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.
Lindsey Williams Online | Promote your Page too
Latest News From March 18, 2016 to March 24, 2016:
Connecticut Credit Risk Spikes To Record High
Amid cuts in aid and surging taxes, it appears the market remains less than impressed at Connecticut’s debt sustainability. Following last week’s disappointing bond auction, CT bond risk has spiked to 65bps over the benchmark – a record spread demanded by investors to take CT repayment risk. CT becomes the 4th riskiest US state after NJ, IL, and PA.
Humans need not apply: RBS to replace 550 roles with robots
Royal Bank of Scotland (RBS) plans to replace 550 of its face-to-face investment advisers with so-called robo-advisers. 220 investment advice roles and 200 protection advice jobs will be cut while face-to-face investment advice will be available only to customers with at least £250,000 in investment assets.
US Manufacturing PMI Misses By Most Since 2013, Presidential Election Blamed
Given the extraordinary jumps in several regional Fed surveys, hope was rife that US Manufacturing PMI’s flash print would jump… it didn’t. Hovering near multi-year lows at 51.4, PMI missed expectations of 51.9 by the most since Aug 2013. With record highs in wholesale inventories, Markit claims that “pre-production inventories decline at the steepest pace in over 2 years.” The blame for this plunge: dollar strength, weak global demand, and Trump. Not recovering…
Americans just had $176 million in wages garnished by the government due to unpaid student loans
Despite more programs available to federal student loan borrowers to manage their loans, borrowers are still struggling. In fact, between October 1 and December 31, 2015, private debt collection companies hired by the Department of Education garnished more than $176 million in wages from defaulted student loan borrowers in order to pay back their debts, according to data released last week. Though the government provides a variety of options to help student loan borrowers manage their payments, it also has extraordinary powers — including wage garnishment — to collect on the debt if a borrower defaults.
U.S. existing home sales tumble in warning sign for housing market
U.S. home resales fell sharply in February in a potentially troubling sign for America’s economy which has otherwise looked resilient to the global economic slowdown. The National Association of Realtors said on Monday existing home sales dropped 7.1 percent to an annual rate of 5.08 million units, the lowest level since November. Sales have been volatile and prone to big swings up and down in recent months following the introduction in October of new mortgage regulations, which are intended to help homebuyers understand their loan options and shop around for loans best suited to their financial circumstances.
Fed’s Lacker says he is confident inflation will return to 2 percent
U.S. inflation is likely to accelerate in coming years and move toward the Federal Reserve’s 2 percent target, Richmond Fed President Jeffrey Lacker said on Monday, flagging upside risks to price growth. Inflation has been unusually sluggish since the 2007-2009 recession. The Fed has kept interest rates low in part to foster faster price gains and said last week it was likely to raise interest rates more slowly than policymakers had expected in December.
Share Buybacks Turn Toxic
Companies are still borrowing and spending billions on buying back their own shares – one of the big drivers behind the blistering stock market rally of the past few years. It worked wonderfully and without fail. But suddenly, it’s doing the opposite, and now the shares of the biggest buyback queens are getting hammered. Something broke in the gears of this financially engineered market! During the November-January period, 378 of the S&P 500 companies bought back their own shares, according to FactSet. Total buybacks in the quarter rose 5.2% from a year ago, to $136.6 billion. Over the trailing 12 months (TTM), buybacks totaled $568.9 billion. That’s an enormous amount of corporate cash that was dumped on the market!
It’s Day 26 Of The Rally – Decision Time
In September/October 2015, the S&P 500 miraculously rallied just over 13% in 25 days amid falling earnings expectations, before collapsing back to fresh cycle lows. It has now been 25 days (and just over 13%) since the Mid-Feb lows (and earnings expectations are plumbing new lows)… The same but different?
Rich people are paying lawyers to get truthful stories deleted from the internet
Last week, Bloomberg, The Independent, Business Insider and a handful of other news organisations all deleted from their websites a story that a rich family did not want published. I can’t tell you why it was deleted or who the story was about, because of a court order from a judge in London ruling that the facts be kept under seal.
January ‘Bounce’ Dies As Fed’s National Activity Index Tumbles Back Into Contraction Near 2-Year Lows
After January’s hopeful spike to 6 month highs, Chicago Fed’s National Activity Index plunged back into contraction (at -0.29) near 2 year lows. A shockingly large 58 of the 85 individual indiators within the index made negative contributions to the overall index which printed notably below the lowest economist’s expectations.
Nanobot implants could give us ‘God-like’ intelligence, but machines won’t overtake us until they learn to love, scientist claims
The human brain could be enhanced by tiny robotic implants that connect to cloud-based computer networks to give us ‘God-like’ abilities, according to a leading computer scientist. Ray Kurzweil, an author and inventor who describes himself as a futurist who works on Google’s machine learning project, said such technology could be the next step in human evolution. He predicts that by the 2030s, humans will be using nanobots capable of tapping into our neocortex and connecting us directly to the world around us. However, he admitted that computers won’t take over us until they learn to love and laugh.
Existing home sales plunge 7.1% to a 3-month low in February
Existing-home sales plummeted 7.1% in February, pointing to ongoing rockiness in a housing market struggling to find its footing. Sales ran at a seasonally adjusted annual rate of 5.08 million, the National Association of Realtors said Monday, well below the 5.3 million rate forecast by economists surveyed by MarketWatch. February’s decline followed a strong two months. Sales surged by the most ever in December, and followed with a sturdy reading in January when most economists had expected some giveback.
Federal Reserve Hot Air Pumped Up a Stock Market Bubble; 93% of Gains Due to Monetary Policy
The mainstream financial media is like a stopped clock. Every once in a while, it stumbles into being right. Last week, we had a veteran trader on CNBC Futures Now telling everybody to buy gold as long as central banks continue their expansionary monetary policy, all the while swearing he isn’t a “gold-bug.”
Legend Warns The Price Of Silver May Hit $660 As The World Financial System Melts Down
On the heels of wild start to the 2016 trading year, today the man who has become legendary for his predictions on QE, historic moves in currencies, and major global events, just warned that the price of silver may be headed to the stratospheric price of $660 as the world financial system melts down. Egon von Greyerz: “The Fed last Wednesday did what I had already forecast back in December and did not increase rates. They know that the real economic situation in the US and in the world is a lot worse than all the manipulated figures and propaganda. Therefore, we are now getting closer to Minsky Moment for the world economy…
Gerald Celente On Why People Are Buying Gold And Why The Price Is Headed Higher
Today the top trends forecaster in the world spoke with King World News about why the price of gold is going higher. Gerald Celente: “Why are people going into gold and why are gold prices going up? Listen to what former Fed president Richard Fischer said, ‘They (the central banks) are running out of ammunition.’ He also said, ‘We injected cocaine and heroin into the system,’ to basically keep the Ponzi scheme going. So why are people buying gold? Because it (the entire global financial system) is on a fake high. So that’s why gold is going up — it’s a fraudulent game. It’s not working. It’s a fake high. That’s why people are buying gold…
Radical Leftists Unleash Anti-Trump Riots Starting On March 19th
Many of the exact same groups that participated in Occupy Wall Street and helped organize protest rallies in Ferguson and Baltimore are now promising to bring us “the largest civil disobedience actions in a generation”. I recently wrote about the trouble that radical leftists have caused by attempting to disrupt Trump campaign events, but now there is a very organized effort to turn this into a national movement. On March 19th, thousands of angry protesters will descend on Trump Tower in New York City to denounce Donald Trump’s “fascist policies”, and on April 2nd dozens of leftist organizations will join together to launch “Democracy Spring” in Philadelphia. From there, large numbers of liberal activists will march to Washington D.C. where they will “risk arrest” during a “peaceful” sit-in at the U.S. Capitol from April 11th to April 18th. If the radical left is this freaked out about Donald Trump now, how bad will things get if he actually becomes the Republican nominee?
Why Investing In Silver Is Vastly Superior To Investing In Gold Right Now
When panic and fear dominate financial markets, gold and silver both tend to rapidly rise in price. We witnessed this during the last financial crisis, and it is starting to happen again. Because I am the publisher of a website called The Economic Collapse Blog, I am often asked about gold and silver when I do interviews. In fact, just a few days ago I was sitting right next to Jim Rickards during the taping of a television show when this topic came up. Jim expressed his belief that investing in gold is superior to investing in silver, but I had the exact opposite viewpoint. In this article, I would like to elaborate on why I believe that silver represents a historic investment opportunity right now.
Catalonia Nears Default, Threatens Spain’s Debt
When Catalonia’s regional government announced a road map to independence from Spain in November last year, Madrid’s response was to threaten to cut off the financial supply lines to the region. It was the equivalent of a declaration of economic war, riddled with risks, especially with an acutely cash-strapped Catalonia facing over €4.6 billion of bond redemptions in 2016.
China Hard Landing Hits Electricity Consumption
OK, we’ve heard the official story. China is transitioning from a manufacturing economy to a consumption-based economy. Consumers are king. They’re going to buy stuff. And that’s going to heat up the economy. Imports and exports have been plunging for months, but no big deal, Chinese consumers – and there are a lot of them – are going to pull the economy forward. That’s the official story.
A Strange Pattern Emerges When Trading The US Dollar In 2016
One of the more surprising market developments of 2016 has been the violent obliteration of those who had taken part in the biggest consensus trade of 2015, namely long the USD. As the Fed finally admitted earlier this week, the US economy is sputtering and is woefully incapable of handling 4 rate hikes, or 3 for that matter. In fact, the Fed will be lucky to push through even one more rate hike without the Chinese Yuan collapsing and unleashing even more capital outflows (which precipitated the major market swoons in the summer of 2015 and early 2016) arguably the main topic during the alleged Shanghai G-20 “central bank accord.” The result: this week saw the biggest two-day USD collapse against a basked of foreign currencies in years, and currently the DXY is trading at a lower level than a year ago.
January Mortgage Delinquencies up 6.6%; 98,000 Bad Mortgages Face Statute of Limitations in 3 States
The Mortgage Monitor for January (pdf) from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 659,237 home mortgages, or 1.30% of all mortgages outstanding, remaining in the foreclosure process at the end of January. This was down from 688,672, or 1.37% of all active loans that were in foreclosure at the end of December, and down from 1.76% of all mortgages that were in foreclosure in January of last year. These are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and the January “foreclosure inventory” is now showing the lowest percentage of homes that were in the foreclosure process since the fall of 2007. New foreclosure starts, which have been volatile from month to month, fell to 71,900 in January from 78,088 in December and from 93,280 in January a year ago, while they were still higher than the 66,626 foreclosure starts we saw in November, which had been the lowest since the crisis began. Over the past year, new foreclosure starts have remained in a range about one-third higher than number of new foreclosures we we seeing in the precrisis year of 2005.
“Don’t Take The Public For Fools!”: China Hides Millions Of Layoffs, Jails Miners Protesting Unpaid Wages
When you look out across markets and across the increasingly fraught geopolitical landscape, there are plenty of black swans waiting in the wings (no pun intended). And quite a few of them are Chinese. China has, among other problems: a massive debt overhang that, all told, amounts to more than 250% of GDP; a decelerating economy that Beijing swears will be able to pull off a miracle and move away from the smokestack and away from export-led growth without slipping into recession; a currency crisis; a new property bubble in Tier-1 cities; and a burgeoning NPL problem in the banking sector. All of those issues are of course inextricably bound up with one another. They are set like dominoes and once the first one tips, the rest will too as sure as night follows day.
Life and Times During the Great Depression
The economy of the United States was destroyed almost overnight. More than 5,000 banks collapsed, and there were 12 million people out of work in America as factories, banks, and other shops closed. Many reasons have been supplied by the different economic camps for the cause of the Great Depression, which we reviewed in the first part of this series. Regardless of the causes, the combination of deflationary pressures and a collapsing economy created one of the most desperate and miserable eras of American history. The resulting aftermath was so bad, that almost every future Central Bank policy would be designed primarily to combat such deflation.
Goldman FX Head: “No Central Bank Conspiracy” To Crush The Dollar, “We Are Right, The Market Is Wrong”
Anyone having listened, and traded according to the recommendations of Goldman chief FX strategist Robin Brooks in the past 4 months, is most likely broke. First it was his call to go very short the EURUSD ahead of the December ECB meeting, which however led to the biggest EURUSD surge since the announcement of QE1. Then, two weeks ago, ahead of the ECB meeting he “doubled down” on calls to short the EUR ahead of the ECB, the result again was a EUR super surge, the biggest since December. And then, as we previously reported, ahead of the FOMC’s uber-dovish meeting, Brooks released a note titled the “The Dollar Rally Is Far From Over” in which he said the following: “today brings the latest FOMC meeting. We expect the Fed to signal that it wants to continue normalizing policy, which means three hikes this year and four in 2017, with the statement referring to the risks as “nearly balanced,” reverting to phraseology used in October, just before December lift-off. Overall, our sense is that the outcome will be more hawkish than market pricing, in particular given that the FOMC may leave open the option of tightening at the April meeting.”
US Money Supply and Debt – Early Warning Signs Remain Operative
Year-end distortions have begun to slowly come out of the data, and while broad true US money supply growth remains fairly brisk, it has begun to slow again relative to January’s y/y growth rate, to 7.8% from 8.32%. So far it remains in the sideways channel (indicated by the blue lines below) between approx. 7.4% and 8.6%, in which it has meandered since mid 2013. We believe the next break “below the shelf” is likely to be a significant event.
The World Map of the U.S. Trade Deficit
The United States has now run an annual trade deficit for 40 years in a row. Last year was no exception, and in 2015 the U.S. had over $1.5 trillion in exports while importing $2.2 trillion of goods. The resulting trade deficit was -$735 billion. Today’s map from HowMuch.net, a cost information site, helps put this most recent information into perspective. Keep in mind that a trade deficit also means an outflow of domestic currency to foreign markets, as the U.S. is spending more money abroad than it is bringing in.
The Lego Movie Economy
After the February jobs report, President Obama said “America’s pretty darn great right now.” He then went on to disparage the “doomsday rhetoric” of the Republicans, which he said was pure “fantasy. I think that there is a good chance that this will enter the Hall of Fame of miss-timed statements, right up there with this jewel from Ben Bernanke in March 2007: “At this juncture, however, the impact on the broader economy and financial markets of the problems in the sub-prime market seems likely to be contained.”
Munich Re Gives The ECB The Middle Finger, Owns Almost 300,000 Ounces Of Gold
Last week, we reported on the ECB’s decision to cut the interest rates and how Mario Draghi said ‘helicopter money’ is ‘an interesting concept that is being studied’. In the accompanying Q&A session, Draghi also said he did not expect the ECB would have to reduce the (already negative) interest rates even further which disappointed the markets. In fact, the disappointment was so big, the ECB already sent one of its members into the trenches to walk back on that statement.
Investors Buy Gold ETFs at Record Pace
What were the three most popular investments over the last month? If we’re judging by ETF inflows, the three areas that investors piled into were precious metals, government bonds, and low-volatility equities. Notably, it was gold ETFs that set a new record with their highest monthly inflows in eight years, as investors bought $7.9 billion of securities in February. This is according to the latest from market data company Markit, that also noted that inflows relative to assets under management (AUM) were equally as impressive. More specifically, last month’s buying represented an increase of 14.6% in terms of AUM. This is a level only surpassed once before during the heat of the Financial Crisis, when inflows relative to AUM hit 17.7% in February 2009.
World’s Second Largest Reinsurer Buys Gold, Hoards Cash To Counter Negative Interest Rates
The world’s second-largest reinsurer, German Munich Re which is roughly twice the size of Berkshire Hathaway Re, is boosting its gold reserves and buying gold in the face of the punishing negative interest rates from the European Central Bank, it announced today. As caught by Mark O’Byrne at GoldCore and reported by Thomson Reuters this afternoon, the world’s largest reinsurer is far from alone in seeking alternative investment strategies to counter the near-zero or negative interest rates that reduce the income insurers require to pay out on policies. Munich Re has held gold in its coffers for some time and recently added a cash sum in the two-digit million euros, Chief Executive Nikolaus von Bomhard told a news conference.
Your Money In The Bank Will Be Gone
The world is now starting the final phase of the failed experiment in creating wealth and prosperity for a select few and massive debt and misery for the masses. It all started with the creation of the Fed in 1913. This led to a global credit creation and money printing extravaganza of a magnitude that the world has never seen before. We have now reached the point when it makes no difference who becomes US president or what the Fed or the IMF will do. No, now we are at the point that von Mises so succinctly defined.
12 Obamacare Insurance CO-OPs Fold After Getting $1.2 Bil from Govt.
More than half of the government-funded nonprofit health insurers created by Obamacare have failed, sticking taxpayers with a $1.2 billion tab and leaving hundreds of thousands of people in more than a dozen states scrambling for medical coverage, a new federal audit reveals. The nonprofit insurers are known as Consumer Operated and Oriented Plan Program (CO-OP) and the Department of Health and Human Services (HHS) has pumped $2.4 billion into them under the president’s hostile takeover of the nation’s healthcare system.
Is coercion ever justified?
Last week’s editorial asked the question: Can the Constitution be improved? We said that the American Constitution represented an new concept in history. It declared that the sovereign power of the state rightfully is derived from the people instead of the divine right of kings. We concluded that it was an amazingly successful beta model but that it was not perfect, because it contained undefined phrases, such as “the general welfare” clause, that left holes through which political predators eventually were able to enter and undermine original intent.
The Internet Of Things Will Be The World’s Biggest Robot
The Internet of Things is the name given to the computerization of everything in our lives. Already you can buy Internet-enabled thermostats, light bulbs, refrigerators, and cars. Soon everything will be on the Internet: the things we own, the things we interact with in public, autonomous things that interact with each other. These “things” will have two separate parts. One part will be sensors that collect data about us and our environment. Already our smartphones know our location and, with their onboard accelerometers, track our movements. Things like our thermostats and light bulbs will know who is in the room. Internet-enabled street and highway sensors will know how many people are out and about—and eventually who they are. Sensors will collect environmental data from all over the world.
Smartphones to replace cards at bank machines
Here’s another use for the smartphone as it invades daily life: in place of your debit card at your bank cash machine. The “cardless” automatic teller machine (ATM) is gaining ground in the US and around the world, with smartphone technology allowing for speedier and more secure transactions. Dozens of US banks are installing new ATMs or updating existing ones to allow customers to order cash on a mobile application and then scan a code to get their money without having to insert a bank card. US banking giants Wells Fargo, Bank of America and Chase are in the process of deploying the new ATMs, as are a number of regional banks and financial groups around the world. Makers of ATMs and financial software groups are ramping up to meet this demand.