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CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: As reassuring as the stock market’s recovery has been from its February selloff, not everyone is sleeping comfortably. Take analysts who monitor charts and say a hallmark of past rebounds has gone missing in this one. To wit: while the S&P 500 Index has risen in six of seven days and just notched its best week in five years, it has yet to see the type of cathartic buying episode that sounded the all-clear after past routs. The reason: relative weakness in energy, transports and even Facebook.
Through the last two weeks, the proportion of advancing shares on the New York Stock Exchange has stayed below 90 percent, a threshold sometimes referred to as “breadth thrust” that’s viewed by technical analysts as a sign of sustained advance. The absence leaves the door open for a trip back to the lows, according to Russ Visch, a technical analyst at BMO Nesbitt Burns Inc.
“Despite the amazing run-up in equities we’ve seen, none of the days qualify as a true breadth thrust,” Visch wrote in a research note. “In fact, it’s not even close.” Visch isn’t alone watching the breadth signal for all-clear signs. Stephen Suttmeier of Bank of America Corp. said the market experienced three days this month where 90 percent of total stocks and exchange volume were down, and he’s now waiting for its opposite. It would “help confirm a meaningful low,” he said.
And Chris Verrone at Strategas Research Partners said “panicked buying” has occurred after almost all major meltdowns during this bull market. Breadth readings spiked above 90 percent twice amid the summer swoon in 2015, and showed similar pattern after the selloff in early 2016. “We would still contend that putting in a good low is a process and the likelihood of some additional drama in front of us is high,” Verrone wrote in a research note. Read more here-https://bloom.bg/2FlD6gS
-CHART OF THE WEEK: U.S. Pays Up to Auction $179 Billion of Debt in a Span of Hours. The U.S. Treasury on Tuesday sold $179 billion of securities as it works to rebuild its cash balance, with yields at its auctions of three- and six-month debt rising to levels unseen since 2008. The government began at 11:30 a.m. New York time by auctioning $51 billion of three-month bills at a yield of 1.64 percent, 6 basis points more than similar-tenor debt sold on Feb. 12, and $45 billion of six-month bills at 1.82 percent.
Its $55 billion sale of four-week notes at 1 p.m. had a yield of 1.38 percent, with a gauge of demand known as the bid-to-cover ratio falling to 2.48, the lowest level since 2008. The first coupon offering of the week, a $28 billion auction of two-year notes, yielded 2.255 percent, the highest in almost a decade. All told, the offerings saw decent demand, given the market is facing a deluge of sales following the recent U.S. debt ceiling suspension. The bid-to-cover ratios on the three- and six-month auctions were 2.74 and 3.11, respectively. “There didn’t appear to be much of an impact on the three- and six-month bill auctions, but the four-week ran into a little bit more of a digestion issue,” Thomas Simons, a money-market economist at Jefferies LLC, said in a note.
The $258 billion slate of U.S. auctions set for this week is helping to push up the rates investors demand. Concerns about the U.S. borrowing cap had forced the Treasury to trim the total amount of bills it had outstanding, but with the latest debt-ceiling drama over, the government is now busy ramping up issuance. Financing estimates from January show that the Treasury expects to issue $441 billion in net marketable debt in the current quarter, with the bulk of that in the short-term market. Read more here-https://bloom.bg/2CcZGcV
-CHART OF THE WEEK: Fed’s Haste Makes Canadian Debt a Better Bet Than Treasuries. Canadian government bonds are outperforming their U.S. counterparts by the most in seven months, an advantage that’s unlikely to disappear soon with the northern central bank in less of a rush to raise interest rates. “There’s way too much optimism priced into the Canadian curve,” said Darcy Briggs, a Calgary-based portfolio manager at Franklin Bissett Investment Management with C$5.4 billion ($4.3 billion) in fixed income.
“I don’t expect Canadian rates to move as high or as fast as in the U.S.” Traders have boosted wagers that the U.S. Federal Reserve will increase interest rates steadily this year amid evidence U.S. inflation is creeping higher and concerns over the federal government’s fiscal deficits. In Canada, expectations for monetary tightening have held steady amid signals of slower growth, including January’s job slump, the biggest decline in payrolls since 2009. Canadian five-year bonds were yielding 2.12 percent at 9:52 a.m. in Toronto, 54 basis points less than similar maturity U.S. notes.
That gap could widen to more than 80 basis points, according to Briggs. Mark Chandler, Toronto-based head of fixed-income research at RBC Capital Markets, expects the spread to stay steady in the next few quarters before widening at the end of the year and reaching as much as 85 basis points by the end of 2019. “The U.S. is somewhat ahead of Canada on a cyclical basis,” and so, at some point, Fed expectations should further surpass those for the Bank of Canada, he said. Read more here-https://bloom.bg/2HANGkS
-CHART OF THE WEEK: Toronto Strain Drives 14.5% Plunge in Canadian Home Sales. Canadian home sales plunged the most in a decade last month, driven by fewer transactions in a Toronto market squeezed by tougher mortgage lending rules and higher interest rates. Sales fell 14.5 percent nationwide from December and were down 26.6 percent in Toronto, the Canadian Real Estate Association said Thursday from Ottawa. The national decline was the biggest since 2008 and Toronto’s was the biggest since 1989, according to historical CREA data.
The housing market is cooling off from heady price gains of 30 percent in Toronto after policy makers stepped in with measures including a foreign buyer tax. The January decline comes after a record December, when buyers rushed into the market before a new federal mortgage lending stress test came into force. The Bank of Canada raised its trend-setting interest rate last month for the third time since July. “The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created home buyer uncertainty and confusion,” CREA President Andrew Peck said in a statement. Some of January’s decline reflected buyers accelerating their purchase plans in December, the group said.
The weakness didn’t show up in prices, with the nationwide benchmark index up 0.3 percent on the month. Prices were little changed in Toronto. The unadjusted average sales price across Canada of C$481,562 ($384,849) was up 2.3 percent from a year earlier. Sales fell in about three-quarters of housing markets across the country. The number of new homes listed for sale dropped by 21.6 percent from December to January to the lowest since 2009, CREA said. Read more here-https://bloom.bg/2CB7C3c
-CHART OF THE WEEK: Sales of Existing U.S. Homes Unexpectedly Fell in January. Sales of previously owned U.S. homes unexpectedly fell in January to a four-month low, indicating a shortage of available properties is increasingly hindering the real-estate industry, a National Association of Realtors report showed Wednesday. Sales growth is limited by an acute shortage of inventory, which is pushing up home prices faster than wage growth. The group noted that property prices have jumped 41 percent over the past five years, while wages have gained 12 percent. If the current pace of sales continues which NAR doesn’t anticipate purchases would be lower than in 2017.
At the same time, steady hiring and elevated confidence to make large purchases, as well as tax cuts that are boosting Americans’ take-home pay, are expected to sustain demand for housing in much of the nation. Borrowing costs have risen since the start of the year, also crimping affordability, with the rate on a fixed 30-year mortgage advancing last week to the highest in almost four years. While the tax legislation also limits the deduction for mortgage interest on more expensive homes, signaling demand may cool in areas of the country where the cost of a house is well above the national median, the Realtors group said there’s little evidence yet that it’s having an impact. Read more here-https://bloom.bg/2FjB0hy
-CHART OF THE WEEK: U.S. Oil’s Costly Again as It’s Stored Less and Shipped Abroad More. Dwindling volumes at the biggest U.S. oil storage hub and the potential for bigger cargoes to sail overseas is giving American crude a premium sheen once again. The price of U.S. benchmark oil has gone above the Middle East marker for the first time in more than a year, data compiled by Bloomberg show. The shale boom that drove American crude to a discount spurred an unprecedented surge of relatively cheap shipments to Asia.
That was a pain for top OPEC producers such as Saudi Arabia, which had their market share threatened as they implemented output curbs to clear a global glut. Now, a combination of new pipeline options, a rail car crunch, demand from Gulf Coast refineries and a thirst for U.S. supply from overseas means less is being hoarded. Stockpiles at Cushing, Oklahoma, have slid in all but one of the past 14 weeks as booming American production bypasses the storage hub. With the Louisiana Offshore Oil Port, or LOOP, this month loading its first very large crude carrier for export, speculation is increasing that bigger cargoes will head abroad.
“Sentiment for U.S. crude has improved in part from LOOP’s very large crude carrier export capability, but fundamentally, falling Cushing stocks remains the main support for higher WTI prices,” said Den Syahril, an analyst at industry consultant FGE in Singapore. West Texas Intermediate crude was at a premium of 36 cents a barrel to Dubai oil on Monday, compared with an average discount of about $2 over 2017. It was 17 cents a barrel above the Middle East benchmark on Tuesday. Read more here-https://bloom.bg/2FfdfHj
-CHART OF THE WEEK: Saudi Arabia Is Taking a Harder Line on Oil Prices. For decades, Saudi Arabia was the voice of moderation within OPEC, pushing back against the urging of members like Venezuela and Iran for higher oil prices. That role seems to be shifting. Thanks to OPEC-led production cuts, crude prices are double their level two years ago and bloated oil stockpiles are almost back to normal. Yet Saudi Energy Minister Khalid Al-Falih wants to go further. Producers should keep cutting for the whole year, even if it causes a small supply shortage, Al-Falih said.
“If we have to overbalance the market a little bit, then so be it,” he told reporters in Riyadh last week. Saudi Arabia faces unprecedented pressures as Crown Prince Mohammed Bin Salman embarks on a program of sweeping economic reforms known as “Vision 2030” and includes the potentially record-breaking initial public offering of its state oil company. “They are definitely not a price dove anymore,” said Mike Wittner, head of oil market research at Societe Generale SA. “They have to think about their social costs, about Vision 2030, about the Saudi Aramco partial IPO or private placement.
Al-Falih’s statement last week could not have been much clearer.” Previously content with oil at $60 a barrel, Al-Falih is now seeing $70 as the level where crude prices should trade, according to a person familiar with the matter, who asked not to be identified because the information was private. “If you’re Mohammed Bin Salman, and trying to radically reinvent your country” then “you need a certain price to make it work,” said Helima Croft, head of commodity strategy at RBC Capital Markets LLC. Read more here-https://bloom.bg/2onmjSz
-CHART OF THE WEEK: Boom Turns to Bust for Millennials Across Advanced Economies. The income boom enjoyed by people born between 1966 and 1980 has turned to “bust” for the generation that followed them, according to a report published Monday. In an analysis of eight high-income countries, the Resolution Foundation think tank found that millennials in their early 30s have household incomes 4 percent lower on average than members of so-called Generation X at the same age. Britain and Spain stand out. In the U.K., Generation X were 54 percent better off than baby boomers born between 1946 and 1965.
By contrast, millennials, born between 1980 and 2000, had incomes just 6 percent higher than those of Generation X at the same age. The U.K. is also notable for the fall in rates of home ownership. For millennials in their late 20s, the figure is 33 percent compared with 60 percent for baby boomers at the same age. Smaller declines are found in Australia and the U.S.
“It’s no secret that the financial crisis hit the vast majority of advanced economies hard, holding back millennial income progress in countries around the world,” said Daniel Tomlinson, a policy analyst at the Resolution Foundation. “But only Spain echoes the U.K. experience a ‘boom and bust’ cycle where significant generation-on-generation gains for older generations have come to a stop for younger people.” Adjusted for inflation, pay for British millennials has fallen by 13 percent, a decline surpassed only by Greece, the think tank estimated. Read more here-https://bloom.bg/2olpHxd
-The Palo Alto Weekly recently asked residents of a ritzy Silicon Valley city: “How do you define your social class?” The survey found that more than 80 people living in Palo Alto and earning up to $399,999 a year in income considered themselves part of the middle class. Residents acknowledged that while they may be rich elsewhere in the US, they still cannot afford to buy homes in the Bay Area. Businessinsider
-British Columbia’s Finance Minister Carole James says she doesn’t want her province’s housing market to be “used as a stock market”, so she’s digging deeper into the tool kit in an attempt to thwart speculators. The tax on foreign buyers is going up immediately to 20 per cent from 15 per cent, and it’s being spread beyond Metro Vancouver. And an additional “bold new” levy will be imposed on domestic and foreign speculators. All part of a 30-point plan that nearly doubles the number of measures introduced by Ontario last year in its 16-point Fair Housing Plan. Should be pointed out the biggest money maker among B.C.’s 30 housing moves, is the increased property transfer tax on the value of homes above $3 million. That strategy is expected to generate $81 million in revenue per year. Most important questions to consider today: Are the additional levies enough to scare off foreign buyers? And will those buyers hopscotch elsewhere in Canada? BNN
-Federal Reserve officials grew more positive on the economic outlook, citing “substantial underlying economic momentum,” and were increasingly optimistic about achieving their inflation target, according to minutes of last month’s policy meeting. Fed officials “anticipated that the rate of economic growth in 2018 would exceed their estimates of its sustainable longer-run pace and that labor market conditions would strengthen further,” the minutes of their Jan. 30-31 meeting released in Washington on Wednesday showed.
A number of participants “indicated that they had marked up their forecasts for economic growth in the near term relative to those made for the December meeting.” “A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate,” the minutes said. U.S. central bankers estimated economic growth at 2.5 percent for 2018 in December. Private analysts have boosted their outlook to 2.6 percent, according to the median forecast in a Bloomberg News survey. Stocks peaked on Jan. 26 before tumbling at the start of February, and longer-term government bond yields began to climb on the prospects of larger amounts of Treasury issuance. Bloomberg
-China increased its holdings of U.S. Treasuries last year by the most since 2010, in a signal its demand for American debt remains resilient. The value of China’s holdings of U.S. bonds, notes and bills rose by $126.5 billion to $1.18 trillion in December from a year earlier, according to Treasury Department data released Thursday in Washington. China remains the largest non-U.S. holder of debt followed by Japan, whose holdings fell for the fifth straight month in December, to $1.06 trillion after ending 2016 at $1.09 trillion.
China’s Treasury holdings are coming under extra scrutiny after a signal earlier this year that America’s largest creditor may be easing bond-buying amid rising trade tensions. Chinese officials said last month that as part of a foreign-exchange review, the government is considering slowing or halting purchases of U.S. Treasuries as they became less attractive relative to other assets. A pullback could complicate plans by the U.S. to ramp up borrowing to finance widening budget deficits and efforts by the Federal Reserve to limit market turbulence from gradually unwinding its balance sheet. Bloomberg
-The scandal involving Latvia’s central bank chief and European Central Bank Governing Council member is deepening as Ilmars Rimsevics now faces accusations of repeatedly trying to extort money from a local bank. Meanwhile, euro-area finance ministers agreed to nominate Spain’s Luis de Guindos to be the next ECB vice president, a move that will hand Madrid a top seat at the helm of the monetary authority for the first time since 2012. Adding to drama in the region, U.K. Prime Minister Theresa May’s team is said to be eyeing a contingency plan to hold back billions of pounds in Brexit payments if the EU declines to give the country the trade deal it wants. Bloomberg
-Stuart Gulliver’s seven-year reign as HSBC Holdings Plc’s CEO ended with a rare failure to live up to analysts’ earnings estimates as lending margins narrowed and the bank booked loan charges related to two clients. Fourth-quarter pretax profit of $3.6 billion missed the lowest estimate among analysts, thanks to impairments on loans to two corporate borrowers said to be Steinhoff and Carillion. Meanwhile, Deutsche Bank AG is said to have started cutting at least 250 jobs at its corporate and investment bank. Bloomberg
-China increased its holdings of U.S. Treasuries last year by the most since 2010, in a signal its demand for American debt remains resilient. The value of China’s holdings of U.S. bonds, notes and bills rose by $126.5 billion to $1.18 trillion in December from a year earlier, according to Treasury Department data released Thursday in Washington. China remains the largest non-U.S. holder of debt followed by Japan, whose holdings fell for the fifth straight month in December, to $1.06 trillion after ending 2016 at $1.09 trillion. China’s Treasury holdings are coming under extra scrutiny after a signal earlier this year that America’s largest creditor may be easing bond-buying amid rising trade tensions. Bloomberg
–Ray Dalio, billionaire philosopher-king of the world’s biggest hedge fund, has a checklist to identify the best time to sell stocks: a strong economy, close to full employment and rising interest rates. That may explain why the firm he created, Bridgewater Associates, has caused a to-do the past two weeks by quickly amassing an $21.65 billion bet against Europe’s biggest companies. The firm’s total asset pool is $150 billion, according to its website. Economic conditions in Europe appear to fit Dalio’s requirements. Last year, the continent’s economy grew at the fastest pace in a decade, and European Central Bank President Mario Draghi has indicated he’s on a slow path toward boosting rates as economic slack narrows. Factories around the world are finding it increasingly hard to keep up with demand, potentially forcing them to raise prices. But Dalio is leading his firm down a path that few other funds care to tread. Bloomberg
-It turns out the rumors were true: This year’s flu shot is indeed less effective than usual. An unusually resilient strain of influenza called H3N2 has been the predominant assailant this season, and the vaccine rolled out last year was ill-suited to protect against it. While previous analyses from Canada and Australia on its H3N2 effectiveness lent some non-significant support to suspicions about the shot, a new report from the Centers for Disease Control and Prevention laid doubt to rest: This season’s vaccine reduced illness caused by H3N2 by only 25 percent.
Still, it’s better to get a shot because it offers some protection, especially against other strains that are just starting to emerge, the CDC says. The vaccine was particularly effective for children aged six months to eight years, reducing their risk of contracting H3N2 by more than half. Overall, however, this season’s vaccine is more than 40 percentage points less effective against H3N2 than it is for H1N1, another flu strain that is also spreading. Weaker than usual vaccine protection is among the reasons this season features record levels of flu. The most recent data show the amount of influenza-like illness currently being reported matches the peak of the 2009 swine flu epidemic. Bloomberg
-The centerpiece of Apple Inc.’s new headquarters is a massive, ring-shaped office overflowing with panes of glass, a testament to the company’s famed design-obsessed aesthetic. There’s been one hiccup since it opened last year: Apple employees keep smacking into the glass. Surrounding the building, located in Cupertino, California, are 45-foot tall curved panels of safety glass. Inside are work spaces, dubbed “pods,” also made with a lot of glass. Apple staff are often glued to the iPhones they helped popularize. That’s resulted in repeated cases of distracted employees walking into the panes, according to people familiar with the incidents. Bloomberg
-What was once unthinkable has now happened two years in a row: 70 degree temperatures have hit New York, Boston and Washington in the depths of February. New York and Boston hit 70 degrees Fahrenheit (21 Celsius) Tuesday, a daily record, and are forecast to rise a few degrees higher on Wednesday. Philadelphia is expected to hit 74. Washington is forecast to reach 79. “Really crazy and just like last year,” said Matt Rogers, president of the Commodity Weather Group LLC.
“We might get a March colder than February nationally.” One year ago a warm front pushed temperatures into the 70s, sparking tornadoes in Massachusetts a first and sending natural gas prices tumbling as people opened windows rather than cranked thermostats. For New York, Boston and Washington, February was actually warmer than March. “It is pretty comparable to the warm up we saw last year, even the dates are pretty similar as well,” said Marc Chenard, a senior branch forecaster at the U.S. Weather Prediction Center in College Park, Maryland. “It is definitely comparable.” Bloomberg
-Debt Cancer: More Than 80 Percent Of American Adults Owe Somebody Else Money. How long can our debt levels keep growing much, much faster than the overall economy? We haven’t had a year of 3 percent growth for the U.S. economy since the middle of the Bush administration, but we keep borrowing money as if there is no tomorrow. Much of the focus has been on the exploding debt of the federal government, and that is definitely something I plan to address once I get to Washington. But on an individual level, U.S. consumers have been extremely irresponsible as well. In fact, one new survey has found that more than 80 percent of all American adults are currently in debt…
It’s no secret that America is a nation that runs on debt, but it may surprise you to learn that the overwhelming majority of U.S. adults owe money in some way, shape, or form. According to new data from Comet, here’s how many Americans have debt at present:
- 80.9% of Baby Boomers
- 79.9% of Gen Xers
- 81.5% of Millennials
For most of us, it starts very early. We were told that going into debt to get a college education would not be a problem because we would be able to pay those loans off with the good jobs we would get after graduation. Unfortunately, those good jobs never really materialized for many of us, and now millions of former college students are absolutely drowning in debt…
A study released Friday by the Brookings Institution finds that most borrowers who left school owing at least $50,000 in student loans in 2010 had failed to pay down any of their debt four years later. Instead, their balances had on average risen by 5% as interest accrued on their debt.
As of 2014 there were about 5 million borrowers with such large loan balances, out of 40 million Americans total with student debt. Large-balance borrowers represented 17% of student borrowers leaving college or grad school in 2014, up from 2% of all borrowers in 1990 after adjusting for inflation. Large-balance borrowers now owe 58% of the nation’s $1.4 trillion in outstanding student debt.
In addition to owing more than a trillion dollars on student loans, Americans are also now carrying more than a trillion dollars of auto loan debt and more than a trillion dollars of credit card debt. Corporations have been incredibly irresponsible as well. Corporate debt has doubled since the last financial crisis, and corporate bankruptcies have been rising steadily in recent years. All it would take for the dominoes to really start falling is some sort of a major economic downturn.
Local, state and federal government debt levels are all at record highs as well. It is now being projected that our national debt will hit 30 trillion dollars by 2028, and those projections are probably too optimistic. My guess is that we will almost certainly hit the 30 trillion dollar mark far sooner than that. We can’t keep doing this to ourselves. Our incessant greed is literally destroying the future, but anyone that tries to warn about the collective insanity that has descended upon our society is mocked and ridiculed.
Let me ask you a question. Would you willingly choose to give yourself cancer? Of course not, but that is essentially what we are doing to ourselves as a society. Debt is economic cancer, and as Lance Roberts has pointed out, if we continue to allow debt levels to grow like this eventually it will kill our entire economy. Read more here-http://bit.ly/2EYCOyy
-70% of fund managers see danger ahead the highest percentage since the financial crisis. The recent turbulence on Wall Street, which pushed the U.S. stock market into its first correction in about two years, seems to have soured fund managers on where the economy may be headed. According to the BofA Merrill Lynch fund manager survey for February, 70% of those polled believe the global economy is in its “late cycle,” the highest such reading since January 2008, right as the financial crisis began to gather steam. The late part of an economic cycle typically coincides with the market’s peak and precedes a decline into recession.
According to the Wells Fargo Investment Institute, which in early January suggested the U.S. economy was poised between the mid and the late parts of the business cycle, this stage is marked by moderating growth, tightening credit, a peak in confidence, higher inflation and an acceleration in the rate of interest rates rising. Some of these factors appear in the current cycle. Investor optimism recently hit a seven-year high, before dropping to a three-month low in its latest reading. And a recent report showed wages growing at their fastest pace in more than eight years. That raised concerns about whether inflation could be returning to markets after years of dormancy and those fears sparked worries that the Federal Reserve could become more aggressive in raising rates.
The changing views on inflation and rates have been widely credited with sparking the recent volatility on Wall Street and the survey showed that 45% of respondents said that an “inflation-induced bond crash” was the biggest risk facing markets, followed by a policy mistake by either the Fed or the European Central Bank. The equity correction was also marked by an exodus from stocks. According to the BofA survey, equity allocation fell to net 43% in February from 55% overweight in January, the largest one-month decline in two years, according to the investment bank. Meanwhile, the percentage of investors who have put on protection against “a sharp fall in equity markets” saw its biggest one-month jump on record. Read more here-http://on.mktw.net/2EspXkL
-Morgan Stanley Says Stock Slide Was Appetizer for Real Deal. The U.S. stock market only had a taste of the potential damage from higher bond yields earlier this year, with the biggest test yet to come, according to Morgan Stanley. “Appetizer, not the main course,” is how the bank’s strategists led by London-based Andrew Sheets described the correction of late January to early February. Although higher bond yields proved tough for equity investors to digest, the key metric of inflation-adjusted yields didn’t break out of their range for the past five years, they said in a note Monday.
While many have warned that faster inflation could hurt stocks, in theory bigger price gains should be at worst neutral, if they boost earnings along the way. Higher real yields, on the other hand, mean a bigger discount rate to value future earnings. Should they break out of the range over the past five years as investors anticipate greater central bank policy normalization, that could hit stocks harder, according to the Morgan Stanley thinking. Relatively low real yields were a big support for equity valuations, so a break higher would indicate that stocks will have to rely on earnings — not multiple expansion — to drive them higher, Sheets and his colleagues wrote. And the challenge there is that a slowdown may loom starting in the second quarter, they said.
“It’s when growth softens while inflation is still rising that returns suffer most,” the strategists wrote. “Strong global growth and a good first-quarter reporting season provided an important offset. We remain on watch for ‘tricky hand-off’ in the second quarter, as core inflation rises and activity indicators moderate.”JPMorgan Chase & Co. strategists have also pointed to real rates as a potential inflection point for markets, though they identified in December the inflation-adjusted cash rate as the one to watch. That measure has a ways to go until their threshold. Read more here-https://bloom.bg/2onLuUV
-GoldCore: Bank Bail-In Risk In European Countries Seen In 5 Key Charts. Nearly €1 trillion in non-performing loans poses risks to European banks.’ Greece has highest non-performing loans as a share of total credit. Italy has the biggest pile of bad debt in absolute terms. Bad debt in Italy is still “a major problem” which has to be addressed ECB. Level of bad loans in Italy remains above that seen before the financial crisis
Deposits in banks in Greece, Cyprus, Italy, Ireland, Czech Republic and Portugal most at risk from bank bail-in. Read more here-http://bit.ly/2HxoewF
-Goldman Sees U.S. Interest-Cost Surge on Yield, Deficit Rise. An historic expansion in U.S. borrowing during a period of economic growth, alongside rising bond yields, will cause a surge in the cost of servicing American debt, according to Goldman Sachs Group Inc. “Federal fiscal policy is entering uncharted territory,” Goldman analysts including Alec Phillips in Washington wrote in a Feb. 18 note to clients. “In the past, as the economy strengthens and the debt burden increases, Congress has responded by raising taxes and cutting spending. This time around, the opposite has occurred.”
Because the average maturity of U.S. debt is almost six years, rising yields will take some time before they send the interest rate the Treasury pays to borrow above the growth rate of gross domestic product, Goldman estimates. When that does happen, it will send the ratio of debt to GDP, which is already elevated, climbing further from about 77 percent now.
If current fiscal policies are extended, the Goldman analysts predict that the U.S. net interest expense relative to GDP will exceed the levels seen in the 1980s and early 1990s by 2027. And debt-to-GDP will probably be higher than 100 percent, “putting the U.S. in a worse fiscal position than the experience of the 1940s or 1990s,” they wrote.
Goldman market strategists see 10-year U.S. Treasury yields peaking in the region of 3.5 percent to 3.75 percent about a percentage point higher than the average over the past decade. They boosted their year-end forecast to 3.25 percent last week. Looking for historical parallels among advanced economies, Goldman pointed out expansionary fiscal policies during economic growth periods in Belgium in the 1970s, Italy in the 1980s and Japan in the 1990s. In the cases of Belgium and Italy, debt ratios continued to deteriorate years later even after budgets were tightened, thanks to elevated interest costs, Goldman analysis showed. Read more here-https://bloom.bg/2GvID3E
-‘No Cash’ Signs Everywhere Has Sweden Worried It’s Gone Too Far. “No cash accepted” signs are becoming an increasingly common sight in shops and eateries across Sweden as payments go digital and mobile. But the pace at which cash is vanishing has authorities worried. A broad review of central bank legislation that’s under way is now taking a special look at the situation, with an interim report due as early as the summer. “If this development with cash disappearing happens too fast, it can be difficult to maintain the infrastructure” for handling cash, said Mats Dillen, the head of the parliamentary review.
He declined to give more details on the types of proposals that could be included in the report. Sweden is widely regarded as the most cashless society on the planet. Most of the country’s bank branches have stopped handling cash; many shops, museums and restaurants now only accept plastic or mobile payments. But there’s a downside, since many people, in particular the elderly, don’t have access to the digital society. “One may get into a negative spiral which can threaten the cash infrastructure,” Dillen said. “It’s those types of issues we are looking more closely at.”
Last year, the amount of cash in circulation in Sweden dropped to the lowest level since 1990 and is more than 40 percent below its 2007 peak. The declines in 2016 and 2017 were the biggest on record. An annual survey by Insight Intelligence released last month found that only 25 percent of Swedes paid in cash at least once a week in 2017, down from 63 percent just four years ago. A full 36 percent never use cash, or just pay with it once or twice a year.
In response, the central bank is considering whether there’s a need for an official form of digital currency, an e-krona. A final proposal isn’t expected until late next year, but the idea is that the e-krona would work as a complement to cash, not replace it completely. Riksbank Governor Stefan Ingves has said Sweden should consider forcing banks to provide cash to customers. In its annual report on Monday, the Riksbank said the question is what role it should play in a future with even fewer cash payments. Read more here-https://bloom.bg/2CbvY89
-Half of Puerto Rico’s housing was built illegally. Then came Hurricane Maria. Gladys Peña built a home the way many thousands of people in Puerto Rico, maybe most, did for decades: in makeshift fashion. Every week for years, Peña, a cafeteria cook, set money aside until she had enough to buy a vacant wooden shack in a densely packed working-class barrio, a one-time squatters’ community a short stroll from the towers of San Juan’s Golden Mile financial district. She knocked down most of the flimsy house, bought building materials bit by bit and gradually built herself a concrete-block first floor with little more than a kitchen in it, and then a wooden second story topped by a corrugated zinc-metal roof. Read more here-http://hrld.us/2ojJg96
-Rolex Daytona Madness Reigns at 2018’s Most Anticipated Auction. A trio of big-deal Daytona’s offers our first look into the thematic auction May 12 in Geneva. Just a few weeks after dropping the hammer on Paul Newman’s own Paul Newman Daytona making it the most expensive wristwatch ever sold at auction Phillips announced it would be holding a thematic Daytona sale in spring 2018 called “Daytona Ultimatum.” At the time, I gave them a bit of flak about the name and the impulse to continue fanning the flames of rare, high-end Daytona collecting, but there’s no question is the most hotly anticipated sale of the upcoming season. Today, Phillips has released the first three lots from the sale and announced that Pucci Papaleo, the author of Ultimate Rolex Daytona, is one of the sale’s curators. Read more here-https://bloom.bg/2Fhb7ib
-Elvis Presley’s Omega Wristwatch Set With 44 Diamonds to Hit the Block. Phillips in Association with Bacs & Russo has scored another celebrity watch coup with Elvis Presley’s Omega wristwatch, which goes on the block during the auction house’s Geneva Watch Auction: SEVEN on May 12 and 13 at Hôtel La Réserve in Geneva. At a charity event and concert in 1961, RCA Records, Presley’s label at the time, presented him with the 18-karat white gold dress watch set with 44 brilliant-cut diamonds on the bezel to mark his impressive achievement of selling 75 million records. The watch was purchased at Tiffany & Co. and features the retailer’s signature on the dial underneath the Omega designation at 12 o’clock.
The case back bears the inscription “To Elvis, 75 Million Records, RCA Victor, 12-25-60,” commemorating the date that the sales milestone was reached. As the story goes, the uncle of the watch’s consignor randomly met Presley in a Las Vegas bar in the 1960s. After expressing mutual admiration for each other’s watches, Presley suggested to trade his Omega for the other gentleman’s diamond-set Hamilton on the spot, which they did. Presley’s watch was later passed on to its current owner, so it has never appeared on the market before. It will be delivered complete with certificates of authenticity from the Elvis Presley Museum and a book titled Elvis by Dave Marsh that includes images of the watch on Presley’s wrist.
“We believe Elvis Presley had hundreds of watches throughout his lifetime,” says Paul Boutros, Phillips head of watches for the Americas, who notes that some of his timepieces, including a Rolex King Midas, are displayed at Graceland, the singer’s famous home in Memphis, Tenn. “This particular watch is the first one to come to market that has such a clear and convincing provenance that celebrates a really important milestone in his career.” And nothing boosts the value of a vintage watch like a clear and compelling celebrity provenance, as demonstrated by last fall’s record-breaking sale of Paul Newman’s Rolex Daytona, which fell under the hammer at Phillips in New York last October for US$15.5 million (US$17.75 with buyer’s premium). Read more here-http://bit.ly/2BFn6Gz
-“Jewelry is an investment you can wear for 30 years and then sell. What else can you do that with?” Chris Del Gatto jewelry expert
-“Diamonds are a portable, alternative store of savings and wealth that are being increasingly utilized for diversification. And in a new and uncertain world, where surprises will continue to catch us off-guard, portability should absolutely be understood as diversification. The ability to easily move savings and wealth is not a feature of precious metals, real estate or most collectibles, but it is for diamonds. They are arguably the densest and most portable form of savings and wealth in existence. Real estate is fixed, and $1 million worth of gold weighs about 10 kilos as much as a large car tire but a handful of collection-quality diamonds can be worth many millions and fit in a pocket.” Joseph Lipton, CEO of Secured Worldwide
-“Another high-class area of transportable tangibles is diamonds. You can hide $10 million dollars worth of diamonds in the cuff of your trousers.” Richard Russell
-In 244 years of auctions, only 18 pink diamonds of more than 10 carats (2 grams) have come up for sale. Christie’s
-“Pink diamond prices have tripled over the past 15 years and on average would be at least 25 to 30 times the value of white diamonds.” David Fardon CEO of Linneys
-“Between 2002 and 2010, the index price for diamonds from the Argyle Pink Diamonds Tender increased 108 per cent, while white diamonds rose 22 per cent.” Josephine Johnson Argyle Pink Diamonds Manager
-“Colored diamonds are even rarer than colorless diamonds. And when you get into colors like pink or very intense shades of pink or green or blue or even red, which is very, very rare the amount that is available in the world is next to nothing. There are more Picassos in the world then there are colored diamonds. The rarity is enormous, so the value is incredible.” Melvyn Kirtly Tiffany & Co.’s chief gemologist
-In 1980 the highest auction price paid for a diamond was $127,000 a carat for a 7.27 ct pink diamond. That record was shattered in 1987 by the first high quality red diamond to be sold at auction, the 0.95 carat Hancock Red. It sold for over $926,000 a carat! The Hancock Red was sold by the heirs of the American owner, Warren Hancock, a Montana rancher and diamond collector. Mr. Hancock had bought all his diamonds at retail prices from his local jeweler, and he had reportedly paid $13,500 for the 0.95 carat red diamond in 1956. It is fair to say this was one of the greatest gemstone investments of the century. Rarecoloreddiamonds.com
-In 1960, “Princie” Pink Diamond sold for 46,000 pounds ($70,725) at Sotheby’s in London. The buyer was Van Cleef & Arpels, which threw a party attended by Maharani Sita Devi of Boroda and her 14-year-old son, Sayajirao Gaekwad, who was nicknamed “Princie” the diamond was named after the youth. In April 2013 “Princie” sold for $39.3 million at Christie’s in New York. Bloomberg
-“The Cartier Devant de Corsage Brooch realized a staggering $17.5 million, a 660-percent increase having first sold for $2.65 million at Christie’s Geneva back in 1991.” Rahul Kadakia, International Head of Christie’s Jewellery Department
-“Having your money in the bank may not mean as much as it used to. Colored diamonds are impressive, durable and portable. In times of global volatility, the ability to easily carry millions of dollars in one’s pocket may well be an attractive prospect.” Angela Berden Christie’s jewelry department senior specialist
-In 1817, R.J. Hauy an eminent French mineralogist wrote “Gems are the flowers of the mineral kingdom fancy color diamonds are the orchids.” “Fancy color diamonds, like orchids, are truly exotic and rare beauties of nature.” Rarecoloreddiamonds.com
-“I never worry about diets. The only carrots that interest me are the number you get in a diamond.” Mae West
-“After all, it really is an investment. It is only when the thing I buy creates a show for those around me that I get my money’s worth.” Evalyn Walsh McLean “Queen of Diamonds” Early owner of the Hope diamond
-“I have come to the realization that colored diamonds, or other gemstones, should first be considered as a unique and individual work of art, and second as a commodity to be analyzed, computerized, and categorized.” Stephen Hofer
-“Exceptionally fine colored diamonds have no fixed price, and as with fine paintings set rules do not hold” S.H. Ball
-“Diamonds are nature’s art, nature’s most beautiful art. Every stone is a story, every stone tells a story.” Diamond DVD-PBS Nature Series
-“A colored diamond is a touch stone of the universe, a little something God created that man can’t always find, they are the last frontier of collectibles.” R. Winston
-“I remember that stone it was an incredible color, it had its own personality I have never seen another one quite like it.” R. Winston
Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00
Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57
Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
-Mike Maloney’s Update On the Gold/Silver Ratio. Watch video here-http://bit.ly/2EJJLUS
-COMEX futures positioning, is the answer to why silver has lagged gold. Put simply, there has been much less managed money buying in silver than there has been in gold since the December price bottoms of each. In fact, there has been hardly any managed money buying in COMEX silver from December through the latest COT report, in contrast to fairly decent managed money buying in COMEX gold.
As to why there has been more managed money buying in gold than there has been in silver, there is an obvious (and simple) answer to that question as well. Gold prices have consistently traded above (I would say have been allowed to trade above) its key moving averages since late-December; while silver prices haven’t. Even after a brief upward penetration of silver’s key moving averages (the 50 and 200-day ma’s) on Wednesday, silver prices closed below them for the week.
Not for minute am I lamenting the lack of managed money buying in silver to this point; I am just explaining why the price of silver has lagged gold. In fact, the lack of managed money buying in silver is a distinctly bullish factor because there is no reason to believe that buying has been anything but delayed and will, at some point, kick in. That’s the whole purpose of COT market structure analysis, namely, be most bullish when managed money buying is at a nadir and be most cautious when it is at a peak. Silver analyst Ted Butler Feb 17 2018 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-At [Wednesday] morning’s highs, silver had penetrated its 50-day moving average to the upside and was not that far away from penetrating its 200 day moving average. Again, moving averages don’t mean much to me by themselves, but their penetrations motivate the heck out of the managed money traders. The reason I consider silver’s market structure to be extremely bullish is because there are many more potential managed money contracts to be bought than there are to be sold.
But as you know, potential managed money buying, as strong as it may be, is not the most critical factor in the silver and gold pricing equation. Instead, the most critical factor is the intensity of the commercial selling that offsets managed money buying, particularly the amount of new short selling by JPMorgan. The only reason silver price rallies have been progressively more tightly capped over the years is that commercial selling, most definitely including new short selling by JPM, has been aggressive enough to contain prices. Even the collective buying of hundreds of millions of ounces of COMEX paper silver by the managed money traders in short periods of time (weeks) has been incapable of adding more than a couple of dollars to the price. That’s how aggressive commercial and JPMorgan selling has been.
Those are the market facts of life and what it has come down to is if the commercials will continue with the same old, same old wash, rinse and repeat cycle, with silver and gold remaining trapped in a seeming never-ending contained price cycle. Many believe that the cycles have become so well-entrenched that to suggest that they might change is foolhardy. I’m not in that camp. I believe this COMEX silver price manipulation will end suddenly and violently and I have chosen to play it that way. Silver analyst Ted Butler Feb 14 2018 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-Ted Butler: Silver Commentary, No Manipulation, After All? In the never-ending search to either verify or rebut one’s own findings, I’d like you to consider something different today. I’m going to ask you to set aside my highly specific allegations of wrong-doing in the silver and gold markets, mostly centering on JPMorgan, and focus instead on whether if what I allege is really wrong or even matters much. Even though my allegations are based upon data published by the CFTC and CME Group, I would ask you to put that aside and consider that I may have been making a mountain out of a molehill about silver (and gold) price manipulation.
The best way of determining whether there is anything wrong in silver is to do a controlled experiment, namely, by removing it from the equation (along with any mention of JPMorgan) and substitute any other world commodity or entity in its place. In other words, would it be patently and outrageously illegal or no big deal at all if what is transpiring in silver occurred in any other commodity? I’ll present the facts and leave you to be the judge.
Pick any and every commodity with an active futures derivatives market that comes to mind and plugin the facts that are known to have existed in COMEX silver over the past ten years. Any and every commodity – corn, copper, crude oil, no exceptions. Now let’s plug in what we know in terms of facts that exist in silver.
First, we know from COT report data that a single entity has held a consistently large concentrated short position in COMEX silver, larger in terms of actual world production than in any other commodity. We further know that this large entity has always been the largest futures market short in COMEX silver over the entire decade; never flipping to net long. Next we know from COT data that while this uniquely large concentrated short seller has always been net short, its short position has both expanded and contracted regularly over the years and get this it has never lost money as it added or bought back short COMEX futures contracts. Never a loss, always only gains, a stunningly perfect trading record. This is determined in silver from observing changes in the concentrated short position of the largest short entity.
Finally we know, from the same source data used in the COT report but published separately in the Bank Participation report, that the dominant short seller in COMEX silver is a large US bank. Although this fact, by itself, wouldn’t be necessarily germane to the question if a manipulation exists or not, it does help tie in other facts. Read more here-http://bit.ly/2sKkbd4
-Clive Maund: Silver Market Update. Silver is completely “off the radar” for most investors right now which is just the way we like it when we are buying, however, as we will see, there are good reasons to believe that this will not be the case for much longer. On its latest 8-year chart we can see why silver has zero appeal for momentum traders now it ain’t goin’ nowhere, or so it would seem, if you project past performance into the future, but as we have repeatedly observed in recent months, it is marking out a giant Head-and-Shoulders bottom, which is quite heavily disguised compared to the concurrent flat topped H&S bottom forming in gold, because it is downsloping. A key bullish point to observe on this chart is the steady volume buildup over the past 2 years, which is a sign that it is building up to a major bullmarket. This hasn’t had much effect on volume indicators so far, but such is not the case with gold, where a more marked volume buildup has driven volume indicators strongly higher so that they recently made new highs, which bodes well not just for gold, but obviously for silver too. Read more here-http://bit.ly/2ukL5rH
-Craig Hemke: Silver’s Key Resistance. With the recognized top in the US dollar, it appears clear that renewed bull markets have begun across the commodity sector. Copper, crude oil and even gold are showing rallies and breakouts that promise much higher prices in the months ahead. But what’s the matter with silver? Read more here-http://bit.ly/2CC2ADw
-Jeff Clark: Why Now Is the Perfect Time to Be in Gold and Silver. We buy gold for many reasons as monetary insurance, a crisis hedge, and even for simple diversification. And another one of those reasons is coming to the fore right now: as a hedge against overvalued stock and crypto markets. We’ve been saying for some time that sooner or later these two markets had to correct and that gold would serve as a buffer against those inevitabilities. It’s a short and simple message, but one that is crucial for investors to address: Are you sufficiently hedged against overvalued equity and cryptocurrency markets? Read more here-http://bit.ly/2Cg1vpo
–Gold Wavers as Fed’s Economic Optimism Boosts Yields, Dollar. Spot gold slipped, erasing earlier gains, as Federal Reserve meeting minutes showed increasing confidence in the strength of the U.S. economy, curbing demand for the metal as a haven. Fed officials “anticipated that the rate of economic growth in 2018 would exceed their estimates of its sustainable longer-run pace and that labor market conditions would strengthen further,” according to minutes of their Jan. 30-31 meeting released on Wednesday. The dollar headed for a fourth straight gain, and Treasury yields pushed higher.
Gold initially rose after the minutes were released, with the dollar briefly sliding as investors assessed comments that officials remain concerned with the pace of inflation. The metal has fluctuated this month as traders look for clues on the pace of monetary tightening, which curbs the appeal of non-interest-bearing assets such as bullion. Read more here-https://bloom.bg/2CbFMid
-Frank Holmes: SWOT Analysis: Gold Traders Overwhelmingly Bullish in Bloomberg Survey. Read more here-http://bit.ly/2HAikLb
-Dennis Miller: Ed Steer Interview, Are precious metals about to shine again? Read more here-http://bit.ly/2EIqC1P
-KWN: Raymond James Just Told Clients “Gold So Close To Breaking Out!” Here is a portion of what Jeff Saut’s partner Andrew Adams wrote: Gold is having trouble breaking out above the $1,365 resistance level, but should it overcome that barrier, it could kick start another leg up for the metal. In the meantime, it remains fairly neutral on a short-term basis but it is worth monitoring in case the breakout does occur. Read more here-http://bit.ly/2EKJKQQ
-KWN: Bullion Banks Cover Massive Number Of Silver Shorts! Also, More Gold Short Covering. Read more here-http://bit.ly/2CbRYiX
-KWN: John Ing Gold Commentary, This Is Going To Send The Price Of Gold Surging Above $2,000. Read more here-http://bit.ly/2HCJIIe
-Clive Maund: Gold Market Update. Gold continues to prepare to break out of its giant Head-and-Shoulders bottom pattern. As we can see on its 8-year chart below, this base pattern has been developing for getting on for 5-years now, so it has major implications. Upside volume has been building for a long time, driving volume indicators higher, a sign that a breakout and new bullmarket is simply a matter of time, and not much at that now. Read more here-http://bit.ly/2CcqPwy