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Powell to Face Capitol Hill Hearing at a Time of Rising Uncertainty Over Fed’s Interest-Rate PlansJun 21, 2023 - 05:23:17 PDT
Fed Chair Jerome Powell is set to testify before Congress for two days, addressing the key question of how the central bank will proceed with interest rate hikes. Last week's Fed meeting yielded mixed signals, with policymakers predicting two more rate increases this year to combat inflation. However, they also revised their inflation forecast higher for next year. Surprisingly, they decided to hold off on a rate hike for the first time in 11 meetings, despite the gloomy outlook.
US equity futures are flat as global markets decline on rising bond yields and UK inflation data. S&P futures down -0.1% after back-to-back losses. FedEx Corp. shares drop 3% on weakened demand. Dollar strengthens, Treasury yields rise. Gold, oil, and Bitcoin show little change. Powell testifies today, more hawkish sentiment expected. 20-Year Treasury Bond auction at 1:00 p.m. ET.
The average person doesn't understand gold. Or even money for that matter.
Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee on Wednesday (June 21). The Fed chief engaged in some more open-mouth operations, trying to guide monetary with words instead of actions.To understand a few things he said, you have to read between the lines.Oh, and he also got at least a couple of things wrong along the way.
Jun 20, 2023 - 13:34:26 PDT
Market analyst Ted Butler raises concerns about the substantial increase in monetary metals derivatives positions held by JPMorgan, Chase Bank, and Bank of America. He suggests that these positions may belong to the U.S. government, with the banks acting as brokers. The disproportionate nature of these positions compared to trading on the New York Commodities Exchange raises suspicions of government involvement. Butler's analysis can be found at SilverSeek.
US National Debt Reaches $32 Trillion, TGA Refilling Drains Market LiquidityJun 20, 2023 - 13:04:15 PDT
The US national debt has spiked by $572 billion, surpassing $32 trillion. Concerns about inflation and interest rates emerge from fiscal stimulus and deficit spending. The Treasury is selling Treasury securities to replenish its checking account, but deficit spending may outpace tax receipts. Massive bond issuance is necessary to address the budget deficit. The previous drawdown of the Treasury General Account injected liquidity into the markets, while simultaneous quantitative tightening and TGA refilling are now draining liquidity with some lag effects.
Extremely Stretched Sentiment: S&P Positioning Is The "Most Extended Ever"Jun 20, 2023 - 12:55:12 PDT
Market sentiment has reversed from bearish to bullish, leading to extremely stretched positioning, as indicated by Goldman Sachs' Equity Sentiment Indicator reaching its highest level since April 9, 2021. The indicator measures aggregate positioning and risk sentiment in the US equity market.
FDIC proposes special assessment on large banks due to losses from uninsured depositors at Silicon Valley Bank. The real problem lies in banks' risky investments with these deposits. Solution: require safer investments and hold banks accountable. Transition to a 100% safekeeping bank to eliminate deposit risks and benefit depositors.
CPI and core CPI inflation cooled, but PCE inflation remains high. The Fed aims for 2% inflation but lacks a clear plan. Additional rate hikes were discussed. Rent is a key factor in core inflation. Global inflation persists, and the Fed faces a dilemma. The stock market bubble continues in an imbalanced economy.
The number of hours worked suggests a recession view according to Gross Domestic Income (GDI). Despite the addition of more workers, average weekly hours are lower compared to pre-pandemic levels. There is a significant discrepancy between job growth and employment levels. GDI data aligns with the picture portrayed by hours worked and full-time employment. Revisions to GDP and jobs are expected to be downward, indicating a potential recession.
The May 2023 New Residential Construction Report showed revisions and mixed results. Housing starts in April were revised downward by 4.4%, while building permits in May increased by 5.2% compared to April but decreased by 12.7% from last year. Housing starts in May were up 21.7% from the revised April estimate, with single-family housing starts showing an 18.5% increase. Caution is advised due to potential revisions, and future year-over-year comparisons are expected to be easier.
The US national debt has surged by nearly $600 billion in just thirteen days since the debt ceiling resolution was signed. With a debt-to-GDP ratio of 121%, it surpasses the threshold of concern. The notion that "we owe it to ourselves" is flawed, as various entities, including foreign governments, hold significant portions of the debt. Repayment is essential to avoid catastrophic consequences, but current policies hinder economic growth. Social Security is projected to run out of funds in a decade, emphasizing the urgent need for change.
Gold and silver prices have been fluctuating due to central bank decisions and the US Federal Reserve's monetary policy outlook. Despite the volatility, experts see favorable long-term opportunities for both metals. Silver is considered a better choice for investors seeking higher returns, while gold's price movement will provide further guidance. Economic growth risks and a weakening US dollar support the positive outlook for gold and silver.
The recent OCC derivatives report shows impressive growth in JPMorgan's and Bank of America's precious metals holdings, signaling their increasing confidence in gold and silver. Bank of America's derivatives positions, particularly in gold, have surged by a remarkable $34 billion (50%). These bullish moves by major banks indicate positive developments and potentially exciting opportunities in the gold and silver markets.
Gold faced a 1% decline on Tuesday due to strong U.S. housing starts data and a stronger dollar. However, the outlook remains positive as traders anticipate cues from Federal Reserve Chair Jerome Powell's testimony on interest rate strategy. Despite the short-term dip, analysts see potential for gold to rebound, especially with inflation remaining elevated and geopolitical tensions continuing.
The fabricated Gulf of Tonkin attack led the US into the Vietnam War, with General Westmoreland's failed leadership going unpunished. Similar patterns of failure can be seen in government policies, like the mishandling of the pandemic and inflation by the Federal Reserve. Despite bank failures, the Fed's leadership remains unchanged. Considering the risks, owning real assets like gold may be wise.
Gen Xers are facing a retirement crisis, with 56% having less than $100,000 saved and 22% having no savings at all. Factors like economic challenges, student loan debt, and the housing crisis have hindered their ability to save. Inflation has further impacted their retirement plans, and the majority carry significant debt. It's crucial for Gen Xers to start saving, prioritize debt repayment, cut expenses, and consider investment options. Taking action now can improve their retirement prospects and reduce reliance on government programs.
Russia has sent nuclear weapons to Belarus, with the rest to be delivered by summer's end. The move aims to deter strategic defeat and respond to aggression. The transfer marks Russia's first since the Soviet Union's collapse. The weapons are short-range tactical nuclear bombs. Putin emphasized their use for self-defense only.
New platforms for cross-border central bank digital currencies (CBDCs) could improve efficiency and safety, according to the IMF. They propose a global CBDC platform with capital controls to reduce payment costs. The IMF is working on a global infrastructure for different CBDCs to work together. The system would enhance cross-border payments and financial markets while protecting privacy. Blockchain technology has limitations, including validator costs, security, efficiency, and privacy concerns.
Shocking Housing Starts Data: Economists Blown Away By 11-Sigma Beat After Biggest Monthly Surge On RecordJun 20, 2023 - 07:48:05 PDT
US housing starts and permits in May surprised experts as they soared to record highs. Housing starts rose by 21.7% to a 1.63 million annualized rate, while permits climbed 5.2% to 1.49 million units. The data indicates a stabilizing housing market but also highlights the impact of high mortgage rates on affordability. The strong numbers are expected to boost Q2 GDP estimates.