REUTERS/ Karthika Suresh Namboothiri

Gold rises as ‘phase one’ trade deal doubts persist

November 22, 2019

“Gold prices were on track for a second straight weekly gain on Friday, as uncertainties about the fate of a ‘phase one’ trade deal between the United States and China lingered. Spot gold was up 0.4% at $1,469.51 per ounce at 1348 GMT, and was 0.1% higher for the week. U.S. gold futures also climbed 0.4% to $1,469.70 per ounce. ‘Gold is on the bullish side given the ongoing uncertainty regarding trade talks, which increased following the approval of the Hong Kong bill in the U.S. Congress,’ a Commerzbank analyst said.

‘In all likelihood, Trump will sign it (the bill) which could be a stumbling block for a solution in trade talks, and hurt prospects of continued negative interest rates. This has continued to support investment demand in gold.’ The United States on Wednesday passed two bills intended to

support protesters in Hong Kong and send a warning to China about human rights, to China’s displeasure. Chinese President Xi Jinping said earlier in the day that China wants to work out an initial trade pact with the U.S. and has been trying to avoid a trade war, but is not afraid to retaliate.”

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Janet Yellen on the economy: ‘There is good reason to worry’

November 21, 2019

Janet Yellen“Janet Yellen is concerned the US-China trade war may end the longest economic expansion in American history. Yellen, the first woman to ever lead the Federal Reserve, doesn’t think a recession will strike in the coming year. But she doesn’t sound confident in that prediction. ‘I have to say, the odds of a recession are higher than normal and at a level I’m really frankly not comfortable with,’ Yellen said Thursday. The former Fed chief said there are ‘definitely downside risks’ facing the US economy, including a ‘marked slowdown in global growth’ and vast uncertainty sparked by trade tensions.

‘There is good reason to worry,’ said Yellen, who served as chairwoman of the Fed between 2014 and 2018. President Trump replaced Yellen with Jerome Powell. Recession fears have recently receded on Wall Street. The Dow rocketed past 28,000 last week as investors cheered progress in US-China trade negotiations, signs of stabilization in the economy and more easy money from the Fed. However, US stocks retreated a bit in recent days on concerns that a preliminary trade agreement may not happen until 2020 … the manufacturing industry has been slammed by the trade war and weak global growth. China’s economy grew during the third quarter at the slowest pace in 27 years. And Germany only narrowly avoided a recession. Yellen warned that those troubles could still infect the rest of the economy.”

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Slowing Business Activity Sounds Alarm for Global Economy

November 22, 2019

Slowing Business Activity“Business activity in some of the world’s largest economies remains sluggish as 2019 draws to a close, amid signs that a long slowdown in manufacturing is spreading to the services sector. Across the globe, factories have been hit by rising tariffs and slowing investment spending as businesses opt to wait out a lengthening period of unusually high uncertainty about future trade relations between the world’s leading economies. Meanwhile, leading sectors such as automobiles and electronic components confront specific challenges, such as tighter emissions standards.  In her first speech as head of the European Central Bank, Christine Lagarde Friday warned that a ‘fracturing’ of the global economic system means that robust rates of economic growth ‘are no longer an absolute certainty.’

‘Ongoing trade tensions and geopolitical uncertainties are contributing to a slowdown in world trade growth, which has more than halved since last year,’ she said. ‘This has in turn depressed global growth to its lowest level since the great financial crisis.’ Surveys of purchasing managers published Friday show that declines in factory activity in Japan and Europe are becoming less severe, although service providers reported less buoyant growth than in earlier months.”

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CNBC/Thomas Franck

World’s largest hedge fund bets over $1 billion on a big stock market sell-off

November 22, 2019

Hedge Fund“The largest hedge fund in the world has reportedly staked more than $1 billion that global equity markets will fall during the next three months. The wager placed by Ray Dalio’s Bridgewater Associates would pay off for the firm if either the S&P 500 or the Euro Stoxx 50 or both decline, people familiar with the matter told The Wall Street Journal. The Journal said the bet uses put options — assembled over months by Goldman Sachs and Morgan Stanley — that give investors the option of selling stocks at a predetermined price by a given date. The firm paid about $1.5 billion for the contracts, about 1% of Bridgewater’s $150 billion in total assets under management, the report said.

‘Though we won’t comment on our specific positions we do want to make two things clear,’ Bridgewater said in a statement. ‘First, the way we manage money is to have many interrelated positions, often to hedge other positions, and these change often, so that it would be a mistake to look at any one position at any one time to try to deduce the motivation behind that position.’ ‘Second, we have no positions that are intended to either hedge or bet on any potential political developments in the U.S.,’ the firm added. Though Bridgewater wouldn’t confirm the motivation behind the bearish bet, many investment strategists and investors alike have grown wary in recent weeks as all three U.S. equity indexes clinched new all-time highs.”

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BLOOMBERG/ Piotr Skolimowski, Jana Randow and Yuko Takeo

Lagarde Calls for Government Help in First Major ECB Speech

November 22, 2019

Lagarde Calls for Govt Help“European Central Bank President Christine Lagarde called for a new policy mix, saying public investment should be stepped up to ease the burden on monetary stimulus and ensure the region can thrive in an uncertain world. In her first major speech, three weeks into the job, the new ECB chief said her institution will continue to support the euro-zone economy. But she also said fiscal policy is a key element for overcoming the challenges of changing global trade and declining domestic growth. Minutes after she finished, fresh data showed the current slowdown worsening.

‘Twin external and domestic challenges call on us to consider — as Europeans — how we should respond to the new environment,’ Lagarde said at a banking conference in Frankfurt. ‘The answer lies in converting the world’s second-largest economy into one that is open to the world but confident in itself — an economy that makes full use of Europe’s potential to unleash higher rates of domestic demand and long-term growth.’ The size of the challenge was highlighted by purchasing managers indexes published Friday, which showed the economy unexpectedly weakened this month, with a downturn in services activity. That suggests a slump in manufacturing, especially in Germany, is starting to spread to other sectors. That kind of data, which drove the euro lower, is something Lagarde will need to address at her first policy meeting on Dec. 12.”

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More than half of Americans think they’re behind on retirement savings, and another 20% have no idea where they stand

November 22, 2019

Retirement Savings“Americans are largely behind on retirement savings, and they know it. According to a new Bankrate survey of nearly 2,700 adults, over half of the respondents (52%) said they’re not where they should be with their retirement savings, while 16% said they’re right on track, and 11% said they’re ahead. What’s more, 20% of respondents said they have no idea where they fall when it comes to retirement savings progress. The survey found that income plays a big role. People who earn less than $80,000 a year were most likely to say they were falling behind on retirement savings, while people who earn more were most likely to say they’re ahead. The high-earners were the least likely group to say they didn’t know where they stood.

Recent data shows Gen X is struggling most with retirement prep. A previous survey from Insider and Morning Consult found that exactly half of Gen Xers don’t have a retirement savings account. That’s only slightly less than the share of millennials who don’t have one, even though there’s a multi-decade age difference. While the Silent Generation and early Baby Boomers have relied on a combination of pension benefits and Social Security to make up their retirement income, Gen X is the first generation that has largely had to assume the responsibility of building up their own nest egg. All told, the Insider and Morning Consult survey found only 36% of Gen Xers are actively saving in a retirement account, while 13% have a dormant retirement account.”

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