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 February 12, 2016 to February 18, 2016:
- The $100 Bill Could Be the Next Victim in the War on Cash; Don’t Become One Too
The war on cash heated up this week when a former Obama economic adviser/ex-Treasury secretary floated the idea of eliminating the $100 bill. Lawrence Summers called for death to the Benjamins in a post on his Washington Post blog titled It’s Time to Kill the $100 Bill. The post announced the release of a paper by Harvard’s Mossavar Rahmani Center for Business and Government senior Fellow Peter Sands arguing that governments should stop issuing high-denomination currency such as 500 euro notes and $100 bills. The paper even proposed withdrawing such currency them from circulation.
- 2016 Reveals Banks Shaky & Gold Solid-James Turk
Gold expert James Turk says the banks are in trouble again. One of the biggest troubled institutions is Germany’s Deutsche Bank, and Turk contends, “It is quite alarming the shares of the stock are basically where they were in the lows of 2008. It’s at the bottom of that year’s financial crisis, and here we have not even started the financial crisis yet. The stock is back to those prices of seven or eight years ago. It makes you wonder what is yet to come. You are seeing publicity stunts like Jamie Dimon buying $25 million worth of JPMorgan stock. It reminds me of what we saw back in the 1930’s. In the history books, guys would go out and buy shares of their stock to convince people that things were okay. The market is telling us that people want to be in safer things, and it looks like gold’s trend has finally turned after a four year correction. . . . It looks like we are going to be heading higher.”
- Stocks Cut in Half & Gold Doubles in 2016-Bo Polny
Market cycle analyst Bo Polny says stocks are going to take a beating, and gold is going to shine in 2016. Polny contends, “What we’ve seen happen so far in gold is just a warm up. We are not even close to see movements in gold, this is just the start. . . . What’s coming is a transfer of wealth. When you are looking at a transfer of wealth, it means a huge financial shift in the landscape. . . . You are going to have the stock market crash this year of a minimum of 50% . . . and gold will double. A $5,000 stock investment, after it is cut in half, will only buy you one ounce of gold that will be $2,500, and that will happen this year.”
- Here’s why (and how) the government will ‘borrow’ your retirement savings
According to financial research firm ICI, total retirement assets in the Land of the Free now exceed $23 trillion. $7.3 trillion of that is held in Individual Retirement Accounts (IRAs). That’s an appetizing figure, especially for a government that just passed $19 trillion in debt and is in pressing need of new funding sources.
- Philly Fed index shows manufacturing contracts for sixth straight month
A early indication of manufacturing conditions in February indicated contraction for the sixth straight month, according to data released Thursday. The Philadelphia Fed said its manufacturing barometer of regional manufacturing activity rose slightly to negative 2.8 from negative 3.5. That was slightly ahead of the MarketWatch-compiled forecast for negative 3. Readings below zero indicate a contraction of activity.
- US Fed hawk now says ‘unwise' to continue rate hikes
It would be “unwise” for the US Federal Reserve to continue hiking interest rates given declining inflation expectations and recent equity market volatility, St Louis Fed president James Bullard said on Wednesday (Feb 17) in comments that mark a stark change of direction for one of the Fed's more hawkish inflation foes.
- Britain outside the EU would stand tall as a free and prosperous nation
In four months’ time the British people are likely to be asked to take the most important decision for the future of our country in their lifetimes. It is not about Europe as such. It is about whether we should remain within a deeply misguided and troubled institution known as the European Union. No one could have been clearer about the problem than David Cameron, in his Bloomberg speech three years ago, when he committed himself to securing a “fundamental, far-reaching reform” of the EU. He has conspicuously failed to do so.
- ALERT: Is This About To Ignite A Terrifying Global Storm?
On the heels of a reprieve in world markets, is this about to ignite a terrifying global storm? And finally, this is from today’s note from legend Art Cashin: Rumblings In The Euro Zone – Yra Harris, the sage of the CME, brought a potential seismic event in euro sovereign bonds to light in his blog earlier this week.
- The ban on cash is coming. Soon.
This is starting to become very concerning. The momentum to “ban cash”, and in particular high denomination notes like the 500 euro and $100 bills, is seriously picking up steam. On Monday the European Central Bank President emphatically disclosed that he is strongly considering phasing out the 500 euro note. Yesterday, former US Treasury Secretary Larry Summers published an op-ed in the Washington Post about getting rid of the $100 bill. Prominent economists and banks have joined the refrain and called for an end to cash in recent months.
- Foreign Officials Sell A Record $48 Billion In U.S. Treasurys In December
There has been much speculation whether foreign official institutions (central banks, SWFs, reserve managers and so on) are selling Treasurys or equities, or both as part of the Quantitative Tightening phenomenon. Moments ago, courtesy of the latest TIC data we have an answer: based on the monthly flow report breaking down Treasury transactions between foreign official and private entities, in December the far more important, former, group sold $48.1 billion in US Treasurys: the highest single monthly outflow on record.
- Gold: Not Just Another Commodity, A Safe-Haven in Times of Uncertainty
Mainstream media pundits, economists, and journalists alike love to lump gold in with other commodities. They put it in the same category as oil, copper, wheat, natural gas, and other things that come out of the ground. But while gold is in fact a metal you must dig up, it is a mistake to call it “just another commodity.” Gold’s recent price performance shows that it is anything but. Gold is a superior safe-haven asset to own in times of financial duress and uncertainty.
- Tony Blair: Britain must give up MORE powers to Brussels and mass migration ‘GOOD for UK'
TONY Blair has called alled for Britain to surrender MORE powers to unelected Brussels bureaucrats and insisted mass migration from eastern Europe has been GOOD for the country as he made a bizarre case for staying in the EU.
- John Paulson Pares Bet on Gold in Fourth Quarter
Hedge-fund manager John Paulson pared his long-held bet on gold in the fourth quarter, according to a filing Tuesday. Paulson & Co. reduced its holdings in an exchange-traded fund that follows the price of gold by $400 million, the filing indicated. The move may have been a costly one: Gold futures soared last week to their highest level in a year, and the precious metal has been one of the top performers in 2016.
- Oil prices crash after Saudia Arabia and Russia agree to freeze production
The world's two most powerful oil producers have reached a tentative agreement to freeze oil production at their current levels, dashing hopes of a supply cut for the world's glutted market. Meeting in Doha, Russia, Venezuelan and Saudi Arabian oil ministers reached the deal on Tuesday morning after months of speculation about a Russia-Saudi entente to limit output and help stabilise prices.
- Stocktake: Looking for investor capitulation
Looking for investor capitulation Market sentiment may be awful but investors are not yet “max bearish”, indicating any bounces should be sold. That line may sound familiar to StockTake readers – we used it three weeks ago, but it remains true today.
- Empire Fed Contracts For 7th Straight Month, Hovers At 7-Year Lows
The Empire Fed Manufacturing survey has been in contraction (below 0) since July 2015 and while February's -16.64 print was above January's -19.37, it was dramatically worse than the expected -10.0. New Orders and Shipments remain in contraction as both prices paid and recived tumbled. Hope improved modestly but remains markedly below December levels, as CapEx spending expectations weakened once again.
- Collapse Of The Paper Gold & Silver Market May Be Close At Hand
There is something seriously wrong taking place in the markets today. This is also true in the paper gold and silver markets as well. For a paper precious metals futures market to function properly, there has to be ample supplies of physical metal. However, the ongoing trend of falling precious metal inventories points to big trouble in the paper gold and silver markets.
- A Cash Ban Has Already Begun…
When looking over these data points, the first thing that jumps out at the viewer is that the vast bulk of “money” in the system is in the form of digital loans or credit (non-physical debt). Put another way, actual physical money or cash (as in bills or coins you can hold in your hand) comprises less than 1% of the “money” in the financial system. As far as the Central Banks are concerned, this is a good thing because if investors/depositors were ever to try and convert even a small portion of this “wealth” into actual physical bills, the system would implode (there simply is not enough actual cash).
- Goldman Channels FDR's `Nothing to Fear' With Sell Gold Call
Goldman Sachs Group Inc. says it’s time to bet against gold as bullion’s rally to the highest in a year isn’t justified, backing the bearish call with a comment from a former U.S. leader in a report that was issued, appropriately enough, on Presidents’ Day. Gold will slump to $1,100 an ounce in three months and $1,000 an ounce in 12 months, analysts including Jeffrey Currie and Max Layton wrote in the report that was dated Feb. 15 and received on Tuesday. It was headlined with a remark from former President Franklin D. Roosevelt.
- Swiss Won't Rethink 1,000-Franc Note as Draghi Hails Crime Fight
Swiss officials have no plans to follow the European Central Bank and consider withdrawing their highest-denomination banknote to help fight crime. A day after ECB President Mario Draghi told lawmakers that there’s “increasing conviction” around the world that such bills are used for illegal purposes, Swiss National Bank Spokesman Walter Meier said by telephone that his institution “isn’t thinking about getting rid of the 1,000-franc note.”
- Negative Interest Rates a Positive for Gold
Negative interest rates are becoming more and more in vogue and that could be good news for gold. Last week, Sweden’s central bank plunged a key interest rate even deeper into negative territory. Riksbanken slashed the rate from negative 0.35% to negative 0.50%. Many analysts anticipated the rate reduction, but the magnitude of the cut caught most by surprise.
- ECB chief says bank is ready to act in March if needed
The European Central Bank is ready to ease policy further in March, President Mario Draghi said on Monday, highlighting risks from financial market volatility, a global slowdown in growth and low oil prices. The ECB will examine risks emanating from weaker emerging market growth and look at whether plunging crude prices along with market turbulence could derail its efforts to boost inflation, Draghi told lawmakers in the European Parliament.
- Morgan Stanley agrees to $3.2 billion settlement for selling risky mortgages
Morgan Stanley on Thursday agreed to pay more than $3.2 billion to settle allegations by state and federal authorities that it downplayed the risk of mortgages it sold in the years before the financial crisis. In announcing the settlement, New York Attorney General Eric T. Schneiderman said the bank’s actions contributed to the collapse of the housing market.
- Japan's economy shrinks 1.4 per cent
Japan's economy shrank more than expected in the final quarter of last year as consumer spending and exports slumped. The result has added to headaches for policymakers already wary of damage the financial market rout could inflict on a fragile recovery. Gross domestic product contracted by an annualised 1.4 per cent in October-December, bigger than a market forecast for a 1.2 per cent decline and matching a fall marked in the second quarter of last year, Cabinet Office data showed on Monday.
- Is Gold Making A Triumphant Comeback?
Analyzing the long term economic and market cycles, the probability is very high that the stock market downturn may eventually be the worst since the Great Depression. Of course, there are many more safety nets now, and the central banks of the world will coordinate in order to soften a decline. But the Fed and other central bankers are not the solution. They are the problem. All the ‘safety nets’ have to be paid for with money the governments don’t have. Therefore, it will have to be financed with ‘money creation’ by their central banks.
- Investors are piling into gold as fear stalks markets
Gold is back in favor with investors running scared of global market turmoil. Physical gold prices have jumped 16% so far this year, and the Gold Shares (GLD) exchange-traded fund (ETF) is up nearly 13% — a handy return compared to big losses on most stock markets. Demand for gold as an investment was up 8% in 2015, and there's evidence that trend is accelerating this year.
- The stage is now set for a basic income for all
It has been a breathtaking week for social policy in Canada. The stage is now set for a serious discussion about the merits of a basic income guarantee, and many of the actors have been cast in their leading roles. Jean-Yves Duclos, federal minister of families, children and social development, stated to both CBC Radio and the Globe and Mail last week that a guaranteed minimum income is a policy worthy of discussion, once the promised enhancements to child tax benefits occur — an existing kind of minimum income for families with children.
- Sunny Nevada Just Killed the Solar Industry with 40% Tax Hike, Derailing the Off-Grid Movement
While Nevadans were celebrating the holidays under solar-powered lights, the Nevada Public Utilities Commission (PUC) voted unanimously to increase a monthly fee on solar customers by 40% while reducing the amount they get paid for excess power sold to the grid. Adding insult to injury, they made the rate changes retroactive, sabotaging consumer investments in solar energy. This single move by government regulators will effectively kill the solar industry in Nevada and put an end to the surge of people seeking to detach from the grid by harnessing their own energy from the sun. Just as importantly, it serves to protect the profits of Nevada’s public utility company, NV Energy.
- Gerald Celente – One Of The Wildest 6 Weeks Of Trading In History, But Here’s The Big Surprise
On the heels of an absolutely wild trading week for global markets, today the top trends forecaster in the world spoke with King World News about one of the wildest six weeks of trading in history. Eric King: “Gerald, they put a few hundred points to the upside in the Dow. So they may rally this market out of the hole. It hit the wire today that Jamie Dimon bought a bunch of JP Morgan stock. Your thoughts on the possibility of a rally, maybe a short squeeze on the public’s (near-record) short positions to get them out before the next tumble to the downside. Do you see that as a possibility?” Gerald Celente: “Of course it’s possible. Absolutely. The game is rigged. Go back to the Davos Meeting in mid-January. I read it on King World News, when you had Art Cashin on and he quoted Ray Dalio from Bridgewater Associates saying that we needed more quantitative easing from the Fed…
- Venezuela Declares Another Emergency: It Has Run Out of Food
Venezuela’s opposition legislature has declared a “nutritional emergency,” proclaiming that the country simply does not have enough food to feed its population. The move comes after years of socialist rationing and shortages that forced millions to wait on lines lasting as long as six hours for a pint of milk, a bag of flour, or carton of cooking oil.
- Deutsche Bank Burns – Silver Is The Trade Of The Decade
Deutsche Bank management spent Tuesday and Wednesday trying to make the case that it had plenty of liquidity and a gameplan to address structural issues. They threw the hail Mary yesterday when they announced the possibility of using available “liquidity” to repurchase a few billion euros worth of senior bonds. I have quotes around “liquidity” because, as I outlined in my blog post about this yesterday, DB is technically insolvent.
- The government just admitted it will use smart home devices for spying
If you want evidence that US intelligence agencies aren’t losing surveillance abilities because of the rising use of encryption by tech companies, look no further than the testimony on Tuesday by the director of national intelligence, James Clapper.
- JPM's Kolanovic Warns Upcoming Recession Could Be Comparable To 2008 Crisis; Says “Buy Gold, Cash And VIX”
By now all of our readers should be familiar with JPM's head quant Marko Kolanovic whose unblemished track record of accurate market calls is not only second to none, but is the equivalent in absolute value terms of Dennis Gartman's consistently wrong calls, which is why we won't spend time introducing him.
- The sinking EU ship: Shock as Italian PM says: ‘EU is like the orchestra on the Titanic'
ITALY’S prime minister Matteo Renzi has stunned Brussels by comparing crisis-hit EU bosses as “like the orchestra playing on the Titanic”. The spirited leader continued his attacks on Brussels chiefs yesterday over their failure to deal with the multiple crises afflicting the 28-member bloc. The EU is currently beset by emergencies such as the global migrant crisis, eurozone debt timebomb, high levels of youth unemployment, the threat of terrorism and Britain’s EU referendum.
- Genius: FATCA has brought in just $13.5 billion in revenue on a cost of $1 trillion
Earlier this week the State Department released its latest statistics for people who have renounced their US citizenship. 2015 was another record year, with 4,279 people divorcing themselves from the US government and heading to greener pastures elsewhere.
- Gold price: why major brokers are still predicting a fall to $1,000
Winner of the London Bullion Market Association's 2015 price-prediction competition forecasts an average of $970 this year. It may be the best-performing asset in what has been a tumultuous start to 2016 but gold is still vulnerable to improvements in rates and the dollar and will fall to $1,000 an ounce or below this year, according to two analysts.
- Gerald Celente Warns The Global Crash Of 2016 Will Be Twice As Devastating As The 2008 Collapse
With gold spiking nearly $70 at one point during today’s trading, today the top trends forecaster in the world warned King World News that the global crash of 2016 will be twice as devastating as the 2008 collapse. Eric King: “Gerald, Stephen Leeb told King World News today that “The world is scared to death of deflation.”
- World Now On The Edge Of Total Panic As Gold Spikes $60 And Global Stock Markets Plunge
With gold spiking more than $60, the dollar falling and bonds surging, today one of the top money managers in the world warned King World News that the world is now in the early stages of total panic as global stock markets plunge. King World News warned its global readers yesterday that global panic was coming because of the derivative nightmare in Hong Kong. Well, it’s here…
- After 1,428 years here’s what brought down the world’s oldest business
In 578 AD, a Korean immigrant named Shigemitsu Kongo made his way to Japan at the invitation of the royal family. Buddhism was on the rise in Japan at the time; though it had only been introduced a few decades prior, the Empress consort had been actively encouraging the adoption of Buddhism across Japan. But since the Japanese had no experience building Buddhist temples, they looked overseas for help. That’s where Kongo came in.
- 5 worst investment calls of this century
The 21st century is well into its second decade, but it’s already had two stock market crashes, a global financial crisis and the Great Recession, from which we haven’t fully recovered. Not surprisingly, financial pundits and gurus have gotten many things wrong. But some have gotten them really wrong. Here are my picks for the five worst investing calls so far, based on how off base they were and how big their consequences were.
- Some Hedge Funds Want to Make Subprime Auto Loans Next Big Short
A group of hedge funds, convinced they have found the next Big Short, are looking to bet against bonds backed by subprime auto loans. Good luck finding a bank willing to do the trade.
- The US Is Already in a Recession; Get Ready for Some Crazy Monetary Policy
Jim Grant appeared on CNBC’s Closing Bell and unhesitatingly said he thinks the US economy has already gone into recession: “I think we are in one…I think there’s a defensible case to be made that a recession began late last year.”
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