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Daily Digest 10/15 - Good News For Gold, Can The Oil Industry Really Handle This Much Debt?

Thursday, October 15, 2015, 10:00 AM

Economy

Walmart Stock Craters On Profit Warning - The Fatal Blindness of Greed (Adam)

Walmart is at the sharp point of the failing US consumers, who are un- or under- employed with stagnant wages and shrinking benefits, pinned by rising rents and healthcare costs, possessing little discretionary income, almost no savings, and living virtually paycheck to paycheck.

In the new retail models, like Walmart and Amazon, the vast bulk of the income goes directly to the top, to a fortunate few like the Walmart family and Jeff Bezos, with a little to shareholders, and crumbs to the employees who are driven harder to be 'competitive.'

Hillary Clinton's Take on Banks Won't Hold Up (Michael W.)

"Just for viewers at home who may not be reading up on this, Glass-Steagall is the Depression-era banking law repealed in 1999 that prevented commercial banks from engaging in investment banking and insurance activities. Secretary Clinton, he raises a fundamental difference on this stage. Sen. Sanders wants to break up the big Wall Street banks. You don't. You say charge the banks more, continue to monitor them. Why is your plan better?"

Gold Standard Nonsense Compelling Us To Repeat History (Aaron M.)

This rhetoric seriously prevents us from observing a simple fact: there was debt under a gold standard and every gold standard throughout history has collapsed. Not a single gold standard ever survived. You just do not understand history. It is the politicians who blow it up, regardless of what you call money.

Good News For Gold (Taki T.)

But the long multi-decade cycles of supply and demand, boom and bust, remain. And though few outside the industry are talking about it yet, the seeds for the next boom are already in the wind.

The reason has to do with global production.

Wall Street firms that bankrolled oil boom are hurting (Aaron M.)

The American energy boom of the past decade was fueled by a wave of cheap credit from big banks. But now cracks have begun to emerge in that boom because oil prices have plunged from around $100 last year to below $50 today.

Wells Fargo (WFC) on Wednesday said it was forced to set aside more cash to cushion against potential commercial defaults due to the "deterioration in the energy sector."

Can The Oil Industry Really Handle This Much Debt? (Evan K.)

As The Wall Street Journal reported in August, Exxon Mobil Corp. and Chevron Corp. stated they were cutting stock-buyback programs, while Linn Energy LLC announced it would stop paying dividends to its shareholders. Meanwhile, several small U.S. oil and gas producers have filed for chapter 11 bankruptcy protection this year. Companies with persistently negative free cash flow fall into the trap of borrowing, as they have to incur more debt to repay what they have already borrowed before. This makes such companies vulnerable to default and bankruptcy.

Q & A with the “Mosul Eye” Historian (jdargis)

The real danger is not in blogging itself, but in getting access to accurate information while maintaining your safety and not revealing your identity. I have used dozens of personalities and styles so as to stay safe. I have penetrated ISIS at its most fortified gates without their notice. I admit that this can be exhilarating in a way that helps relieve my fears of being killed at the hands of ISIS.

The Man Who Builds Luxury Bomb Shelters for Paranoid One Percenters (jdargis)

As we roll down US Highway 41 in Terre Haute, Indiana , my guide insists I give him my iPhone. Then he tosses me a satin blindfold. The terms of our trip were clear—I wasn't to know where we were going or how we got there. That's because we're on our way to the undisclosed location of an underground bunker designed to survive the end of the world, whatever form that apocalypse takes.

Gold & Silver

Click to read the PM Daily Market Commentary: 10/14/15

Provided daily by the Peak Prosperity Gold & Silver Group

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saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
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Posts: 4240
Euro drops on hopes of more QE after ECB

Global economic slowdown in real danger of persisting: Reuters poll

Reuters-58 minutes ago
But now that has come to an end, and the central bank has delivered a series of interest rate cuts to soften the blow from a deliberate attempt to rebalance ...

Emerging Stocks Rally With Currencies as Fed Rate Odds Recede

Bloomberg-5 hours ago
... to own emerging-market debt over U.S. Treasuries narrowed three basis points to 408 on Thursday, ... China Mobile Ltd. climbed 2.7 percent in Hong Kong.

Global Yields Slide to Least Since April on Shifting Fed Outlook

Bloomberg-4 hours ago
... who invests in Treasuries in Tokyo for Diam, which oversees $146 billion. ... said Kazuaki Oh'e, a debt salesman at CIBC World Markets Japan Inc. in Tokyo.

Bank of England Rate Boost Pushed Into Distant Future by Traders

Bloomberg - ‎3 hours ago‎
These futures contracts suggest where U.K. interbank borrowing costs -- which are directly influenced by the central bank's official rate -- might be. The prospect of the first rate increase since 2007 is seen to be diminishing as the global economy ...

UK advertising survey cuts 2015 growth forecasts

Reuters UK-16 hours ago
As a result the IPA cut its forecast for adspend growth in 2015 to 3.7 percent from ... The amount spent on advertising often correlates to wider economic growth.

Euro drops on hopes of more QE after ECB admits it is missing its inflation target

Telegraph.co.uk - ‎4 hours ago‎
Ewald Nowotny is also the governor of Austria's central bank. "Mr Nowotny's comments differ from the recent 'wait & see' mantra coming from several ECB policymakers including President Mario Draghi regarding the need for more stimulative action," said ...

ECB's Nowotny Says Euro-Area Core Inflation `Clearly' Below Goal

Bloomberg - ‎5 hours ago‎
European Central Bank Governing Council member Ewald Nowotny said both headline and core inflation in the euro area are “clearly” undershooting the institution's goal, signaling that more stimulus may be needed. “One has to say that we're clearly ...

China economic growth seen slowing despite policy easing

Reuters - ‎6 hours ago‎
BEIJING China's economic growth is expected to slow to 6.5 percent in 2016 from an expected 6.8 percent in 2015, even as the central bank eases policy further to ward off a sharper slowdown, a Reuters poll showed. A 25-basis-point reduction in ...

Made in China `Lowflation' Keeps Lid on Prices Across the World

Bloomberg - ‎17 hours ago‎
There's also a case, as outlined in a report last week by economists at Standard Chartered Plc, for inflation to pick up over the medium term as wages start to increase, central banks stay accommodative and fiscal policy becomes less restrictive.

China, Hong Kong stocks advance on stimulus hopes

Reuters - ‎10 hours ago‎
gov stimulus hopes rise ahead of Beijing's key economic meeting. * NDRC says inflation will remain mild in coming months. SHANGHAI, Oct 15 (Reuters) - China and Hong Kong stocks rose sharply on Thursday morning amid signs that some investors are ...

China approves 218 projects worth $285 billion in January-September

Reuters - ‎8 hours ago‎
BEIJING China's economic planner said it approved 218 fixed-asset projects worth 1.81 trillion yuan ($285.3 billion) in the first nine months of the year, as Beijing looks to drive infrastructure investment to support slowing economic growth. The ...

Japan's factory output slumps, hints at recession

MarketWatch-6 hours ago
TOKYO--The Japanese government said Thursday that industrial output fell more sharply than first estimated in August, putting the economy at a greater risk of ...

Tokyo Shares Rise on Hopes of Stimulus

Wall Street Journal-10 hours ago
Japanese stocks rose on Thursday, boosted by growing speculation that Japanese authorities will introduce additional stimulus to support the flagging economy.
 

Indonesia launches 4th batch of economic stimulus steps

Xinhua-1 hour ago
JAKARTA, Oct. 15 (Xinhua) -- The Indonesian government on Thursday unveiled its 4th batch of economic stimulus measures to give certainty to employers over ...

South Korea cuts growth outlook, holds interest rate at record low

The Straits Times-12 hours ago
Household debt in South Korea amounted to more than 615 trillion won (S$746 billion) as of September, with housing loans increasing at a record pace this ...

Egypt weakens pound as forex crisis looms

Reuters Africa - ‎4 hours ago‎
CAIRO Oct 15 (Reuters) - Egypt's central bank allowed the Egyptian pound to weaken on Thursday to 7.83 per dollar from 7.73, the first official depreciation since July and a move economists say is needed to ease a foreign currency crisis and support ...
 

India agreed to pay savers less after central bank nudge -sources

Reuters-2 hours ago
"There was a lot of pressure from the RBI and banks to cut interest rates on ... A source familiar with the central bank's thinking said he was not aware of any ...

Brazil's deepening recession worries bankers, fuels job cuts

Venture Capital Post - ‎10 hours ago‎
Brazil was booming based on credit-fuelled growth in consumer spending. The ongoing recession is threatening the economy model and hammering down the consumer spending. The huge job cuts leaving millions of Brazilians, who lost jobs, into debt crisis ...

Brazil tuition defaults jump in first half as recession bites

Reuters-20 hours ago
SAO PAULO Oct 14 College tuition delinquencies in Brazil surged during the first half, reflecting the impact of the steepest economic recession in 25 years, rising ...

Fitch Downgrades Brazil to 'BBB-'; Outlook Negative

MarketWatch-1 hour ago
However, solid international reserves position, established central bank tools to ... an adequately capitalized banking system and a flexible exchange rate.

Petrobras Pulls $790 Million Bond Sale in Blow to Producer

Bloomberg-2 hours ago
The company will face challenges as it seeks to roll over $60 billion in maturing debt over the next four years, Deutsche Bank's analyst Eduardo Vieira wrote in a ...

Volkswagen Was the Final Straw for Europe Stock Forecasters

Bloomberg-16 hours ago
While economic data in the region are still beating forecasts and the European Central Bank said it's ready to increase stimulus, that's little comfort to investors.

US public pensions little improved since recession -Fitch

Reuters - ‎2 hours ago‎
Oct 15 The health of state-run U.S. public pension funds has barely improved since pre-recession highs, according to a Fitch Ratings report on Thursday. The median funded ratio for state retirement systems was 71.5 percent in 2014, "nearly unchanged ...

Market losses, low yields sideswipe US corporate pensions

Reuters - ‎8 hours ago‎
The investment in other assets is nearly double the $26 billion invested in the second half of 2014 and far more than the $14.2 billion invested in all of 2010, according to Federal Reserve data. ... "There is a greater deficit now on the balance sheet ...

$1.17 Trillion at Zero Percent Interest

Wall Street Journal - ‎16 hours ago‎
In the secondary market, some investors have been willing to buy Treasury bills at slightly negative interest rates over the past few weeks. An investor buying Treasurys with a negative yield would lose a bit of money when the bills mature—or make ...

Treasury moves up debt limit deadline to Nov. 3 and warns of default risk

Los Angeles Times - ‎58 minutes ago‎
3 or the federal government risks default. The new deadline is two days earlier than estimated at the start of the month and adds pressure on lawmakers to increase the $18.1 trillion debt limit, a politically volatile issue that pits conservatives ...

Corporate America's Epic Debt Binge Leaves $119 Billion Hangover

Bloomberg-8 hours ago
Since corporate credit contraction can lead to recession, high debt loads will be a ... high-grade companies tracked by JPMorgan incurred $119 billion in interest ...

Oil Slide Means 'Almost Everything' for Sale as Deals Accelerate

Bloomberg - ‎20 hours ago‎
California Resources Corp., the Occidental Petroleum Corp. spinoff, said on Tuesday that it's considering selling stakes in oil and natural gas fields, pipelines and processing plants to pay down a $6.5 billion debt burden that's more than four times ...

Cities and private equity firms fight over ownership of water systems

Los Angeles Times-4 hours ago
And they are hemmed in by taxpayers reluctant to approve new debt. ... For the fastest-growing sector — infrastructure — firms raised $32.4 billion in funds last ...

State comptroller says Illinois can't make November pension payment

Chicago Sun-Times - ‎18 hours ago‎
Munger said the state — which had just $142 million on hand Tuesday – is now $6.9 billion in debt, and that number will grow to $8.5 billion by the end of the year. She said the state is using daily tax revenues to pay the bills it's mandated to pay ...
 
 

Illinois pension system payments will be delayed; revenue down $5B from last year

Reboot Illinois - ‎14 hours ago‎
But by way of court orders, spending dictated in continuing appropriations and paying for primary and secondary education, Illinois is going through its money at roughly the same clip it did in fiscal year 2015, but with about $5 billion less in ...

Vermont Faces Growing Medicaid Deficit

Valley News-11 hours ago
Lawmakers have begun planning to address the FY 2016 deficit, which they will ... “In the scheme of a $1.5 or $1.6 billion program, to be off about $30 million in ...

Survey: Big Growth in Medicaid Enrollees in Expansion States

ABC News - ‎2 hours ago‎
Diane Rowland, director of the Kaiser Commission on Medicaid and the Uninsured, said most expansion states expect much slower enrollment growth this fiscal year. The survey found that improvements in the economy have allowed states to adopt more ...

Looming Tax On High-End Health Plans Draws Heavy Fire

NPR-7 hours ago
The tax was designed to rein in health care inflation and raise tens of billions of ... and Senate, even though repealing the tax would increase the budget deficit.

EconomyA Russian recovery in 2016 won't happen - S&P

Financial Times - ‎1 hour ago‎
S&P also axed its estimate for 2016 growth down to just 0.3 per cent from 1.9 per cent. The Russian economy hit a rough patch in the first half of the year, with the economy contracting 4.6 per cent in the second quarter, and 2.2 per cent in the first ...

CIER cuts Taiwan's 2015 GDP growth forecast to below 1%

Focus Taiwan News Channel-11 hours ago
The think tank seemed less upbeat about the local economy than the government, which lowered its prediction of Taiwan's GDP growth in mid-August to 1.56 ...
jonesb.mta's picture
jonesb.mta
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Posts: 126
Gold Standard Nonsense Compelling Us To Repeat History

I'm nowhere near an economist but I think Martin Armstrong is full of crap. There were debt crisis under the gold standard but nowhere near the size of the one we have now, they were normally brought on by war and were short lived once the war was over. His reasoning that every gold standard failed is pretty shaky too, they failed because the governments that did away with the gold standards wanted to spend hundreds of times the money a gold standard would allow. I may be wrong but his reasoning is wrong as far as I can see. I would appreciate any education anyone could give me on this.

davefairtex's picture
davefairtex
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Posts: 5695
gold standard reasoning

The part I found compelling was that the gold standard could not prevent politicians from acting badly.

Else - why did we ever leave the gold standard in the first place?

A gold standard will not magically make bad stewards of the economy into good ones.  Its like suggesting a better vehicle code will make a bad driver into a good one.

Enforcement, as always, is the issue.

And we did indeed have a bubble during the gold standard.  1929 was just such a bubble.

Boomer41's picture
Boomer41
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Joined: Nov 30 2008
Posts: 137
Walmart

 

Walmart has long been a major factor in moving American jobs overseas. Once a manufacturer becomes a supplier to Walmart and becomes dependent upon its new, biggest customer, it has been Walmart's practice to demand price cuts and insist that the supplier relocate manufacturing overseas to lower the price. Rubbermaid, General Electric and Levi Strauss (amongst many others) have been forced by Walmart to move production to low-cost countries thereby laying-off tens of thousands of American workers. http://www.larouchepub.com/other/2003/3044wal-mart.html

 

When one considers that Walmart's policy of selling for the lowest price makes its target customers low income families, including the unemployed, it becomes obvious that Walmart actually benefits at both ends by exporting American jobs.

 

As a firm believer in the power of free markets to increase efficiency, promote competition, increase value and lower prices, I must admit to being torn between my free market belief and my concern at the way Walmart has so obviously crippled many communities by eliminating their core industry and generally contributed to the wholesale destruction of American manufacturing jobs.

 

Manufacturing: the process of adding value to raw materials or components in order to produce goods that satisfy a customer's needs and can be sold at a profit - is the mainstay of any economy and the main generator of real wealth. Without a robust manufacturing industry, America will continue to decline. We cannot regain prosperity by taking in each others washing.

 

There are no simple solutions. But I suggest we would be better off as a country if the relentless search by Walmart, and other industry giants, for increased profit would be tempered by human concern for the welfare of the society in which it does business.

TechGuy's picture
TechGuy
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Joined: Oct 13 2008
Posts: 453
"His reasoning that every

"His reasoning that every gold standard failed is pretty shaky too, they failed because the governments that did away with the gold standards wanted to spend hundreds of times the money a gold standard"

Consider that even under a gold standard, there is nothing stopping the gov't from devaluing the currency. in 1933 FDR devalued the dollar by 1/3 while the US was still on the gold standard. As long as the gov't can set the rules and regulations of currency, its still has the ability to manipulate and inflate the money supply.

The US did away with the Gold Standard when it ended Bretten woods (trade deficits/Surpluses settled in Gold), The US ended Bretten Woods because it ran out of gold Gov't can also run scams with gold leases and a single ounce of gold could be rehypothecated dozens or hundreds of times. 

I think the real answer is a secular gov't that seperates currency from gov't (ie like separation of the Church and state). Although this is a pipe dream. Any talk of bringing back a gold standard is also a pipe dream since every industrial gov't owes trillions in debt and unfunded liabilities.

 

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