Gold Standard News Daily - Real Money Blog
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6.18.13 - Potential New Crisis Heading Our Way?
Gold prices hit four-week low Tuesday as traders await Fed meeting. U.S. stocks jump on Fed optimism, U.S. dollar higher. Gold last traded at $1,367 an ounce. Silver last traded at $21.61 an ounce.
MARKET NEWS HEADLINES
-Bernanke Looms, Leading to Weeping and Gnashing of Teeth - CNBC
-Are commodity prices about to explode? - Market Watch
-Stocks rally as Fed looms large- CNN Money
-Here's what to watch for Wednesday from the Fed- Yahoo! Finance
-Obama Says Bernanke Has Been at Fed ‘Longer Than He Wanted’- Bloomberg
-Three pitfalls the Fed faces on path to tapering- Market Watch
Roubini, Bremmer and the Fed policy that’s going to implode - Market Watch Famed economist Nouriel Roubini and president of Eurasia Group Ian Bremmer launched into Institutional Investor assault on all that's going wrong with the global economy right now and new crises are most certainly headed our way. They call it a "G-Zero world," referring to leadership void where its every nation for itself.
The easy money policy is going to land everyone in trouble. Markets and economists are hoping for the Fed meeting to kick off a slow and steady easy out of QE. However, "a slow exit risks creating a credit and asset bubble as large as the previous one, if not larger" according to Roubini and Bremmer. "Exiting too fast will crash the real economy, while exiting too slowly will first create a huge bubble and then crash the financial system."
When it comes time to tighten up, officials should expect even more chaos. In the last cycle beginning 2004, the Fed took around two years to normalize policy, and that was against a backdrop of lower unemployment and debt.
CNN poll: Obama’s approval down 8 points in one month - Washington Post
A new poll offers the most concrete evidence yet that President Obama is paying the price for the series of controversies that have come about since the start of his second term. A CNN/Opinion Research poll published Monday showed Obama's approval rating dropping from 53% a month ago to 45%.
The poll shows that Americans, by a 61-35 margin, disapprove of how Obama is handling government surveillance of U.S. citizens. This CNN poll also shows Obama is particularly losing ground on the issue of trust and honesty. Obama's marks on fighting terrorism have also taken a hit. In January, 65% of people approved his handling of terrorism, that number is now down to 52%.
G8 urges overhaul of corporate tax rules - Financial Times
G8 leaders have called for a change of international corporate tax rules and the establishment of a mechanism to track just where multinational companies make their profits, all in an effort to "rewrite the rules on tax" across the world.
The leaders of eight of the world's largest companies all signed a 10-point Lough Erne Declaration calling for greater transparency into corporate profits all around the world. David Cameron, the British Prime Minister, says this new tool would ensure "proper tax justice in our world."
One of the key focal points of the G8 meeting was changing the rules so companies can "know who really owns them and tax collectors and law enforcers should be able to obtain this information easily." However, the Lough Erne Declaration contained no concrete reforms and mentioned the word "should" 13 times.
Wholesale Inflation Heats Up in May - Fox Business
U.S. producer prices rose more than expected in May as gasoline prices rebounded. Underlying inflation pressures remain muted, which could possibly argue against an early scaling back of monetary stimulus by the Federal Reserve. In the last 12 months, wholesale prices accelerated 1.7 percent after rising .6 percent.
Despite the pick-up last month, underlying price pressures remain muted and modest domestic demand makes it difficult for producers to pass on increased costs to consumers. Wholesale prices excluding volatile food and energy costs ticked up 0.1% for a second straight month.
6.17.13 - All Eyes On Fed
Gold prices close modestly lower as traders await Fed meeting. U.S. stocks rise sharply, U.S. dollar index firmer. Gold last traded at $1,384 an ounce. Silver last traded at $21.81 an ounce.
MARKET NEWS HEADLINES
-Stocks rock ahead of 2-day Fed meeting- USA Today
-Voter Proof-of-Citizenship Law Voided by Supreme Court- Bloomberg
-U.S. And Canadian Mint Sales: All Of Domestic Silver Supply Used Solely For Bullion - Seeking Alpha
-Detroit Recovery Plan Threatens Muni-Market Underpinnings- Bloomberg
-The 50 best employers for boomer workers- Market Watch
Fed may disappear inside its shell this week - Market Watch Some Fed watchers think the central bank will employ a "turtle strategy" and disappear inside its shell this week regarding its plans for tapering its monetary-policy stance. The minutes of the Fed's last meeting indicated that Fed officials would very much like to start slowing down the pace of quantitative easing program, given concerns about potential costs of the program.
“We think there will be very little new information at the upcoming press conference,” despite “the brouhaha” over whether Fed Chairman Ben Bernanke will attempt to walk back the movement in rates witnessed since his now infamous statement that the central bank could reduce the pace of asset purchases in the next few meetings, wrote Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC.
Chief U.S. economist at Barclays, Dean Maki, agreed that the Fed will hunker down and believes. "There is no reason to make new promises about tapering. They are very much in data-dependent mode."
All eyes on the Fed when they should be on the G-8 - CNN
Two major events are occurring this week, the G-8 Summit and the policy meeting of the U.S. Federal Reserve. The Fed meeting is likely to get more attention but what people should really be focused on is the G-8 Summit. The G-8 Summit involves the highest officials from the most powerful countries and doesn't happen very often.
The Summit is likely to be less consequential than the Fed when is comes to global economic prospects, partly due to past outcomes. The G-8 Summits tend to "issue grand proclamations that end up leading no where," according to British Prime Minister David Cameron.
This week will likely be a reminder of the world's unbalanced economic policy mix. Central banks are committed, but limited by partial and imperfect tools. The ones who can deliver the required policy complement are politically constrained at both the national and multilateral levels. Until this balance is corrected, global growth and employment will fall short of what is both required and possible and markets will lack the sustained underpinnings of strong fundamentals.
Suddenly, Retiree Nest Eggs Look More Fragile - NY Times
It is evident many Americans don't have enough money to carry them through retirement, and they know it. In this environment of ultralow interest rates, a retired couple could easily exhaust a $1 million bond portfolio, even with relatively modest withdrawals. However, many American families only wish they had that kind of money.
In a recent study, it was found that roughly 44 percent of households in the baby boom and Gen X generations were likely to run short of cash in their retirement years. To make matters worse, forthcoming research from the institute found that low bond yields are worsening the situation.
Bond bubble threatens financial system, Bank of England director warns - The Guardian
In a recent testimony, Bank of England director of financial stability Andy Haldane, admitted the central bank's new financial policy committee is taking too long to force banks to hold more capital. Haldane warned of the possible risks to global financial stability when "the biggest bond bubble in history" bursts.
Haldane also warned the threat of cyber attacks should be at the top of their worry-list, replacing the euro zone crisis. The main risk to financial stability, however, is the bond markets.
"If I were to single out what for me would be biggest risk to global financial stability right now it would be a disorderly reversion in the yields of government bonds globally." he said. There has been growing concern in recent weeks as government bond yields edged higher amid talk that central banks will start to reduce stimulus.
6.14.13 - June Gloom Has Hit The Markets
Gold prices ended higher as U.S. wholesale prices jumped more than expected. News reports indicate the U.S. Federal Reserve will try to calm fears about tapering its stimulus program. Gold last traded at $1,390 an ounce. Silver last traded at $21.99 an ounce.
MARKET NEWS HEADLINES
-Stunning Images From China: Ten Thousand People Waiting In Line To Buy Gold- Zero Hedge
-Detroit won't pay $2.5B it owes- Breitbart
-Are Google, Facebook lying about the spying?- Market Watch
-Stocks tumble again as volatility continues - USA Today
-Stocks To Plunge As World Enters Massive Bank Panic- King World News
Consumer sentiment declines in June - Market Watch A gauge of consumer sentiment declined this month, missing analysts' expectations, according to data released Friday. Markets look at data on consumer sentiment for signals about spending. After hitting the highest level in almost six years in May, the consumer-sentiment index fell to a preliminary June reading of 82.7, down from 84.5 in May.
According to the report, a gauge of consumers’ views on current conditions dropped to 92.1 in June from 98 in May. The gain may reflect rising gas prices. The sentiment report is "another nail in the coffin" of the Federal Reserve tapering quantitative easing in the near term. "A decline in confidence is never good news, but to the extent it will dampen further some of the speculation about near-term Fed tapering, we welcome it,” Ian Shepherdson, chief economist at Pantheon Mecroeconomics, wrote.
IMF denounces US fiscal policy - Financial Times
The International Monetary Fund has denounced the tightening of US fiscal policy calling it "excessively rapid and ill-designed." The IMF also cut its forecast growth from 3 percent to 2.7 percent. The IMF said the rapid tightening of fiscal policy will take between 1.25 to 1.75 percentage points off growth this year.
The IMF also urged the US to adopt a more gradual fiscal consolidation "along the lines" of President Barack Obama's budget proposal. Given its downbeat forecast, the Fund said it expects the US Federal Reserve to keep buying assets at a pace of $85bn-a-month for the rest of 2013, and slowly reduce its purchases in 2014.
Gold Rises as Investors Seek Fed Clarity - CNBC
Gold prices held steady as dealers awaited clearer direction on the Federal Reserve's bullion-friendly monetary easing policy. The next policy meeting takes place early next week. The ultra-loose monetary policy was a key factor driving gold prices to record highs in recent years.
"The Fed meeting next week has kept a lot of people on the sidelines," says Afshin Nabavi, head of trading at MKS. "We may have some moves next week after the FOMC (meeting)." There is an ambiguous picture from investors and people are worried about the withdrawal of quantitative easing.
Fed not expected to taper QE3 until December - CNN Money
Since the announcement of possible "tapering" of the Fed's monetary stimulus program there has been a lot of volatility in the markets. Many experts are now predicting that any "tapering" will not begin until December or even 2014. The Fed is looking for "substantial improvement" in the job market before any attempt at winding down stimulus begins.
It is difficult to measure how successful the program has been. The low interest rates have helped the housing and stock markets over the past few years but the low rates also mean savers are getting measly returns on bonds and other conservative investments.
TOP STORIES OF THE WEEK
Are Markets Facing a Crisis of Confidence? - CNBC
Investors are dumping assets ranging from bonds, currencies to equities and there appears to be a lack of hope among investors that central bank policies can generate real economic recovery. Uncertainty over the timing of the Fed's next move weighed on the U.S. dollar, which recently fell to a near four month low against a basket of major currencies.
The Fed's other trillion dollar problem - CNN Money
U.S. Banks now have $1 trillion at the Federal Reserve, which is far more than they have ever had before. Before the financial crisis, the amount of cash banks kept at the Fed rarely topped $25 billion. Shortly after the start of the financial crisis, as a move to help the banks and save the economy, the Fed began paying interest on money banks deposited at the Fed.
Gold up in shadow of Fed taper debate - Market Watch
Gold traded higher while traders struggle for direction on uncertainty over the prospects the Federal Reserve will soon begin to scale back its asset-buying program. Overall market action remains swayed by the "will-they-taper or won't-they-taper" debate.
Wall Street can't quit Fed addiction - MSN Money
Wall Street is addicted to cheap money. After the mere mention of the word "taper" in relation to the Fed's bond buying program there was a surge in media coverage and shakiness in the markets. Since the beginning of the Fed's program the DJIA, Nasdaq and S&P are all up between 9% and 13%.
6.13.13 - Wall Street Wants Clarity
Gold prices end lower on stronger-than-expected weekly U.S. jobless claims. Stocks waver after data. Gold last traded at $1,384 an ounce. Silver last traded at $21.78 an ounce.
MARKET NEWS HEADLINES
-Dollar sinks to two-month low against yen- Market Watch
-Bank Deposits Confiscation: The “Cyprus Experiment” and the Launch of a Global Trend- Global Research
-Justice Dept. Loses a Round in Battle to Keep Surveillance Wrongdoing Secret- Mother Jones
-Jobless Claims in U.S. Fell by 12,000 Last Week to 334,000- Bloomberg
-IG: More Than 1,000 IRS Employees Misused Government Charge Cards- CNS News
-Supreme Court Says Human Genes Aren't Patentable - Wall Street Journal
Are Markets Facing a Crisis of Confidence? - CNBC Investors are dumping assets ranging from bonds, currencies to equities and there appears to be a lack of hope among investors that central bank policies can generate real economic recovery. Uncertainty over the timing of the Fed's next move weighed on the U.S. dollar, which recently fell to a near four month low against a basket of major currencies.
Concerns over the pace of the global economic recovery were heightened after the World Bank cut its outlook for global growth late Wednesday, saying the world economy should expand more slowly this year than last due to a "deeper-than-expected" recession in Europe.
"We've been living in an environment where economically speaking, bad news was good news because bad news meant more monetary stimulus. The rally that we have had over the past one-and-a-half years has been mainly driven by central banks and now the punch bowl is about to be taken away," according to Hans Goetti, chief investment officer at wealth management firm Finaport.
In the "Fear & Greed Index" created by CNN Money, one can see that extreme fear is current investor emotion driving the market. The extreme fear in the market is caused by such factors as market volatility, safe haven demand, stock price strength and breadth and put and call options. Before the Fed's "tapering" announcement, stocks were staging their best run in decades, and during that time the index showed pure greed was the emotion driving the markets.
Investors seek clarity in next week's Fed meeting - USA Today
Next Tuesday and Wednesday marks the Fed's next meeting. Ever since their last meeting on May 22, Wall Street has been in a state of confusion after the Fed's announcement of possible "tapering" of the bond-buying program in the "next few meetings," causing a rise in market volatility in stocks, bonds and currencies.
Many investors are hoping to get some sort of clarity from the Fed after the Fed's two-day meeting next week. A shift in policy is not expected due to the still-weak labor market, but "Bernanke's remarks could keep the level of uncertainty sufficiently high to (keep stocks in a holding pattern) very near term," says Bruce Bittles, chief investment strategist at R.W. Baird.
U.S. Treasurys are a ‘Ponzi market’: Guggenheim’s Minerd - Market Watch
Scott Minerd, global chief investment officer at Guggenheim Partners, argues that the Federal Reserve's bond-buying program has introduced a false confidence into the market because investors believe Treasury investments will continue to increase in price. Just like a Ponzi scheme, the value of these Treasury assets have become disconnected from their underlying value.
A Ponzi Scheme involves the fraudulent act of repaying one investor's money with the principle of another, thereby over-inflating the value of assets until the bubble finally pops. This isn't the first time Minerd sounded the Ponzi scheme alarm. Just over a year ago he wrote a note that ”the market has reached levels that wouldn’t be sustainable if free market forces were allowed to prevail.”
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