Swiss America Blog Archive


2.14.19 - Is the Fed Insolvent? Technically, Yes!

Gold last traded at $1,314 an ounce. Silver at $15.52 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying despite a firmer dollar. U.S. stocks fell following the weakest retail sales data in a decade as well as uncertainty around U.S.-China trade talks.

Gold rises on hopes of Fed pause; trade talks in focus -Reuters
"Gold prices edged higher on Thursday as soft U.S. inflation data raised expectations that the Federal Reserve will pause rate hikes this year, while investors were looking for developments in trade talks between Washington and Beijing....U.S. consumer prices were unchanged for a third straight month in January, leading to the smallest annual increase in inflation in more than 1-1/2 years, which could allow the Federal Reserve to hold interest rates steady for a while. Gold prices have risen nearly 13 percent since touching more than 1-1/2-year lows in mid-August, mostly on expectations of a pause in interest rate hikes and tumultuous stock markets."

Interview Reflections On Capitalism And The Morality Of It with Craig R. Smith -The Wealth Standard
"Capitalism seems to have more bad than good reputation among people. Breaking down some reasons why it is misrepresented is Chairman of Swiss America Trading Corporation, Craig R. Smith. He gives his thoughts about capitalism and the relevance of money in a laissez-faire capitalist society. He talks about China, the government, and what they have been doing to the markets. Helping those who are still grappling with the monetary system, Craig defines sound money and why it is important. He also reflects about humanity, equality, and where we are headed in the next ten years with our current situation. Ultimately, amidst everything going on in politics, he reminds us how we, the people, are the government."

Is the Fed Insolvent? -New York Sun
"Is the United States Federal Reserve, central bank to the greatest economy in the history of the world, insolvent? Technically it is, writes James Grant in the latest number of his famed newsletter, Grant’s Interest Rate Observer....Mr. Grant, who holds an honorary doctorate in acerbic studies, has pressed this point in an open letter to Wm. C. Dudley, who was until recently the president of the New York Federal Reserve Bank. Mr. Grant was moved to write by an op-ed that Mr. Dudley wrote and that appears on Bloomberg under the headline 'Let’s Stop Worrying About the Fed’s Balance Sheet.'....The reason we’re not supposed to worry about it, after all, is because we live in the age of fiat money. Or irredeemable electronic paper ticket legal tender...Such scrip enables the central bank to print endless amounts of money to cover its largesse. The scale of this was described in an article by Alex Pollock in American Banker. Mr. Grant cites the piece, which notes that in December the Fed disclosed that it had, as Mr. Pollock put it, '$66 billion in unrealized losses on its portfolio of long-term mortgage securities and bonds (its quantitative easing, or QE, investments), as of the end of September.' That amounts, Mr. Pollock notes, to '170% of the Fed’s capital' and means 'on a mark-to-market basis' that 'the Fed had a net worth of negative $27 billion.' If long-term interest rates rise by 1%, Mr. Pollock estimates, 'the Fed’s mark-to-market loss would grow by $200 billion more.'....Mr. Grant...ends his piece with an expression of admiration for the classical gold standard. He quotes a study from the Fed itself that, in 1959, suggested that under the gold standard, as Mr. Grant summarized, 'a currency derived its strength from the integrity of the balance sheet of the central bank that issued it.'"

The new millennial retirement dream -Fox Business
"The traditional view of retirement needs to be rebooted...For the largest generation in the U.S. workforce, the idea of completely stopping work in your golden years seems outdated....Instead of retirement being a singular stopping point, millennials see it as a fluid and longer lasting life stage. And they don’t see the benefit of deferring pleasure until you reach a certain age, when the benefits aren’t guaranteed. Millennials view retirement not as a number, but as a life stage. They want the ability to travel more, donate both time and money to charities and enjoy experiential purchases throughout their working years, thus reaping a higher return on their investment. In retirement, millennials envision switching from their career income to an income that will supplement their desired lifestyle. They want to pursue passion projects, explore hobbies, engage in activist opportunities and monetize their skills. This new definition of retirement is already motivating many millennials to start saving."

RealMoneyBlog - Free daily/weekly email


2.13.19 - Could El Chapo Billions Build The Wall?

Gold last traded at $1,315 an ounce. Silver at $15.65 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and dollar volatility. U.S. stocks rose on investor hopes that Chinese and U.S. trade authorities would reach an agreement before a March 2nd deadline.

Government debt, a real crisis -Rahn/Washington Times
"There is a real crisis that is much more likely to adversely affect most people’s lives much sooner and with greater consequences than climate change, and that is the rise in government debt as a percentage of GDP in many of the major countries. For an individual or private business that has a debt burden and an interest payment burden growing faster than net income, eventually, there will be a day of reckoning. This will necessitate a cut of expenditures until their spending - after payment for interest and principal on their debt - is no greater than income. There is also a day of reckoning for governments that take on too much debt. At some point, interest payments take a higher and higher percentage of government outlays....In 2015, interest payments on the debt amounted to 6 percent of U.S. federal government spending. This year they will be 8.5 percent, and in four years (2023) they are projected to rise to 12 percent. As bad as the situation is in the United States, it is much worse in Japan, Italy and France....Both political parties in the United States are in denial. Some Democrats have proposed trillions of dollars in new spending - for free medical care, education, a guaranteed income, etc., etc. - moving the day of reckoning closer....The real crisis is the failure of too many in the global political class and their media enablers to admit to the public that they are spending addicts, and their refusal to go into fiscal rehab."

bearbull Gold Bulls Are Everywhere -Kitco
"The consensus on gold is that interest is back. Experts on the Ultimate Gold Panel at the Vancouver Resource Investment Conference unanimously agreed that sentiment on the precious metals has turned more bullish. With central banks like China buying gold for the first time in years and funds that were previously not interested in gold starting to add the metal to their portfolio, investors have been showing more confidence. Frank Holmes, CEO of U.S. Global Investors, noted that gold is benefiting from the 'great unwind' of quantitative easing, which has created a cascade of tailwinds for gold. 'This QE unwinding is so disruptive to the stock market, and you could see that when QE3 came in, all of a sudden gold was not moving with this debt creation, and now it is. We also have the trade wars, and the concern that rates are peaking and they’re going to fall, the dollar will fall dramatically, and like in a blink of an eye, gold will be $1,500 or $1,600 [an ounce],' Holmes said. Peter Hug, Global Trading Director of Kitco Metals, pointed out that while investors are concerned gold has not been moving to all-time highs, like $1,900 an ounce, long-term investors of gold would have realized a steady annual rate of return had they held the yellow metal."

Coming Downturn. Cranking Leverage. What Could Go Wrong? -Institutional Investor
"Private equity firms have a gloomy view of the markets, but deal activity is strong - and they’re still leveraging up their portfolio companies. According to a survey released today by advisory firm BDO, 89 percent of private equity respondents said they expect a long downturn in the next two years, with almost a quarter of those expecting a correction in the next six to twelve months....And they're still in love with leverage. In this year’s survey, BDO asked private equity firms for the first time about debt and new companies. About one-third of sponsors said they’re putting more debt on new companies, while one-quarter say they’re using average leverage, in the range of two to three times EBITA....'Debt markets remain strong despite nerves around a recession and leverage is still very much on offer,' wrote the report’s authors. 'But to survive the next recession, PE firms will need to take a more conservative approach to structuring deals and sensitize acquisitions towards a recession scenario.'"

After El Chapo conviction, use seized $14 BILLION to build border wall? -American Mirror
"Could El Chapo’s seized drug money be used to build the border wall? That’s one of the questions many are asking on Tuesday following news of the former drug kingpin being found guilty on all counts. Mexico’s most notorious drug kingpin, Joaquin 'El Chapo' Guzman, will spend the rest of his life in prison after a jury found him guilty on all 10 counts following a three month trial. According to Breitbart, the United States has seized $14 billion from the former drug lord, which gave Sen. Ted Cruz a brilliant idea. The Texas Republican introduced the Ensuring Lawful Collection of Hidden Assets to Provide Order (EL CHAPO) Act in April 2017, which calls for the use of the $14 billion seized from the cartel drug lord to be used to pay for the wall. 'Fourteen billion dollars will go a long way toward building a wall that will keep Americans safe and hinder the illegal flow of drugs, weapons, and individuals across our southern border,' Cruz said in a statement. El Chapo’s $14 billion would fund well over half of the proposed wall along the southern border between the U.S. and Mexico."

RealMoneyBlog - Free daily/weekly email


2.12.19 - A 'Strong Case' For Gold Over Bonds, Stocks

Gold last traded at $1,314 an ounce. Silver at $15.70 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on safe-haven buying and a weaker dollar. U.S. stocks rose amid news that U.S. lawmakers had secured a tentative deal on border security funding and upbeat hopes for U.S.-China trade deal.

Wall Street firm says there is now a 'strong case' for gold over bonds, stocks -CNBC
"As recession fears rise, Bernstein is suggesting investors look to gold and gold mining stocks to reduce risk. The firm's global quantitative trading strategy group on Monday sent a note titled 'a strong case for holding gold.' 'We show that from current equity valuations and from similar points in previous cycles gold and equities give more similar returns ... [to] risk assets such as equities,' Bernstein said. 'A material shift in geopolitical risk and a near-record build up in government debt make other potential risk-free assets more questionable and also bring a temptation to create inflation, thereby further enhancing the case for gold,' the note added. The current geopolitical environment is heading toward a period in which neither stocks nor bonds will work - therefore pushing investors to gold, Bernstein said."

Fed We're Overdue for a Sell-Everything/No-Fed-Rescue Recession -Smith/Of Two Minds
"Central banks, like generals, always fight the last war - until the war is lost. The global economy is careening into recession (call it a 'slowdown' if you are employed by the Corporate-State Media), and while we don't yet know just how deep and wide this recession will be, we can make an educated guess that it won't be a repeat of any of the previous five recessions: 1973-74, 1981-82, 1990-91, 2001-02 or 2008-09. Recessions triggered by energy or financial crises tend to be short and shallow as the crisis soon eases; recessions caused by structural imbalances tend to be enduringly brutal....No longer content with blowing one credit-speculative bubble at a time, central bankers coordinated their efforts in 2009-2018 and inflated the Everything Bubble. But the Everything Bubble didn't resolve or even address the multiple structural imbalances in the U.S. and global economies; it merely papered them over with a triple-whammy credit-speculative orgy of unprecedented enormity....The instabilities and imbalances of economies can be papered over with debt for a time, but debt and financialization tricks don't actually fix what's broken - they make the problems worse. Welcome to the recession of 2019-2021, when central bank policies are finally revealed as the source of half our problems rather than the solution. We're way overdue for a sell-everything recession, one that the Fed will only make worse by pursuing its usual policies of lowering interest rates and goosing easy money. The structural problems are now acute, and giving more free money to financiers and politically powerful corporations isn't going to fix what's broken in the U.S. economy."

Lawmakers Reach Agreement in Principle to Fund Border Security, Avoid Shutdown -Wall Street Journal
"Senior lawmakers said Monday night they had reached an agreement in principle on a sweeping deal to end a monthslong fight over border security and avoid a partial government shutdown this weekend...The deal would include $1.38 billion for 55 miles of modern physical barriers along the border with Mexico, according to congressional aides from both parties. The deal gives both parties something they had sought. Democrats kept funding for physical barriers along the border far below President Trump’s request. But Republicans blocked Democrats' efforts to place certain limits on detention beds, an issue that had derailed the talks over the weekend....'We reached an agreement in principle between us on Homeland Security and the other six bills,' Mr. Shelby said. 'Our staffs are going to be working feverishly to put all of the particulars together.'....Lawmakers said they expected the agreement could be written into legislation that could pass both chambers of Congress before the Friday midnight deadline, avoiding a second partial government shutdown. The biggest question is likely to be whether Mr. Trump will sign the congressional deal. Mr. Trump had sought $5.7 billion to build a border wall and the agreement’s funding is far lower than that."

The Looming Entitlement Problem Is Bipartisan -Samuelson/Real Clear Markets
"One of the great challenges of our time is to prevent Social Security and other programs for the elderly from taking over the national government. It may already be too late. Recently, the Congressional Budget Office reported that federal spending on the 65-plus population now amounts to 40% of non-interest outlays, up from 35% in 2005. By 2029, the CBO projects it to be 50%....By the CBO's math, two-thirds of the projected growth in federal spending over the next decade, after adjustment for inflation, will stem from programs for the elderly - mostly Social Security and Medicare, but also long-term nursing home care under Medicaid and civil-service retirement. Against that backdrop, raising Social Security benefits would seem a non-starter. Guess again. Congressional Democrats have proposed legislation to increase spending....There are roughly 50 million Americans 65 and over. In a population so large, there are bound to be some Americans who are in dire straits because they don't have retirement savings or have retirement plans that are tragically underfunded. There may be targeted remedies that can help them. But the notion that there is pervasive poverty among older Americans is a political fantasy that is used to justify spending that, as a society, we cannot afford....It is conventional wisdom in Washington that the Republican addiction to tax cuts is mainly responsible for the huge budget deficits. This is, at best, a half-truth. Democrats are equally responsible, because they refuse to come to grips with the massive spending on retirement and health care. Expanding Social Security is mostly a political bribe that comes at the expense of other programs and workers, who must pay the resulting taxes."

RealMoneyBlog - Free daily/weekly email


2.11.19 - 3 Reasons Savvy Investors Should Buy Gold

Gold last traded at $1,312 an ounce. Silver at $15.69 an ounce.

NEWS SUMMARY: Precious metal prices eased Monday on a firmer dollar. U.S. stocks wobbled as investors weighed the possibility of the U.S. and China striking a deal to end the ongoing tariff war.

3 Reasons to Buy Gold Here -The Street
"Wobbly stock prices are sending many panicked people running scared for gold, sending prices for the yellow metal soaring. Savvy investors should follow suit. Arthur Hogan, chief market strategist at New York City-based investment bank broker-dealer National Securities, says gold is rallying because 'investor appetite for risk is reduced.' He sees three reasons for that: 1. Geopolitical Risk. The U.S. trade war with China, the humanitarian crisis in Venezuela, and Britain's planned Brexit from the European Union are three examples of this. Each raises uncertainty for investors about the future, and that tends to make them anxious. 2. High Stock Valuations. Investors are also increasingly wary of the stock market that's pricey relative to projected earnings. So, some investors are cashing in at least part of their stock holdings and sending some of the proceeds to gold funds. 3. The Federal Reserve. Hogan says the Fed also seems to be at 'an inflection point' when it comes to U.S. interest rates. He notes that the investment community went from expecting the Fed to boost rates multiple times this year to now perhaps making no increases in 2019....Add it all up and it probably makes sense for small investors to follow the lead of professional investors and buy some gold. After all, gold is like life insurance for your portfolio....Most investment strategists suggest somewhere making gold 5% to 15% of portfolio's value."

CRS interview Dow Rises for Seven Straight Weeks -Fox News
Swiss America chairman Craig R. Smith was a guest with Neil Cavuto/Fox News on Friday discussing the stocks market's resiliency given the increased uncertainty over whether or not the U.S. can negotiate an acceptable China trade agreement prior to the March 2 tariff deadline.

A looming retirement crisis threatens us and future generations -CNBC
"Every day, millions of Americans go to their jobs, work hard, and play by the rules to pay the bills and put food on the table each night. But they often struggle to then find any way to save for retirement. Currently, almost half of all American families do not have any retirement savings. That's a time bomb waiting to go off....We face a looming retirement crisis that will impact millions of elderly and soon-to-be elderly Americans, as well as our children and grandchildren who will have to bail out those generations....How we will afford to care for older Americans when most American families have no or very little retirement savings? First, individuals and families must make saving for retirement a priority....Second, Congress must act as well. This retirement crisis is not news for policy makers. The dirty little secret is that government can provide all the incentives in the world for workers and families to save for retirement. But none of it will matter unless those workers and families make saving for retirement a priority as well."

The Enduring Power of Connecting The Generations -Book Review/Medium
“For the first time in American history we now have more older people than younger ones in America....'1 in 3 Babies Born Today Will Live to 100,' reads a Prudential insurance billboard…'Let’s get ready for a longer retirement,' says the tagline....'How To Live Forever' by Marc Freedman offers readers a preview into this brave new intergenerational future where the gifts and talents of an aging population fit hand-in-glove to meet the needs of a younger generation seeking the encouragement of true mentors. Author and founder of Encore.org Marc Freedman presents an impassioned call to readers to accept the longevity decades now opening up between midlife and old age as an entirely new stage of life, which he dubs the 'encore' years. Freedman feels strongly that modern American culture has been age-segregated for far too long, which has stunted a deeply rooted instinct to connect the generational chain. Surveys show a high degree of mutual respect exists between boomers and millennials. Marc encourages boomers to 'resist the mandate to go off in pursuit of their own second childhood. Instead of trying to be young, we should focus on being there for those who actually are [young].' In the eight short chapters that follow Freedman unpacks how and why 'Age Apartheid' is hindering both young and old and then offers readers scores of examples of courageous age-connecting models that are popping up all over the nation and the world thanks to intentional, innovative grassroots efforts....'Planting, tending, bequeathing to the next generation - it’s an essential human project, one we’ve long understood yet let slip over the past half century…The real fountain of youth is the fountain with youth. And the only true way to live forever is to live together…'"

Learn more about how owning physical gold and silver can help you prepare for your "golden years" in Swiss America's 2019 Real Money Perspectives Newsletter. Call 800-289-2646 to request a free copy or register HERE.

RealMoneyBlog - Free daily/weekly email


2.8.19 - Official vs. Actual Inflation

Gold last traded at $1,318 an ounce. Silver at $15.80 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on safe-haven buying and a flat dollar. U.S. stocks fell as investors worried about ongoing U.S.-China trade negotiations as well as slowing economic growth.

Gold is back in fashion -Moneyweek
"Base metals prices are likely to weaken as the Chinese economy keeps slowing. The gold price rebound, however - the yellow metal is now above $1,300 for the first time since last summer - does look sustainable. One source of demand is central banks, who, according to the World Gold Council, haven’t been buying this much gold since the world came off the gold standard in 1971, says Henry Sanderson in the Financial Times....The key theme here is a need (especially among emerging- market central banks) to diversify currency reserves away from dollars, to which they tend to be highly exposed. This has been the case for several years, but geopolitical tension seems to have accelerated the trend. There should be plenty more demand from this source over the longer term....Gold’s reputation as a safe haven is also coming to the fore now that markets have become more volatile and the political backdrop less predictable....The possible return of inflation is another reason to hold gold."

stamp If people knew the actual inflation rate, it would implode the entire system -Smith/The Daily Reckoning
"Our real-world experience tells us the official inflation rate doesn't reflect the actual cost increases of everything from burritos to healthcare. In our household, we measure inflation with the Burrito Index: How much has the cost of a regular burrito at our favorite taco truck gone up? The cost of a regular burrito from our local taco truck has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016. That's a $160% increase since 2001...If the Burrito Index had tracked official inflation, the burrito at our truck should cost $3.38 - up only 35% from 2001. Compare that to today's actual cost of $6.50 - almost double what it 'should cost' according to official inflation calculations....The takeaway? Our money is losing its purchasing power much faster than the government would like us to believe....The grim reality is that real inflation is 7+% per year....Here are a few of the consequences: 1. Social Security beneficiaries would demand annual increases of 7+% instead of zero or near-zero annual increases....2. Global investors might start demanding yields on Treasury bonds that are above the real rate of inflation....3. Private-sector interest rates would also rise, crushing private borrowing....4. Any serious decline in private and state borrowing would implode the entire system."

Stamp Price Index: Further evidence that the true rate of inflation is at least three times higher than the official CPI Index is reflected in the price of a postage stamp; which is supposed to reflect only the government's pure increase in the cost of living. As the chart illustrates the price of a U.S. first class stamp has risen from $.47 in May 2016 to $.55 in January 2019 - and increase of 16.2%, or 6.48% per year - which is a far cry from the official 2% CPI. Another example is the price of gold, which has risen from $300/oz. in 2000 to over $1,300/oz. in 2019, which is an average increase of 10% per year. This illustrates why gold is a trusted safe haven which outpaces the rising cost of living.

What Will Trigger the Next Crisis? -Wall Street Journal
"The biggest distortion in global markets is also the most important. Rock-bottom interest rates, driven by central banks to allow economies to heal, have encouraged risk-taking. Barring a downturn, interest rates will rise in most of the world, and rising interest rates always expose cracks in the financial system. That was clear in February when a slight uptick in U.S. inflation expectations sent rates higher and ultimately caused the implosion of a multibillion-dollar fund that bet against market volatility....Higher rates have typically pushed down stocks and commodities. In a crisis scenario, that would be just the beginning....The flip side to low interest rates has been a chase for yield that has driven investors to embrace riskier bonds. The result has been a boom in corporate borrowing and a race to the bottom both for high-quality and junk-rated companies....That raises the risk of significant losses for credit investors - from pension funds and insurers to mutual funds, ETFs and banks."

It's Mad for Economists to Ignore the Budget Deficit -Samuelson/Real Clear Markets
"Let's coin a new law of politics. Call it Neuman's Law after Alfred E. Neuman of Mad magazine fame, whose philosophy is, 'What, me worry?' The latest champions of Neuman's Law are Lawrence Summers, Treasury secretary under President Clinton and director of the National Economic Council under President Obama; and Jason Furman, the last chairman of the White House Council of Economic Advisers under Obama. Both are economists; both teach at Harvard....'Deficits ... should not cause policymakers much concern, at least for now,' they write. 'It's time for Washington to put away its debt obsession,' they conclude. 'Obsession'? They must be kidding. This inverts the truth. If Washington feared debt, Congress would long ago have tamed budget deficits...What both Democrats and Republicans actually fear are the highly unpopular steps - spending cuts or tax increases - they might have to take to reduce or eliminate the deficits, which are huge....The message that a reasonable person would take from their essay is that the government can borrow unlimited amounts for the foreseeable future...The essay's true purpose seems to be to provide intellectual support for what self-interested politicians would do in any case: enjoy present pleasures and postpone any future unpleasantness. Let someone else worry about the future. That's Neuman's Law, and it's mad."

RealMoneyBlog - Free daily/weekly email


2.7.19 - Wells Fargo Online Banking Goes Down

Gold last traded at $1,313 an ounce. Silver at $15.67 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on bargain-hunting and a flat dollar. U.S. stocks fell sharply after a report that a meeting between President Donald Trump and Chinese President Xi Jinping is unlikely before a key March deadline.

Wells Fargo Online Banking Goes Down, Customers Unable To Access Accounts -Zero Hedge
"After their first attempt to provide people with account access crashed and burned, Wells Fargo is now simply apologizing and letting people know they can go to a branch or an ATM for their banking needs. The bank has apologized again in a second Thursday tweet: 'We’re experiencing a systems issue that is causing intermittent outages, and we’re working to restore services as soon as possible. We apologize for the inconvenience.' Many who have tried the links provided were met with a '502 Bad Gateway' error. Wells Fargo's online banking and mobile app went down Thursday morning, leaving customers unable to access their accounts and conduct banking needs. It is the second time their system has gone down in less than a week. Spokeswoman Hillary O'Byrne says that the bank is investigating the cause of the outage. Virginia Sportscaster Bill Rose tweeted: 'It's like the 1800's: No ATM's, no credit/debit cards, no online banking, and no way to cash a check at a branch. New corporate slogan:'@WellsFargo- It's like banking in Venezuela'"

Palantir Palantir Knows Everything About You -Bloomberg
"Founded in 2004 by Peter Thiel and some fellow PayPal alumni, Palantir cut its teeth working for the Pentagon and the CIA in Afghanistan and Iraq. The company’s engineers and products don’t do any spying themselves; they’re more like a spy’s brain, collecting and analyzing information that’s fed in from the hands, eyes, nose, and ears. The software combs through disparate data sources - financial documents, airline reservations, cellphone records, social media postings - and searches for connections that human analysts might miss. It then presents the linkages in colorful, easy-to-interpret graphics that look like spider webs....The U.S. Department of Health and Human Services uses Palantir to detect Medicare fraud. The FBI uses it in criminal probes. The Department of Homeland Security deploys it to screen air travelers and keep tabs on immigrants. Police and sheriff’s departments in New York, New Orleans, Chicago, and Los Angeles have also used it, frequently ensnaring in the digital dragnet people who aren’t suspected of committing any crime. People and objects pop up on the Palantir screen inside boxes connected to other boxes by radiating lines labeled with the relationship: 'Colleague of,' 'Lives with,' 'Operator of [cell number],' 'Owner of [vehicle],' 'Sibling of,' even 'Lover of.' If the authorities have a picture, the rest is easy. Tapping databases of driver’s license and ID photos, law enforcement agencies can now identify more than half the population of U.S. adults....All human relations are a matter of record, ready to be revealed by a clever algorithm. Everyone is a spidergram now....Thiel started Palantir - named after the omniscient crystal balls in J.R.R. Tolkien’s Lord of the Rings trilogy - three years after the attacks of Sept. 11, 2001. The CIA’s investment arm, In-Q-Tel, was a seed investor....Palantir is twice the age most startups are when they cash out in a sale or initial public offering. The company needs to figure out how to be rewarded on Wall Street without creeping out Main Street....'The world changed when it became clear everyone could be targeted using Palantir,' says a former JPMorgan cyber expert who worked with Cavicchia at one point on the insider threat team."

Gold Prices Turn Higher As Traders "Buy The Dip" -Kitco
"Gold and silver prices have erased modest early losses and have moved to slightly higher levels and at their session highs in morning dealings Thursday. Once again, traders have stepped in to 'buy the dip' in the metals prices, which is a bullish phenomenon that occurs when prices are in an uptrend and the charts are bullish. The U.S. dollar index has also backed down from its daily high, which is encouraging a bit of buying interest in the precious metals markets. April gold was last up $1.30 an ounce at $1,315.60."

Who’s Afraid of Socialism? -Wall Street Journal
"Now that Donald Trump has criticized the 'new calls to adopt socialism in this country,' Democrats and the media are already protesting that the socialist label doesn’t apply to them. But what are they afraid of - the label or their own ideas? The biggest political story of 2019 is that Democrats are embracing policies that include government control of ever-larger chunks of the private American economy. Merriam-Webster defines socialism as 'any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.' ....You decide if the proposals meet the definition of socialism. • Medicare for All. Bernie Sanders’ plan, which has been endorsed by 16 other Senators, would replace all private health insurance in the U.S. with a federally administered single-payer health-care program. • The Green New Deal. This idea, endorsed by 40 House Democrats and several Democratic presidential candidates, would require that the U.S. be carbon neutral within 10 years. • A guaranteed government job for all. To assist in this 10-year transformation of society. • A new system for corporate control. Senator Elizabeth Warren wants a new federal charter for businesses with more than $1 billion in annual revenue that would make companies answer to more than shareholders. • Vastly higher taxes. These ideas would require much more government revenue, and Democrats are eagerly proposing ways to raise it. Mr. Sanders wants to raise the top death tax rate to 77%. Ms. Ocasio-Cortez wants a new 70% tax rate on high incomes....The American public deserves to have a debate about all this, lest it sleepwalk into a socialist future it doesn’t want. Credit to Mr. Trump for teeing it up."

RealMoneyBlog - Free daily/weekly email


2.6.19 - Car Dealers Flush With Unsold Cars

Gold last traded at $1,314 an ounce. Silver at $15.70 an ounce.

NEWS SUMMARY: Precious metal prices eased slightly Wednesday on a firmer dollar. U.S. stocks traded mostly flat as Wall Street digested mixed quarterly earnings and the State of the Union address.

Gold Getting Set For Bull Run -Sharps Pixley/Zero Hedge
"After seven disappointing years - in US dollars at least - it is hard to shake off some skepticism. That said, gold is showing vigor in no less than 72 currencies where it is at or close to an all-time high. Looking ahead - it is our view that gold is currently firing on 2 cylinders - out of 4. So the best is yet to come. The excellent news is that gold is seeing strong buying from the highest quality, glacial if you like, and perhaps less apparent sectors - that is Central Bank buying and from institutional investors. The official sector is acquiring gold at the fastest rate since 1971 when the Gold Standard ended under Nixon. Not only is the tonnage impressive, it is also the number of participants involved, which suggests this may have legs to run. It begs the question what can they see, that others have not....Meanwhile, institutional buyers (especially in Europe) are starting to throw themselves heavily into gold ETFs. In December 2018 they acquired 76 tonnes taking total holdings to levels not seen since 2013....Gold has all the appearance of an early stage bull run - it mirrors what we have seen before. And secondly, not untypically it is the smart money which is getting in first. It is tempting to declare the bull run in full flow and we see confirmation of this once gold has crossed the magical figure of $1360."

great wall The Coming China Shock -Project-Syndicate
"In September 2018, we argued that China’s economic and foreign policies were defying the 'laws' of economics and geopolitics, and warned that the situation could not last. Since then, our assessment has been borne out, and our concerns have deepened. Until recently, China had been able to pursue a unique development path, owing to the government’s far-reaching control over the economy (and society more generally). But those days are over. The country’s internal debts are mounting to unsustainable heights, and domestic investment levels have passed the point of diminishing returns and are veering toward negative territory. Moreover, China’s strategy of fostering exports, promoting industrial 'national champions,' and expropriating foreign technology has crossed the threshold of what the West, especially the United States, is willing to tolerate. In response to the current global slowdown, the Chinese government has decided to loosen restrictions on private and public borrowing. But this will merely aggravate the country’s debt and overinvestment problems. Or, as a famous Chinese saying goes, it is akin to 'drinking poison to quench one’s thirst.'....Unfortunately, any discontinuity in China’s economic performance would have a seismic effect on the rest of the world, because it would lead to a significant weakening of the renminbi...Such a scenario would have a tsunami-like impact on global currencies....One way or another, China’s continued defiance of the 'laws' of macroeconomics, geopolitics, and economic development will hasten its inevitable return to normalcy. When that happens, the world had better brace itself."

Billionaire Rules -Ponte/World Net Daily
"According to self-described socialist Congresswoman Alexandria Ocasio-Cortez (D.-N.Y.), 540 Americans should not be permitted to exist. America is 'immoral,' she says, for letting anybody be one of these billionaires, to have net worth of $1 billion or more. Equality is the highest ideal of socialists, an ideal Ms. Ocasio-Cortez wants to impose with a very unequal progressive income tax of 70 percent on the rich. Another Democrat in Congress wants 90 percent....Oddly, 39 percent of the billionaires in the crosshairs of such new laws are not Republicans. Many - especially in Hollywood, Silicon Valley, and Wall Street - are among the biggest donors to the Democratic Party and its candidates....Billionaires such as Donald Trump and Howard Schultz create leavening, independence and alternative ideas in our culture. They are too rich to be bullied or silenced. They laugh when 'woke' radicalized billionaire Nicolas Hanauer declares collectivist Ms. Ocasio-Cortez the 'centrist' and capitalist Schultz the extremist. Some billionaires are better than the poor, servile politicians who are bought, sold or controlled by conformist leftist mobs."

Car Dealer Lots Are Flush With Unsold Cars as Sales Are Expected to Drop -Wall Street Journal
"Car dealers are beginning 2019 with a heavier inventory of unsold vehicles on their lots, a situation that some analysts say will put pressure on them to cut factory output as U.S. auto sales are expected to cool this year. There were 3.95 million vehicles on dealership lots at the end of January, a 4% increase from December and up nearly 3% from the prior-year January, according to data released Monday by WardsAuto. Industry forecasters and some auto executives predict sales this year will drop to under 17 million vehicles for the first time since 2014....General Motors Co. has already moved to end production at five North American factories this year in response to falling sedan sales, and aiming to get ahead of an expected U.S. car market downturn....Ryan Gremore, president of the O’Brien Auto Team, a dealership chain in Illinois, Florida and Kentucky, said low interest rates in the past have made it cheaper for dealers to carry higher levels of inventory. But with rates now going up, it will become more expensive to hold on to unsold vehicles and retailers are likely to be pickier about what they stock, he added. 'We’ve carried too much inventory because we’ve been conditioned at artificial rates,' Mr. Gremore added."

RealMoneyBlog - Free daily/weekly email


2.5.19 - A Deepening State Pension Crisis

Gold last traded at $1,319 an ounce. Silver at $15.83 an ounce.

NEWS SUMMARY: Precious metal prices inched higher Tuesday on safe-haven buying despite a stronger dollar. U.S. stocks rose as the corporate earnings season rolled on and investors eagerly await President Donald Trump's State of the Union speech tonight.

The relevance of gold as a strategic asset -World Gold Council
“Gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio: A source of long-term returns, a diversifier that can mitigate losses in times of market stress, a liquid asset with no credit risk that has outperformed fiat currencies, a means to enhance overall portfolio performance. Our analysis shows that adding 2%, 5% or 10% in gold over the past decade to the average pension fund portfolio would have resulted in higher risk-adjusted returns. Gold is becoming more mainstream. Since 2001, investment demand for gold worldwide has grown, on average, 15% per year....Today, gold is more relevant than ever for institutional investors....As a strategic asset, gold has historically improved the risk-adjusted returns of portfolios, delivering returns while reducing losses and providing liquidity to meet liabilities in times of market stress."

quote Mr. President, Tear Down That Word -Noonan/Wall Street Journal
"President Trump just took a drubbing on immigration, undone by the deadly competence of Speaker Nancy Pelosi, who is now generally regarded as the answer to the question: 'What if a Prada bag with a gun in it became a person?' Republicans on the Hill are negotiating for a new deal, but their team just lost and Democrats are heady...If no deal is struck, the president can risk another shutdown or attempt to secure wall funding by declaring a national emergency. The more-serious Republicans do not want that historic precedent set, and in any case it would get bogged down in the courts. What should the president do?....The word 'wall' has become as symbolic to Democrats as it is to the president. When they add, 'But I’m not for the wall,' they are telling their immigrant constituents, 'I don’t fear you, I’m for you.' The Democrats must defeat the president on that one word. The president should let them, while pretending it pains him....Mr. President, tear down that word....He should push and push and then accept a solid deal that doesn’t mention a wall but includes everything else. Then he should act defeated. He should run around looking slump-shouldered and lost in his big blue overcoat. It won’t be hard! He should ask the media please, in the coming year and now that a deal has been passed, to cover the border, talk to people who work there, find out if what we’ve done has controlled illegal immigration. Within a year the answer should be apparent. If the border is secure Mr. Trump will look good: He’s the first president in a quarter-century to get the job done. It was five-dimensional chess after all! If it doesn’t work he’s got a big fat 2020 issue: 'I bowed to reality, I made a deal, and look what they did.'"

Public employees are living longer than expected, deepening state pension crisis -City Journal
"The second-longest bull market in American history hasn’t stopped the deterioration of state and local pension funds, whose unfunded debt has almost quadrupled - by their own accounting - from about $360 billion in 2007 to $1.4 trillion today. Having relied on overly optimistic and inaccurate financial assumptions for decades, public pension administrators are now forced to acknowledge that the systems owe much more than previously thought. Even as local governments struggle to pay for this debt, it keeps growing. Concerned that mortality tables for private-sector workers don’t accurately reflect what’s going on among retired government employees, the Society of Actuaries conducted a three-year study of public-pension retirement systems, evaluating approximately 580,000 deaths between 2008 and 2013, across 78 public-pension plans. The study found that, on average, female teachers were living 90 years, while male teachers lived 87.7 years. By contrast, the Social Security Administration’s life expectancy tables for the U.S. population show that men who reach 65 can expect on average to live 84.3 years, and women 86.7 years....Longer lives for public employees will mean higher costs, and not just for pension plans. Many state and local governments promise to pay for the health care of their retired workers, but few have enough money set aside to do so....Consequently, the amount of money that local governments must pay into the system has been rising steadily. As the latest study on mortality rates shows, that trend is going to continue."

Do you have enough retirement savings to last 23 years? -Marketwatch
"Looking at the income, living expenses and lifespans of today’s retirees can help you make the right financial moves so your golden years aren’t tarnished by an unexpected shortfall....The average remaining life expectancy of someone who’s made it to their early 60s (23.3 years), according to the Centers for Disease Control and Prevention - you should plan to be retired for at least a few decades....The average budget for a retiree, according to Bureau of Labor Statistics data, provides even more color on what to expect when you’re expecting to retire. Older households, defined as ones headed by someone 65 or older, spend $46,000 annually, versus the $57,000 average spent by all U.S. households combined. On average, about half of a retired household’s income comes from Social Security and private and government pensions, according to the BLS, with personal savings and investment and rental income providing 6.9%....If you’re not yet retired, one of the best moves is postponing your retirement party. This strategy is especially valuable for those in their peak earning years."

RealMoneyBlog - Free daily/weekly email


2.4.19 - Gold's Key Role in Venezuela's Crisis

Gold last traded at $1,318 an ounce. Silver at $15.90 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed on Monday despite a stronger dollar. U.S. stocks traded mostly lower as investors awaited the latest batch of corporate earnings releases.

Here's why gold is key to Venezuela's crisis-stricken government -CNBC
"Gold is fast becoming indispensable to those clinging onto power in crisis-stricken Venezuela. Political tensions in the South American country are reaching boiling point, with the oil-rich, but cash-poor, country in the midst of the Western Hemisphere's worst humanitarian crisis in recent memory. Thousands of anti-government protesters took to the streets of the capital city over the weekend to demonstrate against President Nicolas Maduro....Why is gold so important? 'It's important for three reasons: First, gold can act as fresh cash to help (Maduro's administration) survive. Second, it can help provide security or military protection. And, third, it can help them to live, hide and maybe even prepare a comeback,' Moya-Ocampos said. Countries typically only tend to sell large volumes of gold reserves in the most extreme financial circumstances. And, hyperinflation, mounting U.S. sanctions and collapsing oil production prompted Maduro to start selling off gold about a year ago."

bull trap The evidence is in: Stocks are in a 'bull trap' -Marketwatch
"The 'Central Bank Two-Step' is back: Dovish + dovish = nothing but higher prices. The lows are in; what else can I buy? This pretty much sums up current sentiment. And so goes the familiar script during emerging bear markets: A general sense of relief that the lows are in, and a return of optimism and greed after an aggressive counter rally following an initial scary drop. Long forgotten are the December lows after six weeks of higher prices. While indeed a renewed fully dovish Fed may be all that’s needed to keep 2019 bullish, there is evidence that this rally may turn out to be a big, fat bull trap....I recognize that between the dovish Fed and a potential China deal, markets may just drift higher and any pullbacks could turn into buying opportunities. However, as long as SPX remains below its 200 MA without a confirmed breakout above the confluent set of elements discussed above, there is well-founded risk that this market can still turn into a full-fledged bear market. After all, economic growth is slowing, earnings growth is slowing and the last three times the Fed halted its rate-hike cycle a recession soon followed....While the bull case remains technically unconfirmed at this stage, the bull-trap scenario will also remain unconfirmed for some time...I suspect we’ll know more in the next month or two."

Gold and Silver both rallied smartly last week -Merriman/FX Street
"Gold and Silver both rallied smartly last week, with Gold trading above $1330 for the first time since last April. Ever since our special reports on Gold issued in August, when Gold fell to $1167, the yellow metal has been in a very bullish pattern, right in line with those reports pointing to the start of a new long-term 31-month cycle. The start of all long-term cycles is bullish. Silver also performed well last week, crossing above $16.00 for the first time in six months....The amount of gold bought by central banks in 2018 reached the second highest annual total on record, according to the World Gold Council (WGC). Central banks bought the most gold by volume since 1967, according to the industry research firm, which also highlighted it was the largest amount since former U.S. President Nixon Richard's decision to end the dollar's peg to bullion in 1971. The WGC said the bulk of the buying was carried out by a handful of central banks with Russia leading the way as it looks to swap out dollars from its portfolio... The Federal Reserve is reported to hold the most, amounting for almost three quarters of the nation's foreign-exchange reserve pot."

The Clash of Generations, Fed, China, And The S&P500 -Macro Monitor
"Unfortunately, the policy of manipulating asset prices higher to save the economy from the Great Financial Crisis (GFC) over the past decade has created unsustainable politics. It has set the young, who own relatively few assets, versus the old, who own the most. 'For Americans under the age of 40, the 21st century has resembled one long recession,' reports New York Times. 'Many younger workers are struggling to launch themselves into good-paying careers. They then lack the money to buy a first home or begin investing in the stock market...Over all, the generational gap in both income and wealth is growing.' The young finally came out to vote in the 2018 midterms and they brought, and will continue to bring, their pitchforks....What if the country (the majority) is moving left, which we believe it is as the younger generations, saddled with debt and carbon from the baby boomers enter the political fray en masse? Back To The Market. The Fed has thus far been all talk and has done nothing yet to back up its dovishness. But if the labor markets continue to tighten, and tight they are - ask any contractor trying to build or a young couple trying to buy their first home - the Fed will have to move back to a tightening bias....The next big macro factor to move the market is a China trade deal....Thus we expect the market to kiss, or temporarily pierce the 200-day moving average at 2740, before reversing and setting on a new trajectory to test the December low."

RealMoneyBlog - Free daily/weekly email


2.1.19 - 'Medicare for All' Will Terrify Voters

Gold last traded at $1,322 an ounce. Silver at $15.93 an ounce.

NEWS SUMMARY: Precious metal prices steadied near 9-month highs Friday amid ongoing economic uncertainty. U.S. stocks traded mostly higher after upbeat U.S. jobs growth data beat expectations.

Gold steadies near 9-month peak -Reuters
"Gold steadied on Friday after hitting a nine-month peak in the previous session, as the market awaited U.S. jobs data for indications on the strength of the world’s biggest economy. A more dovish U.S. Federal Reserve outlook and a weaker dollar had lifted gold on Thursday, although it later steadied as optimism about U.S.-China trade talks lifted appetite for riskier assets. Still, the precious metal remained on track for its second straight weekly gain and weak Chinese factory data lent support....Additionally, data on Friday showed Chinese factory activity shrunk by the most in almost three years in January, adding to concerns of global growth, which has triggered increased interest for gold of late. Reflecting investor interest, holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, rose to their highest since June on Tuesday."

crs interview Will Border Wall Fight Impact China Trade Deal? -Fox Business
Swiss America chairman Craig R. Smith discusses how the Democrat's interference in funding the construction of a U.S.-Mexico border wall may be influencing the China trade negotiations.

The Fed's latest move proves it's lost -Crudele/New York Post
"Read between the lines and the Federal Reserve is admitting that it is lost. 'Puzzled' might be a better word. And while the stock market loves that idea because it means there probably won’t be as many interest rate hikes as expected this year, this situation isn’t good for America. Interest rates were left where they are at this meeting and the Fed looks more reluctant to raise them in the months ahead....Why isn’t the Fed pushing rates higher? Because there are 'crosscurrents,'says Fed chief Jerome Powell... the most significant of those crosscurrents, namely the fact that the stock market throws a tantrum when the Fed raises interest rates and so, too, does President Trump. It would be messy for the Fed president to admit that he’s watching Wall Street or listening to the president....There’s one other problem that the Fed has - and it’s a very big one. Back in 2009, the Fed started printing fake money so that it could buy government bonds and keep interest rates extraordinarily and artificially low. The government had purchased around $4 trillion in government bonds, bank debt and Treasury securities from 2009 to 2011. The Fed never had a plan to get out of this fake-money situation. It never knew how to 'quantitative tighten,' that is, sell all those trillions in securities without affecting the markets and the economy. The Fed has started selling off those excess assets, something that the financial markets didn’t seem to like....The Fed is like someone driving a car with a navigation system that keeps rerouting. It really doesn’t know if it is going in the right direction. It is lost."

‘Medicare for All’ Will Terrify Voters -Rove/Wall Street Journal
"In a CNN town hall Monday, Ms. Kamala Harris endorsed 'Medicare for All.' Pressed about whether the proposal would abolish private health insurance, the California senator breezily declared, 'Let’s eliminate all of that. Let’s move on.' After Republicans jumped on her for this policy’s radicalism, a Harris adviser said the attacks were 'good trouble' for her. A Jan. 14 Kaiser Family Foundation poll seems at first glance to support that view. It found 56% of Americans favor 'a national health plan, sometimes called Medicare for All, where all Americans would get their insurance from a single government plan,' compared with 42% who opposed the idea. Medicare for All becomes less popular when people hear more about its possible effects. Support dropped to 37%, with about 60% opposed, when respondents were told it would 'eliminate private health-insurance companies' or 'require most Americans to pay more in taxes.' Support fell to 32% when respondents were alerted it would 'threaten current Medicare.'....Just wait until Republicans raise question about how much single-payer health care will cost. In an analysis last summer, Charles Blahous of George Mason University’s Mercatus Center pegged its price tag at $32.6 trillion over the first decade. The total federal budget for this fiscal year is only $4.4 trillion....Republicans cannot merely stand on opposition to Medicare for All; it’s hard to beat something with nothing. The GOP also must lay out ideas to make health care better, more affordable and more accessible with choice, competition and markets. The rush by Democratic presidential candidates to embrace Medicare for All - and measures like 'free' college, guaranteed jobs and universal basic income - may make the 2020 election a contest between promise-them-anything democratic socialism and free enterprise. The stakes don’t get much higher than that."

RealMoneyBlog - Free daily/weekly email


1.31.19 - Mark Levin Rips 'Intellectually Corrupt' Media

Gold last traded at $1,324 an ounce. Silver at $16.03 an ounce.

NEWS SUMMARY: Precious metal prices rose to 8-month highs Thursday on safe-haven buying and Fed-induced dollar weakness. U.S. stocks traded mixed as declines in Microsoft and DuPont pressured the indexes.

Central bank gold buying hits highest level in half a century -CNBC
"Central banks bought the most gold by volume since 1967, according to the industry research firm, which also highlighted it was the largest amount since former U.S. President Nixon Richard's decision to end the dollar's peg to bullion in 1971. Central bank net purchases reached 651.5 metric tons in 2018, 74 percent higher than in the previous year when 375 tons were bought....'Heightened geopolitical and economic uncertainty throughout the year increasingly drove central banks to diversify their reserves and re-focus their attention on the principal objective of investing in safe and liquid assets,' said the World Gold Council report released on Thursday. The WGC said the bulk of the buying was carried out by a handful of central banks with Russia leading the way as it looks to swap out dollars from its portfolio. The Russian central bank sold almost all of its U.S. Treasury stock to buy 274.3 tons of gold in 2018....The price of gold has risen around 9 percent in the last three months."

Mark levin Mark Levin rips 'intellectually corrupt' media -Fox News
"A fired up 'Life, Liberty & Levin' host Mark Levin slammed liberal mainstream media members as 'intellectually corrupt' who commit 'yellow journalism' to harm President Trump. Levin joined Sean Hannity to discuss the recent examples of mainstream media rushing to judgment in order to condemn Trump and his supporters following the BuzzFeed and Covington debacles. 'What a mess,' Levin told Hannity. 'Poll after poll. Survey after survey shows that the media are liberal and Democrat. And they don’t disappoint liberals and Democrats.' Levin said they have 'a groupthink mentality,' and noted the lack of uniformed, required standards among news outlets. 'No clear line between news and opinion. This is an opinion show, I give an opinion… you give an opinion,' Levin said of 'Hannity.'....'No commitment to objectivity and that’s the bottom line. No commitment to truth-telling...'Scandalous, sensational, intellectually corrupt.' Levin said mass media was committed to Hillary Clinton but has pivoted to 'ousting' President Trump. 'They’re sloppy, they misreport, they don’t care, they figure they’ll throw out an apology is they must. They try to destroy the president, his family, anybody associated with him, his staff, Kavanaugh, anything,' Levin said."

Warning! Everything Is Going Deep: 'The Age of Surveillance Capitalism' -Friedman/New York Times
"Recent advances in the speed and scope of digitization, connectivity, big data and artificial intelligence are now taking us 'deep' into places and into powers that we’ve never experienced before - and that governments have never had to regulate before. I’m talking about deep learning, deep insights, deep surveillance, deep facial recognition, deep voice recognition, deep automation and deep artificial minds....As big data got really big, as broadband got really fast, as algorithms got really smart, as 5G got actually deployed, artificial intelligence got really intelligent. So now, with no touch - but just a voice command or machines acting autonomously - we can go so much deeper in so many areas....Machines can recognize your face so accurately that the Chinese government can punish you for jaywalking in Beijing, using street cameras, and you will never encounter a police officer....But bad guys, who are always early adopters, also see the same potential to go deep in wholly new ways. They can fake your face and voice so well that they can create a YouTube video that will go viral of you saying racist things or make it look like the president of the United States just announced a nuclear attack on Russia. They can use technology to fake a bank manager’s voice so well that it can call your grandmother, and, with a voice command, ask her to transfer $10,000 to an account in Switzerland and she’ll do it - and you’ll never catch them in time....'Surveillance capitalism,' writes Harvard Business School professor Shoshana Zuboff, 'unilaterally claims human experience as free raw material for translation into behavioral data. Although some of these data are applied to service improvement, the rest are declared as a proprietary behavioral surplus, fed into advanced manufacturing processes known as ‘machine intelligence,’ and fabricated into prediction products that anticipate what you will do now, soon and later.'....Regulations often lag behind new technologies, but when they move this fast and cut this deep, that lag can be really dangerous. I wish I thought that catch-up was around the corner. I don’t. Our national discussion has never been more shallow - reduced to 280 characters."

Speaking of being punished for jaywalking in Beijing, Swiss America's Special Report THE SECRET WAR discusses how big tech is merging with big government in the U.S. as well as in China. Did you know that today in China, algorithms will track citizens online to decide if they are worthy of "social credit"? By combining government data with the private corporate data, Google has helped China develop Dragonfly, an advanced AI program to spy on China’s citizenry!

Record Cold Forces Rethink on Global Warming -PJMedia
"Headlines around the world are reporting exceptionally frigid conditions and unusually high levels of snowfall in recent weeks. They tout these events as records, but few people understand how short the record actually is -- usually less than 50 years, a mere instant in Earth’s 4.6-billion year history. The reality is that, when viewed in a wider context, there is nothing unusual about current weather patterns. Despite this fact, the media -- directly, indirectly, or by inference -- often attribute the current weather to global warming. Yes, they now call it climate change. But that is because activists realized, around 2004, that the warming predicted by the computer models on which the scare is based was not actually happening. Carbon dioxide (CO2) levels continued to increase, but the temperature stopped increasing. So, the evidence no longer fit the theory....Yet, the recent weather is a stark reminder that a colder world is a much greater threat than a warmer one. While governments plan for warming, all the indications are that the world is cooling. And, contrary to the proclamations of climate activists, every single year more people die from the cold than from the heat....Between 1940 and 1980, global temperatures went down. The consensus by 1970 was that global cooling was underway and would continue. Lowell Ponte’s 1976 book The Cooling typified the alarmism: 'It is cold fact: the global cooling presents humankind with the most important social, political, and adaptive challenge we have had to deal with for ten thousand years. Your stake in the decisions we make concerning it is of ultimate importance; the survival of ourselves, our children, our species.' Change the seventh word to warming, and it is the same threat heard today. The big difference is that cooling is a much greater threat. To support that claim, the CIA produced at least two reports examining the social and political unrest aggravated mainly by crop failure due to cooling conditions. The World Meteorological Organization also did several studies on the historical impact of cooling on selected agricultural regions, and projected further global cooling....The current cold weather across much of the world should prompt us to re-examine climate realities - not the false, deceptive, and biased views created and promoted by deep state bureaucrats through their respective governments."

RealMoneyBlog - Free daily/weekly email


1.30.19 - Uncertainty Boosts Gold to 8-Month Peak

Gold last traded at $1,322 an ounce. Silver at $15.88 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday in anticipation of the Fed pausing further rate increases. U.S. stocks rose on upbeat earning reports from Boeing and Apple.

Gold scales 8-month peak on Fed rate pause hopes, trade woes -Reuters
"Gold prices edged up on Wednesday to their highest since May 2018, supported by uncertainty over U.S.-China trade relations and expectations the Federal Reserve will keep rates on hold. Spot gold was up 0.2 percent at $1,313.96 per ounce as of 0712 GMT, its highest since May 14, 2018. 'For the short-term gold is going to move higher as the U.S. Federal Reserve will have a dovish tone, which should weaken the dollar and give gold a bit of a move up,' said INTL FCStone analyst Edward Meir. Investors are waiting on the Federal Reserve’s policy decision later in the day, with expectations officials will reinforce their recent dovish stance given a stalemate on global trade, signs of a slowdown in the U.S. economy, and waning business and consumer confidence. 'Gold also looks good on the charts ... Physical demand seems to be improving in some markets and ETF buying has been increasing. In general the path of least resistance is probably higher from here,' Meir said."

pending home sales chart US Pending Home Sales Crash Most In 5 Years -Zero Hedge
"Following Case-Shiller's report that home price gains are the weakest in four years, Pulte Homes' CEO admission that 2019 will be a 'challenging year,' and existing home sales carnage, Pending Home Sales were expected to very modestly rebound in December. But it didn't! Pending home sales dropped 2.2% MoM (versus a 0.5% expected rise) to the lowest since 2014... This is the 12th month in a row of annual sales declines...and the biggest annual drop in 5 years... Yet another sign the housing market is struggling amid elevated property prices and borrowing costs... 'The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,' NAR Chief Economist Lawrence Yun said in a statement."

U.S. Economy Is Slowing, Survey Says -Wall Street Journal
"Gross domestic product, or the total value of goods and services produced in the U.S., grew at a 2.6% annual rate in the fourth quarter, economists estimate in a Wall Street Journal survey conducted this week. Output will grow at a 1.8% clip in the first quarter and a 2.5% rate in the second quarter, according to the poll....Economists believe a big slowdown in China’s economy and slower growth in Europe are holding back the U.S., reducing demand for American exports and making companies more reluctant to begin long-term projects....The U.S. expansion is set to turn 10 years old this summer and thereafter become the longest on record...Consumers, however, are a wild card....Other factors appear to be more clearly weighing on economic growth. The Federal Reserve’s campaign to keep inflation tame by steadily raising interest rates has hurt some sectors, chief among them housing....Perhaps the biggest obstacle is China’s cooling economy, which grew at the slowest pace in nearly three decades last year."

Endless welfare benefits are not the answer to ending income inequality -The Hill
"The American policy debate is undergoing an important change. Some influential Democrats no longer view welfare benefits as 'work supports' as they have done for the past generation. Instead, they increasingly see welfare benefits as ends in themselves, regardless of whether recipients work consistently or even work at all to receive them. Meanwhile, the list of benefits that prominent Democrats think that government should provide, from payouts resembling 'universal basic income' to 'carbon dividends' to free college tuition and free health care, is growing rapidly. This twin shift reflects a rejection of the longstanding Democratic position on welfare reform and the biggest proposed expansion of the welfare state since at least the Great Society. With the likely 2020 Democratic presidential candidates pushing many of the plans, they will be debated and possibly enacted in the years ahead. No federal legislation has proposed a full universal basic income yet. But variations of 'handing people cash' have emerged from the possible Democratic presidential candidates....This latest turn hearkens back to the 1980s, when liberals resisted work requirements for welfare recipients, deriding them as making recipients 'sing for their supper.' In 1996, following the lead of President Clinton, more than half of Democrats in Congress rejected that view and joined nearly all Republicans in supporting the 'work first' welfare reform law. This resulted in less poverty and welfare dependence precisely because it successfully promoted more work and earnings by low income parents. Rejecting that approach now in the name of liberating the poor from work will not liberate anyone. It will only harm the very people policymakers are claiming to help by making it harder for them to escape poverty for good."

RealMoneyBlog - Free daily/weekly email


1.29.19 - Fed Chair Leaves Markets Confused

Gold last traded at $1,308 an ounce. Silver at $15.85 an ounce.

NEWS SUMMARY: Precious metal prices rose to 7-month highs Tuesday on safe-haven buying and a weaker dollar. U.S. stocks fell as Wall Street awaited the latest quarterly results from tech giant Apple.

Gold reaches seven-month high as dollar struggles -Reuters
"Gold climbed to a seven-month high on Tuesday and stocks were back on the up too, as investors dug in for three days of political and economic drama and a blizzard of big tech earnings, starting with Apple later. The main European and Asian markets held up well ahead of potentially galvanizing events including a key Brexit vote on Tuesday, Wednesday’s U.S. Federal Reserve decision and Thursday’s conclusion of the latest Sino-U.S. trade talks...'Investors are very cautious, with many uncertainties on U.S.-China trade talks and Brexit. Huawei is at the center of the dispute, creating a very noisy background for the trade talks,' said Margaret Yang, a market analyst at CMC Markets. 'All these are making it more difficult for investors to judge the market’s direction. Money is fleeing into assets such as gold, seeking safety.'"

bull Powell: Once a caver, always a caver -Macro Tourist
"Remember the Powell of last year? You know, the one that tried to convince us that there 'could be no macroeconomic stability without financial stability?' And this Powell was not concerned about financial stability in terms of making sure the stock market never went down, but rather just the opposite. For the first ten months of his stint as Fed Chair, Powell articulated a position of discipline and tried to back away from the idea that Wall Street was dictating monetary policy. Powell repeatedly stressed that rates would be set for the long-run benefit of the economy - not for the desire of the money markets. In fact, even as late as the FOMC meeting on December 19th, 2018 Powell was trying to convince the world that stock market gyrations would not shift his resolve....Funny how things change when Powell is staring down the barrel of a stock market decline that seemed to be spiraling out of control. The late December swoon proved too much for Powell to bear, and since then he has folded like a lawn chair on almost all of his hawkish guidance. Although Powell had abandoned his October 3rd prognostication that the Fed Funds level was a 'long way from neutral', as late as January 10th he was still holding firm that the Federal Reserve’s balance sheet rundown (quantitative tightening) was on 'auto-pilot'....It looked like Powell might hold tough, but Friday the Wall Street Journal published an article that was widely viewed as the first step in the FOMC changing QT policy. "Fed Officials Weigh Earlier-Than-Expected End to Bond Portfolio Runoff"....If Powell had not recently caved to Trump and Wall Street, the market would not be so quick to believe this sort of article. The reason it was taken so bullishly is that lately Powell has been giving the market what it wants....After all, the market believes - once a caver, always a caver."

Fed Chairman Sometimes Leaves Markets Confused -Wall Street Journal
"Federal Reserve Chairman Jerome Powell likes to think of himself as a plain-spoken communicator, but his past three months as the central bank’s leader have proved challenging because markets have occasionally misunderstood him. Markets shuddered during Mr. Powell’s press conference last month in which he sought to highlight the economy’s strength after the Fed raised its benchmark interest rate by a quarter percentage-point to a range between 2.25% and 2.5%. Stocks fell 8% in the days after the Fed raised rates, and bond yields fell to a 10-month low....'The honeymoon is over. This is part of being Fed chairman,' said Diane Swonk, chief economist at Grant Thornton. Mr. Powell struck a different, market-sensitive tone on Jan. 4, signaling the Fed could hold rates steady in coming months because of recent market volatility, slower global growth and muted inflation. Stocks have been up 8% since....During periods of market volatility, the Fed, Treasury and White House usually seek to assure markets in unison."

Expanding economic freedom at home -Washington Times
"If someone were to ask you to name the economically freest country in the world, what would you say? Probably the United States. Even many non-Americans would likely give that answer. Unfortunately, they’d be wrong. The economy that enjoys the highest level of economic freedom is thousands of miles away. It’s Hong Kong. The United States, surprisingly enough, isn’t even in the top 10 of the latest 'Index of Economic Freedom,' an annual data-driven research project that scores and ranks almost every country. So where does the U.S. finish in the 2019 'Index'? No. 12. That puts us between Iceland and the Netherlands, and behind two of our closest allies in the top 10: the United Kingdom (No. 7) and Canada (No. 8). But before you assume there’s nothing to celebrate, let’s put that ranking in context...after sliding to its worst showing yet in the 2017 edition, it’s been making a comeback. It posted a better score on the 2018 'Index' - a 75.7 score (on a 0-100 scale, with 100 being the freest). This year, however, the U.S. earned a 76.8 score. That helped it move up six slots in the world rankings from No. 18. The tax-cut package passed by Congress in December 2017 and signed by President Trump has given our economy a sizable boost. Lawmakers would be wise to lock in those gains by making those cuts permanent. For that matter, they should find other ways to reduce taxes on hard-working Americans."

RealMoneyBlog - Free daily/weekly email


1.28.19 - Green New Deal Would Increase Poverty

Gold last traded at $1,303 an ounce. Silver at $15.76 an ounce.

NEWS SUMMARY: Precious metal prices hovered near 6-month highs Monday ahead of Fed meeting. U.S. stocks fell sharply as investors fretted over weak earnings from Caterpillar and a big revenue cut from chipmaker, Nvidia.

Gold hovers near $1,300 as investors await Fed meet, trade talks -Reuters
"Gold eased back on Monday as the dollar steadied, but the metal held close to $1,300 as investors adopted a cautious approach while awaiting developments on the U.S.-China trade front and Federal Reserve policy....Investors are bracing for a busy week with the culmination of high-level trade talks between the United States and China on Jan. 30-31. Also awaited is the Federal Open Market Committee meeting between Jan. 29 and Jan. 30, where Chairman Jerome Powell is widely expected to acknowledge growing risks to the U.S. economy as global momentum weakens. 'A number of investors will find this an opportune time to get in before the next move higher, likely, given the state of the global economy ... we continue to expect prices to rise towards $1,350,' Capital Economics’ Strachan said."

Fed The Fed Will Crash Markets & The Dollar -Williams/Zero Hedge
"Economist John Williams warns the Federal Reserve has painted itself into a very tight no-win corner. No matter what the Fed does with rates it’s going to be a disaster. Williams explains, 'You had some very heavy selling towards the end of the year and when you saw the big declines in the stock market you also saw that accompanied by a falling dollar and rising gold prices.'....Williams says the U.S. is already entering into a recession. Williams contends, 'The first quarter of 2019 likely will be in contraction partially due to the government shutdown. That is slowing the economy on top of the interest rate hikes, but the cause of the recession here is not the government shutdown. It’s the Fed hiking rates.'....Williams also warns, 'This is a very dangerous time both domestically and globally.' Maybe this is why gold and silver prices keep steadily climbing higher. Williams says, 'As things get worse here there is going to be a flight from the dollar into other currencies and in particular into gold. Gold is the long term store of wealth here...With debt collapsing and currencies collapsing you are going to end up with inflation.'"

Laughingstocks -Dana Lyons' Tumblr
"In every market cycle, bull or bear, prices eventually reach a point at which the vast majority of investors become convinced that the trend at hand will continue on indefinitely. As much as price behavior, it is that sentiment condition that makes the market ripe for a cycle change. And the longer the cycle, the more extreme investor sentiment can stretch in that direction. Not surprisingly, the ongoing, near decade-long bull market has produced one of the more lopsided investor sentiment extremes on record....Bullish sentiment has seemingly reached extremes rarely before attained...we attribute that notion largely to a medium that did not even exist in prior cycles: social media....Financial social media itself has never really experienced a bear market. Therefore, given the democratic and anonymous nature of the social media bullhorn, it’s not surprising that the loudest and most cocksure collective sentiment view on the medium is overwhelmingly bullish....While the bulls have ruled Wall Street for the past 10 years, much of the run has been in the face of, or fueled by, skepticism toward stocks. In recent years, that has changed as we have witnessed various measurable sentiment indicators reaching bullish levels that have marked significant market tops in the past....Households are far above all previous levels of household equity investment outside of the 2000 top...Stock valuations are at historically high, and unsustainable, levels...the S&P 500 is 122% overbought....Eventually - perhaps soon - it will be the bears who will have the last laugh."

The 'Green New Deal' is a prescription for poverty -Washington Examiner
"At its core, the Green New Deal is a measure aimed at eliminating all fossil fuel and nuclear energy and 'meeting 100 percent of national power demand through renewable sources' within just a 10-year time frame, according to a draft legislative text. 'By developing a plan for a Green New Deal, we have an opportunity to create millions of good-paying jobs, virtually eliminate poverty in the United States, and invest in a just transition for communities that have been left behind by racism and corporate greed,' insists Varshini Prakash, founder of the Sunrise Movement. Behind the rhetorical smokescreen, the ugly truth is that a mandatory shift to higher-cost solar and wind energy before the market is ready to support those, as the Green New Deal does, would serve as a regressive tax on the poor....Of course, the Green New Deal championed by Rep. Ocasio-Cortez goes well beyond how power plants generate electricity. It would also include trucks that transport food and cars that take Americans to work. This makes its impact even more dramatic. Just ask France how well skyrocketing gas and diesel prices have worked out for its working class....Far from a cure for poverty, the Green New Deal is a prescription for even more of it."

RealMoneyBlog - Free daily/weekly email


1.24.19 - Shutdown Proves Americans Unprepared

Gold last traded at $1,286 an ounce. Silver at $15.36 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Thursday despite a firmer dollar. U.S. stocks traded mixed amid concerns over U.S.-China trade negotiations following statements by Commerce Secretary Wilbur Ross saying the U.S. was not close to striking a trade deal.

Gold Is Going To Hit $1,500 And Here's The Game Plan... -Kitco
"Gold will hit $1,500 an ounce in 2019, according to Metalla Royalty & Streaming director E.B. Tucker, who is not shying away from his bullish call this year. Right now, gold is at a bottom, which means that it is not about 'if' it is going to go up, but 'when' it is going up, Tucker explained....Gold's jump to $1,500 an ounce is only the beginning, Tucker added, pointing out three signs that make him pro-gold. The first positive sign for gold prices is that many miners are producing at a loss, Tucker noted. The second, is that some of the recent mergers, including Newmont and Goldcorp, are mergers of necessity. And the third, is that mining companies are running out of reserves in the ground. 'We are close to a bottom… And we think that when is just around the corner and that’s why we made that call,' he said."

federal workers Government Shutdown Is Proving Americans Are Not Prepared For A Recession -Zero Hedge
"The brutal reality is that most Americans are not prepared for the next economic downturn or recession. The government shutdown is highlighting just how much Americans rely on others as opposed to themselves, and how little they have saved for an emergency. According to MarketWatch, the government shutdown is perfectly proving that Americans are not prepared for a financial disaster of any kind, let alone an economic recession. Almost 60% of Americans have less than $1000 in savings for a rainy day fund or an immediate emergency. It’s been ten years since the Great Recession left many Americans jobless with no money, and it appears most have learned nothing. The government shutdown serves as a painful warning and preview for what will happen once unemployment rises from 50-year lows. Most Americans live paycheck to paycheck, including those who work for the government....With the government being one of the largest employers in the US, removing this revenue source even for a month is starting to cause panic."

Wilbur Ross Says U.S., China 'Miles and Miles' From Resolving Trade War -Bloomberg
"Commerce Secretary Wilbur Ross downplayed expectations for an end to the U.S.-China trade war when both sides meet in Washington next week, saying the world’s two largest economies are a long way from resolving their differences. 'We’re miles and miles from getting a resolution,' he said in an interview on CNBC on Thursday. 'Trade is very complicated. There are lots and lots of issues.' The Dow Jones and S&P 500 Index were lower in early trading after the secretary’s remarks. 'People shouldn’t think that the events of next week are going to be the solution to all of the issues between the United States and China. It’s too complicated a topic,' Ross said....His comments come with just over five weeks to go before a deadline to conclude a deal. If that doesn’t happen, the Trump administration has threatened to raise the tariff rate on $200 billion in Chinese good to 25 percent from 10 percent."

Unconventional Mortgages Make a Comeback -Wall Street Journal
"Aryanna Hering didn’t have pay stubs or tax forms to document her income when she shopped around for a mortgage last year - a problem that made it tough for her to get a loan. But the nursing student who works part time providing home care for children and the elderly eventually hit pay dirt: For a roughly $610,000 home loan, a mortgage company let her verify her earnings with 12 months of bank statements and letters from clients. Ms. Hering said money she collects from roommates and from renting to Airbnb guests covers more than two-thirds of her roughly $4,300 in monthly payments, and her earnings cover the rest....Lenders issued $34 billion of these unconventional mortgages in the first three quarters of 2018, a 24% increase from the same period a year earlier, according to Inside Mortgage Finance, an industry research group....During the financial crisis, many unconventional loans soured after borrowers misstated their incomes and lenders didn’t ask for documentation, earning them the nickname 'liar loans.' 'It’s a slippery slope,' said Mat Ishbia, the president and CEO of United Wholesale Mortgage, a large nonbank lender that doesn’t issue these loans. These mortgages don’t meet the criteria to be backed by Fannie Mae or Freddie Mac....'Some banks have initiated this practice without the appropriate risk governance controls,' the Office of the Comptroller of the Currency said in a December report."

RealMoneyBlog - Free daily/weekly email


1.23.19 - The Downside of Anti-Trump Rage

Gold last traded at $1,283 an ounce. Silver at $15.35 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Wednesday on dollar weakness. U.S. stocks traded mixed despite strong corporate earnings from companies like IBM, United Technologies and Procter & Gamble.

Gold To Push Above $1,300 As U.S. Dollar Peaks -Scotiabank/Kitco
"A peak in the U.S. dollar and 'toxic U.S. debt' should continue to support gold prices...according to analysts at Scotiabank. In its 2019 forecast, the bank said that it sees gold prices averaging the year around $1,300 as prices are caught in a $150 range with the peak coming in at $1,350 an ounce....The firm said that a weaker U.S. dollar will be a major factor in gold’s potential. The bank sees the U.S. Dollar Index averaging 89.4 points this year, down significantly from its current level around 96 points. 'Peak dollar is simply behind us,' the analysts said. 'The U.S. twin deficit is a core reason for expected [U.S. dollar] weakness and the thinking that the Fed will be ’handcuffed’ from raising rates too high,' the analysts said in their report. The second factor to drive gold will be if uncertainty continues to sweep through financial markets. 'The biggest uncertainty investors face is U.S. monetary policy,' the analysts said....Along with gold, Scotiabank is bullish on silver, outperforming the yellow metal in a weak U.S. dollar environment. The bank looks for silver to average the year around $17 an ounce."

chart In the war on cash, cash may be winning -Payment Source
"Banks, retailers and technology companies [and governments] have spent years relentlessly working to replace cash with plastic, digital or mobile alternatives. And cash has hit back hard. In China, which has the most residents paying via mobile wallets, the government has cracked down on merchants that won't accept cash. In the U.S., the New York City Council will conduct hearings next month on a bill that would ban restaurants and retailers from not accepting cash....Stores that ban cash say it cuts costs and improves employee safety, but the trade-offs may not be worth it; Shake Shack, for example, abandoned plans for fully cashless locations last year shortly after testing the policy at one location....'The market will drive the results on cash,' said Richard Oglesby, president of AZ Payments Group and a senior analyst at Double Diamond Payments Research. 'The government and/or payment processors can do all they want to try to get rid of cash, but lots of people still really like it and will continue to use it.' Because of that, truly cashless stores 'will be the exception to the rule,' Oglesby said....Cash may not be at risk of disappearing on a global scale, but there are some niches and demographics where it hasn't fared as well. Unsurprisingly, younger tech-savvy consumers are among those most comfortable with digital payments....'The shift to a cashless society is imminent, and we have the mobile generation of millennials and Gen Z’s dubbed as those 'transforming the way we bank' to thank for that,' said Steve Villegas, vice president of partner management for U.K.-based PPRO."

Finally we get a bit of good news in today's relentless war against cash, financial freedom and personal privacy; but this war has many fronts. For example, the federal government's Civil Asset Forfeiture program is still circumventing constitutional rights of U.S. citizens by declaring them guilty until proven innocent. LISTEN TO THIS EXAMPLE of a Navy Vet who committed no crime, yet still lost $200,000! Find out what you can do to win the war on cash, read Swiss America's Special Report THE SECRET WAR: Weapons of Cash Destruction.

What We Learned From 2018 -Bonner/American Consequences
"Our beat is money. So we will skip the culture wars, nominee confirmations, and foreign policy initiatives. Let’s just follow the money. And what we notice immediately is that the last decade (save the final three months) was a great time to be rich. The Fed pumped up your stocks, bonds, real estate, and collectibles… And then, Donald J. Trump added a tax cut....And so it came to pass that in 2018, the Fed continued to lend money at below the rate of consumer price inflation (effectively giving it away)… and Washington continued to spend money it didn’t have on things it didn’t need. The rich lost money on Wall Street. The poor lost money as the Main Street economy stumbled. The year came to a close and we were all collectively older and poorer. But no wiser. What’s ahead for 2019?.... The credit markets are warning of an approaching recession. And the stock market rang its bell last year when the S&P 500 peaked at around 2,900 in September - warning of a bear market....By almost any measure you choose, stocks are near the top of their trading range, a point rivaled only by 1929 and 1999. In these circumstances, you don’t need a crystal ball. You need gold. If you stay in stocks, you could lose half of your money… or more… and then wait 20 years or more to get even. So far this century, an investment in gold has beaten an investment in the S&P - even when accounting for dividends - but with much less risk or volatility."

The Downside of Anti-Trump Rage -Barnes/Wall Street Journal
"The strategy of 'resistance' to President Trump has been a disaster for Democrats. They’ve denied Mr. Trump the money for a wall on the border with Mexico but lost ground on just about everything else - notably on taxes, health care and the environment....What keeps Democrats in the mood for resistance after two years? Mr. Trump has become a fixation. No one arouses their opposition the way he does. Democrats are like those Trump-loathing columnists who can’t write about anyone but the president. They’re obsessed with Mr. Trump....With party leaders focused on Mr. Trump, young progressives like Rep. Alexandria Ocasio-Cortez have taken on the task of making the party more left-wing. She 'has had the uncommon ability for a first-year member of Congress to push the debate inside the Democratic party to the left,' the New York Times reported last week. Ms. Ocasio-Cortez’s talk of a 70% marginal tax rate on the highest incomes, a 'Green New Deal' to replace fossil fuels within 10 years, and abolition of the Immigration and Customs Enforcement agency has attracted media attention and favorable comments from Democratic presidential candidates. Yet these are radical ideas unlikely to help the party win in 2020."

RealMoneyBlog - Free daily/weekly email


1.22.19 - Is U.S. Stock Market Bubble Bursting?

Gold last traded at $1,283 an ounce. Silver at $15.32 an ounce.

NEWS SUMMARY: Precious metal prices inched higher Tuesday on safe-haven buying and a flat dollar. U.S. stocks fell as weak data out of China and lower global growth estimates renewed fears of the global economy slowing down.

U.S. Existing-Home Sales Posted Steep Fall in December -Wall Street Journal
"Sales of previously owned U.S. homes declined sharply in December, suggesting sluggishness in the once-hot housing market may persist into 2019. Existing-home sales fell 6.4% in December from the previous month to a seasonally adjusted annual rate of 4.99 million, the National Association of Realtors said Tuesday....In 2018, weakness in home sales reflected a lack of inventory and rising home prices, which have locked many buyers out of the more desirable markets....The median sale price for an existing home in December was $253,600, up 2.9% from a year earlier."

gold Billionaire Sam Zell Buys Gold for First Time in Bet on Tight Supply -Bloomberg
"Gold’s dimming supply prospects have caught the eye of one billionaire. 'For the first time in my life, I bought gold because it is a good hedge,' Sam Zell, the founder of Equity Group Investments, said in a Bloomberg TV interview. 'Supply is shrinking and that is going to have a positive impact on the price.' 'The amount of capital being put into new gold mines is a most nonexistent,' Zell said. 'All of the money is being used to buy up rivals.' The combined gold reserves still buried in mines - an indicator of production prospects - shrank by more than 40 percent in 2017, from its peak after companies cut spending on exploration and development of new projects, according to Bloomberg Intelligence data on big producers."

Ray Dalio sees a 'significant risk' of US recession in 2020 -CNBC
"Ray Dalio, founder of the world's biggest hedge fund, warned on Tuesday of a 'significant risk' of a U.S. recession in 2020. 'It's going to be globally a slow up. It's not just the United States; it's Europe; and it's China and Japan' the billionaire investment titan said Tuesday in an interview on CNBC's 'Squawk Box.' 'Where we are in the later [economic] cycle and the inability of central banks to ease as much, that's the cauldron that will define 2019 and 2020' said Dalio, co-CIO and co-chairman of Bridgewater Associates....Dalio said earlier Tuesday during a Davos panel discussion that 'the next downturn in the economy worries me the most.' He also said he's concerned about 'greater political and social antagonism'around the globe."

Is the U.S. Stock Market Bubble Bursting? In Short, Yes. -GMO White Paper
"In the fourth quarter of 2018, the S&P 500 fell almost 14%. This large price drop occurred in spite of a strong fundamental backdrop. Earnings per share (EPS) for 2018, much of it already locked in, is expected to be about $140, a 28% increase over 2017. And expectations for 2019 are for EPS of about $156, a 12% annual increase. With fundamentals so good, what explains the recent price action? A new model - the Bubble Model - explains this dichotomy between price action and fundamentals by suggesting that a bubble in the U.S. stock market started inflating in early 2017, and continued to inflate through the third quarter of 2018. In the fourth quarter, however, indications were that the bubble had started to deflate. And when bubbles deflate, they generally do so with a volatility bang....Currently, we are faced with a volatile market that, through the end of 2018 at least, is down double digits from the September, 2018 peak. The volatility is consistent with a bubble bursting, though we caution that it is possible that the fourth quarter move in the mean reversion speed could be a head fake. While the dramatic nature of the move in the mean reversion speed to such strong mean reversion suggests that the odds are tilted toward this being the beginning of the end of the bubble of 2017-18, we cannot rule out reflation of the bubble, analogous to the event of late 1998-2000. Given that valuation is still high, our advice, consistent with our portfolio positions, is to continue to own as little U.S. equity as career risk allows."

RealMoneyBlog - Free daily/weekly email


1.18.19 - "We could take a chainsaw to so much of government" - Stossel

Gold last traded at $1,282 an ounce. Silver at $15.39 an ounce.

NEWS SUMMARY: Precious metal eased back Friday as U.S. dollar remains steady. U.S. stocks traded higher on upbeat trader sentiment following U.S.-China trade progress.

Central bankers lack the weapons to fight the next big recession- CNN Business
"If there's a serious recession on the horizon, the world's central banks may have trouble fighting it. Central banks took dramatic and unorthodox steps to prevent economic collapse during the financial crisis. They slashed interest rates, and in the years that followed spent trillions on bonds as part of an effort to spur growth. One decade later, global central banks are only starting to reverse those moves. Interest rates in developed economies remain incredibly low; in some places, they're even negative. The Federal Reserve is unloading some of the bonds it bought, but central banks in Europe and Japan have not yet done so. The question now is whether central banks waited too long to raise rates to more normal levels, leaving them unprepared for the next crisis. 'If we have a recession, I think it's going to be worse than normal,' said Kenneth Rogoff, a professor at Harvard University and former chief economist at the International Monetary Fund. 'It will be more difficult to respond.' Politics is also making life more complicated for central banks. In countries like India and Turkey, they've faced threats of political interference, while President Donald Trump has repeatedly criticized the Federal Reserve."

interview Gov Shutdown: does it impact markets? -Fox Business
Swiss America chairman Craig R. Smith, along with author and former advisor to the Dallas Federal Reserve, Danielle DiMartino Booth, discussing the economic impact the government shutdown may have on the stock market and corporate earnings season. Both Smith and DiMartino Booth are concerned that Morgan Stanley's earning miss could be warning of trouble brewing in the banking sector. Watch now to see their forecasts.

Government shutdown lessons - We could take a chainsaw to so much of government -Stossel/Fox News
"This government shutdown is now longer than any in history. The media keep using the word 'crisis.'....But wait. Looking around America, I see people going about their business - families eating in restaurants, employees going to work, children playing in playgrounds, etc. I have to ask: Where’s the crisis? Pundits talk as if government is the most important part of America, but it isn’t. We need some government, limited government. But most of life, the best of life, goes on without government, many of the best parts in spite of government....During shutdowns, government tells 'nonessential workers' not to come to work. But if they’re nonessential, then why do we pay 400,000 of them? Why do we still pay 100,000 American soldiers in Germany, Japan, Italy and England? Didn’t we win those wars? We could take a chainsaw to so much of government....While pundits and politicians act as if everything needs government intervention, the opposite is true...Private contractors are better because they must compete. Perform badly, and they get fired. But government never fires itself."

Another Billionaire Turns To Gold- Kitco
"Another billionaire has jumped on the gold bandwagon after Sam Zell, the founder of Equity Group Investments, announced on Bloomberg TV that he bought gold for the first time in his life. 'Supply is shrinking and that is going to have a positive impact on the price,' he said in the interview....Zell added that he also likes the physical metal as a hedge. Along with Zell, other billionaires who have said they like gold in the current environment include Ray Dalio, founder of Bridgewater Associates; 'bond king' Jeffrey Gundlach, CEO of Doubleline; and David Einhorn; founder of Greenlight Capital. Dalio has been a firm believer in the yellow metal since August 2017, when he said that investors should have between 5% and 10% of their portfolio in gold. Last spring Gundlach made headlines after he said that gold was on the precipice of a $1,000 rally....'The smart money is buying gold,' said Fred Hickey, creator of the investment newsletter The High-Tech Strategist, in a Twitter post. 'Should be quite a frenzy when the rest of the (Western) world figures this out.'"

RealMoneyBlog - Free daily/weekly email


1.17.19 - The Real Cure for Economic Insecurity -WSJ

Gold last traded at $1,292 an ounce. Silver at $15.53 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Thursday despite a firmer dollar. U.S. stocks traded mixed after Morgan Stanley's latest quarterly results disappointed investors amid growing uncertainty around the Chinese economy.

Why stock-market investors are starting to worry about the government shutdown -Marketwatch
"The partial government shutdown is now setting records, and investors might not be able to ignore it for much longer, analysts said. 'Two key risks that we highlighted in the past (Fed's monetary policy and trade war) have subsided, but new risks have emerged: U.S. government shutdown and signs of additional slowdown outside the U.S.,' wrote Marko Kolanovic, global head of quantitative and derivatives strategy at JPMorgan, in a note dated Wednesday....History shows past shutdowns have had a negligible impact on stocks. So far, that’s been the case with the partial shutdown that began on Dec. 21 and entered its 27th day on Thursday with no end in sight....The White House has reportedly doubled its own estimate of the shutdown’s impact on economic growth, news reports said Tuesday, forecasting it would trim first-quarter gross domestic product by 0.5 percentage points if it lasts through January....Meanwhile, the shutdown has deprived traders, economists and policy makers of at least 10 key government data releases so far, including figures related to housing, trade and consumer spending."

shutdown Who blinks first will matter in Trump, Democrats' wall fight -Associated Press
"Of all the issues at stake as President Donald Trump and Democrats wrangle over his prized border wall, the latest snag is whether bargaining over the proposal should come before or after shuttered government agencies reopen....If Trump blinks first and temporarily halts the shutdown so negotiators can seek agreement, the White House and some Republicans worry there'll be no incentive pushing Democrats to cut a deal. With 800,000 federal employees back at work and getting paid, why would Democrats agree to provide billions in taxpayer money for a keystone of Trump’s presidential campaign that they hate and that he promised repeatedly Mexico would finance? Yet Democrats fear that if they negotiate while the shutdown persists, it would encourage Trump to use such brinkmanship in the future. He’d think the pressure tactic had worked, and he’d have plenty of opportunities to do the same in the near future, they say....To strike a deal temporarily reopening government, the commitment from Democrats 'would have to be pretty strong to get something done' on the wall, Sen. Mike Rounds, R-S.D. said. Otherwise, he added about Trump, 'If it’s just seen as a weakening of his position, then he probably wouldn't do it.'....But majorities of Republicans polled agree with Trump that there's an immigration crisis at the Mexican border and blame Democrats for the shutdown. That means GOP senators abandon Trump at their own peril."

Gold Within Striking Distance Of $1300 -Kitco
"After trading to a high of $1295.40, gold softened a little bit, also trading to a low of $1287.60. What is important about this range is even with a respectable gain on the day, pricing is still caught within a tight and narrow band. That band created on Friday, January 4th was the net result of dynamic Price swings in which gold traded to a low that day of $1278, and a high of $1300.40. Since then gold has not been able to break above or below those price parameters. Investors have bid the precious metal up on multiple occasions since January 4th, however on each attempt $1300 has been an insurmountable price point to trade at or above. That being said there is no question that market sentiment in regards to gold still remains bullish. Beginning after a major climb in pricing at the end of November, when gold was trading at approximately $1213 per ounce....When it comes to the most expensive precious metal (gold, silver, platinum and palladium), palladium is now the most expensive metal. Palladium futures closed at $1327.00 after gaining $47.00, a full $27 above gold futures."

The Real Cure for Economic Insecurity -Editors/Wall Street Journal
"'The gig economy is simply the next step in a losing effort to build some economic security in a world where all the benefits are floating to the top 10%.' So declared Democratic Sen. Elizabeth Warren in 2016 amid an explosion of start-ups that facilitate freelancing by connecting workers with customers. Ms. Warren was echoing a liberal lament that jobs now come with fewer protections and benefits....Yet the Labor Department’s Contingent Work Survey last summer showed that a mere 10.1% of workers were employed in alternative work arrangements, about the same as in 1997. The government study contradicted other liberal claims. For instance, independent contractors earned more than traditionally employed workers and overwhelmingly preferred the flexibility of their jobs....Democrats also want to prohibit state right-to-work laws that let workers choose whether to belong to a union...But one reason the U.S. economy is growing faster than its friends across the pond is a more flexible labor market. The Trump Administration has eased the burdens on employers while giving non-traditionally employed workers access to more benefits...Turns out the best antidote to economic insecurity is less government and more growth."

RealMoneyBlog - Free daily/weekly email


1.16.19 - Why Sanders' $15 Minimum Wage Is Irrelevant

Gold last traded at $1,293 an ounce. Silver at $15.63 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and a flat dollar. U.S. stocks rose as investors cheered strong quarterly earnings from major banks like Goldman Sachs and Bank of America.

Gold resumes climb toward $1,300 -Marketwatch
"Gold prices on Wednesday resumed their climb toward the psychologically important price of $1,300 an ounce, finding support from the turmoil surrounding the U.K.’s plan to leave the European Union and the upcoming vote of no confidence facing Prime Minister Theresa May’s government. Caution among traders has deepen 'ahead of a no-confidence vote on British Prime Minister Theresa May’s government and other geopolitical risks, including the U.S. government shutdown, loom large in investors minds,' said Mark O’Byrne, research director at GoldCore. 'Physical demand for gold coins and bars has picked up in the U.K. and Ireland, due to Brexit and U.K. political uncertainty,' he added....Gold appeared to gain more ground Wednesday following news that U.S. Speaker of the House Nancy Pelosi sent President Trump a letter to postpone the State of the Union speech, said Jeff Wright, executive vice president of GoldMining Inc. 'I think the sudden increase [for gold] is shutdown related, especially when it appears the Democrats have zero interest in engaging with the president or compromising,' he said. 'Also, as the partial shutdown is impacting Q1 GDP little by little.'"

gold chart Measured in 72 currencies, gold is at ... an all-time high -Mining-Journal
"'Well measured in 72 currencies, gold is at ... or within a few percentage points ... of being at an all-time high for people in those countries,' the CEO of Sharps Pixley said. His list started with the Afghan afghani, ended with the Zambian kwacha and included the Australian dollar, Russian ruble and South African rand. 'Not on the list are the British pound, the Swiss franc, the Euro and Chinese yuan - but we are not far off in all of those currencies too,' he said. 'Only in USD does gold lag - and not all of us live in the US.' Analysts have tipped a rising US dollar gold price this year given plateauing US interest rates and geopolitical uncertainties including Brexit. Norman said he remembered the same phenomenon - 'a stealth rally in minor currencies' - ahead of the last major gold bull run in dollar terms in the late 1990s. The bullion dealer said gold had seen an average year-on-year gain of about 10% compounded since 2000, which he believed meant it was a reliable yardstick to measure costs or wealth - and a useful thing to own."

Bernie Sanders' minimum wage proposal is irrelevant thanks to Trump's pro-growth policies -Pudzer/Fox News
"Predictably, Sen. Bernie Sanders, I-Vt., is introducing a bill to raise the minimum wage to $15 an hour. Since the Republicans control the Senate and the presidency, it has absolutely no chance of passing....Progressive hosts who interviewed me on cable news shows would often ask how our company and its franchisees (Carls Jr./Hardees) could hire people for less than a 'living wage' when they were trying to support families. I’d try and explain how increasing wages above the level at which business owners could afford to pay their employees would make it difficult for businesses to survive, let alone grow. I also tried to explain mandatory wage increases would reduce the entry-level job opportunities that young working-class Americans so desperately needed. I suggested that the best solution was for government to pursue policies that encourage economic growth, job creation and increased wages. I co-authored a book entitled 'Job Creation: How It Really Works and Why Government Doesn’t Understand It,' which advocated reducing taxes, slashing regulations, and encouraging domestic energy production....President Trump cut taxes, slashed regulations, and encouraged domestic energy production. Through his first six quarters in office, economic growth doubled from Obama’s 1.5 percent to 3 percent....Because of economic growth, employers can afford to pay higher wages, and they need to if they are going to attract the best employees. We call that capitalism....In 2014, President Obama advocated increasing the minimum wage to $10.10...Today, thanks to President Trump’s capitalist policies that encourage economic growth, we could raise the minimum wage to $10.10 an hour and few people would even notice. If Sen. Sanders and his 'Fight for $15' crowd stay out of the way, a $15 minimum wage may soon be as irrelevant as the bill he is about to introduce."

Falling wages, rising housing costs fuel homelessness among aging Americans -Chicago Tribune
"If current trends continue, the number of aging homeless people will more than double in three major metropolitan areas, straining social and medical services, a report released this week concluded. It said that improvements in housing plus services aimed at preventing medical crises could sometimes save cities money. The report was the work of researchers from several universities, including the University of Pennsylvania and the University of Delaware and was funded by four foundations. Data from New York, Boston, and Los Angeles County were analyzed. Philadelphia's homeless shelters also are struggling with an influx of older homeless people who have complex medical problems the shelters are not designed and staffed to handle...The report said the coming boom in aging homeless people stems from younger, less educated baby boomers who faced economic challenges in their youth: falling wages and rising housing costs. A disproportionate number wound up homeless, an effect that has persisted for decades. Now in their 50s and 60s, they are biologically older than most people their age and already facing the medical problems of aging....The researchers said the cities likely could save money, especially in the oldest, sickest group, by helping older homeless people find permanent housing and providing them with adequate medical and social support."

RealMoneyBlog - Free daily/weekly email


1.15.19 - The Most Absurd Myth of the 21st Century

Gold last traded at $1,288 an ounce. Silver at $15.60 an ounce.

NEWS SUMMARY: Precious metal prices were steady Tuesday despite a stronger dollar. U.S. stocks rose as Netflix led a rally in tech-related stocks after news it would hike its monthly membership prices.

Gold steady as dollar gains on fears of economic slowdown -Reuters
"Gold prices were steady on Tuesday, pressured by a firm dollar on the back of concerns over slowing global growth, but well supported by expectations the U.S. Federal Reserve could refrain from raising interest rates this year. Asian shares were on the back foot on Tuesday as surprise falls in China’s exports stoked worries about the global economy, while the U.S. dollar was marginally higher against its peers....Market participants think that worries of slowing domestic and global growth as well as tame U.S. inflation will make Fed policymakers hesitant to raise interest rates in the world’s largest economy....Meanwhile, investors are still eyeing developments in trade between the United States and China, with U.S. officials expecting a visit by Beijing's top trade negotiator this month."

bear market What's next for the dollar, gold, stocks & bonds? -Merk/Merk Investments
"In assessing our crystal ball for 2019, the starting point is the Federal Reserve (Fed) because they provide an anchor for the price of risk-free assets (Treasuries) around which risk assets are priced....The Fed had been on a set course to let its large Treasury holdings run off (engage in so-called quantitative tightening or 'QT') and to raise rates...In a recent panel discussion, Powell implied the path of quantitative tightening is not set in stone, and the Fed would be flexible. Similarly, Powell suggested the Fed can be very flexible, even lower rates on short notice should it be required. What??? The key thing that had changed is that some markets have thrown a tantrum, notably the equity markets....After Powell flip flopped to suggest the Fed could also be easing, equity markets surged....My conclusion is that, at the very least, volatility is to remain elevated...exacerbated by the Fed’s lack of clear direction....As we are approaching the end of the economic expansion, will king dollar be de-throned? In favor of a weaker dollar is an expectation of lower rates ahead, especially given the run up in recent years....If my crystal ball is correct, the price of gold may break out further to the upside when we are closer to the end of the rate hiking cycle. As recent history suggests, though, the time to diversify is ahead of the unfolding of actual events....All of this doesn’t bode too well for equities. That said, historically, bear markets tend to mostly coincide with recessions...Investors have a certain risk tolerance; with volatility elevated and years of a bull market in equities, odds are their portfolios are riskier than they signed up for."

The Most Absurd Myth of the 21st Century -Bonner/Bonner And Partners
"Every era has its busted myths and failed dreams. Wall Street and Washington wallow in them. The practical challenge for us is not to be smarter than other investors or wiser than other voters… but merely to step outside the myth long enough to get a good look at it....Assets, markets, companies, and empires rise and fall. No single one, or group of them, ever dominates for long. But now comes the most absurd myth of all - that the feds can 'manage' and 'guide' the economy, not only to make it better, but to make sure nothing bad happens....U.S. monetary policy for the last 30 years is nothing more than the classic three mistakes over and over. Mistake #1 - keep interest rates too low for too long. Mistake #2 - raise rates to try to mitigate the damage from Mistake #1. Mistake #3- drop rates in a panic when Mistake #2 causes the economy to crash. And that’s just monetary policy. What about fiscal policy? The key concept of enlightened budget management is that fiscal policy should be countercyclical. You save (surpluses) when the gettin's good… and spend (deficits) when it ain't. Pharaoh did it 3,000 years ago - storing grain during seven fat years… and releasing it during the seven lean years. It's so simple, even a moron could do it....Since 1980, the feds have spent $20 trillion more than they have taken in. This year, spending will outpace tax receipts by roughly $1 trillion. And we’re still in a recovery. Where is the promised growth? Where’s the missing revenue? Of course, the idea is absurd. There is no plausible theory… and no observable case… where people get richer by borrowing more and more money, year after year. Instead, they go broke. It’s only by saving money and investing it wisely that it is even possible to get ahead. And the feds are unable to do either."

White House shifts shutdown strategy, tries to bypass Pelosi -Associated Press
"Shifting strategy, the White House invited rank-and-file House Democrats to lunch Tuesday with President Donald Trump, bypassing Speaker Nancy Pelosi and her leadership team in an effort to get centrist and freshman lawmakers on board with funding Trump’s long-promised U.S.-Mexico border wall. Pelosi approved of lawmakers attending the meeting, telling her team that the group can see what she and others have been dealing with in trying to negotiate with Trump to end the partial government shutdown, now in its 25th day with no resolution in sight....Lawmakers invited to the White House include centrist Democrats from districts where Trump is popular, including freshmen....Senate Majority Leader Mitch McConnell said on the Senate floor that it’s up to Democrats to get the country off the 'political carousel' of the shutdown fight. The Kentucky Republican said Democrats have turned Trump’s wall into 'something evil' and have engaged in 'acrobatic contortions' to avoid dealing with the security and humanitarian crisis at the southern border. With the government shutdown now in its fourth week, negations between the White House and Congress are at a standstill. Trump has demanded $5.7 billion for the border wall; Democrats are refusing but are offering money for fencing and other border security measures."

RealMoneyBlog - Free daily/weekly email


1.14.19 - Goldman Predicts $1,425/oz. Gold

Gold last traded at $1,291 an ounce. Silver at $15.68 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying and a weaker dollar. U.S. stocks fell led by losses in tech, lagging corporate earnings and concerns over an economic slowdown in China.

Gold prices edge higher on expectations of Fed pause -Reuters
"Gold prices inched up on Monday, supported by expectations that the U.S. Federal Reserve will not raise rates this year....Market participants think that worries of slowing domestic and global growth as well as tame U.S. inflation will make Fed policymakers hesitant to raise interest rates in the world’s largest economy....Meanwhile, investors were also worried about a partial U.S. government shutdown...which entered its 24th day on Monday, making it the longest shuttering of federal agencies in the U.S. history, with no end in sight....Markets awaited trade data from China later in the day, with recent signs Asia’s largest economy was losing momentum and the government planning to lower its 2019 economic growth target. Physical gold premiums rose in China last week as investment demand firmed on worries over global growth and a softening dollar."

Understanding Market Cycles -Zero Hedge
"I was digging through some old charts over the weekend and stumbled across this gem from AlphaTrends which explains the 'best time to buy stocks.' The Wyckoff theory is that the better an investor can identify these phases of the market cycle, the more profits can be made on the ride upwards of a buying opportunity."

chart

"2009-Present: So, here we are, a decade into the current economic recovery and a market that has risen steadily on the back of excessively accommodative monetary policy and massive liquidity injections by Central Banks globally. Once again, due to the length of the 'mark up' phase, most investors today have once again forgotten the 'ghosts of bear markets past.'....What gets lost during these bullish cycles, and is found in the most brutal of fashions, is the devastation caused to financial wealth during the inevitable decline. What you should notice is that in many cases bear markets wiped out essentially a substantial portion, if not all, of the previous bull market advance....Whether or not the current distribution phase is complete, there are many signs suggesting the current Wyckoff cycle may be entering its final stage of completion....The recent sell-off should have been a wake-up call to just how quickly things can change and how damaging they can be."

America’s richest are losing confidence in the stock market -New York Post
"The rich and famous want out of this volatile market. America's wealthiest people have lost investing confidence - and they may be right on the verge of a flight to the safety of CDs and other cash products as market losses mount, with a staggering $13 trillion estimated by ET Intelligence Group to have vanished in equities worldwide in 2018. 'In periods of uncertainty, the wealthy tend to be more concerned with asset protection rather than growth,' said Joseph Biondolillo, principal at financial planning firm Biond Financial. 'They tend to be defensive-oriented, and willing to wait for the dust to settle and for all the facts to be in.'....'Significant financial market declines in the first half of December, which have continued, are negatively affecting investor confidence,' said Spectrem President George H. Walper, Jr. And there’s more to come, he added, from fears of a slowing global economy to rising interest rates. Biondolillo says rich investors are now pulling up their stakes in securities. But 'although they do not like uncertainty,' he added, 'the wealthy understand the importance of asset allocation and diversification' in order to weather the storm."

Goldman Predicts Gold Prices to Climb to Highest Since 2013 -Bloomberg
"Goldman Sachs Group Inc. is leading a pack of bullish voices cheering for gold. The bank's analysts led by Jeffrey Currie raised their price forecast for gold, predicting that over 12 months the metal will climb to $1,425 an ounce - a level not seen in more than five years. Bullion has benefited as rising geopolitical tensions fuel central bank purchases, while fears of a recession helped boost demand from investors seeking 'defensive assets,' they said....Speculative interest in gold signals investors are not only closing bearish bets but are also adding to bullish positions, Suki Cooper, an analyst at Standard Chartered, said in a note. Gold is also getting a boost from mounting speculation the Federal Reserve may pause in raising borrowing costs, boosting the appeal of non-interest-bearing metal. 'We expect the safe-haven bid, and to a lesser extent, gold’s inflation hedge properties, to remain key drivers of the metal’s price in 2019, complemented by a resurgence of physical demand,' Cantor Fitzgerald analysts led by Mike Kozak said in a report. Gold and silver are 'looking good in 2019,' underlining a potentially positive indicators that 'should drive a bullish case' for both metals."

RealMoneyBlog - Free daily/weekly email


1.11.19 - Russian Reserves Shift Away From Dollar

Gold last traded at $1,288 an ounce. Silver at $15.66 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on safe-haven buying and a flat dollar. U.S. stocks traded lower as the U.S. government shutdown dragged on and worries over a possible China slowdown also pressured equities.

Gold set for fourth weekly gain on softening dollar -Reuters
"Gold rose on Friday as the dollar slipped on expectations that brakes could soon be applied to U.S. interest rates, putting the non-yielding metal on track for a fourth straight weekly gain. The dollar slipped against other major currencies, impaired by Fed Chairman Jerome Powell’s comment that the central bank could be patient on rate policy. 'Gold rose on a somewhat weaker dollar, but at the moment it seems to be trying to overcome the $1,300 hurdle,' said Commerzbank analyst Daniel Briesemann. The precious metal was also supported by increasing market nervousness over U.S. President Donald Trump's demand for a wall to be built on the border with Mexico. Trump threatened on Thursday to use emergency powers to bypass Congress to pay for the proposed wall....Gold, which is used as a safe-haven investment during times of economic, political and financial uncertainty, is up about 0.6 percent for the week."

gold Times A-Changin’ – But Gold Permanent -Gold Switzerland
"Long term holders of gold have a different perspective of the world. They are not believers in instant gratification. Nor do they believe that a world based on money printing and debt can create sustainable wealth. They also know that the socialism which has spread like a plague in the Western world only works until you run out of other people’s money. What makes gold the most obvious wealth preservation investment and insurance against a false financial system is its permanence. The proof of this is indisputable since gold is the only money that has survived for 5,000 years. Ephemeral financial systems and currencies come and go, so do empires. But gold survives them all. As JP Morgan stated: 'Money is gold and nothing else'. Anybody who doesn’t understand gold, neither studies nor understands history. There is nothing magic about gold, it is just real money. But since it is the only surviving currency why bet against a 5,000 year record? Gold is not an investment, it is a store of value and at times a medium of exchange....The most important asset human beings have been gifted with is their brain and their genes, including their health. Anything material we can lose, however well we protect it. But survival depends mostly on how you use your brain, as long as you are healthy of course. Even the best plans can go wrong. Remember 'The times they are a-changing' and unforeseen events will happen out of the blue. Thus we must be prepared for the unexpected and react as necessary."

Russia Buys Quarter of World Yuan Reserves in Shift From Dollar -Bloomberg
"Russia’s central bank dumped $101 billion in U.S. holdings from its huge reserves, shifting into euros and yuan last spring amid a new round of U.S. sanctions. The central bank moved the equivalent of $44 billion each into the European and Chinese currencies in the second quarter, according to a report published on late Wednesday by the Bank of Russia....'Russia is making a strategic shift in its reserves towards holding fewer dollars and more assets in other currencies,' said Benn Steil, director of international economics at the Council on Foreign Relations in New York....Russia isn't alone in its bid to reduce reliance on the world’s reserve currency amid increasing attempts by Washington to use economic leverage for geopolitical ends. In a deepening trade war with America, China sold a large portion of its U.S. Treasury holdings last year....'We aren't ditching the dollar, the dollar is ditching us,' Russian President Vladimir Putin said in November. 'The instability of dollar payments is creating a desire for many global economies to find alternative reserve currencies and create settlement systems independent of the dollar.'"

Memo to Trump: Declare an emergency -Buchanan/WND
"In the long run, history will validate Donald Trump's stand on a border wall to defend the sovereignty and security of the United States. Why? Because mass migration from the global South, not climate change, is the real existential crisis of the West. The American people know this, and even the elites sense it....Whatever one may think of the face-off Tuesday with 'Chuck and Nancy,' Trump's portrait of an unsustainable border crisis is dead on: 'In the last two years, ICE officers made 266,000 arrests of aliens with criminal records, including those charged or convicted of 100,000 assaults, 30,000 sex crimes and 4,000 violent killings.'....What should Trump do now? Act. He cannot lose this battle with Pelosi without demoralizing his people and imperiling his presidency....Trump should declare a national emergency, shift funds out of the Pentagon, build his wall, open the government and charge Democrats with finding excuses not to secure our border because they have a demographic and ideological interest in changing the face of the nation."

RealMoneyBlog - Free daily/weekly email


1.10.19 - Powell Attempts to Reassure Markets

Gold last traded at $1,287 an ounce. Silver at $15.64 an ounce.

NEWS SUMMARY: Precious metal prices eased back slightly Thursday on a firmer dollar. U.S. stocks traded near flat-line on downbeat Macy's data ahead of Fed chairman Powell's speech.

Gold Treads Water Ahead Of Heavy Dose of "Fed-Speak" -Kitco
"Gold and silver prices are near steady levels in early U.S. trading Thursday. The safe-haven metals are seeing some support from a pullback in global equity markets today. The recent sell off in the U.S. dollar index is also a bullish element for the precious metals markets. February gold futures were last up $0.10 an ounce at $1,292.00. March Comex silver was down $0.015 at $15.72 an ounce. The marketplace is awaiting Federal Reserve Chairman Jerome Powell’s speech to the Economic Club of Washington, D.C. at midday today. Several other Federal Reserve officials also are on tap for speeches today. The Wednesday afternoon release of the minutes from the last meeting of the Federal Reserve's Open Market Committee (FOMC) were deemed as favoring the dovish side of monetary policy, which supported the metals markets and helped to drop the U.S. dollar index to a 2.5-month low on Wednesday. Two Fed officials on Wednesday also suggested there may not be further interest rate cuts in 2019."

CRS Interview Fed Chair Powell Attempts to Reassure Markets -Fox Business
Swiss America chairman Craig R. Smith discussing Fed chairman Jerome Powell's speech at the Economics Club of Washington D.C. today. Mr. Smith believes that what the Fed does regarding the liquidation of its $5 trillion balance sheet, know as Quantitative Tightening, will have a huge impact on the stock market this year. Watch now to find out how many rate hikes we can expect in 2019.

Fed chair Jerome Powell frets over stocks more than you think -Crudele/New York Post
"Jerome Powell is lying to us. The Federal Reserve chairman has said repeatedly that his interest rate policy for 2019 will depend on how the economy is doing. 'Data dependent' is exactly how he explained the Fed’s policy any number of times. And if that’s really the case, Wall Street right now should be worried - very worried - that there will be at least two more interest rate hikes this year....In fact, if you go through the minutes of that last meeting, you can hardly find anything that the Fed finds wrong with the economy. Sure, the group thinks the economy will expand by only an annual rate of 2.3 percent in 2019 and not the 3 percent it looks as though it did in 2018. The Fed statements should have people talking about how many rate hikes there will be in 2019 and not misleading us into believing there won’t be any. So why the lie? Because Powell and his Fed aren't really economic-data dependent. They are market-data dependent - the Fed is afraid that it’s causing the stock market to go down. And the Fed is afraid, I supposed, that people - including the president of the US - are getting angry at it."

Economists See U.S. Recession Risk Rising -Wall Street Journal
"Economists surveyed by The Wall Street Journal see a growing risk of recession in the U.S. On average, economists surveyed in the past week as part of The Wall Street Journal’s monthly poll said there was a 25% chance of a recession in the next year, the highest level since October 2011. 'Trade talks, China, and global growth are formidable risks,' said Lynn Reaser of Point Loma Nazarene University, a former chief economist at Bank of America Corp. Just over two-thirds of the economists said U.S. growth is somewhat or very exposed to a slowdown in other major economies such as China, Europe and Japan. Forecasters are even more concerned about the outlook for 2020. More than half of the economists, 56.6%, said they expected a recession to start in 2020, a presidential election year....Some economists cited the risk that rising inflation could lead to a faster pace of interest-rate increases by the Federal Reserve. Some also noted that the impetus to the economy from fiscal stimulus - tax cuts and more spending - could wane in the months ahead, sapping output growth."

RealMoneyBlog - Free daily/weekly email


1.9.19 - Gov't Shutdown: Not Much Impact

Gold last traded at $1,292 an ounce. Silver at $15.73 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on momentum buying and a weaker dollar. U.S. stocks traded mixed as investors awaited details of China-U.S. trade talk progress.

Gold lifted by weaker dollar as market ponders pace of Fed interest-rate hikes -Marketwatch
"Gold edged higher on Wednesday, buoyed by a weaker dollar as the market looks to comments from Federal Reserve officials for hints on the pace of the central bank’s interest-rate hikes this year. Riskier markets, however, found relief on reported progress, though measured, for U.S.-China trade talks, limiting gains for haven gold. On Wednesday, Chicago Fed President Charles Evans said in a speech that the Fed is likely to 'eventually' push interest rates up slightly into restrictive territory if the dark clouds over the outlook clear up. Separately, however, St. Louis Fed President James Bullard told The Wall Street Journal that the U.S. economy could be pushed into a recession if the central bank presses forward with more rate increases. Against that backdrop, the U.S. Dollar Index was down 0.7% at 95.256. Softness in the U.S. dollar had offered a runway for gold to rise late in 2018, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies....Taking a look at the bigger picture, analysts at Societe Generale were upbeat on the outlook for gold. 'We believe 2019 will be a turning point and would recommend investors consider increasing the gold allocation in their portfolios,' they wrote in a research note released Wednesday."

shutdown What, exactly, are we losing from the government shutdown? Not much -Washington Examiner
"If we were to rely upon the press itself to tell us what the results of the government shutdown were, we'd have to conclude that it saves lives. For we're being told by varied newspapers that three people have died in the understaffed national parks. Given that the average is six deaths in any one week, that would mean that 15 lives have been saved this past three weeks by there being no nonessential federal workers in those parks....If shutting 25 percent of the federal government saves lives and blocks u-bends then, well, do we really need all that government we generally get? It's certainly possible to argue that we don't....Our task, thus, is to look at what government currently does and work out which things it should stop doing....My list is going to be considerably more inclusive here than might be politically viable - I'd close the entirety of the departments of agriculture, education, and commerce in any and every government anywhere straight away, and then after breakfast start thinking about what else we can get along without. Your list might be very much more specific. But it is claimed that there are 650 different regulatory agencies at the federal level alone - actually, within the medical professions alone there are 650 state licensing boards, which does look like a tad bit of overkill. We can most assuredly do without one or more of these. It's an important point, though. If we do want to have less government, the absence of disaster while we currently have 25 percent less of it being instructive about whether we need quite so much as we have, then we need to have government doing fewer things."

Baby Boomers Will Bust Bulls' Best Laid Plans -Zero Hedge
"Those who own the most equities don’t have a lot of time to recover before retirement, and are likely to sell into any rally. There’s been an abundance of analysis on the recent swoon in stocks, but there’s one key variable that often gets overlooked when determining whether and how fast the market rebounds: demographics. On that basis, the outlook isn’t very good....The runway to retirement is significantly shorter, which suggests any patience with a bear market will be rather thin. Even if the next recession proves shallow, older investors, who also own the greatest percentage of equities than any other demographic cohort, will opt for more risk aversion in the decade(s) to come....The closer you are to retirement, the more risk averse you tend to be. Compounding that behavioral reality is another fact: Household wealth has been essentially stagnant for decades....None of that bodes well for tolerance with volatile and declining equity holdings. The point being that equity rallies, whether in the short or intermediate term, are likely to meet with selling from this part of the population."

Investors Should Pay Attention To Silver Momentum -Kitco
"Gold is not the only precious metal seeing a strong start in 2019. Optimism in silver is building as prices hold near their highest levels in almost six months. Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said that continued financial market volatility and a weaker U.S. dollar should continue to support silver prices. 'Silver is poised in 2019 to move above a resistance level that has held the market in check for three years, in our view,' he said. 'A primary companion of higher silver prices - a weakening dollar - is likely to join the recovery in gold and industrial-metals prices.' McGlone isn’t alone in his bullish outlook for silver. Ira Epstein, director of the Ira Epstein Division of Linn & Associates, Inc., also said that he is bullish on the metal in a note to clients. 'As I see it, silver is now in an uptrend. Long positions are now warranted and should be held to as long as prices don’t close back under the 18-day moving average,' he said. Epstein said that he is looking for initial resistance at $15.955 but added that with its current momentum, it has room to run to $17 an ounce."

RealMoneyBlog - Free daily/weekly email


1.8.19 - Praise for Gold's Role as "Diversifier"

Gold last traded at $1,283 an ounce. Silver at $15.68 an ounce.

NEWS SUMMARY: Precious metal prices eased back Tuesday on a firmer U.S. dollar. U.S. stocks traded mixed as shares of Amazon and chip makers rolled over.

BlackRock Heaps Praise on Gold's Role as a Tough Year Opens -Bloomberg
"Gold may extend gains as global growth slows, equity market volatility remains elevated and the Federal Reserve is expected to ease back on the pace of policy tightening this year, according to a BlackRock Inc. money manager, who says the precious metal offers an effective hedge....'I do think we’re experiencing a slowdown,' Russ Koesterich, portfolio manager at the $60 billion BlackRock Global Allocation Fund, said in an interview, citing decelerations in the U.S., China and Europe....'We’re constructive on gold,' Koesterich said in the phone interview on Friday. 'We think it’s going to be a valuable portfolio hedge. We’re multi-asset investors: we think about its effect on the entire portfolio, and what we see value in right now is gold’s value as a diversifier.'....With the dollar and interest rates expected to be range bound, this could be bullish for gold, according to Koesterich....'The relationship between uncertainty, volatility and gold’s relative performance, it’s something that’s worth watching. It has been a store of value for a very long time, and again, it has had a very consistent record of helping mitigate equity risk when volatility is rising.'"

Tonight at 9pm (EST) PBS America will air a one-hour documentary on gold - Gold: The Story of Man's 6000 Year Obsession - Episode 2 - "In the second part of Real Vision's ground-breaking documentary, Grant Williams examines how gold is bought and sold around the world...Grant also weighs up the possibility of the world returning to a gold standard and addresses the all-important accusations of manipulation that surround the subject of man’s 6000-year obsession."

gold What Will Cause the Next US Recession? -Delong/Project Syndicate
"Three of the last four US recessions stemmed from unforeseen shocks in financial markets. Most likely, the next downturn will be no different: the revelation of some underlying weakness will trigger a retrenchment of investment, and the government will fail to pursue counter-cyclical fiscal policy....The next recession most likely will not be due to a sudden shift by the Fed from a growth-nurturing to an inflation-fighting policy. Given that visible inflationary pressures probably will not build up by much over the next half-decade, it is more likely that something else will trigger the next downturn. Specifically, the culprit will probably be a sudden, sharp 'flight to safety' following the revelation of a fundamental weakness in financial markets....If a recession comes anytime soon, the US government will not have the tools to fight it. The White House and Congress will once again prove inept at deploying fiscal policy as a counter-cyclical stabilizer; and the Fed will not have enough room to provide adequate stimulus through interest-rate cuts. As for more unconventional policies, the Fed most likely will not have the nerve, let alone the power, to pursue such measures. As a result, for the first time in a decade, Americans and investors cannot rule out a downturn. At a minimum, they must prepare for the possibility of a deep and prolonged recession, which could arrive whenever the next financial shock comes."

Return Of The Bull Or Dead Cat Bounce? -Zero Hedge
"If you listen to the media, the shocking and totally unexpected downturn last was unable to be foreseen by anyone. Thankfully, it’s now over and we can get back to the roaring bull market. Or can we?....The decline from 'all-time' highs took many of the persistently bullish commentators by surprise. However, the topping process began long before October and the market was sending a clear warning that something was amiss....It isn’t just the extraction of liquidity from the markets which will likely weigh on the markets over the course of the next year. Global economic growth continues to weaken, 'Trade Wars' and 'Tariffs' are still a threat, Valuations remain elevated, Interest rates are still rising and Debt loads remain extremely high....I want to reiterate that portfolio management processes have now been switched from 'buying dips' to 'selling rallies' until the technical backdrop changes....There remains an ongoing bullish bias which continues to cling to belief this is 'just a correction' in an ongoing bull market. However, there are ample indications, as stated, the decade long bull market has come to its inevitable conclusion."

Sears to ask bankruptcy judge for approval to liquidate -Reuters
"Sears Holdings Corp will ask a bankruptcy judge on Tuesday if it can proceed with liquidation after it could not reach an agreement on Chairman Edward Lampert’s $4.4 billion takeover bid, casting doubt on the survival of the 126-year-old U.S. department store chain, people familiar with the matter said. Should Sears liquidate its assets, it would become one of the most high-profile victim in the wave of bankruptcies that has swept the retail sector in the last few years, as the popularity of online shopping exacerbates the fierce price competition facing brick-and-mortar stores. Sears, which filed for bankruptcy protection last October, may have to close hundreds of stores it is still operating, potentially putting up to 68,000 people out of work, the sources said. Its vast inventories of tools, appliances and store fixtures will be sold in fire sales, the sources added....A bankruptcy auction for Sears’ assets is not due until Jan. 14."

RealMoneyBlog - Free daily/weekly email


1.7.19 - Apple Blames China for Stock Plunge

Gold last traded at $1,289 an ounce. Silver at $15.75 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on a sharply weaker U.S. dollar. U.S. stocks rose in volatile trading as U.S. - China trade talks commenced.

Apple Blames China for Stock Plunge -Fox Business
Swiss America chairman Craig R. Smith discussing Apple's stock tumbling to an 18-month low and whether or not this should be blamed upon China. Mr. Smith believes Apple's weakness is less about China and more about the Federal Reserve's decision to continue Quantitative Tightening.

Fed Stock-market investors, it's time to hear the ugly truth -Henrich/Marketwatch
"The Federal Reserve is propping up the market - and here’s the evidence. For years critics of U.S. central-bank policy have been dismissed as Negative Nellies, but the ugly truth is staring us in the face: Stock-market advances remain a game of artificial liquidity and central-bank jawboning, not organic growth. And now the jig is up. There is zero evidence that markets can make or sustain new highs without some sort of intervention on the side of central banks. None. Zero. Zilch....When did global central-bank balance sheets peak? Early 2018. When did global markets peak? January 2018. And don’t think the Fed was not still active in the jawboning business despite QE3 ending. After all, their official language remained 'accommodative' and their interest-rate increase schedule was the slowest in history, cautious and tinkering so as not to upset the markets....The Fed likes to claim it is managing policy based on the economy, not on markets. But here’s the ugly truth on that: The economy these days is very much tied to market performance. Big drops in markets have an adverse impact on the economy, full stop. Hence, it is a fallacy to argue that one looks at one but not the other....Recognizing the market’s newfound sensitivity to QT, the Fed was sure to react....So don’t mistake this rally for anything but for what it really is: Central banks again coming to the rescue of stressed markets."

Gold rises as Fed shift hopes hurt dollar -Reuters
"Gold rose and palladium hit a record high on Monday as the dollar was dented by expectations that the U.S. Federal Reserve would halt its rate-hiking cycle for the year, lifting demand for the metals from holders of other currencies. 'The precious metals complex is fairly well supported given the loose monetary turn coming out of the Fed,' ING analyst Warren Patterson said. Fed Chairman Jerome Powell on Friday said the central bank would be more sensitive to downside risks in the market, adding that it was 'prepared to shift the stance of policy' if needed. Gold tends to gain when interest rate hike expectations ease....The dollar weakened on growing bets the Fed would pause its rate hike cycle in the coming months after Friday’s comments from Chairman Jerome Powell. 'We are seeing buyers returning to the (gold) market on dips,' said Saxo Bank analyst Ole Hansen, adding that the dollar weakness supported prices. "

IMF Warns World "Dangerously Unprepared" For Upcoming Global Recession -Zero Hedge
"In the starkest warning yet about the upcoming global recession, which some believe will hit in late 2019 or 2020 at the latest, the IMF warned that the leaders of the world’s largest countries are 'dangerously unprepared' for the consequences of a serious global slowdown. The IMF's chief concern: much of the ammunition to fight a slowdown has been exhausted and governments will find it hard to use fiscal or monetary measures to offset the next recession. 'The next recession is somewhere over the horizon, and we are less prepared to deal with that than we should be . . . [and] less prepared than in the last [crisis in 2008],' David Lipton, first deputy managing director of the IMF, told the Financial Times during the annual meeting of the American Economic Association. 'Given this, countries should be paying attention to keeping their economy on a level trajectory, building buffers and not fighting with each other.'....'China is clearly slowing down - we think China’s growth has to slow, but keeping it from slowing in a dangerous way is an important objective,' he said, noting that a downshift would be 'material very broadly, not just in Asia.'....With the latest round of US-China trade negotiations starting today, the Atlanta conference revealed widespread pessimism among economists about the chance of any rapid resolution to the current trade wars."

RealMoneyBlog - Free daily/weekly email


1.4.19 - The End of Banks As We Know Them

Gold last traded at $1,281 an ounce. Silver at $15.69 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Friday on mild profit-taking and a weaker dollar. U.S. stocks rallied after Federal Reserve Chairman Jerome Powell said the central bank will be patient in raising rates.

Powell "Listening Carefully To Markets", Sends Stocks Soaring -Zero Hedge
"Fed Chairman Jerome Powell says the Fed is prepared to be patient given tension between signals from financial markets and the real economy. After briefly spooking markets briefly with an optimistic readout of how awesome the economy is, Fed Chair Jay Powell gave stocks just what they wanted, when in a stark departure from his December FOMC speech, the Fed chair said that Fed policy can change and is 'prepared to adjust policy quickly and flexibly' while adding that 'there is no preset path for policy', confirmed that the Fed is 'listening carefully to market.' Perhaps more importantly, Powell also said that the Fed would adjust the balance-sheet normalization policy 'if needed' and if it becomes an issue for the market and economy: 'We said that we would be prepared to adjust our normalization plans' and this would include the balance sheet....And in an amusing tangent, Powell also said that he would not resign if Trump asked him to. This is a distinctly different tone for Powell's communication style - clearly signaling he got the message from markets that his hawkish pre-position perspective on halting asset bubbles is utterly useless once you get the role of Fed Chair."

branch closed Automation will be the end of banks as we know them -TechCrunch
"The unbundling of the bank has begun. Just 10 years ago, the average consumer had very few financial relationships and interacted with just one or two institutions to fulfill all of their financial needs. But fintech companies are breaking up the old guard by focusing on specific things that banks have done and simply doing them better. The fintech revolution started after the 2008 financial crisis, and was driven largely out of frustration with the existing establishment. Facing heavy scrutiny, banks pulled back dramatically on a lot of their activities to reduce risk, which left a significant gap in the marketplace. Fintech companies stepped in and brought new ideas to an industry that had seriously lacked innovation. The established banks are focused on copying the best of what fintech has to offer. They’re moving slowly and are a solid five years behind, but their goal is to provide a just-good-enough mobile experience to ensure their customers stay with them....The next 20 years are going to be defined by the way automation transforms the average person’s life....This is a nightmare scenario for banks: Once automation reduces enough friction in the financial industry, banks lose their relationships with customers....Those that fail to recognize the changing technological landscape run the risk of losing their market share and their position in the marketplace."

Five years ago, in DON'T BANK ON IT!: The Unsafe World of 21st Century Banking, authors Craig Smith and Lowell Ponte warned readers that the Fed's zero interest rate policy would forever change the world of banking as we knew it. Read a FREE Executive Summary of the book to learn about another 19 major banking risks facing depositors in the 21st century.

Gold Poised for Weekly Gain as Global Jitters Boost Haven Demand -Bloomberg
"Gold is headed for a third weekly gain after turbulent equity markets sent investors hunting for haven assets amid global growth concerns. Gold futures breached $1,300 an ounce in New York and spot gold flirted with the level in early London trading, before dropping back as stocks in Europe and Asia recovered some of their losses ahead of fresh trade negotiations between the U.S. and China next week....Sentiment among traders and analysts remained bullish for an eighth week in a Bloomberg survey. With equities faltering, global holdings of gold-backed exchange-traded funds added 67 tons last month and have risen every day since the start of the new year. '2019 is already getting off to a volatile start and we expect to see the political and economic uncertainty of 2018 continue and deepen,' said Mark O’Byrne, research director at GoldCore Ltd. 'We believe risk assets will underperform, while gold outperforms in 2019.'....'The dollar is showing some signs of weakness especially against the yen, stocks are under pressure, yields are coming down, Fed rate expectations have been coming down as well,' said Ole Hansen, head of commodity strategy at Saxo Bank A/S. 'If that trend continues, then gold will continue to assert its role as a safe haven.'"

When The Stock Buybacks Go Bye-Bye -Forbes
"Debt-funded stock buybacks have been one of the major drivers of the U.S. stock market boom since the Great Recession. Ironically, 2018 was the most active year on record for buyback activity, yet the stock market faltered and experienced its first annual loss since 2008. If the stock market performed as poorly as it did in 2018 with record amounts of buybacks to prop it up, just imagine how much worse it would be if buybacks were to slow down significantly or grind to a halt? U.S. corporations have taken advantage of ultra-low bond yields to borrow heavily in the corporate bond market to fund buybacks. The eventual bursting of the U.S. corporate debt bubble will exacerbate the ultimate decline in stocks....Loose monetary conditions are what created the corporate debt bubble in the first place, so the ending of those conditions will end the corporate debt bubble. Falling corporate bond prices and higher corporate bond yields will cause stock buybacks to come to a screeching halt, which will also pop the stock market bubble, creating a downward spiral. There are extreme consequences from central bank market-meddling and we are about to learn this lesson once again....It’s going to take much more than the decline since early-October to unwind this bubble – make no mistake about that....While many investors are hopeful that the current bounce is the start of another leg up, I am not so optimistic: the trend is still down and the market has an incredible amount of excess that still needs to be worked off."

RealMoneyBlog - Free daily/weekly email


1.3.19 - Liberal Revolt to Derail House?

Gold last traded at $1,294 an ounce. Silver at $15.79 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying and rising market volatility. U.S. stocks fell sharply following a dire quarterly warning from Apple and weaker-than-expected manufacturing data.

Gold lifted by signs of ailing global economy -Reuters
"Gold prices scaled a more than six-month peak on Thursday as fears of a global economic slowdown embellished safe-haven demand for bullion, with a weaker dollar adding further support. U.S. gold futures traded up 0.5 percent at $1,290.40. 'Fears of an economic slowdown are one source of the equity market volatility, thus contributing to the covering of short positions in the futures market and investors' renewed interest in gold,' said Julius Baer analyst Carsten Menke. European and Asian bourses were dealt a heavy blow as Apple Inc announced its first revenue guidance contraction in 12 years. The news from the technology giant also weighed on the dollar index, which slipped by about 0.2 percent. Weakness in the currency reflects concerns over the U.S. economy and a drastic shift in investor expectations for interest rate rises, with many now expecting and end to the U.S. Federal Reserve's rate-raising cycle....'Volatile global markets always add to the charm of buying gold,' said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi."

cliff Stock Prices Have Plummeted. That Doesn't Make Them Good Buys -Fortune
"The business press and Wall Street money managers are advancing lots of plausible reasons for the stock market's steep slide, ranging from the menace of more Fed rate hikes to an escalation of trade tensions with China to slowing global growth. A much simpler, and more likely explanation is getting scant attention: Equities have been extremely expensive for years, and the more overpriced they grew, the more vulnerable they become to the kind of severe reversal that’s now underway. Put simply, super-high valuations sow the seeds of super-sharp corrections.In fact, the markets bring to mind those Looney Tunes cartoons where Wile E. Coyote hovers in mid-air over a gigantic chasm, arms and legs whirling helicopter-style, seemingly defying gravity, then suddenly realizes he's run off the cliff, and plunges to the desert floor. Until recently, U.S. stocks were just too pricey to offer anything but paltry future returns. So now, the crucial question is whether the big drop has transformed equities into a bargain, a New Year’s refrain on Wall Street.... Stocks are a lot more expensive than they appear for one simple reason: earnings are highly inflated, raising the denominator, and artificially shrinking the PE....After years of paying essentially flat wages, companies are now finding they need to raise pay to attract workers....Second, delivering another double-digit profit increase would require a return-on-investment bonanza that’s mathematically impossible....Reaching double-digit returns on investment from these already incredible levels of profitability is a fantasy, like imagining the day when Wile E. outfoxes the Roadrunner."

Everything Is Plunging: Stocks, Yields, Dollar Tumble As ISM, Apple Panic Spreads -Zero Hedge
"Today's drop has pushed the Dow to below the Dec 26 closing level, which preceded the historic 1000 point Dow move on December 27. Come to think of it, we are about 350 points from another 4-digit move in the Dow Jones, only this time to the downside. The broad-based drop is being led by the Nasdaq, which is down over 3%, largely due to the Apple fiasco. Stocks aren't the only thing that is sinking: so are Treasury yields led by the belly, with the 10Yr tumbling below 2.60%, and down the 2.57% last, the lowest level since January 2018. Finally, with US recession fears front and center, the US Dollar is also tumbling while gold is surging. And with everything going to hell in a hand basket, gold is just waiting for the right moment to pounce."

Liberal revolt threatens to derail House Democrats on their first day in charge -San Francisco Gate
"House Democratic leaders are set to advance sweeping internal rules changes Thursday...But in their first day of power in the new Congress, Democrats must stave off a liberal rebellion after prominent Democrats said they would oppose the entire rules package that has been carefully assembled by Rep. Nancy Pelosi, D-Calif., and a top lieutenant. Rep. Ro Khanna of California and Rep.-elect Alexandria Ocasio-Cortez of New York said they would vote against the rules changes - in the second vote Democrats will take in the majority after ostensibly electing Pelosi as the new speaker - because of the inclusion of a fiscal measure known as 'pay as you go,' or PAYGO. That rule, echoing a provision in federal law and in the Senate's rules, would require the House to offset any spending so as not to increase the budget deficit....The PAYGO rules date back nearly 30 years, to Congress' initial attempts to rein in the budget deficits of the 1980s. But the rules fell by the wayside amid the budget surpluses of the 1990s."

RealMoneyBlog - Free daily/weekly email


1.2.19 - What Could Go Wrong in 2019?

Gold last traded at $1,284 an ounce. Silver at $15.64 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying despite a stronger dollar. U.S. stocks struggled to find their footing as 2019 trading began.

Gold Opens 2019 With Fanfare -Bloomberg
"Gold's year-end rally is pushing into 2019, with bullion advancing for a fifth straight day as equities posted fresh losses after the worst year since the financial crisis. The metal hit a six-month high nearing $1,300 an ounce...The advance came as fresh figures showed China manufacturing shrinking and U.S. equity futures tumbled as stocks slumped across Europe and Asia. 'Mostly people are moving toward safe-haven assets, such as gold, because of the volatility in the equity markets,' Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services, said by phone. The U.S. government shutdown 'will only further create more uncertainty, so that will be supportive,' he said. Gold surged in the final quarter of 2018 as investors positioned themselves for a global slowdown, with fewer rate hikes expected from the U.S. Federal Reserve, and as a steep sell-off in the global equities spurred demand for havens. 'Gold is building towards a crescendo' in the first quarter, said Eily Ong, a metals and mining analyst at Bloomberg Intelligence."

Learn more about why gold and silver could become the top assets to own this coming year in Swiss America's 2019 Real Money Perspectives Newsletter which is now available! Call 800-289-2646 to request a free copy or register HERE

economic freedom Investors Are Still Cautiously Optimistic About 2019. But Here's What Could Go Wrong. -New York Times
"After an unexpectedly bad year for the stock market, investors are looking for clues about what 2019 will bring. The hope on Wall Street is that the underlying U.S. economy is sound...But the risk is that the plunge, the worst annual decline in a decade, could be the start of something more sinister. The forces that pushed the S&P 500 down 6.2 percent in 2018 are still in place....The index ended 2018 down 14.5 percent from its high point, and a bear market could yet be in store should stocks experience another decline similar to what they went through in early December....'It could get more frightening before it gets better,' said James Paulsen, chief investment strategist at the research firm Leuthold Group....In the worst case, a recession could occur. Stocks tumbled as investors became increasingly concerned that the Fed, under a new chairman, Jerome H. Powell, would raise interest rates too far and send a chill through the American economy....China, Japan and the European Union showed signs of slowing down late in 2018, and reliable indicators of global growth like the price of oil and copper are flashing warnings."

Last month Swiss America chairman Craig R. Smith explained a few additional reasons investors might see things go wrong in 2019 here.

Your Cash Is No Good Here. Literally. -Wall Street Journal
"Sam Schreiber was mid-shampoo at a Drybar blow-dry salon in Los Angeles when someone from the front desk approached her stylist with an emergency: a woman was trying to pay for her blow-out with cash. 'There was this beat of silence,' says Ms. Schreiber, 33 years old. 'She literally brought $40.' More and more businesses like Drybar don't want your money - the paper kind at least. It’s making things awkward for those who come ill prepared....Starbucks went cashless at a Seattle location in January...The practice of not accepting cash has become popular enough to catch the attention of American lawmakers....Despite the popularity of debit- and credit-card transactions, plenty of people do still pay for things with actual money. Cash represented 30% of all transactions and 55% of those under $10....Massachusetts is the only state that currently requires retailers to accept cash. Some New Jersey legislators are working to make their state next. New York City Councilman Ritchie Torres of the Bronx recently proposed legislation that would prohibit retailers and restaurants from refusing cash, and city council members in Washington, D.C., and Philadelphia have proposed similar legislation."

Learn more about the growing "war on cash" and where it is headed in our FREE special report THE SECRET WAR, PART II: Weapons of Cash Destruction.

King dollar's reign faces challenges in 2019 -Reuters
"After an unexpected rally that carried the dollar to 18-month peaks and saw it end 2018 as investors’ top trade, the currency faces challenges in the coming year. They include an expensive valuation, a flagging equity boom, waning cash repatriation by U.S. companies, and the possibility that the U.S. Federal Reserve will not raise interest rates as many times as signaled. Hence the prediction in a Reuters poll this month that the dollar will end 2019 around 5 percent below current levels....Furthermore, the Bank of America Merrill Lynch’s monthly investor survey shows the greenback regaining the 'most crowded trade' crown from the FAANG tech stocks group. But the wheels have come off that investor bandwagon in recent years, as big bets have misfired on Bitcoin and tech....On the economic front, jobs and housing data suggest a decade-long U.S. recovery is losing traction and a flattening bond yield curve is flashing the classic recession warning."

RealMoneyBlog - Free daily/weekly email


12.28.18 - Pending Home Sales Crash 7.7%

Gold last traded at $1,283 an ounce. Silver at $15.38 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on safe-haven buying and a weaker dollar. U.S. stocks traded mixed as Wall Street concluded a roller-coaster week.

With Turmoil Rampant, Gold Targets $1,300 as Gloomy 2019 Beckons -Bloomberg
"Gold is closing out 2018 with a flourish. Prices are poised for the biggest monthly gain in almost two years as concerns about next year’s economic outlook, volatility in global equities and a government shutdown in the U.S. spur demand for the metal as a haven. Spot bullion hit a six-month high on Friday, topping $1,280 an ounce, as investors favored defensive assets, adding to holdings in exchange-traded funds over the month. Silver rose to the highest since August as it approaches its 200-day moving average, which could trigger further technical buying. Gold is powering into the year’s end as global equities sink in the fourth quarter. Banks including Goldman Sachs Group Inc. have flagged the potential for gains over 12 months as the Federal Reserve steps back on the pace of U.S. rate increases. 'We are very optimistic on gold,' said Benjamin Lu, an analyst at Phillip Futures Ltd. 'There's still a lot of uncertainty and gloom toward 2019.'"

money we trust Steve Forbes Is At His Brilliant Best In "In Money We Trust?" -Tamny/Real Clear Markets
"Among monetary policy writers with a desire to revive money as a stable measure of value, Steve Forbes has saint-like qualities. He does because in modern times the economics profession has near unanimously run from the pithy and endlessly true insight from Adam Smith that 'the sole use of money is to circulate consumable goods.'....So what is money? Money is an agreement about value, nothing else...Money is what enables people to exchange the fruits of their labor for all that they don't have. While we work for money, what we're really doing when we go to work each day is expressing a desire to import from others who likely have no interest in what we’re producing....Since trade is really about goods for goods, the measure that's stable will be the one most frequently used on the way to major enhancement of those lucky enough to exchange....All of which underscores yet again the importance of stable money, and a crucial new documentary by Steve Forbes and Elizabeth Ames, In Money We Trust? In a production that will be shown on PBS stations nationwide, the duo remind us of what’s sadly been forgotten by economists, politicians, and media members: money is only money if it has a strict definition of value that holds true over time....With an eye on stability, many hundreds of years ago producers happened on metals (iron, copper, silver, and gold among others) as the best measures of value (money) when it came to facilitating exchange. Gold ultimately won out, and it’s a reminder of the basic truth that money was hardly an invention of the state....They begin their feature on money with a history of its origins. Prominent here is the great monetary thinker Nathan Lewis. Few know money’s various early forms better than Lewis does, nor can they tie early experimentation to the eventual acceptance of gold as the ultimate definer of the measure as well as Lewis can. Gold emerged victorious not by sheer luck or random sun spots, but because (per Lewis and Forbes) it’s the commodity least influenced by everything else. Precisely because there’s so much gold stock, and so little gold flow (new discoveries), gold’s price is very stable. The stability is what makes it money....Forbes and an all-star cast of commentators including Brian Domitrovic, Adam Fergusson, Alan Greenspan, Arthur Laffer, Seth Lipsy, Judy Shelton, Amity Shlaes, Paul Volcker, and many, many others address Nixon’s error, and in the process make a case for a return to some kind of monetary regime focused on currency stability."

Pending Home Sales Crash 7.7%, Biggest Drop In Four Years -Zero Hedge
"Pending home sales dropped again in November, sliding -0.7% vs the expected 1.0% increase, declining in six of the last eight months, with a cumulative loss since March of -5.9% (-8.9% annualized)....and crashed a whopping 7.7% compared to last year, the biggest annual drop since April 2014. Always eager to put lipstick on a pig, commenting on the collapse NAR chief economist Larry Yun said 'the latest decline in contract signings implies more short-term pullback in the housing sector and does not yet capture the impact of recent favorable conditions of mortgage rates.'....Not everyone agrees: as Bloomberg notes, the poor results underscore the challenges as elevated prices and higher mortgage rates keep many Americans on the sidelines of the housing market. Economists consider pending-home sales a leading indicator because they track contract signings; purchases of existing homes are tabulated when deals close, typically a month or two later....Not even Larry could spin the report as bullish admitting that the latest government shutdown will harm the housing market. 'Unlike past government shutdowns, with this present closure, flood insurance is not available. That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas,' Yun said. 'The longer the shutdown means fewer homes sold and slower economic growth.'"

U.S. Economy Fuels Boom in Consumer Debt -Wall Street Journal
"Americans are carrying more consumer debt than ever before...Consumer debt, including credit cards, auto and student loans and personal loans, is on pace to top $4 trillion in 2019. That comes even as mortgage debt approaches levels last seen during the housing meltdown. Homeowners owed about $10.3 trillion on mortgages at the end of the third quarter, up 2.8% from a year earlier, according to Federal Reserve data. Mortgage debt peaked at $10.7 trillion in early 2008....Consumer spending has increased 2.7% on average in the four quarters through September compared with the same period a year earlier, as disposable income rose 2.7% on average, according to Moody’s Investors Service....Consumers on average owed $6,826 on their cards as of September, up 1.9% from a year before and up 11% from 2011, according to credit-reporting firm Experian . Loans originated for new-car purchases between July and September hit $30,977, on average, the highest for any third quarter on record....Whether the growth in credit remains manageable likely depends on the outlook for the U.S. economy, which has been dogged by fears of a slowdown or even recession. Almost half of U.S. finance chiefs believe the economy will slide into recession by the end of 2019, according to a recent Duke University/CFO Global Business Outlook....Credit-card loan losses are rising from a year earlier despite the low unemployment rate....Student loans also are a particular concern. There is more than $1.5 trillion of outstanding student-loan debt...'If borrowers can’t pay down their student-loan debt now, in a time of relative economic prosperity, what will happen during the next economic downturn?,' John Anglim, a credit analyst at S&P Global Ratings, wrote in a recent report."

RealMoneyBlog - Free daily/weekly email


12.27.18 - Mnuchin Calls 'Plunge Protection Team'

Gold last traded at $1,281 an ounce. Silver at $15.30 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying and market volatility. U.S. stocks erased much of the previous day's gains amid renewed tensions between China and the United States.

Beware These January Days When The Fed's QT Will Rock Markets -Zero Hedge
"With traders finally accepting the reality that Quantitative Tightening means collapsing liquidity, tighter financial conditions and - obviously - lower asset prices, especially in the aftermath of Powell's 'autopilot' comment regarding the Fed's balance sheet runoff which sent markets tumbling during the last FOMC meeting....January 2019 should see similar 'tightening' as the Fed's balance-sheet run-off continues (including two heavy weekly QT periods during the first- and third- weeks of January)....The shrinking Fed balance sheet is one of the most important drivers of (declining) asset prices....We'll know as soon as the first trading day of 2019, when $18.2BN in TSYs are set to mature."

gold Gold rises, holds near 6-month highs on falling equities -Reuters
"Gold rose on Thursday, supported by a weaker dollar and investors buying the metal to hedge against falling stock markets, keeping it near six-month highs hit in the previous session. Spot gold rose 0.6 percent to $1,275.06 per ounce. 'The risk-averse sentiment is the most dominant force today. Investors are busy profit-taking in equities, which is benefiting gold,' said Naeem Aslam, chief market analyst at Think Markets UK. A global equity rally fueled by a dramatic surge on Wall Street ran out of steam on Thursday, after a fall in Chinese industrial profits offered a reminder of the pressures on the world economy. 'There has been an extensive surge in the gold exchange traded fund holdings and there is absolutely no shortage of momentum there. Investors are just preparing themselves by buying gold as there are several uncertainties heading into 2019,' Aslam said....Among other metals, silver was up 0.8 percent to $15.15 per ounce, after hitting its highest level since mid-August at $15.18."

The market is pricing in 'widespread disaster' -CNBC
"I learned ages ago that the market is a lot smarter than I am. That collection of buyers and sellers out there has more accumulated wisdom than I could ever aspire to and it's given us a sharp smack across the face. Don't mess with a market that's pounding you with its message. The market has made it totally clear to me that I don't have my eyes open, and if I do, I am not seeing clearly. What is the market telling me that I have missed in my myopic haze? We're in a recession, right? Or at least we will be early next year. That means, of course, that GDP numbers will be revised down, way down. It means that the numbers we have been looking at are an illusion....The market says that a recession must be creeping into all corners of this economy, and if I had a stronger lens prescription, I would have seen it....The market knows in its wisdom that something insidious is happening with inflation. Those threatened tariffs must be to blame - there will be no resolution and the resulting price escalation is going to create an inflationary skyward spiral....All those cynics who, for years, have predicted the end of the longest bull market in history, have finally been correct."

'Plunge Protection Team' convened amid Wall Street rout -NBC News
"Treasury Secretary Steven Mnuchin will host the call with the president's Working Group on Financial Markets, known colloquially as the 'Plunge Protection Team.' The Working Group dates to March 1988 when Washington was still trying to figure out what was behind the 'Black Monday' stock market crash of October 1987...The group also met in 2008 during a profound financial crisis and issued recommendations for overhauling banking regulations and rules on mortgage lending....The benchmark S&P 500 stock index is on pace for its biggest percentage decline in December since the Great Depression. The Treasury Department on Sunday said the Working Group will discuss 'coordination efforts to assure normal market operations.'....Investors are betting U.S. economic growth will slow as a tax cut stimulus fades and as three years of gradual interest rate hikes by the Federal Reserve cool purchases made by businesses and households."

RealMoneyBlog - Free daily/weekly email


12.26.18 - Bear Market: Steeper Losses Ahead

Gold last traded at $1,273 an ounce. Silver at $15.06 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying amid market volatility. U.S. stocks rose in a volatile session as investors tried to regain some of the steep losses suffered in the previous session.

Gold hits six-month high on U.S. political worries -Reuters
"Gold rose to its highest in six months on Wednesday as worries over U.S. political uncertainty, aggravated by a partial government shutdown, and slowing global economic growth drove investors towards the safe-haven metal. Spot gold touched $1,274.68 in early trade, its highest since June 20. 'There is some safe haven buying at this point in time because of the partial (U.S. government) shutdown. The dollar against the Japanese yen and Swiss franc has lost quite a bit of value,' said Afshin Nabavi, Senior Vice President, MKS SA. Investors were unnerved by the partial U.S. federal government shutdown and President Donald Trump’s hostile stance towards the Federal Reserve chairman. The U.S. Senate has been unable to break a deadlock over Trump’s demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until Jan. 3....Spot gold is up about 4.1 percent for the month thus far, putting it on track to register its best December in about 10 years."

money What Was Steve Mnuchin Thinking? Three Possibilities -Atlantic
"Sunday evening, when Treasury Secretary Steven Mnuchin put out a press release on calls he held with executives from the country’s largest banks. Mnuchin's statement assured the public that they had not been having liquidity problems or 'clearance or margin' issues - the sorts of things you would worry about if the country were on the brink of a financial crisis....What was the Treasury secretary thinking? Who thought we were tipping into a financial panic? None of the possible explanations are very reassuring, though it seems that Mnuchin was trying to be. Option one: The Treasury secretary was speaking to an audience of one...the current Federal Reserve chairman, Jay Powell....Option two: The Treasury secretary believes that the market correction is due in part to animal spirits - animal spirits he could quiet by reminding everyone that the financial system is in fine shape....Option three: Mnuchin has some troubling insider knowledge, and he wanted to broadcast to the markets that he is aware and in charge. Maybe some financial firms are teetering?....Whatever Mnuchin was trying to do, he did not succeed in it, instead stoking market fears and sowing confusion...If they're communicating this poorly in the absence of a crisis, just imagine how disastrously they might perform in the presence of one."

King Dollar To Lose Its Crown In 2019 -Kitco
"King dollar's reign could come to an end next year as fears of a global economic slowdown could stop the Federal Reserve from raising interest rates aggressively in 2019, according to some analysts. 'If you look back, U.S. dollar rallies end when the Fed ends its tightening cycle,' said Adam Button, senior currency strategist at Forexlive.com, in a telephone interview with Kitco News. 'We are at that point or very close to that point.' Button’s comments came after the Federal Reserve’s December monetary policy meeting, where they decided to raise interest rates for the fourth time this year, the ninth in the current cycle. However, the pace of rate hikes looks to be slowing as the U.S. central bank, in its latest economic projections, estimated only two rate hikes next year....'While markets are anticipating limited Fed action next year, investors appear to be underestimating the odds of tightening by central banks abroad,' said currency analysts at CIBC World Markets. Some currency analysts have said that the closing gap in global monetary policy will favor the euro over the U.S. Dollar....Simon Derrick, chief currency strategist at Bank of New York Mellon, said that weak economic growth will weigh on U.S. equity markets, which in turn will add further pressure to the U.S. dollar. 'A weaker U.S. dollar would solve a lot of global problems. I think the positive factors would outweigh negative factors,'” he said....Gold and commodities look to do well in 2019 because of a weaker U.S. dollar."

A bear market usually means even steeper losses are ahead -CNBC
"Investors will have a hard time finding a place to hide should the S&P 500 keep trading in bear market territory, if history is any indication. A CNBC analysis using Kensho found that all 11 S&P 500 sectors average steep losses after the broad index plunges 20 percent or more in a six-month period. The S&P 500 entered Wednesday's session in a bear market, down 20.06 percent from an all-time intraday high set on Sept. 21 amid ongoing turmoil in Washington. Stocks entered bear market territory on Monday after the worst Christmas Eve sell-off in history. President Donald Trump went after the Federal Reserve once again on Monday, calling it 'the only problem our economy has' in a tweet. Trump also said the Fed does not 'have a feel for the Market.'"

RealMoneyBlog - Free daily/weekly email


12.21.18 - Job Market Can't Fill Retirement Deficit

Gold last traded at $1,258 an ounce. Silver at $14.70 an ounce.

NEWS SUMMARY: Precious metal prices held near 5-month highs Friday despite a firmer dollar. U.S. stocks erased early gains as a week-long equity exodus put the major indexes on track for one of their worst weeks of the year.

Gold's Recent Strength Should Extend Into 2019 -Barrons
"Prices for precious metals are on track for the biggest quarterly rise in nearly two years, with analysts forecasting further gains in 2019. 'Gold has rallied, in fits and starts, since its August bottom,' says Brien Lundin, editor of Gold Newsletter. As of Wednesday, the metal trades about 4% lower year to date. However, for the fourth quarter it has outperformed U.S. stocks, up more than 4% compared with a drop of 14% for the S&P 500. The metal is poised for its largest quarterly percentage gain since the first quarter of 2017....Gold prices marked a five-month settlement high of $1,256.40 an ounce Wednesday, just ahead of the Fed decision, then eased back in electronic trading....Gold’s performance in 2019 will depend mostly on the same themes that impacted the metal in 2018: the dollar and U.S. equities, says Milling-Stanley. Next year, U.S. 'equities will not be receiving the boost of the Trump [administration] tax cuts, and the dollar will not have the support of three or four increases in the federal-funds rate, so both are unlikely to be as strong as they have been,' he adds....This is a 'great time to buy' gold, says Lundin, as many of the 'bearish factors that had been holding the metal back have now completely shifted into its favor' Lundin expects to see gold climb to $1,375 an ounce by the end of 2019."

chart 2018 Is Officially "The Worst Year On Record" With 93% Of All Assets Down -Zero Hedge
"In his last Early Morning Reid for 2018, Deutsche Bank's Jim Reid writes that '2018 has been like a rebellious teenager suddenly aware of their own mind, independence, and the world around them after years of being guided and cajoled in everything they do.' He also notes that for him 'peak QE moving to QT and the Fed raising rates four times this year has been enough to reverse a significant amount of the liquidity-inspired asset price returns of the pre-tightening era. A bit like Road Runner galloping off the cliff only to suddenly look down.' But most importantly, Reid notes that the chart in question showing the percentage of global assets down on a dollar adjusted basis each year since 1901 was 'the most requested chart we've ever been involved in', and 2018 continues to the be the worst year on record on this measure with 93% of assets currently down - worse than the years of the Great Depression - and up from 89% at the end of October. The record bearish print is made all the more fascinating, considering that just one year ago, 2017, was the 'best' year ever for markets on this measure, when just 1% of assets finished with a negative total return in dollar terms. Putting these two extreme years in context, since 1901 the average has been that 29% of assets finish a given year with a negative total return, leading Deutsche to exclaim that it's been 'an amazing couple of years nonetheless as we swing from one extreme to the other.'"

Stock market woes raise a nagging fear: Is a recession near? -Associated Press
"Fears of a recession have been mounting with the U.S. stock market appearing to be headed for its worst December since 1931 - during the Great Depression. Wall Street's sustained slump has been fueled by investor concerns about lower corporate profits, higher corporate debt, a festering trade war between the United States and China and a broader global slowdown. And the worries are mounting. On Wednesday, stocks tumbled over concerns that the Federal Reserve will continue raising rates. And they plunged again Thursday as President Donald Trump appeared open to a partial government shutdown unless he receives funding for a wall along the border with Mexico....Nearly half the chief financial officers surveyed by Duke University's Fuqua School of Business foresee a recession by the end of next year. And by the end of 2020, 82 percent do so....Both the previous two U.S. recessions overlapped with stock market sell-offs. The Dow plunged nearly 34 percent in 2008 after the housing bubble burst. And it shed about 7 percent in 2001 when the tech stock bubble burst."

Even a Booming Job Market Can’t Fill Retirement Shortfall for Older Workers -Wall Street Journal
"For older Americans, the last few years of work can be a vital chance to patch up thin savings or pay down debt to ease their way into retirement. Many aren’t getting that opportunity. Even though the official unemployment rate is just 3% for older workers, the actual jobs environment is surprisingly bleak. Nearly eight million older Americans are out of work or stuck in low-quality jobs that offer little opportunity to prepare for retirement, a Wall Street Journal analysis of government data shows. The figures include the nearly 2.1 million Americans who are out of work, working part time because they can't find a full-time job or have stopped looking because they don't think anyone will hire them. Another 5.8 million Americans - or 23% of full-time, year-round workers ages 55 and older - are employed in what economists describe as 'bad jobs' that offer no health benefits and typically pay poorly....Some states are experimenting with ways to connect experienced job seekers with willing employers. The Southeast Michigan Community Alliance in Taylor, Mich., held its first 50+ job fair this spring with AARP Michigan. Job seekers’ qualifications were reviewed before the event to make sure they had the needed skills; 31 of them received job offers on the spot. Most participating companies were in the retail, hospitality and home health-care industries, and offered hourly positions that require applicants to spend the workday on their feet."

*Swiss America will be closed December 24-25 for Christmas*

RealMoneyBlog - Free daily/weekly email


12.20.18 - The Fed is Panicking

Gold last traded at $1,267 an ounce. Silver at $14.86 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying and fresh dollar weakness. U.S. stocks continued their decline after the Fed raised interest rates and said it would continue shrinking its massive $4.1 trillion balance sheet in 2019.

Gold: Worst & Best-Case Scenarios In 2019 -Forbes
"The dollar index has had one dominant trend this year - the uptrend. The greenback and gold have an inverse relation....Going into 2019, the yellow metal is likely to shine more as cracks have started to surface in the U.S. economy. The U.S. equity markets are on track to record the worst performance in a decade...The housing market, a leading indicator to gauge the economic health of the country, is showing some serious concerns. Business investment has dried up in the third quarter and effects of tax cuts by Trump administration have almost vanished. Can the U.S. economy end up in recession in 2019? Under the current circumstances, it may not be far stretched to say that if the recession doesn’t see the daylight in 2019, it is likely to see it in 2020....All in all, it is highly likely that we will see an uptrend for gold and factors such as feeble economic growth, escalation in the geopolitics in Europe, the Middle East and stronger threats to Trump’s presidency could drive the price way above the $1600 mark in 2019. However, a controlled Fed policy and a stable economic growth may only push the price towards $1400."

dollar The Fed Is Panicking -Daily Reckoning
"There is growing consensus that the makings of a financial crisis of some sort is building - and could drop sooner rather than later...the belief is that something is wrong....Even though the Fed has been able to avoid another financial crisis the last decade, with quantitative easing (QE) policy - or what I call dark money - their 'toolkit' might not render us 'safe enough.' You see, the Fed manufacturers dark money that the markets have come to rely on. Through quantitative easing (QE) the central bank has accumulated a balance sheet that hit a high of $4.5 trillion of assets last year. By having purchased these assets with electronically created money, the Fed was able to keep rates at the middle and longer end of the yield curve low....The Fed knows it is currently in a catch-22....Here's something else you might not know: Two weeks ago, it even quietly increased its book of assets. That’s the opposite of the policy of unwinding, or selling its assets through quantitative tightening (QT), which is what Chairman Powell promised he would be doing. That’s another sign that the Fed is afraid of a possible new financial crisis. For more proof, consider that former Fed Chair, Janet Yellen, just did a 180 on her prior comments related to the possibility of another crisis....Companies are holding $9.1 trillion of debt now in contrast to the $4.9 trillion in 2007 before the last financial crisis. The financial system is more highly levered than they were prior to the last financial crisis."

BIS warns of seizure at heart of financial clearing system -Evans-Pritchard/Telegraph/GATA
"The pillars of the global financial system are fundamentally unstable which could lead to a frightening chain-reaction in the next crisis, BIS warns. Giant 'central counterparties' that clear the $540 trillion nexus of derivatives are vulnerable to failure in times of extreme stress. The Bank for International Settlements said CCPs could cause 'a destabilizing feedback loop, amplifying stress'. Recent market 'jolt' will be first of many as easy money era ends - says the world’s top watchdog....The rotten apple contaminates the healthy banks. A fire sale of assets spreads contagion. Banks may be forced to hoard liquidity to protect themselves. The BIS said 'balance sheet interlinkages' and what it calls the 'CCP default waterfall' could unravel with 'potentially system-wide effects.' It is just one of many late-cycle pathologies highlighted by the Swiss-based watchdog, the bank of the central banking fraternity and the high priest of orthodoxy. Another brutal week on Wall Street has brought these risks into sharper focus. The three key equity indexes in the United States are all in a full correction after falling over 10 percent from their peak....The Achilles' heel for the global economy is the surging U.S. dollar. The BIS says offshore lending in dollars by European, Japanese, and increasingly Chinese and emerging market banks has risen to $12.8 trillion....This web of dollar liabilities is coming under intense strain as the U.S. Federal Reserve drains liquidity, pushing up global lending rates. A worldwide dollar shortage is emerging. This is acting as tourniquet, tightening an international system built on dollar funding."

Americans are already returning holiday purchases -CBS News
"Holiday gifts should still be under the tree, yet returns are already in full swing. The advent of online shopping and hard-selling promotions by retailers had lots of consumers buying gifts for themselves, aided in their efforts by free shipping for deliveries and returns. That's according to UPS, which expects holiday returns will hit their peak on Wednesday, with an estimated 1.5 million packages returned. In years past, returns didn't really pick up steam until January, and UPS said it still expects another wave will have 1.3 million packages returned on the third day of the new year. Overall, UPS expects to deliver 800 million packages this holiday season. But consumers who starting buying online in the days before Black Friday are busy sending lots of stuff back, at a rate of a million packages a day this month, UPS said. Being able to return merchandise for free is an important part of shopping online for a majority of consumers, UPS said, citing its own research. And Marran said shoppers are changing their behavior as it becomes easier and cheaper to return merchandise: 'Consumers can buy multiple gifts, decide what they want to keep and give to their family and friends, and perhaps return the others, earlier in the season.'"

RealMoneyBlog - Free daily/weekly email


12.19.18 - "Prepare for the worst" -Greenspan

Gold last traded at $1,248 an ounce. Silver at $14.70 an ounce.

NEWS SUMMARY: Precious metal prices held near 5-month highs Wednesday on dollar weakness. U.S. stocks turned negative following the Fed's decision to lift interest rates for a fourth time in 2018.

Gold Is Shining Again -Rush/Investing
"The recovery in gold prices from August lows is gaining momentum. On Wednesday, the precious metal has extended weekly gains to fresh mid-July highs marginally above $1,251 and holds in the positive territory, expecting fresh short-term drivers. It looks like gold is shining again, after a break of the aggressive bearish trend. The bullion’s appeal is rising due to a sell-off in the greenback as the American currency is on the defensive across the board amid the growing doubts in the Fed’s ability to proceed with monetary tightening in 2019. In this context, today’s FOMC meeting will define further direction for the greenback, gold and global financial markets in general. A potentially 'dovish' hike will depress the dollar even further. In this scenario, the precious metal could attract a more robust demand."

reindeer Good News About the Coming Crash -Bonner/Bonner And Partners
"The last leaves are falling from the trees. And the last days of December are counting down, like the quiet moments before an execution....If the stock market keeps sliding, a lot of problems will disappear - the trade war, the search for a chief of staff at the White House, the 'shutdown'… Nancy Pelosi, Trump. Who will care about any of this when the Dow loses 10,000 points?....Worried about inequality? Just let the correction do its work. The rich will be taken down a peg. On Friday, for example, the selloff took stock prices down by more than 2%. Since the whole stock market is valued at about $30 trillion, a 2% drop shaves about $600 billion off balance sheets. And that's in addition to the 10% or so they were already down. Or about $3 trillion in all. But hold on… there’s a long way to go. By our estimate, the rich have gained about $30 trillion in total (from their investments in stocks, bonds, real estate, rare artwork, and collectibles) from the fake money system and the manipulation of interest rates by the Fed. If the stock market gets cut in half (which we expect), that alone will take care of half the problem....Alas, it’s not just stock owners who take a beating. Stocks represent real companies. Companies have owners, bankers, suppliers, employees… and creditors. All of them lose. Employees are laid off. Bonuses are reconsidered. Expansion plans are shelved. Purchases are rescinded. Business implodes. And the weakest companies are unable to pay their debts. Then, of course, the whole credit industry gets the shakes. The weaker lenders collapse immediately. Stronger ones call in their loans - putting further pressure on the wobbly companies. But heck… it’s supposed to work that way. Panics, credit crises, and bear markets – like maggots on dead flesh – clean up market economies. And, still looking on the bright side, we personally will lose millions; but it will be worth it to see the dumbbell rich get what is coming to them. Stay tuned…"

Alan Greenspan: Investors should prepare for the worst -CNN Money
"Alan Greenspan says the party's over on Wall Street. The former Federal Reserve chairman who famously warned more than two decades ago about 'irrational exuberance' in the stock market doesn't see equity prices going any higher than they are now. 'It would be very surprising to see it sort of stabilize here, and then take off,' Greenspan said in an interview with CNN anchor Julia Chatterley. He added that markets could still go up further - but warned investors that the correction would be painful: 'At the end of that run, run for cover.'....'The volatility is a function of how we speak, think and feel - and it's variable,' he said. 'Unless you can somehow radically change human nature and how we respond, this is what you'll always get and have been getting. You have to count on it, if you're going to understand how the market functions.'"

When the White House Fights The Fed, The White House Wins -- Always -Forbes/Forbes
"The Federal Reserve backed off its plans for aggressive interest rate hikes next year after President Donald Trump relentlessly and personally bashed chairman Jerome Powell - a recent Trump appointee, no less. The Federal Reserve and its defenders stress the importance of its independence from outside interference....Our central bank has done a remarkable job over the years creating an aura that those who attack it are either ignoramuses or cranks outside the boundaries of respectable and responsible opinion. This achievement comes in the face of several major blunders, most notably the terrible inflation of the 1970s and early 1980s, and the lead-up to the crisis of 2008–09. Nonetheless, the reality is that if the executive branch pushes hard, the Fed backs off. It is not a fourth branch of government enshrined in the Constitution but a creature of Congress. The Fed's actual but hidden weakness has been a fact of life since its inception in 1913....The basic problem isn't the Fed's independence, but a true understanding that money is a measure of value and that it works best, as Alexander Hamilton well understood, when its value is fixed to gold."

RealMoneyBlog - Free daily/weekly email


12.18.18 - "2019 Could be a Stellar Year for Gold"

Gold last traded at $1,251 an ounce. Silver at $14.73 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on safe-haven buying and a weaker dollar. U.S. stock indexes attempted a bear market rally, recovering a fraction of the steep losses of the prior trading session.

Why 2019 could be a stellar year for gold -Yahoo News
"Gold has gotten a boost over the past three months, rising more than 4%, as investors flock to so-called 'safe-haven' trades, and the commodity is headed even higher in 2019, according to strategists. 'Volatility has reemerged across markets generally - commodities, equities, etc. If that volatility persists, it will be key. It is going to push investors to perceived safe havens like gold,' Chris Louney, commodities strategist at RBC Capital Markets, told Yahoo Finance. Fears of an economic slowdown coupled with trade worries between the U.S. and China have sent the U.S. stock market tumbling since October. All three of the major indices closed in correction territory, or down more than 10% from their recent highs, on Friday....Mikhail Sprogis, Goldman Sachs precious metals analyst, said the firm believes safe-haven trades like gold will continue to rise next year, whether or not the economy actually slows down. 'Our bullish outlook is driven by the expectation of a pick up in 'fear' related investment demand for gold as the U.S. economy slows down and late cycle concerns mount.'....Goldman Sachs has an end of 2019 price target of $1,350 for gold, while RBC has an average 2019 forecast of $1,338."

bear market "This Is A Bear Market" - Stocks Slump After Gundlach Unleashes Truth-Bombs On CNBC -Zero Hedge
"A sheepish Scott Wapner dared to ask DoubleLine's Jeffrey Gundlach an open-ended question about the stock market, and we suspect the response he got was far from what he wanted to hear. 'I'm pretty sure this is a long-term bear market for stocks...S&P is headed to new lows', 'We've had pretty much all of the variables which characterize a bear market.' Other highlights from Gundlach include: I think we'll ratchet up tariffs. 2019 is all about Capital preservation. Worst thing to do is herd into S&P passive fund. Gundlach sees bond yields still moving higher on supply. Mueller, House probes are a market negative. He sees a weaker dollar ahead....Additionally, Gundlach says the Federal Reserve shouldn’t raise interest rates when it meets this week, citing concerns about the bond market and expectations that a slowing economy may require policy reversals in 2020."

Cramer: The stock market is not safe; it's most treacherous in years -CNBC
"CNBC's Jim Cramer said Monday that the persistent sell-off in the stock market has gone beyond concerns about a slowdown in global economic growth and what the Federal Reserve will do on interest rates this week and next year. 'This was a soul-searching weekend for many of us because you left on Friday kind of in disbelief that the market could just fold. And it's not just worldwide slowing growth. It's not just fear of the Fed. But it's basically exhaustion,' Cramer said....'I think that there's a lot of people who say, 'I got to get out. I got to get out, because everyone else is getting out,' said Cramer. 'It's not a safe market. It's a treacherous market. This is the most treacherous market I've seen in a many a year.' The Fed, which meets Tuesday and Wednesday, is in a tough spot, Cramer said, reiterating that if central bankers don't raise rates they risk really scaring the market about the economy. Fed Chairman Jerome Powell should increase rates this week and then pause, the 'Mad Money' host said."

The Bubble’s Losing Air. Get Ready for a Crisis -Bloomberg
"The 'everything bubble' is deflating. The fact that it’s happening relatively slowly shouldn’t blind us to the real threat: The world is dangerously underestimating how hard it’ll be to deal with the fallout once it pops. Frothy markets can’t disguise the warning signs. The shift to tighter monetary policies in the West is putting pressure on global equity and real-estate values. Even more critically, it’s weakening credit markets. Over-indebted emerging markets face headwinds from rising borrowing costs and dollar shortages. Investors need to start focusing on how best to respond to a new crisis. The choices are more limited than many realize....Ultimately, central banks might have to resort to QE variations such as 'helicopter money.' Originally a thought experiment of Milton Friedman, the government would print money and distribute it to the public to stimulate the economy....There is already a crisis of trust - a democracy deficit - in many advanced economies, accompanied by rising political tensions....Governments that want to avoid that dystopian prospect need to address the key underlying problems now, before it’s too late."

America’s wavering housing market all depends on what Fed does next -Marketwatch
"The country’s housing market may have hit its peak...Housing inventory remains incredibly tight, meaning that buying a home is a very expensive and difficult proposition for many. And 2019 appears set to bring more of the same...Mortgage rates will continue to rise, causing home prices and sales to drop. 'I would still rather be a seller than a buyer next year,' said Danielle Hale, chief economist at real-estate website Realtor.com."

RealMoneyBlog - Free daily/weekly email


12.17.18 - Gold Firm as Dollar Eases

Gold last traded at $1,251 an ounce. Silver at $14.75 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday as the dollar slumped ahead of the Fed meeting. U.S. stocks fell after all three major U.S. indexes closed last week in correction territory for the first time since March 2016.

Gold firms as dollar eases, markets brace for Fed -CNBC
"Gold firmed on Monday as the dollar eased from near 18-month highs, adding to bullion's appeal among holders of other currencies, with investors looking to a U.S. Federal Reserve meeting for clues on interest rate developments next year. Markets have priced in a rate rise by the Fed at its Dec. 18-19 Federal Open Market Committee meeting, so the focus will be on how many hikes will follow in 2019, analysts said. 'The market is gearing up for price-friendly news this week from the Fed and later, from China's annual Central Economic Work Conference,' Saxo Bank analyst Ole Hansen said, referring to a closed-door gathering of party leaders and policymakers. 'Based on the data released on Friday, we can see the hedge funds are net long in gold for the first time in five months. So, they are gearing up towards a dovish Fed rate hike stance on Wednesday,' he said."

santa U.S. Stocks Need a Santa Claus Rally to Avoid a Losing Year -Wall Street Journal
"Investors hoping to avoid the first annual decline for major U.S. stock indexes since 2015 are dreaming of a Santa Claus rally....Such a year-end boost will likely be necessary if the S&P 500 is to avoid finishing in the red. It is down 2.8% this year through Friday. But trade tensions with China, slumping commodities prices and concerns about the Federal Reserve’s pace of interest-rate increases have forced investors to reassess the global growth outlook....Economists have scaled back their predictions for 2019, calling for two rate increases next year rather than the three they expected when surveyed last month. Any change in that sentiment would likely rattle the already volatile stock market. 'If the Fed flips back to being more hawkish, that would be the thing that derails this,' said Jeffrey Hirsch, editor of the Stock Trader’s Almanac...Santa's failure to deliver typically doesn't bode well for stocks heading into the new year. The last six times the rally didn’t materialize were followed by three flat years in 1994, 2004 and 2015, two bear markets in 2000 and 2008 and a downturn that ended in February 2016, according to Stock Trader’s Almanac."

U.S. recession risks jump, Fed rate hike expectations slump -Reuters
"The risk of a U.S. recession in the next two years has risen to 40 percent, according to a Reuters poll of economists who also found a significant shift in expectations toward fewer Federal Reserve interest rate rises next year. What has fueled concerns of a downturn is the flattening of the U.S. yield curve - with the spread between two- and 10-year note yields falling to less than 10 basis points, the smallest gap since the run-up to the last U.S. recession....The last time such a high probability appeared in a Reuters poll was in January 2008, just eight months before the collapse of U.S. investment bank Lehman Brothers, which brought on the Great Recession....'The combination of a Fed that does not think that inverting the yield curve is a problem (along with) a global outlook that is not likely to improve in a sustained manner, is likely to lead to a monetary policy error that will push the economy into recession,' noted Philip Marey, senior U.S. strategist at Rabobank."

The Bond Market Has Frozen: For The First Month Since 2008, Not A Single Junk Bond Prices -Zero Hedge
"Late last week, we reported that in the aftermath of a dramatic drop in loan prices, a record outflow from loan funds, and a general collapse in investor sentiment that was euphoric as recently as the start of October, the wheels had come off the loan market which was on the verge of freezing after we got the first hung bridge loan in years, after Wells Fargo and Barclays took the rare step of keeping a $415 million leveraged loan on their books after failing to sell it to investors....The reason the banks were stuck with hundreds of millions in unwanted paper is because they had agreed to finance the bridge loan whether or not there was enough demand from investors, as the acquisition needed to close by the end of the year....'This is clearly more than year-end jitters,' said Guy LeBas, a strategist at Janney Montgomery Scott. 'What we’re seeing now is pretty typical for end-of-credit-cycle behavior.'....The trouble lenders have faced in the leveraged loan market has mirrored the exasperation felt by investors in other asset classes."

Home builder confidence hits 3 1/2 year low as housing crunch worsens -Marketwatch
"The National Association of Home Builders’ monthly confidence index tumbled four points to 56 in December. The December decline took the sentiment index to the lowest since May 2015. It followed a breathtaking plunge from October to November and brought the full-year 2018 average for the index to 67, one point lower than 2017. The buyer traffic tracker fell two points to 43, its lowest level since March 2016....The November sentiment plunge was followed by a new-home sales report that was the lowest in nearly three years....'Customers are hesitating to make a purchase because of rising home costs,' the industry group said, adding that confidence was lowest in parts of the country where prices are highest."

RealMoneyBlog - Free daily/weekly email


12.14.18 - Bitcoin Wasn't a Bubble Until It Was

Gold last traded at $1,241 an ounce. Silver at $14.63 an ounce.

NEWS SUMMARY: Precious metal prices eased back Friday on profit-taking and a firmer dollar. U.S. stocks fell sharply after weaker-than-expected data in China and Europe exacerbated concerns of a global economic slowdown.

Gold - A Perfect Storm For 2019 -Seeking Alpha
"For gold bulls, 2018 was disappointing...Gold had to struggle against a rising dollar, whose trade-weighted index rose a net 3.7% over the same period, and as much as 9.4% from its mid-February low. Dollar strength has been driven less by trade imbalances and more by interest rate differentials....The world is awash with dollars to an extraordinary degree. The great dollar unwind is now overhanging markets, which will remove the principal depressant on the gold price. And when it begins, as a source of supply these hot-money dollars will be seen as the continuation of escalating supply, with the prospect of future US trade and budget deficits to be discounted....With the credit cycle turning and the addition of American tariffs, markets are at a growing risk of replicating the 1929-32 crash and the economic depression that followed. This time, instead of commodities and consumer products effectively priced in gold through a gold standard, they will be priced in fiat currency. Monetary policies will ensure liquidity is freely available to support the commercial banks, government spending and economic activity. This is a recipe for higher gold prices. Demand for physical gold continues to outstrip mine supply. In 2019, risk-weighting rules in Basel III open up the opportunity for commercial banks to augment their liquidity with allocated bullion, attractive to euro- and yen-based banks who face negative interest rates on short-term cash alternatives."

chart U.S. Stock Market Exodus Is Second-Biggest Ever, BofA Says -Bloomberg
"Investors rushed out of U.S. equity funds in the second-biggest weekly exit on record, according to Bank of America Merrill Lynch, as the market sell-off pushed traders to seek safe havens....The turmoil in stocks, which has erased as much as $4 trillion in U.S. equities since the end of September, continued this month as traders feared that a global economic slowdown will curb earnings growth and end the equity bull run....U.S. equities have fallen so much that the S&P 500 Index is now trading near the lowest valuation since early 2016. That's quite a contrast compared to a year ago, when the gauge was at the highest forward price-to-earnings ratio since 2002. The negative sentiment surrounding U.S. stocks showed no signs of dissipating on Friday as S&P 500 futures fell. Trade concerns were fueled by Apple Inc. saying a Chinese ban on sales of the iPhone will force it to settle a licensing battle with Qualcomm Inc., an outcome that may end up harming the country's smartphone industry."

Bitcoin Wasn’t a Bubble Until It Was -Wall Street Journal
"Bitcoin owners still holding on for dear life after an 82% decline are putting on a brave face, but there is no more denying that we have witnessed the popping of a classic bubble. Some believers in blockchain's vast potential agree and rue the gold-rush mentality. Others are in denial, characterizing the current rout as just another bump in the road for a transformative technology....Similar to the tech bubble, financially marginal companies could multiply their value through cryptocurrency association. Take Long Island Iced Tea Corp. The money-losing firm’s shares briefly surged by nearly 300% after it changed its name to Long Blockchain Corp. at the height of the frenzy last December. Buyers of bitcoin near the top weren't just overconfident - a hallmark of bubbles - but were dismissive of skeptics as Luddites who just didn’t get it. Bulls said the same thing in 1999 during the tech boom. The bitcoin bubble, following the housing bubble and the tech bubble, is the third in less than 20 years. Clearly, bursting bubbles don’t inoculate us against falling for another one."

Markets See the Gathering Downside That Powell Does Not -Real Clear Markets
"Though no one would ever state it outright...the Federal Reserve had utterly failed at every single thing it had tried....If ZIRP and QE were genius responses, how come things continued to go wrong? You never hear much about that nowadays, as much of a blackout as it was contemporarily....In 2017, they all said it was finally over. Globally synchronized growth was supposed to mean something, at least as a first perquisite for recovery aimed squarely at 2018. Those hopes have been blasted apart this year...Jay Powell is, or was, supremely confident about globally synchronized growth perhaps more than anyone this side of Mario Draghi. Both eurodollar futures and now US Treasury markets have called his bluff. There is and has been mild inversion in both. Markets see the gathering downside he would rather not admit is exceedingly possible. The President increasingly positions Jay Powell as scapegoat despite his (noticeably less frequent) claims of a domestic economic boom."

RealMoneyBlog - Free daily/weekly email


12.13.18 - 50% of CFOs See 2019 Recession

Gold last traded at $1,247 an ounce. Silver at $14.85 an ounce.

NEWS SUMMARY: Precious metal prices held near 5-week highs Thursday despite a firmer dollar. U.S. stocks seesawed as investors digested the ongoing U.S.-China trade war creating rising market volatility.

Gold Is Still The More Stable Safe Haven Asset For 2019 -Streible/Kitco
"With fears of more volatility in stock markets ahead, investors could do well holding gold, which is still the reliable safe haven asset, said Phil Streible, senior market strategist at RJO Futures. 'Even if you look at bonds and interest rates, the volatility has been quite high in there. We’ve seen bonds tick up three, four, five handles within a short period of time. I think that gold has been a much better, a much more stable investment asset for a safe haven,' Streible told Kitco News."

spirits Most CFOs see a U.S. recession coming by 2020 -CBS News
"Considering that major corporations have been busy shedding workers, it follows that corporate finance leaders see a U.S. recession ahead. Evidence of a slowing economy has been popping up, including recent large-scale cuts in head count by U.S. corporations such as General Motors and Verizon. Eighty-two percent of chief financial officers polled believe a recession will have started by the end 2020, and nearly 49 percent think the downturn will arrive sometime next year, according to the Duke University/CFO Global Business Outlook, released Wednesday. 'The end is near for the near-decade-long burst of global economic growth,' said John Graham, a finance professor at Duke's Fuqua School of Business and director of the survey. 'The U.S. outlook has declined, and moreover the outlook is even worse in many other parts of the world, which will lead to softer demand for U.S. goods.' Worst-case projections would see capital spending drop in 2019, accompanied by flat hiring, found the survey conducted Friday of more than 500 CFOs, including 226 from North America."

Big Tech's Reckoning May Be Imminent After All -New Republic
"Sundar Pichai and House Republicans probably went to bed on Tuesday feeling satisfied with the result of the Google CEO's testimony before the Judiciary Committee...he didn't have to spend much time talking about even more uncomfortable subjects, like his company’s aggressive data collection and user tracking. But there were moments during the hearing that should have kept Pichai up at night....Committee Chairman Bob Goodlatte picked up the baton, saying 'most Americans have no idea the sheer volume of detailed information' being swept up by the search engine’s data collection efforts, which 'would make the NSA blush.' This is a far cry from a simple charge of political bias. Goodlatte's remarks suggest that he's concerned about the company’s monopoly on search and near-monopoly on targeted advertising not because of some unfounded censorship allegation, but because of the sheer market power concentrated in one company....House Democrats were even more persistent in questioning Pichai about his company’s data collection and privacy policies - a sign of what’s to come from the Judiciary Committee under Democratic leadership....After Tuesday, the question is no longer whether Congress will enact regulation, but just how severe it will be."

Paypal is thriving by defying conventional wisdom -The Economist
"In Silicon Valley people are besotted by the latest thing, which is why techies rarely give a thought to PayPal, a digital-payments firm that turns 20 this month. What PayPal lacks in terms of its profile, it has made up for in performance...This year it is expected to facilitate digital payments worth around $582bn, roughly four times more than in 2012....As e-commerce continues to grow, many firms that help with digital payments will thrive, including Square in America and Ant Financial in China. 'The real war is the war on cash,' argues PayPal's boss, Dan Schulman. About 40% of transactions in America are paid for in cash so there is room to grow....Wars are long and grueling affairs."

It is a "grueling" war indeed. The government's (and now big tech's) "real" war on cash has been going on for over two decades now - with zero concern about stepping on your financial freedom or privacy. In fact, they thrive on stripping Americans of their constitutional right to use cash by incentivizing the voluntary surrender of your rights. Find out where this "secret war on cash" is headed in our special report on the subject. Request a FREE copy of THE SECRET WAR, PART II: Weapons of Cash Destruction.

RealMoneyBlog - Free daily/weekly email


12.12.18 - BofA: Gold To Hit $1,400 In 2019

Gold last traded at $1,250 an ounce. Silver at $14.85 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe haven buying and a weaker dollar. U.S. stocks traded higher as investors digested upbeat news related to the ongoing trade war between the United States and China.

Look For Gold To Hit $1,400 In 2019 -BoAML/Kitco
"Investors looking for a commodity to be bullish on in 2019 should look at gold, according to the latest research from analysts at Bank of American Merrill Lynch (BoAML), which is overweight the precious metal. In a teleconference presentation last week, Michael Widmer, metals strategist at the bank, said that a weaker U.S. dollar, rising inflation and low real interest rates will drive gold prices higher next year. In its year-end outlook, the bank sees gold prices averaging the year around $1,296 an ounce with prices rising as high as $1,400 an ounce during the year....'We are moving into an environment that will be very supportive for gold,' he said. Along with a turning tide in U.S. interest rates and U.S. dollar strength, the bank sees growing financial volatility driving gold prices in 2019. The bank sees higher volatility as global liquidity continues to tighten....'In our view, gold prices could spike quickly to a $1,400/oz high next year if global markets perceive that the Fed is about to blink in its dual monetary tightening policy.' Looking outside the U.S., the bank sees weaker Chinese growth as a positive factor for gold as it will prompt the Chinese central bank to loosen monetary policy."

"Can Silver Be 2019's Star Metal?" asks Kitco.com. "Silver is like gold on 'steroids' and can potentially rally even more than the yellow metal in 2019", said Garrett Goggin, editor of GSA Silver. To get up to speed quickly on the potential of silver, read Swiss America's 2018 Silver Report.

panic Bernanke: U.S. has no system in place to deal with another financial meltdown -CBS News
"Wild swings in the stock market are fueling concerns over a potential new economic slowdown....It's been a decade since the last major economic crisis, when about 8.7 million Americans lost their jobs and some of the world's biggest banks collapsed. The men who worked behind closed doors in 2008 to stave off another Great Depression (they're nicknamed the "Three Amigos") are featured in a new documentary from HBO and Vice,"Panic: The Untold Story of the 2008 Financial Crisis. The film delves into what really happened during the financial market meltdown, a crisis caused by irresponsible mortgage lending and a subsequent bubble-burst in the housing market....'I felt very, very alone and very, very disconsolate,' former Federal Reserve Chairman Ben Bernanke told Alex Wagner. 'We really felt like we were kind of out on an island there.'....Wagner asked, 'Are you confident that if the next financial crisis was on America's doorstep, that this president and this Congress could handle it?' Bernanke said, 'I don't think we have a system in place to deal with the crisis once it happens...I think we have fewer fire hoses than we had even ten years ago.'"

Yellen warns of another potential financial crisis: 'Gigantic holes in the system' -CNBC
"Former Federal Reserve Chair Janet Yellen told a New York audience she fears there could be another financial crisis....'I think things have improved, but then I think there are gigantic holes in the system,' Yellen said Monday night in a discussion moderated by New York Times columnist Paul Krugman at CUNY. Yellen cited leverage loans as an area of concern, something also mentioned by the current Fed leadership. 'I do worry that we could have another financial crisis,' said Yellen. In the wake of the financial crisis, some agency regulatory powers were vastly expanded, but others, for example, the ability of the Fed to lend to an individual company in a crisis, were curtailed."

"Birds Of A Feather Get Plucked Together..." -Zero Hedge
"The important question now: 'Is the current uptick in correlations another sign of an impending bear market/recession, already signaled by faltering asset prices?'....We would offer up 3 points about rising correlations that are relevant regardless of market direction: #1. Higher correlations drive market volatility. When sectors move in closer lock step, diversification does less to limit daily price swings for the S&P....#2. Correlation tends to be 'sticky' absent an overwhelming catalyst. We’ve only had one dramatic shift in the last decade: the 2016 election of a Republican president and Congress....#3. High sector correlations are not necessarily negative for US stock returns. The 2010 – 2013 period of 0.83 to 0.88 average correlations saw the S&P gain 33.1%....Summing up: we see higher S&P sector correlations and incremental price volatility as a 'new normal'. Even a timely resolution in the US/China trade dispute will not likely change that. Too many other issues wait in the wings, from high financial leverage to worries over global economic growth and US corporate earnings."

RealMoneyBlog - Free daily/weekly email


12.11.18 - Slower Fed Rate Hikes May Buoy Gold

Gold last traded at $1,250 an ounce. Silver at $14.80 an ounce.

NEWS SUMMARY: Precious metal prices steadied Tuesday despite a firmer dollar. U.S. stocks attempted a rebound amid signs that U.S.-China trade relations could be improving.

Gold buoyed by prospects of slower Fed hikes -Marketwatch
"Gold edged higher Tuesday...as investors scaled back expectations about the pace of future interest-rate increases by the U.S. Federal Reserve. 'Gold prices, a barometer of economic and political news, are awaiting [the] Fed meeting Dec. 18-19 on rate hikes, which could have more dovish language and cautious approach to future hikes,' said George Gero, managing director in the senior consulting group at RBC Wealth Management. 'Brexit turmoil now also may be helping gold as a haven as postponing the vote is a sign of more headaches and headlines,' he added in a daily update. On Tuesday, global currencies were driven by news on the trade front. The U.S. and China have kicked off a new round of trade talks. That helped to lift some risk-sensitive currencies against the U.S. dollar."

Fed Jerome Powell Is Between A Rock And A Hard Place -Daily Reckoning
"Fed Chairman Jerome Powell has recently indicated again that he planned to go ahead with another 0.25 rate hike when the Fed meets Dec. 19, which would be the fourth increase this year....What has emerged is a growing fear that the future could be gloomier than many analysts, governments and central bank leaders anticipated. There are now two major factors that could curtail growth in the U.S. One is the Federal Reserve itself. If the Fed were to continue raising rates too quickly, it would cause government, corporate and consumer debt payments to increase. Second, while President Trump's estimated $1.5 trillion in tax cuts have contributed to boosting U.S. GDP this year, the same impact is unlikely to carry on into next year....The Wall Street Journal reported the Fed is mulling whether to 'signal a new wait-and-see mentality' on interest rates at their upcoming meeting in less than two weeks...The fact is that markets remain addicted to low interest rates and central bank credit. But that just keeps the Fed trapped in a catch-22. It wants to 'normalize' rates as much as possible after years of heavy support to the markets, but it’s now seeing how markets react without that support. The Fed can tolerate weakness in the stock market, but it fears a complete collapse, which is a very real possibility. So Jerome Powell is between a rock and a hard place."

The Debt Threat to the Economy -Wall Street Journal
"If the economy continues to grow at the normal postwar rate, growth-driven federal revenues will overwhelm the costs of the tax cut, paying for virtually all of its originally projected 10-year revenue losses in just five years. But if Treasury borrowing cost normalizes to 3.2% over the next five years, the cost of servicing the federal debt will more than double, from $316 billion this year to $666 billion in 2023. If borrowing costs rose to 4.8% over the next five years, federal debt-servicing costs would more than triple, reaching $1.1 trillion in 2023. In that scenario, the cost of servicing the $7.5 trillion increase in the public debt incurred during the 2009-16 period alone would cost $362 billion - more than the current cost of servicing the entire federal debt....Every dollar the federal government doesn't spend is a dollar it doesn't have to borrow. The caps on discretionary spending should not be lifted in 2019, and any new spending program should require a real spending offset....It’s time to make peace on trade and wage war on the deficit."

Follow the money behind climate alarmism and carbon tax proposals -Washington Examiner
"Media coverage of the recently released National Climate Assessment suggests that unless policymakers intervene to restrict the use of fossil fuels, catastrophic climate change could extract a hefty cost from the economy...But the report rests on several faulty assumptions that fail to account for technological innovations, the impact of robust natural gas development, and the costs associated with climate change policies....Updated scientific research demonstrates there is no firm consensus on the role human activity plays in climate change and that natural influences are largely responsible for warming and cooling trends. The NCA relies on theoretical climate trajectories known as 'representative concentration pathways' that are developed by the U.N.'s Intergovernmental Panel on Climate Change...Just last month, the Intergovernmental Panel on Climate Change proposed a carbon tax of between $135 and $5,500 by the year 2030. An energy tax of that magnitude would bankrupt families and businesses, and undoubtedly catapult the world into economic despair....There ought to be an open and vigorous debate about the merits of carbon tax, how much it will cost, and what kind of benefits could accrue to the environment. But it's important to know that the funding standing behind the groups, organizations, and studies that make the case for a carbon tax have common denominators in the form of left-leaning foundations."

RealMoneyBlog - Free daily/weekly email


12.10.18 - Over Half The World in a Bear Market

Gold last traded at $1,251 an ounce. Silver at $14.67 an ounce.

NEWS SUMMARY: Precious metal prices steadied near 5-month highs on a firmer dollar. U.S. stocks traded sharply lower in a volatile session as banks and Apple led the decline.

"Bear Markets Everywhere": Over Half The World Is Now Down 20% Or More -Zero Hedge
"SocGen's Kit Juckes writes this morning that 'a week ago, market sentiment was optimistic after the G20 meetings in Buenos Aires. That's a reminder not to read TOO much into Monday morning markets!' Picking up on this, another SocGen strategist, Andrew Lapthorne, writes that 'having bounced back strongly post-Powell, equity markets slumped last week as the mood turned decisively bearish.'....Putting the ongoing carnage in context, stock-wise 52% of MSCI World companies are down by more than 20% from their 52-week high, but only 38% of the market cap....As 2008 taught us, when faced with a liquidity crunch, asset managers will paradoxically hold on to their losers in hopes of getting better prices, while dumping winners. Which is why all those traders who have stoically waited for the past ten years for a renaissance in value stocks may finally enjoy a moment in the spotlight, only to suffer an even bigger hit in the coming months if the global economy is indeed about to sink into a market-crushing recession or worse."

Time To Give Silver A Second Look -Seeking Alpha
"Silver prices have been battered on the backdrop of a higher US dollar, higher US Treasury yields and Fed rate hikes. The key question one might ponder would be where silver prices will be heading going forward? A more dovish tone from the Fed will presumably lead to limited upside potential for the US dollar coupled with the fact the net speculators are already heavily long US dollar. Furthermore, considering the tailwinds from fiscal stimulus fades, US growth is likely to slow into 2019 and the comeback of twin deficit worries suggest that US dollar currency appreciation will likely to reverse. Hence, given the inverse relationship between the US dollar and precious metals prices. A weaker USD will bode well for precious metals specifically silver bullion moving forward....From a Gold/Silver Ratio perspective, silver at present looks attractive with the ratio currently standing at 86.93 all-time high as shown below. The ratio between the two metals shows how many ounces of silver it would take to buy one ounce of gold, currently standing at 86.93 all-time high. The all-time low ratio was 13.76 back in the Jan 1980. As the saying goes, what goes up must come down. Hence, the upside potential for the Gold/Silver Ratio seems limited and the bottom line is that the current ratio signals that silver remains significantly undervalued which deserves a second look from investors."

gold silver chart

We agree! Based on historical evidence, silver is poised for a big upward move. The extreme gold-to-silver ratios in 2003, 2009 and 2016 all signaled a major rally in gold and silver prices within a few months. Although past performance is no guarantee of future performance, most experts agree that adding some silver to your portfolio right now, in addition to gold, has a higher than average probability of growth in the coming year.

French "Yellow Jackets" Protest Macron and Gas Tax Hikes -Fox Business
Swiss America Chairman Craig R. Smith was a guest on Fox Business today discussing French President Emmanuel Macron's upcoming speech. The speech is expected to address measures to reduce taxes and boost purchasing power for France’s working classes who feel Macron's presidency has favored the rich. Mr. Smith believes French unrest is a preview of what other EU nations and the U.S. may face unless fiscal changes are made to curb higher taxes and rising government spending. Watch Fox interview

Would Democrats wreck America to win in 2020? -Ponte/WND
"Democratic analysts are frightened for their party’s future. Prior to the 2018 midterm election, voters had denied Democrats control of the House of Representatives, Senate and White House – which spells disaster for a party that buys its voters with taxpayer dollars and government favors. Democrats predicted a 'blue wave' in the 2018 midterms, but won only about 25 seats to barely claim control of the House of Representatives. More than 40 Republican members of Congress refused to seek reelection; without those GOP dropouts, Republicans almost certainly would have kept Democrats a minority in the House....So what must Democrats do to win in 2020? '[The] way you get rid of Trump is a crashing economy. So, please, bring on the recession,' says leftist HBO comic Bill Maher. 'Sorry if that hurts people … [but] a recession is a survivable event; what Trump is doing to this country is not.' If a prosperous economy could make Trump successful and get him re-elected, do not doubt that anti-capitalist Democrats will do everything in their power to economically ruin an America they cannot rule. Democrats have already made it clear they hate our capitalism, individualism, independence and our government-limiting Constitution. As globalists who favor world government, most Democrats would gleefully erase our borders, bankrupt our government with a giant tidal wave of illegal immigrants who vote Democratic, and cheer as our country disappears from their new brave new politically correct world."

RealMoneyBlog - Free daily/weekly email


12.7.18 - Gold Hits Five-month Peak as Dollar Slips

Gold last traded at $1,249 an ounce. Silver at $14.65 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on bullish sentiment and a weaker dollar. U.S. stocks fell sharply amid weaker-than-expected jobs report and rising China-U.S. trade tensions.

Gold hits 5-month peak as dollar slips after US jobs data -CNBC
"Gold prices hit a five-month peak on Friday and continued to trade close to that level as the dollar slid following weaker-than-expected U.S. jobs data that raised the possibility that the U.S. Federal Reserve might go slow on interest rate hikes next year. Spot gold was up 0.5 percent at $1,244.31 per ounce, having hit $1,245.60 per ounce earlier, its highest since July 13. With a rise of nearly 1.7 percent this week, gold looked set to clock its best gain since at least the week of Aug. 24....Gold, which is considered a safe investment during times of financial, economic and geopolitical uncertainty, has recovered about 7 percent from 19-month lows hit in mid-August. 'With increased volatility and geopolitical risk, macro asset allocation is becoming more gold-positive again while we believe much of the dollar's upward move is now behind us with rate hike expectations dropping,' analysts at BMO Capital Markets said in a note."

bullgold What the smart money is buying as the market tanks -CNN Money
"The Dow and S&P 500 are now both in the red for 2018, and investors have few places to hide as the stock market tanks. But savvy people are finding some pockets of safety. Gold, an investment that often shines during times of financial stress, is up nearly 4% so far in the fourth quarter while the S&P 500 and Dow have both plunged nearly 10% and the Nasdaq has plummeted almost 13%. The rise in gold prices has been good news for miners too. Newmont, which is in the S&P 500, is up nearly 10% since the end of September. The VanEck Vectors Gold Miners ETF has gained about 7%....Another clear sign investors are craving anything that can guarantee them a bit of a return: Investors keep rushing into bonds, despite the yield on the 10-Year Treasury falling to just 2.85%. The iShares 20+ Year Treasury Bond ETF has gained nearly 2.5% this year....Another area of the market has held up noticeably better as of late too: food and beverage stocks...So it looks like in these uncertain times for the markets and economy, eat, drink and be merry is one way for investors to profit."

Bear Markets March Across the Globe -Wall Street Journal
"In a sign of the breadth of the global selloff in stocks, Germany's main stock index fell into a bear market Thursday, the latest benchmark to have tumbled 20% or more from its recent peak. There is one thing some of global bear markets have in common: They have been caught up in global trade disputes....Other markets already in bear territory are home to companies exposed to recent trade fights between the U.S. and China. The Shanghai Composite Index, China's main stock benchmark, headed into a bear market in June, followed by Hong Kong's Hang Seng Index in September and South Korea’s Kospi in October. Domestic political uncertainty has hit European stocks hard. Italy's FTSE MIB Index fell into a bear market in October as the Italian government is trying to end a standoff with Brussels over the country's budget."

Are You Ready for the 'Inevitable' Clampdown on Tech and the Media? -Reason
"When Apple's CEO Tim Cook says 'the free market is not working,' bad things are coming. 'I am not a big fan of regulation,' Cook told Axios in an interview. 'I'm a big believer in the free market. But we have to admit when the free market is not working. And it hasn't worked here. I think it's inevitable that there will be some level of regulation... I think the Congress and the administration at some point will pass something.' Holy hell! Regulation of the tech industry and the larger economy (both of which are already pretty heavily regulated, if we're being honest) is inevitable? The free market isn't working? Well, maybe not quite as well as it used to for Apple, which has been a little droopy over the past several years in terms of killer new devices and mega-hits....I worry less about the market power of the FAANG companies than I do about the rise of a new industrial state in which powerful companies and powerful politicians team up to decide how best to run the world in which you and I live. As bad and stupid as Facebook's, Twitter's, and YouTube's attempts at policing themselves have been, I don't see things getting better if Sens. Dianne Feinstein (D–Calif.) or Charles Grassley (R–Iowa) get involved, do you? Maybe instead of freaking out all the time about how stupid media consumers are, we can start focusing on how to become more critical readers and listeners."

RealMoneyBlog - Free daily/weekly email


12.6.18 - U.S. Stocks Slide Into Bear Market

Gold last traded at $1,240 an ounce. Silver at $14.44 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying and a weaker dollar. U.S. stocks skidded further into bear market territory as investors bailed out of stocks amid growing negative sentiment.

Why buy gold now? Because I don't know -Black/Sovereign Man
"From 2000 through 2012, the price of gold increased every year, rising from around $280 an ounce to nearly $1,700. It was an unprecedented run. Then, in 2013, gold took a nose dive, losing over 27% of its value. It was widely reported that the Swiss National Bank, the former bastion of monetary conservatism, lost $10 billion that year just on its gold holdings. As you probably know, central banks hold a portion of their reserves in gold. So that begs the question, did the Swiss National Bank actually lose $10 billion? It still had every ounce of gold in its vaults. And gold, after all, is money. Plus, the SNB wasn't holding gold to speculate...Right now, banks are buying up gold hand over fist. Central banks currently hold 20% of all the gold ever mined—33,000 metric tons. Why? Gold is for the I don’t knows. And right now, there are a LOT of I don’t knows....The day of reckoning is close....What do you do for the I don’t knows? You get some cheap gold while you still can."

bullbear Dow falls around 600 points as arrest of Huawei exec reignites trade worries -Marketwatch
"U.S. stocks were down sharply Thursday, after the arrest of a Huawei executive reignited trade worries, and as continued weakness in oil markets underscored concerns over global growth ahead of an OPEC meeting in Vienna Thursday. The Dow Jones Industrial Average DJIA fell 628 points, while the S&P 500 Index was down 57 points. The Nasdaq Composite Index tumbled 105 points. Investors have been rattled by news that the Canadian authorities had arrested Meng Wanzhou, the chief financial officer of Huawei Technologies, at the request of U.S. authorities for allegedly violating sanctions against Iran. The arrest, which was made on Dec. 1, comes as the U.S. has taken several steps to restrict the Chinese technology giant, trying to persuade international allies to do the same....China authorities reacted furiously, with the spokesperson of the Chinese Embassy in Canada demanding the release of the Huawei executive....The latest development comes amid an already shaky backdrop for trade relations between the U.S. and China. Doubts surrounding the weekend trade moratorium at the G-20 summit between the two sides and ominous developments in the bond market drove sharp losses for stocks Tuesday."

Gold Will Rally 22% in 2019 and Outperform Everything -The Street
"2019 will see the start of a new bull cycle for gold and push the metal up to $1,500 an ounce, said E.B. Tucker, director of Metalla Royalty & Streaming. 'To make big money in this market, you have to see the cycles. Nothing changes. We've had three big cycles in gold since 2000 and we're about to have another one,' Tucker told Kitco News. 'We're calling for $1,500 next year, that's a 22% increase in the price of gold, it'll be one of the best performing markets in a very, very volatile year for equities,' he said. On sentiment, Tucker said that low investor interest in gold could be good, as it signals that gold is not at overvalued levels like bitcoin and cannabis stocks were. 'You've seen things blow up. The cannabis bubble has popped and the stocks are declining. The bitcoin bubble has definitely popped, we called that last year, it's down 70% this year,' he said."

Big-money investors see the bull market ending in 2019 -CNBC
"The longest bull market run in history is coming to an end in 2019, according to the pros who handle Wall Street's big-money clientele. A survey of institutional investors show that 65 percent see a change coming, with the biggest threats being geopolitical tensions and rising interest rates, according to Natixis, which surveyed 500 managers of pension funds, endowments, foundations and the like. In addition to seeing the bull market stopping, they also anticipate the next financial crisis coming in one to five years....Institutional investors have been preparing for the end of the bull market for several years, David Goodsell, executive director of the Natixis Center for Investor Insight, said in an interview. 'The market is catching up to what they've been thinking about. I think they've been positioned for this for quite a while,' he said....'With wildcards everywhere (trade, geopolitics, deficits, protectionism), we have decided to focus on the macro scenarios that seem most likely and most relevant for equity market performance: (1) more Fed tightening, and (2) an upward bias to volatility,' Savita Subramanian, BofAML's equity and quant strategist, said in a research note."

RealMoneyBlog - Free daily/weekly email


12.5.18 - 2019: Less Growth and More Uncertainty

Gold last traded at $1,241 an ounce. Silver at $14.56 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Wednesday on a flat dollar. The New York Stock Exchange and Nasdaq are closed today as the nation remembers George Herbert Walker Bush.

Ignore Stocks, Bonds Are SCREAMING "Danger!" -Zero Hedge
"The single most important market in the world is the bond market. Bonds are what permit Governments to remain solvent. When stock markets collapse, countries can experience recessions. When BOND markets collapse countries go BROKE. Which is why anyone who wants to protect his or her capital going forward should take note that the US bond market is inverting for the first time since 2007. This is a MAJOR warning that there is BIG trouble in the shadow banking system. Again, the last time this hit was in late 2006-early 2007, right before the world moved into the worst financial crisis in 80 years. Indeed, while everyone is celebrating the rally on Monday our Crash trigger remains in a critical 'sell.' The last time this triggered was right before the October meltdown. If you are not already preparing for this, NOW is the time to do so."

umbrella This Holiday Season, Make It Silver and Gold -Holmes/Forbes
"Monday evening marked the beginning of Hanukkah. The Jewish festival of lights commemorates the reclamation of the Holy Temple in Jerusalem from the Syrian-Greeks in the second century. Among many of the holiday’s well-known traditions, at least here in the U.S., is to give children chocolate coins. This arose from the centuries-old practice of parents giving real coins, or Hanukkah gelt, to their kids, who in turn were expected to give them to their teachers. I believe this is a beautiful custom. Whether you observe Hanukkah, Christmas, Eid al-Fitr, Diwali or any number of other religious holidays around the world, gifting your children and grandchildren coins of precious metals such as gold or silver could be made into a tradition in your own family. Take a look at silver. The white metal is on sale right now, trading at a little more than $14 an ounce. That’s the most affordable it’s been in three years....Bloomberg Intelligence Commodity Strategist Mike McGlone believes that the 'trade-weighted broad dollar is near a peak and silver a bottom… and the potential for mean reversion should outweigh continuing-the-trend risks. Silver, among the most negatively correlated to the dollar and positively to industrial metals, appears ready for a potential longer-term recovery.'....Gold is admittedly more expensive, trading just under $1,240 as of today. But there again, if you’re already planning to go all out on gift shopping this holiday season, you might as well make it something that’s truly memorable, holds it value and lasts forever."

The Economic Forecast for 2019: Less Growth and More Uncertainty -Wall Street Journal
"Most private economists expect U.S. growth to slow in 2019, in part because the initial impetus of fiscal stimulus is set to wane, meaning slower profit growth and more calls for a pause in Fed interest-rate increases. A growth slowdown is unlikely to please a president who made much of the growth pickup in 2018. President Trump has blamed his choice to run the Fed - Jerome Powell - for working against his policies to charge up the economy....The Fed’s decisions in 2019 will hinge on what happens next for inflation, rather than the pressure coming from the White House. If the Fed believes inflation has stabilized at 2%, it will pause the rate increases. Two big uncertainties hang over the domestic economic outlook. The first is fiscal policy. Don’t expect Mr. Trump’s tax cuts to be extended or widened in a divided Congress, but the outlook for spending policy is a big unknown....The second economic uncertainty involves business investment. Mr. Trump’s tax cuts and regulatory reductions were meant to encourage businesses to invest more in the U.S."

Charts suggest housing 'bubble trouble' with a tech meltdown 'yet to come' -Marketwatch
"Finding an affordable place to live in the tech-rich Bay Area isn’t easy these days, but it sure seems to be getting easier - a lot easier. That is assuming Wolf Richter of the Wolf Street blog has it right. 'It’s high time to unload houses and condos in Silicon Valley and San Francisco,' Richter wrote. 'Sellers are now flooding the market with properties.' In fact, according to data provided by the National Association of Realtors, he points out inventory has more than doubled from a year ago....The number of active listings has risen in each of the past three months, and now we’re at levels not seen since 2014...signaling 'bubble trouble' in the housing market, says Richter....The number of properties for sale with price cuts has exploded by over 400% year over year....The median asking price peaked in May was at $1,369,200 and has since fallen by nearly 10%, to $1,237,100....'Though share prices of local companies such as Google-parent Alphabet Inc., Apple, Facebook FB, and many others have taken a big hit since the summer, we’re still far from a classic tech meltdown,' Richter said. 'That is yet to come.' And then what happens to the housing market?"

RealMoneyBlog - Free daily/weekly email


12.4.18 - Life, Liberty & Levin: Capitalism vs. Socialism

Gold last traded at $1,246 an ounce. Silver at $14.64 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on safe-haven buying and a weaker dollar. U.S. stocks fell as investors worried about a possible 2019 economic slowdown amid lingering worries about U.S.-China trade tariffs.

Gold Extends Climb With Dollar Sliding -Wall Street Journal
"Gold prices rose 0.6% to $1,246.70 a troy ounce on the Comex division of the New York Mercantile Exchange....The dollar and longer-term Treasury yields have fallen lately as investors weigh the possibility of a less aggressive path of interest-rate increases from the Federal Reserve and trade optimism from the U.S. and China. On Tuesday, the WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, slipped 0.3%....Elsewhere in precious metals, most-active silver futures rose 1.3% to $14.695 a troy ounce. Platinum fell 0.6% to $805.60 and palladium added 1% to $1,177.50."

bull trap Is The Bull Back, Or Is It A "Bull Trap"? -Zero Hedge
"With smiles and much back-patting to go around, the G-20 meeting ended with a 'roar of applause but the accomplishment of nothing.' Nonetheless, as I also pointed out, the market did reach extremely oversold levels during the October/November correction which provided the necessary 'fuel' for a short-term rally. All the market needed was a 'reason' and Trump’s weakened stance with China over trade provided just that....The good news is that on Monday the market cleared the 50- and 200-day moving averages...However, in order to be validated, it must hold through the end of the trading week....If this rally fails sit will result in a continuation of the correction back to recent lows...Despite the recent oversold surge from lows, the primary backdrop of the markets has not changed markedly. The 'trade truce' was nothing more than that. China is not going to back off its position on 'Technology Transfers' as that is the key to their long-term economic future....The Federal Reserve is still reducing their balance sheet by $50 billion per month which has removed a primary buyer of U.S. Treasuries....Valuation remains extremely elevated despite the recent correction. The deterioration in credit is accelerating. Economic growth has likely peaked....There is little doubt the 'bullish bias' persists currently, and the volatility this past year has made managing money more difficult than usual. But that is the nature of markets and how topping processes work."

The Global Carbon Tax Revolt -Wall Street Journal
"France’s violent Yellow Vest protests are now about many domestic concerns, but it’s no accident that the trigger was a fuel-tax hike. Nothing reveals the disconnect between ordinary voters and an aloof political class more than carbon taxation. The fault line runs between anti-carbon policies and economic growth, and France is a test for the political future of emissions restrictions. France already is a relatively low-carbon economy, with per-capita emissions half Germany’s as of 2014. French governments have nonetheless pursued an 'ecological transition' to further squeeze carbon emissions from every corner of the French economy. The results are visible in the Paris streets....Undeterred, Mr. Macron pushed ahead with a series of punitive tax hikes to discourage driving. The protesters in Paris will be expected to pay much of the up to €8 billion annual tab for a minuscule global benefit - that’s how much tax revenue Mr. Macron thinks his levies will raise. This is preposterous in an economy that still has an 8.9% jobless rate (21.5% for the young) and will struggle to hit 2% annual GDP growth. Yellow Vests from less prosperous rural areas, who depend on cars for daily life, know it....The carbon tax revolt is world-wide. Voters in Washington state last month rejected a carbon tax that would have started at $15 per ton of emissions and climbed $2 a year indefinitely....After decades of global conferences, forests of reports, dire television documentaries, celebrity appeals, school-curriculum overhauls and media bludgeoning, voters don’t believe that climate change justifies policies that would raise their cost of living and hurt the economy."

Capitalism vs. socialism: economist George Gilder weighs in -Life, Liberty & Levin/Fox News
"MARK LEVIN, HOST: Hello America, I'm Mark Levin. This is 'Life, Liberty & Levin.' We have a great guest, George Gilder, how are you? GEORGE GILDER, CO-FOUNDER, DISCOVERY INSTITUTE: Great to see you, Mark.
LEVIN: You pioneered the formulation of supply side economics when you served as Chairman of the Lehrman Institute's Economic Roundtable. Program Director for the Manhattan Institute, you're the author of 'Men in Marriage,' 'Visible Man,' 'Wealth and Poverty,' which was a big book that had a big influence on me. 'The Spirit of Enterprise,' 'Microcosm,' 'Telecosm' and 'The Silicon Eye.' And now your newest book, 'Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy.' All right, there's a lot to unravel here, but let's get started this way. Capitalism versus socialism. Explain.
GILDER: Well, capitalism derives from the Latin word for head, caput, and capitalism is the mind-based system and the key characteristic of the human mind is that we're creative, and as Albert Hirschman, the Princeton economist once put it, creativity always comes as a surprise to us, and if it didn't, planning would prevail and socialism would work. Creativity is the foundation of capitalism. And this is -- and socialism is based on planning. It's based on the assumption that we'd already know all we need to know in order to plan our future, and so it leads to tyranny, and that's really the difference. Liberty versus tyranny as someone once put it.
LEVIN: Isn't this the general problem with progressivism, across the board. That is they think they know all they need to know, and now it's just a matter of redistributing ideas, redistributing wealth, redistributing -- it isn't part of the problem, that's easy for people to understand whereas the future is difficult for people to understand.
GILDER: Learning is the heart of capitalism. Learning is finding out things you don't already know. And that depends on openness to creativity, to surprise, and surprise is really crucial to capitalism. You can't predict the products of a really creative process.
....LEVIN: Isn't that not grand irony, then, that the progressive mind-set claims that their decisions are based on science and knowledge, when in fact, it's not based on science or knowledge, it's based on an ideology?
GILDER: It's definitely based on doctrine and dogma. It's really -- in my new book, 'Life After Google,' I do a criticism of what I call Google Marxism.
LEVIN: What is Google Marxism.
GILDER: Well, Marx, his great error, his real mistake, was to imagine that the industrial revolution of the 19th Century, all those railways and dark satanic mills and factories and turbines and the beginning of electricity represented the final human achievement in productivity. So in the future, what would matter is not the creation of wealth, but the redistribution of wealth. Well, Google comes back today and says that it's search engines, it's machine learning, it's artificial intelligence, it's robotics, it's biotech is the ultimate human attainment, and in the future, most of us will be able to retire to beaches while Sergei Brynn and Larry Page of Google fly off to remote planets with Elon Musk in a winner-take all universe. Full program transcript

RealMoneyBlog - Free daily/weekly email


12.3.18 - American Exceptionalism May Be Ending

Gold last traded at $1,234 an ounce. Silver at $14.37 an ounce.

NEWS SUMMARY: Precious metal prices shot up Monday on bullish sentiment and dollar weakness. U.S. stocks rose after President Trump and Chinese President Xi Jinping agreed to a 90-day ceasefire in the trade war.

Economists doubt trade cease-fire will lead to actual deal -CNBC
"Wall Street traders may be exuberant on Monday over the decision to postpone the trade war between the U.S. and China, but economists across the marketplace aren't convinced the delay lead to a permanent solution. It will still be 'challenging' to find a compromise that all parties like, Goldman Sachs economist Alec Phillips wrote in a note to clients Sunday. 'We would expect an initial positive market reaction, the 'pause' prolongs the period of uncertainty around the eventual structure of trade relations between the two countries,' Phillips wrote. 'The specter of higher and broader U.S. tariffs remains, and the underlying issues clouding the trade relationship are deferred to further negotiations...we think the chance of a comprehensive deal that involves rollback of tariffs is slightly higher than before, but still not our base case - perhaps a 20 percent probability over the next three months,' the economist wrote."

gold teeth As Fed Rethinks Path for Rates, Gold’s Poised to Jump in 2019 -Bloomberg
"Gold may be poised to rally as speculation mounts that the Federal Reserve will hit the pause button on interest rate hikes in 2019. After lift-off in late 2015 followed by a rise a year later, the central bank has since steadily raised benchmark rates and is widely expected to do so again this month. But the path after that is clouded after Chairman Jerome Powell said Wednesday rates are 'just below' estimates of the so-called neutral level, which markets took to mean a softer stance than previous comments. It was 'getting pretty obvious that at some point Powell would have to flinch,' said Trey Reik, senior money manager at the U.S. unit of Sprott Inc., which oversees $7.6 billion. 'Once you get to the consensus view that the Fed may be done, the dollar may come under severe pressure. Gold will erupt.' Goldman Sachs Group Inc. recommends an outright long gold position into next year. 'If U.S. growth slows down next year, as expected, gold would benefit from higher demand,' analysts including Jeffrey Currie said in a Nov. 26 note. 'If people get a sense that unemployment’s going up, heaven forbid, we’re going to see great volatility in 2019, that’s going to be a cue to sell the dollar, and that’s going to be a cue to buy gold in much bigger size.'"

FAANG Bubble Warning, And The Subsequent Trillion Dollar Wipeout -Vident Financial
"We all knew that bears had big fangs, but few people anticipated how much the FAANGs would end up having such a big bear market. The collapse of those companies has been sudden and dramatic. Sudden, dramatic… and surprising, though it should not have been. For five years US growth stocks outperformed value stocks. This means that for half a decade the bull market depended on expensive stocks getting more expensive. During this time period, FAANG stocks were the driver of growth stocks, which means that the bull market depended on the most expensive of the expensive, continuing to get more expensive....The point of having principles is to help you remember something when everyone else seems to have forgotten it. The other point of principles is to get you to do something when all emotional pressure is against it....Looking at the FAANGs alone, the loss from recent peak to current (as of this writing), those five companies alone have wiped out almost one trillion dollars in value. That's bad news for investors who chose to invest in those stocks. But it's also bad news for almost everyone who simply decided to invest in a 'diversified' index, since the big money indices were heavily concentrated in these stocks. That's the problem when you don't consciously invest according to set principles, you generally end up drifting with the currents, which is really easy to do, right up until you reach the waterfall."

American Exceptionalism May Be Ending - at Least in Stocks -Wall Street Journal
"Recent choppy trading in U.S. stocks has revived a years long debate: Are the best days of the U.S. bull market over?....Worries about rising interest rates, trade tensions with China, slumping oil prices and peaking corporate earnings have slammed U.S. stocks over the past two months....'The highest priority for the Chinese authorities at the moment is to stabilize their economy,' said Aninda Mitra, Singapore-based senior sovereign analyst at BNY Mellon Investment Management...'My concern is that at the end of 90 days, the U.S. will go back to feeling aggrieved,' Mr. Mitra said....'We do not own U.S. domestic stocks, as the market is significantly overvalued' compared with other countries, said Jacob Mitchell, portfolio manager of the Australia-based Antipodes Global Fund...Mr. Mitchell said he was considering shorting, or betting against, stocks closely tied to the health of the U.S. economy, like retailers and transportation companies, without naming specific targets."

RealMoneyBlog - Free daily/weekly email


11.30.18 - Marriott Says 500 Million Guests Hacked

Gold last traded at $1,226 an ounce. Silver at $14.24 an ounce.

NEWS SUMMARY: Precious metal prices eased back Friday on a firmer dollar as G20 meetings began. U.S. stocks traded mixed as investors looked ahead to a key meeting between President Donald Trump and Chinese President Xi Jinping.

Will G20 Meetings Affect Price Of Gold? -Kitco
"The G20 meetings have begun, and traders and investors are sweating what will happen next to the price of gold. Metals are churning in a range but are trying to break out to the upside. Gold is in a tight trading range and is going to break out big one way or the other; we expect it to be to the upside. Many markets are in the throes of the most miserable trading pattern we can imagine. The pattern is known as consolidation. Out of this pattern will be a dramatic breakout, which we saw in the beginning of October. All signs point to higher prices - the tight range of $1,225-$1,235 in February gold are a sign the market is starting to compress and getting ready to launch. Although gold can go either way, we suspect the odds are greater for a breakout to the upside."

China China Accelerates Cyberspying Efforts to Obtain U.S. Technology -New York Times
"Soon after President Trump took office, China’s cyberespionage picked up again and, according to intelligence officials and analysts, accelerated in the last year as trade conflicts and other tensions began to poison relations between the world’s two largest economies. The nature of China’s espionage has also changed. The hackers of the People’s Liberation Army were forced to stand down, some of them indicted by the United States. But now, the officials and analysts say, they have begun to be replaced by stealthier operatives in the country’s intelligence agencies. The new operatives have intensified their focus on America’s commercial and industrial prowess, and on technologies that the Chinese believe can give them a military advantage. That, in turn, has prompted a flurry of criminal cases, including the extraordinary arrest and extradition from Belgium of a Chinese intelligence official in October. Trump administration officials said the arrest reflected a more determined counterattack against a threat that has infuriated some of the country’s most powerful corporations....The stealing of industrial designs and intellectual property - from blueprints for power plants or high-efficiency solar panels, or the F-35 fighter - is a long-running problem. But as Mr. Trump and Mr. Xi prepare to meet at the Group of 20 gathering in Argentina this weekend, China’s corporate espionage has once again emerged as a core American grievance."

Marriott says its Starwood database was hacked for approximately 500 million guests -CNBC
"Marriott International said on Friday that hackers illegally accessed its Starwood Hotels brand's reservation database since 2014, potentially exposing personal information on about 500 million guests. Shares of the company fell nearly 6 percent to about $115 in trading before the bell. The company said for 327 million guests, personal information compromised could include passport details, phone numbers and email addresses. For some others, it could include credit card information. The company said it learned about the breach after an internal security tool sent an alert on Sept. 8. On further investigation, the hotel chain learned data had been hacked long before. Marriott said it would send emails to affected guests, starting Friday."

For the U.S. Economy, Storm Clouds on the Horizon -New York Times
"Emerging signs of weakness in major economic sectors, including auto manufacturing, agriculture and home building, are prompting some forecasters to warn that one of the longest periods of economic growth in U.S. history may be approaching the end of its run....'We’re in the 10th year of the expansion, and there are some soft points,' said Ellen Hughes-Cromwick, a former chief economist at Ford Motor Co. and the Commerce Department. 'The auto sales cycle has peaked, and the housing cycle also has peaked.' If interest rates continue to rise, she said, 'I don’t really see how the economy can keep powering ahead.'....The basic cause for concern is a widening gap between the evident strength of the economy this year and weakness in economic indicators that look ahead to coming years. Investors are showing signs of concern about the ability of the corporate sector to maintain sky-high levels of profitability. Major stock indexes are roughly flat for the year. Some businesses are starting to worry, too. Farmers are facing large losses because they cannot sell crops to China during a trade war between Washington and Beijing. Sales of new and existing homes have declined in recent months as interest rates rise. Auto sales, also vulnerable to higher rates, have been falling since 2016....'It wouldn’t take much to go wrong to put us into a recession,' Kelly said."

RealMoneyBlog - Free daily/weekly email


11.29.18 - FAANG Bloodletting Just Starting

Gold last traded at $1,230 an ounce. Silver at $14.37 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on dovish Fed comments and a weaker dollar. U.S. stocks fell as investors' hopes of a trade deal between China and the U.S. dimmed.

Why the bloodletting in FAANG stocks is just getting started -Marketwatch
"A burning question for investors is whether the bloodletting has stopped for shooting-star growth names - Facebook, Apple, Amazon, Netflix and Google-parent Alphabet - which have been shoved into bear territory after helping to drive a nearly decade-long bull market....'We expect the real pain will come when a clear rotation occurs. This rotation should get under way when it becomes clear that earnings growth for FAANGs and other technology names in 2019 do not live up to expectations,' said the Canaccord analysts. And that second wave of selling should start in January when fourth-quarter results start rolling out, they say. Last word goes to hedge-fund manager Mark Yusko, who likens this year’s stock pullback to a 'melting ice cube.' 'I think next year, with the economic slowdown, it gets worse - probably double-digit drawdown. The big year is 2020, when the credit bubble starts to blow up,' as companies that have been binging on cheap debt will have to pay the piper,the founder and CEO of Morgan Creek Capital told CNBC."

elephant This 'elephant in the room' could send stocks into a tailspin -Rosenburg/CNBC
"David Rosenberg says he's worried about a serious risk that investors are largely overlooking. The Gluskin Sheff chief economist and strategist warns that the Federal Reserve's balance sheet reduction - not rising interest rates - could have drastic implications for stocks. 'This is the elephant in the room,' he said Wednesday on CNBC's 'Trading Nation.' 'The Fed doesn't really have to do anything on rates. Just the balance sheet alone is going to create quite a significant liquidity squeeze next year.'....'It's uncertain as to whether that causes an outright recession,' he said. 'But it's certainly going to trigger, I think, a significant slowdown that we're already starting to see in a lot of the credit-sensitive data.'....'We're going to be seeing with no fiscal stimulus next year, the peak impact of Fed tightening, the lagged impact, hit the economy and the markets more forcefully in 2019,' Rosenberg said."

Gold gains on Fed comments, palladium hits record -Reuters
"Gold rose on Thursday after Federal Reserve Chair Jerome Powell’s comments boosted perception the central bank would go slow on interest rate hikes next year, while palladium was trading at record levels due to a shortage in supply. 'The hint from the Fed that they are closer to ending the current rate hike cycle caught the markets somewhat by surprise. We saw a good lift up in gold price close to the highs we’ve seen over the past few weeks,' Mitsubishi analyst Jonathan Butler said. 'Treasury yields and dollar dropped back, and that was quite supportive of gold,' he said....Palladium hit a record high of $1,186.50. 'This is a very fundamental story of demand outstripping the supply. It’s been six or seven years of sustained market deficit, which has kept the market exceedingly tight,' Mitsubishi’s Butler said."

US Fed chairman hints at higher rates following Trump attack -Yahoo News
"A day after President Donald Trump's latest attack on the US central bank, Federal Reserve chief Jerome Powell hinted that the key lending rate would move higher but said there was no preset course. Powell said in a speech in New York that interest rates remained 'low by historical standards' and still provided stimulus to the economy. But he said the Fed's gradual increases balanced the risks between raising too much and not enough....Trump on Tuesday again blasted his hand-picked chief of the US central bank, saying he was 'not even a little bit happy' with his selection of Powell. The Federal Reserve chairman has presided over three interest rate increases this year and is widely expected to hike again in December....Powell and other officials have dismissed the sustained political attacks from Trump, saying they have no influence on deliberations of the independent central bank. But many economists warn that by attacking the Fed for raising rates, Trump is actually putting pressure on the central bank to raise rates to demonstrate its independence from political considerations."

Putin: "We Aren't Aiming To Ditch The Dollar, The Dollar Is Ditching Us" -Zero Hedge
"With a number of volatile trends in multiple conflict theaters and geopolitical hot spots now coming to a head this week (Ukraine-Russia, China-US, Iran-US, Turkey-Syria-Russia, Saudi Arabia-Europe), and with Presidents Putin and Trump set to meet at the G20 summit in Argentina in just days, Putin has again signaled Russia will move away from the U.S. dollar....He said, according to Bloomberg, 'We aren't aiming to ditch the dollar. The dollar is ditching us.' Making the case that aggressive US punitive measures against its rivals is undermining confidence in the dollar....To underscore that Russia is not alone in moving toward de-dollarization, Putin added, 'We're not the only ones doing it, believe me.'....Explaining that Washington sanctions will only result in blowblack, citing '400,000 lost jobs' in Europe, Putin said 'key trade partners' were helping Russia on setting up alternate payment systems which would circumvent the SWIFT network."

RealMoneyBlog - Free daily/weekly email


11.28.18 - Fed Warns of 'Large' Market Price Plunge

Gold last traded at $1,223 an ounce. Silver at $14.45 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Wednesday on a firmer dollar. U.S. stocks rose as investors awaited a key speech from Fed chairman Jerome Powell amid hopes of a U.S.-China trade truce.

Fed warns that a 'particularly large' plunge in market prices is possible if risks materialize -CNBC
"The Federal Reserve issued a cautionary note Wednesday about risks to financial stability, saying trade tensions, geopolitical uncertainty and a buildup in corporate debt among firms with weak balance sheets pose strong threats. In what is often a boiler plate report on conditions in the banking system and corporate and business debt, the Fed instead warned of 'generally elevated' asset prices that 'appear high relative to their historical ranges.' In addition, the central bank said ongoing trade tensions, which are running high between the U.S. and China, coupled with an uncertain geopolitical environment could combine with the high asset prices to provide a notable shock....'The resulting drop in asset prices might be particularly large, given that valuations appear elevated relative to historical levels,' the report said."

cycle peak The Best Stock Investors: Dead People -Bonner/Bonner And Partners
"The stock market got a healthy bounce yesterday. Where it goes from here is anyone’s guess. But you don’t have to guess. Because you don’t make money in the stock market from short-term moves...It’s the big, long-term moves that make a difference...Our 'Timing for Dummies' model calls for buying stocks when you can get the Dow for less than five ounces of gold (it’s currently about 20)… and selling stocks when the price goes over 15 ounces of gold. Otherwise, you just wait. In gold. Over the last hundred years, you would have multiplied your real wealth – measured in gold – more than 58 times (three round trips from five to 15)....Over the last 20 years, readers, colleagues, analysts, and family members have criticized us for 'missing out' on the biggest stock boom in history. But guess what. During that period, gold has done better than the S&P 500, even when you account for dividend reinvestment - without the risk....People think they need to invest. They see ads with couples smiling approvingly at their statements...But a study carried out a few years ago showed that the best investors were, in fact, those who were least on top of the situation. What was their secret?...the secret was that the best investors were dead. Their accounts just sat there, still open but inactive, accumulating and reinvesting gains....Even before the yield on the 10-year T-bond reaches 4%, we predict investors will wish they had sold stocks and bonds… and bought gold."

Stock market correction could bring gold trade back from the dead -CNBC
"Gold, the classic bear-market investment, has been ignored by investors this year...But as more investors fear that the end of the bull market in stocks is near and volatility in stocks continues, gold may get some attention. The largest gold ETF, the SPDR Gold (GLD), has taken in $600 million in assets over the past month, according to XTF.com data through Nov. 21. It is a notable one-month movement into gold by investors....'A lot of the factors that led to gold seeing little interest from investors are going to be reversing,' said Bart Melek, director and head of commodity strategy at TD Securities. He expects a steady upward trend for the spot price of gold as central banks pump the break on quantitative easing and tighten monetary policy....Milling-Stanley also sees the dollar headwind easing. 'The dollar is looking a bit wobbly and so are equities, so the things that have been against gold for the past few months are turning,' he said. 'I think the broad trend in equities will be flat to downward with occasional rallies, and I think gold will benefit from that as it has so often in the past,' he said. Milling-Stanley said the price of gold could also now see support from a non-market factor: consumer buying, especially in emerging markets, which account for 50 percent of annual consumption."

The U.S. Housing Boom Is Coming to an End, Starting in Dallas -Wall Street Journal
"Dallas’s once vibrant housing market is sputtering. In the high-end subdivisions in the suburb of Frisco, builders are cutting prices on new homes by up to $150,000. On one street alone, $4 million of new homes sat empty on a visit earlier this month. Some home builders are so desperate to attract interest they are offering agents the chance to win Louis Vuitton handbags or Super Bowl tickets with round-trip airfare, if their clients buy a home. Yet fresh-baked cookies sit uneaten at sparsely attended open houses....Along with a recent swoon in the stock market, the housing market - which makes up a sixth of the U.S. economy - has been a troubling weak spot. U.S. existing home sales have declined on an annual basis for eight straight months, the longest slump in more than four years, according to the National Association of Realtors report Wednesday....'We have this huge affordability crisis,' said Ted Wilson, principal at Residential Strategies, a Dallas consulting firm. 'With mortgage rates going higher, we’re hitting a ceiling.'....Dallas has been the 'canary in the mine shaft' this housing cycle, said Paige Shipp, regional director for Metrostudy, a consultant to home builders."

RealMoneyBlog - Free daily/weekly email


11.27.18 - Bitcoin 'Pyramid Scheme' is Collapsing

Gold last traded at $1,216 an ounce. Silver at $14.15 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Tuesday as trade tensions boosted the buck. U.S. stocks fell amid doubt about a deal being struck on U.S.-China trade at the G-20 Summit this week.

Goldman Predicts Commodities Will Soar in 2019 -Bloomberg
"Commodity bull Goldman Sachs Group Inc. is undaunted by the sell-off in raw materials and is forecasting returns of about 17 percent in the coming months, describing the current situation as unsustainable and touting this week’s G-20 meeting in Buenos Aires as a potential turning point. 'Given the size of dislocations in commodity pricing relative to fundamentals - with oil now having joined metals in pricing below cost support - we believe commodities offer an extremely attractive entry point for longs in oil, gold and base,' analysts including Jeffrey Currie said in a report....Here are some of Goldman’s top ideas for next year, as listed in the report: Oil: Goldman expects an OPEC supply cut and its announcement will lead to a recovery in prices. It advises going long on short-dated Brent....Gold: The market has priced in 10 out of 12 of the Federal Reserve’s hikes that the bank expects, and the strong dollar trend is seen reversing. 'If U.S. growth slows down next year, as expected, gold would benefit from higher demand for defensive assets,' Goldman said, adding that there may be additional support from central bank buying."

housing bubble The Housing Bubble Is Popping Right Now -Jones/Zero Hedge
"Has the Housing Bust 2.0 begun? If so, how bad could things get? And what steps should those looking to pick up values at much lower prices in the future be taking? This week we talk with citizen journalist Ben Jones, property manager and publisher of TheHousingBubbleBlog - where he tracks the latest headlines and developments in the housing market. 'We're going to see a collapse. The housing bubble is in the process of popping right now...What’s happening right now is a lot more suggestive of a bubble bursting much more than it does just a correction or a down cycle. I can’t think of a market in the United States I would buy in right now....If you're looking to purchase housing at better values once this current bubble bursts, you don’t want to buy from Joe Six-Pack. You want to buy from a bank or a lender, that will frequently be Fannie May and Freddie Mac....That’s where we’re headed again. I would be very patient right now about catching a falling knife in the current market. Wait for the coming distressed discounts.'"

"Home value gains have now shrunk to the lowest level since January 2017, as rising mortgage rates cut into affordability," reports CNBC today. Looking forward we can see bubbles forming in housing, tech stocks, bonds and U.S. debt. Some day soon one or more of these market bubbles will hit a sharp pin and investors will panic - trillions could be lost very quickly. Now is the time to hedge your portfolio with physical gold and silver, which are still reasonably priced considering the growing levels of risk. Call Swiss America at 800-289-2646 to discuss re-balancing your portfolio now; before the next market surprise negatively impacts your financial future.

Foreign buyers find U.S. Treasuries less appealing -Reuters
"Some overseas investors appear to be taking a pass on U.S. debt securities just as the administration of President Donald Trump embarks on a record sale of Treasury bills, notes and bonds to pay for its big tax cuts and spending increases. Top foreign holders of Treasuries like China and Japan have shrunk their portfolios of U.S. government bonds this year, and a recent barometer of participation in Treasury auctions suggests overseas buyers have not been showing up in force, according to Treasury Department data....'We do worry about where demand for Treasuries is going to come from, given the ongoing significant increase in supply,' said Torsten Slok, chief international economist at Deutsche Bank. That concern will be on sovereign debt investors’ minds this week with the Treasury scheduled to auction $129 billion in notes with maturities ranging from two to seven years beginning on Monday....A sustained slackening in foreign demand for Treasuries could hurt the U.S. economy. Lower demand means the government must increase the interest it pays out to attract buyers. Those higher federal borrowing costs not only add to the U.S. budget deficit, they also tend to push lending rates higher for consumers and corporations, which could knock the second-longest U.S. economic expansion off track."

The Bitcoin ‘pyramid scheme’ continues to collapse -Crudele/New York Post
"Bitcoin, while not officially a product of traditional Wall Street, is a pyramid scheme. A fraud. But it is best described as a 'confidence game.' I’ve been calling it a 'bitcon' for a long time. And now the pyramid seems to be collapsing because fewer and fewer people have confidence that the price of this inherently worthless 'cryptocurrency' is going to continue to rise....I predicted a number of times that bitcoin would eventually be worth $0...Over this past weekend, the price had fallen to just $3,600, which is still $3,600 too much. Since its peak, bitcoin has lost about $700 billion in value. Think of it this way: The early participants in this pyramid have made a lot of money, but other people have lost $700 billion of their money in less than a year....I discussed this subject with a colleague last week, and she and I agreed that bitcoins are hard to write about. Why? Because bitcoins are the epitome of 'thin air' investments. They represent nothing - not a piece of a company, or an ounce of precious metal or the faith in a country."

RealMoneyBlog - Free daily/weekly email


11.26.18 - G20 Summit: Will Trump Win China Trade War?

Gold last traded at $1,223 an ounce. Silver at $14.26 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Monday despite a firmer dollar. U.S. stocks rebounded as shares of beaten-down tech shares bounced after posting steep losses last week.

Turbulent Stock Market Is Flashing a Warning About the Economy -New York Times
"Last week the S&P 500-stock index turned negative for the year, stoking fears that one of the longest bull markets in history could be at risk. Stocks often act as an early warning system, picking up subtle changes before they appear in the economic data. In recent weeks, retail stocks have been hit over concerns of rising costs....Commodities and the companies that depend on them have been pummeled by the prospect of weaker demand should the global economy slow. Five tech giants - Facebook, Amazon, Alphabet, Apple and Netflix - have shed more than $800 billion in market value since the end of August, the fallout from slowing growth and regulatory scrutiny....'I think there are very clear signs that investors are beginning to worry about weaker growth in the coming year or so, and how that's going to feed through to corporate earnings,' said Michael Pearce, senior United States economist with Capital Economics. Disappointing data and earnings updates could ignite periodic panics over the threat of recession. Markets are likely to be much choppier that than they’ve been in recent years. Gains could be lower."

CRS interview G20 Summit: Will Trump Win the China Trade War? -Fox Business
Swiss America Chairman Craig R. Smith discussing the possible impact of the upcoming G-20 Summit. While experts believe most imported products will be more expensive next year due to higher tariffs as corporations pass higher prices on to U.S. consumers; Mr. Smith believes President Trump is going into the G-20 Summit in a position of strength.

Blockbuster Cyber Monday Is Overshadowed by Economic Outlook -Bloomberg
"Shoppers will spend an estimated $7.8 billion on Cyber Monday - a record - boosting a strong holiday shopping season. And Wall Street seems to be mostly shrugging it off. Even a blockbuster holiday won’t divert the market’s attention from rising interest rates next year and the escalating trade war between the U.S. and China that’s expected to slow global economic growth. U.S. President Donald Trump in September imposed 10 percent tariffs on approximately $200 billion worth of Chinese imports and plans to raise the levy to 25 percent in January, which will drive prices higher. Fears about a consumer spending slowdown in 2019 outweigh any positive signs of a strong holiday, said Tom Forte, analyst at DA Davidson & Co. 'Many of the tariffs will likely be borne by consumers in the second half of 2019 in the form of higher prices on products,' he said. 'Higher interest rates may dampen spending on big-ticket items.'....The weekend sales bump doesn’t appear to be enough to help retailers recover from the selloff in their shares last week."

Economists see the Trump economy slowing drastically next year before a possible recession in 2020 -CNBC
"Major firms this week have been releasing forecasts for next year, and both Goldman Sachs and J.P. Morgan see growth slowing to below 2 percent in the second half of 2019. But at the same time, the two firms expect the Federal Reserve to raise interest rates four times, while other economists believe the Fed may have to move at a slower pace. Economists point to a number of factors for the slower growth, but topping the list of scare factors for markets are those Fed interest rate hikes as well as the impact of tariffs and trade wars, should they continue. Economists do not foresee a recession next year, but by 2020, one seems more likely, some economists said. 'It depends on the Fed. If they continue along the current [interest rate hiking] trajectory they are following ... I think [there's a recession in] the first half of 2020,' said Joseph LaVorgna, chief economist Americas at Natixis....The fear is also feeding on itself with concerns that worsening financial conditions could add to slower growth but possibly hold back the Fed's rate hikes....Economists expect companies to try to pass on the impact of rising tariffs through higher prices."

Bitcoin Falls Below $4,000 as Cryptocurrency Collapse Worsens -Wall Street Journal
"Bitcoin just had the week from hell. The cryptocurrency plunged below $4,000 over the weekend. That means bitcoin has lost nearly a third of its value in seven days, one of its worst weekly selloffs on record. The digital currency has now fallen by about 80% since peaking near $20,000 late last year. Tony Gu, founding partner at NEO Global Capital, said the rout was down to just one thing. 'Panic.' Many speculators have fled the market, as shown by falling trading volumes...Now, another worry has emerged: Cryptocurrency miners, the outfits that solve complex equations to generate new digital coins, seem to be losing interest. The amount of computing effort expended by miners, known as the hash rate, has started falling. 'Bitcoin’s value is always driven by the intensity of demand and supply,' says Edith Yeung, a partner at 500 Startups, an early-stage venture fund. 'If the miners stop mining, bitcoin will not function…and the overall market will lose confidence. If there is no confidence, people will freak out and sell even more.'"

RealMoneyBlog - Free daily/weekly email


11.21.18 - The Fed 'Will Blink' on Rates

Gold last traded at $1,228 an ounce. Silver at $14.51 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and dollar weakness. U.S. stocks attempted to rebound after a brutal sell-off which pushed the tech sector into a bear market.

Why Warren Buffett Would Be Buying Precious Metals Again Today (If He Could) -HedgeEye
"Warren Buffett is famous for many things one of which is his general dislike for precious metals as an investment. But maybe you’re old enough to remember when, just over 20 years ago, he backed up the truck and bought a ton of silver - over 3,000 tons, to be more precise. From the 1997 Berkshire Hathaway letter to shareholders: 'Our second non-traditional commitment is in silver. Last year, we purchased 111.2 million ounces. Marked to market, that position produced a pre-tax gain of $97.4 million for us in 1997. In a way, this is a return to the past for me: Thirty years ago, I bought silver because I anticipated its demonetization by the U.S. Government. Ever since, I have followed the metal’s fundamentals but not owned it. In recent years, bullion inventories have fallen materially, and last summer Charlie and I concluded that a higher price would be needed to establish equilibrium between supply and demand.'....Currently, we have a very similar situation in gold....Thus it appears that a higher price is, 'needed to establish equilibrium between supply and demand.' All in all, it looks like buying gold today fits neatly into the Warren Buffett way of investing in precious metals. He may not be buying precious metals today - but that doesn’t mean investors who understand the simple dynamics of supply and demand shouldn’t be doing so using the very same thesis he has used successfully in the past."

FAANG FAANG: The New “Nifty Fifty” -Bonner/Bonner And Partners
"At Dow 25,000, stocks are too expensive. The Dow-to-gold ratio is now 21. In other words, it takes 21 ounces of gold to buy the Dow. That ratio has only been higher twice in the last 100 years. And each time was followed by an 85%-90% selloff. The FAANG stocks are especially expensive....You buy stocks to make money, not to get rid of it. The whole idea is to buy low and sell high. If you buy high, you’re starting off on the wrong foot....Since things that are out of whack tend to go back into whack, eventually… and since it is extremely unlikely that earnings could rise enough to justify such a high valuation… the price will have to fall to a more reasonable multiple of earnings. In other words, investors will lose money. Even if the FAANGs' technology survives, they probably won’t make much money for investors....That is what happened with the Nifty Fifty stocks of the late 1960s and early 1970s. They were good companies - including Coca-Cola, Sears, and General Electric....The Nifty Fifty stocks might have been good companies, but at 1972 prices, few of them turned out to be good investments. If you had bought them at their peak in 1972, by 1975 you’d have lost two-thirds of your money. By today, you would have lost much of the rest of it. Will the same happen to the FAANG stocks? Will Facebook, Apple, Amazon, Netflix, and Google soon be 'yesterday’s technologies?' We don’t know. But at 2018 prices, there is probably far more downside than upside."

Jim Grant predicts the Fed 'will definitely blink' on interest rates -CNBC
"The Federal Reserve won't end up raising interest rates as aggressively as projected, said Jim Grant, editor and founder of the venerable Grant's Interest Rate Observer newsletter. 'I think the Fed will definitely blink,' Grant told CNBC on Tuesday. 'I don't know when it will reverse course; I suspect sooner rather than later.' Grant said that investors will know the Fed is 'blinking' when they hear it. 'We are going to be data dependent; we are concerned about where growth [is]; we are stepping back from time to time ... and we are watchful waiting. That is what it is going to sound like.' The recent sell-off started after Fed Chairman Jerome Powell said early last month that rates were a long way from neutral, sparking questions about whether Fed officials were going to increase the cost of borrowing money more than forecast. The Fed is expected to raise rates again in December, on top of the three moves already on the books in 2018. After its most recent hike, the Fed projected three rate increases for next year."

Americans Turned to Trump to Roll Back the Progressive Tide -Epstein/Wall Street Journal
"What genuinely excites Mr. Trump’s crowds and draws them to him is their shared antiliberalism. By liberalism I do not mean liberalism of the kind that was at the center of our fathers’ Democratic Party - which supported labor unions, civil liberties, racial integration, involvement in international affairs. I refer to the liberalism now metamorphisized into progressivism, at the heart of the thinking of such Democrats as Elizabeth Warren, Bernie Sanders, Cory Booker, Kamala Harris, Alexandria Ocasio-Cortez and others. This is the progressivism that edges into socialism, that is said to attract the young, that promises a newer, kinder America - the progressivism that exalts identity politics and has no argument with political correctness. As one looks upon the people who attend Mr. Trump's rallies, one sees the faces not of Hillary Clinton's 'deplorables'...these people, despite the progressives’ promises to them of free Medicare, free college tuition, and the rest, want nothing to do with Sens. Warren, Sanders, Booker & Co. Quite the reverse: They loathe them....The pull to the left of the Democratic Party is Donald Trump's greatest hope for re-election....And so things go, two ends without a middle. The shame is that most Americans find themselves in that missing middle...Politics has rarely seemed so dismal."

RealMoneyBlog - Free daily/weekly email


11.20.18 - FAANG Stocks Enter Bear Market

Gold last traded at $1,223 an ounce. Silver at $14.28 an ounce.

NEWS SUMMARY: Precious metal prices steadied Tuesday despite a stronger dollar. U.S. stocks extended their slump into the red for the year as tech stocks entered bear market territory.

Gold Is Just Getting Started -Scotiabank/Kitco
"Analysts at Scotiabank said that they see further potential for the yellow metal as the bank sees a wave of risk-off sentiment sweep through financial markets and inflation pressures rise, according to its November Metals Matters precious metals report. 'Economic data has generally been showing weakness, including some U.S. data, and economic bellwethers such as the base metals have remained under pressure as the U.S. trade disputes have dragged on,' the analysts said. 'Gold has turned more favorable as other markets have started to become more risk-averse. As such, there does seem to be room for more safe-haven demand for gold as money rotates out of equity and bond markets.'....The analysts noted that along with economic uncertainty, geopolitical instability surrounding global trade issues will continue to support inflationary pressures, which could help gold fight against ongoing strength in the U.S. dollar....The analysts said that new momentum in the gold market could also breathe some life into silver...'Should gold prices extend gains and investor interest return, then silver would likely outperform gold’s rebound in percentage terms as it has a history of being more volatile than gold,' the analysts said."

bears Stock-market gains for 2018 vanish -Marketwatch
"U.S. stocks fell sharply at the start of trade Tuesday, extending a pre-Thanksgiving rout that has been fueled mostly by a selling in shares of technology and internet-related companies. Sharp declines in Target and Lowe’s after disappointing earnings also contributed to the tone. U.S. financial markets will be closed Thursday for the Thanksgiving Day holiday and will be see an early close on Friday. U.S. investors continue to be plagued by doubts surrounding slowing global growth, U.S.-China trade relations, and the steady rise in interest rates that can be expected to continue into next year. These doubts have accumulated to induce fears that we are growing nearer to the end of the current economic expansion, strategists say....'Economic data remain strong, but the trend in the trend is deteriorating,' Peter Lazaroff, co-chief investment officer at Plancorp, told MarketWatch. 'Economic conditions are good, but the chances of economic conditions deteriorating over the next year or more is much higher than a surprise on the upside,' Lazaroff said."

Investors' favorite trade is officially dead as each member of tech's 'FAANG' is in a bear market -CNBC
"Each of the five 'FAANG' stocks slipped into a bear market during Monday trading. The FAANG stocks – Facebook, Amazon, Apple, Netflix and Google-parent Alphabet – have fallen steadily over the last 6 weeks as the companies delivered disappointing earnings and mixed forecasts. Collectively, the five stocks have lost nearly $1 trillion in value since hitting their respective 52-week highs. Tech stocks are coming off an October which saw the Nasdaq Composite plunge 9.2 percent, its steepest drop in a month since November 2008. Wall Street defines a bear market as a fall of 20 percent or more from a stock's 52-week high."

Goldman Tells Investors "It's Time To Lift Cash Allocations" -Zero Hedge
"It's been difficult year for Goldman's chief equity strategist David Kostin....You have such gloomy analysts as Peter Oppenheimer who two weeks ago said that 'things do not look encouraging' as various market signals suggest that 'equities could be about to enter a sustained bear market.'....First you admit that 'all good things eventually come to an end'...'Our baseline assumption is that both economic and profit growth will be positive in 2019 but decelerate from the robust levels of 2018.'....'Mixed asset investors should maintain equity exposure but lift cash allocations.' The reason - everyone is overweight stocks and underweight cash...'Cash will represent a competitive asset class to stocks for the first time in many years.'"

RealMoneyBlog - Free daily/weekly email


11.19.18 - Homebuilder Confidence Plummets

Gold last traded at $1,224 an ounce. Silver at $14.40 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying and a weakening dollar. U.S. stocks fell as declines in Apple and semiconductor shares put pressure on the broader market indexes.

The Gold Standard Didn't Disappear In 1971, It Just Went Underground -Lewis/Forbes
"Officially, the gold standard is regarded as superstitious nonsense, especially by academics. The fact that it worked very well for centuries, produced results that nobody seems able to achieve today. But unofficially, gold was not only the basis of the global monetary system for centuries until 1971, it has been - in rough form - the basis of the global monetary system for most of the time since 1971 also. Humans apparently cannot live without it, even if they want to....Alan Greenspan stabilized the dollar against gold during the 1990s, the 'Greenspan gold standard.' The dollar then had over a sixfold decline under Ben Bernanke, falling from $300/oz. to a low around $1900/oz. in 2011....A further decline in the dollar's value would not be tolerated. Serious firepower was brought to the task, probably including financial market manipulation at an unprecedented level. The result was the 'Yellen gold standard' from 2013 to the present, in which the dollar’s value vs. gold has been 'strangely' stable between $1150 and $1350/oz., with a midpoint around $1250/oz. The results have been pretty good....Unlike Greenspan, who gave a lot of hints that he was actively stabilizing the dollar vs. gold, Yellen and now Powell have kept mum....The gold standard works even when it is by lucky chance....The effective choice has been either a gold standard or a 'PhD standard,' and the PhD standard hasn’t amounted to much more than overt currency debauchery."

santa Santa rally for stocks? Get out while the getting is good, says this strategist -Marketwatch
"After some brutal selling in October, the last quarter of the year is already stacking up to be the worst since September 2015. Investment advisers are sounding some end-year caution. Our latest and call of the day, from Seema Shah, global investment strategist at Principal Global Investors, says 'take cover, worse has yet to come,' when it comes to equities. Shah says 'rather than a signal of renewed equity market strength - any year-end rally should be considered an opportunity to exit U.S. equities.' Shah's concerns are based on some familiar themes - Fed tightening, a negative economic hit from a strong dollar, POTUS stimulus that is slowly fading, a rout for tech stocks and the U. S-China trade spat. But one of these stands out bigly. 'I should emphasize again that my negative outlook for U.S. equities rests heavily not on assumptions about the trade war, but on the reversal of easy monetary conditions,' Shah says."

Homebuilder confidence plummets to the lowest level in more than two years as 'demand stalls' -CNBC
"Rising mortgage rates and continued home price growth are hurting affordability and fast becoming a toxic cocktail for the nation's homebuilders. Sentiment among homebuilders dropped 8 points in November to 60 in the National Association of Home Builders/Wells Fargo Housing Market Index. That is the lowest reading since August 2016....'Builders report that they continue to see signs of consumer demand for new homes but that customers are taking a pause due to concerns over rising interest rates and home prices,' said NAHB Chairman Randy Noel, a builder from LaPlace, Louisiana. 'While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall,' said the NAHB's chief economist, Robert Dietz."

Crypto Carnage Continues As Bitcoin Cash Fork Battle Builds -Zero Hedge
"Bitcoin has extended its recent collapse, plunging to $5100 this morning (the lowest since Oct 2017) and down 75% from its record highs in Dec 2017. The latest leg lower seems driven, among other things, by anxiety over the split in Bitcoin Cash. The cryptocurrency industry has now lost more than $660 billion in value from a January peak, according to data from CoinMarketCap.com, with the latest plunge coming as the two Bitcoin Cash software-development factions failed to agree on a way to upgrade the offshoot of the original Bitcoin, leading to a computing power arms race....Bloomberg reports that even Thomas J. Lee, managing partner at Fundstrat Global Advisors and a long-time crypto bull, slashed his year-end price target for Bitcoin to $15,000 from $25,000. The target is based on a fair value multiple of 2.2 times the breakeven cost of mining, which the firm pegs at $7,000, according to a report last week. 'Crypto-specific events have led to greater uncertainty in the crypto market, including the contentious hard fork for Bitcoin Cash,' Lee said in the note. Bitcoin’s break below $6,000 'has lead to a renewed wave of pessimism,' he said."

RealMoneyBlog - Free daily/weekly email


11.16.18 - Retirement Dreams Lost for Millions

Gold last traded at $1,223 an ounce. Silver at $14.34 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on a weaker dollar. U.S. stocks traded mostly lower after a strong downturn in technology shares.

Gold Re-Monetization Is Much Closer Than Many Realize -Palisade Research
"February 2018 marked a major turning point for gold - monetary gold to be more specific - when the Swiss National Pension Fund switched out of synthetic gold derivatives into physical gold. Monetary gold is defined as 'physical gold held in their own vaults or in trust.' The Swiss decision complied with the new banking standards regarding capital adequacy as it relates to solvency and viability....Lessons learned from the last liquidity crisis, when Lehman Brothers nearly caused a global financial meltdown, forced a rethink in how assets held on an institution's balance sheet are to be valued. Counter-party risk became extremely important again...The need for liquidity was a key change in the creation of the new standards, and it shone a spotlight on an asset that had largely been ignored for this purpose - physical gold....A point to consider here is that gold is not traded at the commodity desks of large banks. It is traded at the currency desks....Central banks and large institutions will increasingly turn to monetary gold in the coming months and years. They will seek to add the quality that only monetary gold provides. Capital flows into monetary gold will reflect the need for an asset that is liquid, tested and trusted. Gold's re-monetization is now officially a matter of global monetary policy."

amaras law Yes, We Are In Another Tech Bubble -Real Investment Advice
"Technology has touched our lives in so many ways, and especially so for investors. Not only has technology provided ever-better tools by which to research and monitor investments, but tech stocks have also provided outsized opportunities to grow portfolios..Just as glorious as tech can be on the way up, however, it can be absolutely crushing on the way down....The latest fright came from US technology giants Amazon and Alphabet after their revenue misses last week. Both are highly successful companies but the immediate market reaction to their results suggested how wary investors are of any sign that their growth trajectories might be flattening....The technologist and futurist, Roy Amara, captured the essence of that route with a fairly simple statement: 'We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.' Amara’s law/ the hype cycle is illustrated in this graph....Amara's law describes the dotcom boom and bust of the late 1990s and early 2000s to a tee....In sum, tech stocks create unique opportunities and risks for investors. Due to the prominent role of inflated expectations in so many technology investments, however, tech also poses special challenges for long term investors....The only sensible course is to be wary of the initial hype but wary too of the later scepticism."

Paul Tudor Jones says we're in a global debt bubble -CNBC
"Billionaire investor Paul Tudor Jones said Thursday that the world has loaded on too much debt which could bring trouble across asset classes. 'From a 50,000-feet viewpoint, we're probably in a global debt bubble,' Jones said at the Greenwich Economic Forum in Connecticut. 'Global debt to GDP is at an all-time high.'....Jones is famous for making big macro calls. One of his biggest predictions came when he correctly called the 1987 crash. His hedge fund, Tudor Investment, reportedly manages $7 billion in assets....Global debt hit a record high earlier in 2018, reaching $247 trillion. 'I think this time it's going to be corporate credit and I think the breakdowns are something that we have to pay attention to in the last day or two,' he said. 'And they're really scary because, one thing about this credit bubble [is] we've had liquidity absolutely dry up in so many markets.'....'Zero rates and negative rates encourage excess lending. That's of course why we're in such a perilous time,' he said adding stocks are probably in the 70th percentile of overvaluation."

‘I Was Hoping to Be Retired’: The Cost of Supporting Parents and Adult Children -Wall Street Journal
"There is a growing number of baby boomers who find themselves caring for both their elderly parents and their adult children, rather than kicking back at retirement age. They face the strain of constant caregiving and derailed dreams, as well as added expenses. It’s one more reason why many Americans are entering their retirement years as unprepared financially as any generation in years. A 2014 study by the Pew Research Center found 52% of U.S. residents in their 60s - 17.4 million people - are financially supporting either a parent or an adult child, up from 45% in 2005. Among them, about 1.2 million support both a parent and a child, more than double the number a decade earlier. The squeeze is coming from both ends. With lifespans growing longer, the number of 60-somethings with living parents has more than doubled since 1998, to about 10 million, according to an Urban Institute analysis of University of Michigan data, and they are increasingly expensive to care for. At the same time, many boomers are helping their children deal with career or health problems, or are sharing the heavy burden of student loans....More than a third of people in their 60s who are caring for parents reported a 'moderate-to-high level of financial strain' as a result, a survey by the National Alliance for Caregiving and AARP found. "You have to finally get to the attitude that whatever will be will be. You don’t abandon family because something’s inconvenient," said Barb Strickert, who cares for her 83-year-old mother and 34-year-old daughter."

RealMoneyBlog - Free daily/weekly email


11.15.18 - Here’s What’s Really Troubling the Market

Gold last traded at $1,215 an ounce. Silver at $14.26 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying despite a firmer dollar. U.S. stocks traded mixed as J.P. Morgan led banks higher, while declines in Walmart and Amazon added to losses in consumer discretionary stocks.

Apple falls into bear market territory -CNBC
"Shares of Apple, a bellwether for the technology sector, dipped into a bear market on Wednesday as the decline from its recent all-time high briefly totaled more than 20 percent. Apple, which fell more than 2.5 percent Wednesday, closed at $186.80 per share. The shares finished 19.99 percent off their record high of $233.47, clinched on Oct. 3; Apple's value has dropped to about $886 billion from $1.13 trillion at those October highs. Investors have grown concerned that the company will suffer declines in iPhone unit sales over the next couple of years. Apple began the month by reporting that iPhone shipments missed Wall Street expectations for the quarter and said that it will no longer report how many iPhones it sells...Daniel Ives, analyst at Wedbush Securities, told CNBC on Wednesday, 'As there's less transparency in the story, investors have feared that Apple's trying to hide decelerating unit growth. When you see general nervousness across the tech space, combined with expectations that Apple was going to carry the weight of the FANG names ... it's kind of been a perfect storm."....Analysts at both Guggenheim Partners and UBS on Wednesday cut their price forecasts for Apple shares and blamed lower phone sales expectations for a dimmer outlook."

apple Apple's fall is just a symptom - here's what's really troubling the market -Moneyweek
"Markets are rattled again. This time, fear has coalesced around smartphone giant Apple. The world's first trillion-dollar company is no longer a trillion-dollar company, and yesterday it fell even further from regaining its crown....Apple keeps selling more expensive versions of the iPhone. So sales might be flat, but revenues keep going up....The problem is that the tone of the market has changed. Things it would have brushed off in the recent past are now bothering it. Apple is not the only one. Goldman Sachs, for example, had a terrible day yesterday, falling by 7.5%....Investors are now so nervous that they are paying attention to any news that is less than perfect. You can point to all sorts of bad news, but what it fundamentally comes down to is that central banks globally are tightening up, and the Federal Reserve is in the lead, which makes things even worse, because it means a stronger dollar....I reckon it's going to take some serious good news - or at least a hint of a pause from the Fed - to pull the market decisively out of this particular glum mood."

Gold prices rise, shake off pressure from a stronger dollar as stock market slips -Marketwatch
"Gold prices inched higher on Thursday, shaking off pressure from a stronger dollar to hold on to a week-to-date gain as U.S. and European equities declined. 'Gold appears to have rejected the $1,200 level, as it probed below there on Tuesday and Wednesday but managed to close back above it each of those days,' analysts at Zaner Precious Metals said in a daily note. 'The rate-hike theme may have played itself out.'....The dollar strengthened against the pound as Brexit uncertainty boiled up anew as more senior members of U.K. Prime Minister Theresa May’s cabinet resigned, signaling more turmoil and ahead....Declines in benchmark U.S. and European stock indexes week to date have also helped to boost the precious metal’s investment appeal."

The looming threat to Trump's booming economy -Politico
"President Donald Trump faces a growing list of economic problems that could irritate him even more next year. Chief among them is a withdrawal from the economy's sugar high. Fiscal stimulus from the GOP tax cuts is likely to start running out. The Federal Reserve is expected to keep bumping up interest rates. And few analysts expect a divided Congress - facing soaring deficits and with its eyes on 2020 - to join hands and pass a big infrastructure package or sweeping middle-class tax cuts to keep the fiscal juice flowing. The collection of all these factors, coupled with jittery investors already worried about trade wars and a global slowdown, could deny Trump the kind of big economic growth numbers he loves to celebrate....The decline in fiscal stimulus will come as the Fed, much to Trump's displeasure, is likely to keep raising interest rates in 2019. The Fed is expected to hike rates again next month and several more times next year....Concern over waning stimulus and rising rates has some of Trump's advisers, including Kudlow, scrambling to avoid a round of auto tariffs on Europe and a trade war with China next year. Those concerns helped turn October into the worst month for the stock market since 2011."

RealMoneyBlog - Free daily/weekly email


11.14.18 - Gold: ‘Best House in Bad Neighborhood’

Gold last traded at $1,210 an ounce. Silver at $14.08 an ounce.

NEWS SUMMARY: Precious metal prices steadied Wednesday on a flat dollar. U.S. stocks traded lower as shares of Apple rolled over and a decline in bank shares pressured the broader market.

In a chaotic 2019, gold will be the 'best house in bad neighborhood' -Marketwatch
"Are greater risks stacking up for investors in 2019?....'Equities appear to be in no-man's-land,' says Sean Darby, Jefferies' chief global equity strategist, who writes that Jerome Powell and co.’s intentions is the big thing keeping his clients up at night. And they aren't far off with those worries, according to our call of the day, which predicts 2019 will be a doozy for investors and advises they seek shelter in a much-neglected, glittering port. 'Being long gold has been a tough investment since 2012, and so often, when we see the yellow metal gaining traction, the [U.S. dollar] regains its mojo, and we see the inevitable reversal,' writes Chris Weston, head of research at Pepperstone Group. 'However, emerging warning signs can be seen that suggest 2019 could be the year where gold bulls finally get their day in the sun.' He predicts a 'capital preservation trade' will grip the world in 2019, reviving currency wars, which will boost gold’s safe-haven allure. From there, 'risk aversion will take hold, with a rampant flattening of the U.S. yield curve and a [dollar] flight will be in play.'"

gold Ray Dalio’s Faith in Gold Is Unshaken -Bloomberg
"Not even gold's second quarterly straight decline was enough to shake billionaire hedge-fund manager Ray Dalio's confidence in gold. Dalio's Bridgewater Associates maintained its holdings in SPDR Gold Shares, the largest bullion-backed ETF, at 3.9 million shares, and its stake in iShares Gold Trust, the second-largest, at 11.3 million shares in the third quarter, according to a regulatory filing Tuesday. Dalio recommends gold as a hedge against rising political risk. The hedge fund also added to its holdings in Barrick Gold Corp., Franco-Nevada Corp., Newmont Mining Corp. and Kinross Gold Corp. in the third quarter."

Recent Data Suggest What Could Be the Last Nail in This Bull’s Coffin -Mauldin Economics
"All good things come to an end, even economic growth cycles. The present one is getting long in the tooth...There's no doubt - none, zero, zip - this will happen. The main question is when....A new Bank for International Settlements study examined a database of 32,000 listed companies in 14 advanced economies to identify 'zombie' businesses...Looking only at US listed companies, about 16% qualify as zombies. So, we are actually more zombie-friendly than our average global peers....Worse, once you become a zombie company, you'll likely remain one....Keeping zombies alive hurts healthy companies....Many (possibly most) of these zombie companies should fail. And they will - either suddenly in a crisis, or in slow motion....That, my friends, is how recessions begin. If we're lucky, it will occur gradually and give us time to adapt. But more likely, it will spark another crisis given high leverage and interconnected markets. Not long before the last crisis, Ben Bernanke assured us the subprime 'problem' was contained. It reminds me of the old Hemingway line, 'How does one go bankrupt?' The answer: 'Slowly, and then all at once.'"

Midterms Signal It's Not the Economy, Stupid! -Samuelson/Real Clear Markets
"One lesson of the midterm elections is that economic growth is losing its power to unite the country and to reduce explosive conflicts over race, religion, ethnicity, immigrant status and sexuality. This is unfamiliar. Economic progress has been a routine part of our election narratives. The presumption is that a strong economy favors the incumbent party and a weak economy does the opposite....In a new book, 'Identity Crisis: The 2016 Presidential Campaign and the Battle for the Meaning of America,' political scientists John Sides of George Washington University, Michael Tesler of the University of California, Irvine, and Lynn Vavreck of the University of California, Los Angeles, argue that the last presidential campaign was a clash of identities....Political scientists Alan Abramowitz and Steven Webster of Emory University have coined the useful term 'negative partisanship,' by which they seem to mean that many Americans are more fearful of what the other party might do rather than enacting their own agenda....Of course, the economy hasn't permanently disappeared from political life. Given another recession (which, at some point, is inevitable) or financial crisis, its role would undoubtedly rebound. But meanwhile, it takes a back seat to today's hateful partisanship. One purpose of politics is to conciliate and to cooperate. On that score, we are in a bad place."

RealMoneyBlog - Free daily/weekly email


11.13.18 - "Most Overvalued Market in History"

Gold last traded at $1,201 an ounce. Silver at $13.97 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on bargain-hunting and a weaker dollar. U.S. stocks zig-zagged in volatile trading as a bounce in Apple shares helped lift the broader technology sector.

Is the US the most overvalued stock market in history? -Fox Business
"Volatility remains a headwind for U.S. stocks in November after October wrapped one of the worst months for stocks since about 2008. And the worst may lie ahead, according to perma-bear and longtime StockMarket Cycles Editor Peter Eliades, who says U.S. stocks are facing 'one hell of a bear market.' 'We are facing what I would consider, and a lot of good value people consider, to be the most overvalued market in history,' Eliades told FOX Business' Neil Cavuto on Monday adding that it could last well into 2022....'I’m looking for at least as bad of a decline as we saw from 2007 to 2009 which was in the minus 55% category,' he said. 'I think we are facing that realistically and perhaps even worse than that.' Eliades clarified he isn't making predictions but rather is basing his outlook on the 20-year market cycle."

lame duck 'Lame-duck' Congress returns, facing budget, Mueller, border wall issues -Reuters
"The U.S. Congress returns on Tuesday for a post-election 'lame-duck' session, facing a funding deadline to prevent a partial government shutdown, as well as demands for protections for Special Counsel Robert Mueller and money for a proposed U.S.-Mexico border wall. Those issues, plus leadership contests among both Democrats and Republicans, promise to dominate the brief session of Congress wedged in between last week’s congressional elections and the start of the 2019-2020 Congress in January. In the elections, voters ended the Republicans’ majority control of the House of Representatives and gave it to the Democrats, while leaving the Senate in Republican hands. But nothing will actually change until January. For now, Republicans will retain their dominance in both chambers, although Democrats are already ramping up challenges to their partisan rivals and Republican President Donald Trump....The main legislative project for the lame-duck session will be a spending bill, said aides and lawmakers. Passage is needed to keep the Department of Homeland Security and some other agencies operating beyond Dec. 7, when the money runs out."

A Gold Price Forecast For 2019 -Investing Haven
"The gold price started the year quite bullish only to turn bearish around summer time. What does this mean for 2019? We look at our leading indicators in this article in order to do our gold price forecast for 2019. Sometimes gold can rise because of fear, but for gold to rise on the gold long term there must be some rising real rates....We do not recommend to get caught up in the endless stream of headlines. It will only confuse investors....Our leading indicator analysis suggests the following for our gold price forecast for 2019: the COT report says gold is near a major bottom and that gold will not dip below $1200 in the next few months going into 2019, the real inflation rate is mildly bullish, the Euro is not showing signs of wild moves....We tend to believe that the price of gold will go up to the $1300 area in 2019...Gold is setting a range... the $1200 to $1375 range....Our most bullish gold price forecast for 2019 is that gold will hit $1550 in 2019 (20% probability), but only if it succeeds breaking through the $1375."

Amazon Picks New York City, Northern Virginia for Its HQ2 Locations -Wall Street Journal
"New York City and Northern Virginia will be the homes for Amazon.com Inc.'s second and third headquarters, according to people familiar with the matter, ending a more than yearlong public contest that started with 238 candidates and ended with a surprise split of its so-called HQ2. Amazon is dividing the second headquarters evenly between New York’s Long Island City and Arlington County’s Crystal City neighborhoods, which are both located directly across from the major city centers. The company plans to evenly split the operations with as many as 25,000 employees in each location. The decision effectively gives Amazon a major presence in three coastal hubs that politically lean left, at a time when tech companies are under scrutiny for their perceived elitism and liberal social views....Amazon’s move to New York pits it against rival Google, which is gearing up for its own expansion in the city."

RealMoneyBlog - Free daily/weekly email


11.12.18 - Job Help: Military Veterans' Top Request

Gold last traded at $1,204 an ounce. Silver at $14.02 an ounce.

NEWS SUMMARY: Precious metal prices fell as the dollar touched 2018 highs. U.S. stocks traded sharply lower as Apple shares declined and a strong dollar increased worries about global trade.

Next Market Crash Will Put October Meltdown to Shame -Hussman/Business Insider
"If you thought the stock market correction in October was bad, you ain't seen nothing yet. So says John Hussman, the former economics professor and current president of the Hussman Investment Trust....'Speculative psychology has always allowed valuations to run well beyond historical norms over portions of the market cycle,' Hussman wrote in a recent blog post....'Despite its discomfort, the market decline we observed in October is only a drop in the bucket toward normalizing valuations,' Hussman said. 'Over the completion of the current market cycle, I fully expect the S&P 500 to lose close to two-thirds of its value from the recent peak.'....In the end, the more evidence Hussman unearths around the stock market's unsustainable conditions, the more worried investors should get. Sure, there may still be returns to be realized in this market cycle, but at what point does the mounting risk of a crash become too unbearable?"

recession Understanding The Global Recession Of 2019 -Charles Hugh Smith/Zero Hedge
"2019 is shaping up to be the year in which all the policies that worked in the past will no longer work. As we all know, the Global Financial Meltdown / recession of 2008-09 was halted by the coordinated policies of the major central banks, which lowered interest rates to near-zero, bought trillions of dollars of bonds and iffy assets such as mortgage-backed securities, and issued unlimited lines of credit to insolvent banks, i.e. unlimited liquidity....The success of these policies has created a dangerous confidence that they'll work in the next global recession, currently scheduled for 2019....Unprecedented asset purchases, low rates of interest and unlimited liquidity have inflated gargantuan credit / asset bubbles around the world, the so-called everything bubble....So how do central banks normalize their unprecedented policies without popping the asset bubbles they've created? The short answer is: they can't....Now that central banks have inflated assets into the stratosphere, there's $300 trillion in global financial assets sloshing around seeking higher yields and capital gains. How much of this $300 trillion can central banks buy before they destabilize currencies?"

U.S. on a Course to Spend More on Debt Than Defense -Wall Street Journal
"In the past decade, U.S. debt held by the public has risen to $15.9 trillion from $5.1 trillion, but financing all of that debt hasn't been a problem. Low inflation and strong global demand for safe U.S. Treasury bonds held the government's interest costs down. That's in the process of changing....In 2017, interest costs on federal debt of $263 billion accounted for 6.6% of all government spending and 1.4% of gross domestic product, well below averages of the previous 50 years. The Congressional Budget Office estimates interest spending will rise to $915 billion by 2028, or 13% of all outlays and 3.1% of gross domestic product....Debt as a share of gross domestic product is projected to climb over the next decade, from 78% at the end of this year - the highest it has been since the end of World War II - to 96.2% in 2028, according to CBO projections. At the same time, the Federal Reserve is in the process of gradually raising short-term interest rates."

Job help is US military veterans' top request after serving -Fox Business
"After leaving the military life, the transition into the civilian workforce can often be difficult for many veterans who don’t have the proper skills to get a good job. But one nonprofit aims to help the thousands of military veterans transitioning to succeed in the workforce. 'What we are really trying to do is empower the veterans to find a great civilian job,' said Hire Heroes CEO Christopher Plamp to FOX Business' Maria Bartiromo. 'There's 190,000 that transition every year and they really don't have the skills, they really don't know how to get into a great civilian job.' Plamp said employment Opens a New Window. Help is the No. 1 thing veterans ask for after getting out. And despite some assistance from corporate America, most aren't familiar with the employment process....'One of the main things is that spouse unemployment right now is three to four times the national average for somebody else who would the same education or the same skill level,' he said."

RealMoneyBlog - Free daily/weekly email


11.9.18 - Investors Unprepared For Next Downturn

Gold last traded at $1,208 an ounce. Silver at $14.14 an ounce.

NEWS SUMMARY: Precious metal prices fell Friday on profit-taking and firmer dollar. U.S. stocks dropped as losses in oil prices sparked fears of a global economic slowdown.

The End of a Supercycle -Gold Switzerland
"In a world based on fake paper and fake electronic money as well as fake asset values, the real significance of gold has got lost. With endless credit expansion and money printing, all asset prices have exploded and investors have made fake profits that seem real. But the imminent secular downturn of debt and asset markets as well as the world economy will reveal how unreal these profits were as 90% or more of all the paper wealth in the world will go up in smoke. So investors should now prepare for the biggest wealth destruction in history and also the biggest wealth transfer....As wealth preservation investors we are not really concerned that the market takes its time to reveal the real truth. We know it will come. So we can afford to wait patiently. But it now looks like our patience will soon be rewarded. The gold market correction bottomed between 2013 and 2015 depending on which currency you measure it in. Since then it has spent a long time gathering the energy for the next leg up in this long term bull market. Technically it now looks like that the waiting is finally over and the explosive phase of this market is about to start. If this analysis is correct, we will soon see a quick move to $1,350 and then straight on to above $1,650....Whether markets start a major secular bear market in the next few weeks or months, it is irrelevant. What is clear is that we are at the end of a supercycle of several hundred years. Once it turns, the down cycle is likely to last for decades and be devastating for the world."

panic 'Smart money' not buying stock bounce could mean a test of October lows -Marketwatch
"Stocks may have ripped higher Wednesday in a bout of post-midterm relief, but the 'smart money' doesn’t appear to be buying into the November bounce, noted one analyst, who argued that equities, as a result, could yet retest their October lows and that any sustained rally may be especially reliant on corporate share buybacks. In a Thursday note, analyst Brian Reynolds of Canaccord Genuity focused on the so-called smart index, which remains weak despite a stock market rebound that’s produced a 3.2% rise for the S&P 500 since the end of October and a 3.7% rally for the Dow Jones Industrial. Reynolds argued that the continued bearishness of investors despite the bounce in stock prices indicates that debt-fueled buybacks will be even more important in bringing stocks back up to trend than they have been following other corrections during the current bull market. And since many small-cap companies can’t access the credit market, large-cap companies are more likely to lead the way higher, he said."

How Worldpay Is Winning In The War On Cash -Forbes
"The Economic Times of India reported in August that Berkshire Hathaway was in talks to invest $286 million to $357 million in One97 Communications. That's the company behind India's largest mobile-payment platform. This is potentially the Oracle of Omaha's first direct investment in India. And it's a wake-up call for investors...There is a war on cash. Winners are emerging. One 97 Communications is the parent to Paytm, a high-flying Indian startup. It rose to prominence two years ago when the Indian government pulled 86% of its cash from circulation in an effort to thwart tax cheats. Digital wallets were the logical beneficiaries. You don’t need a degree in rocket science to see what is happening: Eliminating cash makes financial transactions less opaque. It makes them trackable by corporations and governments. Worldpay Inc. is at the center of this assault on cash. The Ohio company provides card-processing machines, integrated point-of-sale and virtual terminals, accounting integration software and ATM services."

For the latest developments in the ongoing war by governments worldwide upon your freedom, your privacy and your cash; request a FREE copy of our 2018 White Paper, THE SECRET WAR, PART II: Weapons of Cash Destruction.

The Average Investor Unprepared For the Next Market Downturn -Real Clear Markets
"The last month has been a particularly choppy one for markets, with the CBOE Volatility Index (VIX) spiking more than 80% during October. It’s apparent that the combination of rising interest rates, mounting trade tensions and early-stage recession fears are setting in. But what's more unsettling is how unprepared the average client is to navigate the next market downturn....The harsh reality is that the investible universe is radically different today than it was during the 2008 crisis. It’s increasingly difficult for investors to achieve true diversification in a world where asset classes and investment styles are highly correlated....This absence of a safety net means the destruction of capital may be permanent when a bear market wreaks havoc....Although today's euphoric environment has led many to forget the pain caused by the Great Recession, we must remember cycles have beginnings and ends. A truly modern portfolio should be built to navigate every step of that journey. Investors will need accessible alternative investments to help protect precious capital, generate income and smooth out returns over a full cycle."

RealMoneyBlog - Free daily/weekly email


11.8.18 - Will Fed Statement Heighten Volatility?

Gold last traded at $1,225 an ounce. Silver at $14.43 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Thursday on a flat dollar ahead of today's Fed statement. U.S. stocks retreated following big gains in the previous session as investors focused on the latest monetary policy decision from the Federal Reserve.

Volatility Heightens Focus on Fed Statement -Wall Street Journal
"Few people expect the central bank to raise its key policy rate above its current target of 2% to 2.25% when the Fed concludes its two-day meeting Thursday. There is also no press conference after the meeting, limiting officials' ability to communicate their outlook. Officials will, however, release a statement that analysts say could potentially tip in a dovish or a hawkish direction. A glancing reference to recent market volatility or tightening financial conditions could be interpreted as a sign that officials are taking that volatility seriously, and proceeding cautiously about raising interest rates should it continue. At the same time, a reference to rising wages or other forms of inflation pressure could send the opposite signal: that officials are more concerned about inflation than skittish markets and are prepared to raise rates even faster than investors are anticipating. Either move could send ripples through markets while many investors remain uncertain about the economic outlook....If Fed officials lean harder in a hawkish direction - suggesting they'll keep raising rates to the point where it curtails economic activity - investors can expect more volatility, said Priya Misra, head of global rates strategy TD Securities in New York."

star wars Bitcoin Will Burn the Planet Down. The Question: How Fast? -Wired
"Max Krause was thinking of buying some bitcoin, as one does. But Krause is an engineer - mostly he works on modeling greenhouse gas emissions from landfills - so his first step was to run the numbers....'I thought, man, this is a lot of energy,' Krause says. 'I thought, it can’t be true that people are using this much energy. But it is.'....Krause's paper tries to make the link between metaphorical bitcoin mining and actual, mining mining by comparing the energy it takes to get the equivalent of $1 worth of cryptocurrency and $1 worth of various valuable metals - gold, platinum, some rare-earths, and so on. The answer: It takes more energy to get a buck’s worth of bits. It was 17 megajoules for a dollar's worth of bitcoin but just 4 MJ for a dollar's worth of copper....Krause's numbers show that bitcoin produces a lot more CO2 than the other currencies, but also that a bitcoin mined in China emits four times the CO2 than a Canadian-grown bitcoin....Everyone knows cryptocurrencies are a planet-burner....'And if the government of China or the US decide bitcoin is a threat to civil society with its electricity usage, it's not going to survive,' says Joseph Bonneau, a cryptocurrency researcher at New York University....You should probably be asking if Krause started mining bitcoin. 'I did not,' he says. 'I was better off buying the coins and holding them than trying to build a rig.' In other words, it was the bad outcome: cryptocurrency not as a mechanism for government-free, secure commerce but merely as a speculative instrument."

So the truth is, Bitcoin is not even in the running to replace our present currency system, let alone Gold; the foundation of all sound money. That is exactly what we told our readers last January in our 2018 Real Money Perspectives newsletter, The Future of Money as a speculative fever temporarily pushed Bitcoin prices above $20,000 each!

How Gold Outshone Bitcoin In October -Constable/Forbes
"When investing in alternative assets gold remains the king. The yellow metal performed far better than the world's best-known cryptocurrency, Bitcoin, during October's market volatility. When investors buy alternative assets, they typically look for two things. First, they want to know how the asset will perform as a safe-haven asset during times of market volatility....While stocks fell, gold prices gained. Prices for the yellow metal started the month at $1,189 a troy ounce and were recently trading at $1,220, according to data from Bloomberg. Meanwhile, Bitcoin, which has been much heralded as a new alternative asset, lost value. The price of one Bitcoin started the month fetching $6,573 and was recently trading for $6,271. That's a drop of more than 4% in October....The second thing that investors usually want from an alternative asset is diversification. When one asset price zigs, the hope is that another asset price will zag. Gold performed that function admirably during October. While stocks slid, gold rallied...There was a zig for the zag."

Can Dems Reverse Trumponomics After Winning Back The House? -Investors
"As the election results show, the Senate will be Republican. The House will be Democratic....There will be no Trump-friendly economic legislation to emerge from the House. Trumponomics won't come to an end, but it will be hard to enlarge its scope....A Pelosi-led party, with leftists in key power posts, will try to stymie Trump's economic initiatives. A Tax Reform 2.0, making this year's tax cuts permanent? Forget about it. Build a wall? Might be tough. A hard line on illegal immigration? The House will do what it can to block any Trump initiatives. A Democratic House might try to roll back Trump's tariffs, too. They may even try to reverse some of Trump's other unquestionably successful growth-oriented policies....What would Democrats be halting? The last two quarters GDP growth has averaged roughly 3.8%. Unemployment is now at a 50-year low of 3.7%, while nearly 157 million people now are working. That's an all-time record. And unemployment for minorities and teenagers is at or near all-time low levels....Americans have voted for gridlocked government because, in their wisdom, they don't seem to want either party to have an upper hand. Fair enough. But it will be up to the Republican-led Senate to make the case that Trumponomics beats the increasingly far-left economics of the Democrats."

RealMoneyBlog - Free daily/weekly email


11.7.18 - East Trusts Gold, West 'Mindless Optimism'

Gold last traded at $1,231 an ounce. Silver at $14.64 an ounce.

NEWS SUMMARY: Precious metal prices inched higher Wednesday on dollar weakness. U.S. stocks cheered midterm election results.

East trusts physical gold while West prefers 'mindless optimism' -Claudio Grass/RT
"The latest data from the World Gold Council (WGC) shows that central banks in Eastern Europe and Asia significantly boosted their gold holdings. RT talked to Claudio Grass, an independent precious metal advisory based out in Switzerland to find out why....RT: For years, Russia, China, India as well as many Asian countries have been stockpiling gold. More recently, countries like Poland and Hungary have begun to increase national gold reserves. What's behind the move? Claudio Grass: Whoever buys physical precious metals, be it an institution, an individual or as we see now, central banks from different countries, largely have the same reasons for doing so: They all want to regain independence and sovereignty. This is achieved by decoupling from a financial system that is unsustainable, overstretched and founded on nothing but faith in government....RT: Are these countries bracing for a potential currency crisis? CG: Of course. It is impossible to create wealth out of nothing, and even though that is an eternal and universal truth, it hasn't stopped states from trying to do exactly that. Unfortunately, if history teaches anything, it is that we don't learn from it...We are sitting on a gigantic bubble in terms of illusionary financial 'wealth', at the end of a long-term debt cycle and the bill for the massive credit spending of the past decade is about to come in....I think complacency and overconfidence are the key markers of the western approach to the future at the moment...The same, arguably, applies when opting for paper gold over physical. Realism has lost over mindless optimism, placing the East at a significant advantage during the next economic crash....people who buy gold understand that it is their personal insurance when the illusion fades and the trust in the current institutions crumbles."

highway 'Welcome to gridlock': Stock traders cheer, dollar investors jeer US midterm results -Business Insider
"Global markets were broadly higher Wednesday, but reaction to news overnight that the Democratic Party had taken control of the US House of Representatives seemed to have little major impact on sentiment....'Welcome to gridlock,' Paul Donovan, the chief economist at UBS Wealth Management, said on Wednesday morning. 'Trump may now fall back on policy areas that do not require Congress, like trade.' 'As this outcome was widely anticipated, we see little immediate market impact,' UBS Wealth Management said in a note issued by its chief investment office....'Without common ground on areas to cut spending, the budget deficit is likely to remain higher than usual, keeping upward pressure on long-term government bond yields,' they said. The prospect of gridlock seems to have affected the US dollar, with the dollar index dropping by about 0.6%. 'The USD has edged gradually lower against many of its counterparts over the course of this week, with this related to expectations that the Democrats winning some influence could provide some legislative resistance towards Trump further pushing forward pro-America policies,' FXTM's Jameel Ahmad said in an email."

"Democratic Socialist" Alexandria Ocasio-Cortez Becomes Youngest Woman Elected To Congress -Zero Hedge
"While Democratic Congressional candidates in key battleground districts struggled to defeat a host of surprisingly resilient Republican incumbents, self-described 'Democratic socialist' Alexandria Ocasio-Cortez cruised to victory in New York's 14th Congressional district, which straddles parts of the Bronx and Queens, becoming - at the tender age of 29 - the youngest woman ever elected to Congress....Prior to becoming involved in politics, the 'girl from the Bronx' (who spent most of her childhood in a comfortable home in suburban Westchester County) and daughter of Puerto Rican parents had been working as a bartender and Bernie Sanders organizer in NYC after graduating from Boston University when she was plucked from obscurity by progressive groups like 'Our Revolution.'.... Alexandria, who was championed by the Democratic Socialists of America, an insurgent socialist organization, will now bring her inchoate policy agenda, which includes a 'jobs guarantee', free college tuition, medicare for all, abolishing ICE and 'housing as a human right', to Washington, where she will no doubt find a niche on the far-left of an increasingly progressive Democratic Party."

Record Number of Markets Now in the Red in Worst Year Since 1901 -Bloomberg
"2018 is going down as the worst year for markets ever, by at least one measure. A whopping 89 percent of assets have handed investors losses in U.S. dollar terms, more than any previous year going back more than a century. The metric comes courtesy of Deutsche Bank AG....The October stock rout has delivered a wake-up call to money managers searching for shelter this year. Swelling dollar-funding costs, equity volatility and fissures in the synchronized growth story are punishing assets across the globe. A month ago, U.S. stocks were one of just a handful of markets that had doled out a decent return in 2018 - before $2 trillion was wiped off their value in the space of a few weeks....European shares are in worse shape. The Stoxx Europe 600 Index has shed over 10 percent this year in dollar terms....Life is bleaker for multi-asset investors in real terms. By that metric, 2018 was already on track to deliver the lowest share of positive returns across 17 asset classes since 2008, according to Morgan Stanley data last month."

RealMoneyBlog - Free daily/weekly email


11.6.18 - Midterms: Do Financial Markets Care?

Gold last traded at $1,226 an ounce. Silver at $14.51 an ounce.

NEWS SUMMARY: Precious metal prices eased back Tuesday on profit-taking and a flat dollar. U.S. stocks rose as investors awaited the results of the midterm elections which may have implications for investors.

The Folding, Spindling & Mutilating of America's Money System -Craig R. Smith/Rediscovering Gold
"Gold is one of the few common values that has united mankind throughout the millennia, transcending race, religion and geography - a rarely noted fact but significant in light of today's growing cultural convergence and emerging global economy....The folding, spindling and mutilating of America's monetary system became legitimized in 1913, when the Federal Reserve was formed. Long ago bankers discovered a nasty little secret referred to as 'fractional-reserve banking' which is fueled by credit and debt creation out of thin air....As difficult as it is for honest, hard-working Americans to fathom, the lifeblood of the American political and economic system is legal plunder. The 19th-century economist Frederic Bastiat summed up the tendency of central governments to embrace economic plunder in this way: 'There are two ways to acquire the niceties of life: to produce them or to plunder them. When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time, a legal system that authorizes it and a moral code that glorifies it.'....Gold and silver coins represent true economic value because they have integrity by design and content."

voted Will we vote to destroy ourselves? - Ponte/WND
"Elections have consequences, said Barack Obama. He was right. Among the unexpected consequences of voting for him were eight years of economic stagnation, an almost-destroyed American Dream, and a 50-year setback in race relations caused by his relentless divide-and-conquer politics of polarization. These problems reversed in 2016 with the election of Donald Trump, who in less than two years has restored our economy to 4.2 percent growth, reduced unemployment for all groups to the lowest levels ever measured, and in the single month of October alone created an average salary increase of 3.1 percent. But polls show the leftist media and other Democratic comrades have waged such a one-sided campaign of hate against him that Republicans might lose one, or even both, Houses of Congress. If this happens, the Trump economic miracle could be stymied and destroyed. Millennials whipped into irrational frenzy against the President will be tricked into voting to ruin their own future prosperity. Democrats eager to reverse America’s economic success will become the Grinchocrats who steal Christmas."

Do financial markets care about a blue wave, red wall or gridlock? -Financial Times
"A blue wave that sweeps away Republicans from both the House and the Senate would no doubt impact financial markets, but when it comes to equity returns, the economic backdrop also matters. According to Nomura's George Goncalves, a blue wave is 'the biggest tail risk facing the markets'. With Democrats in control, the threat of impeachment proceedings or a future debt ceiling showdown rises substantially....The most 'market-friendly' scenario, says UBS's Justin Waring, is a red wall, whereby Republicans retain both chambers and set the stage for a Trump win in 2020....Beyond another fiscal boost, further deregulation and cuts to social security, Medicare and Medicaid could also come. These measures are likely to be a boon for the financial and industrial sectors, Waring says. At this point, markets have largely priced in the most probable outcome: Democrats nabbing the House and Republicans holding onto the Senate. Still, the ensuing political gridlock would likely stymie any sizeable legislative overhaul and sow the seeds for an altercation when it comes time to raise the debt ceiling, as was the case in 2011 and 2013. Whatever the outcome, history shows that around the midterms, stock markets tend to do well."

If Republicans Sweep The Midterms, Here Is What Happens Next -Zero Hedge
"The odds that the Republicans hold both chambers is around 30%, and the odds that the Democrats take both chambers is a piddling 10%. So, what are the implications for policy and markets if Republicans hold the House and expand their majority in the Senate? It's a scenario that ING is calling 'Trump Unbound'...In short, expect Trump to 'double down' on his 'America First' policies, including more hard-line immigration and trade policies, more tax cuts and expanded fiscal spending....If Republicans hold on to both chambers, Trump will take all the credit and he would deserve it...He still would have both houses of Congress, but more than that, would say his unorthodox approach worked. He and his advisers will feel ever freer to 'let Trump be Trump.' Democratic despair could not be overstated: Why can’t we stop this guy?....If the Republicans win despite the best efforts of grassroots Democrats, expect an explosion of political unrest as leftists around the country take to the streets in protest - potentially triggering a wave of political violence."

RealMoneyBlog - Free daily/weekly email


11.5.18 - Epic Downturn: Brace for 40% Market Plunge

Gold last traded at $1,232 an ounce. Silver at $14.66 an ounce.

NEWS SUMMARY: Precious metal prices steadied Monday ahead of midterm elections. U.S. stocks traded mixed on political angst while Apple and Amazon led a broad decline in tech-related shares.

Both Parties Brace for Midterm Surprises -Bloomberg
"The most expensive midterm campaign in U.S. history raced to a finish ahead of Tuesday’s election, as both sides braced for a possible split decision that would hand the House to Democrats and leave Republicans holding onto or expanding their Senate majority. Partisans were preparing for the unexpected, though, two years after Donald Trump stunned the nation with his surprise win. As candidates, surrogates, outside groups and the two parties frantically worked to turn out their voters, strategists for each party agreed the outcome will be determined by the composition of an electorate that’s showing signs of being larger than normal for a midterm year. The verdict could dramatically alter the second half of Trump’s first term. If they win at least one chamber, Democrats have pledged to stifle the president’s agenda and start investigations into his finances, administration, and Russia’s meddling in the 2016 election....A CBS poll released on Sunday projected that Democrats may win 225 seats, more than enough for a majority, but the margin of error of plus or minus 13 seats showed the outcome’s far from set....Much of the national focus has been on the fight for Congress, but 36 states will also elect governors on Tuesday, including high-profile contests in Florida and Georgia."

wall street plane Epic downturn is here, brace for 40% market plunge -Stockman/CNBC
"David Stockman warns a 40 percent stock market plunge is closing in on Wall Street. Stockman, who served as President Reagan's Office of Management and Budget director, has long warned of a deep downturn that would shake Wall Street's most bullish investors. He believes the early rumblings of that epic downturn are finally here....'No one has outlawed recessions. We're within a year or two of one,' he said Thursday on CNBC's 'Futures Now.' He added that: 'fair value of the S&P going into the next recession is well below 2000, 1500 - way below where we are today.' 'If you're a rational investor, you need only two words in your vocabulary: Trump and sell,' said Stockman, in a reference to President Donald Trump. 'He's playing with fire at the very top of an aging expansion.' According to Stockman, Trump's efforts to get the Federal Reserve to put the brakes on hiking interest rates from historical lows is misdirected. 'He's attacking the Fed for going too quick when it's been dithering for eight years. The funds rate at 2.13 percent is still below inflation,' he said. Stockman cited the trade war as another major reason why investors should brace for a prolonged sell-off."

Is it legal for banks to refuse cash? -Crudele/New York Post
"Dear John: Could you please tell me why it’s legal for Citibank to prevent people from using cash to pay their credit card bills at the tellers’ windows? And why no one seems to have noticed or cares about it? C.T. Dear C.T. Citi told credit card holders earlier this year that its branches would no longer accept cash payments on credit cards. You can still make cash payments up to $3,000 per account per month at the bank’s automatic teller machines....Like other banks, Citi is changing with the times. More and more people are doing banking online. It says customers prefer this and that it’s a way to make the branches more efficient. I suspect it’s also a way to eliminate some teller jobs and force people like you to adopt online banking. There is, of course, a simple solution to your problem: Do your business with another bank. If enough people change banks I’m sure Citi will decide the change was ill advised."

The Cryptocosm: How Blockchain Will Transform Your World -Benko/Townhall
"Blockchain technology has been the talk of the tech world for the last several years. That said, it is also something of a riddle, wrapped in a mystery, inside an enigma....George Gilder, in the most important recent book on blockchain, is here to say it. He not only dazzles but demystifies the blockchain, making vivid exactly how it is going to transform the internet and our lives....George Gilder has unequivocally established his bona fides as an economic and technology guru. He now extends his hitting streak with a book about what he calls the Cryptocosm: 'Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy.'....What really makes Life After Google invaluable is how Gilder, clearly and definitively, shows 'how' blockchain is transforming the world....Google makes billions of dollars in profits a year by advertising to you (and me!). But what if Google had to - by the power of competition, not regulation - share a big chunk of that revenue with us? Gilder introduces us to Brendon Eich (former Master of Mozilla) who created the Brave Browser. This keeps your web searches from being tracked by browsers such as Chrome, Safari, or Firefox. And Eich has created a blockchain called Basic Attention Tokens (BATs), which will allow you to be paid for your attention, meaning for seeing ads. Don’t quit your day job yet but… BATs will make users a partner rather a product of companies such as Google."

RealMoneyBlog - Free daily/weekly email


11.2.18 - Physical Gold is Back in Favor

Gold last traded at $1,233 an ounce. Silver at $14.75 an ounce.

NEWS SUMMARY: Precious metal prices steadied Friday despite a stronger dollar. U.S. stocks fell on China trade talk disappointment despite upbeat jobs data.

Physical Gold Back in Favor -Bonner And Partners
"Bill Bonner’s advice today is to buy gold. Somebody must be listening…Demand for physical gold far outweighed demand for gold exchange-traded funds (ETFs) this past quarter…This data comes from the World Gold Council's quarterly report on gold demand trends...Total gold demand during the third quarter was 964.3 tons - equating to $41.6 billion at today's price. And most of that demand was for jewelry and physical bars and coins....This is the first time we've seen quarterly outflows from gold ETFs since Q4 2016… And North America accounted for 73% of those outflows as investors focused on rising equities. The big takeaway here is that falling demand for gold-backed ETFs does not necessarily mean that gold is falling out of favor. Demand for physical gold far exceeds demand for gold ETFs. And because you largely can't sell jewelry, gold bars, and gold coins with the click of a button, investors who buy these assets tend to hoard them. As Bill outlined, that might turn out to be a wise decision."

debt clock Time to Worry -James Grant/Weekly Standard
"America's deteriorating public credit is the cold-button issue of the 2018 midterms. With rare bipartisanship, Democrats and Republicans compete to pretend that the country isn't going broke. In 1992, the third-party presidential candidate Ross Perot likened the widening gap between federal receipts and federal spending to 'the crazy aunt tucked away in the room upstairs nobody talks about.' The old gal's dottier than ever. It took the United States 193 years to accumulate its first trillion dollars of federal debt - the gross debt, as it's called. We will add that much in the current fiscal year alone. All told, the government owes $21.5 trillion...that works out to $65,885 for each American. The remote political cause of this predicament is the ideology of statism. In Washington, this takes the form of tax and tax, spend and spend, elect and elect; on Wall Street, it's found in too-big-to-fail, a virtually socialized mortgage market, and an overreaching, manipulative central bank. The remote monetary cause of our troubles is the closing of the gold-standard era in 1971, or what little remained of it by then. It was the breakdown of the fixed monetary order that opened the floodgates. From Alexander Hamilton to Richard Nixon, the dollar was an IOU, a promise to pay gold or silver at a fixed rate. It subsequently became a thing unto itself, an IOU nothing....Long-term solutions to the problem exist...We could - arguably, we must - replace the Ph.D. standard with a 21st-century variant on the classical gold standard...We would continue to pay with our plastic, and our phones, but the money on which we draw would finally be convertible into grams of that tangible, ductile, eternal precious metal." Full story

IRS increases retirement contribution limits for 2019 -Fox Business
"For anyone saving for retirement, you can now sock away even more cash. The IRS has increased the contribution limits for various retirement accounts for 2019. New contribution limits: Contribution limit for employees who participate in a 401(k), 403(b) and most 457 plans, as well as the federal government's Thrift Savings Plan, is increased from $18,500 to $19,000. The limit on annual contributions to an IRA, which hadn't increased since 2013, were raised to $6,000 from $5,500. Catch-up contribution limit, which is a higher threshold for employees 50 years or older using these accounts, remains unchanged at $6,000. The changes were among several inflation adjustments announced by the IRS Thursday....The changes come at a crucial time. As FOX Business recently reported, many Americans are not prepared for retirement. In fact, nearly half of Americans (48 percent) don’t think their retirement savings will ever reach $1 million, according to a recent study by Fidelity."

Building Bridges Across the Generational Divide -Freedman/Wall Street Journal
"We are careening toward a future with a lot more older people, and for a country that's always thought of itself as young, it comes as a shock to the system. Next year, for the first time ever, there will be more Americans over 60 than under 18, a shift that will become even more pronounced in the coming decades. With that transformation to a more-old-than-young society comes the seeming prospect of scarcity, conflict and isolation. Many see a looming zero-sum fight between 'kids and canes,' competing for diminishing resources in a society split along generational lines. Without discounting these challenges, I believe there is reason for optimism and the possibility of a far better outcome - one that could help us to avoid conflict and solve problems such as child care and loneliness, while also generating a good deal of personal happiness along the way...The fact is, for all the hand-wringing about the graying of America, the needs and assets of the generations fit together like pieces of a jigsaw puzzle. Just ask any grandparent. There is significant evidence from evolutionary anthropology and developmental psychology that old and young are built for each other. The old, as they move into the latter phases of life, are driven by a deep desire to be needed by the next generation and to nurture it; the young have a need to be nurtured. It’s a complementary relationship that goes back to the beginning of human history. The two loneliest groups in the country, according to a 2018 survey, are younger people and older people, in that order....Of all the things that divide us, the gap between old and young is arguably the most bridgeable. Connecting across generations is not only pragmatic, it's an essential part of the human experience and a key to the cycle of life. After all, the young will soon be the old - likely faster than they ever imagined." Full story

RealMoneyBlog - Free daily/weekly email


11.1.18 - More Stock Market Cheats Are Getting Caught

Gold last traded at $1,238 an ounce. Silver at $14.77 an ounce.

NEWS SUMMARY: Precious metal prices rose sharply Thursday on bargain-hunting and dollar weakness. U.S. stocks rose following comments from President Donald Trump which indicated potential progress in U.S.-China trade relations.

October’s Market Rout Leaves Investors With No Place to Hide -Wall Street Journal
"A brutal October selloff across stocks and bonds has tested investors' resolve and the durability of the more than nine-year-old bull market....Stocks around the world lost about $5 trillion in value, according to S&P Dow Jones Indices, as shares in Europe and Asia also tumbled. The tumult left the Dow Jones Industrial Average and S&P 500 clinging to slim gains for the year as a whole. The indexes finished the month down 5.1% and 6.9%, respectively. It was the worst October for the S&P 500 since 2008. Adding to the stock market's anxieties has been a rare simultaneous drop in bond prices that has pushed yields near their highest levels in years. The dual breakdown in stock and bond prices has upended investors' traditional safety tool kit of buying Treasurys during periods of volatility, leaving many with losses....'There's no real place where investors can hide,' Mr. Paolini said. 'This is one of the worst years in a long time for diversification.' A laundry list of problems sent stocks reeling in October, erasing the hefty gains major indexes notched over the summer. Concerns that the U.S. economy is on the verge of overheating sent bond yields up, inducing the stock market’s first bout of volatility earlier this month as investors were forced to re-evaluate the rich valuations in some pockets of the market....'The market is convinced we're at the end of the cycle,' said Steve Chiavarone, who runs Federated Investments’ global allocation fund....'This isn’t going to end tomorrow. If an investor can stomach another 5% to 10% drawdown, hang tight,' said Liz Young, a senior investment strategist at BNY Mellon Investment Management."

chart Does This Bounce Mean The Sell-Off Is Over? -Zero Hedge
"The Dow was up 241 points yesterday and the Bubble Heads already think it's 'back to the races again.' I'm still cautioning 'not so fast!,' however. Nothing has changed technically since last week's major technical breakdown that caused the bellwether S&P 500 to close below a very important uptrend line that started in early-2016. The 'Godfather' of chart analysis Ralph Acampora feels the same way as me and said that the 'damage done to the stock market is much, much worse' than anyone is talking about. According to the chart, the S&P 500 is still below its uptrend line, which means that the breakdown is still intact...As I've been saying, the S&P 500 is likely to continue testing its 2,550 to 2,600 support zone before its able to stage a decent bounce. If the index closes below this zone, it would likely signal further declines ahead. Despite the bounce of the past two days, the Nasdaq Composite index is also below its uptrend line that it broke last week, which means that the breakdown is still intact....As I explained yesterday, I am watching if a bearish head and shoulders pattern is forming in the S&P 500 and other major U.S. stock indices....What this analysis clearly suggests is an environment of mounting risks in the markets which our entire portfolio management team at Real Investment Advice and Clarity Financial have been keenly focused on."

Gold rallies as dollar retreats from multi-month highs -Reuters
"Gold rose more than 1 percent on Thursday, rebounding from a three-week low touched in the previous session, and spurred by the dollar's retreat from multi-month highs....The dollar index, which measures the U.S. unit against a basket of six major currencies, fell 0.7 percent, dropping from a 16-month high hit in the previous session on the back of continued U.S. economic strength....'$1,250 gold price will be the level to watch for, should the dollar weaken further or equities disappoint,' Commerzbank analyst Eugen Weinberg said. Global stocks started the new month on firmer ground after a brutal October, while sterling rallied on reports that Britain and the European Union are close to a post-Brexit deal on financial services. Attention is turning to the U.S. congressional elections on Nov. 6, which will determine whether the Republican or Democratic party controls the U.S. Congress, with some predicting increased market volatility on the outcome."

Market Cheats Getting Caught in Record Numbers -Wall Street Journal
"Federal regulators have ramped up their pursuit of traders who use a bluffing tactic known as spoofing to manipulate market prices, enforcement officials said, leading to a record number of manipulation cases. As part of the push, the Commodity Futures Trading Commission earlier this year quietly began receiving daily sets of market data from the world's largest futures exchange, CME Group Inc. CME handles around 85% of total U.S. futures-markets trading by volume. Regulators for the first time now have access to daily trading data with a one-day delay, giving them a much broader window into trading activity - and possible manipulation. Previously, the CFTC largely relied on CME staff and whistleblowers to spot spoofing....'Policing the market for disruptive trading practices continues to be a huge part of our regulatory investment and effort,' Thomas LaSala, CME’s chief regulatory officer, said in an email."

RealMoneyBlog - Free daily/weekly email


Previous Months

2018

October
September
August
July
June
May
April
March
February
January

2017

December
November
October
September
August
July
June
May
April
March
February
January

2016

December
October
September
August
July
June
May
April
March
February
January

2015

December
November
October
September
August
July
June
May
April
March
February
January

2014

December
November
October
September
August
July
June
May
April
March
February
January

2013

December
November
October

Follow Us

Share Page

Weekly Charts

Current Spot Prices

Gold$1327.63
Silver$15.92
Platinum$843.50

Special Offers

 
  • About Swiss America
  • The moment you contact Swiss America, our team of trained professionals stand ready to serve you…
 
© 2019 Swiss America Trading Corp. All Rights Reserved.   |   Privacy Policy   |   Site Map   |   Contact Us   |   Mobile Version
SWISS AMERICA and Block Logo are registered trademarks of Swiss America Trading Corp.