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Daily Digest 5/19 - Another Market Prop Falters, Is The Gold Rally Doomed?

Thursday, May 19, 2016, 9:58 AM


Another Market Prop Falters—-Q1 Buyback Announcements Down 38% From Prior Year (Aaron M.)

Repurchases aren’t the only thing companies are cutting. As profits fell for a fourth straight quarter, the number of firms slashing dividends rose to a seven-year high. Executives are scaling back after handing out sums of cash that exceeded their earnings, an act that has drawn criticism from politicians. Presidential candidate Hillary Clinton said in July that companies’ focus on share prices is hurting the economy because it lowers investment.

‘Trapping atoms between laser beams’: AI research tool runs Nobel Prize physics experiment (Arthur Robey)

Scientists wanted to recreate an experiment that won the 2001 Nobel Prize in Physics, which involved extremely cold gas trapped in a laser beam known as a Bose-Einstein condensate.

The condensates “are some of the coldest places in the Universe, far colder than outer space, typically less than a billionth of a degree above absolute zero (-273.15 degrees Celsius, or -459.67 degrees Fahrenheit),” according to ANU.

Undeniable Evidence That The Real Economy Is Already In Recession Mode (Aaron M.)

During the month of April, the Cass Transportation Index was down 4.9 percent on a year over year basis. What this means is that a lot less stuff was bought and sold and shipped around the country in April 2016 when compared to April 2015. The following comes from Wolf Richter...

George Soros Sells Stocks, Buys More Gold, Why Investors Should Care (Nate)

The Hungarian-American investor and philanthropist, 85, is chairman of Soros Fund Management, a private family office he created about five years ago after closing his hedge fund and returning capital to his investors. Soros is best known as “The Man Who Broke the Bank of England” because he shorted $10 billion worth of British pounds, making him a profit of $1 billion during the 1992 Black Wednesday UK currency crisis.

Brexit Risks In 2016 – The Movie (Taki T.)

Durkin confronts the “Remainers” arguments about the Brexit risks and dangers by juxtaposing the successful models of Switzerland, of Germany’s economic miracle right after the war and of course, of Britain itself, in the pre-First-World-War era. Instead of an emotional and romanticised narrative, “Brexit: The Movie” approaches the debate from historical and economic vantage points, outlines the absurdity of EU regulations and competition-stifling institutional protectionism and it makes the case for an independent, confident and truly free-trading Britain.

Precisely Wrong on Cash? (Axel M.)

So let's commit the first sin in valuation: we talk about expectations, but then look at current rates, since those are more readily available. When it comes to real interest rates, such a fool's game is exacerbated by the fact that many question the inflation metrics used. We show those metrics anyway, because not only do we need some sort of starting point for an analysis, but there's one good thing about these inflation metrics, even if one doesn't agree with them: they are well defined. Indeed, I have talked to some of the economists that create these numbers; they take great pride in them and try to be meticulous in creating them. To the cynic, this makes such metrics precisely wrong. To derive the real interest rate, one can use a short-term measure of nominal rates (e.g. the 3 month T-Bill, yielding 0.26% as of this writing), then deducting the rate of inflation below:

Is The Gold Rally Doomed? (Tiffany D.)

But all of this takes time. Since investment bankers all look at the same charts, visit the same restaurants and don’t want to be too far out of step, they all tend to arrive at the same conclusion at roughly the same time.

So when a large bank or brokerage finally gets fully behind a new idea, such as “central banks are failing their mission — buy gold and gold stocks,” the proverbial train has already left the station. And the passenger cars on that train? They’re as crowded as a Tokyo subway at rush hour.

Signals: From Gold And The S&P (GE Christenson)

Expect: More currency devaluations, higher prices for commodities, volatile markets, increasing central bank desperation as shown by craziness such as negative interest rates, more QE, and continued zero-interest rate policy. Central banks do NOT have your back – unless you are a member of the political and financial elite.

What Does The Next OPEC Meeting Have In Store? (Josh O.)

In order to gain additional traction for the proposed listing, the Saudis will continue their aggressive stance in OPEC, and keep all the oil producers on the hook, a glimpse of which was given by the new Saudi Aramco Chief executive Amin Nasser.

“Whatever the call on Saudi Aramco, we will meet it,” Mr. Nasser said. “There will always be a need for additional production. Production will increase upward in 2016,” reports The Financial Times.

Gold & Silver

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."


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China's 1 Trillion Yuan Muni Issues Show Yet to Kick Debt Habit

China's 1 Trillion Yuan Muni Issues Show Yet to Kick Debt Habit

Bloomberg-19 hours ago
The yield on 10-year sovereign debt has risen four basis points this month to 2.93 ... tightened after being adjusted for local governments' debt swaps, they said.

China's desire for headline growth may hide longer-term risks ...

Reuters-9 hours ago
Bank of International Settlements data showed total emerging market non-financial corporate debt has ballooned to nearly $25 trillion dollar mark from around ...

BOJ's Kuroda vows to ease more if yen moves hurt price target

Reuters-1 hour ago
... the timeframe for achieving its price target, saying that more time was needed to scrutinize the effect of its decision in January to adopt negative interest rates.

BOJ's ETF Position Risks Becoming Too Big to Exit, Lawmaker Says

Bloomberg-10 hours ago
The opposition lawmaker and former derivatives trader said that to manage liquidity and avoid large price distortions, the central bank must stop its 3.3 trillion ...

BOJ owns more than 5 percent of a dozen Japan REITs: FSA

Reuters-4 hours ago
In the following month, the BOJ took additional easing steps by introducing negative interest rates. After three years of massive asset purchases by the BOJ, ...

Norway's central bank repeats major shocks could lead to negative ...

Reuters-6 hours ago
In March the central bank cut its key rate by 25 basis points to a record low 0.5 percent. "There is still room for manoeuvre in monetary policy. However, in an ...

EU must be JOKING: Spain plots huge tax GIVEAWAY despite ...

Express.co.uk-21 hours ago
... a huge tax give giveaway for all voters despite owing creditors €1.095 trillion. ... Spain's vast debt pile amounts to £17,000 for every man, woman and child.

New Jersey Now Has $1.1B Budget Hole As Debt, Pension Crisis ...

Patch.com-May 18, 2016
New Jersey has a $1.1 billion budget gap as the debt and pension crisis appears to be worsening, according to officials.

Brazil's primary deficit could reach 150 billion reais – minister

Financial Express-9 hours ago

Brazil's fiscal deficit prior to debt interest payments could reach 150 billion reais ($42.10 billion) this year as revenues collapse amid a crippling recession .

Saudi Arabia said to consider paying contractors with IOUs

Ames Tribune - ‎12 hours ago‎
The government started delaying payments last year to prevent the budget deficit from exceeding $100 billion after the oil slump. Deputy Crown Prince Mohammed bin Salman told Bloomberg News in an interview in March that authorities ... “The ability of ...

Amid Budget Deficit, Illinois Considers Taxing Sugary Drinks

WNIJ and WNIU - ‎19 hours ago‎
The proposal would impose a penny-per-ounce tax on sugar-sweetened beverages, syrups or powders. Estimates vary on how much money the tax would collect - anywhere from $375 million to $600 million. The state is facing a $5 billion deficit and growing.

Russia's budget deficit widens to 8.6% of GDP

MarketWatch-2 hours ago
MOSCOW--Russia's budget deficit widened to 8.6% of gross domestic product in ... In the first four months of the year, Russia's budget deficit was 4.7% of GDP, ...

Puerto Rico Sets Default Record With HTA Bond Action

Bond Buyer-20 hours ago
As of August 2015 the PRHTA had $6.1 billion in bond debt outstanding, ... At this point Puerto Rico is in technical default on at least $12.25 billion, which ...

Bankruptcy experts eye Asia boom as debt fears grow

Financial Times-10 hours ago
Bankruptcy experts eye Asia boom as debt fears grow. Jennifer Hughes in ... Default rates are also at their highest in more than five years. Governments across ...


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Balance Due: Credit-Card Debt Nears $1 Trillion as Banks Push

Balance Due: Credit-Card Debt Nears $1 Trillion as Banks Push ...

Wall Street Journal-5 hours ago
U.S. credit-card balances are on track to hit $1 trillion this year, as banks aggressively push their plastic and consumers grow more comfortable carrying debt.

US companies' cash pile hits $1.7tn

Financial Times-1 hour ago
Total debts rose by nearly $850bn last year to $6.6tn, a separate report from rating ... Investors have pointed to the drop in sovereign debt yields as they buy up ...

Cash-Stuffed Balance Sheets No Match for U.S. Company Debt

Bloomberg-1 hour ago
Combining all of the corporate cash in the U.S. wouldn't cover the $1.8 trillion of corporate debt that's coming due in the next five years, according to a report by ...

Negative Rates Scorned by Japan's Megabanks as Charts Turn Ugly

Bloomberg-May 19, 2016
Negative interest rates are adding to an ugly set of metrics for Japan's three largest lenders, with loan growth slowing, credit margins narrowing, bad debts rising ...

BoE's Vlieghe says UK may need more stimulus if growth stays weak

Yahoo News - ‎12 hours ago‎
On Thursday he said either rate cuts or more quantitative easing were options, while a higher inflation target or printing so-called 'helicopter money' to hand out to the public were not options the central bank could consider on its own. While most ...

Defaults Throw Wrench in China's $3 Trillion Company Bond Engine

Bloomberg-18 hours ago
The faltering $3 trillion corporate bond market will test Premier Li Keqiang's ... Debt-laden companies are struggling to lock in stable, longer-term financing.

Standard & Poor's downgrades Alberta's credit rating, cites weak budget, debt

Winnipeg Free Press - ‎16 hours ago‎
Last month, Moody's Investor Service and DBRS both downgraded Alberta's credit rating due to concerns about the province's debt after the NDP government introduced its budget. Alberta's budget includes a $10.4-billion deficit this year. "The one-notch ...

China's Debt Misery Finds Singapore

Bloomberg-12 hours ago
Stressed-debt securities account for a very small and stable part of that difference. ... The notional value of that business is S$238 billion, the bulk of which is ...

Brazil's Financial Chief Says Economy Worse Off Than He Imagined

Bloomberg-16 hours ago
Temer's cabinet also is trying to renegotiate state debt before the Supreme Court ... said Thursday the so-called primary deficit is around 200 billion reais.

Brazil's Consumer Inflation Exceeds All Estimates in Mid-May

Bloomberg-2 hours ago
Brazil's inflation accelerated more than all analysts forecast in the month through mid-May, underscoring the challenges incoming central bank chief Ilan ...

Budget deficit of C$30 billion not hard limit, says Canadian PM ...

Economic Times-9 hours ago
OTTAWA: Canadian Prime Minister Justin Trudeau suggested on Thursday that a C$30 billion ($21 billion) budget deficit was not a hard limit as the ...

Two Wall Street Credit Agencies Downgrade State's Rating

Hartford Courant-16 hours ago

The General Assembly last week approved a $19.76 billion budget that closes a projected $1 billion deficit by cutting programs and increasing overall spending .

Wayne County pay hikes rile officials

Detroit Free Press-12 hours ago
The county's grossly underfunded pension system, health care liabilities and deficit struggles were well-publicized in the months before the county entered a ...

Pew Report: Unfunded Pension Costs Are Largest Claim On Future ...

KMUW-18 hours ago
A report out this week from Pew Charitable Trusts found that unfunded pensions are the largest claim on future revenues in the state of Kansas.

Chicago's pension-fund troubles just became $11.5 billion bigger

Crain's Chicago Business-6 hours ago
The latest estimate for the municipal fund, one of Chicago's four pensions, will add to what had been an unfunded liability estimated at $20 billion. A key driver ...

Poll says two-thirds of Americans would struggle to cover $1000 crisis

Yakima Herald-Republic - ‎10 hours ago‎
He said he would have to borrow from friends or family in order to cover an unexpected $1,000 expense. “I have a pension and I am on Social Security, but it's very limiting,” he said. “It's depressing.” Having a modest, immediately available emergency ...

Health insurers are requesting double-digit bumps for Obamacare premiums across the state, with UnitedHealth ...

Crain's New York Business - ‎8 hours ago‎
In a statement Wednesday afternoon, the New York Health Plan Association said the hikes are necessary. "The 2017 rate submissions reflect increases that are the direct result of the underlying cost of care and marketplace changes that continue to ...

Focus: America's vanishing middle class

OCRegister - ‎10 hours ago‎
With wages stagnant and the cost of living rising, the middle class is getting smaller every year. Here's a look at Americans ... In cities across America, the middle class is hollowing out. A widening wealth gap is moving more households into either ...

Venezuela's Murder Epidemic Rages On Amid State of Emergency

TIME - ‎5 hours ago‎
But it serves as a bloody illustration of just how close to outright societal collapse Venezuela has come since the end of the 20th century, as gangs, guerrillas and militia defend their turfs and traditional authority structures fall by the wayside.

Coke Has Suspended All Production in Venezuela

Fortune - ‎36 minutes ago‎
Coca-Cola FEMSA has suspended all production in Venezuela because of a sugar shortage, the Mexican beverage multinational said in a statement. The company, the largest Coke KO -0.17% bottler in the world, told workers sugar supplies were too low and ...

Venezuela Kidnappers Charging Ransom in US Dollars: Report

Insightcrime.org-9 hours ago
Venezuela kidnappers are now demanding ransom payments in US dollars rather than the local currency, according to a new report, revealing how even ...


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