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 April 29, 2016 to May 19, 2016:
50-Year Veteran Warns A Massive Reset Of The World Financial System Is Coming
With the U.S. dollar continuing to trade near recent lows and gold trading near $1,240, today a 50-year market veteran warned King World News that a massive reset of the world financial system is coming. John Embry: “Eric, just when you think things can’t become any more artificial or ludicrous, Bloomberg comes out with a report that the Japanese central bank, by virtue of its month-to-month purchases of Japanese stock ETFs, is now a top ten holder in approximately 90 percent of the Japanese companies that make up the Nikkei 225 Index…
ALERT: Legend Warns A Day Of Reckoning Is Coming And The Global Collapse Will Be Absolutely Terrifying
After a 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 a day or reckoning is coming and the global collapse will be absolutely terrifying. Egon von Greyerz: “Investors around the world are blissfully ignorant of what will hit them in the coming months and years. Virtually no one understands the risks in the world, and less than 0.5% of investors have protected themselves against the destruction of their financial assets…
Saudi Arabia US Friction, Economic Update, China Gold Fix and Fraud Ignored by MSM
The President was in Saudi Arabia in what the White House claims was a trip to “clear the air.” I really don’t know how you clear the air with the friction between the U.S. and the Kingdom. There is ISIS, which the Saudis are funding along with the U.S, but that’s changing because it appears the U.S. is increasing its attacks on ISIS. There is the bi-partisan Senate bill that will release the missing 28 pages of the 9/11 Commission Report that supposedly implicates Saudi Arabia. It will also allow the families if the 9/11 attack to sue Saudi Arabia if it was involved. The Saudis said they would dump a trillion dollars in U.S. assets if that becomes law. President Obama says he will veto. The House and Senate may have enough votes in this election year to override that veto as big time people in both parties are pushing this. The President is also basically telling Arab allies in the Middle East that they should learn how to share the region with Iran. So, I really do not know how they can “clear the air” with zero resolutions.
A Bird’s-Eye View Of How The US Economy Is Falling Apart (In 4 Simple Charts)
My college-aged kids love him. I’m not talking about Stephen Curry or Justin Bieber (although they love them too); I’m talking about Bernie Sanders. Whether you support him or not, my guess is that most Americans my age are very surprised about his popularity. However, it shouldn’t be a surprise given the economic stress many Americans face. Sadly, roughly 50 million Americans live below the poverty line—the largest number in our nation’s history—and the poorest 40% of all Americans now spend more than 50% of their incomes just on food and housing.
“We Haven’t Seen This Is In Our Lifetimes” – CEO Says “Alberta Is In A Depression”
Regular readers know that we’ve covered Alberta’s decline at length (refresher here), so there is no need to give much of a backstory other than to say that the situation seems to get worse for the Canadian province as each day passes even as oil has rebounded in the past two months. Toronto’s “Condo King” Brad Lamb tried to put things into context when he said the situation is “worse than 2008.” However, on Friday we received an even more gloomy (albeit realistic) description of the economic situation in Canada’s energy hub, Alberta. In a very blunt interview with BNN, Murray Mullen the CEO of trucking company Mullen Group, said that the situation has moved well past recession, and should be described as a depression.
Despite Record Liquidity, Chinese Repo Rates Are Rising Again
As out friends from Fasanara Capital remind us, despite record liquidity injections by the PBOC in the past few days, Chinese repo rates have resumed continue breaking higher. The move is odd, given ongoing record liquidity injections (RMB 680 bn last week, RMB 150 bn today). As Fasanara’s Francesco Filia writes, “the mind inevitably goes to excess credit troubles in China and potential for CNH selling-off” and adds that the “move directly affects leveraged positions on bonds, funded by short-term repos.” While so far, the currency and the SHCOMP remain stable, it is a notable trend to watch.
Saudi Arabia agrees plans to move away from oil profits
The Saudi cabinet has approved sweeping economic reforms aimed at moving the country away from its dependence on oil profits. Just over 70% of revenues came from oil last year but it has been hit by falling prices. One part of the plan will see shares sold in state-owned oil giant Aramco to create a sovereign wealth fund. Announcing the reforms, Deputy Crown Prince Mohammed bin Salman described his country as being addicted to oil.
Greece bailout talks make ‘progress’
Eurozone finance ministers say they have made progress in talks about the bailout programme for Greece. But they said after a meeting in Amsterdam on Friday that further work was still needed. They said they are hopeful that an agreement can reached in the next few days and are ready to call an extraordinary meeting. That would pave the way for the next payment under the bailout. It’s a familiar pattern.
Morgan Stanley’s profit more than halved as trading slumps
Morgan Stanley’s quarterly profit fell by more than half as the Wall Street bank’s fixed-income trading and investment banking businesses took a hit from market volatility early in the year. But the earnings still handily beat expectations as the bank slashed employee compensation, helping to push up its shares 2.5 per cent in premarket trading on Monday. Sliding commodity and oil prices, worries about the Chinese economy and uncertainty about U.S. interest rates made for wobbly markets in January and February, scaring off traders, investors and companies hoping to list on stock exchanges.
Citigroup profit plunges 27% as trading revenue falls
Citigroup Inc’s quarterly profit plunged 27 percent as its trading revenue fell and its costs related to shrinking some businesses rose. The profit decline is the biggest among big U.S. banks that have reported first-quarter results so far, but Citigroup’s earnings and revenue beat Wall Street’s low expectations, helped by a fall in operating expenses. Shares of the No.4 U.S. bank by assets were up more than 2 percent in premarket trading on Friday. Banks globally have had a tough start to the year amid near-zero interest rates, a slowdown in China and low oil prices.
Bank of America profit slides 18% as trading activity weakens
Bank of America Corp, the No. 2 U.S. bank by assets, reported an 18 per cent slide in quarterly profit as concerns about a global economic slowdown and uncertainty about the pace of U.S. interest rate increases dampened bond and stock trading. Net income attributable to common shareholders fell to US$2.22-billion, or 21 cents per share, in the three months ended March 31, from $2.72-billion, or 25 cents per share, a year earlier. Analysts on average had expected earnings of 20 cents per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the figures reported on Thursday were comparable.
Gerald Celente – The Dream Is Dying As Americans Now Consume 80% Of Global Painkillers
While politicians lie, the numbers don’t. On the economic front, according to The Pew Research Center, “Americans are less well-to-do now than at the start of the 21st century. For all income tiers, median incomes in 2014 were lower than in 2000. These reversals are the result of two recessions – the downturn in 2001 and the Great Recession of 2007-09 – and economic recoveries that have been too anemic to fully repair the damage.” Once the “land of opportunity,” the gap between the rich and poor in America is the widest among all the developed nations. A report by the University of Michigan illustrates the Gilded Age wealth inequality that now prevails. The median American household was 13.6 times poorer than an average household in the 95th percentile in 2003. By 2013, the average household in the 95th percentile (top 5 percent) was 24.2 times richer than the median household and 426.5 times richer than the average household in the 25th percentile.
Venezuela introduces two-day week to deal with energy crisis
Venezuela’s government has imposed a two-day working week for public sector workers as a temporary measure to help it overcome a serious energy crisis. Vice-President Aristobulo Isturiz announced that civil servants should turn up for work only on Mondays and Tuesdays until the crisis was over. Venezuela is facing a major drought, which has dramatically reduced water levels at its main hydroelectric dam. But the opposition has accused the government of mismanaging the crisis. The measures announced on national television by Mr Isturiz affect two million public sector workers. “There will be no work in the public sector on Wednesdays, Thursdays and Fridays, except for fundamental and necessary tasks,” he said.
Durable goods orders were weaker than expected in March
Durable goods orders rose 0.8% in March, according to preliminary data from the Department of Commerce. Excluding transportation, orders fell 0.2%. Economists had forecast that orders for goods built to last rose 1.9%, according to Bloomberg. Excluding transportation orders, they forecast a 0.5% rise.
Atlanta Fed Boosts GDP Forecast Following Today’s Durable Goods Miss And Downward Revision
If there was some confusion why the Atlanta Fed recently revised its GDP Nowcast higher following the recent retail sales miss, that confusion will be even more acute today when moments ago the Atlanta Fed plugged today’s weaker than expected durable goods print (and downward revision to past month’s data), and ended up with… a GDP forecast that was higher than previously, or an increase from 0.3% to 0.4%.
New York City Millennials Make Less, Have More Debt
Millennials in New York City earn about 20% less than the previous generation of young workers and are likely to struggle for years from the effects of the late-2000s recession, according to a report from city Comptroller Scott Stringer. The report found the recession saddled people who were born from 1985 to 1996 with greater debt than their parent and given them fewer high-wage job opportunities even as the cost of housing in the city has risen. “Millennials were applying for jobs in the most difficult economic climate since the Great Depression,” Mr. Stringer said in his report, which was set to be released late Monday. “Every generation is expected to do better than the last, but too many millennials are not getting a fair chance to make it here in New York City.”
Twitter plummets 14% on revenue, outlook miss
Wall Street’s view of Twitter can be summed up in far fewer than 140 characters: Too little growth. Twitter shares plunged more than 14% Wednesday after the social media company released financial results after the bell Tuesday. Revenue came in lighter than analysts had forecast and second-quarter revenue guidance fell far short of expectations. Making matters even worse for the beleaguered company, user growth only crept up. The first-quarter triple whammy raised fresh concerns that Twitter will fall even farther behind market leaders Facebook and Google in attracting digital advertising dollars. In a tweet, Twitter acknowledged that “brand marketers did not increase spend as quickly as expected” in the first quarter.
James Rickards Says Yellen Has Gone “Full-Dove;” Won’t Raise Interest Rates
With the Federal Reserve preparing for another meeting, pundits are talking interest rate hikes. Even AP is speculating that a rate hike is unlikely this go-around, blaming problems the “global economy.”The US job market is healthy. The stock market is up. Home prices are rising. Yet as the Federal Reserve prepares to meet this week, it seems in no mood to resume raising interest rates from ultra-lows. With the global economy struggling and US inflation still below the Fed’s target rate, many economists see little likelihood of a rate increase even before the second half of the year.”
Britain’s property market is going to implode as housing nears peak affordability
Property prices in Britain may be surging due to a horrendous imbalance of supply and demand — but the market is poised to implode. Why? Because Britons are not earning enough money to either get on the housing ladder or are spending such a large portion of their wages on mortgages that may not be sustainable. Well, not unless everyone suddenly gets a huge pay rise over the next year or so. That’s the assumption in the latest figures from think tank Resolution Foundation, which show that lower- and middle-income households are spending 26% of their salaries on housing, compared to 18% back in 1995. In London, households spend 28% of their income on housing.
Venezuela Doesn’t Have Enough Money to Pay for Its Money
Venezuela’s epic shortages are nothing new at this point. No diapers or car parts or aspirin — it’s all been well documented. But now the country is at risk of running out of money itself. In a tale that highlights the chaos of unbridled inflation, Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business. Venezuela, in other words, is now so broke that it may not have enough money to pay for its money.
Why Sports Authority is throwing in the towel and closing all of its stores
When struggling retailer Sports Authority filed for Chapter 11 bankruptcy last month in the face of more than $1 billion in debt, the company indicated that it had two options going forward. One of those was to shed under performing stores and emerge from bankruptcy as an intact, but pared-down company. The other was to sell everything and cease operating. On Tuesday, the company appeared to choose the latter.
Suicides Up as Jobs Dry Up
Middle-aged people laid off and unable to find work are taking another way out. They’re killing themselves. Suicide rates are soaring, according to federal data released last week. Especially in economically depressed states and job-starved regions like upstate New York. People in need of work are twice as likely to take their own lives as employed people, and people fired in their 40s and 50s find it hardest to get hired again. That makes boosting economic growth a life-and-death issue. But you wouldn’t know it listening to Barack Obama and Hillary Clinton. President Obama whitewashes reality, claiming the “American economy is pretty darn good right now.”
UK Better Off Outside EU, Economists Say
The UK economy would be about 4% bigger 10 years after leaving the European Union than if it stayed in, according to a group of leading economists who support an exit. A pamphlet published by the eight “Economists for Brexit” set out a series of arguments on the benefits of voting to leave in the referendum on 23 June. They include the claim that lower tariffs on imports from outside the bloc will boost UK consumer spending sharply. It is also argued that EU regulation holds back growth and that without this, jobs and investment will flourish. The pamphlet also argues the UK could better spend its contribution to the EU budget elsewhere, and also that there would be more control over the mix of skills brought by immigrants.
US to paint new pictures on its dying, barbarous relic of a currency
In a letter to the American tax slaves, US Treasury Secretary Jacob Lew “the Loon” has presented his plan to replace some of the images on the dwindling $20, $10 and $5 Federal Reserve Notes. Slave emancipator, Harriet Tubman, will replace Andrew Jackson on the $20, leaders of the suffrage movement will go on the $10 and images of the Lincoln Memorial will go on the $5. You’d think with the US government being $19 trillion in debt they’d have bigger priorities than artwork. The US can’t pay what it owes any more than its indebted citizens can. Something like 50 million are on food stamps and most of the rest don’t have a dollar in the bank to tide them over once things get worse. And they will. Just wait until the dollar crashes for good.
Carl Icahn says he sold entire Apple stake on China woes: CNBC
Billionaire activist investor Carl Icahn said today he had sold his entire stake in Apple Inc, citing the risk of China’s influence on the stock. Icahn, in an interview with cable television network CNBC, also said he was “still very cautious” on the US stock market and there would be a “day of reckoning” unless there was some sort of fiscal stimulus. Icahn had been a huge cheerleader of Apple, acquiring a stake in the company almost three years ago, repeatedly calling the investment a “no brainer.” In an open letter to Apple Chief Executive Officer Tim Cook in May 2015, Icahn had argued that shares of the iPhone maker were worth $240, about 90 percent more than they had been trading. At $240 a share, Apple’s market cap would be $1.4 trillion, Icahn asserted.
End of Golden Era for Investors Spells Troubles for Millennials
Turning 30 just got a lot scarier. A coming collapse in investment returns means that people that age today will have to work seven years longer or save almost twice as much to end up with the same nest egg as those of roughly a generation ago. So says the research arm of McKinsey & Co. in a new report that argues that investors of all ages need to resign themselves to diminished gains. The consulting company maintains that the last 30 years have been a “golden era” of exceptional inflation-adjusted returns thanks to a confluence of factors that won’t be repeated. They include falling inflation and interest rates, swelling corporate profits and an expanding price-earnings ratio in the stock market.
Federal Reserve Leaves Door Open for June Rate Increase
Federal Reserve policy makers left open the door to raising interest rates in June by nodding to improvement in global financial markets and downplaying recent weakness in the U.S. economy. The Federal Open Market Committee omitted previous language that “global economic and financial developments continue to pose risks,” instead saying officials will “closely monitor” the world situation, according to a statement released Wednesday following a two-day meeting in Washington. The Fed left its benchmark interest rate unchanged. “Their removal of the line on risks is pretty significant,” said Carl Tannenbaum, chief economist at Northern Trust Corp. in Chicago and a former Fed official. “That might reflect increased comfort on the committee that global influences appear more manageable.”
Danger Signs in the World’s Top Housing Market
At first glance, the world’s best-performing housing market bears few of the usual hallmarks of a bubble about to pop. Reliance on mortgages is low, and Turkish homeowners reliably repay their loans, helped by house prices that rose faster than in any other country last year. The risk, at a time when construction has grown to make up a bigger share of the country’s investments than in China, is with the builders rather than the buyers. The share of Turkey’s borrowing represented by developers is higher than at any time in the last decade, and represents almost a fifth of all corporate loans, according to the nation’s banking association. An increasing portion of those debts is going bad, with the industry’s portion of non-performing loans nearly doubling in the past five years. “Mortgages are not the problem,” said Ercan Uysal, a banking analyst at Istanbul-based research firm Integras. “Developer leverage is.”
Why “The Grave Dancer” Is Cashing Out Once Again
Sam Zell has called the top again… Zell is a real estate mogul and self-made billionaire. He made a fortune buying property for pennies on the dollar during recessions in the 1970s and 1990s. This earned him the nickname “The Grave Dancer.” Zell was also one of the only real estate gurus to spot the last property bubble and get out before it popped. In February 2007, he sold $23 billion worth of office buildings. U.S. commercial property prices peaked nine months later and went on to plunge 42%.
Investor rebellion over executive pay gathers pace
A shareholder rebellion over excessive executive pay has gathered pace with Weir Group, Shire, Standard Chartered and Reckitt Benckiser all targeted by investors. At the annual meeting of engineering firm Weir Group, a proposed pay policy was rejected by 72% of shareholders. The company says it will discuss alternative options with shareholders. At drugs maker Shire, 49% of investors voted against a 25% pay increase for chief executive Flemming Ornskov. Every three years shareholders receive a chance to vote on the way the formula for executive pay is constructed. That vote is binding, so the board needs a majority of shareholders to vote in favour. So, in the case of Weir, the board of directors will have to come up with a new plan. Votes between these three-year cycles are not binding, but can create embarrassment for the boss and the board of directors, as in the case of Shire.
The U.S. Economy Officially Joins The Global Economic Slowdown – 1st Quarter GDP Comes In At 0.5%
Even the government is admitting that the U.S. economy is slowing down. On Thursday, we learned that U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016. This was lower than analysts were anticipating, and it marks the third time in a row that the GDP number has declined compared to the previous quarter. In other words, GDP growth has been declining for close to a year now, and this lines up perfectly with what I have been saying about how the second half of last year was a turning point that plunged us into the early chapters of a brand new economic crisis. And as you will see below, the official GDP number is highly manipulated, and the way that it is calculated has been changed numerous times over the years. So the bad number that is being reported by the government is actually the best case scenario.
Economy Rotten-Like Apple Sales, Russia US Moving Towards Conflict, MSM Unfair to Trump
The economy is rotten just like Apple iPhone sales numbers. For the first time in 10 years, Apple reported its first quarterly sales drop for their popular iPhone. No, it’s not the end of the world, but it’s a sign there is trouble in the economy. Sure, Facebook beat its earnings projections, but they don’t make anything. Other bad news includes new home sales are down. Manufacturing numbers from the Dallas Fed are down. Consumer sentiment numbers from the University of Michigan are down. Spending is down. Retail sales are down. GDP in the first quarter came in at a paltry .5%. Economist John Williams says that number will be revised down and will probably turn negative. Williams says we are already in a recession or soon will be. Both Bo Polny and Greg Mannarino say the same thing: we are getting to a point where they can no longer hide the bad economy, and there really is no recovery after all.
Dollar Selling Panic Coming-John Williams
Economist John Williams has long predicted the $16 trillion in U.S. dollar assets held outside of America will be sold in a panic. The time draws near for that scenario to unfold, and Williams explains, “When people start selling the dollar, or dollar denominated assets, you will see the value of the plunge. We have had a remarkable rally in the dollar since mid-2014, and it is up over 30%. It is going to be going down by more than that, and we are going to be headed to new lows. We have the waffling of the Fed and the beginnings of the perception that the economy is in serious trouble, which generally would be negative for the dollar. We have started to see selling pressure on the dollar. It has been inching lower. It’s down year to year now. . . . The selling is going to intensify, not only with large central banks, but with corporations that will be beginning to dump their Treasury holdings. . . . Nobody wants to be the last one out the door when you have a panic like this. It’s not a panic yet, but the potential certainly is there.”
As The Price Of Gold Soars, Legend Warns That The World May Now Be Facing Catastrophic Consequences
Today a legend who oversees more than $170 billion warned that the world may now be facing “catastrophic consequences.” Eric King: “Rob, your firm helps to oversee $170 billion globally. What has you worried going forward? What has you concerned?” Rob Arnott: “We are overdue for a U.S. equity bear market and if we get a bear market it will have ripple effects across other asset classes. But the other thing that worries me even more than that is the central banks losing credibility and losing control.
ALERT: Top Money Manager Says Gold And Silver Are Destined For A Historic Mania!
Today one of the top money managers in the world told King World News that gold and silver are destined for a historic mania! Stephen Leeb: “Right now I am focused on gold and silver, particularly gold and silver stocks. Many of these stocks have already tripled in price and some have gone up much more than that. I understand that the massive gains in the high quality mining companies give people pause, and they worry about whether or not to sell. But if I’m right, Eric, about there being a massive bull market in gold, can you imagine how high these stocks will go? Meaning, you haven’t seen anything yet when it comes to the shares. By the time this bull market is near its conclusion it will be an internet mania type of atmosphere for the mining shares…
Gold and Negative Interest Rates
We hear more and more talk about the possibility of imposing negative interest rates in the US. In a recent article former Fed chairman Ben Bernanke asks what tools the Fed has left to support the economy and inter alia discusses the use of negative rates. We first have to define what we mean by negative interest rates. For nominal rates it’s simple. When the interest rate charged goes negative we have negative nominal rates. To get the real rate of interest we have to subtract inflation from the nominal rate, so to speak remove the illusion of inflation.
Venezuela Ups Minimum Wage; Effective Rate a Whopping $13.50 Per Month
So much for that socialist paradise. Last summer we reported that hyperinflation had devalued the Venezuelan bolivar to the point that people were using 2-bolivar notes as napkins. In order to keep up with the rate of devaluation, the Venezuelan government literally flew in 747s full of cash. Now we’ve learned that the Venezuelan government is so broke, it can’t even pay to print more money.
Two Fed Officials Signal Markets May Be Wrong to Doubt June Hike
Two regional Federal Reserve presidents said that an interest-rate increase should be on the table next month, pushing back against market expectations that the U.S. central bank will keep policy on hold for a fourth consecutive meeting. Atlanta Fed chief Dennis Lockhart and San Francisco’s John Williams both signaled on Tuesday that the U.S. economy could warrant a rate hike when the policy-setting Federal Open Market Committee gathers on June 14-15. Investors currently only see a 12 percent chance of such a move, according to pricing in interest rate futures contracts. “I would put more probability on it being a real option,” Lockhart told reporters at the Atlanta Fed’s financial markets conference at Amelia Island, Florida, when asked about the low implied odds of a move next month. “The communication of committee participants and members between now and mid-June obviously should try to prepare the markets for at least a realistic range of possibilities” for the next policy meeting.
Hedge Funds Under Attack as Steve Cohen Says Talent Is Thin
In less than seven days, hedge funds have been subject to a three-pronged attack by some of the biggest names in finance. Steve Cohen, the billionaire trader whose former hedge fund had racked up average annual returns of 30 percent before pleading guilty to securities fraud three years ago, became the latest critic of the business, saying he’s astounded by its shortage of skilled people. “Frankly, I’m blown away by the lack of talent,” Cohen said at the Milken Institute Global Conference in Beverly Hills, California, on Monday. “It’s not easy to find great people. We whittle down the funnel to maybe 2 to 4 percent of the candidates we’re interested in. Talent is really thin.”
U.S. Suicide Rate Surges to a 30-Year High
Suicide in the United States has surged to the highest levels in nearly 30 years, a federal data analysis has found, with increases in every age group except older adults. The rise was particularly steep for women. It was also substantial among middle-aged Americans, sending a signal of deep anguish from a group whose suicide rates had been stable or falling since the 1950s. The suicide rate for middle-aged women, ages 45 to 64, jumped by 63 percent over the period of the study, while it rose by 43 percent for men in that age range, the sharpest increase for males of any age. The overall suicide rate rose by 24 percent from 1999 to 2014, according to the National Center for Health Statistics, which released the study on Friday.
Australia’s Central Bank Cuts Rates to Record Low
Australia’s central bank cut its benchmark interest rate to a record low and left the door open for further easing to counter a wave of disinflation that’s swept over the developed world. The move sent the local currency tumbling and stocks climbing. Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.75 percent Tuesday, a move predicted by just 12 of 27 economists surveyed by Bloomberg. The rest had seen no change. Data last week showed quarterly deflation in the consumer price index and the weakest annual pace on record for core inflation — which the RBA aims to keep between 2 percent and 3 percent on average.
Puerto Rico’s Debt Crisis Deepens as Government Misses Payment
Puerto Rico’s debt crisis moved into a more perilous phase for residents, lawmakers and bondholders Monday after the Government Development Bank failed to repay almost $400 million. The missed principal payment, the largest so far by the island, is widely viewed on Wall Street as foreshadowing additional defaults this summer, when more than $2 billion in bills are due.
U.S. manufacturers still aren’t finding much daylight, ISM survey shows
U.S. manufacturers barely grew in April and there’s little sign of a broad pickup in business anytime soon, a survey of executives found. The Institute for Supply Management said its manufacturing index fell to 50.8% last month from 51.8% in March. Economists surveyed by MarketWatch had forecast the index to fall to 51.4%.
The Nasty Secret About America’s Job Market
By all appearances, it seems like the American economy is back on its feet. Businesses are getting back on their feet, and as a result hiring additional employees to staff their firms. Many of the best jobs out there pay high wages, and the unemployment rate has held steady at around 5% for the past six months, according to the Bureau of Labor Statistics. For all intents and purposes, there are reasons to be optimistic about the economy. But once you dig past the headline unemployment rate, things get a little cloudier. A significant portion of Americans are considered to be “long-term unemployed,” and haven’t been able to find a job for extended periods of time. In other cases, older generations are finding jobs, but at the expense of younger workers looking to fill those same positions. But the biggest unresolved problem is that American’s part-time workforce has grown significantly, and experts aren’t sure it will ever shrink back to pre-recession levels.
Is the US Economy Heading for Recession?
This past week the U.S. government announced the contry’s economy rose in the January-March 2016 at a mere 0.5 percent annual growth rate. Since the U.S., unlike other countries, estimates its GDP based on annual rates, that means for the first quarter 2016 the U.S. economy grew by barely 0.1 percent over the previous quarter in late 2015. Growth this slow indicates the US economy may have “slipped into ‘stall speed’, that is, growth so weak that the economy loses enough momentum and slides into recession”, according to economists at JPMorgan Chase.
Baker Hughes Says US Oil Rig Count Drops Another 11 to 332
Baker Hughes reported the active oil rig count fell by 11 rigs to 332 for the week ending April 29. The total number of active oil and gas rigs declined by 11 to 420. This is the nineteenth week in a row the combined oil and gas rig count has fallen, moving further into record low territory. It is the sixth week in a row for oil-rigs only, now putting the total at its smallest count since late 2009. For the week ending April 22 the energy company said 9 combined oil and gas rigs went offline, bringing the total number of oil and gas rigs down to 431. The oil-rigs only count fell by 8 to 343. Crude oil is extending its gains for a fourth straight week and second consecutive month. The June WTI crude oil contract is currently trading lower on the session by 0.46% to $45.81.
U.S. Consumer Sentiment Fell as Caution Continued
A closely watched gauge of U.S. consumer sentiment declined in April to its lowest level in seven months, the latest evidence of growing worry about the economy’s momentum. The University of Michigan final consumer-sentiment index for April, released on Friday, was 89.0, down from March’s final reading of 91.0 and the lowest level since September. “Consumer sentiment continued its slow decline in late April due to weakening expectations for future growth, although their views of current economic conditions remained positive,” said Richard Curtin, the survey’s chief economist.
Chicago PMI falls to 50.4 in April in sign of economic weakness
A measure of Chicago-area economic activity softened in April, indicating that manufacturers and other large companies are still struggling to cope with lower exports, tepid global growth and even some weakness in the United States. The Chicago business barometer, or Chicago PMI, fell 3.2 points to 50.4 in April, MNI Indicators said Friday. Any reading over 50 indicates improving conditions, but the index has been hovering near the cutoff line for more than a year. Three of the five components in the survey deteriorated, including new orders. Orders dropped to the lowest level since December. Employment also turned negative again. A larger number of poll respondents are worried about the impact of a pending Federal Reserve interest-rate hike, the organization that compiles the report noted.
Automating Ourselves To Unemployment
Students of Austrian business cycle theory are familiar with the term malinvestment. A malinvestment is any poor use of resources or capital, commonly made in response to bad policy (usually artificially low interest rates and/or unsustainable increases in the monetary supply). The dot-com bubble that popped in 2001? The housing bubble that similarly burst in 2008? Those were classic examples of malinvestment. With this article, I’d like to introduce a related term: malincentive. While not part of the official economic lexicon, I consider a ‘malincentive’ a useful word to describe any promise of short-term gain whose long-term costs outweigh any immediate benefits enjoyed. The temptation to urinate in one’s pants on a cold winter day to get warm is a (perhaps unnecessarily) graphic example of malincentive. Yes, a momentary relief from the cold can be achieved; but moments later, you’ll have a much larger problem than you did at the outset. Malincetives and malinvestment go hand-in-hand. In my opinion, the former causes the latter. As humans, we respond remarkably well to incentives. And dumb incentives encourage us to make dumb investments.
After the leaks showed what it stands for, could this be the end for TTIP?
The documents show that US corporations will be granted unprecedented powers over any new public health or safety regulations to be introduced in future. If any European government does dare to bring in laws to raise social or environmental standards, TTIP will grant US investors the right to sue for loss of profits
German plot to keep EU army a SECRET till June 23 EXPOSED: EU plan to control OUR forces
BRITISH Brexit campaigners have been boosted with news from Berlin that Germany is once more pushing for an EU army encompassing all 28 member states with a joint HQ and shared military planning. Along with judicial, tax and immigration issues, a Euro army has for long been one of the main irritants of anti-EU campaigners. The fact that Germany – the powerhouse of the project – is mooting one so close to the referendum on whether Britain stays or goes is seen as madness by politicians fighting to keep the UK within the group. Now a white paper has been drawn up by Berlin. Media reports suggest that the Germans wanted to keep its proposals secret until after the June 23 plebiscite but it has now been leaked.
BRUSSELS SHOCK: EU plots tax on British…to fund benefits for jobless in ITALY
BARMY Brussels bureaucrats are plotting to tax British shoppers to help subsidise the growing benefits bill for the Eurozone’s jobless. Leaders on the continent want to milk Britain’s growing economy by slapping a VAT-style tax on goods and services to fund an EU-wide unemployment benefit fund. The plan would mean British shoppers shelling out millions more at the tills every year to pay for benefits and job creation schemes in Mediterranean countries including Spain and Italy, which have high unemployment rates.
A New Digital Cash System Was Just Unveiled At A Secret Meeting For Bankers In New York
Last month, a “secret meeting” that involved more than 100 executives from some of the biggest financial institutions in the United States was held in New York City. During this “secret meeting“, a company known as “Chain” unveiled a technology that transforms U.S. dollars into “pure digital assets”. Reportedly, there were representatives from Nasdaq, Citigroup, Visa, Fidelity, Fiserv and Pfizer in the room, and Chain also claims to be partnering with Capital One, State Street, and First Data. This “revolutionary” technology is intended to completely change the way that we use money, and it would represent a major step toward a cashless society. But if this new digital cash system is going to be so good for society, why was it unveiled during a secret meeting for Wall Street bankers? Is there something more going on here than we are being told?
The End Of America?: 13 Catastrophic Events Which Could Soon Lead To An American Apocalypse
Is the strongest and most powerful nation on the planet headed for an apocalypse which will bring it to its knees? We live in a world that is becoming increasingly unstable, and apocalyptic themes have become very common in books, movies, television shows and video games. It is almost as if there is an unconscious understanding on a societal level that something very big and very bad is coming, even if the vast majority of the population cannot specifically identify what that is going to be. Last week, the Global Challenges Foundation released a new report entitled “Global Catastrophic Risks 2016” in which they discussed various apocalyptic events that they believe could wipe out more than 10 percent of the population of our planet, and they warned that these types of events “are more likely than we intuitively think”…
This Is Where America’s Runaway Inflation Is Hiding
The Census Bureau released its quarterly update on residential vacancies and homeownership for Q1 which is closely watched for its update of how many Americans own versus rent. It shows that following a modest pickup in the homeownership rate in the prior two quarters, US homeowners once again posted a substantial decline, sliding from 63.8% to 63.5%, and just 0.1% higher than the 50 year low reported in Q2 2015.
Very Big Correction for All Markets Coming-Alasdair Macleod
Financial expert Alasdair Macleod says the most important economic news concerns the U.S. dollar. Macleod explains, “I think the most important point is actually the dollar has turned. The panic move into the dollar by miners and producers of raw material . . . was driving the dollar up. That has now ceased. China has now started buying those raw materials, base metals, oil and so on and so forth. So, the result is the commodity crisis is over. That, actually, is the biggest driver of the dollar, which is pushing it down.”
Egon von Greyerz Warns The World Is Now On The Edge Of Total Chaos And Disaster
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 world is now on the edge of total chaos and disaster. He also discussed the historic opportunity in the gold and silver markets. Egon von Greyerz: “We know that central banks and governments have lost the plot. When the crisis started in 2006, US short rates were 5%. In 2008 they were down to zero and have virtually stayed there ever since. A crisis package of $25 trillion was thrown at the financial system. This is what the likes of JP Morgan and Goldman told the Fed they had to do to save the bank(-ers). Ten years later the world financial system is in a mess that is exponentially increasing. World debt has exploded, most governments are running deficits and the financial system is balancing dangerously on the edge of a precipice. $8 trillion of government debt is now negative and $16 trillion is below 1%…
50-Year Market Veteran Discusses What’s Next After One Gold & Silver Index Soars 135% In Just Over 3 Months!
With the U.S. dollar trading lower once again and the metals consolidating recent gains, today a 50-year market veteran discussed what’s next after one gold and silver index soars 135% in just over 3 months! Eric King: “You have to be very careful not to simply use the COT Report (on gold and silver) because it can be a fairly good timing tool on the way down, at bottoms — and it’s not perfect at that, but on the way up it’s very difficult. And I know we’ve had a lot of people calling tops, and these (calls) were at much lower prices. And the problem with calling those tops is that the commercial COT Report, it’s not going to give you those answers that easy. I remember one time when I was speaking to Ted Butler and the commercials were 100 percent short (on a historic basis) at that time on silver and the price was $6. What happened was the price of silver proceeded to surge 40 percent higher to $8.40, before then collapsing back down so the commercials could try to get healthy on those positions…
ALERT: SentimenTrader Just Issued An Extremely Important Update On Gold & Silver
After last week’s surge in the metals sent the prices of gold and silver to new recent highs, SentimenTrader just issued an extremely important update on the gold and silver markets. From Jason Goepfert at SentimenTrader: “The thrust in gold and gold stocks over the past three months has met the conditions of the studies and indicators that we discussed last fall, particularly last November. By mid-March, several indicators were suggesting shorter-term extreme optimism and the metals backed off a bit. Since then they have surged again, particularly the mining stocks. A concern remains “smart money” hedger positions which are at or near multi-year extreme bets against the metals.
FTSE 100: is this the perfect storm?
The definition of a ‘perfect storm’ is where a rare combination of factors come together to drastically aggravate a situation. Looking ahead, it could be argued that the FTSE 100 faces a perfect storm during the rest of the year and that its downside risks are far greater than its potential upside. The most obvious risk facing the FTSE 100 is Brexit. This may not seem all that likely if most of the polls are to be believed, but there have been numerous occasions in the past where pollsters have made major errors with their predictions (such as in last year’s General Election). And with a number of voters being either undecided or seemingly carefree about the issue, there’s a real prospect of Britain leaving the EU as a result of 23 June’s vote.
Britain is horribly unprepared for the coming recession
It’s the worst of all worlds: Britain looks like it is slipping complacently into a new recession but the country is hopelessly unprepared to deal with it. The macro data is ugly: Construction growth is the weakest in three years. Manufacturing went into contraction for the first time in three years. Consumers have switched their spending from retail goods to food — a sign they don’t feel confident about the finances.
ALERT: Paul Craig Roberts Just Warned The World Financial System Is On Fire And The Price Of Gold May Skyrocket
Today former U.S. Treasury Secretary, Dr. Paul Craig Roberts, warned King World News that the world financial system is on fire and the price of gold may skyrocket. Dr. Paul Craig Roberts: “The West no longer exists. There’s no longer any democracy in the West, certainly not in the United States. The people have chosen Trump, so what are the politicians doing? They simply won’t accept the choice. We see the same thing all over Europe. The British military announced that if the Labour Party Leader Jeremy Corbyn were to win the election, they (the British military) would simply not let him take office…
Putin fires several high-ranking officials in bid to overhaul Russia’s law enforcement structures
Russia’s President Vladimir Putin fired several high-ranking law enforcement officials on Saturday in one of the biggest overhauls of the country’s power structures in recent years. According to a decree published on the president’s official legal portal, Putin fired the Southern transport public prosecutor Seregei Dmitriev, the head of the Federal Penitentiary Service in Moscow Igor Klimenov, and Deputy Interior Minister of the annexed Crimea region Dmitry Neklyudov. Putin also dismissed, among others, two deputies of Russia’s Investigative Committee, Yuri Nyrkov and Vasily Piskarev. He raised the rank of the Committee’s investigator for special cases case, Lev Gura, to a senior investigator.
Russia challenges US after Baltic jet face-off
Russia says it was right to confront a US Air Force reconnaissance plane over the Baltic Sea on Friday. The Pentagon said a Russian jet fighter acted in an “unsafe and unprofessional manner”, and performed a barrel roll over its plane. Russia said that the American jet had turned off its transponder signal, which helps others identify it. It is the second incident in the Baltic this month in which the US has accused Russian planes of flying aggressively.
Trump Picks Former Goldman Partner And Soros Employee As Finance Chairman
In an oddly ironic twist, today Donald Trump announced that he has picked as chairman of his newly launched fundraising operation none other than a former employee of the bank he has repeatedly criticized in the past, and which he used as a foil to criticize Ted Cruz: Goldman Sachs. Trump announced that heading up his own personal fundraising operation as national finance chairman will be Steven Mnuchin, a long-time business associate, chairman and CEO of the hedge fund Dune Capital. More importantly, however, he spent 17 years at Goldman Sachs where he was most recently a Partner, having built a fortung of $46 million before launching his own hedge fund.
Russian nuclear sub fires CRUISE MISSILE in chilling footage of Arctic military drill
The 120-metre Severodvinsk submarine can be seen sinking slowly below the surface before its Kalibr missile erupts from the waves. Is this a warning shot? This chilling footage shows a Russian nuclear submarine launching a cruise missile from underwater to destroy a coastal training target. The 120-metre Severodvinsk submarine can be seen sinking slowly below the surface of the Barents Sea as part of Russian navy Arctic combat drills. Then the Kalibr missile erupts from the waves in a plume of smoke and streaks away into the distance. A loud rumbling can be heard before the camera zooms in to show the launch site. It is the latest show of strength from the country’s military after a number of close passes by fighter jets near US planes and ships.
Warnings mount on world’s corporate debt, China crisis
Corporate debt has reached extreme levels across much of the world and now far exceeds the pre-Lehman financial bubble by a host of measures, the global banking watchdog has warned in a deeply-disturbing report. “As the credit cycle ages, following years of record-setting bond issuance, there are growing concerns about signs of stress in corporate balance sheets,” said the Institute of International Finance in Washington. The body flagged a double threat: a five-fold rise in company debt to $25 trillion in emerging markets over the past decade; and record junk bond issuance in US and Europe, along with shockingly-irresponsible levels of US borrowing to buy back shares and pay dividends.
China’s shadow banking adapts and grows as rules tighten
New players in China’s shadow banking sector are growing rapidly despite attempts to clamp down on opaque lending, taking advantage of a regulatory anomaly to prosper but also raising the risks of a build-up of debt in the slowing economy. Authorities have sought to rein in the riskiest elements of less-regulated lending after a series of defaults, including a 4 billion yuan ($640 million) credit product backed by Evergrowing Bank in September, because of the danger such debts could pose to the health of the world’s second-largest economy. And a government measure created in 2011 to capture shadow banking, total social financing (TSF), shows some success, with shadow banking contracting in the second half of 2014 to roughly 21.9 trillion yuan ($3.5 trillion), according to a Reuters’ analysis of central bank data.
High leverage shifts to China’s bond market after equities deflate
Just when investor fears over plunging Chinese stocks appear to be calming down, the country’s frothy corporate bond market is stirring concerns it could be the next domino to fall. Investment funds have flowed rapidly into corporate bonds since the stock market collapsed in June, triggering a surge of debt issuance. Demand has compressed corporate and sovereign bond spreads to their narrowest in four years – an oddity, when industrial profits are falling and credit risks are rising. While bond investors say corporate bond prices are not at unreasonable levels, they are wary a sharp correction could be sparked by a bond default from major state-owned companies or a change in monetary policy.
High leverage shifts to China’s bond market after equities deflate
Just when investor fears over plunging Chinese stocks appear to be calming down, the country’s frothy corporate bond market is stirring concerns it could be the next domino to fall. Investment funds have flowed rapidly into corporate bonds since the stock market collapsed in June, triggering a surge of debt issuance. Demand has compressed corporate and sovereign bond spreads to their narrowest in four years – an oddity, when industrial profits are falling and credit risks are rising. While bond investors say corporate bond prices are not at unreasonable levels, they are wary a sharp correction could be sparked by a bond default from major state-owned companies or a change in monetary policy.
Chinese police to patrol in Italy in pioneering experiment
Four Chinese police officers will patrol alongside Italian police in Rome and Milan, as a two-week experiment. The officers, who speak Italian, are being sent in a bid to make Chinese tourists feel safe during the peak tourism period, said Italian Interior Minister Angelino Alfano. “If the experiment is successful, we will expand it to other cities in Italy,” he said. Around three million Chinese tourists visit Italy annually. Mr Alfano said that Italian officers would also soon be heading to Beijing and Shanghai to patrol alongside Chinese officers.
HSBC profit falls amid volatile markets