REUTERS/ K. Sathya Narayanan

Gold edges higher but faces first weekly decline in six

January 17, 2020

“Gold edged higher on Friday but was on track to post its first weekly decline in six as solid Chinese data and a preliminary U.S.-China trade deal improved risk appetite.  Palladium jumped over 3% to register another record high as the market grapples with deep supply shortages.  Spot gold was up 0.1% at $1,554.69 per ounce at 1401 GMT, but was heading for a weekly drop of around 0.5% – its biggest since early November.

‘You would expect gold to trade a little bit lower after the economic data from China. (But) what is pushing gold prices higher is the sense of caution as to what to expect after the Phase 1 trade deal,’ said FXTM analyst Lukman Otunuga. ‘I think the sense of uncertainty and caution is encouraging investors to take positions in gold.’ World shares hit record highs after data showed China’s economy was stabilizing and the world’s second-largest economy ended 2019 on a somewhat firmer note as the trade truce revived business confidence. However, investors were still nervous as the Phase 1 deal failed to address tariffs and some important core issues.”

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KITCO NEWS/Jim Wyckoff

Gold, silver prices up; focus on better consumer demand

January 17, 2020

Gold and Silver Prices UpGold and silver prices are moderately higher in early U.S. futures trading Friday. The precious metals market bulls are presently focusing on better global economic prospects in 2020 igniting better consumer demand for the metals. The safe-haven metals are faring well despite keener risk appetite that sees the U.S. stock indexes at record highs and a world geopolitical scene that is presently quiet.

Asian and European stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward higher openings and at record highs again when the New York day session begins. Trader and investor risk appetite remains robust amid a quieter geopolitical front. Given the low interest rate environment at present, and no signs of inflation becoming problematic any time soon, many investors reckon the only game in town is and will be buying shares. However, veteran traders are realizing that a whole lot of bullish stock market traders are now on one side of the boat. That situation may not last long. In overnight news China, the world’s second-largest economy, had its worst annual GDP growth pace in 29 years in 2019, at 6.1% … All in all, the marketplace deemed the data as more upbeat because China’s economy is picking up speed from what was seen a few months ago.”

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MARKET WATCH/Steve Goldstein

From a U.S. stock surge to a bursting of China’s triple bubble, here are 10 possible shockers for 2020, according to Credit Suisse

January 17, 2020

Shockers for 2020“Three weeks into the new year and there really haven’t been that many surprises. Stocks keep reaching new records, and companies with what one could charitably say are elevated valuations, like plant-based food company Beyond Meat and car maker Tesla, are back in fashion. A brief flare-up of tensions in the Middle East seems to have been quickly relegated to history. The impeachment trial for President Donald Trump looks like it will be short-lived …  Now for a few ghastly shockers. One is where China’s gross domestic product growth slumps to below 4%. The Credit Suisse team warns of a triple bubble in credit, real estate and investment, and says that in Japan, the U.S., Ireland and Spain, recessions happened within a year of house prices falling … Another would be technology stocks underperforming. Global technology is overbought, the sell side is very positive on the semiconductor sector, and, statistically, the best-performing three sectors in the U.S. and Europe tend to underperform the following year. Plus, regulatory headwinds are increasing.

A funding crisis in Italy is another nasty surprise the Credit Suisse team imagines. Italy’s per capita growth is the weakest in Europe, it is losing export market share, it has one of the lowest levels of secondary education in Europe, and very challenging demographics. Either a political crisis—Italy is no stranger to those—or a downgrade of Italian debt by credit-rating firms could trigger such a crisis, which could drive spreads on Italian government bonds versus German debt much higher, trigger an Italian recession, and weigh on European stocks.”

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Reuters/Swati Verma, Rajendra Jadhav

Asia Gold-China sees brisk festive purchases; Indian demand tame

January 17, 2020

Asia Gold“Physical gold purchases gathered steam ahead of the Lunar New Year celebrations in China and Singapore, while demand in India dwindled this week, encouraging retailers to offer more discounts. The Chinese Lunar New Year falls during the last week of January and gold demand is usually boosted during the period. ‘Demand has been increasing – but I think it is more about seasonal demand picking up rather than a change in a trend,’ said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS. ‘Demand should start to dry up after the New Year.’  Premiums of $5-$6 an ounce over the benchmark price were charged in top-consumer China, compared with $7-$7.50 last week. In Singapore markets, premiums rose to $0.60-$0.80 an ounce versus $0.50-$0.60 last week.

“We’re seeing the usual buying for the upcoming Chinese New Year … Compared to last year, retail buying is 10-15% better for this period,” said Brian Lan, director at Singapore dealer GoldSilver.  Demand was fragile in India, the world’s second largest gold consumer, where dealers were offering a discount of up to $11 an ounce over official prices, compared with a discount of $7 last week.  The domestic price includes a 12.5% import tax and 3% sales tax. Gold futures were trading around 39,770 rupees per 10 grams on Friday, after hitting a record high of 41,293 rupees earlier this month.”

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BLOOMBERG/Rich Miller and Enda Curran

U.S. Passes Global Growth Baton to Rest of World, For Now

January 16, 2020

Global Growth“America’s days as pace-setter for the world economy may be coming to an end. With the International Monetary Fund releasing new forecasts on Monday, a rising number of economists are predicting that the U.S.’s momentum will fall behind that of the rest of the world as global growth bottoms out and looks set to slowly pick up in 2020. ‘The world leads and the U.S. lags,’ Joachim Fels, global economic adviser for Pacific Investment Management Co., which oversees $1.91 trillion in assets, told Bloomberg Television. In one of the more pessimistic forecasts out there, Pimco predicts the U.S. expansion could slow to about 1% in the first half of this year before accelerating.

The projected 2020 pattern would be in contrast to what happened in the past two years, when U.S. demand was boosted by President Donald Trump’s tax cuts while economies elsewhere were weaker and weighed down by his America First trade policies. ‘We are turning on its head the story we’ve been telling each other for the last two years, namely that Europe was bad and the U.S. was good,’ said Torsten Slok, chief economist for Deutsche Bank AG. That reversal of fortunes has implications for investors. European stock markets should outperform the U.S. while yields on German bunds should converge upward toward those on U.S. Treasury securities, Slok said.”

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FORBES/William Pesek

U.S.-China Trade Deal: A $40 Trillion Trap on Trump’s Wall Street Buddies?

January 17, 2020

US China Trade Deal“There’s one thing we can say for sure about President Donald Trump’s trade talks with his Chinese counterpart Xi Jinping: both men think they’re playing the other for a fool. Folks can debate who’s the real dupe in the ‘phase one’ negotiations. On balance, though, Xi seemed to get the better of the Art of the Deal White House. Trump didn’t score much more than the U.S. had with the Trans-Pacific Partnership. The extra $200 billion of U.S. goods China will buy doesn’t alter the mechanics of the trade relationship one iota. Yet might Wall Street end up being the loser here?

The U.S. investment game just won unprecedented access to China’s financial sector. Just not the kinds of assets Wall Street’s small army of lobbyists might’ve preferred. Once U.S. institutions apply for asset-management licenses, they will soon be able to buy non-performing loans directly from mainland banks—and increase their exposure to the debt stumble for which many observers think Beijing is due. ‘And just like that, U.S. pensioners will backstop China’s $40 trillion financial system,’ quipped Zero Hedge. Snark aside, you have to wonder why investors still traumatized by Wall Street’s subprime crisis would want any part of China’s so-called Minsky moment. That’s when a debt-and-credit-driven boom meets a nasty end. No industrializing economy has avoided one. Not Japan in 1990, nor Latin America in 1994, Southeast Asia in 1997, Russia in 1998, nor the U.S. in 2008. Can China beat the system, so to speak? No one can say, of course.”

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REUTERS/ K. Sathya Narayanan

Gold steadies after U.S.-China deal, palladium jumps over 5%

January 16, 2020

“Gold prices were little changed on Thursday, but still holding above the key $1,550 level as the signing of a preliminary trade deal between the United States and China failed to address concerns about tariffs and other core issues.  Record-setting palladium, on the other hand, soared more than 5%, while platinum jumped to its highest level in almost three years.  Spot gold slipped 0.1% to $1,554.86 per ounce as of 1046 GMT. U.S. gold futures gained 0.1% to $1,555.10.  The much-awaited Phase 1 trade deal was signed by U.S. President Donald Trump and Chinese Vice Premier Liu He on Wednesday, defusing an 18-month-long row that has roiled global markets.

‘From many people’s perspective the deal looks quite underwhelming, there is still a lot which needs to be resolved… that is one of the reasons why gold has upheld the level of $1,550,’ OANDA analyst Craig Erlam said. ‘The fact that the tariffs are still in place gives more hope that the phase two is being taken more seriously.’ Analysts noted the Phase 1 deal fails to address structural economic issues that led to the conflict, doesn’t fully eliminate the tariffs, and sets hard-to-achieve purchase targets, leaving a number of sore spots unresolved.”

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ABC NEWS/Miriam Khan

Senate to accept articles Thursday as Trump impeachment trial set to begin

January 16, 2020

“The Senate is set to formally accept the articles of impeachment Thursday, after they were handed off by key members of the House late Wednesday, officially triggering the third presidential impeachment trial in presidential history.  House managers, who were officially revealed will read the articles of impeachment against President Donald Trump in the Senate chamber sometime in the afternoon, with House Intelligence Committee Chairman Adam Schiff taking a lead role. After the articles are ‘exhibited’ it is expected that Chief Justice John Roberts will be sworn in to preside over the Senate impeachment trial.

“‘This is a very important day for us,’ Pelosi said Wednesday.  ‘Time has been our friend in all this,’ she added, noting what she called the new ‘incriminating’ evidence that has surfaced in the month since the House impeachment vote on Dec. 18. Schiff said the new evidence, revealed by the House just Tuesday night, must be considered by the Senate. It’s undecided if the Senate will hear from witnesses or consider new evidence during the trial.”

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CNN BUSINESS/Jill Disis and Charles Riley

A world trade war is brewing. The US-China deal won’t stop it

January 16, 2020

“The United States has signed a partial trade agreement with China. But that doesn’t mean simmering conflicts and uncertainty over trade won’t drag down the global economy this year. Tensions between the world’s two biggest economies are likely to persist in 2020 as Beijing and Washington enter a second round of trade talks that are expected to be more difficult than the ‘phase one’ process that culminated in a deal Wednesday. The European Union is also locked in its own trade dispute with the United States that has strained ties. And the U.K.’s looming break with Europe brings a slew of challenges as the country attempts to forge a new relationship with its largest export market.

President Trump has heralded the ‘phase one’ US-China trade deal as a significant breakthrough. US officials said the agreement will reduce some tariffs and allow Beijing to avoid additional taxes on almost $160 billion of the country’s goods. The Trump administration also said it received commitments from China to purchase billions worth of agricultural goods and crack down on intellectual property theft …  But more specific details about the text of the agreement have been elusive … ‘The deal as outlined harvests all the low-hanging fruit,’ analysts at Capital Economics wrote in a research note last month. The initial deal ‘does not mark the end of tensions between the US and China,’ they added.”

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MARKET WATCH/Shawn Langlois

The last time this ‘clear danger sign’ flashed in the stock market was in 1999, and we all know what happened next

January 15, 2020

“‘When pigs squeal, feed them.’ Brad Lamensdorf, portfolio manager for AdvisorShares Ranger Equity Bear ETF, used that expression to describe what he sees in his ‘Chart of the Week,’ which, he says, should give investors cause for concern.  The chart, pulled from a recent Wall Street Journal story, essentially shows how much red ink is spilling in the IPO market. As you can see, the last time this ‘clear danger sign’ popped up was on the brink of the dot-com implosion in 1999.  As the Journal pointed out, 42% of these money-losers come from the health-care sector, where investors look to make a killing on smaller biotech stocks with big upside. Another 17% come from the technology sector.

‘Over-priced IPOs usually occur toward the end of a long bull run when stocks in general become very overpriced,’ Lamensdorf wrote. ‘Why does this happen? Generally, because investors have lost their sense of reality. They are willing to buy stocks on hyped stories instead of the facts.’ In other words, investment bankers, he explained, pounce on the opportunity to stuff the stock market — or, as the expression goes, feed the pigs — with overpriced companies as long as the public has an appetite for risk. Investors showed some risk appetite in Wednesday’s trading session, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all moving nicely higher.”

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THE WALL STREET JOURNAL/Greg Ip

The Era of Fed Power Is Over. Prepare for a More Perilous Road Ahead.

January 15, 2020

“The Federal Reserve and other central banks have long been the unchallenged drivers of financial markets and the business cycle. ‘Don’t fight the Fed,’ goes one Wall Street adage. That era is drawing to a close. In many countries, interest rates are so low, even negative, that central banks can’t lower them further. Tepid economic growth and low inflation mean they can’t raise rates, either. Since World War II, every recovery was ushered in with lower rates as the Fed moved to stimulate growth. Every recession was preceded by higher interest rates as the Fed sought to contain inflation.

But with interest rates now stuck around zero, central banks are left without their principal lever over the business cycle. The eurozone economy is stalling, but the European Central Bank, having cut rates below zero, can’t or won’t do more. Since 2008, Japan has had three recessions with the Bank of Japan, having set rates around zero, largely confined to the sidelines. The U.S. might not be far behind. ‘We are one recession away from joining Europe and Japan in the monetary black hole of zero rates and no prospect of escape,’ said Harvard University economist Larry Summers. The Fed typically cuts short-term interest rates by 5 percentage points in a recession, he said, yet that is impossible now with rates below 2%. Workers, companies, investors and politicians might need to prepare for a world where the business cycle rises and falls largely without the influence of central banks.”

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THE MOTLEY FOOL/Sean Williams

The Hidden Recession That Everyone Is Overlooking

January 16, 2020

“To say that the stock market has some big shoes to fill in 2020 would be quite the understatement. In 2019, the benchmark S&P 500 gained approximately 29% (approximately 32% after adding dividends), which is more than four times higher than its historic annual average return of 7%, which includes dividend reinvestment and adjustments for inflation. Patient, long-term investors were handsomely rewarded. But at the same time, worries continue to manifest about the potential for a U.S. or global recession. We’re in the midst of the longest economic expansion in U.S. history, suggesting we’re more likely to be in the late innings of this expansion than the middle.

There is, however, one indicator that’s already pushed into recession territory and is the real story that investors should be discussing. According to the latest ‘Earnings Insight’ report from FactSet Research Systems on S&P 500 companies, fourth-quarter earnings for the benchmark index are expected to have declined by 2% from the prior-year period. This follows year-over-year (YOY) earnings per share (EPS) declines in Q1, Q2, and Q3, and would mark the first time that the S&P 500 has delivered four consecutive quarters of YOY EPS declines since Q3 2015 through Q2 2016. Since a ‘recession’ is officially defined as two consecutive quarters of GDP contraction, four consecutive quarters of YOY earnings contraction certainly fits the bill … This weakness is particularly noticeable with the energy, consumer discretionary, and materials sectors, which are expected to see earnings growth slow by 36.8%, 13.5%, and 10.4%, respectively.”

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Gold rises on U.S.-China trade concerns; platinum hits near 2-year peak

January 15, 2020

“Gold on Wednesday rose from an over one-week low hit in the last session on renewed worries about U.S.-China relations ahead of the signing of an initial trade deal.  Among other precious metals, palladium climbed to a record high and platinum surged to its highest in nearly two years.  Just a day before the signing an interim trade deal, U.S. Treasury Secretary Steven Mnuchin on Tuesday said tariffs on Chinese goods would be in place until the completion of a Phase 2 agreement.

Spot gold rose 0.4% to $1,552.08 per ounce as of 1341 GMT, having slipped to a more than one-week low of $1,535.63 in the previous session. U.S. gold futures gained 0.5% to $1,552.60. ‘The market is uncertain regarding the deal between U.S. and China, while somewhat weaker equity markets and weaker U.S. dollar are (also) supporting gold prices,’ Commerzbank analyst Eugen Weinberg said. ‘The tariffs are not to be reduced any further until the U.S. election cycle is over in November and that doesn’t help in bringing in the confidence into the market.’ World stocks eased off record highs as euphoria over the trade deal depleted.”

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KITCO NEWS/Jim Wyckoff

Gold, silver prices see corrective bounces at mid-week

January 15, 2020

Gold Silver Corrective BouncesGold and silver prices are firmer in early U.S. futures trading Wednesday. The metals are seeing rebounds following recent selling pressure and as global stock markets on Wednesday are pausing from their recent rallies that pushed U.S. indexes to record highs Tuesday. February gold futures were last up $4.70 an ounce at 1,549.30. March Comex silver prices were last up $0.048 at $17.79 an ounce.  Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward slightly lower openings.

The marketplace at mid-week is focused on the U.S.-China partial trade agreement that is scheduled to be signed Wednesday in Washington, D.C. China has pledge to buy $200 billion in U.S. goods over the next two years. Specifics on what amounts spent on what products are not likely to be revealed at the signing. There is some concern in the marketplace that the trade deal will not have the U.S. lifting its trade tariffs on China imports until later this year, which has put some mild pressure on global stock markets …  In other overnight news, economic growth in the European Union’s workhorse country, Germany, fell to a six-year low in 2019, at only 0.6% annual expansion. Meantime, Euro zone industrial growth was up 0.2% in November but down 1.5%, year-on-year, it was reported today.”

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FOX NEWS/Brooke Singman

Pelosi announces impeachment managers to prosecute case against Trump

January 15, 2020

Impeachment Inquiry“House Speaker Nancy Pelosi on Wednesday announced the seven lawmakers who will serve as the House managers to prosecute the case against President Trump in his Senate impeachment trial, which is expected to begin in earnest next week. The House managers include House Intelligence Committee Chairman Adam Schiff, D-Calif., who will be the lead manager and who led much of the impeachment inquiry out of his committee with dramatic hearings to develop the case against the president and House Judiciary Committee Chairman Jerrold Nadler, D-N.Y., whose panel drafted the articles of impeachment. Pelosi also tapped House Democratic Caucus Chairman Hakeem Jeffries, D-N.Y.; Rep. Jason Crow, D-Colo.; Val Demings, D-Fla.; Sylvia Garcia, D-Texas; and Zoe Lofgren, D-Calif.

During then-President Bill Clinton’s impeachment in 1999, there were 13 House impeachment managers. A White House official told Fox News on Tuesday that the president’s legal defense team in the looming impeachment trial would be led by White House Counsel Pat Cipollone. The official said that Trump lawyer Jay Sekulow would also serve on the president’s defense, as well as Cipollone deputies Michael Purpura and Patrick Philbin … After several days of procedural moves, the Senate is poised to launch into the heart of the impeachment trial as early as next Tuesday. Senate Majority Leader Mitch McConnell, R-Ky., shot down the notion being floated by the president earlier this week to bypass a trial and dismiss the articles altogether.”

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MARKET WATCH/Steve Goldstein

Investors are right to reboot worries over trade, HSBC strategist says

January 15, 2020

Worries Over Trade“The long-awaited phase-one trade deal between the U.S. and China is due to be signed on Wednesday, but the uncertainty may still linger. Joseph Little, global chief strategist for HSBC Global with about $500 billion of assets under management, told MarketWatch the tensions around trade aren’t fully resolved. ‘There are still concerns about the macro outlook, about the structure internationally with the U.S. still challenging the nominations for the World Trade Organization,’ he said. ‘The [trade] environment remains very much in flux and a source of concern and challenge for investors.’

That uncertainty—not just in trade but across politics, the economy and the environment—is likely to limit returns across assets. ‘I think it’s hard to get very confident that we’re going to see a significant, strong synchronized global phase of expansion, and equally in investment markets, I think it’s hard to get very positive that we’re going to see a very strong phase of market returns.’ That said, Little isn’t a bear and says U.S. stocks can return 6% or 7% this year. He doesn’t put much emphasis on data showing price-to-equity ratios are elevated. ‘I’m an asset allocator, the critical question is how the opportunity set looks today, not how equity markets are trading relative to how they’ve been trading in the past,’ he says. ‘If you’re being offered a relative return 4% to 5% above what you can get in core fixed-income asset classes, I think at this stage of the cycle, given the macro trends that we have seen and the profit trends that we’re seeing, that’s not too bad.’”

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CNBC/Natasha Turak

‘Danger tomorrow’: Rouhani makes threat to US and EU troops in Middle East

January 15, 2020

Troops in Middle East“In an angry speech on state television, Iranian President Hassan Rouhani lashed out at the U.S. and Europe for its presence in the Middle East and for what he described as the latter’s failures in upholding the 2015 Iranian nuclear deal. U.S. troops are ‘insecure’ in the region today, and EU troops ‘might be in danger tomorrow,’ Rouhani declared, according to a Reuters translation, marking the first time the leader has directed a threat toward European forces in the region. He demanded the U.S. leave and accused it of making the region insecure, saying it should ‘apologize to Tehran’ for its ‘previous crimes.’

The U.S. has significantly increased its troops presence in the Gulf in the past year as shipping and oil facilities have come under fire from attacks blamed on Iran, which Tehran denies. The U.K. has about 400 forces in Iraq, spread around Irbil, Baghdad and Taji, all locations that have been targeted by Iraqi Shiite militias backed by Iran’s Quds Force, the external operations wing of the Islamic Revolutionary Guard Corps. EU forces are also stationed in the Gulf Cooperation Council (GCC) countries, and France and Britain have small numbers of special forces in Syria. A number of EU countries have personnel in Operation Inherent Resolve, the anti-IS coalition, stationed in Iraq … Rouhani also slammed the EU’s ‘failure to keep its promises’ under the nuclear deal, the multilateral agreement signed in 2015 designed to limit Iran’s nuclear program while lifting economic sanctions.”

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CNBC/Silvia Amaro

Fed could use negative rates if US recession strikes, Goldman Sachs chief economist predicts

January 15, 2020

Fed Could Use Negative Rates“U.S. rate-setters could set negative interest rates in the future, despite their own current doubts about the risks of this unconventional measure, Goldman Sachs told CNBC Wednesday. When central bankers implement negative interest rates, it means that banks, for instance, are paying to store cash. The idea behind it is to boost bank lending, push capital out to businesses, and stimulate the economy. This has been the policy by the European Central Bank (ECB) in the euro zone, since the aftermath of the debt crisis of 2011.

However, part of the financial community is skeptical about using this tool, especially over a prolonged time. They believe negative rates have consequences, such as denting banks’ balance sheets, which could have wider impacts on the economy. The U.S. Federal Reserve shares this view.

‘Negative interest rates would entail risks of introducing significant complexity or distortions to the financial system,’ minutes from the Federal Reserve meeting in October said. Fed officials added that ‘the financial system in the United States is considerably different from those in countries that implemented negative interest rate policies, and that negative rates could have more significant adverse effects on market functioning and financial stability here than abroad.’ However, Jan Hatzius, chief economist at Goldman Sachs, told CNBC this might change in the future.”

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Gold dips ahead of U.S.-China deal, palladium hits record high

January 14, 2020

“Gold slipped to more than one-week low on Tuesday as strength in equities markets and hopes for a smooth signing of the U.S.-China Phase 1 trade deal tarnished bullion’s safe-haven appeal, while palladium hit a record high. Spot gold dipped 0.4% to $1,542.50 an ounce after touching their lowest since Jan. 3 at $1,535.63 … ‘As long as stocks continue to make these record highs, there is no real need for the insurance policies you’ll find in gold,’ Saxo Bank analyst Ole Hansen said. ‘We have the signing of the trade deal … we are probably not going to see anyone rocking the boat at this stage, but nevertheless it will give the market an opportunity to read the text and see what’s in the deal.’

Only a day before the Phase 1 trade deal signing, the U.S. Treasury on Monday dropped China’s designation as a currency manipulator, fuelling market optimism. Global equities are at record highs but the tide turned at the opening of European markets as traders took profits ahead of the trade deal. ‘In the current market environment, characterised as it is by high risk appetite among market participants, gold is not in demand,’ Commerzbank analysts wrote … Bullion rose to its highest in nearly seven years last week on worries over potential military conflict between the United States and Iran, but the rally faded in the absence of any further escalation in tensions.”

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CNBC/Yen Nee Lee

The Fed could cut interest rates 3 times this year, UBS predicts

January 14, 2020

Fed Cut Interest Rate“Swiss wealth giant UBS has predicted that the U.S. Federal Reserve could lower interest rates three times in 2020 — a forecast that differs widely from many other projections calling for no change or just one rate cut this year. Arend Kapteyn, global head of economic research at UBS, said on Tuesday that tariffs implemented in the trade war between Washington and Beijing would drag down U.S. growth to just 0.5% year-on-year in the first half of 2020.

The U.S. last raised tariffs on Chinese goods in September, with China following up with its own duty increase on a variety of American products. Further tariff hikes initially scheduled for December were put off as both sides agreed to hammer out the so-called phase one trade deal. ‘We think this tariff damage is going to push U.S. growth down … that’s actually going to trigger three Fed cuts, which is way off consensus, nobody believes that,’ he told CNBC from the UBS Greater China Conference in Shanghai. The CME FedWatch tool places the probability of the Fed standing pat on interest rates at more than 50% through September.”

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CNN BUSINESS/Anneken Tappe

The world is drowning in debt

January 14, 2020

Drowning in Debt“The world’s already huge debt load smashed the record for the highest debt-to-GDP ratio before 2019 was even over.  In fact, it broke that record in the first nine months of last year. Global debt, which comprises borrowings from households, governments and companies, grew by $9 trillion to nearly $253 trillion during that period, according to the Institute of International Finance. That puts the global debt-to-GDP ratio at 322%, narrowly surpassing 2016 as the highest level on record.  More than half of this enormous number was accumulated in developed markets, such as the United States and Europe, bringing their debt-to-GDP ratio to 383% overall.

There are plenty of culprits. Countries like New Zealand, Switzerland and Norway all have rising household debt levels, while the government debt-to-GDP ratios in the United States and Australia are at all-time highs. In emerging markets, debt levels are lower, for a total of $72 trillion, but they have risen faster in recent years, according to the IIF.  China’s ratio of debt to GDP, for example, is approaching 310%, the highest level in the developing world. Investors have long kept a skeptical eye on the highly-leveraged country. Following a push for Chinese companies to reduce their borrowing in 2017 and 2018, debt levels rose again last year, the IIF said in its Global Debt Monitor report.

Such massive worldwide debt is a real risk for the global economy, especially because the IIF expects levels to rise even further in 2020.”

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MARKET WATCH/Rupert Steiner

BlackRock’s Larry Fink warns climate change is on edge of reshaping finance

January 14, 2020

Climate Change“Sustainable investments that take into account climate change will deliver better returns, says BlackRock founder Larry Fink. The boss of world’s largest fund manager warned: ‘In the near future—and sooner than most anticipate—there will be a significant reallocation of capital. I believe we are on the edge of a fundamental reshaping of finance.’ BlackRock which has around $6.84 trillion of assets under management as one of the top index fund managers, is the world’s most powerful investor and has come under criticism for not doing enough to address climate change.

“BlackRock announced initiatives which Fink said will place sustainability ‘at the center of our investment approach, including pushing companies for more transparency and disclosure of climate risks, and quitting investments in thermal coal producers.’ Fink’s letter comes as Australia continues to battle bush fires that have been burning since September … The extent of the damage from one of most severe fire seasons on record has caused governments to focus policies on climate change. Climate change is one of the six key themes being discussed at the 50th annual meeting of the World Economic Forum at Davos next week. Some of the biggest names in the corporate and investment world to answers: ‘How to mobilize business to respond to the risks of climate change and ensure that measures to protect biodiversity reach forest floors and ocean beds.’”

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BLOOMBERG/Anirban Nag

How the World’s Fastest-Growing Economy Plunged into Stagflation

January 13, 2020

Fastest Growing“Just two years ago, Prime Minister Narendra Modi was helming an economy expanding 8%, spurring optimism India was on a path to become a major global growth driver. Now, stagflation looms as the economy grinds toward its slowest expansion in more than a decade and inflation spikes above the central bank’s target, driven by higher food prices. Social unrest against a restrictive new citizenship law is yet another challenge.

And there are few good options to deal with the slowdown. Dwindling government revenue and an already-stretched budget limit scope for fiscal support, while the shock 7.35% surge in retail inflation in December and the threat of higher oil prices mean the door for further interest rate cuts is closing. Sovereign bonds dropped after the inflation data. The yield on the benchmark 10-year bond rose as much as 10 basis points to 6.7% on Tuesday, the most since Dec. 5. Wholesale price inflation quickened to a seven-month high of 2.59% last month, latest data show. So, what went wrong? At the heart of India’s problems is a slump in consumption following a combination of policy missteps, from the unprecedented decision to ban high-value cash notes at the end of 2016, to the chaotic implementation of a unified goods and services tax the following year. That was followed shortly after by a credit crunch, which triggered — and then was worsened by — a crisis among shadow lenders which are a key provider of small loans to hundreds of millions of consumers and businesses.”

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CNBC/Yun Li

The 5 biggest stocks are dwarfing the rest of the market at ‘unprecedented’ level

January 13, 2020

5 Biggest Stocks“It’s no secret that a handful of tech giants have been dominating the stock market, but their leadership has reached a level that is raising eyebrows on Wall Street as being unsustainable. The top five U.S. companies — Apple, Microsoft, Alphabet, Amazon and Facebook — now make up 18% of the total market capitalization of the S&P 500, the highest percentage in history, according to Morgan Stanley. ‘A ratio like this is unprecedented, including during the tech bubble,’ Mike Wilson, the bank’s head of equity strategy, said Sunday. ‘Capital concentration is following corporate inequality like never before.’

These mega tech firms have been the front-runners in this record-long bull market as investors bet on superior growth and dominant market share in their respective industries. They were the biggest contributors to the market’s historic gains last year and the trend shows no signs of stopping in 2020. However, multiple Wall Street strategists are sounding alarms on the increasing dominance of Big Tech, warning of a potential pullback in the stocks ahead … Going back to 1990, only five stocks — Apple, Microsoft, Generic Electric, Cisco Systems and Exxon Mobil — have claimed more than 4% of the S&P 500, and their leader status has typically been short-lived, Segner noted. General Electric stayed the longest — 15 months — above the threshold, while Cisco only lasted a month, he said.”

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Index funds are a form of passive investing that track a broader index, like the S&P 500 which houses the stocks of 500 large-cap U.S. companies including Apple, Microsoft, ExxonMobil, Johnson & Johnson, General Electric, Amazon and Facebook. They’re low-cost and relatively uncomplicated investments that can take the form of a mutual fund or an exchange-traded fund (ETF). They’re based upon a pre-set bucket of stocks that are aligned to an index — and for the first time in history their cumulative value has surpassed managed stock holdings.

The rise of indexing has been propelled by their one-stop shopping convenience which saves time, research hours, and the need for a portfolio manager and their associated fees. And, since most indexes include an array of diversified companies, they’re generally considered low risk. Their ease and simplicity are so appealing that, they’ve invaded Wall Street, particularly since the financial crisis and according to Reuters now control half of the mutual fund market. The Vanguard S&P 500 ETF, one of the largest funds on record, was sitting on $520 billion in assets as of December.

“The index fund is one of a handful of unambiguously beneficial financial innovations. Before it caught on, investors routinely paid sky-high fees to active stock-pickers who often delivered subpar returns. The near-universal popularity of index funds puts them up there with Social Security, Stevie Wonder, and streaming TV.” Bloomberg

Over the past decade some $1.36 trillion has been dumped into indexed mutual funds and ETF’s — while some $1.32 trillion was subsequently pulled out of traditionally managed accounts. The Wall Street Journal calls it, “the passing of the asset crown” and “one of the most dramatic transformations in the history of the financial markets.”  But while the seismic shift has increased fund access and lowered the cost of investing, it has also dramatically consolidated power within the industry as indexing goliaths Black Rock, Vanguard and State Street are now the largest shareholders in almost 90% of S&P 500 firms. Similarly, Barron’s reports that the three firms hold 80% of ETF assets in some 600 products, “that leaves another 1,600 ETFs and more than 100 firms competing like gunslingers in the Wild West.”

The Securities and Exchange Commission approved the first ETF in 1993 and according to the Washington Post there were only 124 index funds back in 1996 valued at just $100 billion. According to recent estimates, the number of ETF’s and Index Funds has now climbed to over 2,000 with a combined value nearing $7 trillion. Their growth shows no sign of slowing down as Black Rock recently estimated the total value of indexing could reach $12 trillion by 2025.

The SEC is now asking some pointed questions, however about transparency, market stability, and the consolidation of financial power. There is little regulatory oversight of the firms that create these indexes, and they’re more than ripe for conflicts of interest. And, while there is a collective upside to indexing during a rising market, the funds offer scant protection for a sudden sell-off or consolidated stampede. Further, retirement funds and life savings are subject to the amalgamated whims of the three, giant asset managers: BlackRock, Vanguard and State Street, the index cartel — subjecting millions of Americans to an uncharacteristic loss of control with respect to their money and retirement savings.

And there are other concerns. The sheer size and number of these funds could distort market prices and make the exchanges unstable. The frenzy surrounding passive investing is reminiscent of bubble behavior and that could cause a market collapse when the inflows exhale. And lastly, these funds offer no allowance for personal risk tolerance or an asset mix that reflects specific retirement needs.

Even the late, great Jack Bogle, the founder of Vanguard and the ‘Father of Indexing’ mused as recently as last year that there are too many shares in too few hands – and that could undermine investing behavior and disrupt market metrics. The truth is Index Trading is too vast to stop, too large to curtail, and far, far too big to fail. But what if it does?

Indexing can mask a multitude of hidden dangers and this is precisely where an alternative investment outside the mania of fast-shifting barometers becomes critical. Gold is private, confidential, highly liquid, and carries no counter-party risk. It is the ideal ‘check and balance’ asset to protect our money from those things beyond our control, specifically — the new world dominance of index funds and the new power brokers of Wall Street.

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Gold Slips 1

REUTERS/ K. Sathya Narayanan

Gold slips 1% ahead of U.S.-China trade deal

January 13, 2020

“Gold prices fell 1% on Monday as optimism in equity markets ahead of the signing of an interim U.S.-China trade deal and lack of further escalation in Middle East tensions diminished bullion’s safe-haven appeal. The U.S.-China Phase 1 agreement is due to be signed at the White House on Wednesday. Spot gold dipped 0.7% to $1,551.25 per ounce as of 1101 GMT, having fallen 1% to $1,546.27 earlier in the session. U.S. gold futures fell 0.5% to $1,552.10.

‘We are struggling (a) little bit with the details. It’ll be quite interesting to see if there is any concrete guidance in the details of the phase-one deal,’ said Julius Baer analyst Carsten Menke. ‘Also, the news that the Chinese and the U.S. would meet on semi-annual basis to discuss trade, I imagine was something which wasn’t expected by the market, and could be weighing on gold.’ A Wall Street Journal report said on Saturday Washington and Beijing had agreed to semi-annual talks aimed at pushing for reforms in both countries and resolving disputes. The positive sentiment ahead of the planned signing boosted global equities, which were hovering just below record levels.

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USA TODAY/Jessica Menton

Stock market shakes off Iran jitters, but investors be in for a bumpy ride in 2020

January 13, 2020

Stock Market Shakes Off Jitters“The stock market has shaken off its jitters over Iran, but analysts say investors could still be in for a bumpy ride this year.  Stocks are back near records, after Iran’s missile attacks sent futures tumbling Tuesday evening. Major averages rebounded midweek after President Trump said the U.S. doesn’t seek a war with Tehran. As investing pros looked ahead at the end of last year, they saw a 2020 full of uncertainty — something investors hate — because of trade tensions with China and a presidential election in the U.S. Now hostilities with Iran have thrown another unsettling element into the mix.

‘Investors have to stay the course because it will likely be a volatile year,’ says Ephie Coumanakos, co-founder of Concord Financial Group. Investors are turning their attention to a series of events this week that could serve as the next catalysts for volatility. A ‘Phase 1’ trade accord with China is expected to be signed, but the two sides haven’t finalized a deal yet. Earnings season, meanwhile, kicks off with several large banks like JPMorgan Chase, Wells Fargo and Citigroup reporting financial results. The conflict with Iran will likely have little impact on companies’ bottom lines, but corporations will need to show profit growth to justify high stock valuations, analysts say.”

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SOUTH CHINA MORNING POST/Georgina Lee

Gold may gain up to 10 per cent this year as geopolitical risks, lower US interest rates push price to US$1,700, say analysts

January 12, 2020

Gold May Gain Up to 10“The tentative easing of tensions in the Middle East in the second half of last week caused the price of gold to pull back from a seven-year high. But analysts see further gains in store for the yellow metal this year, with US$1,700 per ounce achievable on the back of sustained geopolitical risks and lower US interest rates. On Friday spot gold was quoted at US$1,547.51 per ounce, having lost almost 2 per cent over the previous three days from a peak of US$1,574.37 per ounce on Tuesday. Fuelling gold’s spike early last week was a rush to the traditional safe haven asset after Iran fired at least a dozen missiles at military bases in Iraq that hosted American personnel, in retaliation for the US’ assassination of its top general, Qassem Soleimani, on January 3.”

“ING recently revised up its 2020 forecast for gold to US$1,500-1650 per ounce from US$1,500 per ounce, in light of the heightened geopolitical risks from the Middle East. Warren Patterson, ING’s head of commodities strategy, said the attacks will continue to weigh on investors’ minds. ‘While it appears that there has been something of an easing in tensions, we believe market participants are unlikely to forget about these risks any time soon,’ said Patterson. ING expects the Fed to cut the short-term federal funds rate in April, which will send the real yield of US treasuries lower. This will provide further support for gold … Jasper Lo, an independent market commentator, said he would not be surprised to see gold hitting US$1,700 per ounce in 2020, echoing a call made earlier last year by billionaire investor Paul Tudor Jones, founder of macro-trading hedge fund firm Tudor Investment.”

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BLOOMBERG/Andrew Atkinson and Lucy Meakin

U.K. Economy Unexpectedly Shrinks Amid BOE Rate-Cut Debate

January 13, 2020

UK Economy Shrinks“The U.K. economy unexpectedly shrank ahead of the general election, casting doubt over whether there was any growth at all in the fourth quarter. The figures will add to concerns at the Bank of England, where officials are debating whether further stimulus is needed if economic weakness persists. Three policy makers, including Governor Mark Carney, have flagged the possibility of an interest-rate cut in the past week, sending the pound lower and sparking an increase in market bets on a move as soon as this month.

Gross domestic product fell 0.3% in November, missing forecasts for unchanged output on the month. It means growth of around 0.2% was needed in December to prevent the economy contracting in the fourth quarter. The figures reflect caution in the run-up to the December election, with the dominant services industry contracting 0.3% — the biggest decline since early 2018. Overall economic growth of 0.6% from a year earlier was the weakest since mid-2012. The pound fell for a fifth day against the dollar, dropping as much as 0.8% to $1.2966. Gilts rose, led by shorter tenors, and five-year yields fell to the lowest since early December. Carney said last week that the BOE has plenty of policy room to act if necessary, and officials Silvana Tenreyro and Gertjan Vlieghe warned they could join two other colleagues calling for cheaper borrowing costs.”

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CNN BUSINESS/Laura He

China is worried about unemployment. What it’s doing to avoid mass layoffs

January 13, 2020

China is Worried“The Chinese government wants to do whatever it can to protect the economy in 2020. It’s got an enormous task ahead of it. Beijing has made clear that the world’s second largest economy cannot spiral into a slump and risk mass layoffs as it tangles with rising debt, cooling domestic demand and an ongoing trade war with the United States. That’s particularly important this year because it marks the conclusion of the government’s 13th Five-Year Plan, during which it promised to establish a ‘moderately prosperous society’ and end poverty. Senior members of the Communist Party’s Politburo — the seven most powerful men in China — said last week that all efforts must be taken to achieve those goals in 2020.

In recent weeks, the government has bombarded the economy with a wave of stimulus measures, from tariff reductions that could help soothe the pain from rising prices, to rate cuts that could fuel more bank lending. Authorities are also amping up the language they’re using to describe the situation. China’s State Council last month called on local governments to ‘go to all lengths’ to prevent massive job losses this year — what it characterized as the country’s top policy priority.

The chief administrative office even warned that the country could face ‘massive unexpected incidents’ if unemployment balloons — a euphemism in China widely understood to refer to social unrest and riots, and one that is rare in public government documents. In recent years, the government has said it has to create 11 million new jobs annually to keep employment on track.

While China’s official unemployment data has barely budged over the last several years, hovering between 4% and 5%, Beijing’s messaging suggests that it is unusually worried about the slowing economy and the challenges that the year could bring.”

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FINANCIAL TIMES/Joe Rennison

Mountain of risky corporate debt poses ‘stability concern’

January 8, 2020
Mountain of Risky Corporate Debt“Researchers at the Federal Reserve Bank of New York said that an increase in sales of riskier corporate debt poses a ‘financial stability concern’, noting that an economic downturn could force investors to dump assets en masse. The research, published on the New York Fed’s Liberty Street Economics blog, reiterated fears aired by policymakers and investors over rising corporate borrowing. A decade of low interest rates has encouraged companies to binge on cheap debt, increasing leverage and dragging down credit ratings.

Just two companies in the US — Johnson & Johnson and Microsoft — still have a pristine, triple-A rating, the researchers noted. While sales of both the safest, triple-A rated bonds and the riskiest ‘high-yield’ bonds have been declining over the past five years, there has been a dramatic rise in the amount of triple-B rated bonds that sit on the lowest rung of the investment-grade ladder, just above high-yield. Investors and analysts worry that if economic conditions falter, downgrades of triple-B rated debt could trigger fire sales from investors whose mandates forbid them from holding high-yield bonds. ‘Bonds that are already declining in price because of a deteriorating credit outlook can face further stress from the associated selling pressure … The possibility of a large volume of corporate bond downgrades poses a financial stability concern,’ wrote the researchers.”

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KITCO NEWS/Anna Golubova

Gold jumps as U.S. economy disappoints with 145,000 rise in nonfarm payrolls

January 10, 2020

Gold Jumps in Economy“Gold prices rose following weaker-than-expected U.S. employment data from December. U.S. nonfarm payrolls rose by 145,000 in December, according to the Bureau of Labor Statistics. The monthly figure came below market consensus projecting 164,000 new positions. The U.S. unemployment rate remained unchanged at 3.5%, a 50-year low, and the number of unemployed was also unchanged at 5.8 million. Meanwhile, wages, which is another key element in the report, also disappointed.

Average hourly earnings rose only 2.9% versus the expected 3.1%. The biggest jobs gains were in retail trade and healthcare, while the mining sector saw job losses. Gold prices jumped after the data was released, recovering all daily losses. Overall, the U.S. job growth ended the year on a softer note, said CIBC Capital Markets economist Katherine Judge. ‘The disappointments shouldn’t materially change tracking for Q4 GDP which we have at just below 2%, however, could add a slight bid to U.S. fixed income markets today,’ Judge wrote on Friday.”

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MARKETWATCH/Jeffry Bartash

U.S. creates 145,000 jobs in December as hiring slows and wage growth softens

January 10, 2020

US Creates Jobs in December“The economy created 145,000 jobs in the final month of 2019 to cap off the ninth straight year in which new hires topped the 2 million mark, but workers still aren’t reaping a windfall from the strong labor market through rapidly rising pay. The increase in new jobs fell short of the 165,000 forecast of economists polled by MarketWatch. Wall Street was expecting a drop-off after a surprisingly robust 256,000 gain in the prior month. The unemployment rate, stayed at a 50-year low of 3.5%.

What’s more, a broader measure of joblessness known as the U6 rate fell to 6.7% to mark the lowest level on record. The sturdiest labor market in decades has shielded the economy from a broad slowdown in global growth triggered in part by the U.S. trade war with China. Skilled workers are so hard to find companies are afraid to lay anyone off in case the economy speeds up. The low unemployment rate hasn’t produced fatter paychecks for American workers like it usually did in the past, however. The pace of hourly wage growth fell below 3% in December for the first time in a year and a half.”

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THE NEW YORK TIMES/Neil Irwin

Economy in a Nutshell: Manufacturing in Recession. Services Booming.

January 10, 2020

Economy in a Nutshell“Sometimes, the monthly employment numbers seem to come out of left field, and don’t really align with all the other evidence about how the economy is evolving. December is not one of those months. To the contrary, pretty much everything in the latest numbers released Friday fits the broader story. It’s a mostly benign picture, though not without some challenges. Job creation was steady, with employers adding 145,000 jobs in December. It’s a far cry from the revised 256,000 jobs added in November. But the lower number is more consistent with recent growth in G.D.P. and an economy that appears closer to full employment than it has in two decades.”

“There is a more complex story in the composition of those jobs, though. The manufacturing recession underway shows up in the employment numbers: The nation’s factories shed 12,000 jobs in December, with the steepest loss in the making of fabricated metal products. A further 8,000 jobs were lost in the mining sector, reflecting a slump in spending on energy exploration. Transportation and warehousing employment fell by 10,400, another potential knock-on effect of the manufacturing slump. This story is not too complicated: The sectors that bear the brunt of the global economic slowdown and the trade wars are cutting jobs, or at least they were in December. Last week’s report from the Institute of Supply Management adds some color. Its manufacturing index fell sharply in December, the fastest rate of contraction since June 2009, when the economy was struggling to emerge from a deep recession.”

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THE WALL STREET JOURNAL/Matt Wirz and Tom McGinty

Low Liquidity Fueled Hidden Flash Crash in Junk Bonds

January 10, 2020

Price of Bon Due 2023“When Party City Holdco Inc. reported a large decline in quarterly earnings in November, holders of the retailer’s junk-rated debt scrambled to sell. Buyers were hard to find, and prices cratered by as much as 50% before recovering some of the loss. Investors who didn’t sell the company’s bonds and loans took paper losses of half a billion dollars in five trading days, according to a Wall Street Journal analysis of data from MarketAxess and IHS Markit. It was the largest price move since Party City issued the debt.

Such violent price swings were commonplace last fall in the riskiest segment of the roughly $2.4 trillion market for corporate bonds and loans rated below investment-grade, analysis of trade data by the Journal shows, striking a sharp contrast to the relative calm in most markets at the time. Prices snapped back sharply in December, but the volatility confirmed traders’ fears that poor liquidity—how easily sellers and buyers can transact—in high-yield debt is making the market particularly vulnerable to such flash crashes. ‘Given the spikes in volatility, you have to be more tactical in your trading,’ said Steven Rocco, a partner at Lord Abbett. ‘We definitely are weighing liquidity more now.’ Dips in the riskiest segment of the junk bond markets were more extreme this autumn than in December 2018, when volatility ravaged global markets, according to the Journal’s analysis of trade data from MarketAxess.”

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CNBC/Sam Meredith

World Bank warns of global debt crisis following the fastest increase in borrowing since the 1970s

January 9, 2020

Warnings of Global Debt“The World Bank has warned of the risk of a fresh global debt crisis, urging governments and central banks to recognize that historically low interest rates may not be enough to offset another widespread financial meltdown. In its biannual Global Economic Prospects (GEP) report, the Washington D.C.-based group said there have been four waves of debt accumulation over the last 50 years. The current wave — which started in 2010 — is thought to be ‘the largest, fastest and most broad-based increase’ in global borrowing since the 1970s. The World Bank said that while low levels of interest rates — which financial markets expect to be sustained over the medium term — ‘mitigate some of the risks associated with high debt levels,’ the previous three waves of broad-based debt accumulation all ended with financial crises in many developing and emerging economies.

‘Low global interest rates provide only a precarious protection against financial crises,’ Ayhan Kose, director of the World Bank’s Prospects Group, said. ‘The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimize the risks associated with the current debt wave.’ The so-called ‘fourth wave’ of global debt was found to bear many similarities to the previous three: a changing global financial landscape, mounting vulnerabilities and concerns about inefficient use of borrowed funds. The first three waves of global debt accumulation were identified as running from 1970-1989, 1990-2001 and 2002-2009.”

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KITCO NEWS/Neils Christensen

Central banks can’t do QE forever, hold 25% commodities as inflation hedge

January 10, 2020

“The U.S. has officially closed the book on a momentous decade as the S&P continues its longest bull run in history; the market has rallied consistently for the last 10 years. The Index is up 184% since 2010. The gold market is also attracting new attention on the cusp of the new epoch. Although prices are still down from its record highs hit eight years ago, the precious metal ended the decade with a gain of 34%. The questions investors are now asking is: what is in store for markets as the world embarks on a new decade. What are the risks and opportunities to watch for in the next 10 years? For Kitco News’ we have asked a panel of experts:”

Expert: Frank Giustra – Chairman of Leagold, co-founder of The Clinton Giustra Enterprise Partnership

“If someone has a maximum of $100,000 to invest, my suggestion would be to own at least 20% gold and stay liquid. Most investments (stocks and bonds) are overvalued. I am mostly keeping my eye on global trends in both central bank monetary policy and debt levels … I fear one of the biggest threats is a potential implosion of the corporate bond market. Too much of that massive debt is a hare’s breath away from junk status … The current equity bull market is already the longest in history. It’s been fueled by artificially low interest rates. We are beyond bubble territory… and overdue for some kind of accident in the financial markets. Some, yet unknown catalyst will set off a chain of events that will destroy a lot of wealth … stay liquid and make sure you own a lot of gold.”

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REUTERS/ Diptendu Lahiri

Gold slides from near 7-year peak as U.S.-Iran fears subside

January 9, 2020

“Gold prices slid on Thursday, retreating further from a near 7-year peak scaled in the previous session as tensions between the U.S. and Iran eased following conflict over the U.S. killing of an Iranian general. Spot gold fell 0.2% to $1,552.74 per ounce by 1250 GMT, having earlier slipped to $1,539.78 an ounce. U.S. gold futures fell 0.4% to $1,553.70 per ounce. Gold had risen as much as 2.4% early on Wednesday to break above the key $1,600 level after Iran’s retaliatory attacks on military bases housing U.S. troops in Iraq.

President Donald Trump responded to the missile attacks with sanctions rather than military action, while Iranian officials said the missile attack concluded their response, easing fears of wider conflict in the Middle East and prompting a sell-off in safe haven assets like gold. ‘Since Iran and U.S. will not escalate the recent issue out of proportion, we are seeing a little retracement after gold broke a key technical level of $1,550,’ said Bernard Sin, group head of trading at MKS. Holdings of the world’s largest gold-backed exchange-traded fund SPDR Gold Trust dropped 1.05% to 886.81 tonnes.”

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THE NEW YORK TIMES/Jim Tankersley and Jeanna Smialek

The Economy Is Expanding. Why Are Economists So Glum?

January 9, 2020

The Economy is Expanding“The mood among economic forecasters gathered for their annual meeting last weekend was dark. They warned one another about President Trump’s trade war, about government budget deficits and, repeatedly, about the inability of central banks to fully combat another recession should one sweep the globe anytime soon. Among the thousands of economists gathered for the profession’s annual meeting, there was little celebration of Mr. Trump’s economic policies, even though unemployment is at a 50-year low, wages are rising and the economy is experiencing its longest expansion on record. Underlying their sense of foreboding was a widespread sentiment that the current expansion is built on a potentially shaky combination of high deficits and low interest rates — and when it ends, as it is bound to do eventually, it could do so painfully.

Those concerns were echoed on Wednesday by economists at the World Bank, who called the worldwide expansion ‘fragile’ in their latest ‘Global Economic Prospects’ report. The report forecasts a slight uptick in growth in 2020 after a sluggish year bogged down by trade tensions and weak investment. But it said ‘downside risks predominate,’ including the potential escalation of trade fights, sharp slowdowns in the United States and other wealthy countries and financial disruptions in emerging markets like China and India.”

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CNBC/Maggie Fitzgerald

JP Morgan tells wealthy clients a ‘progressive overhaul’ of economy is one of 2020′s biggest risks

January 7, 2020

Risks on Economy“J.P. Morgan’s private bank, which manages $2.2 trillion for wealthy clients, said a presidential victory from a radical leftist candidate is among the biggest threats to their money in 2020. The firm also warned about a possible inflation scare in its annual outlook report to clients. With left-winged Democratic presidential candidates like Sen. Elizabeth Warren and Sen. Bernie Sanders as front-runners in the national primary polls, J.P. Morgan sees a ban on stock buybacks, increased corporate tax rates, collective bargaining and a break-up of big tech as distinct possibilities. ‘A progressive overhaul of the U.S. economy after the election’ would be among the biggest perils, wrote Michael Cembalest, chairman of market and investment strategy for J.P. Morgan Asset Management.

President Donald Trump’s growth strategy fueled by tax cuts and deregulation has lead the stock market to an all-time high, with returns well above the average U.S. president three years into their terms. The S&P 500 had its best run in six years, gaining nearly 30% in 2019. However, Trump was impeached by the House of Representatives in December for abuse of power and obstruction on Congress regarding Trump’s dealings with Ukraine, which could hurt his reputation at the polls, J.P. Morgan noted. Cembalest told clients a Warren-like progressive overhaul will ultimately be up to U.S. voters, whether ‘unorthodoxies and misdeeds of the President offset a pretty strong US economy.’”

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MARKET WATCH/Joy Wiltermuth

Why a bustling labor force could signal a recession looming in the near future

January 8, 2020

Besting Labor Force“Strong consumer demand and a bustling job market have been two key reasons why Wall Street thinks U.S. stocks will rise and the American economy can grow this year. But low unemployment also can be a ‘defining characteristic’ of a late-cycle economy where ‘recession looms in the near future,’ warned a team of Credit Suisse economists led by James Sweeney, in the bank’s 2020 outlook published Tuesday. The team credits the spending power of employed households with helping to prevent recent global manufacturing weakness from spiraling into ‘something more severe,’ but also stressed that higher wages over time come at a cost for companies.

This chart above shows how higher labor costs coming out of the 2007-’09 recession have cut into U.S. corporate profits. To put a finer point on its, U.S. companies saw incomes grow 7.1% a year on average in the first five years of expansion following the 2008 financial crisis, but slumped to only 2% annual growth in the past five years … in the past, low unemployment rates and falling corporate profits have been reliable harbingers of recession, the team wrote. ‘Because although they sustain the cycle, they are not sustainable.’”

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CNBC/Jeff Cox

Nearly all corporate CFOs say the economy is going to slow and the stock market is overvalued

January 9, 2020

CFOs say Economy is Going to Slow“Chief financial officers at big U.S. companies entered 2020 on a cautious note, with almost all anticipating an economic slowdown against the backdrop of an overvalued stock market, according to a survey released Thursday. The Deloitte CFO Signals Survey showed that while the corporate leaders see the economy as ‘good,’ they anticipate that before the year is over, conditions will slow. They see consumer and business spending slowing, and 82% anticipate taking more defensive actions, like reducing discretionary spending and headcount, as a way to stave off the looming headwinds.

The slowdown is likely to be particularly acute in Europe and China. While 69% of respondents see conditions in North America as good, the number is just 7% in Europe and 18% in China, the latter a three-year low as the country’s shift to a more consumer-focused economy and its trade battle with the U.S. both conspiring to hold back growth. ‘North America is clearly the place where companies are continuing to increase their investment focus,’ said Sandy Cockrell, Deloitte Global CFO program leader. ‘There’s still a high level of caution’ … The concerns are consistent with a recent Conference Board CEO survey that found recession at the top of the list of things to fear, though Goldman Sachs recently said the U.S. economy is much less susceptible to recessions. Deloitte surveyed 147 CFOs from U.S., Canada and Mexico, most from companies with more than $3 billion in annual revenue.”

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BLOOMBERG/David McLaughlin and Annie Massa

The Hidden Dangers of the Great Index Fund Takeover

January 9, 2020

Total World Domination“If you hold a stock market index fund, congratulations. The S&P 500’s total return was a thumping 31.5% in 2019, and a fund that passively tracks that benchmark delivered almost all those gains, minus a tiny fee—perhaps just 0.04% of assets. Now here’s something you probably weren’t thinking about when you clicked on the box to choose an index fund in your 401(k) or IRA: You were also part of one of the biggest shifts in corporate power in a generation … Before it caught on, investors routinely paid sky-high fees to active stockpickers who often delivered subpar returns. The near-universal popularity of index funds puts them up there with Social Security, Stevie Wonder, and streaming TV.”

Their success has had a weird and unintended consequence. As millions of investors have done the most sensible thing financially, they’ve also concentrated shareholder power in the Big Three (Black Rock, Vanguard and State Street). Some 22% of the shares of the typical S&P 500 company sits in their portfolios, up from 13.5% in 2008 … They’re potentially the most powerful force over a huge swath of America Inc. Alarm bells have begun to go off … ‘When you see a small handful of players with ever-growing share and ever-growing clout affecting the trajectory of the largest public companies in the world, that’s going to raise a lot of eyebrows,’ says Ben Johnson, a Morningstar Inc. analyst … Even Vanguard founder Jack Bogle—a tireless advocate for indexing—warned just before his death in January 2019 that there may be too many shares in too few hands.”

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REUTERS/ Diptendu Lahiri

Gold retreats from $1,600 as markets eye U.S. reaction after Iran attacks

January 8, 2020

“Gold surged past the $1,600 level for the first time in nearly seven years earlier on Wednesday after Iran conducted retaliatory attacks against U.S. forces in Iraq, but the metal pared gains as investors awaited reaction from the White House.  Spot gold rose 0.7% to $1,585.30 per ounce by 0830 GMT, having earlier surged as much as 2.4% to its highest since March 2013 at $1,610.90. U.S. gold futures rose 0.5% to $1,582.90 per ounce.

‘Gold is paring some gains right now as the retaliation was not seen as aggressive as the markets thought it would be and investors are booking profit for that reason,’ Saxo Bank analyst Ole Hansen said.  ‘How gold will move from here is pinned on what U.S. President Donald Trump says when America wakes up,’ Hansen added, saying at the end of this day we will either see gold back at $1,600 levels or going down to the $1,550.  Iranian state television said that at least 80 ‘American terrorists’ were killed in attacks involving 15 missiles Tehran launched on U.S. targets in Iraq on Wednesday morning.”

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FOX NEWS/Frank Miles

Iran Supreme Leader calls missile strike a ‘slap in the face,’ says it’s not enough

January 8, 2020

Iran Missile Strike“Iran’s Supreme Leader Ayatollah Ali Khamenei said Wednesday that ballistic missile attacks targeting U.S. military and coalition forces in Iraq Wednesday morning were ‘a slap in the face’ to the United States. Khamenei said the U.S. should leave the region, adding, ‘Military action like this is not sufficient. What is important is ending the corrupting presence of America in the region,’ Reuters reported. Iran fired as many as 15 ballistic missiles into Iraq Wednesday, officials said, in a major retaliation by the rogue regime after a U.S. drone strike that killed Iranian Quds Force Gen. Qassem Soleimani last week.

Ten missiles hit the Ain al-Asad Air Base, one missile hit a military base in Erbil and four missiles failed to hit their targets, according to a U.S. military spokesman for Central Command, responsible for American forces in the Middle East. The attacks unfolded in two waves, about an hour apart.

Initial assessments showed ‘no U.S. casualties,’ a U.S. military official in Baghdad told Fox News.

Iranian state television later claimed – without evidence – that the strikes killed ‘at least 80 terrorist U.S. soldiers’ and damaged helicopters, and drones at the Ain al-Asad airbase.”

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BLOOMBERG/Andy Mukherjee

Worst Economy in 42 Years Needs an Honest Look

January 7, 2020

Worst Economy in 42 Years“India’s economy hasn’t been this bad in 42 years. Pulling it back from the abyss will require more honesty than imagination. Tuesday’s advance estimates for the financial year ending on March 31 peg the economy’s inflation-adjusted growth rate at 5%, a third year of slowdown. And even this figure could be optimistic. Consumer demand is in the doldrums and government spending — the only thing supporting growth — is bound to be pruned in the closing months of the fiscal year to avoid a budget blowout.

So much for the real economy. The main function of these advance statistics is to aid the upcoming government budget, which requires a handle on nominal GDP. By that measure, not only is the current fiscal year’s 7.5% growth the worst since 1978, it’s substantially lower than the 12% expansion the government had penciled in when projecting taxes … When Prime Minister Narendra Modi’s government returned to power in 2019, it made rosy projections for public finances by completely glossing over the previous year’s shortfall in tax revenue equal to 1% of GDP … More well-grounded tax assumptions will reveal a big resource gap — closer perhaps to 5% of GDP, including borrowings not captured in the budget but whose burden falls on the taxpayer nonetheless. Indian state governments have a deficit equal to 3% of GDP, higher than the budgeted 2.6%.”

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FORBES/Sergei Klebnikov

Bank of England Chief: Global Economy Is Heading Towards A ‘Liquidity Trap’

January 8, 2020

Global Economy Is Heading Towards A Liquidity Trap“The global economy is heading for a ‘liquidity trap’ and central banks are running low on ways to fight a future recession, warned Mark Carney, governor of the Bank of England, in a recent interview with the Financial Times. The Bank of England governor stated his concern that central banks around the world are ill-prepared to prevent the next major economic downturn. The greatest concern for the British economy and those of other advanced countries is how central banks would be able to combat a future economic recession, and monetary policy alone may not be enough to do so, Carney said.

The outgoing Bank of England chief also warned that the global economy is heading for a ‘liquidity trap,’ which occurs when monetary policy loses all effectiveness and fails to encourage any additional spending. ‘It’s generally true that there’s much less ammunition for all the major central banks than they previously had and I’m of the opinion that this situation will persist for some time,’ he said.

Like other bank leaders, such as the European Central Bank’s Mario Draghi and his successor, Christine Lagarde, Carney argues that governments should also use fiscal policy tools like tax cuts or boosts to public spending to combat a future recession. … ‘We have a statutory responsibility to identify the major risks to financial stability,’ Carney said in the interview. ‘We can’t dodge that.’”

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MARKET WATCH/Mark DeCambre

The man who called Dow 20,000 says one of the biggest stock-market dangers in 2020 is ‘people could be throwing risk to the wind’

January 7, 2020

Throwing Risk to the Wind“‘Actually, one of the dangers is that people could be throwing risk to the wind and this thing could be a runaway. We sometimes call that a melt-up and produces prices too high and then if there’s a shock, you come down to Earth and that could impact sentiment.’

That is Jeremy Siegel, professor of finance at the Wharton School of Business, expressing what he perceives as one of the biggest market risks in 2020, in an interview with Barron’s. The professor who forecast that the Dow would see 20,000 at the end of 2015 says that market fundamentals are sufficient to support the recent run-up in U.S. equity benchmarks but worried that euphoria, or a meltup, could take stocks to unsustainable peaks.

‘I think this market is fully valued and not undervalued, but I don’t think it’s overvalued,’ Siegel told Market Brief, pointing to low interest rates fostered by the Federal Reserve and signs of a detente between Beijing and Washington on the tariff front, as reasons for his fairly positive outlook. The academic’s comments come as markets briefly faced selling pressure, with the Dow, the S&P 500 index and the Nasdaq Composite Index on the verge of producing a second straight decline, until bouncing back, following a U.S. airstrike on Friday that killed Iranian Major Gen. Qassem Soleimani, escalating Middle East tension that could ripple across the globe.”

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ASSOCIATED PRESS/Jill Lawless and Raf Casert

EU chief warns UK must compromise to get Brexit trade deal

January 8, 2020

UK Must Compromise“The president of the European Commission warned Britain on Wednesday that it won’t get the ‘highest quality access’ to the European Union’s market after Brexit unless it makes major concessions. In a friendly but frank message to the U.K., Ursula von der Leyen said negotiating a new U.K.-EU trade deal will be tough. She also said the end-of-2020 deadline that British Prime Minister Boris Johnson has imposed on negotiations makes it ‘basically impossible’ to strike a comprehensive new agreement in time.

Von der Leyen is visiting Johnson at 10 Downing Street in London Wednesday for the first time since the British leader’s election victory last month. Johnson’s Conservatives won a substantial parliamentary majority in Britain’s Dec. 12 election, giving him the power to take the U.K. out of the EU on Jan. 31. It will be the first nation to ever leave the bloc. Britain’s departure will be followed by a transition period in which the U.K.-EU relationship will remain largely unchanged while the two sides negotiate a new trade arrangement. Johnson says the U.K. is seeking a free trade deal, but doesn’t want to agree to keep EU rules and standards. Britain wants to be free to diverge from EU regulations in order to strike new trade deals around the world … That could cause problems. Speaking at the London School of Economics before her meeting with Johnson, von der Leyen warned that ‘without a level playing field on environment, labor, taxation and state aid, you cannot have the highest quality access to the world’s largest single market.”

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The holidays are over. As we stash away all the ribbons and bows, they look a bit less colorful than they did just a few weeks ago. We now find ourselves in the dull, gray routine of winter grappling with resolutions, rush hour, and an overabundance of Amazon boxes. Like every other year, January comes as a moment of reckoning for over-eating, over-spending, and over-promising.

The New Year Blues are actually a fairly common thing. While some celebrate the accomplishments of the old year and approach the new one with enthusiasm — others are engulfed by a sense of dread. And when the cycle of anticipation invariably fails to live up to the hype, it can be debilitating. This is perhaps even more prominent in the world of money, investing, and the markets.

As 2020 begins, we close out a decade of low inflation, low interest rates, and historic economic expansion. In the 2010’s, we not only continued to pull away from one of the worst financial crises since the Great Depression — we made economic history. We reached historically low levels of unemployment for African Americans, Hispanic Americans, Asian Americans, and women along with the highest levels of median household income to ever grace the record books. We also achieved the longest consecutive streak of job growth and the lengthiest bull market in history. And we witnessed something most economists said was not possible — the return of American manufacturing jobs.

But as we dip our toe into a new decade, we’re faced with new pressures and the historical precedent of unexpected political and economic events. In 1980, the U.S. started the decade by entering a deep recession triggered by the Iranian Revolution of 1979 and a dramatic surge in oil prices. In 1990, Iraq invaded Kuwait, which triggered the first Gulf War that subsequently crippled consumer confidence, suppressed business spending, and sparked a U.S. recession. In the year 2000, the dot.com bubble burst which precipitated the collapse of internet stocks causing trillions of dollars in market losses. In 2010, the European Debt Crisis got under way which threatened banks around the world and had adverse effects on both global trade and world economic growth.

In the first week of this new year — stocks have been volatile and there has been endless talk of powder kegs and market bubbles. Corporate debt has reached unsustainable levels and the student loan crisis has spiraled out of control. We’re also grappling with a presidential impeachment, a precarious trade truce with China, renewed rocket warnings from North Korea, hypersonic missile threats from Russia, and a highly contentious presidential election. Add the recent threat of retaliation from an incensed Iran for the killing of Qassem Soleimani, and we get a truly unnerving glimpse into global risk.

Are you tired of hearing Happy New Year yet? So, despite our private resolve to drop a pant size and pay down our debt, the tenor of the 2020’s will very much hinge on the state of the world. From the Korean Peninsula, to the South China Sea, to the Middle East, the 2010’s left behind a tinderbox of global flashpoints. And while Christmas is clearly over on Wall Street, the economic hope of the new decade will likely rest in a familiar place —- the safety, security and staying power of holding physical gold.

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Gold slips from near seven-year highs on lull in U.S.-Iran tensions

January 7, 2020

“Gold prices retreated on Tuesday from near seven-year highs reached in the previous session as investors took profits in the absence of new developments in the tense situation between the United States and Iran. Deficit-hit palladium meanwhile hit another record peak on the back of prolonged supply constraints in the market.  Spot gold was down 0.1% at $1,564.31 per ounce as of 1257 GMT, having fallen as much as 0.7% earlier in the session. It touched its highest since April 2013 at $1,582.59.

U.S. gold futures were 0.2% lower at $1,566.00. ‘There is nothing fundamental going on here, it is just a reaction to yesterday’s price movement. Investors are looking at the other side of the coin and taking some profits,’ ABN Amro analyst Georgette Boele said. The market seems a little more relaxed about the situation in the Middle East, she added. Prices surged on worries about an armed conflict between the United States and Iran after a U.S.-authorised drone strike killed a top Iranian military official on Friday. With both sides exchanging threats of retaliation, a senior Tehran official said on Tuesday Iran had been considering 13 ‘revenge scenarios’ in retaliation to the air strike.”

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CNBC/Elliot Smith

3 reasons why gold could rally for the rest of the year, according to commodity strategists

January 7, 2020

Reasons for Gold to Rally“A combination of continued geopolitical risk, a weaker dollar and negative real rates would continue gold’s rally through 2020, commodity strategists anticipate. However, there is some disagreement over the extent to which geopolitical factors will continue to be supportive for the precious metal. Gold prices rallied to a seven-year high after tensions escalated in the Middle East following the U.S. killing of top Iranian military commander Qasem Soleimani, as investors flocked into typically safe assets, with oil and bond prices also surging.

As well as geopolitical risk, however, macro factors are also boosting gold’s appeal as a hedge against uncertainty. A softened dollar and a persistent negative rate environment are chief among these gold-supportive trends. Since gold is denominated in dollars internationally, weakness in the greenback pushes up gold prices and vice versa. Meanwhile negative real interest rates, in which the inflation rate is higher than the nominal interest, means that creditors will be losing money and are therefore more likely to park their money in gold.”

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KITCO NEWS/Allen Sykora

UBS sees gold prices averaging around $1,600/oz in 2020

January 7, 2020

UBS Gold Price Estimate“UBS said the current backdrop is ‘quite supportive for gold,’ looking for the metal to average around $1,600 an ounce this year, although analysts also offered caution about the early-year gains. Heightened U.S.-Iran tensions on Monday sent gold to a roughly seven-year high, before the metal pulled back some. ‘Macro factors are boosting gold’s appeal as a hedge against uncertainty and a diversifier for investor portfolios,’ UBS said. ‘Seasonally, January also tends to be a strong period for gold due to a combination of physical demand in China ahead of the Lunar New Year holidays and investor allocations are built as portfolios are rebalanced at the start of the year. Our base case is for gold to trade through and average around $1,600 this year.’

Still, analysts said investors need to consider several other factors, including the thin liquidity early in the year, which can exaggerate price moves. ‘Reading too much into recent moves and extrapolating them remains tricky at this stage,’ UBS said. ‘Second, we are cautious about the volatility and sustainability of the impact of geopolitical uncertainty on gold prices. Further escalation would likely see a ramp-up in safe-haven demand for gold, but the bar for persistent and significant price responses tends to increase as the uncertainty drags on. Conversely, we expect de-escalation to swiftly unwind gains.’ There would be a more sustained impact on gold if the uncertainty filters through to inflation and growth, the bank continued. ‘That said, lingering geopolitical uncertainty does further strengthen the case to include gold in a diversified portfolio.”

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YAHOO FINANCE/Sam Ro

The Iran crisis could bring a bigger economic problem than surging oil prices

January 7, 2020

Iran Crisis“The intensifying U.S.-Iran conflict is dominating headlines, and it’s certainly something investors shouldn’t be ignoring. While the U.S. economy has limited direct exposure to Iran, Iran is a big player in the oil market and has the capacity to do things that could cause oil prices to spike. ‘It is a stylized fact that oil price shocks tend to lead recessions,’ Credit Suisse economist James Sweeney said on Monday. ‘Five of the past six recessions were preceded by a sharp increase in oil prices.’ But the world has changed greatly since the last recession. Consumer spending on energy is at historical lows, accounting for just 2.3% of personal consumption expenditures, down from about 6% in the early 1980s. This limits the impact surging oil prices could have on the economy. Higher oil prices may also spark activity in the country’s massive domestic energy sector.

‘Higher oil prices do not have as much of a slowing effect on the U.S. economy as they did years ago,’ Wells Fargo chief economist Jay Bryson acknowledged on Monday. ‘However, the uncertainty that the crisis could impart could potentially be more meaningful.’ Uncertainty is what makes growing businesses delay investment. Uncertainty causes gainfully employed consumers to second guess big purchases. And uncertainty causes investors to refrain from buying stocks. And sometimes even sell stocks. The prospect of a major military conflict isn’t exactly confidence-inducing.”

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MARKET WATCH/William Watts

Why the dollar doesn’t always act like a haven when geopolitical tensions rise

January 6, 2020

Dollar is not always a haven“One of these things is not like the other: Treasurys, gold and the U.S. dollar. Good for you if you picked the dollar. Unlike those other two assets, the U.S. currency didn’t seem to attract much buying interest as investors shunned global stocks at the end of last week and went looking for safety following a U.S. military strike that killed a top Iranian military commander and heightened Middle East tensions. ‘Increased tensions between the U.S. and Iran could lift the dollar — at least against non-major currencies — although we tend to see these sorts of geopolitical rows favoring the yen and Swiss franc first and foremost,’ wrote Steven Barrow, head of G-10 strategy at Standard Bank. On Friday, gold jumped and Treasury prices soared, yanking down yields, as global equities sold off in the wake of the strike.”

“‘When — geopolitical tensions arise that do not tighten liquidity conditions, the dollar is more likely to fall against other major havens, such as the yen and Swiss franc, and will probably trade sideways against the euro,’ said Barrow, who expects the dollar to lose around 5% to 10% in broad trade-weighted terms in 2020. A weaker buck appears to be the consensus call heading into 2020, though skeptics contend that factors that have previously frustrated dollar bears continue to underpin the currency. These include a domestic economy that still outshines its international peers as well as higher U.S. yields, despite the Federal Reserve’s series of three rate cuts last year.”

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CNBC/Jeff Cox

Ben Bernanke says the Fed shouldn’t rule out using negative interest rates

January 6, 2020

Negative Interest Rates“The Federal Reserve should consider negative interest rates as a potential weapon to fight future economic downturns, former central bank Chairman Ben Bernanke said. In a blog post released over the weekend, Bernanke cited the benefits of at least keeping the option alive to take short-term rates below zero. Doing so, he said, would give the Fed flexibility at a time when its policy toolkit is limited. ‘The Fed should also consider maintaining constructive ambiguity about the future use of negative short-term rates,’ Bernanke said in a post released at the American Economic Association conference in San Diego. The option ‘would provide useful policy space’ particularly with historically low rates already in place.

The comments come as Fed officials are weighing how they will respond to the next crisis while simultaneously evaluating the extraordinary tools they used during the last one. Bernanke helped pioneer the use of near-zero interest rates combined with quantitative easing, the aggressive asset purchases that pushed the Fed’s balance sheet past $4.5 trillion as it sought to pull the economy out of the Great Recession. Bernanke is not the only central bank authority to talk about negative rates.

Former Chairman Alan Greenspan told CNBC in September that it’s ‘only a matter of time’ before below-zero yields come to the U.S. When she was chair, Janet Yellen said in a letter that she would ‘would not completely rule out the use’ of negative rates.”

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Gold powers towards 7-year peak as investors rush for safety

January 6, 2020

“Gold prices were near a seven-year high on Monday as escalating tensions between United Stated and Iran attracted safe haven demand, while palladium rose past a key $2,000 level to hit a new record peak. Spot gold rose 1.6% to $1,575.70 per ounce as of 1320 GMT, putting it on course for its biggest one-day jump in more than four months. Earlier in the session it hit $1,579.72, its highest since April 2013. U.S. gold futures gained 1.7% to $1,578.20.

‘It is more of anticipation of what could happen or what might happen (between U.S. and Iran), which is now reflected in the market. Basically, the uncertainty that we don’t know what is going to happen,’ said Julius Baer analyst Carsten Menke. ‘If this issue is something which remains in the political area, like back and forth accusations and threats, then we should not have a lasting impact on gold.’

Bullion is often seen as an alternative investment during times of political and financial uncertainty. Gold prices have gained about 3% since the U.S. killing of a top Iranian military commander on Friday has heightened fears of a wider Middle East conflict, prompting investors to flee from risky assets.”

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CNBC/Fred Imbert

Gold surges to more than 6-year high on geopolitical turmoil, inflation fears

January 6, 2020

Gold Surges to 6 Year HighGold surged on Monday to its highest level in more than six years as investors fled riskier assets such as stocks amid rising tensions between Iran and the U.S. Futures for February delivery were up 1.7% at $1,578.80 per ounce and hit a high of $1,590.90 per ounce. That’s the metal’s highest level since April 2, 2013, when it traded at $1,604.30 per ounce. Gold was also headed for its ninth straight day of gains. ‘This is a bullish development, and while stretched, should lead to higher gold prices in the days/week ahead,’ said Mark Newton, managing member of Newton Advisors. He added that the precious metal could reach a range between $1,650 and $1,700 per ounce in the near term.

Gold prices have been on a tear over the past two sessions after President Donald Trump authorized the assassination of Qasem Soleimani, a top-ranking Iranian military official, in Baghdad. On Friday, gold rallied 1.6%. Soleimani’s assassination led Iraq to expel foreign troops from the country while Iran vowed to retaliate against the U.S. The Iranian regime also said Sunday it would not abide by the uranium-enrichment limits set by the 2015 nuclear deal.”

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MARKET WATCH/Shawn Langlois

Stocks could see a double-digit drop in the coming months, warns Wells Fargo

January 6, 2020

Stocks Double Digit Drop“Even as geopolitical tensions continue to ratchet up, there’s much to be bullish about in the stock market in the New Year — maybe too much, according to Chris Harvey, the head of equity strategy at Wells Fargo Securities. ‘There’s a lot of things to like. Rates are lower, credit spreads are tighter, the Fed has been accommodative, we’ve got some sort of resolution with trade and tariff and sentiment has improved greatly,’ Harvey explained to Bloomberg in a recent podcast. ‘And that’s what we don’t like.’

In other words, when everything starts turning positive and expectations go higher, that’s exactly when investors should be worried.  But they don’t seem to be. ‘Typically, when people are a little bit more, what would we say, greedy, as opposed to fearful, it’s not always a great time,’ he said, with a nod to Warren Buffett’s oft-cited market mantra. ‘With expectations so much higher, we’re just worried that things can change and change rather quickly.’ …Bullishness was in short supply in Friday’s trading session, as investors reacted to the U.S. airstrike in Baghdad that killed a top Iranian military commander. Oil prices jumped, while the Dow, S&P 500and Nasdaq Composite all closed lower. There’s no rebound taking shape on Monday, with futures pointing to a lower open.”

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BUSINESS INSIDER/Carmen Reinicke

Oil spikes above $70, its highest since September, amid mounting Middle East tensions

January 6, 2020

Oil Spikes Amid Mid East TensionsOil surged more than 1% in early trading on Monday morning as tensions in the Middle East escalated over the weekend, pushing Friday’s gains into a second week. Brent crude jumped 1.5%, to as high as $70.74 per barrel, its highest price since September. West Texas Intermediate gained 1.2%, to $63.79 per barrel, its highest since April. Tensions in the Middle East have mounted since the death of Iranian Maj. Gen. Qassem Soleimani late Thursday. Over the weekend, Iran said it would withdraw from the 2015 nuclear deal. On Sunday, US President Donald Trump tweeted that the US would impose sanctions on Iraq if US troops are forced to leave.

Since this conflict started, Brent crude has gained $4, Hussein Sayed, a chief market strategist at FXTM, wrote in a note early Monday. The price will likely climb as the conflict continues and could weigh on stocks as well, he said. ‘At $70-80 a barrel, the global economy is not likely to feel much impact from this raise in prices, but as we get closer to $100 there will be severe consequences,’ Sayed wrote, adding that it could trigger ‘steep selloffs’ in equity markets … Gold has also gained since last week. On Monday, the precious metal hit its highest price since 2013 as investors piled into the safe-haven asset.”

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BLOOMBERG/Nick Wadhams and David Wainer

Qassem Soleimani Killing Leaves Trump’s Middle East Strategy in Tatters

January 5, 2020

Middle East Strategy“U.S. President Donald Trump and his top aides spent the weekend arguing that the killing of Iranian General Qassem Soleimani would deter future attacks and make the Middle East safer. Instead, U.S. policy in the region seems to be going in the opposite direction of what Trump has long promised — with more U.S. troops going in, not fewer; an Iran defiant, not cowed and broken by sanctions; and regional allies giving only lukewarm support to Trump’s airstrike instead of rallying around it. Economic costs of the strike are also mounting: oil surged above $70 a barrel on Monday and equities around the world extended losses. Havens climbed, with gold rising to the highest in more than six years.

The political backlash came quickly, as the U.S.-led coalition against Islamic State was forced to suspend operations and Iraq’s parliament called on Sunday called for U.S. troops to withdraw. Trump responded by saying Iraq could face sanctions and would have to ‘reimburse’ America. Iran said it would abandon limits on uranium enrichment put in place as part of a 2015 nuclear agreement that Trump abandoned in 2018. U.S actions have “made an already volatile situation much more dangerous,” said retired Army Lieutenant Colonel Daniel Davis, a senior fellow at Defense Priorities who favors a U.S. troop withdrawal from Iraq. ‘If you paid any attention to Iran in the last 40 years you know they will never buckle to that kind of pressure. It’s just the opposite.’”

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THE WALL STREET JOURNAL/Paul J. Davies

It’s White-Knuckle Time for Buyers of Riskier Corporate Loans

January 6, 2020

Riskier Corporate Loans“The market for low-rated corporate loans has suffered sharp declines in recent months, a sign of growing aversion to earnings shortfalls or other strains at indebted companies. In the U.S. at the start of December, some 2.5% of leveraged loans were trading at less than 70% of face value, the most since September 2016, according to S&P Global Market Intelligence’s LCD, the loan market research service.  Analysts and investors blame the loose credit standards that characterized the market in recent years, encouraged by strong demand from yield-hungry investors. The hunt for yield also fed a boom in new issuance of structured loan funds known as collateralized loan obligations, or CLOs, which have been the biggest group of lenders in recent years.

But investors are shying away from such loans at any sign of trouble, including those deemed ‘covenant lite’ for their scant investor protections, which is sparking steep falls in the prices of loans to firms—particularly when they fail to hit earnings targets. ‘In the absence of covenants, loans should trade down quicker,’ says Alexander Ohl, head of structured credit at Union Investment in Germany. In Europe, especially, where loan markets are smaller, less transparent and less liquid than in the U.S., loan values can drop very rapidly once they go below the equivalent of 80 cents on the dollar, Mr. Ohl says.”

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Musical Chairs

As we think about resolutions and goals for the new year – many of us gravitate to the traditional aspirations of losing weight, eating better, exercising regularly, and the perennial favorite — being better about money. With respect to the latter, that can take the form of spending less, saving more, or investing smarter.

2019 was a banner year for the financial markets. Despite a debilitating trade war, global growth concerns, and extreme political polarization — Wall Street basked in recurring record highs. For the Dow, the Nasdaq, and the S&P 500, the good times rolled unhindered and unchecked making it the best year for stocks in decades. ‘Fear of Missing Out’ paled in comparison to the ‘Fear of Not Having Enough’ as investors piled into equities head first, breakneck and full bore. So much for ending the year with a bang — the markets closed 2019 with a sonic boom.

But here’s the $85 trillion question. What will 2020 bring? Can Wall Street live up to the ‘go all-in,’ let it ride, devil-may-care attitude that dominated 2019? In order to do that, the three indexes will have to combine for some 37 new records. Possible? Anything is possible but there are a few things that could dampen the new year spirit.

The first is the over-leveraged U.S. consumer. While spending has sustained the American economy, consumer debt is rising and delinquencies are poised to hit decade highs, particularly on credit cards and auto loans. Then, there’s the question of interest rates. The Fed has been unduly restrained and rates remain at historic lows. Over 60% of current homeowners are paying mortgage rates between 3.00% and 4.90%. In 2000 the average rate was 8.05%, in 1990 it was 10.13%, in 1980 it was 13.74%. At some point, rates will have to rise and when they do, the ripple effect could crush the markets. And we cannot overlook the ever-precarious trade truce. If the ‘Phase One’ trade deal between the U.S. and China fails to hold or progress, look for global uncertainty to mount and the markets to elicit a nervous gasp.

While these risks are menacing, they’re being written off as things we merely need to worry about ‘at some point’ but not necessarily now. This type of hope-mongering, can leave investors flat-footed. YES — At some point, the markets will correct, the economic expansion will end, the economy will slow, and a recession will arrive. Until then, it’s a perilous game of market “Musical Chairs” and the critical question we must ask ourselves is where we’ll be sitting and what we’ll be holding when the music stops and “at some point” slides into a chair before we do.

So, as you hum along to another tipsy rendition of “Auld Lang Syne” and guzzle a little Moët & Chandon at midnight — keep a few things in mind. Global growth is decelerating, wealth inequality is soaring, corporate profits are sinking, business uncertainty is rising, and we have no clue who will govern the most powerful economy in the world in 2020.

All of this helped lift gold more than 18% in 2019 making it one of the few assets that not only advanced on all the many things that went right last year — but became a power hedge for all that could go wrong as we move into the next.

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Inflation

It was the economic buzz word of the 1980’s and the big bad wolf of spending, purchasing power, and economic growth. ‘Inflation’ was top of mind whether you were buying a loaf of bread or pumping a gallon of gas. Those were the days that 48-month car loans were over 15% and 30-year fixed mortgage rates hovered at 18%. For those of us that lived through it, inflation sapped our spirit and tapped our paychecks. It was an altered reality where the cost of everything was rising all at once, and the value of money just couldn’t keep up.

Ronald Reagan famously called inflation “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” Indeed, it triggers a fall in real income, raises the cost of borrowing, suppresses business sentiment, and undermines our overall standard of living. The most perilous aspect of inflation, however, is that it is self-perpetuating and self-feeding. It unleashes an animal spirit that creates even more inflation.

In the decades following the second World War, the U.S. inflation rate averaged under 4%. The oil embargo of 1973-1974, however, pushed it into double digits — crippling consumer purchasing power and stretching American households. The surge was blamed on everything from supply side issues, to increased defense spending, rising wages, currency manipulation, and flat-out greed.

Hindsight has taught us, however, that monetary policy mistakes also played a role. ‘The Great Inflation’ report by the Federal Reserve Bank of Atlanta claimed that a combination of bad data and miscalculations caused policymakers to underestimate the inflationary impact of their policies:

“Motivated by a mandate to create full employment with little or no anchor for the management of reserves, the Federal Reserve accommodated large and rising fiscal imbalances and leaned against the headwinds produced by energy costs. These policies accelerated the expansion of the money supply and raised overall prices without reducing unemployment.”

Despite running as a fiscal Conservative, President Richard Nixon continued to fund the Vietnam War, increase social welfare spending, and rack up massive budget deficits throughout the early 1970’s. He also pushed the Fed to maintain low interest rates which temporarily stimulated the economy before eventually fueling higher inflation. Wharton Professor Jeremy Siegel called it, “the greatest failure of American macroeconomic policy in the postwar period.”

As we approach a new decade, much of this sounds familiar and yet we find ourselves in a wholly different predicament. Since the Fed established its 2% target seven years ago, the inflation rate has spent the majority of time hovering below it. Why is this a concern? Because too-low inflation can signal a coming recession and limit the Fed’s ability to turn things around. This has prompted calls to revamp inflation benchmarks across the globe. The rationale is that higher inflation will result in higher interest rates and this will give central banks more tools to fight the next crisis.

According to Alan Greenspan however, a re-calibration of inflation targets may not be necessary. The economist and former Fed Chair recently issued a warning that the rise of loose money and historic deficits could bring inflation back in a big way. Current interest rates remain historically low and the U.S. deficit for 2019 is just shy of an unfathomable $1 trillion. Historically, when cheap money abounds and federal expenditures dramatically exceed revenue, inflation follows.

And in some places, it’s already here.  Venezuela’s inflation rate is an astonishing 282,972.80%. Zimbabwe’s is over 175% and Argentina, North Korea and South Sudan are all over 50%. Food inflation is making headlines in India and China, credit inflation is soaring around the world, and the cost of education, healthcare, and housing in the U.S. has skyrocketed. In an economy where consumer spending accounts for 70% of economic growth, even a modest rise in these areas is worrisome.

Indeed, Credit Suisse’s chief economist stated that U.S. inflation could be “surprisingly high” if global growth holds in light of the Fed’s decision to stop raising rates. Similarly, some market strategists are warning of an “inflation scare” in 2020. While fund managers around the world are re-examining asset allocations due to inflationary risks.

In the current low rate, high debt environment — inflation is not going down. So, if you want to protect your purchasing power, now the time to diversify. Rising inflation will likely put gold back in the headlines as a safe haven and one of the most durable assets to hold in the face of an eroding dollar.

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Gold Coins

December 20, 2019

“Gold edged lower in range-bound trade on Friday, pressured by increased risk appetite on hopes of an interim Sino-U.S. deal, while investors awaited U.S. GDP data for fresh cues on the state of economy. Treasury Secretary Mnuchin said on Thursday the United States and China would sign their so-called Phase one trade pact at the beginning of January, adding that it would not be subject to any renegotiation. Spot gold fell 0.1% to $1,477.95 per ounce by 0808 GMT.

‘The real driver for gold markets has been trade-war risk and with its de-escalation in phase one on the back of Mnuchin’s comments is not bullish for gold,’ said Stephen Innes, a strategist at AxiTrader. China’s finance ministry unveiled a new list of import tariff exemptions for a duration of one year starting Dec. 26 for chemical and oil products from the U.S. The easing of the trade dispute boosted share markets. The dollar was steady, as it was set to gain for the first week in four, supported by better-than-expected U.S. economic data. The initial U.S. jobless claims report was strong with applications for unemployment benefits slipping from a more than 2-year high.”

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MARKET WATCH/Jeffry Bartash

Third-quarter GDP left at 2.1% — stronger consumer spending offset by weaker business investment

December 20, 2019

Stronger Consumer Spending“The pace of growth in the U.S. economy was left at 2.1% in the third quarter, as strong consumer spending was offset by weaker business investment in inventories, in the final estimate from the Commerce Department on Friday. The data showed frothier consumer spending than previously reported in the period running from July to September, but the increase in inventories, or unsold goods, was also marked down to leave GDP unchanged.

The increase in consumer spending, the main engine of U.S. economic growth, was raised to a 3.2% annual pace from 2.9%, which was not quite as strong as the second quarter’s heady 4.6% rate but still very robust.  Americans spent more in the third quarter on services such as financial advice and personal care, revised figures show. Business investment didn’t decline quite as much as the earlier estimates revealed, but it was still negative. Investment in structures fell 2.3% vs. a prior 2.7%. The decline in spending on equipment was lowered to 9.9% from 12%. More notably, the change in the value of inventories was reduced to $69.4 billion from a previous $79.8 billion.”

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KITCO NEWS/Neils Christensen

Inflation garners little attention for 2020, but gold market is watching

December 19, 2019

Inflation for 2020“There is a global push under way to drive inflation higher and while that could be good for gold, it is not clear central banks will achieve their goal. In his last press conference of 2019, Federal Reserve Chair Jerome Powell made a bold statement, noting that inflation hasn’t hit the central bank’s 2% target since he joined the board of governors in 2012. But by the Federal Reserve’s own estimates, 2020 might be the year that Powell sees the central bank reach its goal. In its December projections, the Federal Reserve looks for inflation to rise 1.9% next year. However, even by Powell’s admission, the Fed’s outlook won’t be enough to force a shift in its firmly neutral stance.

‘In order to move rates up, I would want to see inflation that’s persistent and that’s significant—a significant move-up in inflation that’s also persistent before raising rates to address inflation concerns,’ he said. While the Federal Reserve is hoping to reach its inflation target next year, another central bank is less optimistic. In its December projections, the European Central Bank downgraded its inflation forecast to 1% for next year, down a tick from its previous estimate of 1.1%. However, newly minted ECB President Christine Lagarde said that the central bank is confident that its loose monetary policy will eventually drive inflation higher. For most economists, inflation has been at most a back-burner issue, not a significant factor in U.S. economic activity. In their 2020 outlook, economists at Bank of America Merrill Lynch said that they see inflation pushing to 2% next year as the U.S. economy posts growth of 1.7%.”

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BLOOMBERG/Sarah Ponczek

Maybe It’s Time to Start Worrying About Euphoria in U.S. Stocks

December 20, 2019

Start Worrying About Stocks“Mom and pop are rushing back to risk. The ultra-rich want in. Positioning in bellwether mutual funds has virtually never been so bullish. This as the S&P 500 has surged 11% in less than three months. Word is getting around about stocks, music to the ears of anyone who sells or manages them. But if you’re the type of market contrarian who thinks a better backdrop for gains is gloom, all the elation is worrying.

‘Investors jump on momentum and ride the rally and then become convinced that it’s going to continue forever,’ said Aron Pataki, a portfolio manager at Newton Investment Management, with $62 billion in assets. ‘Typically, there is euphoria before pullbacks.’ Not that enthusiasm isn’t warranted. The S&P 500 is up 30% this year with dividends. People who stress about euphoria can sound like they’re complaining about a rising market. It’s just that over the long term, enthusiasm hasn’t been the fuel that drove U.S. equities to a $25 trillion bull run. The latest survey of fund managers from BofA Global Research showed ‘the bulls are alive,’ according to a report. Expectations for global economic growth jumped the most on record, while investor allocations to equities rose to the highest level in a year. Meanwhile, the firm found cash levels among those surveyed are the lowest in six years.”

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MARKET WATCH/Chris Matthews

Most stock investors think the Fed has restarted emergency stimulus, despite denials, says RBC survey

December 19, 2019

Emergency Stimulus“Investors don’t think the Federal Reserve is being straight with them, according to a survey published Wednesday by RBC Capital Markets. In October, the Federal Reserve announced it would expand its balance sheet by purchasing U.S. government debt from major banks, in exchange for newly created bank reserves, but has been eager to tell markets that this action is not a resumption of quantitative easing (QE) — its post-crisis program of purchases of long-term government debt and mortgage bonds meant to stimulate economic growth and avoid deflation.

‘I want to emphasize that growth of our balance sheet should in no way be confused with the large-scale asset purchase program that we deployed after the financial crisis,’ Fed Chairman Jerome Powell said in October.  Powell said that because the balance sheet expansion will only involve the purchase of short-term securities, and is aimed at managing the level of bank reserves in the financial system rather than pushing down long-term interest rates, the actions should be seen as a simple extension of the Fed’s day-to-day market operations. But investors are not heeding this advice, according to RBC’s December survey of institutional investors, with 52% of those surveyed saying that the Fed’s action is ‘effectively a form of QE,’ while only 19% agreed with Powell’s description of the program and 23% said they don’t know.”

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SOUTH CHINA MORNING POST/Nicholas Spiro

US-China trade deal and Boris Johnson’s election victory in Britain have stock market bulls cheering, but for how long?

December 20, 2019

Trump and Johnson“Judging by the recent performance of the MSCI All-Country World Index, a gauge of stocks in developed and developing economies, investor sentiment has been given a significant boost by the majority secured by the ruling Conservative Party in Britain’s parliamentary election and the signing of a ‘phase one’ trade deal between Washington and Beijing. The index has hit a record high, surpassing its January 2018 peak before an outbreak of volatility sent equities tumbling. Over the past several weeks, mounting expectations of a reduction in political risk in Britain and a de-escalation of US-China trade tensions have contributed greatly to a surge in optimism in markets.”

“At a time when investors are looking for reasons to take on more risk – in stark contrast to a year ago when pervasive fears about growth and tariffs caused equity markets  to plummet – the latest developments in British politics and the trade war give the bulls reason to cheer. However, any rally that has its roots in an extremely volatile, politically driven and protracted negotiation process, such as Brexit and the trade conflict, is inherently unsustainable. On Tuesday, the pound came under pressure again as Johnson’s government signalled it would enact legislation that would preclude it from prolonging the transition period covering trade relations with the EU beyond the December 2020 deadline, setting the stage for another ‘cliff-edge’ Brexit in 12 months.”

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Donald Trump

December 19, 2019

“Gold prices edged higher on Thursday after the U.S. House of Representatives voted to impeach President Donald Trump, stoking fears of political uncertainty in the world’s largest economy. Spot gold was up 0.1% at $1,476.69 per ounce. U.S. gold futures edged up 0.1% to $1,480.70 per ounce. Trump became the third U.S. president to be impeached as the Democratic-led House formally charged him with abuse of power and obstruction of Congress in a step that will inflame partisan tensions.

Cautious sentiment supported bullion, often seen as an alternative investment during times of political and financial uncertainty. ‘The impeachment is resulting in a slight increase of the uncertainties and we’re seeing gold inch higher on the back of that,’ said ANZ analyst Daniel Hynes. ‘This news is also offsetting headwinds such as strong equity markets, the trade deal and better economic

data.’ Although the reaction to impeachment was muted, Asian shares pulled back from a one-and-a-half-year peak, while the U.S. dollar eased slightly against a basket of currencies, making gold cheaper for holders of other currencies. If the U.S. Senate convicts, ‘… then that throws next year’s election in a very uncertain place,’ Ilya Spivak, a senior currency strategist at DailyFx said.”

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KITCO NEWS/Neil Christensen

Gold prices up slightly following disappointing Philly Fed Survey data

December 19, 2019

Gold Prices“The gold market continues to spin its wheels, seeing only a little movement as U.S. regional manufacturing data disappoints expectations, according to the Philadelphia Federal Reserve. The Philly Fed said that its manufacturing business outlook dropped to a reading of 0.3 in December, down from November’s reading of 10.4 and significantly missing expectations; Consensus forecasts were calling for a reading around 8.1.  ‘The December Manufacturing Business Outlook Survey indicated essentially flat growth in the region’s manufacturing sector this month.

February gold futures last traded at $1,480.50 an ounce, up 0.12% on the day. Despite the weaker-than-expected data, the components of the report were relatively positive; the new orders index rose to 9.4, up from November’s reading of 8.4 … One major weak spot in the region’s manufacturing sector was the labor market. The report said that its number of employees index dropped to 17.8, down from November’s reading of 21.5. Some good news for gold prices, inflation pressure appears to be on the rise. The Prices paid index rose to 19, up from November’s reading of 7.8.”

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THE WALL STREET JOURNAL/Amara Omeokwe and Josh Mitchell

U.S. Existing Home Sales Decreased 1.7% in November

December 19, 2019

Housing Market“Sales of previously owned U.S. homes declined more than expected in November, the second drop in three months and a sign limited inventory is constraining would-be home buyers. Existing-home sales fell 1.7% in November to a seasonally adjusted annual rate of 5.35 million, the National Association of Realtors said. Economists a 0.4% decrease.  Sales were up 2.7% last month from November 2018, the fifth straight month of year-over-year gains. October sales were revised down to 5.44 million compared with an earlier estimate of 5.46 million.

A lack of sufficient housing inventory to meet buyer demand continues to be a limiting factor for the housing market, according to Jessica Lautz, the trade group’s vice president of demographics.

There was a 3.7 month-supply of homes on the market at the end of November, at the current sales pace … Inventory has been particularly limited for homes priced at the lower end, according to NAR. Sales of homes priced at $250,000 and below declined in November from the prior year, while sales priced $500,000 to $750,000 saw the strongest gains, rising 8.0% year-over-year.”

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BLOOMBERG/Daniel Alpert and Robert C. Hockett

The Jobs Market Isn’t as Healthy as It Seems

December 19, 2019

Unhealthy Job Market“A hallmark of the U.S. economy’s record expansion has been steady growth in employment. Judging from the jobless rate, in fact, the labor market is the best it’s been in half a century. But what is missing in the focus on the numbers is a troubling deterioration in the quality of jobs created. A close look at labor trends reveals that while the U.S. jobs market has expanded, the caliber of the positions created in the largest chunk of the workforce has steadily and significantly declined, leaving Americans working fewer hours on average, and in lower-paying positions. These changes to what we call job quality as distinguished from quantity — account for much that now ails the American economy and, as a consequence, society more broadly.”

“Increasingly, a greater share of job gains are occurring within the lowest quality job subsectors – in particular retail, leisure and hospitality, administrative, waste management, and health-care and social assistance services. While not all the positions in these subsectors are low quality, both the average job and the vast majority of the positions in these subsectors offer less than the mean weekly income of all U.S. P&NS jobs. In fact, the percentage of P&NS jobs created in just these four subsectors corresponds almost exactly to the percentage of goods-producing jobs lost in America from 1990 through today. We have, in other words, replaced most of our highest quality jobs not merely with lower quality jobs, but with lowest quality jobs.”

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CNN BUSINESS/Nathaniel Meyersohn

More than 9,300 stores closed in 2019

December 19, 2019

Stores Closing“2019 was another bruising year for many American retailers, despite healthy consumers and a strong economy. This year, US retailers announced 9,302 store closings, a 59% jump from 2018 and the highest number since Coresight Research began tracking the data in 2012. Bankruptcies in the retail sector intensified this year and many struggling chains cut stores. That led to a spike in closings.

Payless, Gymboree, Charlotte Russe and Shopko all filed for bankruptcy and closed a combined 3,720 stores, according to Coresight. The majority of those were because of Payless, which filed for its second bankruptcy in February and shuttered 2,100 US stores.  Discount chain Fred’s filed for bankruptcy in September and closed 564 stores. Forever 21 also filed for bankruptcy that month and said it will close up to 178 stores. Forever 21’s closures are not in Coresight’s report since they are not finalized. Other retailers, such as Ann Taylor parent Ascena Retail (ASNA), Family Dollar, GNC (GNC), Walgreens (WBA), Signet Jewelers (SIG), Victoria’s Secret and JCPenney (JCP), slashed their store footprints to save money and prop up higher-performing stores. Family Dollar closed 359 this year, while Signet, the parent company of mall stalwarts Kay, Jared and Zales, announced 159 closures.”

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YAHOO FINANCE/Sibile Marcellus

‘We squandered a major economic recovery’: Harvard professor

December 18, 2019

Squandered Economic Recovery“The nation wasted the major economic recovery, according to a new report by Harvard Business School on U.S. competitiveness.  ‘We had this wonderful recovery. It could have given us the chance to take some significant resources and devote them to some of our well-known challenges, like infrastructure or health care…none of that happened. Instead, we squandered a major economic recovery and didn’t use it to make things better,’ said Harvard Business School professor Michael Porter, a co-author of the study.

The business community’s role in politics has made a significant contribution to Washington’s dysfunction, according to HBS’s report. The majority of the business leaders surveyed said businesses’ overall engagement worsened the political system by advancing policies that benefited special interests.  The report lays out the different ways in which businesses engage in politics today. The $6 billion spent annually on lobbying is just one facet; others include spending on elections and ballot initiatives, efforts to influence employees’ votes and donations, and adding former government officials to companies’ payrolls. The overwhelming majority of business leaders surveyed in the report said lobbying primarily advanced company interests, sometimes at the expense of the public interest.”

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December 18, 2019

“Gold eased on Wednesday as a rising dollar offset support for the safe haven metal from lingering U.S.-China trade uncertainty, while palladium slipped after a record run to the key $2,000 an ounce level. Spot gold was 0.3% lower at $1,471.96 per ounce by 1410 GMT, reversing gains from earlier in the session. U.S. gold futures were down 0.3% at $1,476. ‘The dollar is a little bit stronger,’ said Afshin Nabavi, senior vice president at precious metals trader MKS SA, adding, that due to a lack of follow-through on the upside, investors had started modestly selling gold. A break of the $1,465-$1,495 range could attract fresh interest, Nabavi added.

The dollar strengthened as U.S. economic data suggested the Federal Reserve was unlikely to cut interest rates further and as liquidity waned before the coming holidays. World stocks also remained just off record highs. Gold, often used as a hedge against political and economic uncertainties, is however on track for its biggest annual gain since 2010, bolstered by interest rate cuts by major central banks and the protracted tariff dispute.”

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CNBC/Christina Wilkie

House counts down the final hours to historic Trump impeachment vote

December 18, 2019

Nancy Pelosi“The House convenes Wednesday morning for a final day of debate before members vote on whether to make President Donald Trump the third president in the nation’s history to be formally impeached. Following the debate, the Democratic-controlled chamber is expected to approve two separate articles of impeachment, charging Trump with abuse of power and obstruction of Congress. The historic vote is slated to take place Wednesday evening, and the vote breakdown will almost certainly fall along party lines.

While House Democrats use their debate time to condemn the president’s actions, the minority House Republicans are expected to interject with procedural motions, appeals and objections throughout the day. These tactics are a time-honored part of any major House debate — for the party in the minority they serve as symbolic expressions of opposition, in this case to impeaching Trump, and as delay tactics intended to drag out the debate. Despite their serious-sounding names, like ‘motion to adjourn,’ these motions don’t actually accomplish anything. In nearly all cases, either the Democratic leadership will deny the GOP’s requests, or the Democratic majority will vote down last-minute motions that Republicans force members to vote on.”

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MARKET WATCH/Associated Press

Asian markets little changed as Brexit fears temper Wall Street’s optimism

December 18, 2019

Brexit News“Asian shares were mixed Wednesday after record highs on Wall Street amid investor optimism about an interim U.S.-China trade deal announced last week were tempered by fresh worries of a hard Brexit. Japan’s benchmark Nikkei 225 erased earlier gains to inch down 0.4% in morning trading. Hong Kong’s Hang Seng also gave up early gains and was last down 0.1% while the Shanghai Composite was headed in the same direction. Australia’s S&P/ASX 200 gained 0.2% while South Korea’s Kospi was little changed. Benchmark indexes in Taiwan, Singapore, Malaysia and Indonesia were mixed.

The U.S. Fed said Tuesday that industrial production and manufacturing were stronger last month than economists expected, though they are weaker than a year ago. Industrial production rebounded to 1.1% growth in November from October, better than the 0.8% that the market was expecting. But it remains 0.8% below year-ago levels … But in the U.K., British Prime Minister Boris Johnson signalled that he won’t soften his Brexit stance now that he has a majority in Parliament, seeking to rule out any extension of an end-of 2020 deadline to strike a trade deal with the European Union. Analysts say it will be difficult to complete a trade deal within a year, which could mean Britain leaving without a deal at the start of 2021 — a prospect that alarms many U.K. businesses.”

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KITCO NEWS/Allen Sykora

BMO Sees Gold Averaging $1,501/Oz, Profitable Producers In 2020

December 18, 2019

BMO“BMO Capital Markets looks for gold to benefit from loose central-bank monetary policy in 2020, allowing the metal to post an average price of $1,501/oz. The ‘vast majority’ of gold producers should be profitable at these prices, BMO added. Analysts called for silver to average $18.20 an ounce. Shortly before 8:30 a.m. EST, spot gold was at $1,472.40 and silver was at $16.90. ‘With inflation stubbornly low and surprisingly well correlated across global economies, monetary policy looks set to remain loose through 2020 ¾ indeed the bias of risk is for further cuts,’ BMO said.

‘This will keep macro asset allocation supporting gold and precious-metals markets. However, in our view, 2020 is more likely to be a year of consolidation than aggressive upside for gold and silver prices ¾ while many of the tailwinds are still blowing, they are not doing so with the same strength that drove prices higher through Q3.’ … ‘In our view, the gold price moves in ranges, and while global monetary policy is trending toward loosening, a range centered around $1,500/oz looks well based,’ BMO said. “For gold to push out the top of its current range would likely require significant portfolio rotation, most likely at a time of emerging-market panic or equity-market sell-off. For a downside breakout, this would involve a significant risk-on rally for which gold would be the funding source.” Central banks are likely to support gold not only by keeping interest rates low or even negative, but through continued gold buying ‘as they seek to dedollarize their own holdings,’ BMO said.”

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BBC/Europe News

Poland may have to leave EU, Supreme Court warns

December 17, 2019

Polexit“Poland could have to leave the EU over its judicial reform proposals, the country’s Supreme Court has warned.  The proposals would allow judges to be dismissed if they questioned the government’s judicial reforms.  Judges say the proposals threaten the primacy of EU law and could be an attempt to gag the judiciary. Poland has already been referred to the European Court of Justice (ECJ) regarding rules for judges. Under the proposals put forward by the socially conservative Law and Justice party government, judges can be punished for engaging in ‘political activity’. Any judge that questioned the legitimacy of judges nominated by the National Council of the Judiciary could be handed a fine or in some cases dismissed. Politicians will start discussing the proposals on Thursday.

The ruling party claims changes to the law are needed to tackle corruption and overhaul the judicial system, which it says is still haunted by the communist era. But the EU accused Law and Justice (PiS) of politicising the judiciary since it came to power in 2015.  The Supreme Court said the party was undermining the principle of the primacy of EU law over national law. It said in a statement: ‘Contradictions between Polish and EU law…. will in all likelihood lead to an intervention by EU institutions regarding an infringement of EU treaties, and in the longer run [will lead to] the need to leave the European Union.’”

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CNBC/Jeff Cox

‘Decade of the central bank’ ends with the Fed and its global cohorts in need of some new tricks

December 17, 2019

Decade of Central Bank“On Nov. 25, 2008, the Federal Reserve launched the shot heard around the financial world. The central bank announced it would start using digitally created money to buy mortgage debt in an effort to drive down interest rates and resuscitate a dead housing market. Along with a series of cuts that ultimately would take short-term interest rates close to zero, the move was part of an ambitious gambit to take the country out of its worst economic crisis since the Great Depression. It quickly expanded to the purchase of government bonds in a total of three rounds that spanned six years. Flash forward 11 years. The Fed’s campaign of ‘quantitative easing,’ along with keeping rates historically low, coincided with the longest expansion and most robust bull market in U.S. history.”

“As the decade ended, the institutions found themselves in quite a different position from where they started, particularly considering the worries over the state of the economy and potential asset bubbles. Where they once had plenty of space to offer policy accommodation in the case of a downturn, central banks now face severe restrictions. Policy rates among G-7 countries all are below 2% and countries that practiced QE face bloated balance sheets that threaten to pose financial imbalances … ‘This is a new paradigm. This is the world central banks are going to have to operate in where zero percent policy rates are more the norm,’ said Tom Garretson, fixed income strategist at RBC Wealth Management.”

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December 17, 2019

“The gold market continues to trade in a tight range seeing little reaction to growing momentum in the U.S. housing sector.  U.S. housing starts rose 3.2% to a seasonally adjusted annual rate of 1.365 million units in November, the Commerce Department said. Consensus forecasts called for starts to be around 1.34 million. October’s data was upwardly revised to 1.323 million units. For the year, housing starts are up more than 13%, compared to November 2018 levels. At the same time, building permits data, which is a precursor to future projects, was up 1.4% at 1.482 million last month, up from October’s revised level of 1.461 million. Economists were expecting to see 1.41 million permits. Building permits are up 11% from last year.

With most traders and investors looking ahead to the holiday season, gold is seeing little reaction to economic data. February gold futures last traded at $1,481.70 an ounce, relatively unchanged on the day.  Katherine Judge, senior economist at CIBC, said that more positive data in the housing market will continue to ease slowdown fears. ‘With homebuilder confidence at its highest level in over two decades amidst lower interest rates, and a strong labor market, residential investment should contribute to growth in the US in the first quarter,’ she said.”

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FORBES/Simon Constable

Gold Headed To $1,700 By March, Analysts Say

December 16, 2019

Gold Up By March“Get ready for a fast and sizable pop in gold prices.  The cost of buying one troy ounce of the metal will likely rise by around 15% over the next couple of months, analysts say. The reason gets to the heart of how prices of financial assets move over time. They go up, and they go down in somewhat predictable patterns, at least for those who know. In the case of gold, the price fell from $1,546 a troy ounce in September down to $1,455 on November 12, according to data from the London Bullion Market Association. The SPDR Gold Shares (GLD) exchange-traded fund, which holds bars of solid bullion, performed similarly.

Since then, the gold price has mostly moved broadly sideways, but is now beginning to turn upwards once again and should continue to rally over the next few weeks. ‘Gold got very overbought into late August / early September, and since then it corrected its overbought reading,’ states a recent report from Wolfe Research by John Roque and his colleague Rob Ginsburg. They are technical analysts who read charts to forecast where asset prices may move next.”

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BARRON’S/Steven M. Sears

Gold Has Taken a Beating — but Hasn’t Lost Its Shine. How to Play a Rally.

December 17, 2019

Gold Takes a BeatingGold is back. Despite what you may have read in recent days about gold’s price decline, institutional investors are aggressively positioning for the yellow metal to rally through summer since the Federal Reserve recently indicated that it was pausing future rate hikes. Since last week’s meeting of the Fed’s interest-rate setting committee, investors have rushed into the sector and aggressively established large positions in response to the Federal Reserve confirming what everyone already knew—it is unlikely to raise interest rates anytime soon.

This enhanced clarity sparked a push into many so-called risk assets, including gold, that benefit from low rates and an emaciated U.S. dollar. Some notable precious metal trades included the purchase of 15,000 SPDR Gold Shares (ticker: GLD) December $142 calls, and 20,000 VanEck Vectors Gold Miners ETF (GDX) June $30 calls, and a 50,000 ‘call spread’ that entailed buying the GDX March $30 calls and selling the GDX March $33 calls. The gold miners trade, in particular, is audacious. The exchange-traded fund is up about 31% this year, and the trade proves profitable if the fund moves into a new, higher trading range by March. During the past 52 weeks, GDX has ranged from $19.90 to $30.96. The interest in gold reflects the reality that precious metals benefit from low interest rates and a weak dollar. Inexpensive money also aids many so-called risk assets, ranging from stocks to emerging market debt, which is probably the most extreme destination on the risk curve.”

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CNBC/Weizhen Tan

Chinese corporate debt is the ‘biggest threat’ to the global economy

December 17, 2019

Chinese Corporate Debt“Chinese corporate debt is the ‘biggest threat’ to the global economy, warned a Moody’s Analytics economist, who described such risks as a ‘very significant fault line.’ That followed similar comments by Fitch Ratings last week, which said that private companies in China have defaulted on their debts at a record pace this year. While corporate debt is a ‘fault line in the financial system and the broader economy,’ Moody’s Chief Economist Mark Zandi flagged indebted Chinese companies as the larger risk. ‘I would point to Chinese corporate debt as the biggest threat,’ he said, adding that it’s growing very rapidly in China.

Zandi explained that many companies are struggling to deal with a slowdown in growth stemming from the trade war and other factors. ‘In the United States, it’s similar kind of picture — not to the same degree — but we have seen very significant increase in so-called leveraged lending, as in lending to highly indebted companies, and they are vulnerable if the economy were to slow,’ Zandi said. Debt has been a problem in the world’s second largest economy, which has been trying to reduce its reliance on it by tightening regulations to speed up deleveraging — or the process of reducing debt. However, the trade war is putting a dent in its efforts to pare its massive debt levels as China seeks ways to boost its slowing economy, which has been hit by U.S. tariffs. The country has this year more or less paused its deleveraging efforts and put in place more stimulus.”

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MARKET WATCH/Mark DeCambre

Why Wall Street sees the stock market on the verge of a ‘melt-up’

December 17, 2019

Wall Street Melt Up“Is the stock market on the brink of breaking into an unmitigated run-up to fresh records? That is the question a number of market strategists are exploring as the Dow Jones Industrial Average the S&P 500, and the Nasdaq Composite indexes mount their latest concerted assault on all-time closing highs, powered by hope that the U.S. and China can forge a preliminary trade accord to resolve a prolonged battle over import duties. A number of other geopolitical headwinds, at least momentarily, have died down, including concerns about market-roiling effects of uncertainty surrounding the Byzantine pathway toward a U.K. exit from the European Union.

Analysts at Bank of America Merrill Lynch, led by strategists Michael Hartnett, described the market as ‘primed for Q1 2020 risk asset melt-up,’ with the Federal Reserve and the European Central Bank still providing ample support to portions of the market and economy that have shown some signs of softness.  UBS Global Wealth Management Chief Investment Officer Mark Haefele said that a partial Sino-American trade resolution contributes mightily to the bullish thesis that a number of strategists have adopted. ‘This could unlock further upside for equity markets, driven by an improvement in business confidence and a recovery in investment,’ Haefele wrote … It is important to note that a so-called melt-up is considered by market pundits as the end phase of an asset bubble and is usually, but not always, followed by a significant downturn in stock values … some analysts are pointing to growing signs that Wall Street investors are becoming overcomplacent about market buoyancy.”

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BLOOMBERG/Mark Gilbert

Negative Interest Rates Are Destroying Our Pensions

December 16, 2019

Negative Interest Rates Destroy Pensions“It’s becoming increasingly apparent that the negative interest rates introduced in several countries in the wake of the global financial crisis are trashing bank profitability. Less obvious, are their debilitating impact on pension plans. And that’s why the days of sub-zero borrowing costs may be drawing to a close. Sweden’s central bank is poised to abandon the negative interest rate policy it’s pursued for half a decade by increasing its policy rate to zero even though inflation is expected to remain stubbornly below target for years to come.

Riksbank Governor Stefan Ingves has said negative rates were always meant to be ‘a temporary measure,’ and that the central bank would ‘probably’ raise borrowing costs when it meets on Thursday … The emergency measures introduced to resuscitate growth, including central banks expanding their balance sheets by embarking on quantitative easing, were supposed to be transient. Instead, they’ve become fixtures of the economic firmament. It’s been disastrous for pension plans. A 1% decline in interest rates increases calculated pension liabilities by about 20%. It reduces the funding ratio, which measures a pension provider’s ability to meet its future commitments, by about 10% … With about $11.7 trillion of the world’s debt yielding less than zero, the funds that run pension plans are anticipating meager returns from the assets they manage.”

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If you’re like most Americans, you have a healthy sense of skepticism. When things sound too good to be true, you get a little nervous — even cynical. Whether we’re presented with zero percent financing, one-penny Whoppers, or a free shopping spree — deep down we’re suspicious. We can’t help thinking, ‘what’s the catch’ because it is within the parameters of the ‘catch’ that good deals turn detrimental, money is lost, and what we thought was the best thing since sliced bread turns out to be the worst thing since bread-making.

As consumers, our economic sixth sense has served us well. We tend to shy away from Nigerian prince emails, shady sweepstakes, and fishy tax collection notices. We’re wary of fake discounts, bait and switch deals, and extreme markdowns.

Our instincts often get scuttled, however, when it comes to a booming stock market. The Head of Wealth Planning at Vanguard recently suggested that the recommended 60/40 stocks-to-bonds portfolio split has skewed to 75/25 for investors captivated by the upside of the sustained bull market. This dramatically elevates risk, particularly for those with a short-term retirement horizon.

Why do we do this? There are two main reasons. The first has to do with all the economic warnings that consumed the financial media for the better part of the year regarding the U.S.-China trade war. Indeed, the manufacturing woes, business uncertainty, and hits to American farmers, Chinese factories, and German auto makers were all very real. Then there was the prospect of a no-deal Brexit which threatened to shrink the U.K.’s GDP by up to 8%. And we were told the global economy was buckling under the weight of a severe and sustained manufacturing contraction. But now that we’ve arrived at a ‘Phase One’ trade deal, an orderly Brexit process, and a global economy that has seems to have regained its footing — Wall Street is melting-up and a stampede of optimism is pushing the market to recurrent highs.

This brings us to the second reason that we tend to suppress all that healthy skepticism that has steered us clear of financial danger — the so-called “fear of missing out.” It is that urgent feeling that someone is benefiting from something that we’re not participating in. It is the gnawing belief that everyone else is making more money, enjoying a greater upside, and riding higher than we are. The FOMO with respect to the current bull market, overpowers any concerns of a correction, an economic pull back, or a financial realignment. And, it is that “caution to the wind” approach to money and retirement that prompts us to make bad decisions.

Engaging in risky behavior because everyone else does, does not make for a sound financial plan. It wasn’t all that long ago that countless consumers followed the crowd into the ‘no money down,’ subprime traps that pushed their homes underwater. Or, signed up for credit cards with fleeting introductory rates, or used their houses as piggy banks with hefty cash-out re-fi’s that dramatically inflated their mortgage debt.

Just as we do when we buy anything — when we invest, particularly in equities, we have to tap into our innate sense of cynicism and ask the hard questions. What if monetary policy can’t be normalized? What if there is a corporate debt-driven recession? What if more countries exit the EU? What if the global economy continues to wobble?

So, whether it’s a BOGO, FOMO or Door Buster Deal that lures you to the Wall Street risk party, make yourself aware of the exits. This is not about having the right coupon at the right time. It’s about having the right money in the right place — right now. Amid the dark pools and the unicorns, the fat tails and the fallen angels — we must again summon our inner skeptic. Is Wall Street riding new highs because of market fundamentals or because the world just dodged another trade war bullet?

Those that come upon the real answer, will likely leave the party as quickly and as quietly as possible.

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Gold Steadies

December 16, 2019

Gold Steadies“Gold steadied on Monday as a weaker dollar and a lack of details on the ‘phase one’ U.S.-China trade deal offset pressure from gains in the markets. Spot gold inched 0.1% higher to $1,477.16 per ounce by 1106 GMT. U.S. gold futures were steady at $1,481.60. ‘Based on gold’s reaction, it appears the market is not very convinced about the deal… in the sense that this is not really a breakthrough in terms of lifting growth globally, in the U.S. or China,’ said Julius Baer analyst Carsten Menke.

‘Gold market investors are still a bit sceptical about the growth outlook next year so they prefer to hold onto their positions.’ The deal, announced on Friday, will reduce some U.S. tariffs on Chinese goods in exchange for increased Chinese purchases of U.S. agricultural, manufactured and energy products by some $200 billion over the next two years. The news pushed up world stock markets, which were trading a notch below a record high hit last week. U.S. Trade Representative Robert Lighthizer said U.S. exports to China will nearly double over the next two years. ‘There still remain concerns about what this deal entails and how much this phase one trade deal will alleviate the downward pressure on the global economy going into 2020,’ said FXTM market analyst Han Tan.”

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CNN BUSINESS/Julia Horowitz

A ‘black swan’ market indicator flashes a warning

December 15, 2019

Black Swan Market“A ‘phase one’ US-China trade deal. A resounding election victory for UK Prime Minister Boris Johnson that removes ambiguity on Brexit. In recent days, some of the political fog that’s hung over markets has lifted. Investors have responded by pouring into riskier assets. Stocks in the United States and Europe have reached fresh records amid the euphoria. But look at options markets, and a more cautious story emerges. Take the CBOE Skew Index, otherwise known as the ‘Black Swan’ index, since it tracks demand for options that would pay out if the S&P 500 were to see a sharp, unexpected drop. That index jumped to its highest level in nearly 15 months last week. This signals that investors are looking for protection in case the rally goes awry.

‘This options-based measure of the cost of disaster insurance on US stocks seems to indicate trouble ahead,’ Nicholas Colas, co-founder of DataTrek research, said … Right now, investors generally appear to be in the Colas camp. Demand for safe havens remains muted, with gold prices down more than 3.5% since September. But with all the excitement heading into the end of the year, talk of smart hedges looks poised to ramp up.”

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POLITICO/Kyle Cheney and Andrew Desiderio

Judiciary Committee impeachment report alleges Trump committed ‘multiple federal crimes’

December 16, 2019

Impeachment Report“President Donald Trump committed criminal bribery and wire fraud, the House Judiciary Committee alleges in a report that will accompany articles of impeachment this week.  The report, a 169-page assessment of the case for Trump’s removal from office, contends that Trump committed ‘multiple federal crimes’ — ones that Democrats addressed under the broad umbrella of ‘abuse of power,’ the first article of impeachment against the president.  ‘Although President Trump’s actions need not rise to the level of a criminal violation to justify impeachment, his conduct here was criminal,’ the panel’s Democrats argue, labeling Trump’s behavior ‘both constitutional and criminal in character’ and contending that the president ‘betrayed the people of this nation’ and should be removed from office.

The staff report, which was filed to the House Rules Committee just after midnight Monday, argues that Trump directed a months-long scheme to solicit foreign interference in the 2020 election, the allegation that forms the core of the two articles of impeachment — abuse of power and obstruction of Congress — approved by the Judiciary Committee last week. Democrats emphasized that proving a criminal violation is not required to justify impeachment. ‘The Framers were not fools. They authorized impeachment for a reason, and that reason would have been gutted if impeachment were limited to crimes,’ the report states.”

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THE WALL STREET JOURNAL/Paul Hannon

Global Economy Steadies but Europe Remains a Weak Spot

December 16, 2019

Global Economy Steadies“The global economy seems likely to avoid a further slowdown next year, with a raft of supportive government policies lifting activity in China and the U.S. still on a robust path. However, Europe remains a weak spot, according to surveys of purchasing managers released Monday, with few signs that a long decline in manufacturing is nearing its end. Global economic growth steadied in the three months through September, as output in the Group of 20 leading economies expanded at the same rate as in the second quarter. But while there are signs the Fed’s rate cuts earlier in the year have helped to keep the U.S. economy on a robust growth path, the ECB’s have had a less noticeable impact.”

“‘The eurozone economy closes out 2019… with businesses struggling against the headwinds of near-stagnant demand and gloomy prospects for the year ahead,’ said Chris Williamson, chief business economist at IHS Markit. Eurozone factories have seen their overseas sales slow sharply since early 2018, partly reflecting a global cooling of trade linked to an exchange of tariff increases between the U.S. and China. The ECB’s economists Thursday lowered their economic growth forecast for next year to just 1.1%, the latest in a series of downgrades that stretches back to June 2018. However, ECB President Christine Lagarde gave no indication that policy makers are considering another round of stimulus measures to follow those announced in September, instead pointing to “some initial signs of stabilization.”

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BLOOMBERG/Catherine Bosley and Niclas Rolander

The Most Momentous Rate Decision This Month Isn’t Fed or ECB

December 14, 2019

Most Momentus Rate Decision“The world’s oldest central bank stands to be the most significant this month as it pioneers a shift away from negative interest rates. Sweden was among the handful of economies that reduced key interest rates half a decade ago below zero. Now officials at the Riksbank — founded in 1668 — insist the policy has done its stimulus work, so their so-called repo rate can stop being negative. That puts the rich Nordic country in the spotlight of global monetary policy as counterparts watch nervously to see how easy it is for subzero rates to be unwound. While the Fed has resisted President Trump’s calls to venture into negative territory, the euro zone, as well as Switzerland, Denmark and Japan, find themselves in the same boat as Sweden.

‘A Riksbank hike in December would be a signal that central banks admit that there’s a downside to too-low interest rates,’ said Thomas Elofsson, portfolio manager at Catella. ‘It will be interesting to follow how the SNB and the ECB communicates and acts with this new mindset.’ The Riksbank decision on Dec. 19 promises more monetary action than central banks in the U.S. and the euro zone delivered last week. 18 economists surveyed by Bloomberg predict a quarter-point increase in Sweden’s policy rate from the current minus 0.25% …  Sweden’s shift is taking place against a global backdrop of worries about the harmful effects of subzero policy. Complaints by banks about profit margins have grown louder, while both the Riksbank and the ECB were among central banks warning last month about the financial stability risks.”

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THE GUARDIAN/Mohamed El-Erian

What if the global economy’s luck runs out?

December 16, 2019

Global Economy and Luck“This year is ending on a relatively positive note, especially when compared with the same time last year … As tempting as it is to dwell on current financial and macroeconomic conditions, doing so risks obfuscating a key element in the outlook for the future. There is a curious contrast between the relative clarity of expectations for the near term and the murkiness and uncertainty that comes when one extends the horizon further – say, to the next five years.  Many countries are facing structural uncertainties that could have far-reaching, systemic implications for markets and the global economy.

For example, over the next five years, the EU will seek to establish a new working relationship with the UK, while also dealing with the harmful social and political effects of slow, insufficiently inclusive growth. The EU will have to navigate the perils of a prolonged period of negative interest rates, while also shoring up its economic and financial core. As long as the eurozone’s architecture is incomplete, consistent risks of instability will remain … Such fluidity clouds the economic, financial, institutional, political, and/or social outlook for other countries. Today’s macroeconomic and geopolitical uncertainties will amplify those fuelled by technological disruptions, climate change, and demographics. And they will raise questions about the functioning and resilience of the global economy and markets.”

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Money on World

It’s a fairly simple rule of thumb — if we borrow more money than we can pay back, we’re overleveraged.

Consumers become overleveraged when they have more bills and expenses than income to pay them with. Businesses become overleveraged when they have a high ratio of debt to capital. Countries become overleveraged when their liabilities exceed their overall economic output.

These are not unfamiliar scenarios. Cheap credit, excessive borrowing, and vast gaps between income and debt were among the root causes of the Great Recession. And when the financial crisis hit back in 2007-2008, central banks from Western and Eastern Europe, Asia, Scandinavia, the Middle East, and North America stepped in to save their economies from collapse by lowering borrowing costs, underwriting bank debt, guaranteeing deposits, and bailing out lenders. So, in order to restore confidence, stimulate growth, and ignite a recovery — they dramatically stretched their balance sheets.

As we approach 2020, household debt has reached unprecedented levels, corporations are carrying unwieldy liabilities, and governments worldwide are swimming in a deeper and murkier sea of red than at any other time in history. According to a November report by the International Institute of Finance (IIF), world debt is on track to exceed $250 trillion this year, three times global economic output. This comes on the heels of another reckless era of cheap money, easy credit, and rampant borrowing. It is the highest cumulative debt load the world has ever known, and it shows no signs of abating.

This has brought us to a breaking point. The world’s reserve banks have managed to deliver the economy from crisis-to-recovery for hundreds of years, but now find themselves overloaded and under stress. Faced with balance sheets that are too high and interest rates that are too low, they are short on stimulus and shy on firepower.

So, as we sit atop this towering mountain of debt and default and once again look to monetary authorities to save the global economy — we realize that they may not even be able to save themselves. Fiscal cycle after fiscal cycle, deficits have increased and budgets have exploded to unsustainable levels. And, for the first time ever we’re forced to contemplate the desperate notion of what comes next —The Implausible? The Unworkable? The Impossible?

With a $23 trillion liability, the threat of de-dollarization, and the prospect of massive new spending initiatives like ‘Medicare for All’ and the Green New Deal — the Fed, in particular, has little room to increase spending or encourage borrowing. And if Powell and company lose control of the economy, America could be headed for a crisis far worse than 2008 with no foreseeable escape.

So, where does a cash-strapped, belly-up world turn? To one place and one place only. In 2019 central bank, net gold purchases will shatter 50-year highs. This is no coincidence. In a world that has seen empires rise and fall, civilizations come and go, watersheds, turning points, depressions, recessions, defining moments and monumental indebtedness — there has never been anything as safe, steadfast and as enduring as solid gold.

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Stock Market Trends

KITCO NEWS/Jim Wyckoff

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

December 13, 2019

Stock Market TrendsGold 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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Stocks for Roaring 20s

KITCO NEWS/Neils Christensen

Gold sees short term boost as ECB’s Lagarde reiterates ‘highly accommodative’ monetary policy

December 12, 2019

Gold Sees Boost“The gold market found some short-term momentum, hitting a five-week high after the European Central Bank (ECB) maintains its ‘highly accommodative’ monetary policy in a continued attempt to push inflation higher. The latest ECB meeting and decision was a historic moment as Christine Lagarde took the reins as the central bank’s first female president. In Lagarde’s debut opening statement, she highlighted that although conditions have improved, the risks still tilt to the downside.

 

‘Let’s face it; it’s weak growth. Economic growth is not at its potential,’ Lagarde said during the question-and-answer portion of her press conference. The central bank’s latest economic projections points to meek growth through 2022 and shows inflation will remain subdued. The ECB sees the eurozone economy growing 1.2% in 2020, up a tick from September’s estimate of 1.1%. Economic growth is expected to rise to 1.4% in 2021 and 2022 … The latest comments from Lagarde helped to push gold prices to a five-week high and back within striking distance of $1,500 an ounce. However, after the initial pop, the market has given back some of those gains.”

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MARKET WATCH/Jeffry Bartash

Jobless claims soar to 2-year high of 252,000 in wake of Thanksgiving

December 12, 2019

Jobless Claim 2 Year High“The number of Americans who applied for unemployment benefits in early December soared to highest level in more than two years, but the spike was likely tied to a later than usual Thanksgiving holiday instead of rising layoffs.  Initial jobless claims jumped 49,000 to a seasonally adjusted 252,000 in the first week of December., the government said Thursday. That’s the highest level since September 2017. Economists polled by MarketWatch estimated new claims would total 220,000 in the seven days ended Dec. 7.

Raw or unadjusted jobless claims show unusually large increases in a number of states, including California, New York, Texas, Pennsylvania, Georgia and Minnesota. Jobless claims often gyrate during the long holiday season that starts after Thanksgiving. Laid-off workers wait longer to file claims, unemployment offices are closed more often and companies add and drop temporary workers. Poor weather can also skew the numbers.”

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BLOOMBERG/Nir Kaissar

Don’t Expect the Roaring ’10s for Stocks to Repeat in the ’20s

December 12, 2019

Stocks for Roaring 20s“As the 2010s come to a close, it’s safe to say that the decade has been an enchanted one for U.S. stocks. The hard question is what lies in the decade ahead, and the data suggests that investors shouldn’t expect a repeat performance…. Earnings are extraordinarily volatile, even more unstable than stock prices by some measures. The volatility of yearly changes in earnings per share has been nearly three times greater than that of stock prices since 1871, as measured by annualized standard deviation — a whopping 52% for earnings compared with 19% for stock prices. And lest you’re tempted to conclude that much of that earnings volatility is a relic of the ancient past, consider that two of the three most severe earnings recessions on record were the previous two around the dot-com and housing busts. The only one that rivaled them was the 1920-21 recession (no, not even the Great Depression).”

“Given that volatility, it’s unlikely that the last decade’s record earnings growth will spill into the next one. Unfortunately, investors can’t expect much more from the other two sources of stock returns. The dividend yield is likely to remain around 2%, which is roughly where it’s been for decades. And the 12-month trailing P/E ratio is roughly 24, which is 50% higher than its long-term average of 16, so future changes in the market’s valuation are more likely to eat into returns than enhance them. Those sobering figures explain why most Wall Street firms expect U.S. stocks to deliver more muted returns during the next decade. It’s a good reminder that what appears in the rearview mirror is no indication of the road ahead.”

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THE NEW YORK TIMES/Alexandra Stevenson

China’s Companies Binged on Debt. Now They Can’t Pay the Bill.

December 12, 2019

China Companies Debt“China’s companies racked up some towering bills as they expanded, and the world’s investors and lenders rushed to offer them even more money. Now the bills are coming due, and a growing number of Chinese companies can’t pay up, in a sign that the world’s No. 2 economy is feeling the stress from its worst slowdown in nearly three decades.  Two high-profile companies — a giant government-run trading firm and a conglomerate backed by China’s most distinguished university — are the latest to join a long list of Chinese businesses that have run short of cash when it was time to pay back their debts. Chinese corporate borrowers have defaulted on nearly $20 billion in loans this year.

The amount is small compared with China’s overall economy, but the toll is rising. Chinese companies owe hundreds of billions of dollars in debt that is coming due over the next two years, including more than $200 billion owed to lenders and investors around the globe. China now faces the difficult task of figuring out which of these companies it will allow to fail. The central government in Beijing keeps a tight grip on the Chinese financial system and often rescues companies to preserve jobs. But Beijing has shown a greater willingness to let companies go insolvent to teach them a lesson about borrowing too much, and many local governments now lack the funds to help their hometown champions.”

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THE WALL STREET JOURNAL/Nina Trentmann

CFOs Brace for Potential Recession in 2020

December 11, 2019

CFOs Brace for Recession“Chief financial officers are bracing for a recession, cutting costs and hoarding cash to ride out an expected downturn ahead of next year’s presidential election, new research indicates. Fifty-six percent of CFOs at U.S. companies said they are preparing for a recession, which economists define as two consecutive quarters of declining performance across an economy, according to a survey conducted by Duke University’s Fuqua School of Business. More than half of all finance chiefs expect the U.S. to be in a recession by the end of 2020, according to the survey.

 

‘Companies are worried about the big picture,’ said John Graham, a Duke University professor who oversees the survey. ‘At the same time, their orders are still coming in reasonably strong right now, so for their own company’s circumstances and plans, things look good in the short run.’ CFOs say they are pursuing cost-reduction efforts, paying down debt, extending maturity schedules of their debt and locking in low interest rates to prepare for a potential downturn, Mr. Graham said. Wednesday’s survey echoed sentiment in a recent Association of International Certified Professional Accountants report, in which finance executives indicated lower expectations for revenue and profit growth, as well as caution around capital spending. U.S. business investment and corporate profits fell in the third quarter, even though gross domestic product grew at a stronger than expected 2.1% annual rate.”

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MARKET WATCH/Shawn Langlois

Beware of the ‘toxic concoction’ that could finally crush the U.S. economy

December 11, 2019

Toxic Mix Could Crush Economy“President George W. Bush famously uttered those words a decade ago as the U.S. government was scrambling to restore liquidity and calm panicky markets during the upheaval of the financial crisis. A few years after that, Berkshire Hathaway’s Warren Buffett hailed Bush’s comment as ‘the greatest economic statement of all time.’ At the time, Buffett said Berkshire always has at least $20 billion in cash. ‘Some day in the next 100 years when the world stops again, we will be ready,’ he explained to a group of M.B.A. students in 2013. ‘There will be some incident, it could be tomorrow — at that time, you need cash. Cash at that time is like oxygen.’

Fast forward to this week, and that day could soon be upon us, according to Charles Hugh Smith of the Of Two Minds blog, who warned that this ‘sucker is finally going down’ and no amount of ‘loose money’ will be able to stop it. ‘We live in a bizarre world dominated by magical-thinking,’ he wrote in his latest post, ‘a world in which the Federal Reserve creating more dollars out of thin air is supposedly the solution to everything.’  But that’s clearly not the case. There are several ‘knotty structural problems’ that he says can’t be helped by an accommodative monetary policy, including unsupportable pensions, mounting consumer debt, a health-care system that’s bankrupting the country, outrageous student loan debt, funding unwinnable wars, etc.  The ‘loose money’ approach is actually ‘metastasizing’ a new set of problems that will ultimately ‘bring this sucker down.’ … It all adds up to what Smith sees as the same ‘toxic concoction’ that has led to the destruction of economies throughout history.”

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Gold Prices Dec 11

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Gold firms ahead of tariffs deadline and central bank decisions

December 11, 2019

Gold Prices Dec 11“Gold inched up on Wednesday as investors sought safety from the threat of new U.S. tariffs on Chinese goods coming into effect on Dec. 15, while also awaiting policy decisions from major central banks. Autocatalyst metal palladium held just shy of an all-time record high. Spot gold had gained 0.2% to $1,467.31 per ounce by 1048 GMT. U.S. gold futures rose 0.3% to $1,471.90. ‘Trade war continues to be a factor supporting gold, there’s no easy solution to it and that uncertainty will keep gold prices up,’ said Commerzbank analyst Eugen Weinberg.

President Trump has days to decide whether to impose tariffs on nearly $160 billion worth of Chinese goods, scheduled to take effect on Sunday … Washington is laying the groundwork for a delay in the latest tariffs, but a final decision has not been made, the person said. ‘Should both parties (U.S. and China) fail to reach positive consensus, gold prices will receive strength over lackluster risk appetites for the near term,’ Phillip Futures analyst Benjamin Lu said in a note. Gold is considered a safe investment during political and economic uncertainty.”

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USA TODAY/Jessica Menton

Millionaires sour on U.S. economy, with their views at the lowest level since before the recession

December 10, 2019

Millionaires on Economy“Millionaires are the most cautious they’ve been on the direction of the economy since the years leading up to the global financial crisis. Investor sentiment on the economy for the next 12 months dropped 14 points from a year ago to – 7, its lowest level since 2006, according to Fidelity Investments’ annual Millionaire Outlook Confidence Index. That marked its lowest level since the index began that same year.

 

Fidelity’s 11th Millionaire Outlook Study surveyed 2,026 investors, including 1,102 millionaires and 924 investors that Fidelity calls the ‘millionaires of tomorrow.’ The study focused on five key measures for its confidence index: the economy, the stock market, real-estate values and consumer and business spending. The outlook wasn’t taken in 2007, 2011 and 2015.  The latest data signals that some wealthy investors are skittish about the longevity of the 10-year economic expansion, even as job creation remains robust and stocks touch record highs.”

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YAHOO FINANCE/Myles Udland

The world’s super-rich are hoarding physical gold

December 10, 2019

Super Rich Are Hoarding“Gold has had a great run in 2019. Over the last year, gold prices are up nearly 20%. The yellow metal is on pace for its best year since 2010. In a note to clients published over the weekend, analysts at Goldman Sachs outlined why the strategic case for owning gold remains strong. The firm cites political uncertainty and recession fears that are unlikely to abate as primary catalysts, among other worries among the global elite like wealth taxes and increasing talk about MMT and central bank effectiveness. By 2020, the firm thinks the price of gold will reach $1,600 an ounce; on Monday, gold was trading near $1,460.

But the firm also surfaces some really interesting data on how investors have expressed their desire to own gold. Which is that owning the physical metal seems to be the global elite’s preferred way to hedge against tail events. ‘Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs,’ the firm writes … this means that for those including gold in their end-of-the-world trade, owning gold bullion is a must. ‘This [data] is consistent with reports that vault demand globally is surging,’ the firm writes. ‘Political risks, in our view, help explain this because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense.’ ‘Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios.’”

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CNN BUSINESS/Julia Horowitz

British pound has been riding high. An election surprise could send it crashing

December 11, 2019

The British Pound“Investors are betting that Prime Minister Boris Johnson will sweep to victory in Thursday’s election. If he doesn’t, the pound and UK stocks are poised to plunge. The pound has strengthened about 2% since the general election was called in late October, and on Wednesday was trading near a seven-month high around $1.31, and way above a low of $1.20 hit in August. The FTSE 250 index of midsize British companies has gained roughly 3%. Traders are counting on Johnson, who has held his lead in the polls against Labour leader Jeremy Corbyn, to score a majority in parliament on December 12. This would allow the Conservative leader to take the country out of the European Union by January 31 — removing Brexit uncertainty.

‘It means more clarity about what government intends to do,’ said Jordan Rochester, a strategist at Nomura. Should Johnson win, UK markets are expected to hold onto recent gains … particularly if the margin of victory is slim … An unexpectedly strong showing from Labour, meanwhile, could result in a shock. The odds of the opposition party winning an outright majority look small. But recent polling suggests there’s still the chance of a hung parliament, which would open the door to Labour forming a minority government with the support of a smaller party.”

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FOX BUSINESS/Megan Henney

Corporate pension plans could become a thing of the past

December 11, 2019

Corporate Pension Plans in the Past“Despite record-breaking gains in the stock market this year, U.S. pension plans are near their worst financial state in two years. That’s according to a new report from Mercer, a human resources consulting firm, which found that nearly 63 percent of pension funds are considering ‘termination’ of guaranteed benefits to new workers within the next five years. That would close off the pensions to future participants.

The reason pension plans are on their death bed essentially comes down to the escalating cost of the promised payments to former employees: Historically low interest rates have pushed funded positions lower in 2019. By the end of 2019, the average pension plan had 85 percent of the funds necessary to meet its obligations, hovering near a two-year low, according to Mercer. The report comes amid a diaspora of pension plans in corporate America, which are increasingly turning to more risk-averse retirement plans, such as 401(k)s. In fact, a majority of American companies no longer offer a long-term, defined-benefit pension plan, which guarantees workers a monthly payment when they retire.

In October, embattled General Electric became the latest company to offer lump-sum buy-outs to about 100,000 former employees who have not begun receiving their pension, while freezing the retiree payments for about 20,700 salaried pensioners … The number of pension plans offering defined benefits dropped by about 73 percent between 1986 to 2016, according to data from the Department of Labor’s Employee Benefits Security Administration.”

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CNBC/Elliott Smith

Rising debt is one of the two biggest global economic risks, former Barclays CEO Diamond says

December 10, 2019

Rising Global Debt“Rising debt is one of the two biggest risks facing the global economy, according to Atlas Merchant Capital CEO Bob Diamond. Aside from the U.S.-China trade war, Diamond cited negative-yielding bonds and a rise in outstanding credit worldwide as a key concern for investors. ‘It may be 2020, it may be 2021, but at some point we need to begin to worry about the proliferation of credit,’ Diamond, who served as CEO of British bank Barclays from January 2011 until July 2012, told CNBC at the SALT Conference in Abu Dhabi.

‘One of the very positive things that has happened over the last 10 years since the financial crisis is the quick reaction of monetary policy and lowering interest rates, but I worry about the $17 trillion in negative interest rate bonds, and we worry about the overall size of the amount of credit that is outstanding now,’ he added. In its recent Global Financial Stability Report, the IMF (International Monetary Fund) escalated its warnings about high levels of risky corporate debt, which have been exacerbated by persistent low interest rates from banks. Last month, ratings agency Moody’s issued a negative outlook for sovereign creditworthiness in 2020, citing a ‘disruptive and unpredictable’ political environment for the $63.2 trillion in outstanding government debt across the 142 sovereigns it rates.”

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REUTERS/Karthika Suresh Namboothiri

Gold firms as trade deadline nears; investors await Fed verdict

December 10, 2019

Gold Prices Today“Gold rose on Tuesday on uncertainty over U.S.-China trade talks ahead of a Dec. 15 tariff deadline while investors looked to the U.S. Fed’s policy meeting for cues on its 2020 monetary outlook. Spot gold rose 0.4% to $1,467.00 an ounce at 1323 GMT while U.S. gold futures gained 0.5% to $1,471.50. ‘Gold is riding higher on dollar weakness and caution ahead of a looming tariff deadline,’ said analyst Lukman Otunuga. If Washington proceeds with the earmarked tariffs, risk aversion is likely to engulf financial markets until the end of the year.

Agriculture Secretary Sonny Perdue said President Trump does not want to implement the next round of scheduled tariffs against Chinese goods on Dec. 15 but wants ‘movement’ to avoid them. The protracted trade war between the world’s two largest economies has fanned recessionary fears, putting safe-haven gold on track for its best year since 2010. A weaker dollar versus major currencies also offered support. ‘Gold has defended the $1,450/oz level despite a U.S.-China trade deal appearing increasingly likely and unexpectedly strong U.S. jobs data,’ UBS analysts said in a note.”

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KITCO NEWS/Allen Sykora

Commerzbank: Loose monetary policy to lift gold in 2020

December 10, 2019

Loose Monetary PolicyGold should benefit from continued ‘ultra-loose’ monetary policy in 2020, rising to an average price of $1,550 an ounce in the fourth quarter of the New Year, Commerzbank said Tuesday. Silver and platinum are likely to ride the coattails of gold higher, analysts said. However, the bank looks for high-flying palladium to finally run into an ‘overdue correction’ and push lower. Gold has backed down from its September high just shy of $1,560 an ounce, but remains 14% stronger for the year, Commerzbank said.

This would be the strongest annual gain since 2010. The metal last traded at $1,465.80 an ounce. ‘We envisage an increase to $1,550 per troy ounce by the end of 2020,’ the bank said. ‘The high optimism among speculative financial investors and the subdued demand in Asia will initially preclude any higher prices, so we expect to see the lion’s share of the upswing in the second half of the year.’ Prospects for the yellow metal are ‘positive,’ the bank said. ‘Monetary policy pursued by the major central banks will remain ultra-loose next year,’ analysts said. ‘Admittedly, the Fed ruled out any further rate cuts. Still, they are not entirely off the table, and are still more likely than rate hikes.”

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MARKET WATCH/Sunny Oh

Wall Street players without access to Fed liquidity may feel pain if repo market seizes up at year end

December 10, 2019

Wall Street Feels Pain“By most accounts the Federal Reserve has moved aggressively to prevent the recurrence of strains in the multi-trillion dollar repo market, where banks and hedge funds borrow and lend funds on a short-term basis.  Yet for those who aren’t primary dealers and thus don’t benefit from the U.S. central bank’s regular injections of liquidity, the end of year could prove a treacherous period when short-term funding turns scarce according to market participants.  Banks across Wall Street typically pull back their lending at the end of the quarterly and yearly period to avoid receiving steep regulatory surcharges that demand too-big-to-fail financial institutions carry additional capital on their balance sheets.

‘Current open market operations in their current form are still not getting to those who still need term funding,’ said Nick Maroutsos, co-head of global bonds at Janus Henderson Investors, referring to repo funding contracts that extend beyond a day and which have been deployed by the Fed to help market participants get past the year-end hurdle. ‘The money is not getting where it needs to go,’ he said. Since September, the Fed has halted the shrinking of its balance sheet and has lent out billions of U.S. dollars through open market operations, parceling out cash in return for collateral in the form of U.S. Treasurys. These injections have helped keep a ceiling on overnight lending rates for the repo market which surged three months ago and prompted the central bank’s interventions.”

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CNBC/Jeff Cox

Credit Suisse shocking call: Fed will launch ‘QE4’ before year-end to stem Street cash crunch

December 10, 2019

Credit Call Wall Street“The Federal Reserve could be launching another round of money-printing in the next few weeks as problems in the overnight lending markets re-emerge and force the central bank into more aggressive action, according to Credit Suisse.  A fourth version of quantitative easing — often referred to as ‘money-printing’ for the way the Fed uses digitally created money to buy bonds from big financial institutions — would be needed by year’s end to bridge a funding gap as banks scramble for scarce reserves, Zoltan Pozsar, Credit Suisse’s managing director for investment strategy and research, said. ‘If we’re right about funding stresses, the Fed will be doing QE4 by year-end,’ Pozsar wrote. ‘Treasury yields can spike into year-end, and the Fed will have to shift from buying bills to buying what’s on sale – coupons.’

That would mean a shift from purchasing short-term Treasury debt and expanding into longer duration and more aggressive balance sheet expansion … ‘The Fed’s liquidity operations have not been sufficient to relax the constraints banks will face in the upcoming year-end turn,’ he said … ‘If carry makes the world go ’round, and reserves make carry possible … the day we run out of reserves would be the day when the world would stop spinning.’ Pozsar said. “No, this is not an overstatement.’”

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SOUTH CHINA MORNING POST/Anthony Rowley

A stock market correction – long overdue – will tip the global economy into a perfect storm

December 9, 2019

Stock Market Correction“Leading stock markets may finally be connecting with the real economy after a long period of in-denial euphoria. Even before US President Donald Trump signalled that trade wars may persist (only to be refuted by rumours of an imminent deal), there were signs that stock dumping might be imminent. After a  veritable frenzy of buying back their stocks, some big companies in the US and elsewhere are using their overvalued shares or ‘scrip’ as a currency to buy other companies that have real assets and earnings while the going is still (just about) good. This is an ominous sign.

Buying back shares made sense for firms with interest rates at record lows. It makes debt capital cheap and results in higher earnings for remaining shareholders. But a recent wave high-profile mergers and acquisitions (M&As) – including LVMH buying Tiffany and the Manchester City football club deal – with some financed by share exchanges, has been seen by some analysts as signalling the end of the bull market. When companies begin to buy competitors rather than invest in new, greenfield activity, and when they use their stocks to buy that growth, it signals diminishing confidence. It could also be a sign of an impending economic slump.”

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BLOOMBERG/Billy House

Democrats to Impeach Trump for Abuse of Power, Obstruction

December 10, 2019

Trump Impeachment“Democrats announced two articles of impeachment against President Donald Trump on abuse of power and obstruction, moving them another step closer to a historic vote by the full House next week. Judiciary Chairman Jerrold Nadler said Trump stands accused of ‘high crimes and misdemeanors’ under the Constitution by seeking foreign help for his re-election and engaging ‘in unprecedented, categorical and indiscriminate defiance’ of Congress’s investigation.

Nadler and Intelligence Chairman Adam Schiff delivered a compressed outline of their case Tuesday, arguing that Trump used his office to pressure the newly elected Ukraine president to announce politically motivated investigations for Trump’s personal, political benefit. ‘The evidence of the president’s misconduct is overwhelming and uncontested,’ Schiff said at the Capitol. It ‘goes to the heart’ of whether the U.S. can conduct a free and fair election in 2020, he added. Nadler said the Judiciary panel will take up the articles of impeachment later this week. That likely sets up a full House vote next week. The impeachment trial will be held in the Senate, where the Republican majority is expected to acquit him … The House impeachment inquiry, which Trump has labeled a witch hunt and Republicans derided as a rushed drive toward a predetermined conclusion, is reaching an end-of-the-year climax at the same time Congress is attempting to wrap up budget negotiations and push a major trade pact to conclusion.”

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Strategic Reason to Hold Gold

KITCO NEWS/Allen Sykora

Goldman Sachs: ‘Strategic Case Is Still Strong’ For Holding Gold

December 9, 2019

“Goldman Sachs says the ‘strategic case is still strong’ for investing in gold and reiterated its call for the precious metal to rise to $1,600 an ounce next year, even though analysts conceded there could be more of a pullback in the short term. Gold has risen by 19% over the last 12 months due to slower global economic growth and elevated geopolitical tensions prompting ‘fear-driven’ demand, Goldman said. However, since September, the metal has eased from its highs for the year due to a rotation into pro-risk assets and an increase in long-term real interest rates, the bank continued.

Further, the metal could ease some more due to elevated speculative positions, Goldman said. Traders exiting bullish trades are potential sellers. ‘Overall, while we acknowledge the risks related to still-high gold positions, we believe the strategic case is still strong, particularly for investors with long-term horizons,’ Goldman said. ‘This is based on a deteriorated attractiveness of long-term DM [developed-market] bonds as portfolio diversifiers and real return generation instruments, exposure to growing EM [emerging-market] wealth, limited mine supply growth, elevated political risks and a potential increase in debasement concerns sparked by rising airtime of Modern Monetary Theory.’”

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FORBES/Yuwa Hedrick-Wong

The Next Recession May Come by Stealth

December 8, 2019

The Next Recession“The global economy today is mired in uncertainty arising from the trade war, an enfeebled Europe, Brexit and rising geopolitical tensions. An even deeper source of uncertainty is that the liberal global economic order, in place since the 1950s, is dying. Two trends are converging to kill it. The first is the West’s declining economic dominance relative to the rest of the world, and China in particular. The second is the rise of populism in Western democracies, arguably the most serious challenge to the legitimacy of the liberal global order. And yet, even as the liberal global economic order fades away, it’s unclear what a post-liberal global economic order will look like. So, for now, the global economy is like a barfly at closing time: it has no clue where it’s going, but it can’t stay here.”

“Against this backdrop, any number of missteps could trigger chain reactions that push developed world economies into recession. But we should also be prepared for a potentially different kind of downturn. The accepted definition of a recession is two consecutive quarters of contraction in an economy. The next recession, however, may not technically qualify as one. For example, we could have one quarter of 0.3% growth, followed by a contraction of 1.2% the next, then anemic growth in the third and fourth quarter of, say, 0.1% each, and then another contraction of 0.5% and so on. While the technical definition of a recession may never be met, the economy would still be shrinking, left to wane inexorably by impotent monetary and fiscal policies. It would be a recession by stealth.”

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CNBC/Patti Domm

What Trump does before trade deadline is the ‘wild card’ that will drive markets in the week ahead

December 6, 2019

Trump Before Trade Deal“The Trump administration’s Dec. 15 deadline for new tariffs on China looms large, and while most strategists expect them to be delayed while talks continue, they don’t rule out the unexpected. ‘That’s the biggest thing in the room next week. I don’t think he’s going to raise them. I think they’ll find a reason,’ said James Paulsen, chief investment strategist at Leuthold Group. But Paulsen said President Trump’s unpredictable nature makes it really impossible to tell what will happen as the deadline nears. ‘He’s the one off you’re never sure about. It’s not just tariffs. It could be damn near anything,’ Paulsen said. ‘I think he goes out of his way to be a wild card.’

Just in the past week, Trump said he would put new tariffs on Brazil, Argentina and France. He rattled markets when he said he could wait until after the election for a deal with China. Once dubbing himself ‘tariff man,’ Trump reminded markets that he sees tariffs as a way of getting what he wants from an opponent, and tariffs may be around for a long time. Trade certainly could be the most important event for markets in the week ahead, which also includes a Fed interest rate decision Wednesday and the U.K.’s election that could set the course for Brexit. If there’s no China deal, that could beat up stocks, send Treasury yields lower and send investors into safe havens.”

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SOUTH CHINA MORNING POST/David Brown

Donald Trump’s trade wars could scupper the euro-zone’s fragile economic recovery. That’s the last thing both sides need

December 9, 2019

EU Fragile Economic Recovery“There has been much focus on the pitfalls of the US-China trade war, yet the threat of increasing trade tensions between the US and Europe could be a bigger potential worry for global markets. Forget US President Trump’s headline-grabbing threat to slap 100 per cent tariffs on champagne, cheese and French luxury handbags in retaliation for France’s digital services tax that is expected to affect US tech giants such as Google, Apple, Facebook and Amazon. If the US and Europe go head to head, there could be serious consequences for China if global growth takes another hit. It’s the last thing global investors need right now. They need hope and encouragement looking ahead to 2020, not more dismay.

The 17-month trade dispute is clearly taking its toll. China is feeling the pinch, judging by the latest trade data, showing exports down 1.1 per cent in November, for a fourth consecutive monthly decline. The positive takeaway is that more domestic stimulus steps will now be needed so Beijing can help steer the  growth rate into a more secure range above 6 per cent next year. For this to happen, China needs forward-looking, targeted and effective policies to keep global risks at bay and ensure domestic demand stays underpinned. It will require even looser monetary and fiscal policies, which will keep investors positive for the time being. As Germany is the world’s third-largest exporter of goods and services, which means its fortunes are closely governed by the ebbs and flows of global trade, it’s no surprise that the nation’s leading economic indicators have been so fragile.”

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FRANCE 24/News Wires

Day 5 of public transport chaos in France as strike over pensions continues

December 9, 2019

France Public Transit Strike“French commuters and tourists braced for a fifth day of public transport chaos Monday as the government prepared to respond to widespread anger over pension reform that has sparked open-ended walkouts.  President Emmanuel Macron, Prime Minister Edouard Philippe and senior cabinet ministers met late Sunday to discuss the contentious reform, which the country’s powerful labour unions claim will force many to work longer for a smaller retirement payout.

As both the government and unions vowed to stand firm, businesses started counting the costs of the strike which began last Thursday when some 800,000 people took to the streets across France in a mass rejection of plans to introduce a single, points-based pension scheme, unifying 42 existing plans. The stoppages stranded commuters, closed schools, and hit tourism and Christmas retail.

Many people opted to take days off or to work from home, but thousands had no choice but to squeeze into perilously overcrowded suburban trains and metros whose numbers were slashed to a minimum. The biggest labour unrest in years came as France’s economy is already dented by more than a year of weekly anti-government demonstrations by so-called ‘yellow vest’ activists protesting unemployment and waning spending power. Many are opposed to Macron’s plans for putting the country on a solid economic footing, of which the retirement overhaul forms a major part.”

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REUTERS/Karthika Suresh Namboothiri

Gold gains as trade tariff deadline looms

December 9, 2019

Gold on the Rise Monday“Gold rose on Monday as investors hedged against a possible escalation in the U.S.-China trade dispute ahead of a Dec. 15 deadline for fresh U.S. tariffs, while scarce palladium surged to a new high as it closed in on the $1,900 mark. Spot gold was up 0.3% to $1,463.92 per ounce by 1307 GMT. U.S. gold futures traded 0.2% higher at $1,468.40. China’s Assistant Commerce Minister Ren Hongbin said Beijing hoped it could reach a trade agreement that satisfied both sides as soon as possible, but investors seemed reluctant to let go of gold amid diminishing hopes of a deal before Dec. 15.

‘There will be enough uncertainty and support in the market ahead of that date to keep the market stuck in this range,’ Saxo Bank said. Prices shed 1.1% on Friday after strong U.S. non-farm payroll data. ‘Based on the (jobs) report, you could argue that gold should be trading lower; it hasn’t. It just goes to show that there is quite a bit of scepticism about the outlook for global growth,’ they added. Also providing support, China’s exports shrank for the fourth consecutive month in November.”

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Gold Unchanged US China Trade

REUTERS/Karthika Suresh Namboothiri

Gold unchanged as U.S.-China trade uncertainty persists

December 5, 2019

“Gold was little changed on Thursday, hovering below a one-month peak as investors sought further clarity on the U.S.-China trade war in a week of mixed messages. Spot gold was flat at $1,474.60 per ounce by 1340 GMT, having hit its highest since Nov. 7 at $1,484 the previous day. U.S. gold futures were also unmoved at $1,479.70. ‘We have seen gold very volatile in the last couple of days with all the headlines around the trade war,’ said Carlo Alberto De Casa, chief analyst at ActivTrades. ‘Investors are generally cautious at times like today when there is no news.’

A Bloomberg report on Wednesday fanned hopes that the two sides were close to a phase one deal, prompting a rally in global equities while gold retreated from a one-month high. With a Dec. 15 deadline for imposition of further U.S. tariffs on Beijing looming large, President Donald Trump said on Tuesday that an agreement might have to wait until after the U.S. presidential election in 2020.”

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KITCO NEWS/Allen Sykora

Softening economy to mean stronger gold in 2020 – Metals Focus

December 5, 2019

Softening Economy Stronger Gold“A weaker global economy in 2020 is likely to mean stronger gold prices, said Philip Newman, director of consultancy Metals Focus. Further, he pointed out that there is still a large amount of negative-yielding bonds around the world, which also helps the metal. ‘We don’t have a [forecast for a] tremendous rally, but we do have it moving gradually higher,’ Newman said in an interview. Newman called for gold prices to average just above $1,500 an ounce in 2020 and perhaps get as high as the $1,650 neighborhood. He is anticipating an average of around $1,400 an ounce for 2019, up from around $1,270 in 2018.

‘The macro[economic] backdrop is deteriorating into 2020,’ Newman said. ‘That tells us you’re going to have loose monetary policy by key central banks…. We think this will be ultimately supportive of gold.’ The metal has struggled some recently, with spot prices falling back to roughly the $1,475 area after peaking around $1,556 in early September. Still, they remain well above the levels where they were during the first half of the year, suggesting ‘considerable investment’ demand flowing through the market, Newman said.  ‘We think that as the economy starts slowing in 2020, that will bring a pause to the record highs we’ve seen in the U.S. equities. Ultimately, we think this will bring renewed inflows into the precious , primarily gold,’ Newman said.”

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BLOOMBERG/Erik Wasson and Billy House

Pelosi Says House Will Draft Trump Impeachment Articles

December 5, 2019

Impeachment Articles“Speaker Nancy Pelosi said the House will draft articles of impeachment against President Donald Trump for abusing his office in a ‘profound violation’ of the public trust. ‘The facts are uncontested. The president abused his power for his own personal benefit,’ Pelosi said Thursday at the Capitol. ‘Today, I’m asking our chairmen to proceed with articles of impeachment.’ The announcement puts Trump on track to become the third president to be impeached in U.S. history. But the chances that the Republican majority in the Senate will convict him are scant.

Speaking in somber tones against a backdrop of American flags, the California Democrat said Trump undermined U.S. security and jeopardized the integrity of the country’s elections by pressuring a foreign government for help in next year’s presidential campaign. ‘His wrongdoing strikes at the very heart of our Constitution,’ Pelosi said. ‘The president leaves us no choice but to act because he is trying to corrupt once again, the election for his own benefit.’ She spoke a day after Judiciary Chairman Jerrold Nadler indicated the panel was moving toward at least three articles of impeachment: abuse of power, bribery and obstruction. Trump was defiant on Thursday morning, saying on Twitter that Democrats ‘have no impeachment case’ and challenging them to move fast so the nation can move on.”

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MARKET WATCH/Barbara Kollmeyer

This stock bear is waiting for one clear signal to jump back into markets

December 5, 2019

Bear in Head First“Stock market bears have had few breaks this year.  The S&P 500 has nabbed 26 record closes this year, while the Dow counts 15, and pullbacks have often been quickly met by investors ready to buy. The pendulum swinging back toward more optimistic U.S.-China trade talk means a few more records could be reached in 2019. Our call of the day comes from JonesTrading’s chief market strategist Michael O’Rourke, an unrepentant bear who sees little reason to dive in now, even if he has missed gains this year. ‘We have been in an environment of deteriorating stock fundamentals, a weak global economy and a decelerating U.S. economy, against a backdrop of a historically expensive market,’ he tells MarketWatch.

Despite strong gains, the S&P 500 is just under 10% above its 2018 high, while the Russell 2000 is below its 2018 high. As for his call: ‘I will turn positive on the equity market when valuations are more attractive and aligned with economic and earnings growth.’ What has happened in the past couple of years is that company earnings growth has been ‘artificial,’ driven by the administration’s tax cuts, he argues. That should mean that investors should assign a lower valuation, but they aren’t doing that, which is ‘dangerous.’ ‘I will become more constructive on the equity market as it begins to approach that historic 15x to 16x earnings multiple within a stable economic environment,’ says O’Rourke. And right now, the forward price/earnings ratio—a popular method of valuing a stock’s worth—for the S&P 500 is right around 20.”

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YAHOO FINANCE/Julia LaRoche

Jeffrey Gundlach gives Fed’s Powell a ‘C-‘, likens him to a losing NFL coach

December 5, 2019

Jeffrey Gundlach“If bond investor Jeffrey Gundlach were to grade Jerome Powell, he’d give the Federal Reserve Chairman a ‘C’ — arguably slightly better than the grade he’d receive from President Donald Trump, his fiercest critic. In a wide-ranging exclusive interview with Yahoo Finance, the CEO of $150 billion DoubleLine Capital explained that one of the main frustrations investors have had with the Fed lately is its inconsistent messaging. ‘Every press conference from basically December until about June was a completely different message from the one before,’ Gundlach told Yahoo. ‘And they were getting increasingly dovish. And then he kind of went all-in on dovishness, and started to follow the bond market and cut rates.’

The 60-year-old billionaire analogized Powell’s behavior to ‘an NFL coach after losing a game.’ He added that the heads of losing teams all say the same thing, ‘Got to watch the tape, got to play better, not good enough.’ Now Jay Powell does the same sort of boilerplate. He just says, ‘data-dependent, don’t know we’re going to do, we might.’ He basically wants to say as little as possible. He went on to describe the Fed as ‘rudderless’ and ‘shamelessly following the bond market [more] than ever before.’ He noted that the Fed has pretty much always followed the bond market, except during the Paul Volcker era, when the then-Fed chief was indifferent to the message of the market.

‘So, at this point, I’m afraid I would have to give Powell a pretty low grade. I’d give him a C- because of the fact that he’s really kind of lost his way as it appears.’”

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THE WALL STREET JOURNAL/Megumi Fujikawa

Japan’s Cabinet Approves $120 Billion Stimulus as Economic Clouds Gather

December 5, 2019

Japan Approves Stimulus“Prime Minister Shinzo Abe’s cabinet approved a $120 billion stimulus program, Japan’s largest in more than three years, citing the same global economic risks that have led central banks in the U.S. and Europe to cut interest rates. Mr. Abe’s plan is also aimed at healing a self-inflicted wound on the Japanese economy: the October increase in the national sales tax to 10% from 8%. Retail sales fell 7.1% in October and car sales were particularly hard-hit, suggesting the tax may have led consumers to refrain from big-ticket purchases. Japan’s exports have already been suffering this year, in part because of a slowdown in Chinese growth.

Tokyo’s new spending includes more than $50 billion to help recover from a typhoon in October that killed about 100 people. Levees in many areas collapsed and led to widespread flooding, pointing to the need for stronger infrastructure. Other spending will go to putting more digital devices in schools and funding reward points for shoppers who pay for purchases with credit cards, smartphone apps or other cashless methods. The government started the reward program in October to blunt the impact of the tax increase, and it has proved more popular than expected. Mr. Abe’s government estimated new spending by central and local governments would boost Japan’s real gross domestic product by a cumulative 1.4% through the fiscal year ending in March 2022. The spending plan of ¥13.2 trillion ($120 billion) is as much as the previous major stimulus package, which was released in August 2016 when a slowdown in developing economies caused turmoil in financial markets.”

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Tariffs on China

REUTERS/Aftab Ahmed and Rajendra Jadhav

India’s Nov gold imports jump to 5-month high as prices retreat

December 3, 2019

“India’s gold imports in November jumped 78% from a month earlier to the highest level in five months as jewellers in the world’s second-biggest market for the metal restocked after a fall in prices, a government source said on Tuesday.  Higher imports by the South Asian country could support global prices that have risen more than 12% so far in 2019, but could also widen India’s trade deficit and put pressure on the rupee. India fills nearly all of its gold demand through imports.

India imported 71 tonnes of gold in November, compared with 40 tonnes in October, the source said on condition of anonymity as he was not authorised to speak to media. Imports were down 16% from November 2018, however, he added.  Gold prices corrected after the Diwali festival, giving an opportunity for jewellers to replenish inventory, said Mukesh Kothari, director at Mumbai bullion dealer RiddiSiddhi Bullions. Indians celebrated the Dhanteras and Diwali festivals in October, when retail demand for gold peaks as it is considered auspicious and invokes lasting prosperity.”

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MARKET WATCH/Chris Matthews and William Watts

Dow tumbles 300 points after Trump says China deal may be best after election

December 3, 2019

Dow Tumbles“U.S. stocks fell sharply at the start of trade Tuesday, on track for a second day of heavy losses, after President Donald Trump said the idea of holding off on a U.S.-China trade deal until after the 2020 presidential election had appeal, undermining market confidence that a deal may be done before fresh import tariffs are imposed on December 15.  Investors were also monitoring moves by President Trump to raise or threaten tariffs on other partners, including Brazil, Argentina and France. The Dow Jones Industrial Average DJIA, -1.36% fell 326 points, or 1.2%, to trade at 27,450, while the S&P 500 index SPX, -1.02% gave up 33 points, or 1.1%, to trade at 3,080. The Nasdaq Composite index  COMP, -1.03% retreated 113 points, or 1.3%, at 8,456.

Stocks saw their biggest one-day decline in nearly eight weeks on Monday, with the Dow falling 268.37 points, or 1%, to end at 27,783.04. The S&P 500 dropped 27.11 points or 0.9%, to close at 3,113.87, while the Nasdaq Stock-index futures were trading higher in premarket action Tuesday, but turned lower after Trump, speaking at a London news conference where he is attending a NATO meeting, said he had “no deadline” when it comes to concluding the long-running U.S.-China trade talks. ‘In some ways, I think it’s better to wait until after the election if you want to know the truth. But I’m not going to say that, I just think that,’ Trump said.”

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CNBC/Maggie Fitzgerald

If we are in for another December market plunge, here are the places to hide out

December 3, 2019

December Market Plunge Hide Outs“It’s December, markets are dropping and it feels like we’ve been here before. Stocks dropped the first two trading days of December and investors are having deja vu. The Dow tumbled nearly 270 points on Monday and continued to fall more than 400 points on Tuesday after President Donald Trump suggested he may want to delay a trade deal with China until after the 2020 presidential election. Alongside the suffering markets, the CBOE Volatility Index, a gauge for investor fear, jumped more than six points above the 17 level, after being stable and range bound for most of November.

Investors are now having flashbacks to last year, when the market suffered its worst December since the Great Depression amid the intensified U.S.-China trade war and a rate increase from the Federal Reserve, with the major stock averages briefly dipping into bear market territory on an intraday basis. The VIX spiked above the 36 level in December 2018. In case fears that last December will repeat itself become a reality, CNBC screened for the best places to hide out when volatility spikes …The iShares Gold Trust ETF (IAU) and the SPDR Gold Shares ETF (GLD) are the best performing ETFs during months when volatility spikes, trading positive 65% of the time and returning an average of 2.6% if you buy when the VIX starts to move and sell one month later. Gold is seen as a safe haven and store of value during times of economic uncertainty and increased geopolitical tensions.”

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BLOOMBERG/Eric Lam and Gregor Stuart Hunter

Here’s What Happens to Markets If U.S. Tariffs on China Kick in Dec. 15

December 2, 2019

Tariffs on China“President Donald Trump’s latest missives on trade are a wake-up call to markets close to record highs that a major deadline is looming with China. The Dec. 15 flashpoint on tariffs was thrown into sharp relief Tuesday when Trump said he sees no urgency to complete a deal, right after he threatened an assortment of trading partners with levies. ‘If tariffs scheduled for Dec. 15 are implemented it would be a huge shock to the market consensus,’ said Sue Trinh, managing director for global macro strategy at Manulife Investment Management in Hong Kong. ‘Trump would be the Grinch that stole Christmas,’ she said.

Global equities came within a whisker of their all-time high last month, propelled in part by swelling optimism that at least an interim U.S.-China trade deal was in the offing. Meantime, the clock kept ticking towards Dec. 15, when Trump has threatened to impose 15% levies on $160 billion of Chinese imports. With about two weeks to go on the China front, the Trump administration hit Brazil and Argentina with steel tariffs and proposed levies on France as punishment over a tax that’s hit U.S. tech companies. Moves by self-styled Tariff Man Monday were enough to trigger the biggest Wall Street sell-off in eight weeks — with a little help from a weak U.S. manufacturing report. ‘I have no deadline,’ Trump told reporters when asked if he wanted an agreement by year end. Stocks fell. The U.S. president suggested that in some ways, it might be better to wait until after the November election. The following are the views of a number of market participants on what happens if the tariffs on China kick in Dec. 15. It will be ‘definitely risk-off across the screen,’ Tongli Han, chief investment officer at Deepblue Global Investment, said. ‘What happened recently makes this trade deal more costly for Chinese leaders — so I’m seeing a gloomy future for the short term, one-to-two months.’”

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THE WALL STREET JOURNAL/Ian Talley

Iran, Cut Off from Vital Cash Reserves, Is Approaching Economic Peril, U.S. Says

December 3, 2019

Iran Approaching Economic Peril“While Iran’s sanction-battered economy has sparked protests across the nation, U.S. officials cite new intelligence suggesting Tehran’s finances are more dire than previously thought and are bringing it closer to a financial crisis. Tehran’s sophisticated sanction-evasion efforts have offset some of the losses from plummeting oil exports due to global U.S. sanctions pressure. But according to new U.S. financial intelligence, the government is scraping the barrel on foreign-exchange reserves, a critical indicator of the country’s ability to control economic forces and to import equipment and supplies.

That shortfall, combined with the oil drop-off and a widening trade deficit, puts Iran in even greater economic duress than in 2013, when the government of President Hassan Rouhani was pressured into starting official nuclear negotiations with global powers, U.S. officials say. The state of Iran’s economy is clouded by unknowns, as the country’s economic statistics aren’t always considered reliable or transparent, and intelligence from U.S. allies indicate Iran’s government may have sufficient amounts of off-book income to ease its shortfall.”

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KITCO NEWS/Jim Wyckoff

Gold, silver prices pop as stocks wobble on Trump trade rhetoric

December 3, 2019

Gold and Silver Prices PopGold and silver prices are posting good gains in early U.S. trading Tuesday, on some safe-haven buying interest following downbeat remarks from President Trump regarding the U.S.-China trade negotiations. February gold futures were last up $11.40 an ounce at 1,480.20. March Comex silver prices were last up $0.249 at $17.205 an ounce.

Trader and investor risk appetite has again been dented Tuesday following Trump’s comments in London, regarding a partial U.S.-China trade deal. Trump said there is no timetable on even a partial deal and implied any deal could come after next year’s U.S. presidential election. ‘In some ways, it may be better to wait until after the election,’ said Trump. Trump on Monday threatened Brazil and Argentina with trade tariffs and on Tuesday did the same to France. Asian equities were mixed and European stock markets were mostly lower overnight. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. In other overnight news, the Euro zone producer price index in October rose 0.1% from September and was down 1.9%, year-on-year. That’s yet another worrisomely low inflation report coming from the world’s third-largest economy.”

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Red Rock Secured Latest News: Zero Fees for Life!
A lifetime of savings for you!

Did you hear the news? Red Rock Secured got a special going on that allows you to enjoy zero fees for life! You read that right. No fees for the rest of your life amounts to significant savings! That means more profitable investment opportunities and a better chance of living the retirement lifestyle that you’ve always dreamed about.

The Best Time to Invest in Precious Metals is Now

The time for precious metals investing is now! Gold, silver, platinum, and palladium prices are on the rise. Buying now helps you secure your financial future and weather the storms that come with a shaky economy. If you’re serious about retirement investing, turning your 401K or traditional IRA into a Gold IRA with Red Rock Secured makes sense. You’re not penalized for doing so nor are you forced to pay taxes on your savings until you’re ready for disbursement.
Can we emphasize the fact that there are no fees for life collected on the latest special we’re running? How can you pass up an opportunity like that! It’s money in your pocket when you finally do decide to retire and can be used to do everything you set out to do financially in the future.

Take advantage of this unique offer TODAY! The savings it yields is significant and well worth your time and attention. Let us know if you have questions about the offer so we can explain it in greater detail to you.

Why Gold, Silver, Platinum, and Palladium

The case for gold, silver, platinum, and palladium as investment options remains strong. They offer a great return on investment. The scarcity of precious metals helps keep their value high. Even when their price drops in the market, it’s temporary, unlike digital currency and stocks.

Precious metals are valued by all countries and cultures who have their own coins and bullion. The value is in the weight of the metal. Things such as circulation date, mintmark, and condition also play a factor in the value of precious metal coins.

Protecting your collection of gold, silver, platinum, and palladium by requesting Depository services from us is ideal. You know your Gold IRA is protected by Lloyd’s of London who prevents the loss of your investments. Due to the tangible nature of your precious metal collection, you can physically see it, hold it, and account for its whereabouts unlike cryptocurrency and other forms of intangible investments.
Take Advantage of Our Offer and Experience Significant Savings on Fees

Take advantage of our latest offer of zero fees for life right away! You can’t do wrong

with Red Rock Secured. When you buy precious metals from us, you’re investing in your financial future. Let us be a part of your personal history by allowing us to be involved in your retirement planning.

We are here to answer your questions and increase your confidence in investing in precious metals. They truly are the best option for your future success. Do everything you can to protect the money you worked so hard to acquire by selecting the coins and
bullion that appeals most to you as an investor.

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Keep your retirement savings safe and secure by storing the precious metals in our Depository.

Now that you’ve converted your traditional IRA into a Gold IRA, how do you plan on storing your coin collection? Do you have a safe and secure place to do so? If you’re not planning on storing your gold, silver, platinum or palladium locally in a safety deposit box or vault, choosing to keep them in our Depository is the answer.

The idea behind protecting your retirement funds is to make sure that no one who shouldn’t have access to them does. It’s important that you’re able to trust the companies you work with and invest in. Too many horror stories about shady brokers and Ponzi schemes exist to not take extra precautionary measures in guarding your investments.
Some of the things that our Depository option has to offer you as an investor include:

• Freedom. You can purchase all your precious metals from us and have them sent to our Depository. It saves you time and the frustration of locating a place to store your retirement funds safely. If you value your time as much as you value your money, having greater say over how you work, save, invest, and store your gold, silver, platinum, and palladium matters. You spent your whole adult life planning for life after the workforce. You might as well be able to enjoy it with greater ease, right?
• Accessibility. You have better control of your precious metals. You’re able to account for them in a way that you can’t do easily with stocks, bonds, and digital currency. The coins are available when you want them without you needing to jump through hoops to get to the investments, either. You can access your precious metals anytime you need to without any real hassle.
• Security. A state-of-the-art facility protected by Lloyd’s of London is what you get when you store your Gold IRA in our Depository. Rather than worry about your funds all the time, gain peace of mind knowing that they are being protected around-the-clock by the most secure safety features available. They’ll be there waiting for you to use them once you’ve retired.
• Convenience. If you elect to store your coins outside of an IRA, you’ll need to file for an LLC. There are paperwork and fees involved with doing so. If you want less hassle and more convenience, our Depository option delivers both. You can transfer your traditional IRA into a Gold IRA and elect to have it stored in our secure facility all in the same visit to our website.

Do your part to keep your precious metals safe this year. Our Depository option provides you with plenty of reasons to store your gold, silver, platinum, and palladium with us. Your coins and bullion are in good hands because of the added security features we provide.

You also don’t need to worry about losing your investment in the event that the bank declares bankruptcy because the precious metals aren’t included on the balance sheet overseen by Lloyd’s of London. There are few investment options that deliver high rates of security the way that Depository-protected precious metals do. You can rest assured that your best interests are always in mind with Red Rock Secured.

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TSP vs IRA

A lot of the information you find online is completely inaccurate

At Red Rock Secured, we’re faced with a lot of questions from customers who want to make the wisest investment options they can before retirement. Lately, we’ve been answering a lot of inquiries about the Thrift Savings Plan or TSP. Rather than spend even more time fielding calls about the subject, we decided to answer your inquiries here so more people benefit from the information.

Getting to understand the fee structure for IRAs and TSPs allows you to determine which is right for you as a government employee or member of the United States uniformed services. You’ll be able to save yourself money in fees by having knowledge of how both retirement funds work.

This short guide helps you get to know IRAs and TSPs more intimately. When faced with a decision as to which way to invest your retirement savings, you’ll know exactly why it benefitted you to choose the way you did.

Which Investment Option Offers the Lowest Fees (TSP vs IRA)

So, do Individual Retirement Accounts or IRAs have lower fees than Thrift Savings Plans or TSPs? It’s a really good question to ask considering the investment option you make significantly impacts your financial future. Avoiding paying any more money than you absolutely should ensures that you’ll have more to work with once retirement takes place.

What You’ll Be Charged for as an Owner of an IRA or TSP

If you own an IRA, there is an assumption that you’ll pay more but that isn’t necessarily the case. You won’t necessarily need a financial advisor to oversee the account, either, if you choose to do-it-yourself. There is a lot of contradictory reports on the internet telling you differently.

A TSP has an expense of .033 percent. You won’t be charged anything extra, however, in yearly maintenance fees or costs involved with trading. IRAs are subject to whatever fee structure the financial institution devised for themselves. Inquiring with the bank of your choice to learn which charge nothing in terms of maintenance fees and have NTFs or ETFs available is ideal because it saves you from paying unnecessary amounts of money to the institution.

Keep More of Your Money for Yourself

Taking the time to learn what there is to know about IRA fees and Thrift Savings Plan fees allows you to keep more of your hard-earned money for yourself. You face fewer expenses when you’re well-informed and understand what each type of investment option offers you. You’re then able to invest the way you see fit and secure your ideal retirement lifestyle and financial future.

We Can Help You Plan a Brighter Retirement Lifestyle

Let Red Rock Secured be a part of the planning process with you. We’ve got a lot to offer in the way of resources, so be sure to take a look around our website. As always, if you can’t find the answer you need, feel free to reach out to us right away. We’re invested in your future just as much as you are. Let us help ease your concerns by providing you with the information that you seek about IRAs and the Thrift Savings Plan.

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There’s never been a better time to buy precious metals for retirement.

Retirement-minded people have a lot of questions about investing. One, in particular, gets asked a lot. People want to know if it’s a good time to invest in gold (GLD). To avoid sounding cliché because of the nature of our business, we wanted to explain why it’s always a good time to buy precious metals as a source of funding for your retirement lifestyle.

What Makes Gold Worth Investing In?

The volatile economic climate we’re faced to deal with causes a lot of uncertainty for investors. You want to make decisions that impact your financial future in positive ways. You don’t want to lose all of the money you worked so hard to earn, save, and invest.

Gold prices have steadily risen despite the tough situations American investors have faced the past six months. Talks of trade wars caused certain stocks to plummet. Without panicking, are you prepared to move your traditional IRA into a Gold IRA?

Doing so gives you greater flexibility and security. After all, we have our own Depository insured by Lloyd’s of London to store the precious metals in. When you’re ready, you can withdraw your retirement savings and use the funds after taking care of your obligations with the IRS.

Why a Gold IRA?

Having a Gold IRA ensures that you wind up with more of the money you started out with. Stocks are only as good as the companies they’re part of. If a scandal breaks loose or bankruptcy occurs, you’re stuck with a considerable loss.
Putting all those nest eggs into one proverbial basket doesn’t make sense. Diversification is essential to growth. Gold, however, gives you a fighting chance of coming out on top.

Just look at the market today. GLD continues to see gains while other investment options have lost. People don’t run away from precious metals the way they do real estate properties and digital currency.

They know a good deal when they see it. Gold, silver, platinum, and palladium aren’t metals you see every day like copper and nickel. Our metals are precious because they’re scarce in nature, making them worth more to investors instantly due to their rarity.

A Gold IRA takes the money out of a traditional IRA and transfers its value into the precious metals of your choice. There are no penalties or fees involved with the transaction and you don’t pay any capital gains tax until you withdraw the funds at a later date. If you’ve experienced losses with other investments, there is a good chance that they’ll cancel out what you owe on the precious metals you’ve profited from.

A Solid Investment Option Recognized Worldwide

Gold is the investment option of the future. For centuries, it has served as a form of viable currency recognized by people worldwide. As an investment option, it continues to rise in value, unlike stocks and bonds. It provides security against political and economic uprising and doesn’t plummet in value because of corporate scandal.

Take a look at our inventory and opt to have your purchases stored in our high-security Depository Storage. Your retirement funds are available whenever you request them. They’re also insured by Lloyd’s of London and not included on the bank’s depository balance sheet which protects you in the event of bank bankruptcy.

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If you have it in you to work longer, you probably should.

There are many factors that come into play when it comes to how far your saved dollars stretch in today’s world. Things such as inflation and investment scandals could take a toll on your retirement savings. If you invest in the wrong thing or trust the wrong person, it could cost you big. On a similar note, if you don’t have enough money saved or invested in the right opportunities, you could very well find yourself living a different type of retirement than you first anticipated.

Retiring Late into Your Sixties or into Your Seventies Can Help You Retire Better

One of the ways to avoid that from occurring is by retiring later than your peers. Rather than think about early retirement, you choose to work into your late 60s or even into your 70s as a way of bolstering your retirement fund with extra money. It’s not an option for everyone but if you’re physically healthy enough to continue doing the job that you currently have, you might want to consider the option of staying a few years longer.

The following list includes compelling reasons why late retirement may be right for you. After taking inventory of your savings and investments, you’ll have a better idea if it is an option you want to explore. When all is said and done, you’ll know right away if you’ve made the right decision.

The four advantages of postponing retirement for a few years include:

1.More money to save for retirement. The more you work, the more you have to save and invest.
2.Increased opportunities to invest. You’ll have more money to use to buy precious metals or take advantage of other investment opportunities.
3.Better chances of living the lifestyle that you prefer. With the right investments, you’ll make a profit which allows you to stretch your money further and live the life you always dreamed of.
4.A clearer picture of what your retirement looks like.Up until now, you may have not had a clue what you wanted to do after leaving the workforce.
Take advantage of a better, more secure life after retiring. We’ll show you how!

Precious Metals Continue to Gain Value Despite Changes in Economic Climates

Postponing retirement for a few years has its advantages. As long as you’re healthy enough to continue working, you might want to do so. This is especially the case if you got a late start building a retirement fund or had to tap into your 401K or IRA at any point during your life to take care of an emergency.

If you were able to postpone retirement for five to ten years, you could save a significant sum of money and invest it into a Gold IRA where you’re not forced to pay taxes on it until you retire and withdraw from it.

By that time, the precious metals have had time to increase in value and you’ll see a gain in the sum you started with. To avoid paying capital gains tax, one of your other investment options must have lost you money.

If you continue to work with a financial advisor to diversify your portfolio, it will balance out in your favor.

For example, you may have lost money on a piece of real estate you were hoping to flip but gained on the sale of your gold coins. The loss experienced was significant enough to cancel out the profits you made off the precious metals, leaving you with more money to work with.

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Get very clear about what you want to do after you’ve left the workforce.

Do you have a plan for after you retire? Are you hoping to move closer to your children and grandchildren so you can create beautiful memories together with your family? Are you planning on seeing more of the world via RV or cruise ship? Is a retirement community the ultimate goal where you can enjoy the company of other people your age?

Whatever the case may be, you’ve got options and the sooner you get clear about what you want, the easier it is to save for retirement. After all, not everyone has the same goals or needs to live the same lifestyle. It’s all about your individual needs and values as a person which require thought and planning now.

How Precious Metals Help You Achieve More in Less Time

Now that you’ve got a clear picture of what you want and how much money it takes to sustain the lifestyle of your dreams, it’s time to think long and hard about your current investments. To date, are they making you money or costing you more to own? Are you seeing giant fluctuations in prices and fear that you may lose even more money on them if you don’t choose to sell them prematurely?

Precious metals provide you with greater financial security for numerous reasons. First and foremost, they’re not affected by political and economic affairs as much as other investments such as stocks are. They’re scarce which helps people see their value. Gold and silver are also recognizable forms of currency throughout the world, making them appeal to a larger group of people.

Gold, silver, platinum, and palladium can be purchased using pre-tax or post-tax dollars, too, giving you greater flexibility and freedom over your investments. You’re able to choose the coins or bullion that you want most thanks to our wide selection of inventory. There is also no fees or penalties charged with transferring a traditional IRA into a Gold IRA.

You can choose where to store your precious metals, too. If you prefer to house them in your own safety deposit box or financial institution, you can. If you’d like to use our Depository services, it’s also an option.

We Help You Better Envision Your Financial Future

Get clear about the retirement lifestyle you are hoping to live. Red Rock Secured makes investing in precious metals easier. You have a real advantage when you own gold, silver, platinum, and palladium. The right investment option for many soon-to-be-retirees involves us.

Let our company be a part of the retirement planning process for you.

We’re here to answer your questions and put your mind at ease when it comes to thinking about life after leaving the workforce. Share your plans with us so we can help you make the right decisions about which precious metals to invest in. You’ve got a bright future thanks to Red Rock Secured and the gold, silver, platinum, and palladium that we sell.

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TSP Investment Advice

To better understand the best way to invest in the Thrift Savings Plan or TSP is to first know what is TSP. Once you’ve covered that ground then you need TSP Investment Advice, it’s best to know what advantages it provides for investors like you. Having that knowledge makes it easier for you to decide whether or not the option is right for you and your plans for retirement.

What is the Thrift Savings Plan?

A Thrift Savings Plan or TSP is a retirement saving plan exclusively offered to private sector workers. It was introduced in the late 1980s by the adoption of the Federal Employee’s Retirement System Act for government workers and members of the military. A TSP may be automatically contributed to with each paycheck earned and in some cases, matched by the agency a person works for.

Do I need a TSP Investment Advice?

Typically not taxed until after retirement age, a TSP is similar in set-up as a 401K with the employer matching a certain amount of money saved by the employee. A Roth TSP gives people greater freedom to use their post-tax dollars to invest at the same time that they are making contributions to their normal TSP with pre-tax dollars.

Advantages of Having a TSP

The advantages that come with having a TSP are well-documented. To illustrate its value, we’ve listed a few below for reference purposes. You can then see for yourself why so many civil servants opt to invest their money this way.
A TSP allows you to enjoy employer-matched retirement contributions much like you would if you were working in the public sector. That means you’re able to amass a considerably large nest egg faster than you would if you, alone, were investing. There is typically a threshold that you must reach to ‘tap’ out of employer contributions which takes time if you’re only contributing small amounts to your TSP.

Six Funds to Invest in with a TSP or Roth TSP

Both a TSP and a Roth TSP offer six types of funds to invest in. Knowing which is right for you takes time and research. It’s worth knowing a little something about each.

They are Government Securities Investment (G) Fund, Fixed Income Index Investment (F) Fund, Common Stock Index Investment (C) Fund, Small Capitalization Stock Index Investment (S) Fund, International Stock Index Investment (I) Fund, and Certain Life Cycle (L) Funds. The final option includes a mixture of individual funds securities. Each has its advantages and disadvantages which you’ll learn more about by researching the funds.

Now, you have a better understanding of the options that await you as a civil service employee.

What Red Rock Secured Has to Offer You as TSP Investment Advice

Make the right investment choices for your financial future. With Red Rock Secured, you’ve got options. The precious metals that you invest your money into come in different forms as well as denominations. Choosing the right gold, silver, platinum, and palladium coins to include in your collection helps you protect the money you worked so hard to save in the past. Working with a financial advisor helps you decide how to best invest your money including in the TSP of your choice.

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Investing in Gold IRA

We’re helping people make the most of their investment opportunities daily.

Now that you’ve decided to take the plunge and invest in precious metals, Why to do investing in gold IRAwhere to invest

silver, platinum, and palladium? How do you know which websites to trust and which companies to support?

Where to do investing in gold IRA

At Red Rock Secured, we make our customers a priority and it shows in the interactions we have with them right from the start. The way that we’ve set up our website makes finding information about investing in gold IRA fast and easy. We go out of our way to be the one company that people trust and want to buy from long-term.

To better understand why we are the right company for you to work with, we’ve listed a few of the things that make us stand out among the competition. It gives you an incentive to look into a Gold IRA, Home Delivery, and Depository services. Part of being an informed investor is knowing that you’ve made the right decisions concerning the money you saved for retirement.

What Red Rock Secured Has to Offer You

Red Rock Secured has your best interests in mind. We work with you to investing in gold IRA smartly so you can live out your retirement years according to your terms. Overcoming financial roadblocks is easier when you have liquid assets that you can convert to cash quickly which is why investing in gold IRA remain a favorite option for investors.
Five reasons why you should buy gold bars and other precious metals from Red Rock Secured include:

1.Our wide range of inventory at different price points. Investing in the gold IRA and other pieces of precious metal that you desire is easy with such a wide selection to choose from.
2.The fact that there are no penalties and fees involved with transferring a traditional IRA into a Gold IRA. If that wasn’t an incentive to invest in precious metals, nothing is.
3.The Home Delivery service we offer. Storing your coins in whatever facility you choose is an option.
4.The Depository services that we offer. We provide protection in a controlled climate monitored by Lloyd’s of London.
5.The excellent level of customer service we provide consistently. We’re always available to answer questions and ease your concerns.

We make investing in precious metals safe, easy, and convenient. We value our customers and put them first at all times. You can’t go wrong with a company that has you and a fantastic financial future in mind.

Invest Wisely So You Can Retire with Greater Ease

investing in gold IRA continue to surprise and delight investors. While other investment options lose money, gold and silver have kept a foothold in today’s marketplace. The price of both metals has risen steadily for months and continues to despite political and economic issues facing the United States.

For the type of investment option viewed as valuable globally, choose investing in gold IRA. Red Rock Secured offers an excellent selection of inventory, sound financial advice, and top-notch services. Our commitment to our customers is also outstanding which is why people continue to invest their retirement savings in gold, silver, platinum, and palladium.

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Update to gold IRA investment by learning how to do that now..

If you’ve got an old retirement plan that you’re not sure what to do with now that you’ve moved on to another company, it’s time to think of gold IRA investing. Cashing it out today subjects you to penalties and fees that eat up a good amount of the money that you saved. Instead of taking a chance and being penalized in the process, why not invest in gold IRA?
You can transform that old IRA into a Gold IRA investing with no repercussions. You’re not charged extra for doing so nor will you pay taxes on the money until after you’ve made a withdrawal. As the coins you purchased gain greater value, the likelihood of your profiting from the transaction increases.

Advantages of Having a Gold IRA

If you’re not sure why you should do gold IRA investing , know that you’re not alone. Many people aren’t aware of the benefits of doing so. They simply haven’t possessed the knowledge needed to buy gold, silver, platinum, and palladium until now.
Lucky for you, it’s never too late to gold IRA investing. It’s something we offer year-round and a sound solution for that old retirement plan of yours. A Gold IRA investment has distinct benefits which are highlighted below.
Some of the advantages of investing in a Gold IRA include:

•It’s one of the most secure diversification options available. Unlike other investment options that cause you to lose money, precious metals don’t. They retain their value well and often increase in value given enough time.
•Precious metal fraud is virtually non-existent. Your gold IRA investing are protected because the gold that you buy is carefully weighed, purity tested, and issued by a select and secure minting process. You won’t be scammed out of your hard-earned money by buying fake coins.
•It performs better than stocks and other investments. Gold has real staying power. As a form of currency and investment option, it beats almost everything else you can buy. When the stock market crashes and you’re left cleaning up the aftermath, your gold IRA investing will continue to have value worldwide.

To date, gold IRA investing continues to rise in value. It weathers economic and political storms well. It’s also highly regarded in most markets with people all across the globe acknowledging its value. You can easily sell it, too, and use the cash for your day-to-day needs.

Turning Your Traditional IRA into a Gold IRA is a Safe and Easy Process

Now that you know why investing in gold IRA is beneficial, you have different options available for that old retirement plan of yours. You don’t need to cash it out and be penalized. You can use it to buy gold, silver, platinum, and palladium instead. Then, when you do retire and decide to sell your fortune, you’re responsible for paying tax on the precious metals in your possession.

After years of sitting in a Depository, the coins have likely increased in value. Even if they haven’t, you may avoid paying taxes on capital gains thanks to the other investments you’ve made. If the stocks or real estate that you invested in lost money throughout the years, you could possibly write off the profits you collected on your investment in Gold IRA.

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Before you know it, you’ll reach expert investor status.
If you’ve been in this world for a while, you know the importance in saving and investing in precious metals. That way, when you do leave the workforce, you’re prepared for whatever life throws at you. You’re able to navigate the roughest storms with greater ease because you have the finances available to provide yourself with breathing room. You’re not left wondering how in the world you’ll pay for a medical emergency or family crisis. In fact, you’ll have plenty of money put away to live a comfortable lifestyle long after you’ve left the workforce for good.

Why Investing in Precious Metals Make the Best Investments

that they have more time to increase in value. Following There is a high amount of risk with every type of investment that you make. In order to profit, you must be willing to accept the fact that you could also lose money. You put a lot of trust into systems that you may or may not understand. You’re also relying on people to do things that you feel would be in your best interests and sometimes, they don’t.

A few of the things that stand out about investing in precious metals as investment options are that you can buy them on your own with pre-tax or post-tax dollars. The gold, silver, platinum, and palladium can be delivered to your home via our convenient Home Delivery service. You can also elect to have them stored in Lloyd’s of London’s Depository where they are accounted for and easy to collect at any time.

Investing in precious metals has value that people around the world attest to. It cannot be faked the way that other paper currencies and certificates can be. It goes through a rigorous process to determine its validity. It’s scarce, too, making it something sought-after by investors and collectors alike.

The risk that comes with buying precious metals or Investing in Precious Metals is far less than other types of investments. Take real estate for example. If you were to buy a house to flip, put money into updating it, and then the housing market crashed, you’d be forced to sell it for considerably less than you hoped for. You may even be out money because the longer property sits empty, the greater amount of upkeep it requires to make it presentable to buyers.

You could also put a lot of money into stocks. You may find a company or two that look promising. If corporate scandal or bankruptcy shakes things up, you’ll be forced to sell your stocks after they’ve dropped in value in an attempt to recoup costs.
As noted, precious metals are far more lucrative as investment options because you can put them into a Gold IRA without penalty or fee. You won’t even pay taxes on the money that you’ve saved for retirement until you’ve taken a withdrawal which means today’s gold prices is enough to convince you of how big of demand there is for investing in precious metals.

Red Rock Secured Makes Investing for Beginners Safe and Easy

Every investor started out being a beginner. Don’t let the title intimidate you. With Red Rock Secured’s assistance, you, too, can become a pro at investing in precious metals. In a matter of no time, you’ll be making better decisions about how to invest your retirement savings.

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Make investment decisions that make better sense going forward
If you follow the investment world closely, you’re likely to notice a trend as of late. Treasury bonds have fallen in value while gold and silver continue to rise. If you have a lot of money sunk into bonds but want to invest in precious metals, there are some things that you should know in advance. That way, you’re able to maximize the amount of money you’ve saved and invested by avoiding paying penalties, fees, and extra taxes on the income you’ve earned.

What a Gold IRA Provides

A Gold IRA gives you greater control over your retirement accounts. You can take the money you’ve saved and transfer it to precious metals such as gold, silver, platinum, and palladium. Doing so doesn’t cost you a fortune nor are you penalized for doing so. It’s not like cashing out an old retirement account where you’re forced to pay penalty fees for withdrawing early.

Security is one of the most important things a Gold IRA provides. Flexibility is another. You’re in control of the coins you choose to buy with your retirement savings. You can spend as much or as little as you want on them and know that they’ll still retain their value years later.

Treasury bonds have continued to fall in the past few months. Gold and silver, however, remain strong investment options. It could be due to the scarcity of the metals or even the world’s view of their value. Whatever the case may be, it benefits you by giving you something better and more profitable to invest in.

You Have the Power to Change Your Financial Future

Take advantage of gold and silver prices today. You have the power to change the way you invest in an instant. Rather than trust that other people have your best interests in mind, take it upon yourself to buy precious metals and secure a better financial future than your peers. You have the ability to live the rest of your life in style and comfort.

Deciding against investing in treasury bonds in favor of purchasing gold and silver gives you better security. Precious metals continue to be seen as valuable by investors globally. If you haven’t had a chance to explore buying gold and silver, you’ll want to now while the prices remain high.

Red Rock Secured Wants to Help You Invest Better

We want to make your financial future after retirement bright. By offering you better options for investing your money, we know that we give you hope. You’ll enjoy greater profitability from gold, silver, platinum, and palladium. All you need to do is decide the quantity of each you want to invest in.

If you have questions about investing in precious metals instead of treasury bonds, be sure to check out the resources we’ve made available on our website. You’re well aware of the benefits of buying gold, silver, platinum, and palladium. Contact us for more information and to express your interest in precious metals today.

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Live your picture-perfect retirement lifestyle by investing wisely today.
Treasury bonds were previously an investment option that many people were encouraged to buy. Currently, their value has fallen while precious metals such as gold and silver continually rise in value. So, what options do you have as an investor wanting to live a comfortable retirement with as much money as possible once you’ve left the workforce? Should you wait to see if bonds go up in value or allocate part or all of your retirement savings to different investment options?

Treasury Bond Investment Risks
Treasury bonds come with a great deal of risk. As an investor, you should be aware of them so you don’t lose large sums of money when investing in them. The combination of inflation and Treasury low yields can be disastrous to the most seasoned investor.
Interest rate risk can be, too. When interest rates rise, liquidating costs you money. You lose out on the profits you thought you’d receive by sinking money into the bonds.
There is also a great deal of opportunity cost with the money spent on a bond being better used elsewhere. Once the money is spent, there is no way to reallocate the funds. You may find that a better investment comes along at a later date but have all your money tied up in bonds.
As you can see, there are many compelling reasons not to invest in treasury bonds as part of your retirement portfolio. The money can be used in better ways including buying gold and silver which has steadily increased in value for the past few months. It’s the type of investment option that withstands the test of time because precious metals aren’t printed on demand and distributed en masse the way paper currency is.

The 411 on Precious Metals
Gold, silver, platinum, and palladium offer greater flexibility and freedom as investment options for many reasons. First and foremost, they’re not seen as disposable the way that paper currency is. Precious metals are scarce and valued worldwide. Coins and other types of bullion are recognizable forms of currency with value that have been accepted for centuries.
Next, they have liquidity. Gold and silver can quickly be turned into cash if needed. The tangible objects are also easier to account for and protected by the highest levels of security in depositories. You can visually see them, hold them, and inventory them whenever you choose to do so.

Think Steps Ahead to the Future Where Your Investments Count Most
Ditch the treasury bonds and invest in gold and silver instead. Precious metals remain valuable in today’s marketplace and they continue to rise despite the political, social, and economic climates we’re dealing with today. If you want a brighter future, you’re able to get one step closer to it with the help of Red Rock Secured. We make investing in precious metals safe and easy.
Be better informed about the investments you make in the future. Study the market to see where you’re potentially losing money. Instead of sinking your money into treasury bonds, turn it into a penalty-free Gold IRA right away. Your future lifestyle and happiness depend on your ability to think several steps ahead in the future.

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What Should You Do With That Old Retirement Plan?

Update it to include precious metals by learning how to do just that now.
Today’s retirees have a lot more to consider than their parents and grandparents did. The way that inflation affects the US dollar in modern times is far greater than it was in the past. Fewer companies offer pensions and some don’t even match retirement contributions despite claiming to care about their employees and their financial futures. If you’ve been fortunate enough to have your 401K contributions matched, consider yourself one of the rare few. Business structures differ drastically than they did when you first started your working career out of high school or college and not all companies are future-minded when it comes to their workers.

Gold IRA Retirement Planning
So, what do you do about that old retirement plan? How do you make it meet modern requirements for a satisfying standard of living? If you want to avoid the upset that comes with losing large sums of money with your retirement investments, it’s time to start thinking about transferring your savings into a Gold IRA Retirement.

Benefits of Investing in a Gold IRA Retirement
To fully understand the scope of benefits that come with investing in a Gold IRA Retirement, it’s important to know how it works. Essentially, you’re taking the contents of your traditional IRA and using the money you saved plus the interest it earned to purchase precious metals. The process is penalty-free, fee-free, and non-taxable until you make a withdrawal from your gold IRA retirement account. The coins or bullion that you buy is delivered to your home via our Home Delivery service or kept in a Depository protected by Lloyd’s of London.
Among the many benefits you receive from investing in gold, these are the most well-known and noted:
Peace of mind knowing that precious metals seldom lose value. In fact, studying today’s market allows you to see how gold prices are on the rise despite political and economic issues. Since 1990, the US dollar has lost nearly HALF of its purchasing power which means that by the time you pay taxes on your retirement savings, you’ll have even less to work with. Inflation eats up profits so the more money you start with, the better chances you have of living the retirement lifestyle you hoped to enjoy.
Gold IRA is a form of currency recognized around the world. Digital currency such as the Bitcoin is not accepted by certain countries who do not view it as having value. Gold has a great reputation throughout the globe as being something rare and valuable. It’s not exclusive to one region of the world, either, the way US dollars and cents are. You can buy gold coins from nearly every country there is.
It’s a tangible good that you can hold in your hands. Although proof of some investments come in the form of paper, they’re intangible. Precious metals can be held in your hands, inventoried, and turned into cash rather quickly if there is a need to convert them. The same cannot be said about stocks and bonds which go through a rigorous process to make their funds available to you.
Make your old retirement fund work better for you today. You now know why investing in a Gold IRA Retirement is ideal. It’s time to start the process of converting your traditional IRA into a Gold IRA right away.

Gold IRA Retirement Make the Most Sense for Modern Retirement
Learn more about the value of a Gold IRA retirement by contacting Red Rock Secured for more information today. You’ll find valuable resources such as our free downloadable guides to investing on our website. Our blog also covers topics of interest and provides compelling reasons for investing in precious metals versus other types of investments. As always, direct your questions to us so we can answer them promptly and further convince you of the value of gold, silver, platinum, and palladium.

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Looking back two quarters ago and you will see why precious metals remain a mainstay for investors.

If the past two quarters has taught us anything, it’s that gold continues to rise in value. Political and economic affairs have done little to tarnish its reputation as a valuable source of currency around the world. In fact, precious metals remain virtually recession-proof because of their scarcity. Unlike the US dollar which can be printed on demand to boost the economy, fewer pieces of gold, silver, platinum, and palladium exist, making them worth more to investors internationally.

The Informed Investor is Placed in a Favorable Position
Being in the market to do something different with your retirement savings puts you in a favorable position. After all, isn’t it freedom that you desire after leaving the workforce? Spending your days doing whatever you like and being able to afford to do it is your ultimate goal when investing. It goes without saying that avoiding the downfall that comes with making poor financial decisions is a priority.
Reviewing what analysts have to say about precious metals helps confirm their role as highly sought-after investment options. It confirms your decision to invest in gold, silver, platinum, and palladium. You can see the proof that precious metals retain their value and even increase in value in times of political and economic duress.

What Makes Gold the Best Option for Retirees
When you decide to move your retirement funds into a Gold IRA, you’re securing a favorable financial future for yourself. You’re eliminating a lot of the risk that comes with investing your money in stocks, digital currency, and even real estate. The option to buy gold, silver, platinum, and palladium with pre-tax and post-tax dollars exist to meet your unique needs.
You can use precious metals to diversify your portfolio, give you and your family greater security, and even avoid paying capital gains tax by writing off your losses each year. Because a loss can be carried over to future returns, the money you make off the sale of your gold isn’t eaten up by taxes. The profits that you make are then yours to use to fund your retirement lifestyle

instead of being paid into the IRS.
It only makes sense to make the switch now to gold, silver, platinum, and palladium before the political and economic climate worsens. Your bright future depends on your ability to see the value of precious metals. Reading reports and following gold prices helps raise your awareness and see how valuable they are as currency and an investment option.

Being an Informed Investor Helps You Make the Best Decisions About Your Financial Future
Investing doesn’t need to be hard to be effective. In fact, when you invest in precious metals, you’re able to accomplish more in less time. Reviewing detailed analysis reports tracking the rise of gold over the past two quarters helps convince you of its value as an investment option and part of your retirement portfolio. It helps secure your vision of life after leaving the workforce by helping you achieve everything you’ve set out to do financially.

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Make the most from your investments so you’re able to enjoy your ideal retirement.

The ultimate goal when saving and investing for retirement is to come out on top financially. After all, how else do you plan on bringing in money when you’re no longer working? You want the money that you’ve invested to do its job of increasing in value but avoid paying penalties and taxes as much as humanly possible.
So, is there a way to invest that makes it so you don’t pay capital gains tax? If you’re planning on buying gold with your retirement funds, there are things you’ll want to know so you can avoid unnecessary taxation and enjoy more of the money you earned while planning for retirement. That means greater security and less to lose by diversifying your investment portfolio.

What is Capital Gains Tax?
Capital gains tax is assessed after selling an asset such as stocks, bonds, jewelry, precious metals, and real estate. The price that the item sold for is subtracted from the original purchase price to come up with a taxable amount paid to the IRS. Whatever profit you made off the item upon receipt of sale is considered a capital gain.
The IRS evaluates long-term gains differently than short-term gains. Capital gains tax is not calculated until the asset is sold. To pay less on their investments, most taxpayers report capital losses so they’re not required to pay in as much in taxes.
By diversifying your investment portfolio with precious metals who retain their value better than other investments such as stocks, bonds, and real estate and reporting the losses from the sale of those items, you can cancel out what you gained from the sale of your gold, silver, platinum, and palladium. Your losses even roll over to future tax returns which could be extremely beneficial for you.

Work with a Financial Advisor to Diversify Your Portfolio
Demonstrating an interest in gold and other precious metals and expressing it to your financial advisor allows you to put more of your investment funds into the purchase of them. It helps you diversify your portfolio in a way where you come out on top. You can invest in a Gold IRA without penalties and fees.
Then, when the time is right to sell some of your coins or bullion, you can use the losses that you had on the sale of other investments to cancel out your tax liability on your gold and other precious metals. It’s a win-win situation. You get to let your investments increase in value over time and not get stuck being taxed to death on the precious metals whenever you’ve decided to turn them into cash.

How Red Rock Secured Can Help You
There are many ways Red Rock Secured can help you. From selling you the best precious metals money can buy to offering you services such as Home Delivery and Depository Storage that you can’t resist, we do it all. Avoiding unnecessary taxes and penalties is something that every investor hopes for when they put their money into gold, silver, platinum, and palladium.
Now that you know how to avoid capital gains tax, you can buy gold the way you hoped to. An investment in precious metals is a sound way to secure your financial future. Make your retirement one that upholds your high standards of living with Red Rock Secured.

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Why Gold and Silver IRA remain a sure bet during times of political and economic unrest.

If current trade talks spell doom and gloom in your mind, it’s time to reconsider the money you’ve currently invested for retirement. Before things become really complicated for you financially, you have the option to switch to gold and silver IRA without penalty or fee. You see, Red Rock Secured offers a gold and silver IRA that allows you to turn your current 401K into a fund filled with the most sought-after precious metals.
Unlike stocks which are affected by political and economic affairs, gold remains a stable source of currency and a very appealing investment option for people wanting a better financial future for themselves in retirement. gold and silver IRA allow you to be smarter and not work harder to prepare for life after you’ve left the workforce. They allow you to protect what you worked hard for during times of economic tension.

The Staying Power of gold and silver IRA
What makes gold and silver IRA the best investment choice for retirees? How about gold, silver, platinum, and palladium’s reputation worldwide. As a form of currency, gold and silver IRA  are recognized by every country who knows of their scarcity and value coins and bullion because of it.
Unlike stocks whose value is determined by a company’s reputation, current political and economic conditions, and the brokers responsible for buying and selling shares, gold, silver, platinum, and palladium continue to retain their value even in the most volatile setting. One look at the gold index is enough to see the steady climb it has been continuing to make in price since summer 2018. Following the price of gold recently shows you how others are valuing it, too.

Making the Move from Traditional IRA to Gold and Silver IRA
There is no better time than today to move from a traditional IRA to a gold and silver IRA. The political and economic climate is right. There are no penalties or fees involved in the transfer of funds. Best of all, you have the right to keep your gold in your choice of locations including our Depository which is insured by Lloyd’s of London.
You have access to your gold and silver IRA investments at all times. In fact, we even offer Home Delivery of your gold if you elect to store it closer to your residence. We make sure that it arrives safely to you so that you get everything you’re entitled to once you retire and pay taxes on your pre-tax investments.

Learn More About Red Rock Secured
Red Rock Secured can teach you all you need to know about investing in gold and silver IRA. In fact, we have numerous resources for you to access including several guides and our blog featuring relevant topics pertaining to gold, silver, platinum, and palladium. If you have questions about gold and silver IRA, Home Delivery or our Depository, don’t hesitate to ask.
We’re here to assist you in every way that we can so you can enjoy your retirement with less stress worrying about trade wars, political, and economic upheaval. Instead, you’ll know that you’ve taken every step that you could to protect your money so you can continue to live off of it long after you’ve left the workforce. Contact us with your questions today.

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It’s never been a better time than now to invest in gold IRA account.

If you’re a follower of the news and like to stay on top of current affairs, it’s hard to miss all the talks the Fed has concerning rate cuts. If the subject itself concerns you, it’s time to do something about it. One look at gold’s prices is enough to convince you of its staying power despite all the doom and gloom the media has been putting out. Don’t you think it’s time for you to take matters into your own hands and say, “Enough is enough,” when it comes to others dictating the value of your investments?

You’ve worked hard your whole adult life for the money you’ve saved and invested for retirement. It only makes sense that you do what’s right for you and your family at this time. It’s fine to follow the news so you’re well-informed about what’s going on in the country. It is, however, even more, important to create your own reality by choosing what happens to your money.

One of the most appealing things about investing in gold IRA account is that they aren’t impacted by political and economic unrest the way that other investment options are. Sure, they can drop in value, but only slightly. Gold, silver, platinum, and palladium are all widely recognized worldwide as sources of currency and investment options which gives them an advantage over paper and digital currencies.

What You Need to Know About Gold IRA Account in This Moment
Gold continues to increase in value with each passing day. The prices have been on the rise for the gold IRA account since summer 2018 and continues to please investors currently. Unlike other types of investments, gold IRA account remains a scarce resource with worldwide appeal. When you turn your IRA or 401K into a Gold IRA Account, you’re securing a fine financial future for yourself for retirement.
You have a tangible item that you can hold in your hands and account for. It’s not just a sum on paper. You can see gold, count it, and even turn it into paper currency rather quickly if you need to. Even better, you can use pre-tax dollars to buy it and not be penalized or charged a fee for turning your investment account into a Gold IRA Account. When you’re ready to cash in some of your savings, you pay taxes at the time of the withdrawal which means that you have time to let it appreciate more in value before paying into the IRS.

Stay Ahead of Economic Uncertainty by Investing in Gold IRA Account
When no other type of investment makes sense, gold does. It allows you to overcome political and economic unrest. It remains a well-received and valued form of currency around the globe. gold IRA account continue to inch up in price when being compared to other forms of investment options. Gold cannot be printed on demand the way paper currency is so it doesn’t lose its value as quickly. Inflation doesn’t affect gold IRA account the way it does US dollars, either, which is something to consider when choosing what you want to invest in.

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Protect your retirement funds from loss.

When it comes to protecting your precious metals inside an IRA, there are two options that we offer for precious metals IRA. The first is Depository which offers state of the art security and 100% insurance by Lloyd’s of London. The second is Home Delivery which provides you with the option of storing and insuring the coins yourself. If you don’t want the responsibility of keeping your gold, silver, platinum, and palladium safe, Depository Storage is the option that is best for your investments. It’s one of the most popular services that we offer as a company.

Among the most notable benefits of keeping your precious metals in the Depository, is that you don’t need to find a safe place to store them. Precious metals IRA take care of that task for you and offer you top-notch security features that protect your investments. Best of all, you’re still in charge of your investments because you’re able to see them in person any time you want. Sleep soundly at night knowing that your future is protected in every way possible.

How Long Does It Take to Convert My Retirement Account into a Precious Metals IRA?

The process of converting your retirement account into an Precious metals IRA that holds precious metals takes minutes to do and is done by a qualified company such as Kingdom Trust to ensure that all investments in your account are handled the way you’d expect them to. They are then stored at a secure facility. That way, you have nothing to worry about when it comes to the storage of your retirement funds.

How Does Red Rock Secured Protect My Investments?

You might ask how we keep track of the precious metal IRA that we keep in the Depository. It’s a simple process that provides clear documentation showing proof of ownership of every piece of metal that you own. You’re able to come in and check out the Depository any time that you feel the need to.

Physically examining the metals that you own in person is very reassuring. You can also gain peace of mind knowing that your investments are safe because they’re not accounted for on the Depository’s balance sheet. If bankruptcy is inevitable for the Depository, you won’t have your gold, silver, platinum or palladium seized.

Invest in Your Future with Red Rock Secured

Precious metals IRA are an investment in your future. If you want to retire comfortably and know that you have enough money saved to see you through all the days of your retirement, partner with us to come up with a plan to convert your retirement savings into a Gold IRA. Having a retirement account that includes precious metals is a wise choice.

Red Rock Secured puts the power of your investments in your hands. If you’d rather explore our Home Delivery option, you can learn more about it by visiting the section of our website dedicated to it. Either way, you’ve made the right choice by choosing to invest in precious metals IRA.

 

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