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European currencies are plummeting, with bleak economic prospects and looming rate cuts. Sterling hit a six-month low against the dollar, while other European currencies are also faltering amid rising oil prices and a strengthening dollar. There's speculation the Euro could approach dollar parity, highlighting Europe's deepening economic troubles.
US, EU PMIs Signal Slowing Growth, Rising Prices are Signaling Global StagflationSep 22, 2023 - 07:53:27 PDT
Euro area growth is stagnating, particularly in France and the UK, despite minor improvements in Germany. Inflationary pressures, though currently moderate, loom on the horizon. The US faces further economic challenges with manufacturing barely recovering and services declining. With slower growth and inflation, central banks are grappling with the looming threat of 'Stagflation'.
The FOMC and the Bank of England surprised markets by not raising interest rates this week as expected. Following the FOMC’s decision, gold and silver fell on the back of its hawkish statement before recovering slightly. In Europe this morning, gold was $1926 up a net $2 from last Friday’s close. Silver fared much better at $23.68, up 65 cents. Silver is obviously in a bear squeeze, while hedge funds have become disinterested in gold.Often, silver leads the way upwards and this may be the case today. The next chart shows how Open Interest on Comex remains low in both contracts, indicating that downside is limited.These are the sort of doldrums that can support a substantial bull leg, so on balance the danger is being short rather than long. But there is one big hurdle to overcome, and that is a firm dollar and rising T-bond yields. These are up next:It is not just a problem facing dollar markets. The next two charts show 10-year bund and JGB yields.
Central banks, including the European Central Bank and the Federal Reserve, are grappling with the complexity of addressing prolonged high inflation. Despite recent challenges, like misjudging the transitory nature of inflation and dealing with unpredictable guiding metrics, these institutions now hint at a prolonged period of higher rates. Their previous forecasts have often been inaccurate, leading to diminished confidence in their projections. Additionally, there's a lack of consensus among economists about key indicators, complicating the policy-making process.
US Debt: We Are Now Officially Paying More Than $2 Billion per Day Just in Interest Expense Alone!Sep 22, 2023 - 06:37:40 PDT
US debt surpassed $33 trillion just 60 hours ago and has increased by an additional $50 billion. This translates to an increase of $833 million in debt every hour. Equally distributing the total US debt to every household would result in a burden of $252,000 per household. Daily interest expenses exceed $2 billion. Furthermore, the debt ceiling remains unlimited until January 2025. Simply unsustainable.
Inflation Adjusted Home Prices Are Now 85% Above Their Average Dating Back to 1900Sep 22, 2023 - 06:12:12 PDT
Accounting for inflation, current home prices surpass any previous records. Homes now cost 20% more than their inflation-adjusted 2008 peak. Shockingly, the median home now sells for an alarming 530% of the median annual income, and the median house payment consumes 49% of median PRE-TAX income. Housing affordability is at its all-time low.
Sep 22, 2023 - 06:03:46 PDT
Bonds have plunged to their weakest levels in years, pushing mortgage rates to near a 23-year high of 7.47% for a 30-year fixed rate. The Conference Board's Leading Economic Indicator reported a decline of -0.4% for August, with a year-over-year drop of -7.6%. Despite attempts by the Federal Reserve to curb inflation, their efforts fall short. The Fed's target rate has increased rapidly recently, but its balance sheet is slowly contracting.
Growth is linked to increasing debt and spending, but when discretionary spending falls, growth stumbles. High corporate profits are unsustainable, and if they drop to a more historic norm, it could lead to a 2/3 decline in stock valuations. Current stock market values are inflated due to temporary financial conditions and are detached from economic reality.
Amid fears of prolonged high interest rates, investors are rapidly withdrawing from equities, says Bank of America Corp. Global equity funds lost $16.9 billion in a week, with US stocks hit hardest. Alarming signs point towards potential market instability by 2024, with major financial firms echoing these concerns.
The Federal Reserve wrapped up its September meeting on Wednesday and left interest rates unchanged. But Powell and Company had plenty to say. In this episode of the Friday Gold Wrap, host Mike Maharrey breaks down the rhetoric and argues that what the Fed says and what it will do are two different things.
JP MORGAN OIL MAGIC: Provides A Clue About The Global Oil Industry's Massive Natural Decline RateSeptember 22, 2023
If the JP Morgan energy analysts are correct, the global oil industry is facing a massive decline in base production. What's even more alarming, is that they have provided some "MAGICAL OIL SUPPLY" that will offset this base decline by 2030. I have my doubts... LOL...
China, in a strategic move, increased its gold reserves in August, positioning itself positively in the global market. While global gold ETFs saw outflows, Chinese ETFs recorded inflows, highlighting the nation's strong inclination towards the precious metal. The Shanghai Premium, an indicator I've monitored, has been consistently bullish, reflecting China's burgeoning demand for gold. With the launch of the Shanghai Gold Exchange in 2014 and steady growth in official reserves, China's influence in the gold market has undeniably risen. This move not only showcases the public's trust in gold as a safe-haven asset but also emphasizes China's vision to play a dominant role in the gold sector. Simply put, China's golden era is in full swing.
Following Western sanctions due to Russia's incursion into Ukraine, the UAE's primary gold supplier in the past year was Russia. According to the UN's Comtrade database, the UAE imported 96.4 tons of Russian gold, constituting about a third of Russia's yearly mining output and marking over a 15-fold yearly surge in gold imports from Russia to the UAE.
The House Financial Services Committee approved a bill banning the Fed from developing a US central bank digital currency (CBDC). Introduced by Congressman Tom Emmer, the bill highlights concerns about privacy and individual sovereignty. Despite many countries progressing with their own CBDCs, the U.S. remains divided. While the bill's fate in the House is uncertain, its prospects in the Democrat-led Senate appear grim. Rep. Maxine Waters warns the bill could hinder the U.S., especially if the dollar loses its global dominance. The House's decision on the bill remains awaited.
The U.S. penalizes the homeless, poor, and mentally ill for merely trying to survive. Despite a housing crisis, laws against basic survival activities rise. The bail system jails those who can't pay, ruining lives. Many can't handle minor emergencies financially, yet face crippling bails and fines. Instead of aiding the mentally ill, the U.S. imprisons them. These harmful policies deepen societal rifts, showcasing the nation's misplaced priorities.
Rising flash mob thefts across the U.S. are devastating retailers, forcing many to lock up goods reminiscent of restrictive shopping eras. Crimes like the $300,000 heist at a Los Angeles Nordstrom are becoming commonplace. This criminal surge, combined with staff cuts and increased costs, is endangering the traditional shopping experience. The situation reflects a failing system due to misguided policies favoring criminals over law enforcement.
Navigating the world of silver investment can feel a bit daunting. With some platforms offering hundreds of options, but we’re here to help.
Amid pandemic lockdowns, record inflation, mounting student debt, and an unstable job market, more young adults are living with their families than striking out on their own. The American Dream seems shattered, with 45% of Americans aged 18 to 29 living with family. This dismal economic situation, reminiscent of the 1940s post-Great Depression era, suggests the current landscape is stacked against young people, rendering financial success nearly unattainable.
New interventionist policies threaten to choke the gig economy, imposing burdens like fixed minimum wages. While most gig workers value their independence, these changes risk excluding many, especially the less competitive. The red tape and rising costs will hit businesses and consumers, with food service prices set to surge.
The Federal Reserve failed to raise rates, despite previous intentions to curb inflation. Their projections even indicate a potential rate decline in 2024. On the housing side, existing-home sales dropped in August, with a significant 15.3% year-over-year decline, suggesting a weakening housing market.