Daily Digest

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Daily Digest 10/14 - World Faces Recession Next Year, Most Americans Have Less Than $1k In Savings

Wednesday, October 14, 2015, 10:32 AM

Economy

Britain cuts 2017 car production forecast to 1.8 million cars - SMMT

Britain will build around 1.8 million cars in 2017, less than originally expected, due to more sluggish growth in Europe, industry body the Society for Motor Manufacturers and Traders said on Tuesday.

Oil Sands Boom Dries Up in Alberta, Taking Thousands of Jobs With it

At a camp for oil workers here, a collection of 16 three-story buildings that once housed 2,000 workers sits empty. A parking lot at a neighboring camp is now dotted with abandoned cars. With oil prices falling precipitously, capital-intensive projects rooted in the heavy crude mined from Alberta’s oil sands are losing money, contributing to the loss of about 35,000 energy industry jobs across the province.

Citi's Buiter: World faces recession next year

"The policy arsenal in the advanced economies is unfortunately very depleted, debt is still higher in the non-financial sector than it was in 2007. So we are really sitting in the sea watching the tide go out and not really able to respond effectively to the way we should."

Sweden's Central Bank Looks at Muni Debt as Liquidity Dries Up

Swedish central bankers are now looking at the country’s 240 billion-krona ($30 billion) municipal bond market as a possible channel for further stimulus as its debt purchases risks distorting trading in government debt.

China auto sales expand at slowest pace in 3 years

Light-vehicle sales in China expanded at the slowest pace since 2012 so far this year, underlining the slump in demand that prompted the government to cut a tax on car purchases to revive demand in the world’s biggest auto market.

Interest rates could still go lower, says Bank of England's newest committee member

In his first public appearance since being appointed to the Monetary Policy Committee (MPC), Gertjan Vlieghe told MPs the Bank could reduce its benchmark interest rate and carry out more quantitative easing if required.

Retailers warn of dismal spending; sales tax hike seen stifling demand (Japan)

Do not believe in official statistics, Japanese retailers seem to be saying, as they cut earnings forecasts and warn of lackluster consumer spending, a key growth engine for Japan at a time when exports and factory output are stalling.

S. Korea's household debts continue surging trend on low rates

It was only the second largest monthly increase to the record high of a 10.1 trillion expansion in April this year. The surging trend came as the central bank lowered the benchmark interest rate to an all-time low of 1.5 percent in June after cutting it by a percentage point in March.

EU says Spain too optimistic on growth, warns on deficit

The Commission believes Spain's budget deficit will be 4.5 percent of gross domestic product in 2015 instead of the required 4.2 percent. The discrepancy will widen in 2016, it has forecast, with an estimated deficit then of 3.5 percent of GDP, against a 2.8 percent agreed target. EU rules require that national deficits should not go beyond 3 percent of GDP.

Germany's Schaeuble warns against addiction to low interest rates

Speaking at an engineering conference in Berlin, Schaeuble described interest rates as "too low" and said this was causing problems, particularly with regard to pension provisions.

Swedish cbank not sure inflation rising as forecast - deputy governor

The Riksbank kept its key repo rate unchanged in September at a negative 0.35 percent and stood by a message that it was ready to do more if inflation did not continue to pick up. Floden repeated that the Riksbank was ready for further expansionary measures. "We are not sure inflation is rising as forecast," he said in an interview.

ECB board member: Inflation key trigger for stimulus

“In the event that the downward risks I have mentioned weaken the inflation outlook over the medium term more fundamentally than we currently project, we would not hesitate to act,” he said. -

China to put growth before reform ambitions amid slowdown fear

"We will have to rely on policy stimulus to safeguard the 7 percent growth target," said an economist from a government think-tank. "We should not put financial liberalization at the forefront of economic reforms."

South Africa Seen in Seven-Year Slouch as IMF Cuts Growth View

If economic growth in South Africa this year is bad news, 2016 is set to be even worse, according to the International Monetary Fund.

U.K. Inflation Falls Back Into Negative Territory

Britain’s muted prices highlight how central banks around the world are sharply undershooting their inflation targets despite deploying large-scale stimulatory policies.

EM slowdown weighs on Bank of Japan outlook

The Bank of Japan has jumped on the bandwagon of blaming its own slowdown on the downturn in emerging markets. Minutes from the BoJ's September 14-15 meeting see it singling out emerging markets as a reason for a shift in the domestic economy's performance. In fact, a simple count sees the number of times "emerging" was used in the minutes jump to 34 in September from 16 at the August meeting.

Bank of Canada Has No Plans to Shift From Inflation Targeting

Inflation targeting has "stood the test of time" and the Bank of Canada has no plans to shift away from the practice, Gov. Stephen Poloz said Monday.

Mexico's central bank sells $200 mln after peso slumps

Mexico's central bank on Tuesday said it sold $200 million of $200 million offered in an auction after the peso weakened sharply during the session.

Singapore Set to Ease as Currency Faces Rerun of '97 Asia Crisis

Singapore’s economic performance has worsened since the April gathering. Analysts forecast the nation entered a technical recession in the third quarter, while consumer prices dropped for a 10th month in August, the longest streak of declines since the Asian financial crisis. Analysts predict the currency is on course for its worst year since 1997.

Treasuries Climb as China Data Weaken Case for Fed Rate Boost

Treasuries advanced for a second day after data showing Chinese imports fell for the 11th straight month bolstered speculation that the Federal Reserve will delay raising interest rates until 2016 in the face of weakening global growth. The probability traders assign the Fed waiting until at least 2016 to raise rates has risen to 63 percent, futures data showed.

India central bank cuts key interest rate to 6.75%

"Since our last review, the bulk of our conditions for further accommodation have been met," Mr. Rajan wrote in his policy statement. He also noted that underlying economic activity remains weak. The RBI's move is likely to provide a boost for India's economy, which decelerated in the quarter ended in June.

Icahn sees ‘danger ahead’ over zero rates, junk bonds

He said the end result of this steady stream of cheap money is a dangerous unknown. “You don’t know how bad the end of this is going to be. You do know, though, that when you did it a few years ago, it caused a catastrophe. It caused ‘08,” he said.

Spanish inflation dives, falls to -1.2%

Spain's consumer prices fell in September at their fastest pace in six months, driven by a decrease in energy costs that some economists expect could lead to months of falling prices in the eurozone's fourth-largest economy.

Goldman Sachs slashes S&P 500 price and earnings forecasts

The investment bank also cut its 2015 S&P 500 earnings-per-share forecast to $109 from $114, representing a 3% year-over-year decline in earnings. For 2016, Goldman sees the S&P climbing 5% to 2,100, with earnings per share for the benchmark coming in at $120, down from the previous forecast of $126.

Most Americans have less than $1,000 in savings

Approximately 62% of Americans have less than $1,000 in their savings accounts and 21% don’t even have a savings account, according to a new survey of more than 5,000 adults conducted this month by Google Consumer Survey for personal finance website GOBankingRates.com.

Gold & Silver

Click to read the PM Daily Market Commentary: 10/13/15

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

11 Comments

saxplayer00o1's picture
saxplayer00o1
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Repost Of Today's News

Singapore Central Bank Eases Policy by Adjusting Currency Band

Bloomberg - ‎14 hours ago‎
Singapore's central bank eased monetary policy for the second time in 2015 in an effort to revive growth. The local dollar advanced to the strongest in almost a month. The Monetary Authority of Singapore, which uses the currency rather than interest ...

Kiwi Drops Most in 3 Weeks as Central Bank Says Easing Is Likely

Bloomberg - ‎17 hours ago‎
The New Zealand dollar fell by the most in three weeks on signals the nation's central bank will further ease monetary policy. The kiwi dropped as much as 1.1 percent, the biggest decline since Sept. 21, after Reserve Bank Governor Graeme Wheeler said ...

Aussie Falls as Westpac Loan Rate Rise Spurs RBA Easing Chances

Bloomberg - ‎15 hours ago‎
Westpac Banking Corp. said it will increase its variable home-loan rates from Nov. 20, as it announced capital raising on Wednesday in Sydney. New Zealand's dollar extended declines after central bank Governor Graeme Wheeler said in a speech further ...

China Consumer Inflation Eases, Pressuring Beijing for More Stimulus

Wall Street Journal-11 hours ago
According to the People's Bank of China, loan demand in the manufacturing ... it has been below 50 since the central bank started releasing the data in 2004.

Serbian Central Bank Unexpectedly Cuts Rate to Record Low

Bloomberg-4 hours ago
With its seventh rate cut this year, the central bank is trying to spur growth in the biggest economy to emerge from the former Yugoslavia, which has suffered ...

India's Wholesale Prices Decline for 11 Straight Months

Bloomberg-7 hours ago
India's wholesale prices fell for the 11th straight month as central bank Governor Raghuram Rajan kept monetary policy accommodative. The wholesale price ...

Germany Sells Notes at Sub-Zero Yields as Mizuho Eyes ECB Limits

Bloomberg-1 hour ago
Euro-area central banks bought more than 340 billion euros of public-sector debt under their QE plan through the end of September, ECB data released on Oct.

Japan producer prices fall most in almost 6 years

MarketWatch-6 hours ago
The trends at factory gates could eventually feed into the price tags on store shelves, putting an even greater distance between the central bank and its inflation ...

Japan govt cuts economic assessment as output sags

CNBC - ‎8 hours ago‎
An unexpected fall in August industrial production prompted some economists to suggest Japan's economy could contract in July-September, which would put it in a technical recession after the previous quarter's contraction. In addition to the decline in ...
 

Japan to exempt some food from sales tax hike, sparks worries about debt

Reuters - ‎5 hours ago‎
The government will raise the nationwide sales tax to 10 percent from 8 percent in April 2017 to pay for rising welfare spending, but politicians are worried about the economic impact after a sales tax hike last year helped trigger a recession. Low ...

European Factors to Watch-Equity futures fall on China deflation ...

Reuters UK-8 hours ago
European Factors to Watch-Equity futures fall on China deflation worries ... on Wall Street weakness, China worries > TREASURIES-Prices rise on growth fears, ...
 
Industrial output in the eurozone fell in August, an indication that slower growth in China and downturns in other large developing economies are beginning to weaken the currency area's recovery.
 
U.S. stocks opened mostly lower Wednesday after the producer-price index, an important inflation indicator, declined in September and retail sales matched economists' forecasts.
 
In an interview with CNBC, Tarullo said it would be better to look for tangible signs of rising inflation and improving wages, than to rely on historical relationships like the Phillips Curve that link declining unemployment to future rises in inflation.

Billionaire Singer Lauds Gold as Central Banks Aid Recovery

Bloomberg-43 minutes ago
As central bankers prop up bond and stock markets with near-zero interest rates and bond purchases, gold is being overlooked, according to Elliott ...

UBS Sees Sovereign Assets Shrinking by $1.2 Trillion

Bloomberg-5 hours ago
Central bank and sovereign wealth fund assets will shrink by $1.2 trillion, or almost 7 percent, by the end of the year as China and petrostates including Russia ...

Brazil August Retail Sales Fall More Than Economists Forecast

Bloomberg-2 hours ago
Working to slow consumer price increases to the official target of 4.5 percent by the end of 2016, the central bank raised the benchmark Selic in seven ...

Brazil's Next Big Crisis Is Scaring Bankers and Wiping Out Jobs

Bloomberg-13 hours ago
A 43-year-old steel worker, Santos had loaded up on debt to finance his new ... Total loans in the banking sector climbed five-fold over that time to 3.1 trillion ...

As early October optimism fades, equities rely on risk premium

Reuters-1 hour ago
The Bank of Japan is also seen injecting more stimulus into its faltering economy. Some say ECB and BOJ quantitative easing could continue for years. Japan's ...

China expected to post worst growth since 2009

WPTZ The Champlain Valley - ‎13 hours ago‎
"Even as growth has come down, the government has abstained from high profile stimulus efforts," said Louis Kuijs of Oxford Economics. "That is because ... policymakers have so far not felt that the deceleration of growth has been severe enough to ...

The biggest American debt selloff in 15 years

KSPR-11 minutes ago
Just in the first seven months of the year, foreign governments sold off $103 billion of U.S. debt, according to CNNMoney's analysis of Treasury Department data.

Chicagoans' Cost to Exit Swap Agreements Approaches $300 Million

Bloomberg-3 hours ago
Moody's downgrade of Chicago's general-obligation debt in May forced the city to ... Since then issuers have paid at least $5 billion to unwind the agreements.

Civic Federation: $588M property tax hike won't be enough to shore up finances

Chicago Sun-Times - ‎10 hours ago‎
The Civic Federation will get behind Mayor Rahm Emanuel's bad-news $7.8 billion budget on Wednesday with a giant caveat: a $588 million property tax increase for police and fire pensions and school construction is “not enough to stabilize” Chicago's ...

Key payments could be at risk in Illinois cash crunch

Reuters - ‎16 hours ago‎
Illinois' debt service payments on bonds total $3.4 billion in fiscal 2016, while payments to its five retirement systems total $6.8 billion, according to a May budget analysis by the Chicago-based Civic Federation. A monthly breakdown of those amounts ...

Interest rate hike could cripple auto sales, increase loan risk

Chicago Tribune-19 hours ago
Interest rate hike could derail U.S. auto boom fueled by cheap debt, longer term loans. ... U.S. consumers took out $101 billion in car loans over the 12 months ...

UPDATE 2-Austria strains to stay within EU structural deficit rules in 2016

Reuters - ‎2 hours ago‎
Schelling, however, has said some of the roughly 1 billion euros ($1.14 billion) allocated for measures related to migrants and refugees, or 0.31 percent of GDP, was excluded from the structural deficit. In parliament, he was more circumspect. "It is ...

U.K. pension funding deficit continued to grow in September

Pensions & Investments-20 hours ago
The total deficit of defined benefit funds covered by the Pension Protection Fund's 7800 index increased 11.2% to £311.7 billion ($472.7 billion) over the month ...

Teamsters face a reduction in pension benefits

KSFY - ‎16 hours ago‎
SIOUX FALLS - More than 400,000 Teamsters across the country face an uncertain financial future, as their pension fund is running out. The financial future of those teamsters is tied to the Central States Pension Fund. After receiving a letter which ...

Wisconsin retirees receive letter on how much their pensions will be cut

WDJT - ‎16 hours ago‎
A group of Wisconsin retirees met to discuss deep cuts to their pensions after receiving a letter detailing exactly how much money they'll lose. This is part of the Multiemployer Pension Reform Act of 2014 that underfunded pension plans. The Wisconsin ...

Cops Retiring in Their 40s While Pension Systems Break Cities' Backs

Michigan Capitol Confidential-5 hours ago
His wife, whose job title was telecommunicator, started collecting pension checks in 2010 at age 51. Since 2009, the city of Ann Arbor has seen 43 individuals ...

Preckwinkle plans to tax cable TV, bowling and golf

Chicago Tribune-37 minutes ago
The sales tax revenue will be spent on increased government worker pension payments, loan repayments and capital projects such as roads, bridges and major ...
 

Shortfall rises by $16 billion at UAW Retiree Medical Benefits Trust

Pensions & Investments - ‎21 hours ago‎
The estimate of the unfunded future expenses of the UAW Retiree Medical Benefits Trust that pays the health-care costs of more than 700,000 United Auto Workers retirees from three Detroit-area automakers widened by $16 billion last year as it changed ...

The Next China Default Could Be Days Away as Steel Firms Suffer

Bloomberg-12 hours ago
A default would be the first by a Chinese steel company in the local bond market, ... Sinosteel Corp. and its units had more than 100 billion yuan of debt as of ...
saxplayer00o1's picture
saxplayer00o1
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Strong dollar restraining activity, Beige Book finds

Strong dollar restraining activity, Beige Book finds

Report on economy puts prospect of rate hike more in doubt

Arthur Robey's picture
Arthur Robey
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Posts: 3936
Tyranny of The Mind

Here is an concrete example of the lifeless product of the left brain. Look, and mark you well. The left brain would count these as cities, when in fact they are as lifeless as a statue. 

http://www.collapse.news/2015-10-14-ghost-cities-portend-total-global-ec...

 

Uncletommy's picture
Uncletommy
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Posts: 474
Answer me this?

How do Central bankers think that by targeting a set inflation rate, as the answer to economic stability, that this will some how keep the economy chugging along. If prices rise at, let's say 2%, productivity should, logically, increase at least at the same pace or a little bit better. We know that is not happening, so it figures that any growth will have to come from somebody printing more currency. As PP points out, that requires debt. When economies soften, the wealthy start to hoard their funds, thereby reducing capital availability. Isn't that what causes depressions? How do we think that a deflationary cycle can be avoided by these methods? It makes me wonder whether war is the only solution to this financial predicament. You have to destroy everything so we all can start building again and be productive. What am I missing here?

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cmartenson
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You might start here...
Uncletommy wrote:

How do Central bankers think that by targeting a set inflation rate, as the answer to economic stability, that this will some how keep the economy chugging along. If prices rise at, let's say 2%, productivity should, logically, increase at least at the same pace or a little bit better. We know that is not happening, so it figures that any growth will have to come from somebody printing more currency. As PP points out, that requires debt. When economies soften, the wealthy start to hoard their funds, thereby reducing capital availability. Isn't that what causes depressions? How do we think that a deflationary cycle can be avoided by these methods? It makes me wonder whether war is the only solution to this financial predicament. You have to destroy everything so we all can start building again and be productive. What am I missing here?

Great observations and questions...!

The very best recent explanation of those dynamics that I have seen can be found here:

 

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Michael_Rudmin
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Posts: 772
Uncle tommy, war is inevitable for them.

That is why we ARE at war. Continuously, now, going on fifteen years.

Yet that logic is only their thinking. It isn't correct.

Even if it had been sort-of correct back in the days of the French Revolution (and it wasn't: the horror that it became outweighed the horror that had been), or sortof correct after WW2, that was dependent upon cheap energy.

I don't care if the price of oil is listed at $25/bbl, fracking oil isn't that cheap. You pay for it on the front side in taxes and other ways.

So without cheap energy, you can't rebuild.

Arthur Robey's picture
Arthur Robey
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Posts: 3936
Theory breakthrough?

It looks as though we might have a winner at last.  Once the theory is nailed then we can begin to plug in the numbers and we are off to the races. 

I hope Prof Hagelstein approves. He has put a lot of effort into this. 

The basic idea is that ponderomotive forces at resonance frequencies shake out neutrons from elements such as deuterium and lithium, and that these neutrons are then captured by e.g. nickel, resulting in energy release by well-known physical laws.

And

We did an experiment on our own but we stopped it. We realised that we were sitting on a neutron source and that’s not something you should do in your basement,” Rickard Lundin, Professor of Space Physics at Swedish Institute of Space Physics and member of The Royal Swedish Academy of Sciences (KVA)*, told me.

http://animpossibleinvention.com/2015/10/15/swedish-scientists-claim-len...

Me? I have my doubts.  Many of the LENR experiments report no neutrons. I am hoping that mass is being released from the nucleus by muons. (About 6 muon masses =1 neutron mass). In a muon rich environment transmutations are inevitable. 

I think that the Swedes have described something completely new.

reflector's picture
reflector
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Posts: 267
war is not the answer
Uncletommy wrote:

 If prices rise at, let's say 2%, productivity should, logically, increase at least at the same pace or a little bit better.

i see no  evidence for making such a claim.

if i am a farmer who sold you a quart of milk every week last year at $1.00 per quart, and this year i raise the price to $1.02, does my milk cow suddenly become 2% more productive and make more milk?

Uncletommy wrote:

When economies soften, the wealthy start to hoard their funds, thereby reducing capital availability. Isn't that what causes depressions?

nope.

depressions / recessions / market crashes are merely the hangover from drinking too much the night before, when we should have known better. don't want a hangover? limit yourself to 2 drinks, and don't let bernanke anywhere near the punch bowl.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

- Ludwig von Mises

Uncletommy wrote:

 It makes me wonder whether war is the only solution to this financial predicament. You have to destroy everything so we all can start building again and be productive. What am I missing here?

what an irresponsible thing to say! war is not a solution to anything *at all*, it is senseless violence in which many people die, are crippled for life, families are destroyed, and property is damaged and destroyed.

i know there is some misguided krugman-esque, keynesian propoganda along those lines, but it doesn't make sense if you consider it logically.

wouldn't you rather spend your hard-earned money buying a car, investing in your business, or even paying some bills, instead of having to rebuild your house that a tank just rolled over?

frederic bastiat convincingly refutes the broken window fallacy:

https://en.wikipedia.org/wiki/Parable_of_the_broken_window

Arthur Robey's picture
Arthur Robey
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Posts: 3936
Quote of the day.

The society that separates it's scholars from it's warriors will have it's thinking done by cowards and it's fighting done by fools. 

Thucydides

SingleSpeak's picture
SingleSpeak
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Posts: 496
You Had Me At Singapore...

Central Bank Eases Policy ....

SS

Time2help's picture
Time2help
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Posts: 2766
Thucydides...
Arthur Robey wrote:

The society that separates it's scholars from it's warriors will have it's thinking done by cowards and it's fighting done by fools. 

Thucydides

Now that is a great quote Arthur.

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