MARKET WATCH/Mark DeCambre
Gold prices struggle for purchase higher after worst weekly in more than 2yrs
November 11, 2019
“Gold futures traded little-changed Monday as the precious commodity sought to gain traction higher after the sharpest weekly skid in percentage terms since 2017 for silver and gold. December gold on Comex was 50 cents, or less than 0.1%, higher at $1,463.40 an ounce, after the yellow metal marked its biggest weekly slide, off 3.2%, since the week ended May 5, 2017, when the most-active contract fell 3.26%.
December silver meanwhile, shed 4 cents, or 0.2%, at $16,775 an ounce, after it booked a 6.8% decline for the week, the sharpest such fall since the week ended July 7, 2017. Commodity experts say precious metals may be in a vulnerable spot after recent record gains in the Dow Jones Industrial Average and the S&P 500 index which imply that demand for assets considered havens may be waning in place of growing appetite for stocks. ‘While $1,460 is providing some temporary support, this remains a very vulnerable level with $1,440-1,450 below here also interesting,’ wrote Craig Erlam, senior market analyst at brokerage Oanda.”
Hong Kong protests: Two people in critical condition after day of chaos
November 11, 2019
“Two people are in critical condition after another day of violent demonstrations in Hong Kong. A protester was injured on Monday morning when he was shot at close range by a police officer.
He was the third person shot by police since the protests began 24 weeks ago. Later on Monday a pro-Beijing supporter was doused in flammable liquid and set alight after arguing with protesters, who are demanding greater democracy and police accountability in Hong Kong. The territory’s Chief Executive Carrie Lam, speaking to reporters on Monday evening, warned protesters they would not succeed in getting their demands.
There were clashes across Hong Kong on Monday between protesters and police, who fired rubber bullets and tear gas. At one point, tear gas was fired in the central business district – a rare occurrence during working hours on a weekday. Monday’s violence followed a weekend of vigils and protests after a 22-year-old student protester died on Friday. Alex Chow had been in hospital since he fell from the ledge of a car park during a police operation a week ago. The protests started in June against a now-withdrawn plan to allow extradition to mainland China.”
CNN BUSINESS/Julia Horowitz
Two of the world’s biggest economies are at risk of recession
November 10, 2019
“Investors have recently put fears about the pace of global growth aside, opting for optimism on a ‘phase one’ US-China trade deal. But muted economic data expected out of Europe this week could change the mood. Germany may post data Thursday indicating that it’s in recession. Economists surveyed by Reuters believe the world’s fourth largest economy shrank 0.1% between July and September — marking two straight quarters of negative growth. It’s possible that Germany — which has been hit by the trade war, as well as falling global demand for autos — just dodged a bullet.
Recession or not, the reality is that Germany’s economy, the largest in Europe, looks very weak. A reminder of that could give investors a jolt. ‘The fact remains that the German economy has been in de facto stagnation for more than a year, Brzeski said. This is clearly nothing to become too cheerful about. Also, on the calendar is Fed Chair Jerome Powell’s testimony before Congress on the US economy on Wednesday and Thursday. Expect Powell to get grilled on where the Fed goes after three straight ‘insurance’ cuts to interest rates. He’s also likely to face questions on weak manufacturing and business investment data … The United Kingdom will report GDP data on Monday. The country’s economy shrank for the first time since 2012 in the second quarter as global growth and Brexit fears loomed large — but economists think the U.K. will narrowly recession.”
401(k)s Aren’t Helping Americans Save Enough for Retirement.
November 9, 2019
“The rise of 401(k) plans over the past 40 years as a pension replacement hasn’t helped Americans save enough for retirement, thanks primarily to the relative immaturity of the system and a lack of access or participation for many workers. In a new research paper from the Boston College Center for Retirement Research … argues that there are four reasons for 401(k)s’ shortcomings—the system’s youth (the plan has been around only since the early 1980s), the lack of universal coverage, so-called leakage where participants withdraw funds early, and fees.
Most workers have 401(k) balances at retirement that are well below their potential. For example, a 25-year-old median earner in 1981, if he/she contributed regularly, would have accumulated about $364,000 by age 60. But in reality, the typical 60-year-old with a 401(k) in 2016 had less than $100,000 … Many employers still don’t make plans available or restrict participation. Further, some employees simply don’t participate. Plan participants have a number of ways of accessing savings before retirement. They have the ability to cash out when they change jobs. Or they can take hardship withdrawals. The 10% penalty imposed on withdrawals before age 59½ hasn’t prevented considerable leakage, either. Vanguard Group data for 2013 shows an annual leakage rate of 1.2% per year, nearly half of which is attributed to cash-outs during a job change.”
MARKET WATCH/Shawn Langlois
The biggest risk facing the stock market in the coming year isn’t trade jitters or the election, Deutsche Bank warns
November 10, 2019
“There’s plenty for investors to get all stressed out about in the coming year, and Deutsche Bank chief economist Torsten Slok’s latest list of the 20 biggest risks will do little to alleviate concerns. As you can see, the potential for more trade fallout and fears over slowing growth still rank high on Slok’s list, but inequality is in the top spot. ‘They are all important at different horizons,’ Slok told MarketWatch on Sunday, ‘but a continued rise in inequality and associated political response is something investors can no longer ignore.’
Democratic presidential candidates certainly aren’t ignoring it. Increased taxes on the rich, is a critical part of the campaigns of both Sens. Elizabeth Warren and Bernie Sanders ahead of the election. Big-name investors have already made it clear what a President Warren could mean for markets. Billionaires Paul Tudor Jones, Leon Cooperman and Steve Cohen have all talked about a nasty correction that could follow her victory.”
THE WALL STREET JOURNAL/Anna Maria Andriotis and Ben Eisen
More Borrowers Are Going Underwater on Car Loans
November 9, 2019
“Consumers, salespeople and lenders are treating cars a lot like houses during the last financial crisis: by piling on debt to such a degree that it often exceeds the car’s value. This phenomenon—referred to as negative equity, or being underwater—can leave car owners trapped. Some 33% of people who traded in cars to buy new ones in the first nine months of 2019 had negative equity, compared with 28% five years ago and 19% a decade ago, according to Edmunds. Those borrowers owed about $5,000 on average after they traded in their cars, before taking on new loans. Five years ago the average was about $4,000.
Rising car prices have exacerbated an affordability gap that is increasingly getting filled with auto debt. Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can last seven years or longer. Borrowers are responsible for paying their remaining debt even after they get rid of the vehicle tied to it. When subsequently buying another car, they can roll this old debt into a new loan. The lender that originates the new loan typically pays off the old lender, and the consumer then owes the balance from both cars to the new lender. The transactions are often encouraged by dealerships, which now make more money on arranging financing than on selling cars.”