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3.25.19 - Fed's "Inadvertent Sense Of Panic"
Gold last traded at $1,321 an ounce. Silver at $15.54 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying and a flat dollar. U.S. stocks struggled as worries over the global economy overshadowed news that the special counsel found no collusion with Russia on the part of President Donald Trump.
Gold rises as U.S. recession fears boost safer assets -Reuters
"Gold prices rose on Monday as investors' appetite for riskier assets faded on concerns about a potential U.S. recession and decelerating global growth, increasing appeal for the bullion alongside yen and bonds. The metal last week posted its third consecutive weekly gain and rose 1 percent, the most since the week ended Feb. 1. 'Market is in a risk aversion mode. It seems that the data from Friday night, of U.S. and Europe, didn't come as expected,' said Michael McCarthy, chief market strategist, CMC Markets. Data on Friday showed that U.S. manufacturing activity unexpectedly cooled in March and businesses across the euro zone performed much worse than expected this month, fanning concerns on global growth. 'If data continues to be as weak as forecast then there is very good chance we could see significant higher gold prices,' McCarthy said, adding that the inversion of yield is a sign of concern. 'Volatility fueled by uncertainty and with plenty of Fed speakers expected to reinforce the dovish rhetoric from the central bank, the U.S. dollar will be limited on the upside.'"
Next: Trump's Promise on the Fed? -New York Sun
"President Trump's plan to nominate Stephen Moore to a governorship of the Federal Reserve could come to be seen to be as important as the justices he's named to the Supreme Court...During the 2016 campaign, though, Mr. Trump made an issue of monetary policy, and this is the first substantive signal we've had that he might redeem that pledge. Few issues have so riveted these columns as the monetary problem - how to work our way back from the wilderness of fiat money, meaning currency unmoored to gold or silver. How can we return to a system more in line with what the Founding Fathers of America intended and signaled in the Constitution and in statute?....What we like about Mr. Moore is that he is prepared to ask basic, even radical questions about our monetary system, such as whether we need the Federal Reserve in the first place. He posed that question in a Wall Street Journal interview, in which he favored a monetary rule and said: 'I think we should have a discussion in this country about whether we need a Fed.'....Mr. Greenspan called the question 'very interesting' in an era when central banks were losing the power to affect long-term rates. The ex-chairman then suggested that some mechanism has got to be in place - a gold standard, he offered, or a currency board - because otherwise, 'all of history suggests' that 'inflation will take hold.'....Mr. Greenspan then pointed out that 'we did very well in the 1870 to 1914 period with an international gold standard.' And, without the Federal Reserve. Could Mr. Moore pursue such questions from the Fed’s board? We'd like to think so."
Trader Warns Yield Curve Inversion Confirms Fed's "Inadvertent Transmission Of A Sense Of Panic" -Zero Hedge
"It isn't all that meaningful to debate whether the inverted yield curve in the U.S. that occurred Friday will lead to a recession a year from now...The point is, it was a clear sign that investors perceive that there is trouble lurking now. And you need to trade accordingly. It is a mistake to watch how the shape of the Treasury curve evolves and start parsing the U.S. data in isolation. Because if you do that, it is in fact reasonable to conclude that the market has probably overreacted. As has the Fed. If not in deed, in how they conveyed their message. They inadvertently transmitted a sense of panic. But it just isn't possible to escape the fact that how the rest of the world is faring directly affects the U.S. economy and asset prices....As far as equities are concerned, the S&P 500 traded conveniently down to and settled at its first major technical level at 2800. It was instructive that I heard more people discuss how much further it can fall and still be 'corrective.'"
Congress’s Mean Girls Are Trump’s Offspring -Noonan/Wall Street Journal
"A basic fact of this presidential cycle: When Donald Trump walked through the door, he burst off the jambs and made the opening bigger and more jagged, forever. Now almost anyone can walk through. A second fact is that the Democratic Party has been tugged dramatically to the left....In 2016 voters who wanted major change, who wanted greater economic equality or more-expansive programs, knew that if they hired Bernie Sanders he'd come in and push things in the direction they desired....Now that's changed...If a hard-line lefty were chosen as the nominee next year, extreme things would seem quite possible. The new lefties are a minority in the House but have become the face of the party, its brand. Rep. Alexandria Ocasio-Cortez is more famous than candidates for president. The left has the energy, the excitement, the media pull....Rep. Ilhan Omar of Minnesota surely meant to oppose U.S. policy toward Israel but somehow couldn’t quite manage to do it without being obviously anti-Semitic....Ms. Ocasio-Cortez is quick—quicker—to aggression. Her default position, behind the smiles and hugs and warmth and dancing, is the pointed, accusatory finger....I think we all know where this started, the political brutishness, the ignoring of traditions and norms. Donald Trump is both origin and rationale. The mean girls of Congress have learned at his knee. They have taken their tactics from him...They have a taste for it, and a talent. They are good at being the thing they supposedly despise. They are not the antidote...but an iteration of it."
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3.22.19 - Yield Curve Inversion Predicts Next Recession
Gold last traded at $1,313 an ounce. Silver at $15.42 an ounce.
NEWS SUMMARY: Precious metal prices rose Friday on safe-haven buying despite a firmer dollar. U.S. stocks fell sharply as jitters over the global economy were sparked by dreadful manufacturing data out of Europe and the Fed's cautious outlook on the U.S. economy.
Stocks, Bond Yields Fall Amid Anxiety Over World Economy -Wall Street Journal
"Global stocks and bond yields slid Friday as weak manufacturing data deepened investors’ anxiety about the health of the world economy. Signs that momentum continues to cool across major economies have challenged investors, raising questions about whether a soft patch of data could mark the start of a more persistent downturn. A report Friday showed factory output in the eurozone fell in March at the fastest pace in six years, while a gauge of U.S. manufacturing activity slipped to its lowest level in nearly two years....Meanwhile, stocks across the world retreated, with the S&P 500 losing 1.2% and benchmark indexes in France, the U.K. and Germany sliding more than 1% apiece. 'The global economy has clearly become an issue, with big headwinds there,' said Tim Anderson, managing director at broker-dealer TJM Investments....'The market is polarized: Half thinks we are in a bull market recovery and the other half thinks we are in a bear market rally,' said Eoin Murray, head of investment at asset manager Hermes....In another sign of pessimism, traders doubled down on bets that the Fed will go as far as lowering rates soon - something they haven’t done since the midst of the financial crisis in 2008."
Yield Curve Inverts For The First Time Since 2007: Recession Countdown Begins -Zero Hedge
"The most prescient recession indicator the market just inverted for the first time since 2007. Don't believe us? Larry Kudlow last summer explained the reason investors focus on the 3-month to 10-year spread is that it has preceded every recession in the last 50 years. On six occasions over the past 50 years when the three-month yield exceeded that of the 10-year, economic recession invariably followed, commencing an average of 311 days after the initial signal. And here is Bloomberg chart showing how the yield curve inverted in 1989, in 2000 and in 2006, with recessions prompting starting in 1990, 2001 and 2008. This time won't be different."
Gold rises as growth concerns dent risk appetite -CNBC
"Gold edged higher on Friday as weak economic data from the euro zone exacerbated fears of a global slowdown, weighing on risk sentiment and putting bullion on track for its best week in nearly two months. 'There is some safe demand that has surfaced,' said Jim Wyckoff, senior analyst at Kitco Metals. 'The U.S. Federal Reserve suggested U.S. economic growth was slowing, which has spilled over into notions that the rest of the world economy might be experiencing slower growth. That was highlighted by the PMI data out of the European Union, auguring for some trepidation in the world’s stock markets.'....'Price action in gold continues to lend strength to our view that expected data deterioration will help spark a gold rally as interest rates continue to fall in the context of a slowing global economy,' analysts at TD Securities wrote in a note."
How Socialism Destroyed Venezuela -Economics21.org
"Many in the media have blamed Venezuela’s worsening humanitarian crisis on corruption, mismanagement, falling oil prices, or U.S sanctions - anything but the rise of socialism in what was once the wealthiest country in South America. Yet corruption and mismanagement were the direct result of increased government control of the economy - socialism - and in reality, lower oil prices and U.S. sanctions have little to do with the crisis. Instead, the mass starvation and exodus faced by Venezuelans are the natural consequence of the socialist policies implemented by dictators Hugo Chavez and Nicolas Maduro. There are three main policies implemented by Chavez since 1999 that produced the current crisis: Widespread nationalization of private industry, currency and price controls, and the fiscally irresponsible expansion of welfare programs....Perhaps the most harmful part of the Venezuelan socialist project is the part that the international media and leftist figures used to praise most frequently: welfare programs. The socialist regime created social 'missions' aimed at tackling poverty, illiteracy, healthcare, and more. But despite enjoying higher government oil revenues due to a tenfold rise in oil prices from $10 a barrel in 1999 to more than $100 in 2008, the regime financed a growing deficit by printing more currency. Expansive welfare programs and massive public-works projects provided ever-growing opportunities for still greater corruption. Printing money to pay for endless state programs unsurprisingly led to high rates of inflation. Socialism run rampant - not cronyism, corruption, falling oil prices, or U.S. sanctions - caused the crisis in Venezuela."
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3.21.19 - Social Security Reform, Without Tax Hikes
Gold last traded at $1,307 an ounce. Silver at $15.43 an ounce.
NEWS SUMMARY: Precious metal prices eased back Thursday amid Fed dovishness and dollar volatility. U.S. stocks rose as Apple and Micron surged to lead the tech sector higher.
Gold hits 3-week high as Fed defers rate hikes -Reuters
"Gold climbed to a three-week peak on Thursday as the U.S. Federal Reserve ruled out chances of any interest rate hike this year, while a surprise cut in U.S. growth forecast added to concerns on global economic slowdown....Having downgraded the U.S. growth, unemployment and inflation forecasts, the Fed brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year. 'The Fed was even more dovish than expected and that added to concerns that U.S. growth, and therefore global growth, is hitting a patch of weakness,' said Kyle Rodda, a market analyst with IG Markets in Melbourne. 'U.S. dollar is well off its highs from yesterday and the Treasury yields are coming down which means going into bonds or assets of that nature yields less and gold becomes more attractive.'"
A Central Banking Domino Effect Is in Motion -Wall Street Journal
"Abrupt changes in the policies of the world’s largest central banks have rippled through smaller economies, leaving them with the prospect of low and even negative interest rates for years to come. The danger is that these easy-money policies could fuel destabilizing bubbles in real estate and other asset markets. They may also leave banks with little ammunition to respond to the next economic downturn....With financial markets so interconnected, problems in small countries can quickly spread to larger ones. On Wednesday, the Federal Reserve left its key policy rate in a range between 2.25% and 2.5% and indicated that it is unlikely to raise rates this year. In late 2018, officials had signaled they expected between one and three increases this year. Two weeks ago, the European Central Bank went further, saying it would launch new stimulus to support the eurozone economy via cheap loans for banks. It also said it expected to keep its key interest rate at minus 0.4% at least through 2019, a longer horizon than before....It isn’t just Europe that is affected by the actions of big central banks. On Thursday, Bank of Korea Gov. Lee Ju-yeol signaled he would maintain the current pause in policy tightening, saying the Fed’s 'more-accommodative-than-markets-expected' statement would allow his bank 'more leeway' in taking action."
Social Security reform is long overdue, but massive tax hikes are not the answer -Fox Business
"House Democrats are considering pushing a massive tax hike on American workers, regardless of their income level, as part of a bill to expand Social Security. There’s no question that Social Security faces significant funding issues, but there are better ways to reform the program than increasing payroll taxes on every employer and worker. According to the Social Security and Medicare Trustees, Social Security is facing a $13.2 trillion cash shortfall between 2034 and 2092. Medicare is in even worse financial shape facing a $37.7 trillion funding shortfall over the next 75 years, but the issues with Medicare are a topic for another time....Back in December 2016, then-Rep. Sam Johnson, R-Texas, introduced the Social Security Reform Act. The Social Security Reform Act would have made the program solvent, creating a $600 billion surplus while still expanding benefits, phasing out the tax on benefits, and providing an increased cost-of-living adjustment (COLA) for lower-income individuals...The Social Security Reform Act would have simply increased the retirement age to 69 from 67 and means-tested benefits for survivors, among other tweaks, to ensure the viability of the program. Social Security has to be reformed if the program is to remain viable, but House Democrats’ plan falls far short of a serious proposal because the so-called 'solution' is more of the same from the far-left: tax increases."
Americans Are Still Confused About What Socialism Actually Is -Reason
"It is a good idea for people living in a self-governing democracy to have discussions about basic political philosophy even if the debates can become overheated in a world dominated by social media. As King Solomon wrote in Ecclesiastes, 'What has been will be again, what has been done will be done again; there is nothing new under the sun.' The same ideas and temptations are always with us, so reprising musty old debates is healthy....Socialistic governments of all types obliterate the incentive to work and invest, so they end up just taking things away....The Democratic Socialists of America website, which argues that 'working people should run both the economy and society democratically to meet human needs.' You don't think that idea - people apparently should vote on how other people's businesses are managed - could lead to draconian results?....Western democracies have passed socialistic programs such as Social Security and Medicare - and that hasn't led to gulags. True enough. Wealthy, capitalistic nations have the excess wealth to afford costly entitlements. But look at the resulting debt levels. These Ponzi schemes are unsustainable and do an iffy job providing comfortable retirements and health care for the masses. They embody many flaws of socialism, even if they have not led to disaster. That could change because Democratic socialists want to expand them much further. Polls say large percentages of Americans have a vaguely warm view about socialism. The best response is to highlight its failures in its many forms, especially as some politicians use the term in a positive way. Let the debate continue."
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3.20.19 - Ad Rigging: Google Fined $1.7 Billion
Gold last traded at $1,314 an ounce. Silver at $15.51 an ounce.
NEWS SUMMARY: Precious metal prices eased back slightly Wednesday ahead of Fed statement. U.S. stocks fell after President Trump said U.S. tariffs on Chinese goods would likely not end soon.
Buy Gold, Sell Stocks Is the 'Trade of Century' -Bloomberg
"One of last year’s best-performing hedge funds says the 'trade of the century' is to buy gold and sell stocks as risk assets are due for another meltdown. It’s only a matter of time until the bearish bet pays off big, according to Crescat Capital LLC...The investment company says it’s ready to capitalize on an end of the economic cycle as indicators warn that a recession is imminent in the coming quarters. The consensus is pointing to a recession in 2020 or 2021, Tavi Costa, a global macro analyst at Crescat, said by phone. 'We think it’s a lot closer than that and we have a number of macro timing indicators that we look at.' Among the warning signs, Crescat cites corporate insiders who are currently selling stocks hand over fist - indicating a potential stock bubble burst. In early 2017, those investors heavily sold shares while the S&P 500 continued climbing. That happened again in 2018. With the smart money selling once again, 'the third time should be the charm for the stubborn U.S. market,' Crescat wrote to clients over the weekend....'Soon the buy-the-dip mentality and bull-market greed will turn to fear. Selling will beget more selling. That’s how bear markets work,' Crescat wrote. 'There is so much more ahead to profit from the short side of the market. The bear-market rally is running out of steam!'"
A growing list of companies from FedEx to BMW are warning about the world economy -CNBC
"With an ongoing trade war between the U.S. and China, Brexit uncertainty weighing on Europe and the U.K., and new weakness out of Japan, a group of business leaders say it’s harder than ever to rake in profits. This week, top executives at FedEx, BMW, UBS and others described bleak global business conditions while discussing quarterly results. Fitch Ratings also 'aggressively' cut its forecast for the year. The head of UBS was the latest to blame the world’s backdrop for weaker-than-expected results. Chief executive Sergio Ermotti told a conference in London Wednesday that it 'one of the worst first-quarter environments in recent history,' Reuters reported. 'Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue,' FedEx Corp. Chief Financial Officer Alan B. Graf, Jr. said in the firm’s quarterly earnings report....Samsung also joined in on Wednesday. 'We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts,' Samsung Co-Chief Executive Kinam Kim said."
A Recipe for Massive Government Spending -Rickards/Daily Reckoning
"Leading Democratic presidential hopefuls Elizabeth Warren, Kamala Harris and Bernie Sanders have expressed desires to increase income taxes to 70% or even 90% on the rich, impose 'wealth taxes' on their net worth and impose estate taxes that are equally onerous when they die....Don’t assume you’re exempt just because your annual income is lower. Those tax thresholds are on wealth, not income, and could include stocks, bonds, business equity and intangible business equity for doctors, dentists and lawyers....The leading Democratic candidates for president and numerous members of Congress have come out in favor of Medicare for All, free child care, fee tuition, a guaranteed basic income even for those unwilling to work and a Green New Deal that will require all Americans to give up their cars, stop flying in planes and rebuild most commercial buildings and residences from the ground up to use renewable energy sources only. The costs of these programs are estimated at $75–95 trillion over the next 10 years. To put those costs in perspective, $20 trillion represents the entire U.S. GDP and $22 trillion is the national debt....The big spenders have a simple answer to the complaint that we can’t afford it. Their answer is, 'Yes, we can!' That’s because of a new school of thought called Modern Monetary Theory, or MMT. This theory says that the U.S. can spend as much as it wants and run the deficit as high as we want because the Fed can monetize any Treasury debt by printing money and holding the debt on its balance sheet until maturity, at which time it can be rolled over with new debt....There are serious problems with MMT (not the ones Jay Powell and mainstream voices point to). But very few analysts can really see the flaws."
Google Fined $1.7 Billion in EU for Restricting Rivals’ Ads -Wall Street Journal
"Alphabet’s Google was fined $1.7 billion by the European Union for limiting how some websites could display ads sold by its rivals, the tech giant’s third antitrust penalty from the bloc since 2017. Wednesday’s decision, which is smaller than the total of $7.67 billion levied against Google in two previous decisions, is the last among formal charges the EU’s antitrust regulator has so far filed against the tech giant, drawing to a close at least one part of the nearly decadelong investigation into the company....'Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anticompetitive contractual restrictions on third-party websites,' said Margrethe Vestager, the EU’s antitrust chief. 'This is illegal under EU antitrust rules,' she added. Even though Google has stopped this behavior in 2016, Ms. Vestager said that 'at a minimum our decision requires Google to put a stop to those restrictions or any other restrictions with an equivalent effect and not to reinstate them.'"
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3.19.19 - Investing Amid Schizophrenic Politics
Gold last traded at $1,306 an ounce. Silver at $15.37 an ounce.
NEWS SUMMARY: Precious metals prices rose Tuesday on safe-haven buying and a weaker dollar. U.S. stocks gave back most of their gains after a report stated China may be walking back some trade offers.
Gold prices edge up on tepid dollar -Reuters
"Gold prices rose for a third consecutive session on Tuesday as the dollar weakened on expectations that the U.S. Federal Reserve will maintain a dovish tone at its monetary policy meeting this week. The dollar, which eased marginally against major currencies, traded close to a two-week low posted in the previous session. Traders currently expect there will be no U.S. rate hikes this year, and are even building in bets for a rate cut in 2020. Federal Reserve Chairman Jerome Powell will speak at a news conference on Wednesday....SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose about 1.1 percent on Monday, its biggest one-day percentage gain since Jan. 18."
How to invest when politics goes schizophrenic -Ponte/WND
"For most of America’s history, we have been governed by two political parties of one mind. Both Republicans and Democrats were mostly practical, centrist and pro-capitalist. Even liberals eager to tax business were careful not to kill the goose that laid the golden eggs of jobs and prosperity. But with the 2018 election, this secure political environment for investors has changed. In our newly schizoid politics and economics, one of America’s two parties is now largely controlled by self-described socialists who hate the free market and want to destroy it. History is again up for grabs in class warfare, and every future election will be Russian roulette, with the fate of American free enterprise hanging on whether capitalist or anti-capitalist politicians win. How long can our nation, divided against itself, continue to stand?....What happens to investing in America now that one political party is determined to control or destroy every company, except those crony entities such as Solyndra that funnel huge campaign contributions to the Democratic Party in a partisan taxpayer-money-laundering scheme? What is an investor to do when politics - not product quality or business competence - determine a company’s success or failure?"....Investors can rethink and escape America’s new socialist schizophrenia, as Craig R. Smith and I explain in our latest free White Paper, Protecting Your Wealth In Today's America.
Fed Faces Crucial Decision on Its Portfolio Mix -Wall Street Journal
"Markets have cheered the Federal Reserve’s imminent announcement that it will stop shrinking its asset portfolio later this year, but determining that date is just one challenge facing central-bank officials....Specifically, they need to decide the right combination of Treasurys of varying duration to hold - whether mostly short-term bills or a mix that also includes more longer-term notes and bonds....Fed Chairman Jerome Powell has signaled the central bank is prepared to announce Wednesday, after its two-day policy meeting, when it will end the runoff of its $4 trillion portfolio later this year....Before the 2008 crisis, the average maturity of the Fed’s Treasury holdings was less than four years. Now, it’s around nine years. The average maturity of all Treasury debt outstanding is nearly six years....Officials aren’t eager to discuss the possibility of selling mortgage bonds because they don’t want to do anything to disturb an already fragile housing market."
Andrew Yang, a presidential candidate who’s attracting support from Millennials -SF Gate
"The unlikely presidential run of Andrew Yang, who is proposing a $1,000-a-month 'freedom dividend' to every adult in America, rolled Friday into San Francisco, where some 3,000 supporters listened to the New York tech entrepreneur warn about how artificial intelligence and robotics are taking jobs. The 44-year-old son of Taiwanese immigrants who met each other at UC Berkeley has already surpassed expectations - virtually nonexistent when he got into the race - by inspiring enough donations to qualify for the Democratic primary debate in June. Yang outlined his idea for guaranteed universal income to a young, exuberant crowd of mostly Millennials at an outdoor soccer field lined with food trucks on Mission Bay Boulevard North. He said the idea has not only had wide historical support - including from founding father Thomas Paine, the Rev. Martin Luther King Jr. and Nobel Prize-winning economist Milton Friedman - but it has already been implemented in Alaska, which uses oil revenue to fund it. 'What they are doing with oil money in Alaska, we can do for all of us around the country with advancing technology,' Yang told the crowd, many of whom waved 'Yang Gang' and 'Humanity First' signs....Yang’s growing grassroots popularity during his first-ever campaign is remarkable considering how his main platform, universal basic income - also known as the freedom dividend - involves taxing tech companies to pay all adult U.S. citizens $1,000 per month. His idea, which he calls human-centered capitalism, is to offset impending job losses caused by robotics and artificial intelligence."
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3.18.19- Why Gold Is Still The Best Basis For Money -Forbes
Gold last traded at $1,301 an ounce. Silver at $15.32 an ounce.
News Summary: Precious metal prices rose Monday, building on last week's rally, as investors eye Fed meeting. U.S. stocks struggle for direction as traders await Fed statement due later this week.
Why Gold Is Still The Best Basis For Money- Forbes
"To understand why gold works, as a standard of monetary value, you have to understand what makes good money. Today's cryptocurrency enthusiasts are rediscovering what monetary thinkers have always known: that the best money is stable money, or, as I like to term it, Stable Money -- money that is stable in value....Ideally, a currency would be perfectly stable in value. The market economy is organized via prices, profit margins, returns on capital and interest rates. Changes in the value of the currency derange this process, creating chaos and havoc....In practice, such idealized perfection is not quite possible, so we have to go with the next best thing. The next best thing is gold: the thing that most closely approximates this ideal of stability of value....Gold's performance as a standard of Stable Value has been exemplary. It is, actually, a lot better than one might rationally expect. The things that the gold standard made possible -- such as the extraordinary stability of bond yields during the nineteenth century -- have never been replicated under fiat currencies....Economies work best when currencies are stable in value. Once we know what the goal is, we then look for a way to achieve it; and the best way has always been to base a currency on gold. Nobody has found a better way, even in the form of a proposal; and nobody has ever needed to find a better way, because gold has always worked very well."
A Recession Is Coming, And Maybe a Bear Market, Too - Bloomberg
"The recessionary indicators are numerous. Tighter monetary policy by the Federal Reserve that the central bank now worries it may have overdone. The near-inversion in the Treasury yield curve. The swoon in stocks at the end of last year. Weaker housing activity. Soft consumer spending. The tiny 20,000 increase in February payrolls, compared to the 223,000 monthly average gain last year. Then there are the effects of the deteriorating European economies and decelerating growth in China as well as President Donald Trump’s ongoing trade war with that country. There is, of course, a small chance of a soft landing such as in the mid-1990s. At that time, the Fed ended its interest-rate hiking cycle and cut the federal funds rate with no ensuing recession. By my count, the other 12 times the central bank restricted credit in the post-World War II era, a recession resulted.... At present, I don’t see any major economic or financial bubbles that are just begging to be pricked. The only possibilities are excess debt among U.S. nonfinancial corporations and the heavy borrowing in dollars by emerging-market economies in the face of a rising greenback. Housing never fully recovered from the subprime mortgage debacle. The financial sector is still deleveraging in the wake of the financial crisis. Consumer debt remains substantial but well off its 2008 peak in relation to household income."
"Kicking The Can Down The Road Forever": Nobody In Charge Wants 2019 To Actually Begin- Zero Hedge
"As we crawl towards the end of Q1 it becomes evident that the main theme for 2019, besides appalling far-right violence, is that nobody in charge wants 2019 to actually begin. What do I mean by that? That all we see everywhere is can-kicking rather than decision making. For example, look at Brexit. After last week’s drama of the UK having now said No to EU membership, No to PM May’s Withdrawal Deal, No to No Deal, No to a second referendum, and No to Parliament testing out alternatives to May’s deal, this week we are either going to see May’s deal reheated and presented once again...For a second example, look at UK-China trade relations. The news from the South China Morning Post today is that the Trump-Xi summit to sign this 'trade deal' --on which I have been voluble in my scepticism-- is now not going to take place in March, or even in April. Now it is apparently going to happen in June. The reason? The same one that led to my scepticism: no agreement from China on the structure of enforcement mechanisms that will mean the deal means something. Of course, that is also epic can-kicking....Furthermore, the US Federal Reserve, when they meet this week, will also try to send the message that doing precisely nothing is exactly the right action to take....In short, 2019 is aping 1984: not just on the invasive/repressive technology front, where China is leading the way, but in that its vision of the future being a boot kicking a can down the road – forever."
Expectations of weaker economy unites small business owners- Fox Business
"Although small businesses vary widely in terms of size, industry and issues, they do appear to be generally united by a growing uneasiness about the economy. Several surveys and economic reports released in recent weeks show that company owners have more trust in their businesses than the national or local economy, and that they're running their businesses more conservatively in response to uncertainty about overall business conditions. In a survey by the U.S. Chamber of Commerce and MetLife taken in January, 53 percent of the 1,001 randomly selected small business owners questioned said they believe the national economy is in good shape, down from 58 percent in a survey taken in the last quarter of 2018. Fifty-three percent said their local economy is in good health, down from 56 percent. A small business index that accompanied the survey fell to 65.6 from 69.3 in the fourth quarter. 'The change is largely due to a decline in economic outlook and expectations (both national and local), but small business owners report their fundamental operations remain strong,' the chamber and MetLife said."
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3.15.19 - Is Income Inequality Fair?
Gold last traded at $1,302 an ounce. Silver at $15.32 an ounce.
News Summary: Precious metal prices rose Friday on a weaker U.S. dollar and renewed optimism over a U.S.-China trade deal. U.S. stocks continued higher as investors digested comments from Chinese Premier Li Keqiang.
Commerzbank Sees $1,400 Gold, $16.50 Silver By Year-End - Kitco
"Commerzbank looks for gold to climb as high as $1,400 an ounce and silver to $16.50 before the end of 2019. Gold started the year strongly, nearly reaching $1,350 an ounce last month, helped by a U.S. Federal Reserve that made a dovish U-turn and now appears cautious about hiking interest rates again. However, the metal subsequently gave up much of its gains and was trading at $1,303.60... Silver, which has followed gold up and back down, was at $15.35. Analysts pointed out that gold hit its yearly highs in 2014, 2015 and 2018 during the first three months of the year. However, they say they do not think the metal has peaked in 2019, calling the recent pullback a 'pronounced correction,' with more upside to come. 'We are still convinced that gold will climb noticeably during the course of the year,' Commerzbank said. 'This is supported by the premature end to the Fed’s rate-hike cycle, the continued ultra-expansionary monetary policy of the ECB [European Central Bank], possibly stronger demand in China and India again and a possible revival of investment demand in the West. What is more, central banks remain important buyers. Gold is likely to rise to $1,400 per troy ounce by year’s end.'"
Is Income Inequality Fair? -Williams/Zero Hedge
"Some Americans have much higher income and wealth than others. Former President Barack Obama explained, 'I do think at a certain point you've made enough money.'....Democratic presidential hopeful Sen. Elizabeth Warren, in calling for a wealth tax, complained, 'The rich and powerful are taking so much for themselves and leaving so little for everyone else.'....A system that requires that one serve his fellow man to have a claim on what he produces is far more moral than a system without such a requirement....Bill Gates, co-founder of Microsoft, with a net worth over $90 billion, is the second-richest person in the world...Millions of people around the world voluntarily plunked down money to buy Microsoft products...If Gates and others had followed President Obama's advice that 'at a certain point' they'd 'made enough money' and shut down their companies when they had earned their first billion or two, mankind wouldn't have most of the technological development we enjoy today....The only people who benefit from class warfare are politicians and the elite; they get our money and control our lives. Plus, we just might ask ourselves: Where is a society headed that holds its most productive members up to ridicule and scorn and makes mascots out of its least productive and most parasitic members?"
U.S. manufacturing sector slowing as economy loses momentum - Reuters
"U.S. manufacturing output fell for a second straight month in February and factory activity in New York state was weaker than expected this month, offering further evidence of a sharp slowdown in economic growth early in the first quarter. The reports on Friday extended the streak of weak economic data and underscored the Federal Reserve’s 'patient' stance toward further interest rate increases this year. Fed officials are scheduled to meet next Tuesday and Wednesday to assess the economy and deliberate on the future course of monetary policy. The U.S. central bank raised rates four times last year....In a separate report on Friday, the New York Fed said its general business conditions index fell 5.1 points to a reading of 3.7 in February. It was the third consecutive monthly reading below 10, which the New York Fed said suggested 'that growth has remained quite a bit slower so far this year than it was for most of 2018.'"
Explosion of global debt biggest risk to world's financial system, Bank of Canada warns- Financial Post
"The Bank of Canada’s senior deputy governor says an explosion of global debt over the last decade is a top concern that she argues is holding back economic growth and creating vulnerabilities in the world’s financial system. The global financial system is in better shape than it was in 2007 before the financial crisis, but unknowns such as ongoing U.S.-China trade tensions could knock things off course, Carolyn Wilkins said in a speech Thursday in Vancouver. Wilkins also warned that high debt loads usually become an 'amplifying factor' when it comes to an economic downturn....'The global development that concerns me the most, though, is rising debt,' Wilkins said in her speech at an event hosted by the University of British Columbia’s economics department and CFA Society Vancouver....She said the combined global debt owed by governments, businesses and households now amounts to US$240 trillion, which is US$100 trillion higher than just before the financial crisis and more than three times the world’s gross domestic product. Government debt, she added, has 'skyrocketed' over the past 10 years, while corporate borrowing has “exploded” and now displays some risky qualities....Wilkins added it’s important for policy-makers around the world to continue efforts to conduct stress tests on different parts of the financial system, and, when necessary, put in safeguards."
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