Gold is sending a warning signal
The recent action in the gold market is sending out a big warning signal that investors need to heed, veteran industry insider Jack Bouroudjian said Thursday.
That "red flag" is the acceleration of the move higher in gold over the last couple of months, which he believes is telegraphing a loss of confidence in central banks.
"It may have started out as a reinflation trade, but right now it is turning into that flight to quality and flight to safety. It is one of those things that is more than likely going to stop any kind of a move in equities," the co-founder and director of UCX said in an interview with CNBC's "Power Lunch."
In fact, despite recent stock market highs, the breadth, volume and data are horrible, said Bouroudjian, also a CNBC contributor. "Everything is leading us to believe that we're not going to see a big pop in earnings," he explained. "In fact, this earnings recession we've been going through is going to maintain itself, and if that's the case we're talking about a market that is too rich." Therefore, he believes equities will move lower.
U.S. economic outlook brightens on upbeat job, inventory data
The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained strength in the labor market despite a sharp slowdown in hiring last month.
Other data on Thursday showed wholesale inventories recording their biggest increase in 10 months in April, prompting economists to raise their second-quarter economic growth estimates. The rise in inventories came even as sales at wholesalers rose for a second straight month.
Initial claims for state unemployment benefits declined 4,000 to a seasonally adjusted 264,000 for the week ended June 4, the Labor Department said. The drop confounded economists' expectations for an increase to 270,000.
"The hand-wringing over the May jobs report may be misplaced," said Joel Naroff, chief economist at Economic Advisors in Holland, Pennsylvania. Claims have dropped by 30,000 since surging to 294,000 in early May. They have now been below 300,000, a threshold associated with a strong job market, for 66 straight weeks, the longest streak since 1973.
Retail Meltdown: Which Chains Are Closing Stores in 2016?
With some retailers, including Sports Authority and Sports Chalet, closing all of their stores, and others, like Aeropostale, teetering on the edge of heading into the great strip mall in the sky, this has been a difficult year for brick-and-mortar retailers.
The damage, however, is not limited to the chains that are closing up shop entirely. A number of others -- including some iconic names -- are getting smaller, closing stores as a way to shrink into, if not profitability, at least lower losses.
It's a tough time for America's shopping centers, with it looking like those temporary pop-up Halloween stores will have their pick of prime locations this year. Blame the Internet in many cases, changing consumer demands in others, bad management in a few, and a combination of all of the above in many cases.
Ralph Lauren (NYSE:RL) plans to cut 8% of its workforce while closing more than 50 stores, according to the company. It also plans to trim its management structure from an average of nine layers down to six. CEO Stefan Larsson, who joined the company from Old Navy, where he led a successful turnaround, also plans to cut the amount of time it takes the brand's clothes to go from idea to stores. Macy's (NYSE:M) plans to close 40 stores and eliminate as many as 4,500 jobs, a process that has already started and will continue through the summer. CEO Terry J. Lundgren said the moves were needed due to the company's "disappointing 2015 sales and earnings performance." The chain does plan to open five new Macy's locations in 2016 as well as 50 additional Macy's Backstage off-price stores....
It's Gonna Be Awful! - Peter Schiff
Congressman: Federal Reserve Policy Could Lead to Huge Inflation, Recession
Rep. Jeb Hensarling (R., Texas) said in a Wednesday interview with the Washington Free Beacon that when the Federal Reserve begins to unwind its balance sheet of roughly $4.5 trillion there will be a bout of inflation or possibly a recession.
The Fed traditionally conducts monetary policy by setting the federal funds rate, “the rate at which banks borrow and lend reserves on an overnight basis.” The Fed lowered this rate almost to zero in December 2008 after the economy sunk into recession due to the financial crisis. After some time, the Fed injected more money into the economy by purchasing Treasury and mortgage-backed securities. Between 2009 and 2014, the Federal Reserve made large-scale asset purchases, known as quantitative easing, which increased the size of the Fed’s balance sheet to $4.5 trillion in October 2014.
“The more probable scenario is we are at some point going to be in a bout of huge inflation or we’re going to be back in a bad recession,” Hensarling said. “They have a huge balance sheet that they have to unwind and depending on if you unwind it too quickly, if you unwind it too slowly, you could either end up with high inflationary pressures or you could throw the economy back into a recession.”
“It’s problematic and it’s dangerous what they’re doing,” Hensarling said. “We need monetary policy to be predictable, rules based, and easily communicated to the public so everybody can plan their financial affairs around knowing what the value of money will be. Today we don’t know.” The Fed finally raised interest rates to a quarter of a percentage point in December 2015 after keeping them near zero since 2008. Hensarling said that he is not trying to get interest rates to either increase or decrease but he is advocating for a more predictable, rules-based monetary policy.
If you want economic growth, pick the candidate who’s actually created jobs
President Obama’s top banker Janet Yellen gave a somber assessment of the current job market this week, throwing cold water on the president’s election-year message that voters should elect a Democrat to the White House again. Obama’s been bragging that America has “the strongest” economy in the world. And pigs can fly.
Growth under Obama has averaged a stagnant 1.7 percent a year. Meanwhile, Ireland is growing at nearly 8 percent, India at 7 percent, Sweden at 4 percent. The Obama economy is embarrassing compared to those countries — and compared to what Americans enjoyed for decades. It’s “the worst economic-growth record of any president” since the Great Depression, says Stanford economist Michael Boskin.
Last week’s economic reports were bad news for job seekers. Growth dipped below 1 percent in the first quarter, and full-time employment actually shrank in May. We can’t let Obama-stagnation become the new normal. It’s driving Americans to self-destruction. Deaths from alcoholism, drug addiction, cirrhosis of the liver and suicides — what Princeton University researcher Anne Case calls “deaths of despair” — have soared.
These tragedies raise the stakes in this presidential election. Who’s equipped to jump-start America’s economy, Hillary Clinton or Donald Trump? Spoiler alert: It’s not Hillary. She makes her money giving speeches and promoting books about herself. Of course, Trump is no slouch when it comes to self-promotion. But he’s made a fortune actually building businesses. Trump runs an impressive 185 income-producing ventures, all listed on his 104-page Financial Disclosure Statement. (Hillary’s is only 11 pages.)
EU referendum: What happens if Brexit wins?
Later this month, Britain may do what no country has done before and vote to leave the European Union. Opinion polls suggest the public is split down the middle. The referendum on June 23 is too close to call.
Those in favor of walking out of the EU -- the Brexit option -- say European rules stifle U.K. business and leaving would boost the economy. They also say Britain would regain control of its borders and be able to limit immigration. Those campaigning for the U.K. to stay -- including the government -- paint a much grimmer picture of life outside the EU. They say trade and investment would suffer, triggering a recession, killing jobs, slamming the pound and causing house prices to fall.
The referendum is the biggest decision Brits have faced in a generation. The last direct vote on the country's ties with Europe was in 1975. A win for Brexit would shape the future of the U.K. and Europe for decades to come. The big problem is that nobody knows exactly how.
Prime Minister David Cameron would face huge pressure to resign. He is campaigning for Britain to stay in the bloc, but his Conservative party (and government) is bitterly divided over the issue. Fellow Conservative and former London mayor Boris Johnson leads the Brexit campaign and may be a candidate to succeed Cameron.
Something Very Big is afoot!
For more than three years we have watched the COMEX very closely. The initial clue to begin watching were the waterfall events where the amounts of paper gold and silver sold simply dwarfed what was being mined. I have said many times after the smackdowns, "first, no one has this much (gold or silver), second, no trader would ever sell in this fashion and destroy the price he will receive for the sale. Clearly the sales were done to affect price downward". Each time I have written on this topic and suggested it would ultimately end with a delivery default I have been trolled. It looks very much like we will soon find out a default of delivery is not only possible but highly probable.
Starting with gold, last month (May) saw 221,000 ounces stand for delivery. This amount actually grew during the month which is highly unusual as the amount standing has ALWAYS dropped during delivery periods, this is the first time to my knowledge that the amount standing actually increased. For comparison, May 2015 delivered only 2,500 ounces. Looking back at June of 2015, the amount standing on first notice day was 509,000 ounces. The final amount delivered was 295,000. As I have written and questioned before, who would fully fund their account 100% to take delivery ...and then "go away"? The answer of course is someone willing to accept a "premium" as a bribe to not take delivery.
This June as you know does look to be quite interesting. The initial amount standing was 49.119 tons or over 1.5 million ounces. The amount dropped on day two by about 4 tons but has since gained back nearly all of it to stand at 49.11 tons. (If I am not mistaken, this month is the largest month of gold contracts ever standing for delivery.) Over 40 tons have already been served so we know these longs could not be persuaded to "go away". We have seen no evidence of delivery for March, April or May. If we add these together with June, we have 65.813 tons standing with only 51.12 tons of registered gold.
My point is this, someone very real and very big is standing for gold. This "someone" would not be bribed to go away last month and does not look like they will go way this month! Who is this long who all of a sudden cannot be bribed to stand down? As you know, I have speculated the Chinese (and Russia) have been positioning themselves to abandon the dollar as the reserve currency.
Deutsche Bank Issues Blistering Attack—–Says Desperate Draghi Risks Destroying Entire ‘European Project’
The European Central Bank’s loose monetary policy risks destroying the European project, Deutsche Bank has warned. In a blistering attack, Deutsche suggested the ECB had “los[t] the plot” and that its “desperate” actions raised the risk of a potentially “catastrophic” mistake by the central bank.
David Folkerts-Landau, Deutsche’s chief economist, said negative interest rates and quantitative easing had hurt savers and allowed politicians to delay badly-needed structural reforms.
“ECB policy is threatening the European project as a whole for the sake of short-term financial stability,” he said in a note titled “The ECB must change course”. It said: “The longer policy prevents the necessary catharsis, the more it contributes to the growth of populist or extremist politics.
“The benefits from ever-looser policy are diminishing while the litany of distortions, perversions and disincentives grows by the day. Savers are punished and speculators rewarded. Bad companies survive while good companies are too scared to invest.” The German economist also warned that the “whatever it takes” stance taken by president Mario Draghi and the ECB had “distorted the market-based pricing of government bond yields”.
ECB Gets Clocked by the Two Biggest German Banks
On the fateful day of June 8, when the ECB began buying euro-denominated corporate bonds, some of which now trade in negative-yield absurdity, the two biggest German banks counter-attacked in a well-coordinated two-pronged move.
Commerzbank, of which the German government owns nearly 16% as a consequence of the bailout during the Financial Crisis, leaked to Reuters with impeccable timing that it was considering hoarding tons (literally) of cash in its vaults rather than paying the punishment interest on deposits at the ECB.
That “punishment interest,” as Germans call the negative interest the ECB charges for deposits, is -0.4%. Currently, Eurozone banks have €850 billion on deposit at the ECB, so the punishment interest would cost them €3.4 billion per year.
The ECB is on a bond-buying frenzy, which creates a sea of liquidity – the money that the ECB “printed” to buy the bonds with – and banks end up with it. They’re supposed to lend it out, but demand for loans for reasonable projects is low, given the dismal investment environment in the Eurozone. So the liquidity just sloshes around and distorts and corrodes everything it comes in contact with.
Billionaire Investor George Soros Sees Economic Trouble Ahead
Why should anybody care that billionaire George Soros is trading again and making big bets that will pay off if economies around the world fall on harder times? When the 85-year-old hedge fund founder did something like this a decade ago, the U.S. housing market was about to implode, Lehman Brothers would soon collapse and the U.S. and global economy was headed into what economists call "the toilet."
One thing Soros appears to be most concerned about this time around is weakness in China. The Wall Street Journal first reported the news about Soros' return to trading, and cites "people close to the matter" in reporting that:
"Worried about the outlook for the global economy and concerned that large market shifts may be at hand, the billionaire hedge-fund founder and philanthropist recently directed a series of big, bearish investments.
"Soros Fund Management LLC, which manages $30 billion for Mr. Soros and his family, sold stocks and bought gold and shares of gold miners, anticipating weakness in various markets. Investors often view gold as a haven during times of turmoil."
New Jersey retirees won't get a pension increase
The New Jersey Supreme Court ruled on Thursday that retired public employees do not have a contractual right to receive increasing cost-of-living adjustments, a decision that is expected to save the state billions of dollars.
Governor Chris Christie's administration suspended the COLA payments, which are tied to inflation, as part of reforms in 2011 aimed at curtailing the ballooning cost of public pensions.
Despite running a heavily Democratic state, Christie, a former Republican presidential candidate who is now stumping for presumptive nominee Donald Trump, has notched several victories against the public sector, beginning with his ability to garner bipartisan support for the pension reforms.
He was even allowed to go back on promises he made in those same reforms when, in 2014, he slashed the state's pension contributions, saying a surprise revenue gap left him no choice. The state Supreme Court vindicated that move last year. Even so, Wall Street credit rating agencies rank New Jersey the second-worst U.S. state, behind only Illinois, partly because of its growing pension costs and narrow reserves.
DNC Platform Committee Member Thinks No One Should Have A Gun
House passes bill to help Puerto Rico avoid default
The House of Representatives, in a rare moment of bipartisanship, passed a bill Thursday to help Puerto Rico restructure its massive, $70 billion debt load and hopefully avoid defaulting on any more of its debt payments.
The bill establishes a seven-person advisory board that will be in charge of negotiating with the island's creditors, who lobbied hard against any kind of federal intervention out of fears the Puerto Rico would not pay its full debt. The Obama administration, led by Treasury Secretary Jacob Lew, has pushed hard to give the U.S. commonwealth some kind of relief, arguing that it has already cut back government services and needed some assistance.
The bill, which passed 297-127 after a strong push by House Speaker Paul Ryan, R-Wis., did not include any direct financial assistance, allaying fears from many Republicans about a possible bailout. Instead, it allows the oversight board to negotiate with creditors and avoid a lengthy, and costly, battle in court.
Ryan argued on the House floor Thursday that Puerto Rico needed congressional assistance because, unlike every U.S. state, Puerto Rico is not legally allowed to file for bankruptcy to restructure its debt. Ryan said a failure to act would lead to a more difficult decision over bailing out the impoverished island.
Former Fed President: All My Very Rich Friends Are Holding A Lot Of Cash
If you put together a list of the world’s most brilliant, most famous investment experts… they were all at John Mauldin’s Strategic Investment Conference last month. My head is still spinning with all the information and investment ideas I heard at the conference, but the consensus among the majority of speakers was that things are going to get ugly.
Richard Fisher was president of the Federal Reserve Bank of Dallas and a voting member of the Federal Open Market Committee (FOMC) from 2005 to 2015. You couldn’t find anyone more wired into the Fed and the state of the economy than Fisher.
He is worried about the $19 trillion US government debt (up $11 trillion since 2008) because the Fed has fired all its monetary bullets and can’t expand the balance sheet any further.
But Fisher’s most telling comment came during the Q&A session when he was asked how his personal portfolio was positioned. Fisher’s response: “In the fetal position.” Moreover, he also said (paraphrasing as closely as I can), “All my very rich friends are holding a lot of cash.”
Why the middle class has less money and bigger bills
About two thirds of America's gross domestic product is generated by consumption. That means our economy runs on people buying stuff. And who buys the most stuff? The middle class. That's why Loyola Marymount University economics professor Jennifer Pate says the middle class is so important to the economy.
"These are people who purchase goods and services across the year that leads to higher economic prosperity in our country," she said. "These are people who work in these jobs, service sector jobs where you're providing the goods and services that people want to purchase in order for the economy to function. You have to have a middle class that's doing this work."
So how come overall the U.S. economy is doing well, but the middle class is shrinking? "If wealth isn't being shared among people outside of the top bracket, then it doesn't feel like we're wealthy unless you're in the top," Pate said. "Wealth is being generated, it's just not being distributed."
Marketplace calculated that the typical middle class life has gotten 30 percent more expensive in the past twenty years, and Pate says overall wages have been flat since the 1970s. She shared more of her thoughts on how our economy has changed fundamentally in the past several decades and what it means to have a disappearing middle class.
Steve Moore on Trump’s economic policy
Billionaire Investors Back A Gold Price Rally In 2016
It wasn’t so long ago that some of the more famous investor gurus were shrugging off gold as nothing more than shiny trinkets with no investment value. They were wrong. This safe haven is back, the recovery is clear, and there have been some very big changes of heart. The biggest gold producers in the world have seen their share prices double this year. Not only are gold prices soaring, but producers are cutting costs and slimming down debt as they pave the way for gold to return to the top of the favored commodities list.
Even though gold dropped earlier in May, Thompson Reuters noted that shares outstanding for two major ETFs tracking gold rose 11 percent, and precious metals ETFs enjoyed four straight weeks of inflows in May. A ton of money is moving around here. And thanks to an overvalued U.S. dollar, gold may have nowhere to go but up.
Gold has no upper limit on its price, and according to Harvard economist Kenneth Rogoff, speaking to the Financial Times recently, emerging economies might do well to shift all their U.S. dollar reserves to gold. Gold, he says, could be viewed as “an extremely low-risk asset” with average real returns comparable to very short-term debt.
Russia, it seems, would agree. Moscow hates the U.S. dollar and craves gold, tripling its gold holdings between 2005 and 2015. Weak prices, stock market vulnerabilities, and a weakening currency in 2015 also led Chinese investors to buy almost 1,000 metric tons of gold as a safe haven asset. Billionaires have certainly taken notice. They are dumping massive amounts of money into gold right now and seeing huge returns. They are now ahead of a game that has seen prices rise almost 14 percent this year—even with the recent correction.
EBT Card Outage
Widespread reports continue to pour in from all over the nation of “glitches” with the food stamp system. It is eight days into the month and large numbers of people still have not received their benefits, and in other instances it is being reported that EBT cards are simply not working correctly. So what in the world is going on here? On downdetector.com there are scores of reports of problems with the EBT system from people all over the nation. Could this simply be another example of government incompetence, or is something else at work here?
I had heard some rumblings about this over the past few days, but I had not really taken them seriously until I read an article from highly respected author Ray Gano…
It interesting over the weekend I got several emails telling me about cell phones being down, internet being down, and get this, EBT cards not working and having no money associated to them. This is a concern because when the US Government has payment failures, then there is possibly something happening that the press is not telling you about.
Now, we know that computers have problems and that states, counties and cities run on computers. But what is interesting is that since the beginning of 2016, The US government has had over 2,700 reports on downdetector.com showing that they have been late loading the money onto these EBT cards.