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Friday 02.03.2017

U.S. economy adds a strong 227,000 jobs in January

America added 227,000 jobs in January, well ahead of December's gain of 157,000 jobs. The unemployment rate ticked up a bit to 4.8%. More Americans started looking for work again -- a good sign -- which explains the small increase in unemployment.

It's the first jobs report to be released under the Trump administration. However, the Labor Department conducted its jobs survey in the second week of January, when President Obama was in office. The report represents the economy that Trump is now taking over.

"President Trump is inheriting an economy on its way to full employment, but there is still more work to do," says Elise Gould, an economist at the Economic Policy Institute.

The jobs report has also become a contentious issue, because President Trump once dubbed the unemployment rate a "hoax." His labor and treasury nominees have also criticized the number. While the top line numbers are pretty strong, Trump is also inheriting problems in the U.S. job market. The underemployment rate -- people that are unemployed plus those who work part-time -- actually rose in January to 9.4% from 9.2% in December. But that rate has fallen considerably in recent years. Still, there are 5.8 million Americans working part-time jobs but who want a full-time position.

China’s Demand for Gold Can’t be Met

A couple of weeks ago, I was in Toronto meeting with gold industry experts. One night, I spoke with a man who has been in the gold business for over 45 years. For over four decades, this man has bought and sold gold. He has bought and sold gold mining shares. He has bought and sold gold mines. During this time, he has also worked with the Chinese government, Chinese industry and Chinese investors. He knows a few things about gold, and about Chinese gold.

Here’s what he said to me: “I’ve seen estimates out of China that over 375 million Chinese want to buy gold. But they can’t. They live in the remote interior of the country, not the more open, coastal cities. These Chinese have little or no access to gold markets. And even if they did have access, there’s not enough gold.”

The man explained that any Chinese with means and access is buying gold. He told me that just the Shanghai Gold Exchange has over 10 million customers. 10 million separate, account-holding customers. Just for gold.

While we were talking, I did some quick math in my head. Suppose the average customer, a middle class Chinese worker, has about $2,500 socked into gold. At $1,250 per ounce, that’s the equivalent of about two ounces of gold.

Poll: Most Americans Still Favor Travel Freeze on Refugees from Countries with Ties to Terrorism

Despite protests and strong opposition from Democratic Party leadership, most Americans still favor a travel freeze on refugees coming to the U.S. from terror-ridden countries.

According to a new Rasmussen Reports poll, just over half of Americans (52%) favor President Donald Trump’s executive order on immigration that halts the flow of refugees from seven countries in the Middle East and Africa known to have strong ties to terrorism. Forty-three percent (43%) of respondents oppose the action.

The poll of 1,000 likely U.S. voters conducted Jan. 31 to Feb. 1 finds that, while most Americans support such a measure, there remains a strong divide between the opinions of Republicans and Democrats.

"Eighty-two percent (82%) of Republicans and 54% of voters not affiliated with either major political party favor the temporary refugee ban," writes Rasmussen. "Seventy-one percent (71%) of Democrats are opposed." Before Trump signed the executive order, 57 percent of Americans were in favor of a travel ban on refugees from Syria, Iraq, Iran, Libya, Somalia, Sudan, and Yemen. Just 33 percent were opposed to temporarily halting travel from those countries.

The Federal Reserve Is Already Reversing QE In A Strange Sort Of Way

One of the great policy questions of our times is how and when is the Federal Reserve going to reverse quantitative easing? They've created a vast new quantity of base money which is now sloshing around the economy and as things return to normal that needs to come back out. As it does so the Fed's balance sheet contracts and we do indeed all get back to something like normality.

Last week Ben Bernanke explained one part of this. I disagreed with his reasoning but then there's a reason why I do journalism and he does central banking--something, perhaps, to how much we each know about our respective spheres. His reasoning being let's get interest rates up again and then we'll reverse the QE.

How to reverse the QE everyone knows. Those bonds, or at least some of them, mature over time and at present the Fed buys more to keep the stock intact. All they have to do is stop buying to replace and allow maturity to deal with it. Given that almost none of the borrowers will ever actually repay, rather than roll over, their debts this means that the new issuance to pay for the old maturing at the Fed will be in the public markets. And so the job is done. There's no need for the Fed to sell anything they can just wait and do absolutely nothing and it will happen.

All of which is fine and dandy. But there's an interesting wrinkle being pointed to today. Which is that the Fed's actions already have the effect of reducing QE.

Gold, Platinum on Faber's Radar; Expect 'Year of Disappointments'

'The president is watching': Milo Yiannopoulos responds to show of support from Trump

Conservative provocateur Milo Yiannopoulos called himself a "catalyst" for change after President Donald Trump threatened to pull federal funding from the University of California at Berkeley over violent anti-Yiannopoulos protests on the campus.

Yiannopoulos, an editor at the far-right website Breitbart News whom many identify with the alt-right, a white-nationalist movement, was set to appear at UC Berkeley as part of his book tour.

"American universities should be on notice," Yiannopoulos told Business Insider in a text message. "The president is watching. The days you could silence conservative and libertarian voices on campus and still expect to collect their tax money are coming to an end."

He continued: "I am the catalyst for this change. I'm confident Trump and his team are watching closely and will act decisively." Trump tweeted Thursday morning: "If UC Berkeley does not allow free speech and practices violence on innocent people with a different point of view — NO FEDERAL FUNDS?"

Amazon this week joined a chorus of technology companies in opposition to the Trump administration's recent executive order on immigration.

Amazon this week joined a chorus of technology companies in opposition to the Trump administration's recent executive order on immigration.

The Wall Street Journal reports that chief executive Jeff Bezos wrote to employees in an email Monday that the company informed the White House of its position and contacted members of Congress regarding possible legislation to alter it.

Bezos added that the company is prepared to support a lawsuit opposing the order filed by the attorney general of its native Washington state and that, "We are working on other legal options, as well."

Trump's executive order, issued late Friday, temporarily banned refugees and immigrants from seven predominantly Muslim nations and reportedly stranded hundreds of travelers at the nation's airports. The order was rolled out without input from key federal agencies and was subsequently halted by federal court rulings.

Uber CEO Trevor Kalanick Caves to Leftist Pressure and Quits Trump's Advisory Board

After weeks of protest over the CEO of Uber's decision to join President Trump's advisory board, and after his own CTO's flagrant missive against the President, Trevor Kalanick informed the President that he was removing himself from the economic council.

“Earlier today I spoke briefly with the president about the immigration executive order and its issues for our community,” Kalanick wrote in an internal email obtained by the Times. “I also let him know that I would not be able to participate on his economic council. Joining the group was not meant to be an endorsement of the president or his agenda but unfortunately it has been misinterpreted to be exactly that.”

Radical leftist groups have been protesting Uber on social media, under the hashtag DELTEUBER.

The creator of the hashtag, Dan O'Sullivan, was quoted saying “let this be a warning: if you are a corporation who thinks you will ride out Trump, and quietly make money at his side, you will be made to pay a price.”

Lowe's to hire more than 45,000 seasonal workers

For Lowe's, a hub for garden equipment and building supplies, springtime brings the type of rush its department store peers experience during the holidays. So to meet the demands of its busiest season, it will be hiring over 45,000 additional workers.

The seasonal jobs will include loaders to get products into the hands of shoppers who order online, as well as cashiers, sales people and assemblers who can help put together products for consumers browsing at an actual store.

“Our goal is to meet customers wherever they are, whether in stores, online or at home, with the support, inspiration and solutions they need to tackle their home projects,” Jennifer Weber, Lowe’s chief human resources officer, said in a statement. “Seasonal employees play an important role in helping customers during this peak period.’’

There’s a chance that some of the temporary positions may become permanent. Last year, almost 50% of Lowe’s seasonal staff went on to become part-time or full-time employees.

Federal workers turn to encryption to thwart Trump

Federal employees worried that President Donald Trump will gut their agencies are creating new email addresses, signing up for encrypted messaging apps and looking for other, protected ways to push back against the new administration’s agenda.

Whether inside the Environmental Protection Agency, within the Foreign Service, on the edges of the Labor Department or beyond, employees are using new technology as well as more old-fashioned approaches — such as private face-to-face meetings — to organize letters, talk strategy, or contact media outlets and other groups to express their dissent.

The goal is to get their message across while not violating any rules covering workplace communications, which can be monitored by the government and could potentially get them fired.

At the EPA, a small group of career employees — numbering less than a dozen so far — are using an encrypted messaging app to discuss what to do if Trump’s political appointees undermine their agency’s mission to protect public health and the environment, flout the law, or delete valuable scientific data that the agency has been collecting for years, sources told POLITICO.

Trump's doing what he promised

Harley Davidson Denies ‘Muslim Ban’ Protestors Prevented Milwaukee Meeting With Trump

Harley Davidson canceled an event with President Donald Trump after the motorcycle manufacturer grew wary of potential protests, according to a CNN report Tuesday.

According to CNN, the event was scheduled to take place in Milwaukee, Wisc., Thursday, where Trump was to tour a Harley Davidson factory and sign two executive orders related to American manufacturing. The White House was already in Milwaukee preparing for the event. Fox 6 in Milwaukee reported that the White House confirmed the planned visit Monday.

Harley-Davidson said that they “don’t, nor did we have, a scheduled visit from the President this week at any of our facilities,” in a statement released Tuesday evening. The company said that “We are proud to have hosted Presidential visits at our facilities,” and added that “We look forward to hosting the president in the future.”

Members of Trump’s advance team were reportedly scouting out locations for a presidential visit. Harley Davidson’s corporate headquarters is located in Milwaukee, and the company produces the engines and transmissions for its iconic motorcycle in nearby Menomonee Falls. A Harley museum in Milwaukee is also a popular attraction.

Gold Hits Highest Level of Trump Presidency

Gold hit an 11-week high on Thursday after the U.S. Fed eral Reserve gave no clear signal on the likelihood of a March interest rate increase in its latest statement, prompting another drop in the dollar.

The U.S. currency slipped to a 12-week low against a basket of currencies and an eight-week low versus the euro after the U.S. central bank gave an upbeat view on the economy, but no hint of accelerating rate hikes. Spot gold struck its highest level since Nov. 17 at $1,225.30 an ounce, and was up 0.9% at $1,219.96.

U.S. gold futures for April delivery were up $14.00 at $1,222.40. "Gold... successfully traded through its resistance at $1,220," Heraeus trader Alexander Zumpfe said. "If it closes above there, the short-term uptrend is back and a test of $1,235 might be on the cards."

The weakening dollar was the main factor driving gold higher, along with concerns about political risk, Afshin Nabavi, head of trading at MKS, said. U.S. non-farm payroll data for January will be closely watched on Friday. The report is seen as a key barometer of the health of the U.S. economy and will be examined for signs that growth is strong enough to support further interest rate hikes.

U.S. House Begins Work on First Policies to Repair Obamacare

The first legislative effort to make changes to Obamacare got underway in the U.S. House, the beginning of what is expected to be a long and contentious process. The House Energy and Commerce Committee’s health panel is examining drafts of four bills Thursday that will likely serve as a basis for some of Republicans’ earliest moves to replace pieces of the massive health-care law that they’ve vowed to repeal.

“Together, the bills will play an important role in being among the first bricks placed in the rebuilding of our health care system,” Republican members, including Energy and Commerce Chairman Greg Walden of Oregon, wrote in the newsletter Morning Consult.

Although Republicans and President Donald Trump have promised to undo the Affordable Care Act -- a law that brought coverage to 20 million people since it was passed in 2010 -- they have yet to agree on a way to dismantle or repair it.

The bills could help lower premiums, particularly for younger, healthier Americans, by allowing insurers to charge older Americans higher prices and tightening enrollment periods. Under Obamacare, insurers can’t deny coverage or charge more to people with pre-existing conditions. One of the bills would attempt to ensure that people with pre-existing conditions won’t be denied coverage, if those ACA protections are lost as part of the Obamacare repeal efforts.

Reality Check: Berkeley Proves Why the Inmates Shouldn't Run the Asylum

What Exactly Is a Border Tax?

Many countries try to make their products more competitive in international markets. Some subsidize exports directly and indirectly (China), some have very lax labor laws (Bangladesh), some devalue their currency (Europe, Japan), and some do all of the above just to boost exports and discourage imports.

The United States has engaged in currency wars with Europe, China, and Japan and devalued the dollar during the Federal Reserve’s quantitative easing programs after 2009. It didn’t help much to close the trade deficit.

This is why President Donald Trump is now proposing a more radical concept: the border adjustment tax, or BAT. True to its name, the BAT would adjust the price for both exports and imports, but would do so through corporate taxes.

Under the BAT plan, importers of Mexican or Chinese goods, for example, would pay a 20 percent tax on merchandise sold in the United States, making products like tequila, fresh fruit, and iPhones more expensive, although it is not yet clear which countries would be affected. Trump indicated that the tax could be levied on Mexico to pay for the southern border protection wall.

China has stolen 3.4 million American jobs since 2001

Donald Trump relentlessly bashed China on his way to the White House, and not without reason. Between 2001 and 2015, the US lost 3.4 million jobs due to its trade deficit with China, nearly three-quarters of them in manufacturing, according to a new study by the Economic Policy Institute, a left-leaning research group.

The study vindicates Trump’s unstinting focus on “cheating China” during his campaign. “Any notion that their economy is based on a free-market system is simply not true,” Trump wrote in a Wall Street Journal editorial in Nov. 2015.

EPI’s findings back that up. In addition to manipulating its currency in the past—in effect, subsidizing exports and taxing imports—China also coddles many industries and engages in other practices that give its companies an unfair trade advantage.

However, the report’s conclusions also defy the campaign narrative (and conventional wisdom) that most of the jobs lost to China were in industrial sectors like steel and automobiles. “The hardest hit industry was computers and electronic parts—contrary to urban myth,” says Robert Scott, an economist at EPI and author of the study. And while Trump’s populist message resonated strongly in the hollowed-out Rust Belt, those midwestern states aren’t the only places that have suffered from China-related job losses.

Are cash payments in danger of extinction?

The rise of contactless and mobile payments may make purchases easier and simpler, but could it eventually lead to the elimination of cash entirely? There’s no doubt that cash payments are becoming an increasingly unpopular method of payment; the Federal Reserve estimates that there will be $616.9 billion in cashless transactions in 2016, and increase of $556.9 billion in just six years.

Sweden in particular is in danger of allowing cash payments to disappear – the amount of cash in circulation as a percentage of GDP in Sweden has dropped from around 3 percent in 2008, to roughly 1.8 percent now.

On the whole, governments and monetary committees have supported this trend, for a variety of reasons. There are arguments that contactless payments are more secure than cash, that it will prevent crime and makes it easier to control the monetary policy of a country.

Recently the European Central Bank decided to remove the €500 note from circulation as a way of making money laundering and organised crime more difficult and according to German newspaper Handelsblatt, a proposal to cap all cash transactions at €5,000 was made in February 2016 by the junior partner of the German coalition government. So, would a cashless society really be better for everyone?

Roger Stone says Trump will never change

Burrito chain Chipotle's profit tumbles nearly 77 percent

Chipotle Mexican Grill's quarterly profit fell 76.5 percent, hurt by minimum wage increases, higher spending on advertising, promotions and a spike in costs for avocados, the main ingredient in guacamole.

The company's shares were down about 2 percent in extended trade on Thursday. Chipotle's sales swooned in November 2015 when the chain was linked to a multi-state E. coli outbreak, and went into free fall a month later after at least 80 Boston College students were sickened by norovirus traced to a Chipotle restaurant.

Since then, the company has given away free and discounted food, spent more on advertising and promotions in a bid to bring back diners.

The company's net income fell $15.98 million, or 55 cents per share, in the fourth quarter ended Dec. 31, from $67.87 million, or $2.17 per share, a year earlier.

New year brings surge in job cuts

U.S. employers welcomed 2017 with a wave of corporate downsizing. Outplacement consultancy Challenger, Gray & Christmas reports that the nation's bosses plan to cut their payrolls by 45,934 in January -- up 37% from December and the highest tally since last April when 64,141 workers were let go.

January's top four job cut announcements occurred in the retail sector, with Macy’s reporting plans to close 68 stores and fire 10,000 workers.

“Overall, it was a solid holiday shopping season,” said Challenger, Gray & Christmas CEO John A. Challenger, “but several retailers, including Macy’s, were unable to capitalize on stronger consumer confidence and spending.” In all, retailers announced 22,491 planned cutbacks last month, accounting for 49% of all job cuts recorded during the month. The January total is virtually unchanged from the same month a year ago.

Meanwhile, the energy sector, which cut 20,103 jobs in January 2016, reported just 1,853 planned terminations to kick off 2017. “Oil prices were already starting to rebound in the last half of 2016,” Challenger pointed out, adding that “with an administration that is expected to be very friendly to the oil, gas, and mining industries, many are forecasting a swift and sustained turnaround for these firms in 2017. The fact that January job cuts in the sector were 91 % lower than a year ago, certainly appears to support that outlook.”

Housing affordability, debt, holding back prospective buyers

While existing-home sales increased 3.8 percent to a 10-year high in 20161, affordability pressures, student debt and possible confusion about down payment requirements prevented many aspiring homeowners from reaching the market, according to recent consumer insight from the National Association of Realtors.

NAR’s Aspiring Home Buyer Profile analyzed 2016 quarterly survey data from its Housing Opportunities and Market Experience (HOME) survey to capture movements in the housing expectations and sentiment of homeowners and non-homeowners — both renters and those living with a family member.

According to the findings, respondents last year maintained a favorable view about homeownership, with over 90 percent of homeowners and roughly eight out of 10 non-homeowners each quarter indicating that owning a home is part of their American Dream.

However, despite these positive feelings, optimism about it being a good time to buy diminished among non-owners. The percent share who believed it was a good time to buy declined from 63 percent in the first quarter to 55 percent in the fourth quarter. The share of homeowners who thought it was a good time to buy also dipped as the year went on but hovered at a much higher rate of around 80 percent each quarter.

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