Biggest Rise in 9 Years
Gold last traded at $1,479 an ounce. Silver at $17.00 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday amid political and economic uncertainty. U.S. stocks traded slightly higher despite disappointing FedEx earnings, ahead of Trump impeachment vote.
Gold prices look to post biggest annual rise in 9 years -Marketwatch
"Gold prices look to end the year more than 15% higher, on track to post their biggest annual climb in nine years. 'Gold has seen considerable safe haven buying from investors concerned [over] low and negative yields in the bond market and fearing a possible downturn in equities,' said George Milling-Stanley, chief gold strategist at State Street Global Advisors. Gold exchange-traded funds have also been 'feeling the benefit of strategic asset allocation type buying by institutions and individuals.' 'Ongoing uncertainties, both macroeconomic and geopolitical have provided support for both types of buying,' he said....Helped by Federal Reserve Chairman Jerome Powell saying in June that he would 'make a mid-cycle adjustment and give the markets the interest rate cut they had been clamoring for, gold rapidly rose to over $1,550 an ounce by September,' said Milling-Stanley....In the decade from early 2001 to late 2010, prices for the metal climbed from $250 an ounce to $1,250 an ounce, for an 'average gain of $100 per year,' said Milling-Stanley...'Speculative activity' drove prices up by $500 in just nine months in 2011, then as that speculative interest waned, gold prices fell back to the $1,250 level in the spring of 2013....Milling-Stanley said it's 'possible' for gold to see similar moves to the ones it's seen in the past decade."
'Say a PRAYER': Trump pleads innocence hours before impeachment -Politico
"Donald Trump began one of the most consequential days of his presidency with a national call to worship, again pleading absolute innocence and urging Americans to turn to their faith ahead of his imminent impeachment by the House of Representatives. 'Can you believe that I will be impeached today by the Radical Left, Do Nothing Democrats, AND I DID NOTHING WRONG!' Trump tweeted Tuesday. 'A terrible Thing. Read the Transcripts. This should never happen to another President again. Say a PRAYER!' The president's post came less than two hours before lawmakers were scheduled to convene and begin the day’s historic proceedings. A full House vote on articles accusing Trump of abusing his office and obstructing Congress is expected to take place in the evening hours and fall sharply along party lines, making Trump the third U.S. president ever to face the chamber's ultimate punishment. Trump will likely be addressing a 'Keep America Great Rally' in Battle Creek, Michigan, when the House approves the charges against him....'I think what we're seeing today is a culmination of what the Democrats' obsession with impeaching this president has come to,' Rep. Doug Collins said on 'Fox & Friends,' adding that his colleagues on the other side of the aisle are 'infatuated with impeding this president, and impeachment is the only way they feel they can do it.' 'It's a sad day. It's a tragic day,' Rep. Liz Cheney, the third-ranking House Republican lawmaker, also told Fox News. 'And I think the Democrats have got to understand the danger that they're creating here and the damage they're doing to the Constitution and to the republic.'
Euphoria sweeps across Wall Street. How long will it last? -CNN Business
"What a difference a year makes. Last year, recession fears set off Wall Street's worst December since the Great Depression. Now, US stocks are capping off a blockbuster year with yet another dose of extreme optimism....Recession fears have receded for three primary reasons: The US-China trade war is cooling off, the global economy is showing hints of bottoming and central banks are coming to the rescue with easy money....The CNN Business Fear & Greed Index is flashing 'extreme greed,' a reversal from the 'extreme fear' gripping markets a year ago. The gauge of market sentiment is nearing the highest levels of the past three years....Of course, there is no guarantee this newfound optimism will prove correct. Just as recent recession fears were overdone, this bullishness may be exaggerated...the tech sector is now sporting the highest price-to-earnings ratio since November 2007, according to Bespoke Investment Group....The Fed is injecting vast amounts of money into the financial system. The Fed's purchases of Treasury bills, aimed at easing stress in the overnight lending market, has ballooned the size of its balance sheet by more than $300 billion since early September...'Such liquidity is pumping up financial valuations,' Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, wrote in a note on Monday. But the Fed can't inject cash into the system forever. Shalett, who flagged the potentially 'dangerous dynamics' of the Fed moves, expects the balance sheet expansion to end in the first quarter. At which point, the market will be flying solo."
China won't rush into agriculture purchases under phase one deal -South China Morning News
"Chinese buying of American farm products will be determined by how competitive they are, and not just by estimates laid out in an initial trade accord, according to a US government trade adviser. While China has pledged to buy at least US$80 billion in US produce in the next two years, according to US Trade Representative Robert Lighthizer, purchases probably will be attuned to market conditions, said Tom Kehoe, an adviser to the US Department of Agriculture and Lighthizer. 'These are businesspeople,' Kehoe said. 'They are going to have to be in a competitive situation. Otherwise, they are not going to buy it.' Kehoe’s comments underline the ongoing challenges for US growers competing in crop markets with products from Brazil and Argentina, where currencies have weakened against the US dollar....'There are safeguards built in [for both countries] to live up to what they’ve promised,' and those details will be released in the 'next few days', he said. 'Pretty much all [agriculture] markets are involved: most of the grains, beans, pork, some seafood.'"
12.17.19 - $1,700 Gold by March -Forbes
Gold last traded at $1,481 an ounce. Silver at $17.08 an ounce.
NEWS SUMMARY: Precious metal prices consolidated Tuesday in preparation for the next leg upward. U.S. stocks traded mixed as investors digested trade issues and concerns about overbought stocks.
Gold Headed To $1,700 By March, Analysts Say -Forbes
"Get ready for a fast and sizable pop in gold prices. The cost of buying one troy ounce of the metal will likely rise by around 15% over the next couple of months, analysts say. The reason gets to the heart of how prices of financial assets move over time. They go up, and they go down in somewhat predictable patterns, at least for those who know. In the case of gold, the price fell from $1,546 a troy ounce in September down to $1,455 on November 12...Since then, the gold price has mostly moved broadly sideways, but is now beginning to turn upwards once again and should continue to rally over the next few weeks. 'Gold got very overbought into late August / early September, and since then it corrected its overbought reading,' states a recent report from Wolfe Research by John Roque and his colleague Rob Ginsburg. In this case, the two authors say the 'turn' is on, and the next short-term move will likely see a surge of around 15% over the next 75 days or so....If history is a guide, then expect gold prices to rally 14% to $1,679 an ounce by the end of February."
You call this a trade deal? -Tonelson/Marketwatch
"Phase One deal with China fails 'The Art of the Deal' test. OK, let's assume that something deserving the name 'U.S.-China trade deal' has been reached - even one dubbed 'Phase One' or 'preliminary.' Deep doubts would remain justified about whether it can possibly serve American interests....No useful accounts have been released of what China will actually buy from the United States (though it's interesting that President Donald Trump has included manufactures on the list - not simply agricultural products and other commodities), and by when the Chinese will buy these goods. Special bonus - shortly after noon, the President said he 'thinks' China will hit $50 billion in U.S. agriculture imports. Over what time period? Heaven only knows...There's absolutely nothing from the administration so far about 'structural reforms and other changes to China's economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.'....If the United States is not recognized as sole judge, jury, and court of appeals when dealing with Chinese compliance, history teaches that will be the case that the agreement literally will be worthless....In short, this is no time for Trump to reach any deal with China - whatever phase it's called. In fact, it's the time for the president to keep the pressure on."
The Global Economy's Luck May Run Out -El-Erian/Project Syndicate
"This year is ending on a relatively positive note, especially when compared to the same time last year. There is hope of a global growth pickup, trade tensions have lessened, and central banks have reaffirmed that that they will maintain ultra-low interest rates and continue to provide ample liquidity. Financial volatility is subdued, and there are reasonable expectations of solid investor returns across many asset classes. As tempting as it is to dwell on current financial and macroeconomic conditions, doing so risks obfuscating a key element in the outlook for the future. There is a curious contrast between the relative clarity of expectations for the near term and the murkiness and uncertainty that comes when one extends the horizon further - say, to the next five years. Many countries are facing structural uncertainties that could have far-reaching, systemic implications for markets and the global economy....The US is entering a tense and divisive election year. Germany, Italy, and Spain are in the midst of difficult political transitions. The EU is dealing with Brexit and other regional divisions. And China's government is trying to consolidate power in the face of slowing growth and continuing protests in Hong Kong. The main worry - one that too few market participants have spotted - is that over the next five years, global economic and market conditions may need to deteriorate nearer to crisis levels before national, regional, and multilateral political systems muster an adequate response. Fortunately, we are now in a period when action could be taken to prevent the worst-case scenario from becoming a binding reality."
Morgan Stanley: It's Fair To Say The Market Rally Is Due To The Fed's QE4 -Zero Hedge
"Morgan Stanley's Michael Wilson, who in 2018 was the most bearish and accurate of all sellside analysts, fought the Fed in 2019 and the Fed won. One week ago we quoted from Wilson's latest weekly report, in which the now quasi-bullish strategist explained why he had grudgingly turned bullish, saying 'we continue to see the 3 largest central banks in the world expand their balance sheets at the rate of $100B per month ($60B from the Fed, $25B from the ECB and $15B from the BOJ).'....'It's fair to say that [the rally] may be more due to the balance sheet reversal [i.e. 'NOT QE', also i.e., QE 4] than fundamentals since the real signs of bottoming have come from international PMIs rather than the US,' says Wilsom. Having identified the culprit behind the move, Wilson then echoes BofA's Hartnett who as a reminder expects the S&P to hit 3,333 by March 3, saying that the meltup is likely to continue 'with the Fed scheduled to keep expanding its balance sheet by $60B /month through the first quarter' which the MS strategist concludes is 'a powerful positive force that can take stocks well above fair value between now and then.' And 'then' what? Actually ignore that: the real question is just what is the 'fair value' of stocks when one strips away not just QE4, but also QE3, QE2, QE1, and trillions in QE from other central banks. Luckily, the market will be permanently halted long before we will ever find out."
12.16.19 - Negative Interest Rates: The New Normal?
Gold last traded at $1,481 an ounce. Silver at $17.04 an ounce.
NEWS SUMMARY: Precious metal prices traded steady Monday. U.S. stocks rose after the so-called U.S.-China 'phase one' trade deal clears the path for higher stock prices.
Gold stable as investors assess U.S.-China trade deal -Marketwatch
"President Donald Trump and Chinese officials on Friday announced an agreement on a preliminary U.S.-China trade pact. Gold gained ground in Friday's session, however, boosted by a weaker U.S. dollar and a fall in Treasury yields...However, analysts said a lack of detail and other uncertainties could allow gold to find haven-related interest, driving prices higher. 'I do think the bulk of the negative news for gold might be finally out of the way, and the markets seem to be positioning for any disappointment on the U.S.-China trade developments if and when China responds; this could add 1-2% of the upside for gold from current levels,' said Stephen Innes, chief Asia market strategist at AxiTrader, in a note."
Negative Interest Rates Could Be the New Normal -Bonner/Bonner And Partners
"Every generation has its fads and follies… which it takes for Eternal Truth. Diversity… climate change… and a 2% inflation target top today's list. Early adopters believe they are 'progressive.'...They think of themselves as the cutting-edge, liberal-minded innovators that move society forward. And then the next generation laughs at them. TIME magazine has just named Greta Thunberg its Person of the Year. Ms. Thunberg thinks she knows what temperature the Earth should be...As to what the Earth's climate should be, we have no opinion....The financial world, too, has its own claptrap. Central bankers and economists think they know what the consumer price inflation rate should be: 2%. Why 2%? There's no evidence that 2% is better than 3% or that 3% is worse than zero....But let us move along and pause to gawk at another marvel: negative rates. In this Brave New World, many economists think they not only 'make sense,' but that the situation requires them. When savers have to pay for the privilege, they reason, they'll stop hoarding money and begin spending it. Then, the economy will grow faster, people will have jobs, incomes will rise, profits will go up… and we'll all be richer. Our jaw drops open… our breathing stops. Imagine all those generations of idiots that went before us...If they had only known. We shudder to think how much richer they could have been if they had spent all their money rather than saved it...And here's another big plus for negative interest rates: They turn debt into an asset...'The borrower is servant to the lender,' it says in the Bible. But now, with these new miracles of modern finance, it's the lender who must brew the debtor's tea and empty his chamber pot. Negative interest rates? Bring 'em on! Soaring debt? No problem! A debt crisis? Forgetaboutit."
The US-China trade deal leaves a large American deficit and a permanent collision course -CNBC
"Looking at the latest U.S.-China trade numbers, one wonders how the agreement announced last week could lead to an acceptable balance of bilateral trade accounts. China'’s surplus on its U.S. goods trade in the first ten months of this year was $294.5 billion, and amounted to 40% of America's total trade gap. During the same period, Beijing slashed U.S. exports to China 14.5% to $87.6 billion. By contrast, Chinese goods sales to the U.S. were more than four times larger at $382.1 billion. In spite of that, reports indicate that Beijing promised to increase - over the next two years - its purchases of U.S. goods and services by $200 billion....The sad truth is that the U.S. will continue to run huge wealth (and technology) transfers to China financed by America's increasing net foreign debt that will show as net foreign assets on China's books. Other big issues - such as intellectual property protection, forced technology transfers, illegal industry subsidies and exchange-rate management - are appearing as declaratory statements rather than clearly defined legal arguments. It is obvious that political expediency took precedence over an agreement to close the U.S. trade gap with China as a matter of American national security....Investors should watch trade numbers for reliable signs of the real value of last week's agreement."
5G 'can spy on you': Tech will watch you at home -Daily Star
"An inventor has sensationally claimed that 5G technology can be abused to spy on people in their own homes – listening in on conversations and even watching people in the bath. The state-of-the-art technology could revolutionize the speed of mobile phones when it is eventually rolled out. Mark Steele...believes local councils installing the masts are ignorant to the threat they put people under. In an interview with Daily Star Online, the patent writer said 5G waves are the same ones used by self-driving cars and therefore street lights fitted with 5G technology are 'scanners'....Explaining more how he believes microwaves can be abused with 5G, Mark added: 'If you've got Wi-Fi in your home what actually happens is that you have actually got microwave radiation in the environment and I can scan that environment and any disturbance in those microwaves, I can pick that up and I can actually turn that and a digitalization of that into voice recognition....Mark - who acts as a technical advisor to anti-5G group saveusnow.org.uk - has also claimed that he is afraid the waves are damaging to human health."
12.13.19 - Gold Headed to $2,500-$3,000/oz ?
Gold last traded at $1,481 an ounce. Silver at $17.01 an ounce.
NEWS SUMMARY: Precious metal prices rose Friday on safe-haven buying despite a stronger dollar. U.S. stocks fell after China and the U.S. agreed to a phase-one trade deal but investors were skeptical of the outcome.
Gold is going to $2,500, $3,000 an ounce: investment expert -Yahoo Finance
"Wealthy people are stocking up on physical gold, as in bullion, coins and bars, according to a recent note from Goldman Sachs. As a result investors who are bullish on gold say it’s the precious metal’s moment to shine. 'I think gold's going to $2,500, $3,000 an ounce in the 2020s because the climate - the landscape for gold is so hugely supportive,' Paul Schatz, Heritage Capital president, told Yahoo Finance's On The Move....What's interesting this cycle is that it's not just gold ETFs and other abstract investments driving demand for gold but rather people buying actual gold bullion. 'Physical gold seems to really be in... and basically it sounds like rich people are hoarding physical gold, the bullion itself,' said Yahoo Finance's Myles Udland, co-anchor of The Final Round and co-author of Morning Brief...I just think end of the world trades are fun, and it seems like the global rich want the actual thing,' he added. According to Schatz, 'an individual investor should have 5% to 10% in some capacity in precious metals. People who don't trust the markets, don't trust paper will want to buy gold coins."
China Says Deal Agreed, U.S. to Roll Back Tariffs in Stages -Bloomberg
"China and the U.S. agreed on the text of a phase one trade deal that includes the removal of tariffs on Chinese goods in stages, Vice Commerce Minister Wang Shouwen said, as President Donald Trump confirmed that some levies will be reduced and said the next round of talks will start immediately. China will increase imports from the U.S. and other countries, Wang said at a briefing in Beijing Friday. Vice Chairman of the National Reform and Development Commission Ning Jizhe added that the specifics of agricultural purchases would be released later, as the text of the agreement is still under review. The comments were China's first response to a deal signed off by Trump on Thursday that would halt higher tariffs planned for Dec. 15 and represent the first phase in defusing the trade war that’s shaken the global economy....Unfolding along with the trade news on Friday was the House Judiciary Committee's recommendation to impeach Trump."
Stocks, Yuan, Bond Yields Are All Tumbling As Lack Of China Deal Details Worries Traders -Zero Hedge
"A total lack of detail (and growing confusion) at the contents of the phase one US-China trade deal has traders spooked. The Dow is at the lows of the day...Yuan has erased all of yesterday's gains...And Treasuries have erased all of yesterday's losses...Additionally, all ags are dumping as China refused to provide any detail on the size of purchases...It's hardly a surprise, but Axios's Jonathan Swan reports that President Trump specifically objects to the detail in the WSJ story claiming that the US would rollback existing tariffs by half. Allowing such generous rollbacks would sacrifice a lot of leverage for the next round of talks...and neither Trump nor President Xi want to look weak. President Trump just poured cold water on the brightest aspect of his shiny new (reported) trade deal by dismissing claims that prior tariffs will be rolled-back as reported by WSJ yesterday."
Who Can Beat Trump? -Noonan/Wall Street Journal
"Impeachment is a reality show going on in Washington, and everyone knows the outcome, so it's not even interesting. On my way to Waterloo I realized: We're about to have the third impeachment of a president in American history, and the day it happens it's not going to be Topic A in America. It will barely be mentioned at the dinner table. It is a coastal elite story, not a mainland story. The Democratic race is as fluid as it looks. No one, even bright party professionals speaking off the record, knows what to expect. Biden was inevitable, then maybe Elizabeth, maybe Pete's inevitable, but Bernie may be inevitable, and don't write off Joe. But 'Beat Trump' is back. When 2019 began Democrats were thinking that was priority No. 1. Then other things became more important - Medicare for All, climate change, policy. But it feels like Democrats here are circling back to their original desire. 'Who can beat Trump?' is again the most important question. They don't know the answer. They're trying to figure it out....How difficult will it be to beat Mr. Trump? While I was in Iowa the new jobs numbers came out. America has functional full employment. It is a marvelous thing. We're not in any new wars. With peace and prosperity, how can the incumbent lose? The counterargument is that his approval is stuck in the low 40s with peace and prosperity, which tells you everything - he is vulnerable, more than half the country rejects him in what are for him ideal circumstances."
12.12.19 - How to Get Americans to Love Capitalism
Gold last traded at $1,471 an ounce. Silver at $16.89 an ounce.
NEWS SUMMARY: Precious metal prices eased back Thursday on profit-taking amid China trade deal progress. U.S. stocks jumped to all-time highs after President Trump said China and the U.S. were near a trade deal.
How high will gold go? Just watch the central banks -Kitco
"The gold market will be watching closely in 2020 for signs on whether the U.S. Federal Reserve and other major central banks will cut interest rates. As 2019 winds down, gold is up 14% for the year so far, helped in large part by three 25-basis-point rate cuts by the Fed. Spot metal was at $1,484.50 an ounce around mid-morning. A number of banks look for the metal to climb to $1,550 or reach $1,600 in 2020....'When the Fed started cutting rates, gold took off,' said Colin Cieszynski, chief market strategist at SIA Wealth Management. 'It was acting as a hard currency and people were starting to devalue the paper currencies. If the central banks continue to put in stimulus and devalue their currencies, that could be beneficial to gold.'....Suki Cooper, precious-metals analyst with Standard Chartered, was upbeat about precious metals and gold in particular....A large amount of negative-yielding debt around the world creates a favorable backdrop for gold, she said. Standard Chartered looks for the Fed to remain on hold with rates in 2020. Several major banks look for gold to top $1,600. ABN AMRO forecast gold to pull back early in the year, then to bounce as the economy slows in the second half....Cooper expects central-bank buying of gold to remain robust...Chinese demand is expected to improve, she said."
Americans’ Credit Card Debt Poised to Reach 10-Year High -Yahoo Finance
"Americans are projected to fall seriously behind on their credit card bills at the highest rate in a decade as banks push a record number of people to get plastic. The share of credit card borrowers who are at least 90 days past due on their accounts will probably tick up to 2.01% next year, the highest level since 2010, according to a forecast by TransUnion....As lenders sign up more people for credit cards, the newest borrowers are increasingly falling behind on their bills. Accounts opened in recent years have been souring at faster clips than prior years, suggesting that more new borrowers are struggling to keep up with their minimum payments. For instance, 5.4% of credit cards originated in 2018 were delinquent within nine months, up from 4.5% the year before."
U.S. Offers to Slash Existing Tariffs on China Imports and Cancel New Levies -Wall Street Journal
"U.S. negotiators have offered to slash existing tariffs by as much as half on roughly $360 billion of Chinese-made goods as well as to cancel a new round of levies set to take effect on Sunday, according to people briefed on the matter...President Trump wrote in a Tweet on Thursday morning: 'Getting VERY close to a BIG DEAL with China. They want it and so do we!' The tariff-reduction offer was made in the past five days or so, the people said, and in exchange, the U.S. side has demanded that Beijing make firm commitments to purchase large quantities of U.S. agricultural and other products, to better protect U.S. intellectual-property rights and to allow greater access to China's financial-services sector. Should China not carry out its pledges as part of the potential deal, the tariff rates would return to their original levels, a clause known in trade negotiations as a 'snapback' provision....Details of the new U.S. plan emerged as the clock runs out for the two sides to reach an agreement before 12:01 a.m. on Sunday - the date that President Trump has set for tariffs to increase on an additional $156 billion of Chinese goods...The new tariffs set for Dec. 15 would hit roughly $156 billion of imports from China of mobile phones, laptops, toys, clothing and other consumer products. Wary of what they regard as Beijing's poor record on following through on its pledges, U.S. negotiators led by Trade Representative Robert Lighthizer have asked China to commit in writing to some agricultural purchases up front and to agree to a detailed timeline for future purchases....Chinese negotiators led by Vice Premier Liu He have asked their counterparts to not only cancel the planned December tariffs but also to roll back existing levies - a demand that the U.S. had resisted until recently. 'The ball is in China's court now,' said one of the people briefed on the U.S. offer."
How to Get Americans to Love Capitalism Again -Paulson/Bowles/New York Times
"American capitalism is at a serious inflection point. Many Americans, including the two of us, are alarmed by enormous levels of inequality and by declining economic mobility. We are concerned that in many cases American markets are no longer the most competitive in the world. And, we worry that our country's long-term economic strength will slowly deteriorate because of an unsustainable fiscal trajectory that leaves future generations worse off. The solution is not to upend the system. A market-based economy, for all its flaws, is still the best way to achieve broad economic prosperity and to ensure that living standards continue to rise over time. But the answer is not to maintain the status quo, either. Radical change or complete inaction seem to be the only types of solutions that are being debated in today's marketplace of ideas....We see many excellent ideas that are ripe for bipartisan collaboration and that can begin the process of adapting our economic policies so that they work for far more people. First, we must aggressively invest in our human capital. That starts with addressing the supply side of the education market, including investments in community colleges....Universal basic income is not a viable solution...Instead, we should look at more targeted and efficient approaches to encouraging work by supplementing the wages of low- and middle-income Americans, such as expanding the earned -income tax credit or enacting a wage -subsidy program. Finally, we have to confront the uncomfortable truth that our country is on an unsustainable fiscal trajectory. Spending priorities such as education, infrastructure, and high-value research and development are underfunded, while our commitments to entitlements continue to rise indefinitely....Inequality undermines our economic strength and more Americans become disillusioned with the capitalist system that has made upward mobility a pillar of the country's identity since its founding."
12.11.19 - 80% Say Politics Biggest Stressor in Life
Gold last traded at $1,471 an ounce. Silver at $16.72 an ounce.
NEWS SUMMARY: Precious metal prices rose Wednesday on bargain-hunting and a weaker dollar. U.S. stocks traded mixed as investors awaited the Federal Reserve’s latest decision on monetary policy.
Sell the Nasdaq and Buy Gold -Gold Switzerland
"Stock markets are at the end of the end of a secular bull market. The Nasdaq index has gone up 112X since 1973. Once this market turns, the fall can be very rapid. In 2000-2002, the Nasdaq fell 80%. It would be surprising if the coming fall is smaller than the last one. Thus a 95% fall would not be surprising....I am absolutely convinced that the situation today is worse than in 2000 and the bubbles are of course much bigger. Anyone holding onto Nasdaq stocks or any other stocks will see a total destruction of values and wealth in the next few years....When stock markets fall, precious metals will continue their secular bull market which initially started in 1971 with the last leg starting in 2000....The 20-year bull market that started in 2000 has only seen one year with a major correction which was in 2013....We have hardly started the move at this point. When the events I discuss in this article come into play, gold will move at a pace that will surprise everyone. We will see multiples of the current price before the current bull market ends. But remember that physical gold should not primarily be owned for capital appreciation purposes. Above all, we hold gold as the best protection against a rotten financial system and insurance against unprecedented financial, economic and political/geopolitical risk."
"We're Living On Borrowed Time..." -Taggard/Zero Hedge
"Here at PeakProsperity.com, my co-founder Chris Martenson and I have spilled a lot of ink in the ensuing years, warning how QE (aka central bank money printing), stock buybacks, and record low interest rates have pushed the degree of systemic unsustainability to Bizzaro-world levels....The vertical lines (in John Hussman's chart) indicate 'dispersions' which are market conditions Hussman finds are highly-correlated with 'steep and rather abrupt market plunges, often representing the first leg of a more extended collapse'."
"Notice how rarely they have occurred over the past 25 years, and yet they've suddenly increased in frequency of late (the most recent took place on Nov 20th). This is what you would expect to see from a dangerously over-extended system, where prices have been propelled way beyond where they can be sustainably supported. Keep in mind, today's all-time high prices are occurring at a time when: The global economy is in a pronounced slowdown, US corporations are in an earnings recession, The year-long US-China trade war will not be resolved anytime soon, The repo market is signalling something is badly broken in the banking system, Articles of impeachment are being drawn up against the sitting US President.....What we are experiencing right now is a 'time lag' between the collapse of the argument underlying the 10-year bull market and investors' recognition of that. A full decade and some $14 Trillion in newly-printed money later, plus the cheapest interest rates in recorded history, and yet the central banks have not been able to restore growth to the global economy. The experiment has failed....Whatever time we have left, and it may very not be much, is a gift. Use it."
Trade war: US-China deal deadline 'likely to be missed' -South China Morning Post
"A former US government trade official has warned that China and the United States are likely to miss a looming deadline to reach an agreement meant to pave the way for an end to their trade war. 'Both sides have said that they are very close, but I can tell you as a trade negotiator that the last mile is always the most difficult,' former acting deputy US trade representative Wendy Cutler said, speaking at China Conference....'What China is telling the United States is that it is not enough just to not go ahead with the December tariffs, but they also want to see some existing tariffs lifted.' Officials from the two sides are trying to conclude negotiations before Sunday, when the Office of the United States Trade Representative is set to impose 15 percent tariffs on a further US$156 billion worth of Chinese imports if an interim deal is not reached beforehand. US Commerce Secretary Wilbur Ross repeated the warning last week."
8 In 10 Americans Say Politics Are Biggest Source Of Stress In Life -Study Finds
"U.S. politics have never felt quite as contemptuous, and unavoidable, as they do today. We're a nation of people who are constantly plugged in, whether that be via smartphone, desktop, or regular old cable news....Now, a new survey of 2,000 Americans finds that all of this vitriol filled political discourse is taking a serious mental toll. An astounding 78% of respondents say politics are the number one source of anxiety and stress in their life. The survey, commissioned by LIFEAID Beverage Co., also identified on-the-job worries (51%), and financial matters (51%) as other common factors stressing Americans out. Another major stressor for many is health and medical issues (37%), and 25% say their commute to work each day is a stressful nightmare. Surprisingly, 37% of respondents listed their own partner as a big source of personal anxiety and stress. Other frequently cited stressors included social media (29%) and climate change (32%). All of that stress is complicating other aspects of life, as well, with two-thirds (67%) of respondents admitting their constant anxiety is causing them to be less productive at work....For many Americans, their stress levels have never been higher. In all, 68% say they've never felt more stressed than they do today. More over, 67% say they can't realistically say their stress will go away any time soon."
12.10.19 - Super Rich Hoarding Physical Gold
Gold last traded at $1,468 an ounce. Silver at $16.72 an ounce.
NEWS SUMMARY: Precious metal prices rose Tuesday on upbeat 2020 forecasts and a weaker dollar. U.S. stocks traded mixed as investors were skeptical the U.S. could postpone the implementation of additional levies on Chinese goods.
The world's super-rich are hoarding physical gold -Yahoo Finance
"Gold has had a great run in 2019. Over the last year, gold prices are up nearly 20%. The yellow metal is on pace for its best year since 2010....In a note to clients published over the weekend, analysts at Goldman Sachs outlined why the strategic case for owning gold remains strong. The firm cites political uncertainty and recession fears that are unlikely to abate as primary catalysts, among other worries among the global elite like wealth taxes and increasing talk about MMT and central bank effectiveness. By 2020, the firm thinks the price of gold will reach $1,600 an ounce; on Monday, gold was trading near $1,460....'Political risks, in our view, help explain this because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense.' 'Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counter-party credit risk involved.'"
"They've Effectively Lost Control Of The System" -Williams/Zero Hedge
"Economist John Williams says don't put too much faith in the good employment numbers that came out last week because 'It's not as happy of a picture as it looks.' Williams is the founder of ShadowStats.com. His calculations strip out government accounting gimmicks to give a more accurate picture of economic data. Williams explains, 'What the Fed has done with their easing is they created a circumstance of sustainable moderate economic growth. So, they don't need to cut rates anymore. That's nonsense. You don't have sustainable moderate growth. For example, look at this last month, industrial production is in a state of collapse... Manufacturing is negative... Oil production is collapsing year to year as oil and gas exploration has plunged. . . . Retail sales have been overstated in employment... That's going to be revised lower... We have been getting better numbers as of late, and the economy is still falling off a cliff.' Maybe that explains the Fed's panic moves with $60 billion a month QE, which it says is not QE, and extreme intervention in the repo market where the Fed routinely pumps out tens of billions of dollars in liquidity a night. Williams says, 'The system is not stable, and it probably is insolvent...' So, the Fed is pumping out billions of dollars every month, and yet, the economy keeps sinking. What does this tell Williams? 'The system is not operating properly. These are stopgap measures, stopgap liquidity that the Fed is putting into the system. If they understood what was going on, they would not be doing that. They wouldn't have to do it. They have lost control of the system effectively,' says Williams."
House Democrats Announce Two Articles of Impeachment Against Trump -Wall Street Journal
"The House Judiciary Committee will pursue two articles of impeachment against President Trump, focused on his effort to push Ukraine to announce an investigation of a political rival and lack of cooperation in the subsequent investigation...The first article is on abuse of power. Democrats allege that Mr. Trump took advantage of his position as president to pressure Kyiv to investigate a political rival. The second article is on obstruction of Congress, related to the president's moves to block aides from participating in the impeachment investigation....Should the committee vote to send the articles to the House floor, they are subject to immediate consideration and require a simple majority to pass. The House votes would be expected to fall largely along party lines and would move the case to the Senate for a trial, likely beginning in January. A two-thirds Senate majority would be necessary to convict Mr. Trump, and politicians from both parties believe that is unlikely....Republicans reacted with anger following Democrats' announcement on Tuesday, saying that Democrats hadn't made their case and were simply trying to overturn the 2016 election....The White House would like a trial to begin right away and has made that point clear on Capitol Hill, a person familiar with White House thinking said."
Paul Volcker, at 91, Sees 'a Hell of a Mess in Every Direction' -New York Times
"'There is no force on earth that can stand up effectively, year after year, against the thousands of individuals and hundreds of millions of dollars in the Washington swamp aimed at influencing the legislative and electoral process,' he wrote in his book, 'Keeping at It: The Quest for Sound Money and Good Government.'....The book is not limited to tales of the past, however. It addresses current policy, like the 2 percent inflation target that has become the goal of the Federal Reserve. 'I puzzle at the rationale,' he wrote. 'A 2 percent target, or limit, was not in my textbook years ago. I know of no theoretical justification.' With a laugh, he told me that he believed the policy was driven by fears of deflation. 'And we haven't had any deflation in this country for 90 years!' But there is something more worrisome affecting policy than fear, he told me. Money. 'The central issue is we're developing into a plutocracy,' he told me. 'We've got an enormous number of enormously rich people that have convinced themselves that they're rich because they're smart and constructive."
12.9.19 - 2020: Goldman Sachs Sees Gold Soaring 9%
Gold last traded at $1,466 an ounce. Silver at $16.66 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday on a weaker dollar and an equity market pause. U.S. stocks traded mixed as investors awaited news on impending U.S.-China trade tariffs.
Goldman Sachs sees gold soaring 9% in 2020 -Business Insider
"The price of gold could jump 9% to $1,600 per ounce by the end of March, according to Goldman Sachs. The investment bank stood by its three-month, six-month, and 12-month forecasts in a research note last week. It highlighted as factors underpinning the price: political uncertainty, recession fears, high household savings, low interest rates, an equities selloff, growth of emerging markets, moderate growth in mine output, robust central-bank purchases, and greater discussion of Modern Monetary Theory, among others. Goldman's analysts said they 'remain optimistic' about gold going into 2020, given investors view it as a safe or 'haven' asset during turbulent times. 'We still see upside in gold as late cycle concerns and heightened political uncertainty will likely support investment demand for gold as a defensive asset.'"
Paul Volcker, Central Banker Who Defeated Inflation, Dead At 92 -Zero Hedge
"Paul A. Volcker, who helped shape American economic policy for more than six decades, and who will forever be etched in the history books for leading the Federal Reserve's brute-force campaign to subdue inflation in the late 1970s and early '80s, has died on Sunday in New York, the NYT reported. He was 92....Paul Volcker was the last of the great US central bankers. He was followed by such intellectual midgets as Alan Greenspan and Ben Bernanke who unleashed the now infamous cycle of Fed-inspired booms and busts, the outcome of which will have devastating consequences for the US economy and the world. In recent years, Volcker was instrument in crafting the 'Volcker Rule' which prohibited banks from engaging in prop trading, which however banks promptly circumvented by pretending that prop trading was, in fact, hedging. 'As a senior Federal Reserve official from 1975 to 1987, in addition to battling inflation, he sought to limit the easing of financial regulation and warned that the rapid growth of the federal debt threatened the nation’s economic health. In his last official post, as chairman of President Barack Obama's Economic Recovery Advisory Board, formed in response to the 2008 financial crisis, he persuaded lawmakers to impose new restrictions on big banks - a measure known as the 'Volcker Rule.'...His defining achievement, however, was his success in ending an extended period of high inflation after President Jimmy Carter chose him to be the Fed's chairman in 1979. He prevailed by delivering shock therapy, driving the economy into a deep recession to persuade Americans to abandon their entrenched expectation that prices would keep rising rapidly. The cost was steep. As consumers stopped buying homes and cars, millions of workers lost their jobs. Angry homebuilders mailed chunks of two-by-fours to the Fed's marble headquarters in Washington. But Mr. Volcker managed to wring most inflation from the economy,' reports New York Times."
As Tariff Deadline Looms, Investors' Other Worries Fade Away -Wall Street Journal
"Investors are anxiously waiting to see whether a new round of tariffs on Chinese consumer goods takes effect next week, one of the few remaining hurdles for the stock market in 2019....Many analysts had assumed that tariffs on more imports from China, ranging from smartphones to clothing, would be off the table after the U.S. and China reached a tentative truce in mid-October. But President Trump's comment early last week that he is willing to wait until after next year's presidential election to strike a limited trade deal raised the specter of a new challenge to the U.S. economy....Soothing comments from trade officials convinced some analysts that Mr. Trump's remarks were a negotiating tactic....'Just as easily as markets sell off on one headline and one tweet, they can turn around 10 minutes later,' said Shawn Cruz, manager of trader strategy at TD Ameritrade. 'It's going to drive what investors are going to be doing.'....If the new tariffs start hurting consumers, some investors are wary of another uptick in recession fears. 'The domino effect is scary,' said Keith Buchanan, a portfolio manager at GLOBALT Investments. Mr. Buchanan said the firm has recently increased its investment in gold because the precious metal tends to hold its value when appetite for riskier options wanes."
Jobs, Jobs Everywhere, But Most of Them Kind of Suck -New York Magazine
"Friday's jobs report must have been adapted from a comic book - because everyone's calling it a 'blockbuster'....A true 'full employment' economy can advance many goals that liberals have struggled to promote through legislation....For the median job-seeker in Trump's America, the odds may be good, but the good jobs are an oddity. Amid all the encouraging signs in Friday's jobs report, wage growth remained bizarrely tepid....What technology and trade have done, however, is displace millions of Americans from their middle-class jobs, and send them hurtling down the income ladder into less remunerative occupations....The plight of the downwardly mobile manufacturing worker is familiar to most Americans. But that of the displaced administrative assistant is less so. And yet, they are two sides of the same story: Since 2000, the U.S. economy has shed 2.9 million jobs in (disproportionately male) production occupations, and 2.1 million in (disproportionately female) administrative and office-support roles...What's more, the jobs that our 'blockbuster' economy is creating aren't just lackluster in monetary terms, but in other measures of job quality, as well. A recent Gallup survey illuminates this point...Gallup’s headline finding is that, as measured by its index, only 40 percent of Americans currently have 'good' jobs."
12.6.19 - What's Behind Today's Blockbuster Jobs Report?
Gold last traded at $1,460 an ounce. Silver at $16.58 an ounce.
NEWS SUMMARY: Precious metal prices dipped on profit-taking Friday after upbeat economic data boosted the buck. U.S. stocks rose on the back of U.S. jobs growth as Wall Street wrapped up a choppy week of trading.
Here Is The Main Reason For Today's Blockbuster Jobs Report -Zero Hedge
"Following a disastrous ADP print just two days ago, which showed that the US economy added just the second fewest number of private payrolls since March 2010, and a sellside 'whisper' number that was about half the consensus expectation of 183K, the BLS reported a blockbuster jobs report, according to which the US economy added 266K jobs (according to the establishment survey), the biggest monthly increase since January, and a near record divergence with what ADP indicated. To be sure, peaking behind the headline data revealed some questionable data, like only an 83K increase in employment (according to the Household survey), a 7K drop in mining jobs, a 4K decline in wholesale trade, a stagnant construction sector, lot of seasonal hiring, a catch up in census worker hires, and so on. Warts aside, many are confused what was behind the surprise upside print, and how the payrolls print came 29K jobs more than the highest forecast among 78 economists. The simple answer: a surge in manufacturing workers. As shown in the chart below, 54K manufacturing workers were added in November, the most in over two decades, or since 1998, as a result of about 41K GM striking workers returning to their jobs. That said, the November surge was an offset to the 43K slide in October, so on net, the print was largely a wash between the two months."
Gazing into the recession crystal ball -One America News
"The protracted trade war between China and the United States and a deteriorating global growth outlook have left investors nervous that the longest expansion in American history is at risk of ending. Recession fears were sparked earlier this year when the yield curve inverted – a key indicator of a pending downturn....While concerns have eased, an economic rebound is not expected any time soon, according to a recent Reuters poll of economists, and pockets of the economy and markets which are causing concern...A recent report from S&P Global Ratings pegs the chance of a U.S. recession over the next 12 months from 25%-30%....Consumer demand is a critical driver of the U.S. economy, and historically consumer confidence wanes during downturns. Currently consumer confidence is near cyclical highs....Credit spreads – the premium investors are paid above the yield on safer U.S. Treasuries to hold the riskier securities – typically widen when the perceived risk of default rises. Investors are now pulling out of the riskiest U.S. corporate debt amid concerns about leverage levels as the economy slows."
Markets In 'Goldilocks' Mode Amid Strong Job Gains -Forbes
"November turned into an employment bonanza, helped in part by the return of workers from a strike at General Motors (GM). The economy busted out with 266,000 new jobs, the highest total for any month since January. If you add the Labor Department’s upward revisions of a combined 41,000 jobs for September and October to this impressive November tally, new jobs growth has averaged a very healthy 205,000 the last three months and 180,000 for the year to date....If you're punching a clock, you earned on average of seven cents more for each hour on the job in November compared to October. That puts wage growth at 3.1% year-over-year, right in the heart of the 'Goldilocks' zone that gives workers a wallet boost but probably won’t be enough to have the Fed fretting about potential inflation....With the Fed meeting looming next week, it's not too early to start thinking about outcomes. At this point, chances for a rate cut look about as likely as a snowstorm in Miami, if the futures market is any indication."
'Don't fall asleep on gold' as it gears up for another run -Marketwatch
"'The noise around gold during its big run in the summer has certainly quieted down as the metal has been consolidating for over three months. ETF inflows for gold have finally moderated from extreme levels as investor exuberance fades,' said Jeff deGraaf, chairman of Renaissance Macro Research, in a Thursday note. 'We don't want you to fall asleep on gold, the charts are too good,' deGraaf said. 'A drop in extreme sentiment during a period of consolidation as the overbought condition works off after breaking out of a large basing pattern is exactly the type of action you want to see.'....Gold sits around 5.6% below the September high, holding a 15.8% year-to-date gain and posting a 19% rise over the last 12 months. The popular, bullion-tracking SPDR Gold Trust is up 14.8% year to date and 18.9% over the last 12 months....'Gold may be gearing up for another run and we think it's worth owning here,' he said."
12.5.19 - 10 Outrageous 2020 Predictions
Gold last traded at $1,479 an ounce. Silver at $16.98 an ounce.
NEWS SUMMARY: Precious metal prices rose Thursday on bargain-hunting and a weaker dollar. U.S. stocks decline despite upbeat employment data amid China trade deal worries.
Gold prices to rally to $1,600 by end of 2020 -ABN AMRO/Kitco
"Easy monetary policy and low interest rates are here to stay and that will support gold prices in the long term, but investors need to be a little patient, according to one market analyst. In her 2020 outlook forecast published Wednesday, Georgette Boele, senior FX and precious-metals strategist at ABN AMRO, said that she is bullish on the precious metals next year, but the yellow metal could see a modest correction in the first half of the year....Looking past the near-term risks, the Dutch bank is bullish on gold, looking for the price to push above $1,600 an ounce by December 2020...Monetary policy and lower real interest rates are the biggest reasons Boele expects to see higher prices in the second half of 2020. She added that ABN AMRO economists expect the Federal Reserve to cut interest rates in the first quarter of 2020. 'Central banks remain keen to support growth and/or to reach their inflation target. In the near term, we expect growth in the eurozone to remain weak and the economic situation in the U.S. to deteriorate,' she said. 'The outstanding amount of negative-yielding government bonds will probably grow; while gold has no yield, it is at least not paying negative rates.' Boele also said that weak economic growth should weigh on the U.S. dollar, providing another bullish factor for gold."
Could 2020 Rhyme with 1980? -Craig R. Smith/Swiss America
"Forty years ago gold prices spiked up over eight-fold – from $100/oz. in January 1977 to $850/oz. in January 1980. (A 1980 gold price of $850/oz. would equate to an inflation-adjusted gold price of $2,574/oz. today). What were the factors that pushed gold prices to rocket to historic highs four decades ago? Could we see a similar scenario play out again forty years later in 2020? History may not always repeat, but sometimes it rhymes. Several factors converged in 1980 which sent investors rushing for the protection of physical gold. One of which was geopolitical uncertainty, as Russia invaded Afghanistan and the Iran hostage crisis erupted. We faced a diplomatic standoff between the United States and Iran over fifty-two American diplomats and citizens held hostage for 444 days between November 4, 1979 and January 20, 1981. Fast-forward to 2019, and the Mid-East is just as combustible as ever. A conflict could break out in any number of places for any number of reasons. Consider the September 14, 2019 attack on Saudi oil facilities, Iran's U.S. threats against our trade sanctions, an Iranian-backed Shiite militia in Iraq, an attack by Hezbollah on Israel, or if Syria's repression morphs into an international confrontation. Any of these could erupt by early 2020." Full Story
10 Outrageous Predictions 2020 -Saxo Bank
"Continuing almost two decades of tradition, our experts have made 10 Outrageous Predictions for the year ahead. Their consensus-smashing forecasts would send shockwaves through the markets, if they come to pass. So will they prove pure fantasy or visions of reality? 1. Chips go cold in AI winter - Diminishing returns on chip applications sees the SOX Index of semiconductor stocks collapse 50%. 2. Stagflation rewards value over growth - The iShares MSCCI World Value Factor ETF outperforms the FANGs by 25%. 3. ECB folds and hikes rates - European banks make a comeback as the EuroStoxx bank index rises 30%. 4. In energy, green is not the new black - The green revolution gets a reality-check as dirty energy starts to pay once again. 5. South Africa gets electrocuted by ESKOM debt - USDZAR rises from 15 to 20 as world cuts credit lines to the rainbow nation. 6. Trump announces America First Tax - A 25% tax on all foreign-derived revenue scrambles supply lines and pushes inflation higher. 7. Sweden breaks bad - Sweden’s pragmatic attitude shift leads to a massive increase in fiscal spending that drives up the SEK. 8. Dems win clean sweep in 2020 election - Democrats take control of the presidency and both houses of congress. Big healthcare and pharma stocks collapse 50%. 9. Hungary leaves the EU - HUF collapses to EURHUF 375 as Hungary’s leadership and the EU fight over the country’s place in the Union. 10. Asia launches digital reserve currency - An Asian, AIIB-backed, digital reserve currency tanks the US dollar by 30% versus gold. Gold prices rise above $2,000/oz."
How jittery investors would respond if Trump doesn't reach a trade deal with China -The Hill
"President Trump's off-the-cuff remark yesterday that a trade deal with China could be delayed until after the U.S. elections in 2020 spawned a large stock market sell-off. While markets have since recouped some of the losses amid hopes that a deal will be reached, the reaction to Trump’s statement raises the specter of what might happen if there is an impasse. Previously, investors hoped an accord would be reached whereby China purchased more agricultural goods from the U.S. while the Trump administration rolled back some of the tariff hikes it had implemented. If not, the round of tariff hikes totaling $156 billion that were slated for December 15 would go into effect and virtually all imports from China, worth about $550 billion, would be subject to duties of 15 percent to 25 percent. Throughout the negotiating process, he has suggested that a deal is about to be consummated, only to pull the rug at the last moment. Investors have been caught off guard each time, because they believe it is rational for both sides to reach an agreement before economic damage is inflicted. But this is not how the president views the situation. He believes the U.S. has the upper hand in negotiations, because China depends on the U.S. as an export market and its domestic economy is slowing more than official statistics indicate....Thus far, the impact of tariff hikes has mainly been felt by U.S. manufacturers, farmers and businesses that have borne the brunt of the tariff hikes...But the latest round of hikes that were implemented this summer and which are scheduled for this month will mainly affect consumer goods....Should consumer confidence falter, it would likely be accompanied by stock market weakness."
12.4.19 - 2020: An Election Year Recession?
Gold last traded at $1,480 an ounce. Silver at $16.91 an ounce.
NEWS SUMMARY: Precious metal prices eased Wednesday on profit-taking despite a weaker dollar. U.S. stocks rebounded from a 3-day slide based on an upbeat report about the U.S. China trade agreement.
Gold Outlook 2020 -FX Empire
"Technical analysts seem to be painting a bullish picture with 2019's mid-year breakout laying the groundwork for even higher prices in 2020. The bears are watching the 10-year yield, the bulls, the chart pattern. The two will work together to produce a strong rally if signs of recession re-emerge next year....'According to our work, gold broke out of a critical 6-year base in June 2019 and established a new bull market. The correction that began in September is nearly complete, and gold should resume the uptrend in 2020. For 2020, we expect gold to continue to advance the larger pattern and challenge key resistance between $1750 – $1800. Our current forecast calls for a pattern breakout above $2000 by 2021 or 2022. However, that time frame could be expedited depending on the results of the 2020 election. Longer-term, we believe gold will continue to progress throughout the 2020s, potentially reaching $7500 - $10,000 or higher as the debt super cycle implodes globally." writes AG Thorson of Gold Predict."
An Election Year Recession? -Levisohn/Barrons
"President Donald Trump said that he'd be happy to wait on a trade deal until after the 2020 election. Did he just make a 2020 recession more likely, and in an election year at that?....My main argument...The economy isn't nearly as strong as it looks and a soft landing is not assured....Yesterday's November's ISM manufacturing index showed a decline in manufacturing activity, not a rebound. And then today, trade fears returned after having been calmly swept into the corner. The latter is particularly bad for the bullish narrative, and stocks have reacted accordingly. But how realistic is a 2020 recession, particularly since it is an election year?...In a note released last week, Societe General's Stephen Gallagher argued that there wasn't much room for monetary stimulus - the Fed already cut interest rates - or fiscal stimulus - tax cuts have already ballooned the deficit. And with a divided government, it's highly unlikely an agreement can be reached until after a recession has started, he continues. The good news is that a recession during an election year is very unlikely. Since 1950, only two have started during an election year: In 1960 - when John F. Kennedy beat Richard Nixon - and 1980 - when Ronald Reagan beat incumbent Jimmy Carter - according to Dow Jones Market Data Group. We'll give an honorable mention to the Financial Crisis, which earned its name in 2008, even though the recession actually started in 2007. That puts the odds of a recession during an election year at 17.6%."
Trillion-dollar deficits as far as the eye can see, and hardly a voice of caution to be heard -The Hill
"In the old days, a decade or so ago, Democrats would have assailed Donald Trump's failure on federal deficits; instead of eliminating it, as promised, the deficit has doubled to a trillion dollars as far as the eye can see....Yet deficits, as a political issue, are dead....For Democrats, the pressing urgency of unmet needs in health care, education, infrastructure and the social safety net far outweigh any rising debt. They favor tax hikes, mainly on the rich, to reverse the huge 2017 Republican tax cuts, but there's less premium on the green eyeshade test of paying for all spending initiatives. Most Republicans strongly want to keep those tax cuts - the only significant achievement of three years of party rule - and have little interest in tackling politically popular entitlements....Even Washington's most stalwart and consistent fiscal hawk, Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, acknowledges the budget deficit isn't a top policy concern right now 'as low interest rates buy us some time.' However, she cautions that the fiscal situation 'is the worst it has been since just after World War II,' adding, 'No one knows when the tipping point is or what it looks like, but those are questions we shouldn't want to find the answers to.'"
Citizen Bloomberg -Ponte/WorldNetDaily
"In 1941, filmmaker Orson Welles created what many regard as the best movie ever made. 'Citizen Kane' followed the career of a newspaper magnate who began as an idealist but gradually became ruthlessly obsessed only with power. In the film, Charles Foster Kane changes from a puppet master who elects and pulls the strings of tawdry politicians into a politician himself....Michael Bloomberg - who should be called 'Citizen Bloomberg' - is one of today's most powerful media magnates. He owns a major interest in a slightly left-of-center news service, a radio and a television network, and Bloomberg Business Week Magazine, a media complex that employs approximately 2,700 journalists and analysts...His media empire has earned Bloomberg $52.3 billion in net worth, which makes him at least the ninth-richest person in America....Earlier this year, writes AP, Bloomberg 'pledged to separate myself from his foundation and private businesses should he launch a campaign.' Now, however, he has as yet offered no firewall that would keep him from using his media outlets in the presidential campaign, nor has he agreed to sell his media companies if elected. Can he ethically be both an elected president and a media baron? This raises hundreds of legal and ethical questions. Can those reporting for Bloomberg's media empire be fair and objective if their boss is a candidate? He has said: 'I don't want the reporters I'm paying to write a bad story about me.' Can reporters elsewhere who might someday need to seek a job with Bloomberg's empire be truly impartial, or would they be afraid of being put on his 'enemies list' and censor themselves?....Bloomberg allegedly has a long record of stop-and-frisk close encounters with female employees, as the New York Police Department under his 12 years as a firearms-confiscating mayor did disproportionately with African American and Latino males. He has recently apologized for both behaviors, but this raises the question of who Citizen Bloomberg, 77, is becoming."
12.3.19 - Here's What Happens If Dec. 15 Tariffs Kick In
Gold last traded at $1,484 an ounce. Silver at $17.24 an ounce.
NEWS SUMMARY: Precious metal prices shot up to 1-month highs Tuesday amid rising China trade uncertainty. U.S. stocks sank after President Donald Trump suggested he may delay a trade deal with China until after the 2020 presidential election.
The price of gold is up sharply on flight to safety flows -Forex Live
"The price of gold is up sharply in reaction to flight to safety flows on the back of a deterioration of US China trade. Technically, looking at the daily chart, the price rise of $17.60 to $1480 has the precious metal moving closer to its 100 day moving average at $1486.17. The high price today has so far reached $1481.86. The last few days has seen the price consolidating at lower levels. However the run to the upside today has traders eyeing that key moving average. A move above would be more bullish from a technical perspective."
The New Cold War? It's With China, and It Has Already Begun -Ferguson/New York Times
"When did Cold War II begin? Future historians will say it was in 2019. Some will insist that a new Cold War had already begun - with Russia - in 2014, when Moscow sent its troops into Ukraine. But the deterioration of Russian-American relations pales in comparison to the rise in Sino-American antagonism that has unfolded over the past couple of years....Public opinion made a similar shift. A Pew Research Center survey showed that the percentage of Americans holding an unfavorable view of China jumped to 60 percent in 2019 from 47 percent the year before. Only 26 percent of Americans held a favorable view of the country. Something else changed in 2019. What had started out as a trade war - a tit for tat over tariffs while the two sides argued about the American trade deficit and Chinese intellectual property theft - rapidly metamorphosed into a cluster of other conflicts....The threat also loomed of a currency war over the exchange rate for the Chinese yuan, which the People's Bank of China has allowed to weaken against the dollar....Evidence of Chinese espionage and influence operations in American academia and Silicon Valley is already pushing the government to reprioritize national security in research and development. It would be nothing short of disastrous if China won the race for quantum supremacy, which could render all conventional computer encryption obsolete. The one big risk with Cold War II would be to assume confidently that the United States is bound to win it....In 2007, the economist Moritz Schularick and I used the term 'Chimerica' to describe the symbiotic economic relationship between China and the United States. Today, that partnership is dead. Cold War II has begun. And, if history is any guide, it will last a lot longer than the president on whose watch it started."
Trump Says Trade War Could Drag On, Stokes France Spat -Wall Street Journal
"President Trump suggested a trade war with China could drag out past the 2020 election and stoked a tariff spat with France during a visit to Europe for a NATO meeting. Mr. Trump said he had 'no deadline' to conclude a trade deal with China, adding that 'in some ways I like the idea of waiting until after the election,' during a sitdown with the North Atlantic Treaty Organization Secretary-General Jens Stoltenberg on Tuesday in London. The president’s comments injected fresh uncertainty over the future of a 'phase-one' trade deal between the U.S. and China. Looming closer are the administration's plans to impose tariffs on smartphones, toys and other products from China on Dec. 15. Mr. Trump also criticized French President Emmanuel Macron for comments he made about the 29-member military alliance, and expressed frustration with France’s new digital-services tax. 'I don't want France taxing American companies. If they're going to be taxed it's going to be the United States that will tax them,' Mr. Trump said...The French tax, which was signed into law July 24, applies a 3% tax on revenue that tech companies reap in France from such activities as undertaking targeted advertising or running a digital marketplace. In response, the Trump administration has proposed tariffs of up to 100% against $2.4 billion of French imports."
Here's What Happens to Markets If U.S. Tariffs on China Kick in Dec. 15 -Bloomberg
"The Dec. 15 flashpoint on tariffs was thrown into sharp relief Tuesday when Trump said he sees no urgency to complete a deal, right after he threatened an assortment of trading partners with levies. 'If tariffs scheduled for Dec. 15 are implemented it would be a huge shock to the market consensus,' said Sue Trinh, managing director for global macro strategy at Manulife Investment Management in Hong Kong. 'Trump would be the Grinch that stole Christmas,' she said....It will be 'definitely risk-off across the screen,' Tongli Han, chief investment officer at Deepblue Global Investment, said in an interview with Bloomberg TV. 'What happened recently makes this trade deal more costly for Chinese leaders - so I'm seeing a gloomy future for the short term, one-to-two months.'....The message to investors is 'maybe trim a little bit of equity exposure, or certainly not chase the market at this stage. But look to do so in the next few weeks if we see a 5-to-7% pullback.'....'Even if there is a trade deal, it doesn't solve most of the issues that we still have with China,' which is something that markets are going to have to reflect in time, said Christopher Smart, chief global strategist at Barings Investment Institute, on Bloomberg TV. 'In fact, it probably makes the relationship more difficult to manage, because we've taken tariffs off the table.'"
12.2.19 - Selling Your Home to Fund Retirement?
Gold last traded at $1,469 an ounce. Silver at $17.00 an ounce.
NEWS SUMMARY: Precious metal prices steadied Monday on bargain-hunting and a weaker dollar. U.S. stocks faltered as investors digested disappointing manufacturing data along with deteriorating trade news.
The Narrative About Gold is Changing Again -Yahoo Finance
"Let's face it, we live in a world of radical uncertainty. There are not only many known unknowns in the world, but the same can't be said of unknown unknowns...But the real issue is that we do not know the probabilities, because we even do not know how the world works. You see, the probability applies in a casino but not in a real world. So how do we cope with the unknown? Mervyn King, former governor of the Bank of England, provides an answer in his interesting book The End of Alchemy. According to him, a coping strategy comprises three elements â€“ a categorization of problems, a set of rules of thumb to cope with the latter class of problems; and a narrative. What is narrative? King defines it as 'a story that integrates the most important pieces of information in order to provide a basis for choosing the heuristic and the motive for a decision.'....The narratives are of great importance in the financial markets. As King points out, 'under radical uncertainty, market prices are determined not by objective fundamentals but by narratives about fundamentals.'....Now, it seems that the narrative about the economy, the central banking and gold is changing again. The economy is slowing down and people worry about recession. The global bond market is awash in negative yields. The Fed abandoned its tightening cycle. The price of gold jumped above $1,400 and it is flirting with $1,500. In such an environment, there are substantial odds that narratives will change in favor of gold."
The Hidden Link Between Fiat Money And The Increasing Appeal Of Socialism -Zero Hedge
"What causes the seemingly unfounded confidence in socialism we encounter more and more in the news media and among political activists? It is likely not a coincidence that most people living today have lived most of their lives in a world dominated by fiat money. It has now been nearly fifty years since the United States broke all ties between the dollar and gold. It's been even longer since other major currencies were tied to gold at all. Consequently we now live in a world where the creation of wealth is seen by many as requiring little more than the creation of more money. In this kind of world, why not have socialism? If we run out of money, we can always print more....Gold backing of a currency provided a solid intellectual foundation of reality that few even recognized existed within themselves; (i.e., that we live in a world of scarcity and uncertainty). This reinforced the idea that wealth has to be built. It cannot be conjured out of thin air, just as gold cannot be conjured out of thin air. But fiat currency can be conjured out of thin air and in enormous amounts. The longer a fiat currency is the coin of the land, the more one is led to believe that nothing should be in short supply, since everything is bought with money and money need not be in short supply....The psychological impact of a lifetime within a fiat money economy cannot be underestimated. One's world is turned upside down....If wealth is so easy to create, many conclude only greed and cruelty are what stand between us and far greater prosperity for all. But that is the very reason that fiat money is so subversive to the social order. In a sound money economy any new spending program can be funded only by an increase in taxes, an increase in debt, or by cutting existing funding....It would be hard to invent a more effective method for the destruction of modern society."
After the US-China Trade War -Roach/Project Syndicate
"Trade truce or not, a protracted Cold War-like conflict between the United States and China has already begun. That should worry the US, which, unlike China, is devoid of a long-term strategic framework. The so-called phase one 'skinny' trade deal announced with great fanfare on October 11 may be an important political signal. While the deal, if ever consummated, will have next to no material economic impact, it provides a strong hint that Trump has finally had enough of this trade war. Consumed by domestic political concerns - especially impeachment and the looming 2020 election - it is in Trump's interest to declare victory and attempt to capitalize on it to counter his problems at home....But the Chinese leadership is not about to capitulate on its core principles of sovereignty and its aspirational mid-century goals of rejuvenation, growth, and development....If a phase one accord is reached, it behooves us to ponder what the world will look like after the trade war. Several possibilities are at the top of my list: deglobalization, decoupling, and trade diversion. Deglobalization is unlikely....Global decoupling is also unlikely....Trade diversion is another matter altogether...Putting pressure on one of many trading partners - precisely what the US is doing when it squeezes China in an effort to reduce its merchandise trade deficits with 102 countries - is likely to backfire....Trade truce or not, a protracted economic struggle between the US and China has already begun....That should worry the US, which is devoid of a long-term strategic framework. China is not. That is certainly the message from Sun Tzu in The Art of War: 'When your strategy is deep and far-reaching â€¦ you can win before you even fight.'"
Planning to sell your house to fund your retirement? Think again -Marketwatch
"Meager personal savings, debt, looming health care costs and more are pushing millions of older Americans to the brink. At least you could always cash out of your house and move somewhere cheaper, right? Perhaps, but as a new study from Zillow, the real estate website warns, perhaps not. The problems are threefold: Demographics, geography and finances....Zillow says 34% of all owner-occupied homes in the U.S. are owned by people aged 60 or older. Millions of these homes will hit the market over the next two decades as senior boomers either die, move in with their children or to an assisted living facilities. The problem: There are too many homes to be absorbed by Gen Xers. This suggests that prices will have to fall. Geography matters, too, and will impact some areas more - perhaps much more - than others. It's no surprise that homes in Rust Belt cities will be under pressure as people, for one reason or another, try to sell....Then there is the undeniable problem of finances. While some baby boomers have the luxury of having some sort of pension, along with retirement savings, Gen Xers are highly unlikely to have the former and have done little about the latter."