The economic reports continue to show an overall rate of deterioration in economic activity down to levels – in general – comparable with the 2008-2010 period. Freight transportation activity is part of the “nerve center” of the economic system. The latest data from Cass shows a rapid decline in both freight shipments and expenditures that began in mid-2014:
Although shipments ticked up from April to May 1.3% – attributable to seasonality – year over year shipments for May dropped nearly 6%:
Andrew Maguire: “When you look at gold priced in British pounds, or euros, or the yuan, we are talking about the price of gold in those currencies already reaching 2013 levels. So we are seeing big moves in gold in every currency and it’s beginning to spillover into dollar gold. It all boils down to a paradigm shift that we are witnessing in the gold market at this point. And I see a lot of…
There’s nobody looking for value out here [in the stock market] – there is none. It’s obvious the Fed is holding up the stock market. This is one of the reasons the Fed will never be audited. – Friend and colleague of Investment Research Dynamics.
The money printing by the Fed has created the most overvalued stock and bond market in history. The stock market overvaluation is even worse if you use real accounting. But it’s not just outright money printing. The supply of money includes credit creation. This is a fact that surprisingly is overlooked by most, even those I consider highly intelligent: debt behaves like money until that point in time when the debt is extinguished by repayment – not “restructuring.” Take a look at this:
(click to enlarge – source: Wolfstreet.com with IRD edits). The auto debt used to finance car purchases since 2010 hits an all-time every month. The debt issuance behaves like printed money until it’s repaid. But I would bet at least half of that $1 trillion debt will default.
To help save the economy, the Government will announce next month that the Immigration Department will start deporting seniors (instead of illegals) in order to lower Social Security and Medicare costs.
Older people are easier to catch and will not remember how to get back home.
LOL This made me laugh. But I'd add to it that before the deport them they confiscate their pensions.
You should probably make peace with this trend; it’s going to define our future into the 2020s.
Because now the market plainly sees — as I have been saying since 2012 — that the U.S. economy is a bit like Wile E. Coyote: His jerry-rigged plans to catch his prey never quite work out, because he’s not wily enough to understand that his plans are doomed from the outset. He doesn’t understand his prey.
Thirty-eight thousand jobs. That was the latest Acme anvil to smack the coyote senseless.
The cost of mining gold for the world’s top producers dropped more than 7% in the first three months of the year as most companies ignored the metal price’s spike and continued efforts to straighten out their books, a new report shows.
According to data compiled by SNL Metals & Mining, the top 17 publicly listed gold companies that reported all-in sustaining costs (AISC) produced the metal at a weighted-average cost of $833 per ounce in the first quarter of 2016. This compares to the $900 an ounce price calculated by Gold Fields Mineral Services (GFMS) for the same period last year.
As yet another indicator that Asian demand for gold so far this year has been slipping significantly, May gold deliveries out of the Shanghai Gold Exchange (SGE) in May came in at only 147.3 tonnes – down from 171.4 tonnes in April. The year to date figure is thus 834.6 tonnes – a very significant 17.7% fall on last year’s total at the end of May of 982.7 tonnes. Admittedly 2015 was a huge record year for SGE gold withdrawals, and the current levels, if the average to date continues for the remainder of the year, would put the year-end figure at just over 2,000 tonnes – still a huge amount in terms of global demand.
Federal Reserve Chair Janet Yellen made her usual bipolar remarks yesterday in a speech: Last week’s employment report was disappointing, she said, but the labor market was tightening (a good thing) and wages look like they were finally rising.
The economy might have weakened, Yellen said, but the gross domestic product, a measure of economic health, looks strong in the second quarter. Inflation — a good thing in the mind of the Fed — wasn’t high enough but it is getting there.
And she also stated the incredibly obvious in her usually obtuse way: The Fed will raise interest rates, but probably not now — maybe later, but it might not be able to because it might have to use “conventional means,” which means lowering interest rates, if the economy falters.
By Pining 4 the Fjords | Friday, June 3, 2016 at 7:24 pm “LOOK EVERYONE! GORILLA SHOOTING!” You may have seen the biggest story of the entire year, maybe the biggest story of modern times, play out over the last week when Harambe the Gorilla was shot and killed at the Cincinnati zoo after a child fell into its enclosure and the beast began dragging the boy around. Television, newspapers, and major media outlets from across the world descended as the story nearly broke the internet. Should they have shot it? What kind of savages shoot an innocent animal? What kind of savages care so little for a boy’s life? Who will be charged? Why are people being charged at all? Why aren’t the parents being prosecuted? Who should pay for this outrage? Is it an outrage? Why are you outraged? Why aren’t YOU outraged?
Meanwhile, in this same western hemisphere, a nation that just two generations ago was the wealthiest country per-capita in all of South America is now suffering a catastrophic economic collapse and hyperinflationary event, to a near mainstream media blackout punctuated by occasional, drive-by articles that are largely misleading. Virtually the only in-depth, ongoing coverage of this catastrophe has been on the internet, mostly in the alternative media.
In 1970, Venezuela was not only the richest country in Latin America, it was one of the twenty richest countries in the entire world, with a per capita GDP higher than Spain, Greece, and Israel and only 13% lower than that of the United Kingdom.
Andrew Maguire: “China now has gold investors’ backs. As a key part of its plan, China is building up gold reserves both by way of direct, unreported PBOC (People’s Bank of China) purchases, and much more importantly, openly encouraging citizens to build up their gold investments…
The entire financial world is a cartoon drawn by can kickers who are called experts. The thieves of our future should be rounded up and made permanent parties on “Naked and Afraid.” Clearly they are scared to death as to what is contained here. Their actions are so transparent they are naked. The visual of this is really awful. Worst is what they do knowing their short term actions, will without any doubt, bring on the long term return to the New Normal Dark Ages. These experts and self-proclaimed elites are truly the Four Horsemen of the End of Days Economic. From MOPE to QE to EDE and the end.
If I was young or a strong 75, I would get out of here while I still could going to the best location of nobody in the middle of nowhere. Watch the documentary “Last Alaskans” to see the lifestyle of the survivors and their families. For that life you have to be young or have the strength of an ox. Preppers know the problem but Preppers will all run out of their carefully selected but limited preparations. The elite are fairy like fops, all of them. The old European families are so bad there is no description. They only mingled with their own kind or people so they are more inbred than the aboriginal.
These manic liberals, one world government and 1% have killed us all, including themselves. I wish I had an easy solution but there is none. You must be self-sufficient among self-sufficient others in the most rural of areas. Now who can do that?
There is one sign of hope. That is Heimo in this documentary. He is the northern most Jew on the planet, and thus the TV name, Heimo North. If Heimo can do it and be so happy, there is a chance, but not in Manhattan or Los Angeles.
Heimo may never know it happened or care. So who wins, Heimo or the 1%, Kim Kardashian, or Edna North?
What's left unsaid is much of the upper middle class is prospering due to privileged positions that are increasingly at risk of disruption. What does it take to be upper middle class? According to one analyst, the answer is: at least $100,000 a year for a family of three. The Growing Size and Incomes of the Upper Middle Class (Urban Institute).
The paper claims the upper middle class has grown from 12.9% of the population in 1979 to 29.4% in 2014--in essence, the shrinkage of the "middle class" is not just from households dropping down the ladder but millions of households climbing up to the upper middle class. Not Just the 1%: The Upper Middle Class Is Larger and Richer Than Ever (WSJ.com)
“When it becomes serious, you have to lie.” — Jean-Claude Junker, President of the European Commission.
Normally, I would not bring a European politician into a discussion about the U.S. economy. But in this case, European Commission President Jean-Claude Junker has “let the cat out of the bag.” In an unguarded moment, Junker let slip the working principle that guides politicians everywhere.
The approximate hour Janet Yellen spent wandering in circles and spewing double talk during her presser yesterday was time well spent. When the painful ordeal of her semi-coherent babbling was finally over, she had essentially proved that the Fed is attempting an impossible task.
And better still, that the FOMC should be abolished.
The alternative is real simple. It’s called price discovery on the free market; it’s the essence of capitalism.
It was fun playing Masters of the Universe when expectations were low. Ah, the good old days, when a simple, completely empty promise to do whatever it takes could move the world. It was fun being a central banker back in the good old days--back then playing Master of the Universe was wondrously good fun. Now--not so fun. Now that interest rates are drifting below zero, there's not much room for fun left in that sandbox. As for mortgage rates: they're so low, some countries are effectively paying people to take out a mortgage, and the resulting bubbles and market distortions are no fun.
For more than three years we have watched the COMEX very closely. The initial clue to begin watching were the waterfall events where the amounts of paper gold and silver sold simply dwarfed what was being mined. I have said many times after the smackdowns, “first, no one has this much (gold or silver), second, no trader would ever sell in this fashion and destroy the price he will receive for the sale. Clearly the sales were done to affect price downward”. Each time I have written on this topic and suggested it would ultimately end with a delivery default I have been trolled. It looks very much like we will soon find out a default of delivery is not only possible but highly probable.
Starting with gold, last month (May) saw 221,000 ounces stand for delivery. This amount actually grew during the month which is highly unusual as the amount standing has ALWAYS dropped during delivery periods, this is the first time to my knowledge that the amount standing actually increased. For comparison, May 2015 delivered only 2,500 ounces. Looking back at June of 2015, the amount standing on first notice day was 509,000 ounces. The final amount delivered was 295,000. As I have written and questioned before, who would fully fund their account 100% to take delivery …and then “go away”? The answer of course is someone willing to accept a “premium” as a bribe to not take delivery.
The media is doing it’s part to cover up the unexpectedly bullish trading action in gold and silver. It’s a given that the Fed is making an all-out effort to keep a lid on the price gold. But we found this headline from Investing.com to be a head-scratcher: “Gold pulls back from 3-week highs on U.S. jobless claims data.” Here’s the truth:
As you can see, the price of gold shot up $9 right after today’s jobless claims data was released (it’s a useless statistic anyway). If the headline said: Gold price hit on London a.m. fix, that would have been the truth.
This decline is inevitable in fast-expanding economies that depended on export growth and investment booms. The fundamental context of China's economy is that it has traced out an S-Curve--as did previous fast-developing nations such as Japan and South Korea. Gordon Long and I discuss why there's no easy fix to the S-Curve in our new video discussion Bull in the China Shop (35:25).
Two months ago, there was a referendum in Holland about an association agreement between the EU and Ukraine. A relatively new Dutch law states that with an X amount of signatures a referendum can be ‘forced’ by anyone. Before, during and -especially- after the vote, its importance was -and is actively being- pooh-poohed by both the Dutch government and the EU. That in itself paints the issue better than anything else. Both the call and the subsequent support for the referendum stem from resistance against exactly that attitude.
The Dutch voted No to the EU/Ukraine agreement. It was with a turnout not much above the validity threshold, but a large majority of those who did vote agreed they want no part of the deal. This puts Dutch PM Rutte in an awkward position, he can’t be seen ignoring the population. Well, at least not openly.
The Fed traditionally embarks on an interest rate tightening cycle when inflation has started to run hot. This decline in the purchasing power of the dollar will nearly always manifest itself in: above trend nominal GDP, rising long-term interest rates and a positively sloping yield curve. These prevailing conditions are all indications of a market that is battling inflation; and thus prompts the Fed to start playing catch up with the inflation curve. For example, the last time the Fed began a rate tightening cycle was back on June 30, 2004, when the Fed moved the Overnight Funds rate from 1% to 1 ¼%. At the time, the Ten-year Note yield was 4.62%, and the Two-year Note was 2.7%, creating a 1.92% spread between the Two and the Ten-year Note. To illustrate the fact that the long end of the yield curve was pricing in future inflation, the Ten-year yield climbed to 5.14% two years into the Fed's rate hiking cycle. And perhaps more importantly, real GDP was 3% and rising, while nominal GDP posted an impressive 6.6% in the second quarter of June 2004. To reiterate, the last time the Fed began to raise rates it did so on the back of higher than normal nominal GDP, rising long-term interest rates and a positively sloping yield curve. With this in mind, let's take a look at the environment for the current tightening cycle.
If the Comex were allowed to issue paper contracts representing no more that 10 or 20% of the actual amount of gold held by Comex vaults, what would the price of gold be?
1.176 million ounces of gold have been delivered – or should I say “delivered” – for the June contract six days into the June contract delivery period. I don’t follow the delivery patterns as closely as I used to, but this is a massive amount of stated deliveries. Even more interesting is the fact that there’s still 6,683 Juno contracts open representing 668,300 ozs of potential deliveries. This is a relatively high number of contracts still open this far into the delivery period.
The job market went ker-plop in May, which should send new college graduates to the beaches instead of gainful employment, and their tuition-paying parents to psychiatrists.
Let me get right to the bad news. And then I’ll give you even worse news, so you’d better pull up a beach chair.
The Labor Department reported on Friday that the nation’s economy added only 38,000 jobs in May. The experts expected a modest gain of 150,000 jobs, so the actual figure is like setting off a bomb at a gas station. ...
Click through for the rest of the article. It's a good read. The report definitely set off rocket in gold on Friday.
Hence, if rising incomes and an increase in consumer debt are not culpable for the PCE gains, then what is? One possibility is that Americans are dipping into their savings…
“Americans had been socking away money,” reports the Wall Street Journal, “but now appear a little more confident. The personal saving rate in April was 5.4 percent, down from March’s 5.9 percent and the lowest level of the year.”
Perhaps this explains it. But, nonetheless, something about it doesn’t quite add up. Especially since it contradicts the story included in the May issue of The Atlantic, aptly titled, The Secret Shame of Middle-Class Americans. In short, the premise of the article is based on a Federal Reserve survey that found that nearly half of Americans would have trouble finding $400 to pay for an emergency.
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