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 March 11, 2016 to March 17, 2016:
Record Swings of Deflation and Inflation Coming-Michael Pento
Money manager Michael Pento says the Fed and other global central banks are “not going to stop manipulating the markets.” Pento explains, “There is no escape from the manipulation by central banks and manipulation of asset prices. There is no escape of manipulation of interest rates, of money supply growth, of stock values and of bond prices. They can never stop. . . . Just a hint that this massive manipulation of all markets and asset classes might end someday sends them crashing. So, there is no escape in Japan, China, Europe and the United States. That means we are headed for massive bouts of wild swings between inflation and deflation, the likes of which we have never before seen in the history of economics.”
This Chart Shows the First Big Crash Is Likely Just Ahead
The story on Wall Street and CNBC continues to be that we’re in a correction and this is a buying opportunity. Even Warren Buffett joins the chorus of stock market cheerleaders for the skeptical public. Well, I agree with the skeptical public, not the experts here! The bull market from early 2009 into May 2015 looks just like every bubble in history, and I’m getting one sign after the next that we did indeed peak last May.
What’s in Store for the Real Economy
The Census Bureau announced today that total business sales in January did what they’d been doing relentlessly for the past one-and-a-half years: they fell! This time by 1.1% from a year ago, to $1.296 trillion, and by 5% from their peak in July 2014. They’re now back where they’d been in January 2013. Sales are adjusted for seasonal and trading-day differences, but not for price changes. And since January 2013, the consumer price index rose 2.8%! This is why the US economy has looked so crummy. That’s bad enough. But it gets much worse.
U.S. Consumer Prices Fell in February
U.S. consumer prices fell in February due largely to a slide in gasoline prices, but other evidence pointed to steadily building inflation pressures that could reassure the Federal Reserve as it considers raising short-term interest rates. The consumer-price index, a gauge of what Americans pay for everything from refrigerators to dental care, declined 0.2% over the month, the Labor Department said Wednesday. Overall prices haven’t risen since November and are up just 1% over the past year.
U.S. industrial output resumes downturn in February
After hopeful signs of stabilization in January, industrial production decreased 0.5% in February, according to data released by the Federal Reserve on Wednesday. Economists polled by MarketWatch had expected a 0.6% fall in industrial output for February. The Fed revised January’s strong gain in output to 0.8%, down a tad from the 0.9% gain initially estimated. Many analysts said the details were not as disappointing as the headline.
US Recession Data Signals It’s A Very Short Road To Capital Controls
“Prosperity is like a Jenga tower. Take one piece out and the whole thing can fall.” That’s a direct quote from John Williams, the President of the San Francisco Federal Reserve Bank in a speech he gave a few weeks ago. He could have just as easily been talking about propaganda. The Fed, the White House, Wall Street, the media have a vested interest in peddling a certain narrative about the economy. The narrative goes something like this: “Everything’s awesome. Stop asking questions”. But if you look at their own data, the numbers tell a different story.
China Freight Index Collapses To Fresh Record Low
The Baltic Dry Index has risen for the last few weeks, buoyed by hopes (a la Iron Ore) of a National People’s Congress stimulus surge from China. While the scale of the ‘bounce’ is negligible in real terms compared to the total collapse, it has caused such momentum-muppets as Jim Cramer to proclaim China ‘fixed’ and investible. So we have one quick question – if everything is awesome, why did the China Containerized Freight Index just crash to new record lows? It appears BDIY gets over-excited relative to CCFI…
US Government Blames 9/11 On Iran, Fines Iran $10.5 Billion; Iran Refuses To Pay
On March 14th, Iran announced that it will never pay the $10.5B that a U.S. court demanded it pay for the 9/11 attacks. The same Bill-Clinton-appointed judge who had ruled, on 29 September 2015, that Saudi Arabia has sovereign immunity for 9/11 and so can’t be sued for it, ruled recently, on March 9th that Iran doesn’t have sovereign immunity and fined Iran $10.5 billion to be paid to 9/11 victims and insurers; but, on March 14, Iran’s Foreign Ministry said Iran won’t pay, because, as the Ministry’s spokesman Hossein Jaberi Ansari put it, “The ruling is ludicrous and absurd to the point that it makes a mockery of the principle of justice while [it] further tarnishes the US judiciary’s reputation.”
RBS to cut almost 450 investment banking jobs in UK
Royal Bank of Scotland is cutting 448 investment banking jobs in the UK, moving two-thirds of them to India. The bank, 73% of which is owned by the taxpayer, said it would cut back- and middle-office roles in its investment bank, including a small number of technology jobs. Under its chief executive, Ross McEwan, RBS has been shrinking the division to focus on its personal and small business operations in the UK and Ireland.
US retail sales dip in Feb.; Barclays slashes GDP view
U.S. retail sales fell less than expected in February, but a sharp downward revision to January’s sales could reignite concerns about the economy’s growth prospects. The Commerce Department said on Tuesday retail sales dipped 0.1 percent last month as automobile purchases slowed and cheaper gasoline undercut receipts at service stations.
Japanese Gold Buying Spree Confirms Negative Interest Rates Good for Gold
Over the last several weeks, we’ve been building the case that negative interest rates are good for gold, and mainstream analysts have echoed our thoughts. Last week, Britain’s largest bank, HSBC, issued a statement saying the longer the world’s central banks continue to experiment with negative interest rates, the better the outlook for gold.
US Business Inventory-Sales Ratio Jumps To Post-Crisis (7 Year) High
Following the recessionary surge in Wholesale Inventories-to-Sales ratio, this morning’s Total Business inventories-to-sales rose to 1.40x – the highest since May 2009. With a 0.4% slump in sales and 0.1% rise in inventories, the smell of recession lays heavy on US businesses… but then again – who cares if Draghi can keep buying ‘assets’ and saving the world?
Unpaid subprime car loans hit 20-year high
Americans with lower credit scores are falling behind on auto payments at an alarming pace. The rate of seriously delinquent subprime car loans soared above 5% in February, according to Fitch Ratings. That’s worse than during the Great Recession and the highest level since 1996. It’s a surprising development given the relative health of the overall economy. Fitch blames it on a dramatic rise in loans with lax borrowing standards that have helped fuel the recent boom in auto sales. More Americans bought new cars last year than ever before and the amount of auto loans soared beyond $1 trillion.
Ackman takes $1B hit as Valeant tumbles 49%
Somebody give Bill Ackman an aspirin. Better make it a double. The embattled hedge fund mogul saw the value of his investment in Valeant Pharmaceuticals fall by $766 million on Tuesday after shares of the troubled company fell by 51 percent in the wake of three troubling disclosures.
Gold Falls as Investors Lock in Gains Ahead of Fed Meeting
Gold prices fell Monday, as investors locked in gains on the precious metal ahead of this week’s Federal Reserve meeting. Gold for May delivery closed down 1.1% at $1,245.10 a troy ounce on the Comex division of the New York Mercantile Exchange.
The Cashless Society – Keynesian “Stability” Vs Trumpian Turmoil
In this article, Claudio Grass, Managing Director at Global Gold Switzerland, talks to economist and Mises Institute Senior Fellow Thomas DiLorenzo. This exclusive interview covers central bank monetary policies, Keynesian economics, the economic“recovery,“ political correctness, and much more.
The Liquidity Endgame Begins: Whiting’s Revolver Cut By $1.2 Billion As Banks Start Slashing Credit Lines
Earlier today we reminded readers about the circular (and why note fraudulent conveyance) scheme hatched by JPMorgan to reduce its secured loan exposure to Weatherford, when just two weeks ago none other than JPM underwrote an WFT equity offering in which it sold equity in the company, and which proceeds were promptly used by the company to repay the JPMorgan revolver. We then showed that it wasn’t just Weatherford: most of the “uses of funds” from the recent record surge in oil and gas equity offerings, have been used to repay the secured debt/revolver facilities, thereby eliminating funded and unfunded balance sheet exposure of major US banks.
Having Killed Their Equity Market, China Unleashes “Tobin Tax” For FX Market
In September last year, Chinese regulators stepped on the throat of a ‘fair’ market in equity futures trading and for all intent and purpose killed the Chinese equity market. Tonight – after 2 days of Yuan weakness – having warned everyon from Soros to Kyle Bass that “betting against the Yuan can’t possibly work,” The PBOC just unleashed plans for so-called “Tobin Tax” on FX transactions (which implicitly taxes each transaction, reducing liquidity, raising margins and reducing leverage). Deputy central bank governor Yi Gang raised the possibility of implementing a Tobin tax late last year in an article written for China Finance magazine, and now, as Bloomberg reports, it is on!
Trump is a Picky Eater Who Sleeps 3 Hours a Night and Hates Sloppy Dressers, His Ex-Butler Says
What is it like serving at Donald Trump’s beck and call? The billionaire’s former butler Tony Senecal has much to tell — like when a young Mr. Trump and first wife Ivana, had four butlers waiting on them hand and foot. Senecal, who served Trump for almost 20 years, told IE: “After Mr. Trump and Ivana got a divorce, we were going over to his room one night and he said: ‘Tony, do I need four butlers?’ and I said: ‘As long as it’s me Mr. Trump you only need one.’ He got rid of the other three.” Senecal describes Trump as a man always on the move and rarely relaxes. “I’m going into the room to clean it after he’s gone and he’s re-arranged the closet. And the clothes are all on the floor that he wants to get rid of,” he said. The former butler said that Trump is always busy because he is “always thinking.”
“It’s The Q2 2015 Rally All Over Again” – Morgan Stanley Warns Big Oil Drop Imminent Due To “Rampant Hedging”
One week ago, the market was disappointed when Goldman’s head commodity strategist, Jeffrey Currie pointed out the obvious, namely that the higher the price of oil rises, the greater the probability it will tumble shortly, as a result of recently shut off production going back online. To wit: Last year commodity prices were driven lower by deflation, divergence and deleveraging which were reinforcing through a negative feedback loop. Deflationary pressures from excess commodity supply reinforced divergence in US growth and a stronger US dollar which in turn exacerbated EM funding costs and the need for EMs to de-lever though lower investment and hence commodity demand. While we believe that these dynamics likely ran their course last year resulting in signs of rebalancing, the force of their reversal has created a new trend in market positioning that could run further. However, the longer they run, the more destabilizing they become to the nascent rebalancing they are trying to price.
Bloomberg Stumbles On The “Only One Buyer Keeping The Bull Market Alive”
Last week, when Bloomberg was celebrating the 7 year anniversary of the third longest, most central bank-supported, and thus “most hated” bull market in history, it said that “investors are awash in angst, showing little faith the run can continue. They worry about contracting corporate earnings, slowing Chinese growth and uncertainty over interest rates. And they’re walking the talk by pulling cash from stocks at almost the fastest rate on record. It’s not unwarranted – the S&P 500 has gained just 0.5 percent in the last 18 months.”
Stocks are climbing that ever-higher “wall of worry”
It can hardly be denied that stocks are climbing that infamous “wall of worry”. Every day it seems, more and more doom-laden headlines appear in the media to suggest stocks are heading for an almighty fall. That is making my “headline indicator” (HI) start to twitch (as it has done recently for crude oil and gold). On Thursday afternoon, Mario Draghi unleashed his latest money-printing bazooka, and I made a few comments on Friday on how that related to the euro. Since then, there has been a veritable barrage of negative comment from the pundits on why central banks are out of ammo. Many conclude that the next crisis will see them powerless to stem the inevitable wave of selling.
Fed’s ‘Cocaine and Heroin Injection’ a Criminal Act-Gerald Celente
Trends forecaster Gerald Celente says former Fed President Richard Fisher dropped an ominous truth bomb last week on CNBC. Celente says, “Last week, when it was a celebration of . . . 2009 and the markets started going up, Fisher says, quote, ‘We injected cocaine and heroin into the system to enable a wealth effect . . . and now we are maintaining it with Ritalin.’ Fisher also said, a few weeks ago, that ‘the Fed is a giant weapon that has no ammunition left.’ Let’s take his quote, and this is very important, ‘We injected cocaine and heroin into the system.’ You go back to our 2010 alert, and we said this was no recovery. It was a cover-up. What Fisher just said was a criminal act. Injecting cocaine and heroin into the system was a criminal act by the banking gang.”
Still not enough: US gov’t collects record $1.2 trillion in taxes, or over $8k per taxpayer
Uncle Sam hauled in $1.248 trillion in taxes for the first five months of fiscal year 2016, costing each taxpayer $8,263, according a monthly Treasury Department statement. Even after adjusting for inflation, however, the government is still in the red. The federal government collected more money between October 2015 and February 2016 than it did any other five months in history, said the Treasury statement, released on Thursday. The US fiscal year begins on October 1 and runs through September 30.
Obama makes case for gov access to all digital devices to prevent terrorism and tax cheats
Without mentioning the government’s case against Apple directly, President Barack Obama told a Texas audience that mobile devices should be built such a way that the government can access them in order to prevent a terrorist attack or enforce tax laws. “The question we now have to ask is: If technologically it is possible to make an impenetrable device or system where the encryption is so strong that there is no key, there’s no door at all, then how do we apprehend the child pornographer, how do we solve or disrupt a terrorist plot?” Obama said during a question and answer session at the South by Southwest Interactive festival in Austin, Texas on Friday, according to Reuters.
Trend Forecaster Gerald Celente Warns: Prepare For The Panic Of 2016: “History Will Remember This”
Earlier this week hedge fund manager Marin Katusa explained that up until the recent stock market hit all the easy money flowing into the energy sector was being exuberantly spent on hookers, blow and fancy toys. Now, as oil prices hover under $40 per barrel, Katusa said more pain is likely coming and oil, along with other asset classes, are going to go “lower for longer.” In a recent interview with Future Money Trends, trend forecaster Gerald Celente echos Katusa’s concerns. Having accurately predicted the Crash of 2008 nine months ahead of the bottom falling out on a global scale, Celente says another panic is coming this year.
Credit Card Debt In The United States Is Approaching A Trillion Dollars
For the first time ever, total credit card debt in the United States is approaching a trillion dollars. Instead of learning painful lessons from the last recession, Americans continue to make the same horrendous financial mistakes over and over again. In fact, U.S. consumers accumulated more new credit card debt during the 4th quarter of 2015 than they did during the years of 2009, 2010 and 2011 combined. That is absolutely insanity, because other than payday loans, credit card debt is just about the worst kind of debt that consumers could possibly go into. Extremely high rates of interest, combined with severe penalties and fees, can choke the financial life out of almost any family in no time at all.
Beware: The market’s ‘crystal ball’ just turned from bullish to bearish
Once again, the stock market’s crystal ball proved to be deadly accurate. About a month ago, I wrote that the option premiums on the Volatility Index (“VIX”) were slanted highly in favor of a lower VIX. And because a lower VIX usually means a higher stock market, I argued the market’s crystal ball – VIX option prices – was predicting a rally in stocks…
Until this happens, keep buying gold: Gartman
Gold is up nearly 20 percent in 2016, and that has veteran trader Dennis Gartman urging investors not to sit out on the rally. “The trend is up, the trend has been up for the last several months and I continue to think that as long as the monetary authorities are going to remain as expansionary as they are [this trend will continue],” the editor and publisher of The Gartman Letter said in an interview with CNBC’s “Futures Now” on Thursday. “Monetary expansion equals higher gold prices.”
Jim Rogers: ‘This isn’t the end of the correction in gold’
I recently had a chat with fellow Singapore resident Jim Rogers, one of the most successful investors in history. Jim co-founded the Quantum Fund, one of the world’s most successful hedge funds. After the fund generated returns of more than 4,200% over 10 years, Rogers quit full-time investing. He went on to drive around the world, literally, and write several excellent books that blend travelogue, investment insight, and political commentary. Today, Jim is viewed as one of the founding fathers of the boots-on-the-ground approach to investing in emerging and frontier markets around the world.
Secret Monetary Group Warns a Catastrophe Is Coming
The Bank for International Settlements is nothing if not obscure. As the central bankers’ bank, it seems little-more than a back-door, private club for monetary elites to rub shoulders. And it’s located in Switzerland which has always carried a reputation for financial secrecy. Then it has this going for it – John Keynes of “Keynesian economic theory” opposed its dissolution back in the 1940s. His was the kind of thinking that has largely influenced central banks to hijack our economies with manipulative monetary policies! So you’d probably think I hate these guys.
Bundesbank Fears “Doom Loop”
“ECB barrel-scraping getting louder” – that’s what Daiwa Capital Markets called it. But those acts of desperation, as sweet as they seem to the markets, had slammed into opposition at the German Bundesbank. And now “people familiar with the matter” and a “central bank source” are talking to the Wall Street Journal to air their concerns. Yesterday, the ECB bent over backwards to increase the negative interest rate absurdity, given how well it has been working so far. It cut its deposit rate one notch to negative 0.4%. That was less than expected. But it also added a slew of “surprises” intended for the markets to feed on and soar.
SILVER OUTBREAK: Investment Demand Will Totally Overwhelm The Market
It’s no secret to the precious metal community that silver is one of the most undervalued assets in the market, however 99% of Mainstream investors are still in the dark. This was done on purpose to keep the majority of individuals invested in Wall Street’s Greatest Financial Ponzi Scheme in history. You see, this is the classic PUMP & DUMP strategy. Unfortunately, it’s not a lousy penny stock that Wall Street is pumping, rather it’s the entire market. Most pump & dump stock campaigns last a day, week or a few months. Sadly, this one has gone on for decades and the outcome will be disastrous for the typical American.
“Gloom” Returns To China’s Economy: Industrial Production, Retail Sales Miss Lowest Estimates
After an unprecedented surge in Chinese attempts to stimulate the economy in late 2015, mostly on the fiscal side, coupled with recent monetary easing by the PBOC which cut the banks’ reserve ratio recently and unleashed a tsunami of new loan creation in January, many expected that this unprecedented credit impulse would translate into at least a modest rebound for the economy, prompting a stable pick up in spending for the economy which many are touting is now consumer-spending driven as opposed to export and production.
From Champs To Chumps: Latin America Oil Giants Owe $275 Billion
The Latin American state-run oil companies whose largesse filled government coffers from Mexico to Brazil during the crude boom of the previous decade are quickly becoming dangerous liabilities as soaring debt levels spook investors. Regional leaders are being forced to shelve plans to spend petro-cash on popular projects after oil prices plunged more than 50 percent in the past two years and are instead grappling with mounting bills at their state-backed champions. The burden is being amplified as local currencies crumble against the dollar, driving up the cost of to pay off foreign debt.
A Right Way and a Wrong Way to Weather “The War on Cash”
Many people have been talking recently about the “war on cash.” With policymakers seriously talking about eliminating cash, it can be worrisome. But there is a way to avoid the consequences of the “war on cash. You just need to pick the right strategy. With the endless lowering of interest rates and the possibility that they could turn negative, there is more incentive than ever for people to pull their dollar savings from banks and just hold on to the paper cash at home. After all, why risk your dollars in a bank that yields zero return or even charges you to hold your money? As a result, people are buying up safes, pulling their dollars out of the bank, and storing them at home.
Why Negative Rates Can’t Stop the Coming Depression
Are you ready to pay to save? Agora founder Bill Bonner explains why “negative interest rates” are spreading around the world…and could soon come to the U.S. Negative interest rates are a disaster story in the making. And they will only speed up the major monetary collapse we believe is coming. Bill believes the fallout from his catastrophe will be far worse than 2008. When it hits, every service you’ve come to depend on – your bank…your grocery store…your Social Security checks – will shut down.
U.S. import prices fall for eighth straight month
U.S. import prices fell in February for an eighth straight month, weighed down by declining costs for petroleum and a range of other goods, but the pace of decline is slowing as the dollar’s rally fades and oil prices stabilize. The Labor Department said on Friday import prices slipped 0.3 percent last month after a revised 1.0 percent decrease in January. Import prices have decreased in 18 of the last 20 months, reflecting a robust dollar and plunging oil prices. They were down 6.1 percent in the 12 months through February. That was the smallest year-on-year drop since December 2014. Economists polled by Reuters had forecast import prices slipping 0.6 percent last month after a previously reported 1.1 percent fall in January.
China’s yuan hits 2016 high on strong fixing, global US dollar weakness
China’s onshore yuan on Friday (March 11) hit its strongest level against the US dollar in 2016, buoyed by the central bank’s firmest midpoint this year and the greenback’s slide after the European Central Bank suggested it was done cutting rates for now. Offshore yuan strengthened 0.3 per cent from Thursday to hit its highest level since early December at 6.4733 just before midday. The onshore yuan hit 6.4866 in late morning trade, its highest level since Dec. 29. Its previous 2016 peak was 6.4880, on Feb 15.
Silver Could Be Poised to Come Out of the Shadows
While there’s been a lot of attention focused on gold over the last few months, silver has remained in the shadows. The white metal has lagged a bit behind as the gold market turned bullish over the last few months. But there are some good reasons to take a close look at silver. According to Bloomberg, silver has advanced 10% since the first of the year while gold surged 18%. But dynamics look good for silver to close that gap: “Silver hasn’t been so cheap relative to gold for more than seven years and with mine supplies forecast to contract this year that may be a sign it’s ready to come out of the yellow metal’s shadow.”
Men’s Wearhouse parent closing 250 stores
Shares of Tailored Brands, formerly known as Men’s Wearhouse, jumped more than 11 percent in early trading Thursday, a day after the company announced plans to close roughly 250 stores this year. That includes shuttering 80 or 90 full-price Jos A. Bank stores. The announcement followed worsening sales trends at that label in the fourth quarter, with the company adding that it expects weakness there to continue into 2016. Revenues at Jos. A. Bank have gotten whacked since the company ended its ubiquitous Buy One Get Three Free promotion in October.
The World Economy Wreckers Of Beijing
The desperate suzerains of the Red Ponzi are incorrigible. There appears to be no insult to economic rationality that they will not attempt in order to perpetuate their power, privileges and rule. So now comes the most preposterous gambit yet. Namely, a veritable tsunami of state handouts to foster, yes, capitalist entrepreneurs! That’s right. As described by Bloomberg, Premier Li Keqiang gave the word, and, presto, nearly $340 billion poured into an instantly confected army of purported venture capital funds run by local government officialdom all over the land.
German bank that almost failed now being paid to borrow money
German bank Berlin Hyp had just issued 500 million euros worth of debt… at negative interest. I wondered if I really did go through a time warp, because this is exactly the same madness we saw ten years ago during the housing bubble and the subsequent financial crisis. To explain the deal, Berlin Hyp issued bonds that yield negative 0.162% and pay no coupon. This means that if you buy €1,000 worth of bonds, you will receive €998.38 when they mature in three years. Granted this is a fairly small loss, but it is still a loss. And a guaranteed one. This is supposed to be an investment… an investment, by-the-way, with a bank that almost went under in the last financial crisis. It took a €500 billion bail-out by the German government to save its banking system. Eight years later, people are buying this “investment” that guarantees that they will lose money.
ECB cuts rates to new low and expands QE
The European Central Bank has unveiled a series of new measures to strengthen the eurozone’s recovery, with policy makers expanding their quantitative easing package and cutting benchmark interest rates to a new low. The ECB has raised the amount of bonds the eurozone’s central bankers buy each month under QE from €60bn to €80bn — a greater amount than many analysts had expected. It also expanded the range of assets it will buy to include corporate bonds. At the moment, the ECB buys mostly government debt alongside smaller amounts of bundles of smaller loans repackaged into asset-backed securities and covered bonds. The central bank’s governing council also cut its deposit rate by 10 basis points to minus 0.4 per cent. The main refinancing rate fell by 5 basis points to 0 per cent. The move, which was towards the low end of markets’ expectations, in effect raises the fee charged on some bank deposits parked at central banks in the Eurosystem.
Former Reagan Advisor: Congress Just “Hatcheted” Your Social Security Benefits
While it went virtually unnoticed, Section 831 of the House’s new budget bill could radically change your Social Security benefits as soon as May 1. This change will affect the benefits that as many as 21.3 million Americans could be eligible for, instantly. It could change your chosen retirement date. It could change the way you vacation. It could change your entire financial future…
Bear Market 2016 Will Get Worse for One Major Reason
During a four-day rally last week, the Dow Jones Industrial Average climbed 490 points. And that was just the most recent surge in the index’s 1,200-point recovery since its dismal start in early January. While the signs of a rebound were encouraging, Money Morning experts say “bear market 2016” isn’t close to being over. “Despite some moderately positive economic news last week, the global economy remains depressed and the prospects for significantly higher stock prices are low,” Money Morning Global Credit Strategist Michael Lewitt said.
The Stronger U.S. Dollar Is Actually Destroying the Markets
The U.S. dollar remains the most important financial instrument in the world. The dollar rally has been the single most decisive factor in determining economic growth (or weakness) and market direction since early 2014. And – right now – that’s not a good thing. Don’t listen to Alan Ruskin, the macro strategist from Deutsche Bank (need I say more?) who posits that the strengthening dollar is largely a positive, since it’s paired with an “improving labor market” and a “lower misery index.” He’s looking for misery in all the wrong places.
Terminally ill face being forced to do work experience or lose their benefits
Terminally ill people face being forced to work to keep their benefits under draconian new Government plans, it was revealed yesterday. Cancer patients who have more than six months to live could have to do work experience or see their payments slashed under the scheme by Work and Pensions Minister Iain Duncan Smith.
Number of people on zero-hours contracts in UK increases to 801,000
The number of workers on zero hours contracts in the UK has increased by 15 per cent in the last three months of 2015 compared with a year earlier, an increase of 104,000 contracts, according to the latest figures from the Office for National Statistics. One in 40 UK workers is on a contract that does not guarantee a minimum number of hours, the figures show. Some 801,000 workers were on zero-hours contracts in the UK from October to December 2015, or 2.5 per cent of people in employment, compared to 697,000 workers in the same period in 2014. Part of the increase may be accounted for by additional recognition of the term zero-hours, the ONS said, rather than new contracts.
Jim Rogers Says 100% Probability US Is Heading for Recession; Data Backs Him Up
Media and government officials keep telling us the economy looks great, but a peek behind the curtain tells a different story. Some people do see the writing on the wall. Peter Schiff has been saying the US may well have already entered a recession. Last month, Jim Grant echoed Peter, saying the US economy likely went into recession in December 2015. And in a recent interview, Rogers Holdings Chairman Jim Rogers said there is a 100% probability the US will be in a downturn within a year: “It’s been seven years, eight years since we had the last recession in the US, and normally, historically we have them every four to seven years for whatever reason—at least we always have. It doesn’t have to happen in four to seven years, but look at the debt, the debt is staggering.”
This chart explains how the Baltic Dry Index could spell doom for the global economy
Even if you follow markets and global economics news, you still may not know what the Baltic Dry Index (BDI) is and why it matters. You might guess it’s related to shipping – and you’d be right. The BDI is a very useful gauge of global trade, and tells you how much it costs to move goods around the world in massive ships. These goods can be pretty much anything: iron ore, grain, coal … stuff the world needs to build things and function. As such, analysts keen to predict how the health and future of the global economy like to pay close attention to it.
Are You Kidding Me? Chinese Exports Plunge 25.4 Percent Compared To Last Year
We just got more evidence that global trade is absolutely imploding. Chinese exports dropped 25.4 percent during the month of February compared to a year ago, and Chinese imports fell 13.8 percent compared to a year ago. For Chinese exports, that was the worst decline that we have seen since 2009, and Chinese imports have now fallen for 16 months in a row on a year over year basis. The last time we saw numbers like this, we were in the depths of the worst economic downturn since the Great Depression of the 1930s. China accounts for more global trade than any other nation (including the United States), and so this is a major red flag. Anyone that is saying that the global economy is in “good shape” is clearly not paying attention.
China Resorts to “Stealth Interventions” to Prop Up Yuan and Stock Market
A record $1 trillion or so has fled China in the last year or so. Official reserve data is masked, so it’s difficult to pin a precise number. We do know the official monthly drain is the smallest since June, but Daiwa Capital Markets believes PBOC Using Stealth Intervention as Reserves Decline.
Crackpot Valuations
The markets are eerily quiet. With so many trends and facts to titillate us all, you’d expect a little more excitement. As it is, the big sell-off at the start of the year seems incomplete – a kind of financial foreplay without the climactic battering of a real bear market. What to make of it?
A $10 billion hedge fund is bracing for a 2008-type event
Perry Capital, a $10 billion New York-based multi-strategy hedge fund led by Goldman Sachs alum Richard Perry, is preparing for another credit event like 2008. Perry Capital bought $1 billion worth of credit-default swaps (CDS) on about 10 investment-grade corporate bonds, The Wall Street Journal reported last month. Investment-grade bonds have a rating of BBB or higher by Standard & Poor’s or Baa3 or higher by Moody’s. They are companies seen as having the safest balance sheets. Perry stands to profit if those companies are downgraded by ratings agencies.
Markets betting on near-zero interest rates for another decade
World markets may have recovered their poise from a torrid start to the year, but their outlook for global growth and inflation is now so bleak they are betting on developed world interest rates remaining near zero for up to another decade. Even though the U.S. Federal Reserve has already started what it expects will be a series of interest rate rises, markets appear to have bought into a “secular stagnation” thesis floated by former U.S. Treasury Secretary Larry Summers. The idea posits that the world is entering a peculiarly prolonged period in which structurally low inflation and wage growth – hampered by aging populations and slowing productivity growth – means the inflation-adjusted interest rate needed to stimulate economic demand may be far below zero.
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