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More than one-in-five working age Millennials live at home

The kids are not moving out. The high cost of housing is having a big impact on the Millennial generation. In high cost areas you are seeing homes being sold to investors (including foreign buyers) and those that do buy as owner occupied tend to be a lot older than previous first time buyers. Even from family and friends it is interesting to see a few homes sold in their varied neighborhoods only to be turned into rentals immediately – these were very standard single family homes in neighborhoods where rentals were rare (not anymore).

Yet another continuing trend is the number of working age Millennials living at home with mom and dad. Mom and dad are your typical Taco Tuesday baby boomers and are “shocked” that their kids can’t afford to rent let alone buy a home. Given current prices Millennials are not going to be buying in many high priced markets for years to come.

In total, 2.3 million adult “kids” live at home with their parents in California. Across the U.S. the total is roughly 10 million. So California as a percentage has more Millennials living at home than the nation overall. Take a look at the top metro areas where Millennials are living at home:

Miami has the highest percentage of Millennials living at home. This is followed by Riverside, Los Angeles, and finally the New York metro areas. So two of the top four areas are not only in California, but in Southern California. This makes total sense since Los Angeles is the most unaffordable rental market in the U.S. based on current rents and what families earn. In fact, there are only 4 markets were the percentage of Millennials living at home is above 30 percent.

Nokia could cut 10,000-15,000 jobs worldwide

Telecom network equipment maker Nokia (NOKIA.HE) is likely to cut 10,000 to 15,000 jobs globally - far more than it has announced so far - after its acquisition of Franco-American rival Alcatel-Lucent (ALUA.PA), a Finnish union representative said. The company has announced plans for around 2,400 job cuts in Finland and Germany as part of a cost-cutting program but has not so far given a global figure.

Cuts on the scale estimated by the union would represent as much as 14 percent of Nokia's worldwide work force of 104,000. Nokia kicked off the rationalization program in April with a target to slash 900 million euros ($1 billion) of operating costs by 2018.

"We haven't heard any official numbers, but based on the information from our union contacts, I would estimate the global impact of this round would likely be around 10,000 to 15,000 jobs," said Risto Lehtilahti, a trade union shop steward at Nokia's Oulu site. A Nokia spokeswoman declined comment on the figure.

Analysts and union representatives said that the company will likely follow up with a new round of cuts once the current one is finished. "Nokia and Alcatel have lots of overlaps, so the numbers will go up and the range could be something like that (10,000-15,000)," said Hannu Rauhala, analyst at OP Equities. "The integration takes place at a very hectic stage in the network industry. The market is falling, technology is changing and the environment is turbulent, so it is difficult to see that they would make it (the company) ready in one go," he said.

Hackers could bring down the banks, warns network boss

The head of the network that connects the world's banks has issued a warning: Hackers will strike again, and they could bring down a bank. The message from SWIFT CEO Gottfried Leibbrandt follows cyberattacks on banks in Bangladesh, Vietnam and Ecuador in which similar methods were used to circumvent local security systems.

The attack on Bangladesh's central bank yielded $101 million, while Ecuadorian bank Banco del Austro was hit for $12 million. Leibbrandt suggested in a speech on Tuesday that other attacks may have gone unreported.

"The Bangladesh fraud is not an isolated incident: we are aware of at least two, but possibly more, other cases where fraudsters used the same modus operandi, albeit without the spectacular amounts," he said.

SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, has already warned customers that the attacks appear to be "part of a wider and highly adaptive campaign." In each case, the criminals followed the same basic pattern: Attackers used malware to circumvent a bank's local security systems. They gained access to the SWIFT messaging network. Fraudulent messages were sent via SWIFT to initiate cash transfers from accounts at larger banks.

The Myth That the President Can Save the Economy

Hillary Clinton wants to bring back the 1990s. She has touted her husband’s economic record—“the longest peacetime expansion in our history”—and promised to put him in charge of fixing the economy because, in her words, “he knows how to do it.”

Donald Trump wants to resurrect the 1950s. With his promises to bring back manufacturing jobs and flip the U.S. trade deficit with China, Mexico, and other countries, Trump is calling for a closed economy not seen since the U.S. was the industrial colossus of the world. “We will have so much winning if I get elected that you may get bored with winning,” he said.

Both decades are worthy subjects of economic nostalgia. But as the country enters a general election in which promises about saving the economy will become more debased than Venezuelan currency, this is a good time to revisit an old truism: Presidents don’t shape the economy as much as the economy shapes presidencies. Although the office of the presidency has become imperial when it comes to surveillance, security, and foreign affairs, it remains relatively weak when it comes to single-handedly bending the GDP curve upwards.

The 1950s and 1990s are both good examples of the many ways that circumstances outside of any one individual’s control determine economic growth far more than policies originating in the Oval Office. In the 1950s, Dwight Eisenhower was considered a responsible steward of an economy that was poised to convert wartime productivity into peacetime bounty. During World War II American factories had learned productivity lessons that they later applied to making cars and refrigerators. The economy benefited from the mass adoption of several technologies, such as television and air conditioning, which had been invented decades prior but had not caught on because of the war and Depression. With much of the world still coping with the aftermath of war, the U.S. was the world's factory, and wages for middle-class workers soared.

Roger Altman Doesn't See a Recession Happening in 2016

Q1 2016 Canadian Silver Maple Sales Surge To Highest Record Ever

The Royal Canadian Mint just published its Q1 2016 Report, and the silver bullion coin sales figures were stunning to say the least. Not only did sales of Canadian Silver Maple Leafs surpass its previous record during the third quarter last year, it did so by a wide margin.

Why is this such a big deal? Because Q1 2016 sales of Silver Maples topped the Q3 2015 record, without surging demand and product shortages. Last year, there was a huge spike in silver retail investment demand due to the supposed “Shemitah” or the collapse of the broader stock markets. Investors piled into silver in a big way as they perceived a year-end market crash was inevitable.

During last August and September, some websites stated 2 month delivery wait times for certain products such as Silver Eagles and Silver Maples. With the huge spike in demand, sales of Canadian Silver Maples reached 9.5 million oz (Moz) in Q3 2015. Although, once investors became more relaxed as the broader markets turned around, demand for physical silver investment cooled down. Thus, Silver Maple sales declined to 9.1 Moz in the last quarter of 2015.

Actually, I was quite stunned by the figures published in the recent Royal Canadian Mint Report. Sales of Silver Maples jumped 1.1 Moz in Q1 2016 vs Q3 2015, with no real spike in overall retail investment demand. Which means, investors bought more Silver Maples in Q1 2016 than any other quarter in history. Furthermore, if Silver Maple sales continue to be this strong, the Royal Canadian Mint is on track to sell over 40 Moz compared to the 34.3 Moz in 2015. If Silver Eagle sales also continue on their strong trend of 1 Moz per week, the U.S. Mint could sell over 50 Moz of these coins. Together, these two official mints could sell over 90 Moz of Silver Eagles and Maples in just one year.

Gold Takes A Breather... Is This The Buying Opportunity Investors Are Looking For?

First it was Stan Druckenmiller, now it's George Soros. Following billionaire former hedge fund manager Druckenmiller's announcement that gold was his family office fund's largest currency allocation, we learned last week that his old boss, billionaire investor George Soros, purchased a $264 million stake in Barrick Gold (NYSE:ABX), the world's largest gold producer, after liquidating $3.5 billion in U.S.-listed stocks. Additionally, he disclosed owning call options on a gold ETF.

Soros' investment can be held up as further proof that sentiment toward gold has decidedly shifted positive, following the challenging last three years.

London-based precious metals consultancy Metals Focus just released its Gold Focus 2016 report in which the group calls an end to the gold bear market that began in late 2011, after the metal hit its all-time high of $1,900 per ounce. "We are optimistic about gold over the rest of this year and our projections see it peaking at $1,350 in the fourth quarter," the group writes. Global negative interest rate policy fears have reawakened investors' confidence in gold as a reliable currency and store of value.

The group adds: "In the near term, there may well be some liquidations of tactical positions." This is to be expected, especially around the start of summer, based on historical precedent. We've noticed that mining companies which have deleveraged their balance sheets this year have been some of the biggest gainers. Barrick, now Soros's largest U.S.-listed allocation, started 18 months ago.

Americans Increasingly Concerned About Outliving Savings

As life expectancies continue to climb, Americans are increasingly less confident that their savings will last through retirement. According to the latest findings from Northwestern Mutual's 2016 Planning & Progress Study, two-thirds of Americans believe there is some chance that they will outlive their savings, with one in three (34%) saying the likelihood is 51% or better. Fourteen percent think that outliving their savings is a definite (100% likelihood).

However, the study found Americans are not proactively addressing the financial implications of living longer. Only a fraction (21%) say they have increased their savings while more than four in 10 (44%) report having taken no steps at all.

The lack of preparation is particularly concerning given decreasing confidence about the future availability of Social Security. Only one-quarter of Americans (24%) say it's "extremely likely" that Social Security will be there when they retire. Nearly three in 10 (28%) listed Social Security uncertainty among the greatest obstacles to achieving financial security in retirement. Just one-third of non-retired Americans (35%) expect that Social Security will be their sole or primary source of retirement income compared to nearly half of current retirees (49%).

For the second year in a row, health care costs (45%) emerge as a top-cited obstacle to financial security in retirement along with lack of savings (44%)—substantially ahead of lack of planning (30%), events in Washington, D.C. (23%) and volatile markets (22%).

Why This Market Veteran Isn't Falling For a June Rate Hike

Federal Reserve: Mortgage debt rises to 4-year high

The amount of money that Americans owe to mortgage lenders rose to the highest level in more than four years during the first quarter, according to a new report from the Federal Reserve Bank of New York.

The New York Fed’s Quarterly Report on Household Debt and Credit, released Tuesday, showed that the nationwide total of mortgage debt rose by $120 billion from the fourth quarter of 2015 to the first quarter of 2016, to a total of $8.37 trillion.

According to the Fed report, which is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data, that’s the highest level in four-and-a-half years. Overall housing debt, which also includes home equity lines of credit, rose to $8.85 trillion in the first quarter, which is the highest that figure has been since the fourth quarter of 2011.

According to the Fed report, the HELOC debt amount actually fell by $2 billion from the fourth quarter of 2015 to the first quarter of 2016, to a total of $485 billion. Overall, American’s total debt, which includes mortgage debt, HELOCs, student loans, auto loans, and credit cards, increased by $136 billion in the first quarter, to $12.25 trillion. As the New York Fed notes in its report, the bulk of the total first quarter debt increase came from mortgages – $120 billion of the total $136 billion increase.

Switzerland About to Vote on “Free Lunch” for Everyone

In early June the Swiss will be called upon to make a historic decision. Switzerland is the first country worldwide to put the idea of an Unconditional Basic Income to a vote and the outcome of this referendum will set a strong precedent and establish a landmark in the evolution of this debate.

The Swiss Basic Income Initiative in a demonstration in front of parliament. As we have previously reported (see “Swiss Parliament Shoots Down Socialist Utopia” for details), Switzerland’s parliament has already rejected the idea, with even the socialists voting against it (proving that they are still in possession of most of their marbles and quite likely in possession of an abacus as well).

The Swiss public will have to approve or reject a change in the constitution that would allow for the introduction of an Unconditional Basic Income (UBI), or a preset, monthly minimum income to be paid out by the government to every adult and child in the country if their income falls below a specific threshold. Even though details of this proposal have been few and far between, the most commonly cited amount of this guaranteed income would be 2,500 Swiss Francs for adults and 625 francs for children. The architects of the proposal stress that this government-guaranteed payment, unlike the current benefit programs, will be entirely “no questions asked”, i.e., it will not be means-tested and will apply to every person legally living in Switzerland.

Currently, these are all the details that the Swiss have at their disposal to make their decision. No plan has so far been put forward to specify how such a proposal would be financed, whether an increase in income tax or VAT will have to be enforced, which specific existing welfare programs it would replace or how the glaringly obvious exploitation possibilities of such a plan would be avoided, without any kind of means test – or without “asking any questions”, according to one of the campaign’s catchphrases.

May 2016: Will Deutsche Bank Survive This Wave Of Trouble Or Will It Be The Next Lehman Brothers?

If you have been waiting for “the next Lehman Brothers moment” which will cause the global financial system to descend into a state of mass panic, you might want to keep a close eye on German banking giant Deutsche Bank. It is approximately three times larger than Lehman Brothers was, and if the most important bank in the strongest economy in Europe were to implode, it would instantly send shockwaves rippling across the entire planet. Those that follow my work regularly know that I started sounding the alarm about Deutsche Bank beginning last September. Since that time, the bad news from Deutsche Bank has not stopped pouring in. They announced a loss of 6.8 billion euros for 2015, Moody’s just downgraded their debt to two levels above junk status, and they have been plagued by scandal after scandal. In recent months they have gotten into trouble for trying to rig precious metal prices, for committing “equity trading fraud” and for their dealings in mortgage-backed securities. The following comes from Zero Hedge…

A month after admitting to rigging precious metals markets, Deutsche Bank has been hit with a double-whammy of more alleged fraudulent behavior today and the stock is sliding. First, Reuters reports that the bank took a charge of 450 million euros for “equity trading fraud,” and then Bloomberg reports that The SEC is looking into Deutsche’s post-crisis mortgage positions.

This is a bank that is steadily bleeding money, and so the last thing that it needs is for government agencies to be putting immense pressure on it. Unfortunately for Deutsche Bank, the SEC seems determined to kick it while it is down…

Troubled Wall Street giant Deutsche Bank is under another investigation, this time by the Securities and Exchange Commission regarding the pricing and reporting of certain mortgage-backed securities.

The Beginning of a US Dollar Crash?

I live in Asia and travel the continent quite a bit. So I’ve been a big fan of the strong dollar in recent years. The greenback has gone a long way in this part of the world. Flights… hotels… restaurants… It seems like everything’s been on sale. But now it looks like the party might be over. The greenback is now in a downtrend. Here are a few ways to play it for profit…

First, let’s look at some typical misinformation campaigns… Here are recent headlines from the chattering media class: 4/5: Dollar Rises as Investors Anticipate U.S. Data. 4/6: Dollar Falls on Fed Minutes. 4/13: Dollar Climbs Before Data Forecast. 4/15: Dollar Falls on Lackluster U.S. Data. 4/21: Dollar Rises After Solid U.S. Data. 4/25: Dollar Sinks After Q1 Growth Takes Another Hit

You got that? Now, ready to pull the trigger on a moneymaking trade with that advice? Good luck! (You’ll need it.) You see, there’s absolutely nothing there that can help you reliably make money trading the dollar.

You can’t make a greenback trade by keeping tabs on frenetic, emotional seesawing of media blather. This all reminds me of 2008-2009, when everyone said the dollar would go to zero.

2015 Corporate Progress Report: Cash Up $17 Billion, Debt Up $850 Billion

Debt can be a good thing. It gets the wheels of the economy moving. Too much debt, however, can be a bit of a problem to say the least (see: the financial crisis).

Well, American companies may just have a mountain’s worth of problems, according to a new report from Andrew Chang and David Tesher of S&P Global Ratings. “At the same time, the imbalance between cash and debt outstanding we reported on last year has gotten even worse: Debt outstanding increased 50x that of cash in 2015,” wrote Chang and Tesher.

“Total debt rose by roughly $850 billion to $6.6 trillion last year, dwarfing the 1% cash growth ($17 billion).” To be fair, Chang and Tesher do mention that the $1.84 trillion in cash that the over 2,000 companies they analyzed are holding is the largest amount ever. The issue is, a big pile of cash doesn’t help, as the analysts put it, “mask” the much, much larger mountain of debt.

Even more worrying, according to the analysts is the distribution of cash and debt among the companies they covered. “Removing the top 25 cash holders from the equation paints an even more concerning picture: Total debt rose $730 billion in 2015, while cash declined by $40 billion,” wrote Chang and Tesher.

Jim Grant: No rate hike this year

China Economic Collapse: Jim Chanos Issues Chilling Report on China

Jim Chanos is at it again. The billionaire short seller has often worried that China’s economic collapse is right around the corner. Last year’s stock market crash proved he may have a point, but how would we know when the economic collapse is here?

Chanos may have an answer. He says China’s problems are eerily similar to what went wrong in the United States a few years ago: reckless banking activity helped create the conditions for a crash.

So, if the Chinese financial system looks like the U.S. system did between 2005 and 2007, then that would give us a sign that the Chinese economy may be on the brink of collapse. Unfortunately, that’s exactly what’s been happening—a series of stock market crashes, followed by currency devaluation, followed by…well, misery.

Chanos laid out this devastating argument while speaking with Business Insider’s Linette Lopez and Josh Barro. “If we learned anything…during our crisis, it was you shouldn’t finance hard-to-value long-term esoteric real estate-related derivatives or securities with overnight money, which is what a lot of the investment banks ended up doing by ’07/’08,” he said. “They couldn’t move a bunch of the gunk on their balance sheet and increasingly they were financing themselves in the repo market.”

Moody’s downgrades Deutsche Bank’s credit rating

Moody’s doesn’t seem to have faith in Deutsche Bank’s turnround plan and so has downgraded the rating on its unsecured debt. Senior unsecured debt now has a Baa2 rating, down from Baa1

The credit rating agency, citing the German lender’s recent weak performance, said it faces challenges “including continuing low interest rates and macroeconomic uncertainty”. Responding Chief Executive John Cryan told Bloomberg he was “very disappointed” adding his bank has never had more capital and could easily repay its debt many times over.

A five-year turnaround plan at Deutsche Bank includes 9,000 job cuts, asset sales and cost reductions. Moody’s did say its outlook on ratings is stable, reflecting potential long-term benefits to creditors of that five-year strategy plan. It added the stable outlook reflects the actions taken by Deutsche Bank’s management team to preserve capital and liquidity during the restructuring process.

Deutsche Bank recently drew scathing criticism from shareholders at its annual general meeting. They were unhappy over its dramatic share price decline, costly legal wrangles and public squabbling among its directors. CEO John Cryan warned shareholders he expects further significant legal charges this year. Deutsche Bank has already set aside provisions of 5.4 billion euros to settle pending litigation. “Litigation expenses of this magnitude are completely unacceptable,” Cryan said, to broad applause from shareholders.

Bill Clinton's 'Economic Miracle'

Things have gotten so bad in the oil industry that workers have stopped paying their car loans

It's a hard time to be an oil worker. The slump in the price of crude — which is still half what it used to be even after a recent recovery — is hitting jobs and showing up in the consumer lending market.

Researchers at the Federal Reserve Bank of New York recently took a look at hardship in oil producing counties. They laid out their findings in a blog post on the NY Fed's Liberty Street Economics site, Tuesday.

They identified the counties where oil and gas jobs make up at least 6% of employment (the national average is 0.6%). There are 327 such counties, in the US, representing 1.7% of total US employment.

They then looked at delinquency rates in those areas. The findings for auto loan delinquencies is especially interesting. From the report: Auto loan delinquency rates were very similar in energy-producing counties to the U.S. average between 1999 and 2007. Beginning with the financial crisis, though, the energy counties began to perform persistently better. Since mid-2014, though, energy-county delinquencies have risen sharply in both absolute and relative terms.

As Their Anchors Sink, Malls Try To Present Retail 'Experience'

Many of the department stores that once anchored bustling shopping malls continue to close. Macy's will shutter 36 additional stores this year; 78 Kmart and Sears locations will also close. What to do with that vast, vacant space? There is no traffic, and no problem finding parking at Owings Mills Mall in Maryland. The 5,000 or so parking spaces are all vacant. A J.C. Penney closed last month and a Macy's closed last year.

When it opened in 1986, it was anchored by a Saks Fifth Avenue and catered to well-to-do Baltimore suburbanites. The mall's owner, Kimco Realty, is planning a multimillion-dollar revamp. Like many malls that are trying to re-attract customers, it will include a movie theater and restaurants. But it will not include a department store.

Jan Rogers Kniffen, a retail consultant familiar with the Owings Mills project, says the developers are hoping outdoor shopping without department stores will pay off. "They're trying to make it more interesting and more experiential, and so they're turning it inside out and making it open-air. Whether that will be a solution or not, I don't know," he says.

For many in Generation X, the suburban mall was their social epicenter. Kniffen says mall rats are no more. "The culture is dead. [They] were the last generation that went and hung out at the mall," he says. People shop where they socialize — and that's increasingly online. In less than 15 years, Kniffen expects half of sales will be Web-based, which will hit department stores especially hard.

Migration 'enormously positive' for Europe economies: IOM chief

The surge of migration to Europe is enormously positive for EU economies in the long term, the director general of the International Organization for Migration (IOM) said, praising improved efforts by European nations to integrate migrants into the economy.

Over one million migrants, many refugees escaping conflict in Syria and other states, arrived in Europe in 2015 and almost 200,000 have arrived so far this year by land and sea routes. The influx has caused concern in some conservative EU societies, boosting right-wing parties, and also prompted the bloc to negotiate a controversial deal with key transit country Turkey to stem the flow of migrants.

But with labour shortages in ageing EU societies, IOM director general William Lacy Swing said migration have a positive economic effect on Europe. "In general it is positive, because migrants bring a lot of motivation," Swing told AFP at the World Humanitarian Summit in Istanbul.

"Many of them bring a specific skill or they bring low level skills that fill jobs that people... in the European Union, United States, Japan for example... don't want to do," the head of the inter-governmental organisation said. "They will soon be putting money into the market and the sooner they can become regularised, the sooner they will pay tax, and the sooner they can become citizens, the sooner they can vote."

Wednesday 05.25.2016

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.