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Dec 15, 2023 - 11:55:33 PST
Billionaire investor Stan Druckenmiller, speaking on CNBC, issued a stark warning about the soaring U.S. government debt, stressing its potential to drastically hinder essential spending and erode America's global leadership. He sharply criticized Treasury Secretary Janet Yellen for failing to capitalize on low-interest rates during the pandemic to issue long-term bonds. Druckenmiller's outlook paints a grim picture of the U.S. economy's future under current fiscal policies.
Dec 15, 2023 - 11:46:29 PST
Over three years since the 2020 Covid economic shutdowns, troubling signs reemerge in the financial markets. US investment-grade bond yields have experienced their largest two-day drop since April 2020. Additionally, the US Treasury 10Y-2Y yield curve continues to be steeply inverted, indicating potential economic distress.
Concerns Mount in Crucial U.S. Financial Sector Over Fed's Reducing Balance SheetDec 15, 2023 - 08:13:16 PST
Concerns are mounting over the Federal Reserve's potential miscalculation in its quantitative tightening strategy, risking disruptions in critical financial systems like the repurchase-agreement markets. Recent tensions in these markets have pushed one benchmark rate to a record high, reminiscent of the crisis in September 2019 when an overnight market rate spiked to 10%, prompting emergency intervention by the central bank.
Weak GDP Growth Projected for U.S. Q4 as Per PMIs, Despite Prices Remain ElevatedDec 15, 2023 - 07:59:00 PST
The Composite US PMI's unexpected rise to 51.0 in December masks deeper economic issues, notably a worrying decline in Manufacturing, which fell to 48.2. This downturn in manufacturing, set against a backdrop of weak global data, signals significant and persistent challenges in the economy despite a marginal improvement in Services.
An inflation lesson from a beloved holiday classic, plus the latest on the Fed, interest rates, gold, and more.
Two weeks ago, Federal Reserve Chairman Jerome Powell said it would be "premature" to conclude that monetary policy is sufficiently restrictive. This week, the Fed indicated rate cuts are on tap for next year. What a difference two weeks makes! In this episode of the Friday Gold Wrap, host Mike Maharrey breaks down this week's Fed meeting and the status of the inflation fight.
Gold prices are heading towards a weekly increase, fueled by a declining U.S. dollar and reduced Treasury yields following the Federal Reserve's hint at lower borrowing costs next year. Spot gold rose by 0.3% to $2,041.70 per ounce, achieving a 1.9% increase this week, while U.S. gold futures climbed 0.6% to $2,056.40.
Bond King Jeffrey Gundlach’s ‘Fire Alarm’ Is Going Off as Treasury Yields Break Below a Key LevelDec 15, 2023 - 06:03:13 PST
DoubleLine's founder warned in a CNBC interview that a drop below 4% in the 10-year rate could signal major economic troubles. Since then, the rate has decreased to 3.9%. He anticipates a further decline into the "low threes" in 2024, coinciding with a likely recession. Gundlach predicts the Federal Reserve will cut the fed funds rate by 200 basis points, significantly more than the 75 basis points projected by Fed officials for 2024, reflecting a severe economic slowdown.
After Three Strong ‘Beats’ in a Row, the Empire State Manufacturing Survey Crashes into ContractionDec 15, 2023 - 05:57:18 PST
The Empire State Manufacturing Survey, after three consecutive strong performances, plunged into contraction in December, falling from +9.1 to -14.5, far below the expected +2.0. This significant decline shifted the measure from a 7-month high in 'expansion' to a 4-month low in 'contraction'.
Households across income levels are equally feeling economic strain, with 60% of those earning under $50,000 and 61% of those making over $100,000 per year perceiving the economy as being in a recession.
The euro zone's business activity sharply declined in December, signaling a likely recession. This downturn, affecting major economies like Germany and France, spanned both services and manufacturing, indicating a severe and widespread economic slump.
Since 1950, When the Fed Starts to Cut Rates, the Unemployment Rate Has SpikedDec 15, 2023 - 05:33:25 PST
Historically, when the Federal Reserve starts cutting rates, the unemployment rate often spikes, usually beginning three months after the first cut and averaging around 7.5%. In contrast, the Fed's current projection is for the unemployment rate to rise only to 4.1%, just 0.4% above the current level. This pattern suggests that achieving a "soft landing" for the economy is unlikely, based on past trends.
2023 has been a challenging year for American finances. A recent report reveals that 6.8 million Americans are behind on payments or have received deferments on at least one credit account. The survey also identifies the regions in the U.S. where these financial difficulties are most pronounced.
President Xi Jinping's administration faces increasing pressure to enhance support for China's economy, with high expectations for a significant growth target in 2024. The country's recovery from the pandemic has been hindered by an ongoing real estate crisis and deflationary trends, indicating persistently low consumer confidence.
Dec 15, 2023 - 05:11:08 PST
Europe's leading central bankers emphasized that it's premature to ease measures against high inflation, despite the U.S. Federal Reserve Chair Jay Powell signaling potential rate cuts. Despite the European Central Bank and the Bank of England's resistance to rate-cutting speculation, investors are increasingly betting that these banks will eventually indicate borrowing cost reductions in 2024, following the Fed's lead.
Fed's Rate Projections Lead Dollar to Its Worst Week in Nearly Half a YearDec 15, 2023 - 05:07:42 PST
The U.S. dollar is on track for its largest weekly decline in five months, influenced by expectations of rate cuts from the Federal Reserve. In contrast, the more stringent monetary policies of central banks in Europe have bolstered the euro and the pound, contributing to their weekly gains against the dollar.
BIG CRACKS APPEAR: Massive U.S. Deficits & Major Problems At The FDIC Deposit InsuranceDecember 15, 2023
While the U.S. Treasury monthly deficit surged again in November, this is only one part of the "Major Problems" occurring in the U.S. financial system. Another BIG CRACK is appearing in the U.S. FDIC Insurance Fund as the percentage of insured deposits hit a low...
Gold and silver are poised to significantly outperform in the metals sector, with gold projected to reach new highs of around $2,175/oz by the fourth quarter of 2024. Silver is also expected to see a strong uptrend, averaging near $30/oz during the same period. This optimistic forecast, driven by the Fed's rate cutting cycle and declining U.S. real yields, highlights a particularly bullish outlook for both metals into early 2025, as emphasized by J.P. Morgan's Gregory Shearer.
In 2023, despite a slight slowdown, central bank gold purchases showed resilience according to the World Gold Council. Gold demand globally remained robust, with a 3% increase in jewelry consumption and a 6% rise in demand for gold bars and coins. Gold production also saw significant growth, exemplified by Barrick Gold Corp's Nevada project. Notable countries with substantial gold reserves include Austria, Spain, Lebanon, the UK, Kazakhstan, Saudi Arabia, Uzbekistan, Portugal, Taiwan, and Turkey, highlighting gold's importance as a stable economic asset.
Gold prices hit a 10-day high, with spot gold rising 0.5% to $2,036.69 per ounce, following the Federal Reserve's indication of ending its monetary tightening cycle. U.S. gold futures increased by 2.7% to $2,051.20. This surge is linked to a weaker U.S. dollar and lower Treasury yields, making gold more attractive as interest rates fall. The market anticipates a potential Fed rate cut in March, alongside increases in silver, platinum, and palladium prices.