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.
Latest News From April 8, 2016 to April 14, 2016:
- Hathaway Is Right, The Price Of Gold Will Skyrocket…To $10,000 – $20,000
Eric King: “Stephen, I know you’ve had a chance to look at the KWN interview with John Hathaway — your thoughts on what John had to say.” Stephen Leeb: “John is absolutely right. Eric, I don’t think people really appreciate how little gold there is in the world. If you add it all up, the value of all of the physical gold in the world is something like $7 trillion….
- Greece sells country’s largest port to China
China has described a deal to sell Greece’s biggest port to Chinese shipping group COSCO as a “win-win” for both countries. Under the deal between Greece’s privatization fund HRADF and China COSCO Shipping Corporation, the Chinese investors will pay 280.5 million euros($319.79 million) to HRADF for the initial acquisition of a 51 per cent stake, while it will pay another 88 million euros within five years for the remaining 16 per cent, provided it has implemented the agreed investments in the port.
- Legend Art Cashin Warns This May Shock Investors Across The Globe And Create Panic
Legend Art Cashin warns this may shock investors and create panic. Eric King: “Art, you put out a note yesterday stating that we needed to take a look at the velocity of money. What is that looking like at this point? Any changes? Art Cashin: “Yes, M2 has moved up. But perversely and in a countervailing sense, the Bank of St. Louis released the monetary base. The monetary base is what the Fed can do directly. If you can grow the monetary base, then ordinarily it would indicate that you can get monetary velocity and some inflation.
- World Gold Council First Quarter Report a Bunch of Bull
The World Gold Council’s first quarter report is a bunch of bull. Or perhaps it would be more accurate to say it projects a very bullish outlook for gold. The report confirms what we already knew – gold got off to a glittering start in 2016 – and it predicts the rally will likely continue and evolve into a genuine, long-term bull market.
- Gold Surges As Peter Boockvar Issues An Ominous Warning
On the heels of gold trading $20 higher and silver surging 60 cents, today Peter Boockvar issued an ominous warning. Peter Boockvar: Following the rally from Friday, European bank stocks are up for a 2nd day as more details emerge about a possible private sector involved TARP like program for Italian banks. Officials from the Italian Treasury Department and central bank will be meeting with top bank executives possibly this week. The Euro STOXX bank index is up by 2.3% as of this writing after Friday’s 3% rally with Italian banks again leading the gains. Italian banks have been suffocated by an excess of bad loans and the Renzi government is finally doing something about it…
- How The Oil Crisis Has Impacted Military Spending
A report by the Stockholm International Peace Research Institute has revealed that most of the world’s nations hiked their military budgets last year, marking the first increase in spending since the 2008 crisis. It seems that the only ones not taking part in this military spending hike are some of the world’s biggest oil producers. While the United States is still the country with the largest military budget at $596 billion spent in 2015, this figure was actually a decline on the previous year. Saudi Arabia, according to Bloomberg, would also have cut its military budget if not for the war in Yemen. Russia, the world’s top oil producer, shrank military outlays in 2015 to $66.4 billion.
- How a US President and JP Morgan Made Panama: And Turned it Into a Tax Haven
This goes back a long way. The Panamanian state was originally created to function on behalf of the rich and self-seeking of this world – or rather their antecedents in America – when the 20th century was barely born. Panama was created by the United States for purely selfish commercial reasons, right on that historical hinge between the imminent demise of Britain as the great global empire, and the rise of the new American imperium.
- Something Just Snapped In Saudi Money Markets
Away from the headlines about The Panama Papers, global financial markets turmoiled quietly this week with a surge in equity and FX volatility and banks suffering more death blows. However, something happened in Saudi Arabia's banking system that was largely uncovered by anyone in the mainstream… overnight deposit rates exploded to their highest since the financial crisis in 2009…
- ALERT: Legend Warns That People Must Now Prepare For A Massive Global Collapse
Egon von Greyerz: “The bank stocks are now warning investors that it is time to get money and assets out of the banking system. As you know Eric, we warned investors long before the 2006 – 2009 crisis to get out of the banking system. At that time banks were saved by a $25 trillion global package but that won’t happen again. Credit worldwide has increased by 70% since 2006 and the banking system as well as the world economy are now in a massively worse condition than they were at that time…
- Pierre Lassond On the End of the Bear & $8000 Dollar Gold
Franco-Nevada’s Pierre Lassond is “very sure” gold’s 5 year bear market is over and we’re at the start of a new bull market. Just how high could gold go during this new bull market?
- Will the Bank of Japan force a lower yen?
Both the European Central Bank and the Bank of Japan appear to be making little headway in bringing their respective currencies down against the dollar, and lifting inflation rates which in some cases have faltered into negative territory. And so it was on Friday that the yen’s highest level in two years delivered another blow to the Japanese government’s efforts to swing the economy around since it plummeted in the wake of the Fukushima nuclear disaster five years ago.
- Watch Japan – For All Is Not Well In The Land Of The Rising Sun
One of the epicenters of the global financial crisis that started during the second half of last year is Japan, and it looks like the markets in the land of the rising sun are entering yet another period of great turmoil. The Nikkei was down another 390 points last night, and it is now down more than 1,300 points since a week ago. Why this is so important for U.S. investors is because the Nikkei is often an early warning indicator of where the rest of the global markets are heading. For example, the Nikkei started crashing early last December about a month before U.S. markets started crashing really hard in early January. So the fact that the Nikkei has been falling very rapidly in recent days should be a huge red flag for investors in this country.
- CEO Keith Neumeyer: “There's Going To Be A Major Revolt If We See Negative Rates”
CEO Keith Neumeyer Warns: “There’s Going To Be a Major Revolt… We’re Going To See Riots” With negative interest rates now the order of the day in much of the Western world, it’s only a matter of time before financial institutions start charging American depositors for the privilege of keeping their money safe in the U.S. banking system.
- Why Are Thousands Of Millionaires Fleeing Chicago And Other Major Cities Around The World?
The elite are fleeing major cities around the globe at a staggering rate. In fact, the Chicago Tribune is reporting that approximately 3,000 millionaires left the city of Chicago alone during 2015. The same study discussed in that Chicago Tribune article found that 7,000 millionaires left Paris, France last year. So why is this happening? Why are thousands of millionaires suddenly packing up and moving away from the big cities? Could it be possible that they have many of the same concerns that “preppers” do about what is coming?
- Economic Collapse Is Erupting All Over The Planet As Global Leaders Begin To Panic
Mainstream news outlets are already starting to use the phrase “economic collapse” to describe what is going on in some areas of our world right now. For many Americans this may seem a bit strange, but the truth is that the worldwide economic slowdown that began during the second half of last year is starting to get a lot worse. In this article, we are going to examine evidence of this from South America, Europe, Asia and North America. Once we are done, it should be obvious that there is absolutely no reason to be optimistic about the direction of the global economy right now. The warnings of so many prominent experts are now becoming a reality, and what we have witnessed so far are just the early chapters of a crushing economic crisis that will affect every man, woman and child in the entire world.
- Deutsche Bank Says World “Past The Point Of No Return” In The Default Cycle
Over the past year, the credit cycle finally turned, and has unleashed the latest default cycle. In fact, as BofA's Michael Contopoulos warned last week, it may be the worst default cycle in history with “cumulative losses over the length of the entire cycle could be worse than we’ve ever seen before.” Over the weekend, the FT got the memo with a report that “global company bond defaults at highest level since 2009” in which it said that “the global bond default rate by companies is running at its highest since 2009 with the US accounting for the vast majority, according to rating agency Standard & Poor’s. A further four defaults this week, with three coming from the troubled oil and gas sector, pushed the overall tally to 40 with a little over a quarter of 2016 done.”
- Biggest Collapse Ever-Get Gold Now-James Rickards
Financial expert and best-selling author James Rickards says another economic collapse is coming. Rickards contends, “It’s very clear, and you can prove this scientifically. The next collapse will be bigger than anything in history or maybe since the Bronze Age or the fall of the Roman Empire. Why do I say that? . . . We have these things coming together. The system is larger. That means systemically it is exponentially more risky. The central banks don’t have any dry powder, and it is just a matter of time before the collapse comes. In 1987, the stock market fell 22% in one day, not in a week or a month, but one day. Today, that would be the equivalent of a 4,000 point drop. . . . In 1998, the Long Term Capital crisis shut almost every stock and bond exchange in the world. In 2000, the Dot Com; 2007, the mortgage crisis; and in 2008, you had Lehman and AIG (failures). In other words, these events are not rare, and they happen every three, four or five, six or eight years. It’s not like clockwork, but nobody should be surprised if it happened tomorrow. We’ve got the systemic scale. We’ve got exponential increase in risk. The central banks are out of dry powder, and it’s been eight years since the last one. It’s just a matter of time.”
- Next Shoe to Drop on Spanish Banks – “The mortgage ‘floor clauses’ are a fraud.”
Thursday, April 7, 2016, could go down in history as a great day for Spanish mortgage holders and a very grim one for many Spanish banks, thanks to a new ruling that the so-called mortgage floor-clauses that were unleashed across the whole financial sector in 2009 are abusive (but not illegal) and lack transparency. These floor clauses set a minimum interest rate — typically of between 3% and 4.5% — for variable-rate mortgages, even if the Euribor drops far below that figure. In other words, the mortgages are only really variable in one direction: upwards!
- BlackRock CEO Fink: Negative & Low Interest Rates Eat into Consumer Spending at Worst Possible Time
“A hostile landscape” – that’s what BlackRock CEO Larry Fink called the global investment, economic, and political environment in his gloomy annual letter to his shareholders. It starts out propitiously: Investors today are facing tremendous uncertainty fueled by slowing economic growth, technological disruption, and social and geopolitical instability. More specifically: In China, growth is slowing with global effects. In the U.S., the quality of corporate earnings is deteriorating, with record share repurchases in 2015 driving valuations – an indication of companies succumbing to the pressures of short-termism in place of constructive, long-term strategies.
- Supply Chain Slump “Worse Than The Great Recession”
Not to continue beating a dead horse, but I have a stick and the carcass is right in front of me. The entire supply chain inside the US economy is full agreement both on where the economy is right now and, perhaps more importantly, how it came to be that way. Such harmony is not atypical, as synchronicity usually defines the hard edges of any cycle. This, however, is something else entirely, especially as it stretches back years and confirms we are witnessing nothing like the usual.
- Iran War Drums, Panama Papers Update, Economy Weak and Sick
Lots of news about Iran this week being overlooked because of the so-called Panama Papers. Iran has issued a warning to the U.S. not to interfere with its ballistic missile program. Iranian officials say any attempt to interfere with its weapons program would be crossing a “red line.” Iran also wants to improve the destructive power of its warheads which would also help in detonating a nuclear armed missile. Iran has recently test fired ballistic weapons and continues to develop them. An Iranian General was quoted this week on Iranian state run press, as saying “The reason we designed our missiles with a range of 2000 km is to be able to hit our enemy the Zionist regime from a safe distance.” The Obama Administration is now talking about putting sanctions on Iran because it continues to develop ballistic missiles. Might I remind you, the Iran deal to curtail its nuclear program was not signed by Iran. By the way, the U.S. Navy just intercepted a load of weapons going to the Iranian backed rebels in Yemen.
- Crash of Biblical Proportions Coming in 2016-Bo Polny
Market cycle analyst Bo Polny says don’t bet on the U.S. dollar or the stock market to hold their value in 2016. Polny contends, “The dollar is going down with the stock market. It did in December of 2015. It did in August of 2015, and the dollar is falling right now again. As soon as the stock market gets started to the downside, the dollar is going to go with it again. So, the dollar is going to go down with the stock market with this next meltdown. What’s going to end up happening when they hit the cycle low is what they did the last low (2009) and had QE 3. Guess what, that’s going to mean (in the next crash) QE 4. Then, that will mean they will be printing money like crazy. Let’s say there is a 20% drop on the dollar, even 10%. Everybody goes to sell the bonds. If the 10-year is only giving 1.7% yield, if the dollar drops 10%, they are losing 8%. If the dollar drops 20%, they are losing 18%. So, all these countries will be losing on billions or trillions of dollars of bonds, and then you will get a fire sale on bonds. Everyone will be dumping the bonds because they will be trying to get rid of them as fast as possible. That is what’s going to happen when they announce QE 4.”
- China “Could Push Whole World into Fresh Economic Crisis”
After years of big wage increases in China, the supply of cheap labor is coming to an end. The migration of rural populations to cities, which in practically no time created over 250 cities with over 2 million inhabitants, is also coming to an end. As the cost of labor has soared, the manufacturing base is now migrating to cheap-labor countries like Vietnam, leaving less work in Chinese cities for migrant laborers. With few options left, they’ve started to return to their villages. This leaves China with massive challenges, just when its debt-burdened economy can least afford them.
- Bank Bail Ins Begin as EU Bank “Bailed In” In Austria
Bank bail ins in the EU are here after Austria's financial markets regulator FMA imposed a hefty haircut on creditors in an Austrian bank. Creditors in the bank Heta Asset Resolution will receive less than half of their money back according to the country’s financial regulator, the FMA. Senior bondholders in the so called “bad bank” could expect to receive around €0.46 for each euro which would be paid from the realisation of assets by 2020, according to the FMA statement. It said that this had been calculated using “very conservative” assumptions. “This package of measures also ensures the equal treatment of creditors. Orderly resolution is more advantageous than insolvency proceedings,” the FMA said.
- Silver Surges Most In 6 Months As Hedgers Cover
The last 3 days have seen silver prices surge over 6%, testing back towards the psychologically important $16 level. Having been pressured lower after the ECB bounce, the precious metal jumped perfectly off its critical 200-day moving-average, nearing the highs of the year once again.
- Chesapeake Forced To Pledge Entire Company As Collateral To Preserve Existing Credit Facility
As we enter the critical spring borrowing base redetermination season, which as we previewed previously is the biggest threat to near-insolvent energy companies whose banks may, and in many cases will, decide their assets are worth far less and as a result dramtically cut their revolver availability, one of the biggest question marks was how generous would the banks of troubled gas giant Chesapeake be, whose $4 billion credit facility is one of the few things keeping the company still afloat. We got the answer earlier today when the company announced it had succeeded in maintaining its entire $4 billion borrowing base and as a result would not suffer an imminent liquidity crunch.
- Helicopter Money “Not on the Table,” ECB Swears Furiously
It has finally sunk in: what everyone really wants is helicopter money. Central banks, instead of transferring trillions of newly created dollars or euros or whatever to the banks should just hand them directly to the people, like dropping bank notes from a helicopter, so that these people can grab them and spend them all in one fell swoop, thereby creating sudden artificial demand, driving up inflation, and solving all economic problems of our times. Instead of creating asset price inflation, as QE had done, it would create consumer price inflation. Wages would still remain stuck, and workers would soon not be able to buy the normal things at these inflated prices, but that wouldn’t matter because now they’re getting helicopter money, and companies could increase their sales, margins, and profits simply by raising prices without having to sell a single extra item.
- Ben Bernanke: “Helicopter Money May Be The Best Available Alternative”
Now that the prospect of helicopter money by the ECB has so infuriated Germany, the ECB had to reach out to Schauble to “mollify” the Germans who are dreading the second coming of monetary paradrops in one century, it was only a matter of time before Citadel's most prominent employer opined. In a blog post earlier today, Brookings' blogger and the central banker who together with Alan Greenspan has been most responsible for the world's unprecedented debt pile and sad economic state, Ben Bernanke, took the podium to share his views on “helicopter money” head on.
- Analysis: The mechanics of leaving the European Union
Ignoring shouted questions about whether he will resign, he reprises his reaction to his shock Commons defeat over Syria in 2013. “The will of the British people is clear,” he says, “I get it and I will negotiate accordingly to implement their clear decision.” Suppose that, or something like that, happens. What next, for the government and for Parliament? How would MPs deliver the decision the British people had just voted for? The first point to make is that the process cannot easily be separated from the political mayhem that would then unfold.
- Russia Relies on Gold to Push Reserves Back Over $380 Billion
Whether you define gold as a barbarous relic, a pet rock, “tradition”, or “doomed”, Russia surely refers to it as a saving grace. As Russia’s foreign reserves dwindled to just under $350 billion in early 2015, many predicted Russia was going to burn through all of their reserves in the not too distant future as they dealt with a depreciating Ruble and plummeting oil revenues. However, this dire prediction did not pan out mainly due to one thing: Russia’s strategic decision to load up on as much gold over the past few years as it possibly could. As we have shown in the past, Russia has shown an insatiable desire for Gold, and as Bloomberg points out, has increased their holdings more than 12% since last July.
- Will The Oil Price Dip Send BP plc and Royal Dutch Shell Plc Back Into Reverse?
Oil is up 44% since Brent crude hit a low of $27 a barrel in January, to reach $38.93 at time of writing. FTSE 100-listed oil giant Royal Dutch Shell(LSE: RDSB) has rallied with it, its share price up 33% since mid-January, from a low of 1277p to today’s 1709p. BP(LSE: BP) is a more troubled beast and its share price growth has been less spectacular, rising just 5.5% from its January low of 328p to 346p today.
- European Bank Outlook More Uncertain Than in 2009, Perol Says
Groupe BPCE Chairman Francois Perol said the outlook for the European banking industry is more uncertain in some respects than in 2009 as negative interest rates squeeze margins and digitalization changes the model. “Chinese growth is decreasing, oil prices are down with unexpected consequences, geopolitical risk is in a lot of areas,” Perol told reporters Saturday on the sidelines of the Ambrosetti Workshop in Cernobbio, Italy. Banks also have to deal with structural changes including “digitalization, a huge change for our retail banking business, negative interest rates and a changing regulatory landscape,” he said.
- World Bank goes big on fighting climate change
The World Bank has announced plans to fight climate change through a new Climate Change Action Plan that it hopes will see investment in environmental projects reach $29 billion a year by 2020. In a statement on Thursday, the Bank said that, in the next five years, it planned to help countries in the developing world add 30 gigawatts of renewable energy to global energy capacity; provide “early warning systems” to 100 million people; and develop “climate-smart agriculture investment plans for at least 40 countries.” The news comes in the wake of the historic COP21 agreement reached in Paris at the end of 2015. There, 195 countries agreed to make sure global warming stayed “well below” 2 degrees Celsius and to “pursue efforts” to limit the temperature rise to 1.5 degrees Celsius. The Bank said its announcement came a fortnight before the world's leaders meet in New York to sign the Paris Agreement.
- UK Goods Trade Gap With EU At Widest Level
The UK's trade in goods deficit with the European Union is at its widest ever level, with a series of other indicators providing further evidence of troubles for the economy. The Office for National Statistics (ONS) reported a gap of £23.8bn between imports and exports with the EU in the three months to February. It reflected, the ONS said, a 1.3% decrease in exports and a 1.1% rise in imports during the period – a time when fierce debate began over the country's continued membership of the EU ahead of June's referendum. The economic slowdown in many world markets was also reflected in the country's total deficit in goods and services, which widened to its largest three-monthly figure since March 2008.
- Peter Schiff: The Economy Is A Disaster
Peter Schiff was on Tuesday's edition of PreMarket Prep, where he reiterated his bearish thesis for the market in the wake of the Federal Reserve's decision not to raise interest rates last week. Schiff wasn't convinced by the positive market talk coming out of the Fed. “I knew that it was all talk, and when Janet Yellen actually spoke she validated what I said,” Schiff said. “She basically came out and said ‘We're not raising rates and it's not because we think the economy is weak, it's because we decided that lower interest rates are appropriate.' Which is all B.S, because it's all about the economy. The economy is a disaster. I think Yellen probably realizes we're in a recession.”
- Vermont Residents Leave State As It Becomes Riddled With High Taxes
Democratic presidential candidate Sen. Bernie Sanders isn’t coy about his intention to spend like crazy and raise everyone’s taxes if he’s elected president. Forgetting the fact that his health care plan is a disaster for the working poor, these sentiments of taxation to solve every societal ill appears to be the governing ethos in Vermont, where the state legislature just passed millions more in tax increases.
- Silver Jewelry Sales Strong, Reflecting Broader Demand for the White Metal
The market for silver jewelry grew in 2015, mirroring an overall surge in demand for the white metal, according to a survey report released yesterday by the Silver Institute: “Silver jewelry sales in the United States were solid in 2015 with 60% of jewelry retailers reporting increased sales, according to a survey conducted on behalf of the Silver Institute’s Silver Promotion Service (SPS). This marked the seventh consecutive year of growth for silver jewelry sales and confirmed that silver jewelry is an increasingly important category for many retailers.”
- Schiff: Obama's tax inversion rules will backfire
Economist, author and financial analyst Peter Schiff told CNBC's Rick Santelli the new tax inversion rules from the Obama administration, which ended the Allergan-Pfizer deal, could backfire. “By the government making it harder for American companies to buy foreign companies and invert, they are going to leave American companies vulnerable to being acquired by foreign companies instead,” Schiff said in a Santelli Extra interview exclusive to CNBC Pro subscribers. “And when that happens, the domestic job losses are going to be much bigger.” Apart from tax regulation, Schiff also discusses his views on inflation, gold, the Fed and Donald Trump.
- Fed minutes: Debated rate hike in April, but several concerned
Federal Reserve policymakers debated last month whether an interest rate hike would be needed in April though a consensus emerged that risks from a global economic slowdown warranted a cautious approach. “Many participants expressed a view that the global economic and financial situation still posed appreciable downside risks,” according to the minutes from the Fed's March 15-16 policy meeting released on Wednesday.
- California's $15 Minimum Wage Is Going To Be Painful
Of course, part of the basic intention of the rise in the minimum wage to $15 an hour in California is that it should be painful. Those plutocrats should be forced to disgorge all that they’ve made by exploiting the working man all these years and such pain is just wonderful. However, that’s not quite what’s going to happen as two interesting little studies show. The truth is that California is a very large and very diverse economy and there’s no evidence at all which shows that $15 an hour is the right price for labor right across it. (Of course, I argue that there shouldn’t be a minimum wage in the first place but that’s a slightly different matter.) Whatever your arguments in favor of a rise in the minimum wage there’s no way to make that one rate right for all of California.
- Central Banks are Pushing Monetary Heroin to Addicted Economies
We hear a lot about the role of central banks in the world’s economies. But what exactly have they been doing over the last few years, and what has the actual impact been? Central banks have the authority over the interest rates and the quantity of a nation’s currency. Their official responsibility is to regulate price stability. By law some central banks, such as the Federal Reserve, operate under a dual mandate and must also promote full employment. Central banks hold the reserve assets that support the integrity of their issued currency.
- Venezuela to cut power use with holidays
Venezuela’s President Nicolas Maduro has decreed that all Fridays for the next two months will be holidays, in a bid to save energy in the blackout-hit Opec country. “We’ll have long weekends,” Mr Maduro said in an hours-long appearance on state television on Wednesday night, announcing the measure as part of a 60-day plan to fight a power crunch. A severe drought, coupled with what critics say is a lack of investment and maintenance in energy infrastructure, has hit the South American nation, which depends on hydropower for 60% of its electricity.
- Trump Unbound
Even by The Donald’s standards his 95 minute long interview with the Washington Post was remarkable. He let loose so many stray shots as to leave the establishment press clucking in a chorus of disbelief. It undoubtedly started with the stink bomb he lobbied at the ” all is awesome” meme about the US economy and stock market.
- The Number of People Behind on Student Loan Payments Is Staggering
Student loan debt can haunt borrowers for decades. An increasing number of student loan borrowers are behind on their payments, creating concern that millions of Americans may never pay off their debts. About 43% of the 22 million Americans with federal student loans weren’t making payments as of Jan. 1, the Wall Street Journal reported. That’s actually a slight improvement from the same time last year, when the non-payment rate was 46%, the Department of Education found.
- Wholesale Inventories Drop Most Since 2013; Sales Miss As Slowdown Accelerates
There was one thing keeping US GDP growing in recent months: rising inventory. Well, no more. Moments ago the Dept of Commerce reported the latest inventory data and following major historical revisions, not only was last month's inventory print slashes from 0.3% to -0.2%, but the February Inventory number was a dramatic -0.5% drop, far below the -0.2% expected. This was the biggest sequential drop since the spring of 2013.
- Wholesale Inventory Plunge Is Bad Sign For U.S. GDP Growth
Wholesale inventories tumbled at their fastest rate in nearly three years, data showed, signaling first-quarter U.S. economic growth was even weaker than expected. Wholesale stockpiles fell 0.5%, the Commerce Department said Friday, the biggest drop since May 2013. Analysts had expected a 0.2% decline. Meanwhile, January was revised from a small gain to a 0.2% decline. Wholesale inventories have now fallen for five straight months as companies try to whittle down high stockpile levels. But wholesale sales have dropped for the last four months, down 0.2% in February after January’s 1.9% tumble.
- Cash Limits Are All About Control Over You, But You Can Take Back the Power
JP Morgan Chase Bank just fired another salvo in the “war on cash.” The bank recently capped ATM withdraws for non-Chase customers at $1,000 per day. The move came after the bank began installing new ATMs that dispense $100 bills. Some people were reportedly pulling tens of thousands of dollars out at one time, according to a report in the Wall Street Journal. A spokeswoman said the bank “felt it was prudent to set withdrawal limits on all of our ATMs.”
- The Atlanta GDP Now estimate falls to 0.1% from +0.4%
The Atlanta Fed updated their GDP estimate for the 1st quarter earlier today, and once again it is to the downside. The new GDP growth estimate is 0.1% vs. 0.4% last reported on April 5. The decline was attributed to the wholesale trade report from the US Bureau of Census. The forecast for the contribution of inventory investment to the 1st quarter to real GDP fell from -0.4% to -0.7%.
- Puerto Rico Senate Passes Sweeping Moratorium on Paying Debt
Puerto Rico’s Senate approved a bill calling for a moratorium on a wide range of debt payments, including general-obligation bonds, through January 2017 in the latest escalation of the Caribbean island’s fiscal crisis. The measure, passed around 2:30 a.m. local time, would allow Governor Alejandro Garcia Padilla to suspend payments on debt backed by the government, the island’s Government Development Bank and other public agencies, according to a copy of the legislation obtained by Bloomberg. That includes the Sales Tax Financing Corp., known by its Spanish acronym Cofina. A default on those obligations would be a first for Puerto Rico, which so far has only failed to pay on bonds backed by legislative appropriation and rum taxes.
- Special Report – Puerto Rico's other crisis: impoverished pensions
When Puerto Rico attempted to shore up its chronically underfunded public-employee pensions in 2013, Francisco del Castillo “knew grown men and women who wept.” Under the reform package, retirement ages rose. So did employee contributions. Current and future participants were transferred to less-generous defined-contribution accounts, similar to 401(k) retirement savings plans. Del Castillo, then the deputy chief of the island’s largest government-employee pension system, said members of his own staff who were on the verge of retirement suddenly faced the prospect of working seven or eight more years for reduced benefits. The law extracted “a pound of political flesh” from those, like del Castillo, who helped craft it, he said. “We wanted it to work.”
- Puerto Rico's Development Bank on Brink as Debt Gambit Goes Bad
Puerto Rico’s Government Development Bank, which was set up after the Great Depression to chart a course out of poverty, is on the verge of a collapse that would deepen the Caribbean island’s $70 billion debt crisis. The lender was designed to promote business investment with a long-term horizon, but in recent years politicians turned it into a piggy-bank that lent to the government and its agencies, helping keep them afloat as the island’s economy shrunk. Now it’s rapidly running out of cash and likely to default on a $422 million debt payment due in May — raising the risk that it may be pushed into receivership or broken up.
- Puerto Rico Investors Sue to Stop Development Bank Payments
Hedge funds holding debt in Puerto Rico’s Government Development Bank sued to stop the island’s key fiscal entity from making payments to local government agencies as it faces a growing cash shortage and the prospect of insolvency. The funds, which include affiliates of Brigade Capital Management, Claren Road Asset Management and Solus Alternative Asset Management, accused the bank in a lawsuit filed Monday in San Juan federal court of seeking to “prop up” local agencies at the expense of other creditors. The situation may imperil restructuring efforts for the bank, which its regulator says is facing a cash shortfall of as much as $1.3 billion in June. Puerto Rico, which is negotiating with creditors to reduce a $70 billion debt load, has “had every incentive to cannibalize” the bank to “meet its own liquidity needs through preferential transfers even if such transfers make it impossible to restructure” the bank, the hedge funds said in the complaint. “The unfortunate depositors and bondholders left behind in GDB will be left to bear amplified losses.”
- Kenya's Chase Bank placed under receivership by CBK
A retail bank in Kenya has been placed under receivership after running into financial difficulties. Panic withdrawals on Wednesday, caused by “inaccurate” rumours on social media, led to a run on Chase Bank, said the Central Bank of Kenya (CBK). Its branches were shut on Thursday. The bank is the third to be placed under the CBK's control in the past year. Chase had recently released two conflicting financial statements, a BBC reporter says. A subsequent audit showed it had hidden loans to its directors, adds the BBC's Ferdinand Omondi in the capital, Nairobi. In a statement, the CBK said it would appoint a team to run the bank.
- Chase ATMs to Limit Withdrawals for Noncustomers to $1,000 a Day
J.P. Morgan Chase & Co. capped ATM withdrawals at $1,000 per card daily for noncustomers—cracking down as people started pulling out tens of thousands of dollars at a time when the bank was modifying its machines to dispense hundred-dollar bills with no limit. The bank said there doesn’t appear to be fraud involved. But partly due to heightened regulatory scrutiny, banks are paying more attention to large cash transfers that could be a sign of money laundering or other types of shady activity. Typically, the card-issuing bank sets withdrawal limits, not the bank owning the ATM.
- EU referendum: IMF’s Christine Lagarde warns of dangers of a ‘Brexit’
Christine Lagarde, International Monetary Fund Managing Director, has put June’s EU referendum among the threats to the global economy. A vote to leave the EU is “clearly part of the uncertainty we have at the moment” Lagarde said in an interview with Bloomberg Television in Frankfurt, noting the impact it may have on London’s financial sector. Her comments came on the same say day she has urged governments to pursue more growth-friendly policies in a speech at Frankfurt's Goethe University, Germany. Lagarde warned that the recovery from the 2007-2009 global financial crisis “remains too slow, too fragile and risks to its durability is increasing”. She said that the global outlook has weakened further in the past six months, suggesting the IMD may be revising its growth outlook.
- Think the Market Will Reach a New High? Here’s Why We Don’t – Just look at the environment we’re in.
Stocks are once again rallying after another “mini crash” at the start of the year. We’ve had three of these things since October 2014 without much to show for it. Stocks have basically gone nowhere for a year and a half. After the first crash in late 2014, stocks were able to eke out a new high into May of last year. But since then, stocks have failed to make new highs despite strong attempts like this one. Ten months without a new high.
- Gas Pipeline Uses 160 Eminent Domain Suits To Get People’s Property In 3 States
Eminent domain is a tough pill to swallow for Americans who take their property rights very seriously, and the aggressive moves by Sabal Trail to seize property for a natural gas pipeline running through three southern states is turning into a drama of immense proportions. Sabal Trail, the joint venture planning to build a 500-mile natural gas pipeline through Georgia, Alabama, and Florida, has gone to court in order to secure the right of way through the land where the pipeline should pass. So far, Sabal Trail has filed 160 eminent domain suits and more are expected, according to a report by the Orlando Sentinel. The company is desperately trying to get the right of way through 346 more properties, though it says it has already secured the agreement of 1,248 landowners in the area along the route.
- Robert Kiyosaki And Harry Dent Warn That Financial Armageddon Is Imminent
Financial experts Robert Kiyosaki and Harry Dent are both warning that the next major economic crash is in our very near future. Dent is projecting that the Dow will fall to “5,500 to 6,000 by late 2017″, and Kiyosaki actually originally projected that a great crash was coming in 2016 all the way back in 2002. Of course we don’t exactly have to wait for things to get bad. The truth is that things are not really very good at the moment by any stretch of the imagination. Approximately one-third of all Americans don’t make enough money to even cover the basic necessities, 23 percent of adults in their prime working years are not employed, and corporate debt defaults have exploded to the highest level that we have seen since the last financial crisis. But if Kiyosaki and Dent are correct, economic conditions in this country will soon get much, much worse than this.
- PanamaPapers: India to probe hundreds for possible tax evasion
Even as many governments begin probing financial wrong-doing by those on the “Panama Papers” leak list, Indian Prime Minister Narendra Modi on Monday also ordered a multi-agency team to investigate the expose. 500 Indians, including top Indian film stars, business honchos and politicians, have been named in the list for alleged offshore holdings. According to an Indian Central Bank notification, those Indians setting up or buying foreign companies before 2013 are in ‘technical’ violation of Indian laws. Indian Prime Minister Modi has vowed to take action against all unlawful accounts held abroad.
- The EU Has Bigger Trouble than Brexit alone
The referendum in the Netherlands on April 6th is going to cause a lot of trouble, possibly axing the strong Dutch commitment to the European project. The plebiscite is about the Association Treaty between EU and Ukraine, into which the EU inserted some curious clauses about military cooperation and such. It is not a trading treaty per se, since those are the sole responsibility of the European Commission and would not require ratification by the member states. Another fact that points toward bigger issues at stake is the last-minute involvement of the US government that recently urged Dutch voters to vote YES.
- EL-ERIAN: Here are 10 things you should be closely watching in the global economy
Roller-coaster views about global growth were important contributors to the first quarter's dramatic “V”-shaped stock market performance — from a scare early in the year that weakness in China and elsewhere could tip the US into recession to a more comforting assessment underpinned by friendly central banks and, in the case of the US, strong job creation. Disappointing growth is also the common element behind numerous improbable developments that have become reality, be they negative central-bank policy rates in Europe and Japan, almost one-third of government debt globally trading at negative yields, or the influence of antiestablishment political movements on both sides of the Atlantic.
- The Path to the Final Crisis
Our reader L from Mumbai has mailed us a number of questions about the negative interest rate regime and its possible consequences. Since these questions are probably of general interest, we have decided to reply to them in this post. Before we get to the questions, a few general remarks: negative interest rates could not exist in an unhampered free market. They are an entirely artificial result of central bank intervention. The so-called natural interest rate is actually a non-monetary phenomenon – it simply reflects time preferences. Time preferences are an inviolable category of human action and are always positive.
- China’s Gold Intent – ICBC Bank Reclassified as an LBMA Market Maker
ICBC Standard Bank, China and the world's largest bank, has been reclassified as a spot Market Making Member of the London Bullion Market Association (LBMA) with effect from today according to a note posted on the LBMA website last night at 2100 GMT.
- ‘Everything Is Being Sold' – Smart Money Selling Soars, Now In 10th Straight Week
“Still No Confidence In The Rally” – that's the title of the latest weekly BofA report looking at the buying and selling by its smart money clients (institutional clients, private clients and hedge funds), which finds that not only were sales by this group of clients last week the largest since September, and the fifth-largest in our data history, but this was the 10th consecutive week of selling as absolutely nobody believed this fakest of fake “rebounds” in recent history.
- 19 Facts That Prove Things In America Are Worse Than They Were Six Months Ago
Has the U.S. economy gotten better over the past six months or has it gotten worse? In this article, you will find solid proof that the U.S. economy has continued to get worse over the past six months. Unfortunately, most people seem to think that since the stock market has rebounded significantly in recent weeks that everything must be okay, but of course that is not true at all. If you look at a chart of the Dow, a very ominous head and shoulders pattern is forming, and all of the economic fundamentals are screaming that big trouble is ahead. When Donald Trump told the Washington Post that we are heading for a “very massive recession“, he wasn’t just making stuff up. We are already seeing lots of things happen that never take place outside of a recession, and the U.S. economy has already been sliding downhill fairly rapidly over the past several months. With all that being said, the following are 19 facts that prove things in America are worse than they were six months ago…
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