Precious metals news

With a debt ceiling deal done, the threat of a US government default is off the table for the time being. But a wave of corporate defaults is on the horizon according to Deutsche Bank's annual default study.
This is the inevitable consequence of central bank monetary policy and it was entirely predictable.

Gold Performance in Major Currencies, 2000-2023 YTD. Annualized Performance of Gold, in USD, if Bought on the Last Day of the Month and Held until 05/31/2023 (Holding Period ≥ 1 Year). And Much More.

Central banks have long been familiar with gold as an asset class. Through variations of historical gold standards, central banks accumulated large gold reserves initially to back their paper currencies. After the end of the Second World War, the implementation of the Bretton Woods system continued to place gold at the heart of the international monetary system. The US dollar would be pegged to gold with guaranteed convertibility at a fixed rate, while all other currencies would be pegged to the US dollar. However, skyrocketing US budget deficits in subsequent decades led to a breakdown of the Bretton Woods system until the US finally suspended the convertibility of the dollar to gold in 1971, effectively ending gold’s formal role in the international monetary system.

Given the dire levels of global debt, foreign central banks are compelled to prioritize enhancing the quality of their international reserves to support their monetary systems. In essence, these institutions function similarly to traditional businesses that require high-quality assets on their balance sheets to establish financial stability.

Although Gold has pulled back and its latest breakout attempt failed, it remains fairly close to the most significant Gold breakout in 50 years and the most significant macro breakout since the S&P 500 broke out in 2013.

Gold rebounded on Monday after weaker U.S. services sector growth reinforced bets for the Federal Reserve to stand pat on interest rates next week.

Tax cuts and deregulation are all well and good. But without Fed reforms, monetary technocrats could stifle an American economic revival any time they want. There’s no time to lose. Aspiring Republicans must get serious about fixing the Fed.

For many, that was a crystallizing moment for the 90-year-old Federal Home Loan Bank system, which has ballooned to more than $1.5 trillion while playing a growing role as a backstop for banks taking all kinds of risks -- and a diminishing role in funding new mortgages. That’s raising questions about the purpose of FHLBs and why the private institutions enjoy so much government support. .

Two Deutsche Bank strategists just wrote a study in which they said “a default wave is imminent.” This May 31 news item from Marketwatch provides details: By the fourth quarter of 2024, they [the two Deutsche Bank strategists] say the U.S. high-yield default rate will peak at 9%, and the U.S. loan default rate will reach 11.3%. The European speculative-default rate will rise too, though to a less steep 5.8%.

The political and financial class breathed a sigh of relief when Congress passed the Fiscal Responsibility Act of 2023. The bill suspends the debt ceiling for two years, thus avoiding the establishment’s nightmare of a government default on its debt. Rather, it allows the government to continue adding trillions of dollars of debt that will be monetized by the Federal Reserve.

The question that came up after my detailed report on jobs by employer category was this: Why were jobs in the “retail trade” in May, at 15.55 million, still down from the peak in 2016? And why were they about level with where they’d been at the end of 2007 before the Great Recession, even as total jobs at all “establishments” have grown by about 13% since 2007 and by 8% since 2016? Turns out, jobs in the “retail trade” are on a structural decline, despite surging retail sales, in part because of the way jobs in the “retail trade” are defined.

The second, third, and fourth largest bank failures in U.S. history occurred this year. And yet, none of the banks that blew up were on the “Problem Bank List” that is prepared quarterly by the federal bank regulator that is supposed to be on top of these things – the Federal Deposit Insurance Corporation (FDIC).

I don’t completely concur with Jimbo’s idea here, but it’s an interesting way to look at it, and I absolutely agree with the conclusion. Fact is that deposits are declining dollar…

While markets have clearly given up worrying about a recession, the laundry list of indicators warning of one keeps growing. The latest example, via Real Investment Advice’s Lance Roberts, highlights the relationship between tightening bank lending standards and GDP.

Euointelligence has an interesting take on why Biden Inflation Reduction Act will fail in its goal to re-industrialize the US.

Here's a Tweet that caught my eye regarding the "fundamental problem" in China. What about the US and EU?

Banks, especially regional banks, made stupid bets regarding interest rates with deposits and a few went under as a result. There may be serious implications down the road, but for now, the Fed avoided a crisis. Yet, in some ways, this setup is worse. Stagnation will linger as recession or near-recession for a long time.

...lots of questions came up about what types of jobs had been created, whether these jobs were mostly low-paid jobs in the Leisure & Hospitality sector or wherever, and whether “multiple jobholders” inflated those strong jobs numbers. So today, we’ll get into the jobs by industry. As we’ll see in a moment, jobs in retail, and Leisure & Hospitality, and State & Local Government (mostly educators) are still below where they’d been before the pandemic.

t really should not have been a surprise - given the weakness in Manufacturing PMIs - but headline and core US factory orders disappointed in April (today's latest data). The headline factory orders rose just 0.4% MoM (half the 0.8% MoM expected) and worse still, the March data was revised form from +0.9% to +0.6% MoM.

Following the decline in Manufacturing survey data (both ISM and PMI in contraction - sub-50), both Services surveys were expected to show improvements in May.