From James Harkin (Webmaster & Editor of LindseyWilliams.net). Here is a summary of articles of interest from around the world for this week. Please LIKE the Lindsey Williams Online Facebook Page to see stories posted daily regarding the current state of the economy around the world.
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Latest News From June 10, 2016 to June 16, 2016:
June 23, 2016: The Brexit Vote Could Change EVERYTHING And Plunge Europe Into Financial Chaos
On June 23rd, a vote will be held in the United Kingdom to determine if Britain will stay in the European Union or not. This is most commonly known as the “Brexit” vote, and that term was created by combining the words “Britain” and “exit”. If the UK votes to stay in the European Union, things over in Europe will continue on pretty much as they have been. But if the UK votes to leave, it will likely throw the entire continent into a state of economic and financial chaos. And considering how bad the European economy is already, this could be the trigger that plunges Europe into a full-blown depression. So if things will likely be much worse in the short-term if Britain leaves the EU, then it makes sense for everyone to vote to stay, right? Unfortunately, it isn’t that simple. Because this choice is not about short-term economics. Rather, the choice is about long-term freedom. The EU is a horribly anti-democratic bureaucratic monstrosity that is suffocating the life out of most of Europe a little bit more with each passing year. So if I was British, I would most definitely be voting to leave the EU.
Halliburton & Baker Hughes get downgraded: Moody’s
Following the failed merger of Baker Hughes and Halliburton, Moody’s has made the decision to downgrade both companies’ credit ratings. Halliburton and Baker Hughes had their senior unsecured debt downgraded from A2 to Baa1. Halliburton announced that they planned to acquire Baker Hughes back in November of 2014, and HAL, therefore, took on much debt in order to finance the acquisition. Moody’s Vice President, Andrew Brooks, stated that “Debt incurred to finance its failed bid to acquire Baker Hughes Incorporated together with the negative impact on profitability and cash flow of the very weak oilfield services environment have eroded HAL’s credit metrics to levels which no longer support its A2 rating.”
15 Facts About The Imploding U.S. Economy That The Mainstream Media Doesn’t Want You To See
You are about to see undeniable evidence that the U.S. economy has been slowing down for quite some time. And it is vital that we focus on the facts, because all over the Internet you are going to find lots and lots of people that have opinions about what is going on with the economy. And of course the mainstream media is always trying to spin things to make Barack Obama and Hillary Clinton look good, because those that work in the mainstream media are far more liberal than the American population as a whole. It is true that I also have my own opinions, but as an attorney I learned that opinions are not any good unless you have facts to back them up. So please allow me a few moments to share with you evidence that clearly demonstrates that we have already entered a major economic slowdown.
Where Do Matters Stand? — Paul Craig Roberts
On the eve of World War II the United States was still mired in the Great Depression and found itself facing war on two fronts with Japan and Germany. However bleak the outlook, it was nothing compared to the outlook today. Has anyone in Washington, the presstitute Western media, the EU, or NATO ever considered the consequences of constant military and propaganda provocations against Russia? Is there anyone in any responsible position anywhere in the Western world who has enough sense to ask: “What if the Russians believe us? What if we convince Russia that we are going to attack her?” The same can be asked about China.
BRICS Bank inks strategic cooperation deal with China Construction Bank
The New Development Bank (NDB) launched by the BRICS countries on Wednesday signed a strategic cooperation agreement with China Construction Bank, the country’s second-largest lender. “The NDB, as per its mandate, is building partnerships with major banks in its member countries. Cooperation with CCB is important for us, given the key role it plays in infrastructure financing,” said NDB President Kundapur Vaman Kamath in an emailed statement to The BRICS Post. “The MoU signed today will provide our two institutions with a framework for collaboration in several areas including bond issuance, joint financing and information exchange. I look forward to a long and mutually beneficial partnership,” Kamath added. The China Construction Bank is planning to support the BRICS Bank with adequate credit lines and a commitment to invest in the new lender’s first financial green bonds. The BRICS bank has said clean energy will be part of its core focus.
It’s 2000 All Over Again!
At this year’s Strategic Investment Conference, my good friend Mark Yusko poured cold water on whatever bullishly warm feelings the most optimistic folks may have clung to. You might think someone who manages real money would have a more enlightened view than those bearish economists. Mark, however, was hardly bullish. He listed ten plausible scenarios that could send markets down to the basement. Here I’ll focus on his “Surprise #6: Déjà vu, Welcome to #2000.2.0.” That’s right: Mark says it’s year 2000 all over again. That was when the tech bubble popped and sent us to an ugly bear market and recession. Here are four major parallels he pointed out that make it clear we are heading for another ugly recession—or are already in one without realizing it.
How a summer of shocks threatens to bring mayhem to the markets
Two words are back on the lips of every investor in the City. “Event risk” has begun to dominate trading floor conversations, as a slew of central bank decisions, legal rulings, and political upheavals threaten to bring an end to the calm that has descended upon the markets. May is the one calm month we have before a pretty volatile JuneMarchel Alexandrovich. After a brief break from the turbulence that dominated the start of the year, when fears over the strength of the global economy and the idea of a sharp slowdown in China unnerved money managers, volatility is set to return to the scene.
Eurozone banks hit by bad debts
Investment in the eurozone remains far below pre-crisis levels, partly due to problems in the banks, the Organisation for Economic Co-operation and Development (OECD) has said. Bad debts at the banks are making them less willing to lend. The OECD says many legacies of the area’s financial crisis are unresolved and major new problems have emerged.
Libya claims $1.2bn damages from Goldman Sachs over trades
Libya’s $67bn national investment fund is seeking damages from Goldman Sachs, saying the bank encouraged it to make complex, money-losing investments. The Libyan Investment Authority, which runs the fund, is looking to claw back $1.2bn (£840m) it says was lost through nine disputed trades conducted in 2008. The Libyans said the trades were made under “undue influence”. Goldman said the claims were without merit and it would fight them vigorously. The trial started on Monday at the High Court in London.
Why are so many bankers committing suicide?
Three bankers in New York, London and Siena, Italy, died within 17 months of each other in 2013-14 in what authorities deemed a series of unrelated suicides. But in each case, the victim had a connection to a burgeoning global banking scandal, leaving more questions than answers as to the circumstances surrounding their deaths. The March 6, 2013, death of David Rossi — a 51-year-old communications director at Monte dei Paschi di Siena, the world’s oldest bank — came as the institution teetered on the brink of collapse. Rossi was found dead in an alleyway beneath his third-floor office window in the 14th-century palazzo that served as the bank’s headquarters. A devastating security video shows Rossi landing on the pavement on his back, facing the building — an odd position more likely to occur when a body is pushed from a window.
Chart of the Decade: European Banks Fleeing German Banks Like Rats From A Sinking Ship
Smaller banks often deposit funds in bigger banks. The level of banks’ deposits at other banks is a reflection of their confidence in the system as a whole. The ECB measures and is kind enough to share with us the level of bank deposits in other banks in Europe, breaking the data down by country and the Eurozone as a whole. Banks have been pulling their money out of other banks in Europe like rats deserting a sinking ship since 2012. Even the advent of QE in 2014 only slowed the stampede. European banks are still gettin’ out of Dodge.
Bogle Says Prepare for Stocks, Bonds to Miss Historical Returns
John Bogle, the founder of Vanguard Group Inc., said investors should prepare for weaker results than stock and bond markets generated during his six-plus decades in money management. The average annual return has been around 12 percent for stocks and 5 percent for bonds during his career, Bogle, 87, said Wednesday in an interview with Bloomberg Radio. “That is not going to be true in the future,” he said. “It’s reasonable to think that stocks might return 4 to 5 percent in the next decade.” A bond portfolio, including corporate debt, could produce a yield of about 2.5 percent, he said.
The Land Below Zero: Where Negative Interest Rates Are Normal
In Copenhagen, bicycles take undisputed priority over cars and even pedestrians. A sizzling restaurant scene has made foodie fetishes of moss, live ants, and sea cucumbers. Despite a minimum wage not far below $20 an hour and some of the world’s steepest taxes, unemployment is almost the lowest in Europe. Parents happily leave infants unattended in strollers on the sidewalk while they stop in to cafes. Clearly the usual rules tend not to apply in Denmark. So it’s no surprise that the country in recent years has added a major new entry to its sprawling repertoire of eccentricities: Since 2012 it’s been a place where you can get paid to borrow money and charged to save it. Scandinavia’s third-largest economy (the population is 5 million, and there are about as many bikes) is deep into an unprecedented experiment with negative interest rates, a monetary policy tool once viewed by mainstream economists as approaching apostasy, if not a virtual impossibility. Companies—though not yet individuals—are paying lenders for the privilege of keeping funds on deposit; homeowners, in some cases, are actually making money on mortgages.
There Have Almost Never Been This Many Global Stocks in Decline
Fear of a possible Brexit is being manifested in equities around the world. The Bloomberg composite referendum poll tracker shows that in recent days, the share of the electorate who would vote to leave the E.U. has pulled ahead of the percentage who would vote to remain. Amid the evidence that the “Leave” camp is gaining support, global equities have come under acute pressure, with the MSCI All World Index giving back more than 4 percent over the four sessions through Tuesday. What’s startling about this particular pullback is how the number of stocks that are rising was, at the time of yesterday’s close, absolutely dwarfed by the amount in decline, observe analysts at Bespoke Investment Group.
S. Africa Gets Reprieve From Junk as S&P Keeps Rating Unchanged
South Africa got a reprieve from a junk credit rating as S&P Global Ratings warned it could cut the nation’s debt assessment if the economy doesn’t recover. The foreign-currency rating was kept at BBB-, one level above junk, and the local-currency rating was affirmed at BBB+, S&P said in a statement on Friday. The outlook on the rating was kept at negative. The rating affirmation keeps South Africa on the same level as India and Italy. “South Africa’s weak economic growth, relative to that of peers in similar wealth categories, continues to be hurt by a combination of factors,” S&P said. The negative outlook signals “that we could lower our ratings on South Africa this year or next if policy measures do not turn the economy around,” it said. While the nation maintained its investment grade for now, economic growth forecast at the slowest pace since the 2009 recession will keep pressure on the rating. A downgrade to junk for Africa’s most-industrialized economy could prompt forced selling by some funds that are prevented by their mandate from owning junk-rated securities.
Gerald Celente – The Next 8 Days May Change The World Forever
Today top trends forecaster Gerald Celente just that the next 8 days may change the world forever. Gerald Celente: Direct Democracy referendums, a staple in Switzerland – one of the wealthiest, most democratic, least violent, most market-oriented countries in the world – in which the public, not politicians, vote on high-profile issues… has gone British… Next Thursday, United Kingdom citizens will vote whether to stay in or exit (Brexit) the European Union. In the run-up to the referendum, world equity markets swoon and sway with polls that fluctuate between “Remain” or “Leave.”
Brazil’s Exploding Debt-to-GDP Is Going to Become a Problem Soon
Reining in Brazil’s mammoth budget is no small feat, no matter how good you are. Cut discretionary spending, and risk blowback from an already frustrated electorate. Raise taxes, you could exacerbate the nation’s crushing recession. Privatize government companies? Beware the wrath of the unions. Shrink social security? It’ll take decades to manifest itself on the nation’s balance sheet. And that doesn’t even start to address Brazil’s massive interest tab. That’s the harsh reality facing Acting President Michel Temer, 75, who took over three weeks ago for Dilma Rousseff as she awaits an impeachment trial. His economic cabinet — dubbed the “dream team” by Goldman Sachs Group Inc. — takes over a crisis-torn country with a public-sector debt burden that climbed 9 percentage points last year alone to 67 percent of gross domestic product. And liabilities keep mounting fast. The budget gap is now the biggest among all countries in the G-20 except Saudi Arabia, equal to more than 10 percent of GDP.
National Bank profit falls 48% on bad energy loans; boosts dividend
National Bank of Canada (NA.TO) has delivered quarterly results that look ugly but invite observers to look ahead to better times later this year. The smallest of the Big Six reported that its second-quarter profit fell to $210-million, down 48 per cent from last year. That’s the ugly part, and it stands out from the far-more encouraging results from the other big banks this quarter. The decline was expected though, after the bank announced last month that it would set aside $250-million to cover bad loans to the energy sector. Overall, provision for credit losses came to $317-million, giving National Bank the opportunity to construct two what-if scenarios that can make its results look considerably more upbeat.
The Federal Reserve Has Created an Unprecedented Disaster for Pension Funds
When it comes to the Fed, Congress is mired in hypocrisy. The anti-regulation, de-regulation crowd on Capitol Hill shuts its mouth when it comes to the most powerful regulators of all – you and the Federal Reserve. Meanwhile, Congress goes along with the out-of-control, private government of the Fed—unaccountable to the national legislature. Moreover, your massive monetary injections scarcely led to any jobs on the ground, other than stock and bond processors.
Next Banking Scandal Explodes in Spain
The last five years have been a bumper period for banking scams and scandals in crisis-ridden Spain. From Bankia’s doomed IPO in 2012 to the “misselling” of complex preferentes shares to “unsophisticated” retail bank customers, including children and Alzheimers sufferers, all of the scandals have had one thing in common: the banks have consistently and ruthlessly sacrificed the welfare and wealth of customers, investors, and taxpayers on the altar of short-term survival. Some commentators claim that the problem of banking instability in Spain has been put to rest in recent times, thanks chiefly to a robust, debt-fueled recovery, a tepid resurgence of the real estate sector and the transfer of the most toxic assets from banks’ balance sheets to the festering balance sheets of the nation’s bad bank, Sareb. They could not be more wrong. Despite the untold billions of euros of public funds lavished on “cleaning up” their balance sheets and the roughly €240 billion of provisions booked against bad debt since December 2007, the banks are just as weak and disaster-prone as they were four years ago.
Negative rates stir bank mutiny
Lenders in Europe and Japan are rebelling against their central banks’ negative interest rate policies, with one big German group going so far as to weigh storing excess deposits in vaults. The move by Commerzbank to consider stashing cash in costly deposit boxes instead of keeping it with the European Central Bank came at the same time as Tokyo’s biggest financial group warned it was poised to quit the 22-member club of primary dealers for Japanese sovereign debt. The ECB and the Bank of Japan have for months imposed negative rates for holding bank deposits in an attempt to push lenders to deploy their cash in the real economy through more aggressive lending to businesses. The policy in effect taxes banks for storing excess liquidity.
ECB Gets Clocked by the Two Biggest German Banks
On the fateful day of June 8, when the ECB began buying euro-denominated corporate bonds, some of which now trade in negative-yield absurdity, the two biggest German banks counter-attacked in a well-coordinated two-pronged move. Commerzbank, of which the German government owns nearly 16% as a consequence of the bailout during the Financial Crisis, leaked to Reuters with impeccable timing that it was considering hoarding tons (literally) of cash in its vaults rather than paying the punishment interest on deposits at the ECB. That “punishment interest,” as Germans call the negative interest the ECB charges for deposits, is -0.4%. Currently, Eurozone banks have €850 billion on deposit at the ECB, so the punishment interest would cost them €3.4 billion per year.
“Death of the Dollar” Not Yet
Our favorite death-of-the-dollar gurus will have to remain patient for a while longer, it appears. Not that they don’t have plenty of reasons to be confident. But right now, the much maligned dollar is hot – on every level! With its top two competitors – the euro and the yen – now mired in negative-yield absurdity, investors are fleeing to greener pastures where yields are still higher. And the greenest pasture of them all with the most liquid government bond market is the US. Foreign demand at the 10-year Treasury auction on Wednesday hit a record high of 73.6%, beating the prior all-time record of 73.5% in May. And they sold at a yield of 1.702%!
Four alternatives to holding your savings in a bank
“Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day.” Those were the words of famed bond fund manager Bill Gross. (Gross was actually the first portfolio manager inducted into the Fixed Income Analyst Society’s “Hall of Fame”. And yes, there really is a hall of fame for that.) Gross wrote that more than $10 trillion in government bonds actually have NEGATIVE yields, and that interest rates are at the lowest levels in financial history. For example, the British government just issued its lowest-yielding bonds since 1694. This has very dangerous implications.
Introducing Europe’s Frightening New Tax Directive
A few days ago, the European Commission released details of a tax directive that will create a pan-European tax system, complete with a brand new Tax ID number for all the good citizens of Europe. The proposal also aims to increase taxes across the board if they feel that a member state (like Ireland) doesn’t charge enough tax. According to the proposal, other European countries like Ireland and Estonia “distort competition by granting favourable tax arrangements.” Apparently it’s not ‘fair’ that high-tax France and Belgium have to compete with low-tax Ireland and Estonia. So rather than the bankrupt countries getting their act together to attract business, the solution is to penalize everyone and make the entire continent less attractive. It’s genius! The directive goes on to demand more onerous reporting, attack anyone who takes legal steps to reduce what they owe, and even threaten businesses with exit taxes if they try to leave Europe. This really is like a return to the feudal system.
John Hathaway – There Is A Deepening Shortage Of Physical Gold
On the heels of gold and silver moving higher along with the dollar and the Dow tumbling, here is a reminder from one of the greats in the business, John Hathaway, that discusses the deepening shortage of physical gold. John Hathaway: “According to the World Gold Council, the current investment allocation of world institutional portfolios to gold is a miniscule .55 percent. The flows resulting from a return of investment interest in gold for hedging purposes only, and in the best of all possible worlds (robust economic growth, world peace, etc.), would seem to have a potentially powerful impact on gold prices.”
FTSE Loses £30bn In Value As Brexit Fears Grow
The FTSE 100 slumped below the 6,000 threshold for the first time in four months on Tuesday, as growing concern about the EU referendum caused jitters in global markets. More than £30bn was wiped off the index as it finished a fourth session in negative territory, following further opinion polls which indicate strong support for Brexit and The Sun’s decision to throw its support behind the Out campaign. In London, the FTSE fell 2% to close at 5924 – and other European markets also ended the day in the red, including the CAC 40 in France and Germany’s DAX. The STOXX 600, a pan-European index, has lost 8% since the start of June, wiping off €600bn (£475bn) off the value of its constituents.
A Trip Down The Rabbit Hole Of Money Dropping Helicopters, Followed By Debt Repudiation
Today one of the greats in the business has given King World News permission to share a crucial piece of information with our global audience. This piece takes a trip down the rabbit hole of money dropping helicopters, followed by debt repudiation. Bill Fleckenstein: It is worth noting, however, that today is a bit of a red-letter day in the annals of monetary experimentation because it marks the beginning of Mario Draghi’s and the ECB’s buying of corporate bonds as part of their roughly 80-billion-euro-per-month (i.e., over $90 billion) monetization scheme…
George Soros Is Preparing For Economic Collapse – Does He Know Something That You Don’t?
Why is George Soros selling stocks, buying gold and making “a series of big, bearish investments”? If things stay relatively stable like they are right now, these moves will likely cost George Soros a tremendous amount of money. But if a major financial crisis is imminent, he stands to make obscene returns. So does George Soros know something that the rest of us do not? Could it be possible that he has spent too much time reading websites such as The Economic Collapse Blog? What are we to make of all of this? The recent trading moves that Soros has made are so big and so bearish that they have even gotten the attention of the Wall Street Journal…
Top Advisor To Sovereign Wealth Funds Warns Another Lehman Moment Is Coming As Gold & Silver Surge!
With Wall Street having one of the strangest years in 2016, today a top advisor to the most prominent sovereign wealth funds, hedge funds, and institutional funds in the world, warned King World News that another Lehman moment is coming. He also discussed what this will mean for major markets and he exposed what will be the trigger for gold and silver to skyrocket. Michael Belkin: “The world is changing. What’s happening economically in Europe is we have extremely weak banks. Let me give you two names, UniCredit and Deutsche Bank. I’m telling my clients to sell and short those stocks. UniCredit is one of the biggest, if not the biggest Italian bank. It has a huge balance sheet, not enough capital, and huge non-performing loans (20 percent). The stock is down about 50 percent on the year and they are gasping for air.
Something Big That Always Happens Right Before The Official Start Of A Recession Has Just Happened
What you are about to see is major confirmation that a new economic downturn has already begun. Last Friday, the government released the worst jobs report in six years, and that has a lot of people really freaked out. But when you really start digging into those numbers, you quickly find that things are even worse than most analysts are suggesting. In particular, the number of temporary jobs in the United States has started to decline significantly after peaking last December. Why this is so important is because the number of temporary jobs started to decline precipitously right before the last two recessions as well.
Global markets rattled as Brexit gains traction
Jitters over the coming EU referendum have wiped £67bn off of the FTSE 100 in the past three days, amid signs that support for Brexit has risen to the strongest levels on record. Concerns over a leave vote pushed London’s leading index down by 1.2pc, to a three-month low of 6,044.97, as nerves about the repercussions of a withdrawal from the EU sent shockwaves through global equity markets. European stocks were left battered, with the Euro Stoxx 50 shedding nearly 2pc. Worries about the global economy, in part fuelled by the belief that a Brexit vote could destabilise the wider eurozone bloc, also dampened investors’ appetites for US stocks. The flagship S&P 500 index closed down more than 0.8pc as traders fled for the perceived safety of government bonds and gold.
Was The Gotthard Base Tunnel Opening Ceremony An Illuminati Ritual Intended To Honor Satan?
The opening ceremony of the Gotthard Base Tunnel in Switzerland featured a “goat-man” that dies, is resurrected, is worshipped and is crowned as “the king of the world”. The “goat-man” that played such a key role in this performance bore a striking resemblance to Baphomet, which in recent decades has become one of the key symbols used to represent Satan in the occult community. So could it be possible that this entire ceremony was actually an Illuminati ritual that was intended to honor Satan? Don’t pass judgment until you see the videos. On Wednesday, June 1st, the long-awaited opening ceremony of the Gotthard Base Tunnel in Switzerland finally took place. It is the longest and the deepest railroad tunnel in the entire world, and it took 17 years to build. It is 35 miles long, more than 2,000 meters deep in places, and the construction of this unprecedented tunnel cost a grand total of more than 11 billion euros. So the opening of this tunnel was quite a big deal over in Europe. Prominent European politicians such as German Chancellor Angela Merkel, Italian Prime Minister Matteo Renzi and French President Francois Hollande were all in attendance, and they were treated to an incredibly bizarre opening ceremony that cost approximately 8 million euros to produce. From Switzerland, this opening ceremony was broadcast by television all over the world, and so countless numbers of people were exposed to it.
Why Is The Weather So Crazy All Of A Sudden?
All over the planet, global weather patterns have gone completely nuts. Just over the past few days we have seen “life threatening” heatwaves, extremely dangerous wildfires, vicious tornadoes and unprecedented flooding – and that is just in the United States. And of course this is just the continuation of a trend that stretches back to last year, when extremely weird weather created “apocalyptic-like conditions” in many areas around the world. So why is this happening? For decades, we could count on weather patterns falling within fairly predictable parameters, but now that is completely changing all of a sudden. All over the globe we are seeing things happen that we have never seen happen before, and the weather just seems to get even more crazy with each passing month.
George Soros Sells America Short – Literally
The Wall Street Journal reported on its front page this morning that leftist billionaire and Democratic mega-donor George Soros, the convicted insider trader who “broke the Bank of England,” has stepped back into trading personally in recent months. The Journal reports that Soros is betting against America, adopting “bearish derivative positions that serve as wagers against U.S. stocks.” It is not clear at what point in the first quarter the firm took those positions; the S&P 500 was up 3% on the quarter, so Soros may be in the red so far, according to the Journal report. But on May 16, Soros’ fund disclosed that it had doubled its bet against American stocks.
The Woman who Discovered $200 MILLION missing from E.U. Accounts
Marta Andreasen was hired as the EU’s first proper chief accountant in 2002. She was in charge of 130 staff and, surprisingly, was the first properly qualified accountant to hold the post. She did her job correctly – and in no time at all, identified that £170 million was missing or unaccounted for in the E.U. budget – that’s more than $200 million! The corrupt E.U. immediately slapped her with a disciplinary charge for “defamation” and she was suspended from her job.
Fed’s Yellen sees rate hikes ahead, but few hints on when
Federal Reserve Chair Janet Yellen on Monday gave a largely upbeat assessment of the U.S. economic outlook and said interest rate hikes are coming but, in an omission that stood out to some investors, gave little sense of when. Overall, Yellen said, “I see good reasons to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones.” While last month’s jobs report, released Friday, was “disappointing,” and bears watching, policymakers will respond “only to the extent that we determine or come to the view that the data is meaningful in terms of changing our view of the medium- and longer-term economic outlook.”
The Fed’s credibility gap is getting wider
If Fed policy was a fairy tale, the title might be “The Central Bank That Cried Wolf.” Investors have watched in bemusement as Fed officials throughout the past several years have warned that policy would change, only to back down at the slightest sign of turbulence. It now appears the market is no longer taking the Fed’s threats seriously. In a speech Monday, Fed Chair Janet Yellen gave only modest signals that she was reconsidering policy, which just a few months ago was geared for as many as four interest rate increases this year. Nevertheless, a market bracing for a high likelihood of a summer hike now is considering that “we may well not see one,” said David Rosenberg, chief economist and strategist at wealth management firm Gluskin Sheff.
Half Of Washington DC Employers Have Cut Jobs, Hours Due To Minimum Wage Increases – And It’s Going To Get Worse
As former McDonald’s CEO Ed Rensi so eloquently explained not long ago, raising the minimum wage would wipe out thousands of entry level jobs for those who don’t have very many other options. Washington, DC is validation of Rensi’s theory. According to a report from the Employment Policies Institute, nearly half of Washington, DC employers said they have either laid off employees or reduced the hours of employees to adapt to the District of Columbia’s minimum wage hikes since 2014.
Weak Jobs, Consumer Activity Hint at Weakening American Economy
A disappointing increase in job openings and a poor increase in consumer credit indicate Americans are increasingly struggling to make ends meet. In April, consumer credit rose just $13.4 billion, far below the $18 billion expected and less than half of March’s $28.4 billion, according to new data released by the Federal Reserve. Analyst expectations of sharply increasing consumer credit usage were based on previous data that showed strong retail sales, which is often financed by credit cards.
Wholesale Inventories Rise Most In 10 Months, Sales Miss; Ratio Only Higher Post-Lehman
Wholesale inventories rose more than expected in April (up 0.6% MoM vs 0.1% exp) – the biggest monthly jump in 10 months – but sales disappointed (rising only 1.0% versus a 1.1% expectation). This sales growth topping inventory growth is a positive but for context the inventory-to-sales ratio remains at 1.35x – the highest level ex-Lehman on record. They just keep building inventories… even as sales remain lower YoY…
Urban Outfitters (URBN) Stock Plunges in After-Hours Trading on Q2 Sales Trend
Urban Outfitters (URBN) stock is falling by 7.84% to $25.74 in after-hours trading on Thursday, after the apparel retailer announced its comparable store sales are declining in the fiscal 2017 second quarter, which ends next month. “Thus far during the second quarter of fiscal 2017, comparable retail segment net sales are mid single-digit negative,” the company said its quarterly report filed with the SEC. If trends continue through the quarter, comparable store sales would decline, compared with a 4% increase for the same quarter last year and a 1% increase for the fiscal 2017 first quarter ended April 30.
Venezuela announces new plan to tackle food crisis
The Venezuelan government says it has imported thousands of tons of basic foodstuffs and will begin distributing them through communal councils directly to family homes. In Caracas the Food Minister, Rodolfo Marco Torres, said 70% of the country’s food would be supplied in this way. The Venezuelan opposition says the new system could discriminate against them. The country has been badly hit by the fall in oil prices and is suffering severe shortages in food and medicines. President Nicolas Maduro has accused private food production companies and supermarkets of hoarding food for speculation. Mr Torres said the government had purchased 115,000 tons of basic goods including rice, sugar, maize and beans.
Bond markets hit by economic worries
The returns on British and German government debt, or bonds, have hit new all-time lows. The market has been affected by concerns about the global economic outlook. Weaker economic performance usually leads to cuts in interest rates and bond yields tend to move down in parallel. An increasing number of government bonds are now giving negative returns, less than zero. These moves have highlighted a question that is increasingly being asked in the markets: Is the world heading for another financial crisis, this time in the market for government and company debt? The new records being hit by government bonds are the results of central bank policies of very low or even negative interest rates.
Grains Decline as U.S. Sees Global Supply Exceeding Estimates
Grain prices dropped in Chicago after the U.S. government said that supplies will be bigger than analysts expected. World wheat inventories in the 2015-16 season will reach 243 million metric tons, the U.S. Department of Agriculture said Friday in a report. That compares with analyst projections at 242.5 million, on average. Global corn reserves will be 206.5 million tons, topping the 205.5 million estimate.
The Pension Bubble: How The Defaults Will Occur – Peter Diekmeyer
Experts worry about stock, bond and real estate market excesses. But a bubble is forming that dwarfs them all: in pension plans. Millions of Americans and Canadians who are counting on pension benefits to fund their retirements risk being severely disappointed. The hard money community has, of course, been aware of this for some time. However in recent years, even the elites have been taking notice. One such group, the International Forum of the Americas, will be holding its fourth annual pension conference in Montreal next Monday. There politicians, financiers and monetary policy officials will discuss the declining rates of return in public and private sector pension plans. The picture they will paint is increasingly grim.
Wall Street’s Treasuries Market Bluff Exposed in Auction Retreat
When U.S. officials broached the question of more oversight in Treasuries this year, Wall Street pushed back by pointedly reminding them of the “critical role” it plays in ensuring America’s ability to borrow. Turns out, the firms might be overstating their influence. Banks known as primary dealers, which trade directly with the Federal Reserve and bid at U.S. debt auctions, have bought just 30 percent of the new securities this year, the smallest share on record, data compiled by Bloomberg show. The 23 firms — which include JPMorgan Chase & Co., Goldman Sachs Group Inc. and Deutsche Bank AG — also aren’t bidding as aggressively as they once did.
A ‘tsunami’ is about to overwhelm the debt market
A tidal wave may be coming to the bond market, and it’s not going to be pretty. At least that’s the view of Matthew Mish, credit strategist at UBS. To Mish, the elevated rates of default in the commodity sector and high risk bonds are a harbinger of things to come for the broader debt market. “First, our quantitative framework is signaling a broader deterioration in the default outlook, with our model projecting default rates of 4.3% over the next 12 months (versus 2.6% one year prior),” Mish wrote in a note to clients on Thursday.
New Reasons to Worry About Europe’s Banks
European banks have lost their mojo. A toxic combination of negative interest rates, comatose economies and a regulatory backdrop that might euphemistically be described as challenging is wreaking havoc with bank business models. Their collective market value has dropped by a quarter so far this year. The smoke signals emanating from the European Central Bank in recent weeks suggest regulators aren’t blind to this. Daniele Nouy, who chairs the ECB’s bank supervisory board, said earlier this week that the central bank “is aware that the low-interest-rate environment is putting pressure on the profitability of European banks.” Regulators may respond by going easier when drafting new rules.
China’s Debt Load Is (Much) Higher Than Previously Thought, Goldman Says
Count total social financing (TSF) as another Chinese statistic of increasingly dubious value, according to analysts at Goldman Sachs Group Inc. With many investors grappling to understand the degree to which China’s economic growth has been fueled by debt, efforts to get a grip on measures of new credit creation have gained fresh urgency. To date, many have relied on the TSF invented by the Chinese authorities in 2011 as a way of capturing a larger slice of the country’s shadow banking activity, but Goldman analysts led by M.K. Tang cast fresh doubt, in a note published on Wednesday, on the measure’s ability to gauge credit creation.
Pensions may be cut to ‘virtually nothing’ for 407,000 people
One of the biggest private pension funds in the country is almost out of money, and fresh out of options. The Central States Pension Fund has no new plan to avoid insolvency, fund director Thomas Nyhan said this week. Without government funding, the fund will run out of money in 10 years, he said. At that time, pension benefits for about 407,000 people could be reduced to “virtually nothing,” he told workers and retirees in a letter sent Friday. In a last-ditch effort, the Central States Pension Plan sought government approval to partially reduce the pensions of 115,000 retirees and the future benefits for 155,000 current workers. The proposed cuts were steep, as much as 60% for some, but it wasn’t enough. Earlier this month, the Treasury Department rejected the plan because it found that it would not actually head off insolvency. The fund could submit a new plan, but decided this week that there’s no other way to successfully save the fund and comply with the law. The cuts needed would be too severe.
Jerome Kerviel, rogue trader, wins unfair dismissal case
The French ex-trader Jerome Kerviel, whose unauthorised transactions lost his bank €4.9bn (£3.82bn), has won a claim for unfair dismissal. A labour court said the bank, Societe Generale, had dismissed him not because of his actions, which it must have known of, but for their consequences. The court ordered the bank to pay him €450,000 (£350,000) in damages. A lawyer for the bank said it would be appealing a “scandalous” decision that ran counter to the law. Mr Kerviel, 39, served a three-year jail term after being convicted of breach of trust and fraud in October 2010. He was charged with gambling €50bn (£39bn) of Societe Generale’s money on trades without the bank’s knowledge, which nearly brought down the business.
Here’s How George Soros’s Latest Predictions Have Played Out
George Soros, the 85-year-old billionaire who broke the Bank of England in 1992, is becoming more involved in day-to-day trading at his family office, taking a series of big, bearish bets. Soros is best known for netting $1 billion as a hedge fund manager decades ago when he and his then-chief strategist Stan Druckenmiller wagered that the U.K. would be forced to devalue the pound. His predictions haven’t always played out so well. Anticipating weakness in various global markets, his Soros Fund Management cut its publicly disclosed U.S. stock holdings by 37 percent in the first quarter while buying shares of gold miners and an exchange-traded fund tracking the price of the precious metal. Since then, the S&P 500 Index has returned 3.1 percent. Barrick Gold Corp., his largest new position disclosed in the quarter, fared better, jumping 44 percent.
Puerto Rico’s Bonds Rally as House Nears Passage of Rescue Plan
Puerto Rico bonds are staging the longest rally in six months with the U.S. House of Representatives poised to vote on legislation to help resolve the island’s $70 billion debt crisis. The prices of some securities rose Thursday amid speculation that the House will approve a bill, known as Promesa, that empowers a federal control board to monitor the U.S. territory’s budgets and oversee any debt restructurings. The gains came after an index of Puerto Rico debt climbed for eight straight days through Wednesday, the longest winning streak since November, S&P Dow Jones indices show.
US warns of hacking threat to interbank payment network
US regulators have warned banks about potential cyber attacks linked to the interbank messaging system. The statement came two weeks after the Federal Bureau of Investigations sent a notice cautioning US banks after the hacking of Bangladesh’s central bank. The FBI message warned of a “malicious cyber group” that had already targeted foreign banks. In February, hackers stole $81m (£56m) from Bangladesh’s account with the Federal Reserve Bank of New York. The hackers used the Bangladesh central bank’s Swift credentials to transfer money to accounts in the Philippines. Swift is the system banks use to exchange messages and transfer requests. The hackers attempted to steal nearly $1bn, but several of their requests were rejected because of irregularities.
Chinese police require DNA for passports in Xinjiang
Police in China’s north-western region of Xinjiang are asking some residents to provide DNA samples and other biological data when applying for travel documents. People in the multi-ethnic area of Yili will have to provide the samples before being allowed to go abroad. The Chinese government is trying to crack down on periodic violence, which it blames on Islamist militants. Many Muslims in Xinjiang say they are discriminated against. They say the Chinese authorities often refuse to issue documents allowing them to travel. Most of the Uighur ethnic minority, which makes up about 45% of Xinjiang’s population, practise the Muslim faith. Over the years China’s authorities have attributed violent attacks to Uighur militants, who they say are inspired or aided by overseas terror groups. Uighur leaders have denied being behind the violence.
Compare The Contrast Of Censored Images Showing Socialist Country Where The Elite Thrive, The Poor Starve
Most of us have seen the heartbreaking images and videos flowing out of Venezuela where food lines are hours long, basics like bread are unattainable for many and recent reports showing Venezuelans are so hungry and desperate they are hunting dogs, cats and pigeons, but that is only half the story. Due to government corruption, there are “two Venezuelas,” one where the poor are having their electricity and food rationed by the government, causing civil unrest and bringing the country to the brink of civil war, but the other “country within the country” is living high drinking champagne and vodka, eating Belgian chocolates and lobster, wearing brand name clothes, and dining in exclusive restaurants. Via Telesur, a man by the name of Agustin Otxotorena, a Basque executive living in Caracas, grew tired of constant calls from friends and relatives in Spain telling him that there was no food in Venezuela, so on May 20 he began publishing photos on Facebook of supermarkets in upscale sectors of Caracas filled with goods. What you will see below is what the ABC news bureau in Venezuela censors from their reports, images from Otxotorena’s Facebook account which when seen side by side with the tragic images of starving Venezuelans show a sickening contrast between who the government allows to starve and who doesn’t.
Saudi Post-Oil Plan Weighs Income Tax on Expat Workers
Saudi Arabia is considering taxing millions of foreign residents as the kingdom seeks to reduce its reliance on oil revenue after the plunge in crude prices. The proposal was included in the country’s National Transformation Plan, an ambitious multi-year program released this week. But the tax element is only “an initiative that will be discussed,” Finance Minister Ibrahim al-Assaf said on Tuesday at a news conference in Jeddah. Economists said the proposal is unlikely to see the light soon because it could hamper the kingdom’s ability to attract the foreign investment it needs to revive growth hit by the oil slump. Still, raising the possibility of income tax in the blueprint — even if only on foreigners — shows the readiness of its architect, Deputy Crown Prince Mohammed bin Salman, to consider steps that past Saudi rulers have shunned. Prince Mohammed, the king’s son and second-in-line to the throne, has already cut fuel and utility subsidies and proposed reducing the public-sector wage bill. The kingdom is also joining other members of the six-nation Gulf Cooperation Council in imposing value-added taxation starting from 2018.
The Obama Administration Could Cause the Next Big For-Profit College Collapse
The Obama administration is at risk of repeating the mistakes that led to the expensive collapse of for-profit chain Corinthian Colleges Inc. In that case, the Department of Education failed to address years of allegations that the company’s schools swindled its students and warning signs that Corinthian was facing financial difficulty. When the department finally took action by delaying the delivery of federal student aid to the schools, officials were “surprised” by the cash crunch the delay caused. That set off a series of events that culminated in Corinthian filing for bankruptcy protection less than a year later. The increasing cost to taxpayers of Corinthian’s collapse was at least $90 million as of March.
Trail of Defaults Leads to Dark Corner of Tax-Exempt Bond Market
When Philip J. Kennedy needed financing to buy low-income housing in a wealthy Dallas suburb, he bypassed Texas agencies for a tax-exempt bond issuer 700 miles away in Gulf Breeze, Florida. Leaving the state allowed Kennedy’s non-profit American Opportunity Foundation Inc. to secure $35 million to buy Garden Gate Apartments in Plano, Texas, and a development in Fort Worth without answering questions from local authorities about AOF’s past difficulties repaying debt. Scores of non-profit organizations like AOF are required to use government-created agencies when selling bonds. In return, the agencies charge fees. At times, these conduits aren’t in the same state as the projects they’re financing, giving officials on the ground little incentive to scrutinize the deals.
S&P 500 Record Taunts Investors Before Floor Caves In on Friday
Another run at a record ended in frustration for stock investors as the biggest selloff since mid-May erased gains for the week and dragged the S&P 500 further from a 10-month high. A week that started with the whiff of celebration as equities pulled within 1 percent of their all-time high ended with disappointment amid concerns about global growth and Britain’s referendum on the European Union. The S&P 500 dropped 0.9 percent to 2,096.07 on Friday, its worst decline since May 17, leaving it down 0.2 percent over the five days.
Day 8 No Money on EBT Cards – Riots Next? – Get Prepared!
It interesting over the weekend I got several emails telling me about cell phones being down, internet being down, and get this, EBT cards not working and having no money associated to them. This is a concern because when the US Government has payment failures, then there is possibly something happening that the press is not telling you about. Now, we know that computers have problems and that states, counties and cities run on computers. But what is interesting is that since the beginning of 2016, The US government has had over 2,700 reports on downdetector.com showing that they have been late loading the money onto these EBT cards. Folks, we are now going on 8 days where the Government has not paid the EBT payments so that people have food. Why is this? Are we looking a possible Venezuela event taking place here in the US?
Dire Financial Warnings and Debt Jubilee-David Morgan
Finance and economy writer David Morgan says there has been a noticeable increase in dire warnings from some of the biggest names in the investing world. Why are the elite sounding the alarm on another financial meltdown? Morgan says, “One reason is they see it’s rather imminent . . . so, could it be this year? Absolutely. I have been kind of right and wrong on this. I am right about the deterioration in the economy, the money supply and the inability to directly address the problem. Where you pinpoint it is more difficult. I said 2015 would be the year that most sleepy Americans would wake up and see the economy isn’t really recovering. . . . I think it’s going to be 2016.”
Rise in Starving Children Puts Strain on Venezuela’s Hospitals
The increasing shortage of food and other basic products in Venezuela, on top of inflation, is now takingits toll on the health of the nation — most notably, on its malnourished children. Children frequently arrive to the San Felipe Central Hospital after having fainted from malnourishment, officials told the PanAm Post, and are given medicine to take three times a day. Mothers tell physicians they don’t have enough food in their homes, even after rationing. “Children under five months of age come in here with diarrhea and when the parents are asked what the child has been eating, they say mostly rice cream because they can’t get milk,” one hospital worker said. The same source confirmed parents blame themselves because they don’t have the salary or access to staple foods to improve the situation. “You can’t feed a five-month-old on rice,” the source said, “and it’s going to affect their long-term health.”
A Breakdown in Old Rules Leads to a Rethink on How Global Markets Work
A standard textbook relationship that every student of economics learns in school has been flipped on its head, and it’s leading to a major rethink on the connection between bank balance sheets, exchange rates, global asset prices, and monetary policy. The prices of derivatives used for hedging currency risk are violating no-arbitrage rules, a development that points to a significant decline in global banks’ ability to intermediate capital flows from global investors, in part because of new regulations that have been introduced in recent years. That decline in intermediation capacity appears to have heightened the sensitivity of exchange rates and global asset prices to monetary policy since the crisis, and helps explain some of the unusual gyrations witnessed recently in markets — like extreme moves in the so-called cross-currency basis, which according to traditional theory should be non-existent, and mostly was before the crisis that began in 2007.
Whistle-Blower Said to Aid SEC in Deutsche Bank Bond Probe
The U.S. Securities and Exchange Commission is being helped by a whistle-blower in an investigation of Deutsche Bank AG’s post-crisis mortgage-trading business, according to people with knowledge of the situation. The SEC received a whistle-blower complaint alleging that the bank inflated the value of mortgage bonds on its books and masked losses around 2013, said the people, who asked not to be identified because the matter is confidential. The SEC is probing how the bank valued government-backed mortgage bonds known as Agency pass-through securities that it amassed after the 2007 U.S. housing crisis.
Bond yields in UK and Germany fall to record low
The return on benchmark UK government bonds has fallen to a record low as investors move in to safer assets on concerns about the glo