KITCO NEWS/Jim Wyckoff

Gold prices resilient despite apparent U.S.-China partial trade deal

December 13, 2019

Gold prices are slightly higher in early U.S. trading Thursday, and are showing surprising resilience in the face of a geopolitical scene that appears to have become more stable late this week. Some downbeat U.S. economic data is working in favor of the precious metals bulls Friday, as is a slumping greenback on the world foreign exchange market. February gold futures were last up $1.30 an ounce at 1,473.50.

U.S. retail sales in November came in up a paltry 0.2% from October, which was a downside miss from expectations for a 0.5% rise. Asian and European stock indexes were higher overnight. The U.S. stock indexes are pointed toward higher openings and new record highs. Risk is back on the table for traders and investors following reports the U.S. and China are very close to a partial trade deal, as was reported at midday. However, the marketplace is now wondering why there is ‘radio silence’ coming from Chinese officials Friday … Reports said the partial trade deal involves China purchasing $50 billion of U.S. goods—mostly agricultural products—in 2020, in exchange for the U.S. not imposing new tariffs on Chinese imports into the U.S., and cutting in half the current tariffs in place.”

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MARKET WATCH/Shawn Langlois

Here’s proof that 401(k) plans are not working for most Americans — can you guess who they ARE working for?

December 12, 2019

Retirement Gap Has Grown“Those golden years aren’t looking so golden for most Americans. Clearly, the country’s in the midst of a savings crisis as families struggle to cover rising home costs, hefty student-loan debt and everything in between. And it seems it’s only getting worse, unless you’re at the top of the wealth pyramid.

The Economic Policy Institute nonprofit, nonpartisan think tank this week published a series of telling charts that ‘paint a picture of increasingly inadequate retirement savings for successive generations of Americans — and large disparities by income, race, ethnicity, education, and marital status.’ … With almost half of all working-age families having ZERO in retirement savings, the fact that the median family had only $7,800 in these accounts shouldn’t come as a surprise. At the same time, the 90th percentile family had $320,000 and the top 1% of families (which isn’t shown on the chart) had $1,663,000 or more.”

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THE WALL STREET JOURNAL/Harriet Torry

Holiday Retail Sales Had a Lackluster November Start

December 13, 2019

Holiday Retail Sales“Retail sales advanced at a lackluster pace in November, signaling a slower-than-expected start to the critical holiday shopping season. Retail sales, a measure of consumer spending at stores, restaurants and online, increased a seasonally adjusted 0.2% in November from a month earlier to $528.0 billion, the Commerce Department said Friday. Sales declined sharply in November across a number of categories that are closely tied with holiday gift-giving, including clothing, electronics, department and sporting goods stores. Spending at bars and restaurants also dropped 0.3% last month, the steepest monthly decline since December last year.

Excluding the volatile categories of autos and gas, retail sales were flat in November. Robert Frick, corporate economist at Navy Federal Credit Union, said that ‘retail sales point to more consumer caution’ in a commentary note. Still, Friday’s report suggests consumers are spending enough to support the expansion, he added. As the traditional start of the holiday-shopping season, November is a key month for retailers, especially for department stores, clothing outlets and online sellers.

The month includes Thanksgiving Day and Black Friday, days in which Americans crowd malls and shop online for deals. Due to a late Thanksgiving, there are six fewer days in the holiday shopping season this year compared with 2018. Cyber Monday fell in December this year, and so wasn’t accounted for in Friday’s report … November sales at electronics and appliance stores rose 0.7% last month but slid 1.5% from a year earlier. Sales at non-store retailers, a category that includes internet merchants like Amazon.com, were up 0.8% from October and grew 11.5% from a year earlier.”

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CNBC/Yelena Dzhanova and Christie Wilkie

Judiciary Committee votes to advance articles of impeachment against Trump

December 13, 2019

Articles of Impeachment“Following two days of heated debate, the House Judiciary Committee on Friday approved two articles of impeachment against President Trump, sending them to the House floor for a final vote. Both articles were passed by a 23-17 margin along party lines. The articles charge Trump with abuse of power and obstruction of Congress for a months’ long campaign to pressure Ukraine to launch investigations into his political opponents and his subsequent refusal to allow senior White House aides to testify before Congress as it investigated the matter.

Trump campaign spokeswoman Kayleigh McEnany said in a tweet immediately after the vote that the move ‘will backfire and on November 3, 2020, voters will re-elect’ Trump.  The full House vote on the articles is expected next week, before Congress goes on recess for the Christmas holiday. Friday’s vote followed two days of public debate during which members of the Judiciary Committee proposed various amendments to the legislation. None of the amendments was accepted by the Democratic controlled committee … If articles of impeachment pass the House next week, the Republican-controlled Senate will conduct a formal trial of the president, likely in January. It is unclear whether the Senate plans to call witnesses to defend the president or merely mount a legal defense without the added drama of live witnesses.”

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ASSOCIATED PRESS/Jill Lawless, Danica Kirka and Mike Corder

Johnson claims Brexit mandate with new conservative majority

December 13, 2019

Boris Johnson“Boris Johnson’s gamble on early elections paid off as voters gave the UK prime minister a commanding majority to take the country out of the European Union by the end of January, a decisive result after more than three years of stalemate over Brexit. Johnson’s promise to ‘get Brexit done’ and widespread unease with opposition leader Jeremy Corbyn’s leadership style and socialist policies combined to give the ruling Conservative Party 365 seats in the House of Commons, its best performance since party icon Margaret Thatcher’s last victory in 1987. Corbyn’s Labour Party slumped to 203 seats, 59 fewer than it won two years ago, vote totals showed Friday.

 

The results offer Johnson a new mandate to push his EU withdrawal agreement through Parliament. Since taking office in July, he had led a minority government and, after the House of Commons stalled his Brexit deal at the end of October, he called the election two years ahead of schedule in hopes of winning a clear majority. ‘I will put an end to all that nonsense, and we will get Brexit done on time by the January 31 – no ifs, no buts, no maybes,’ he said as supporters cheered. ‘Leaving the European Union as one United Kingdom, taking back control of our laws, borders, money, our trade, immigration system, delivering on the democratic mandate of the people.’”

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YAHOO FINANCE/Arkadiusz Sieroń/FX Empire

Fed Says No Hikes In 2020. What About Gold?

December 12, 2019

Gold Prices“Yesterday, the FOMC published the monetary policy statement from its latest meeting that took place on December 10-11th. In line with expectations, the U.S. central bank left the federal funds rate unchanged at 1.50 to 1.75 percent: Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1 1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective.”

Curiously enough, the Fed’s stance will be easier without any particular economic justification: the whole path of expected growth in GDP and overall inflation is unchanged, core inflation is slightly down this year, while the unemployment rate got reduced over the whole path! But the lower level of the federal funds rate should be supportive for the gold prices. Indeed, the immediate reaction of gold to the FOMC statement was positive. The price of the yellow metal rose from $1,470 to $1,478 during the first hour after the publication of the fresh announcement and economic projections … But what to expect in the future? Well, the Fed will certainly talk a good deal about its neutral stance. However, we all know that the U.S. central bank is not truly neutral, for it has clear dovish bias. For years, the Fed projected higher interest rates that they actually turned out to be in reality. And the U.S. central bank is not eager to take interest rates back to the pre-crisis level. Not at all! As Powell said during his press conference, ‘I would want to see inflation that’s persistent and significant’ before raising rates again. That’s huge declaration which means that Powell gave up on any try to normalize the interest rates.”

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