Radio Show Newsletter
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: Too Soon to Price in a Sept. Fed Hike? Investors Think Maybe. As the next meeting of Federal Reserve policy makers in mid-June draws near, investors are putting the chances that they’ll raise interest rates at nine in ten. Still, despite many officials’ insistence that they would like to raise rates twice before the end of the year, following their increase in March, market odds on a September hike at only about one in four haven’t followed the betting on June higher. Why not?
The answer may just be that it’s still too early, judging by how the three increases officials have delivered so far in this tightening cycle have played out. In fact, the current pattern headed into the upcoming meeting of the U.S. central bank’s rate-setting Federal Open Market Committee, scheduled for June 13-14 in Washington, looks a lot like the run-up to the Fed’s first hike of the cycle in December 2015. At the time, about two weeks before liftoff, investors were discounting the odds of another increase three months later by a similar amount as today.
Officials didn’t end up raising rates in March 2016, despite signaling at the December 2015 meeting that they would like to, because market turmoil ignited by fears over global growth got in the way. It wasn’t until December 2016 that policy makers were able to hike again. And based on how the year had just gone, investors were considerably more skeptical about the Fed following through with another increase three months later than they were the year before a subsequent hike in June was seen as more likely than one in March. Read more here-https://bloom.bg/2rWuwB5
-CHART OF THE WEEK: Trump Trade’s So Dead You May as Well Buy It, Says Citigroup. Citigroup Inc. says it may be time to bet on Donald Trump. With inflation trending lower and economic growth picking up globally, “Trumponomics” tax cuts and increased government spending has largely lost its grip on asset markets, Citi strategists led by Jeremy Hale wrote in a recent note. That’s made the risk-reward equation for the medium-term reflation trade favorable, they wrote. “Citi economists have not changed their base case, still expecting fiscal stimulus and tax cuts or reform later this year,” the strategists wrote in a May 25 note. Citi is “slightly” overweight equities and underweight bonds. But it’s also overweight cash, “given that markets are rich and we want powder to buy dips,” they wrote. Read more here-https://bloom.bg/2qBejgN
-CHART OF THE WEEK: Pretty Soon Electric Cars Will Cost Less Than Gasoline. Battery powered cars will soon be cheaper to buy than conventional gasoline ones, offering immediate savings to drivers, new research shows. Automakers from Renault SA to Tesla Inc. have long touted the cheaper fuel and running costs of electric cars that helps to displace the higher upfront prices that drivers pay when they buy the zero-emission vehicles. Now research from Bloomberg New Energy Finance indicates that falling battery costs will mean electric vehicles will also be cheaper to buy in the U.S. and Europe as soon as 2025. Batteries currently account for about half the cost of EVs, and their prices will fall by about 77 percent between 2016 and 2030, the London-based researcher said. Read more here-https://bloom.bg/2rEIpE6
-“Given groupthink and the determination of policymakers to do ‘whatever it takes’ to prevent the next market ‘crash,’ we think that the low-volatility levitation magic act of stocks and bonds will exist until the disenchanting moment when it does not. And then all hell will break loose (don’t ask us what hell looks like), a lamentable scenario that will nevertheless present opportunities that are likely to be both extraordinary and ephemeral. The only way to take advantage of those opportunities is to have ready access to capital.” Paul Singer Elliott Management
-“Australia’s dollar is the worst-performing major developed currency in the past three months and the country’s equity market is among the world’s weakest this year. The Aussie dollar remains above 74 U.S. cents. Money managers at BlackRock Inc. and AMP Capital Investors Ltd. agree it should be trading closer to 70 cents. For Altius Asset Management’s Bill Bovingdon, it reminds him of the cartoon duo Wile E. Coyote and the Road Runner. The Aussie dollar hasn’t yet realized there is no substance holding it up.” Bloomberg
-India’s economy grew at the slowest pace in more than two years in the first quarter, dragged down by Prime Minister Narendra Modi’s cash ban in November and the weight of the country’s bad bank debts. Bloomberg
-A Canadian regulator said it disciplined two mortgage brokers who funneled business to Home Capital Group Inc., marking the first disclosure of action taken against dealers who submitted fraudulent loan applications to the embattled mortgage lender. The Financial Services Commission of Ontario conducted its own review into Home Capital in relation to the company severing ties in 2015 with 45 brokers who used falsified client income on applications. The agency found that broker Gagandeep Duggal and agent Zaheer Mohammad weren’t complying with the rules, according to a spokesman. Home Capital and the regulator hadn’t disclosed the names of any dealers sanctioned until now. Bloomberg
-HSBC is bearish on the pound and believes the risks associated with a “hard” Brexit will see the currency weaken immediately after the general election on June 8 whatever the outcome. Writing on Tuesday, HSBC strategists David Bloom and Daragh Maher forecast that the pound would reach parity with the euro and 1.20 against the dollar by the end of 2017. They said that the currency “remains vulnerable to a potentially acrimonious negotiation process with the EU and the lingering possibility of a ‘no deal’ outcome.” The pair also pointed to a continued widening of the trade deficit and signs that the economy is losing traction — notably through lower consumer spending as reasons that the pound will adjust downwards. Businessinsider.com
-A series of missteps by U.K. Prime Minister Theresa May and her advisers have seen the Conservative Party’s lead over the opposition Labour Party fall to single digits from a margin bigger than 20 points, in April, when the election was called. Investors are starting to take seriously the risk that the vote may not produce the strong and stable government promised, with the pound the main victim of these jitters the moment. Brexit, meanwhile, has survived another challenge, as a opponents have ended their attempt to use the Irish courts to secure a last-minute reprieve. Bloomberg
–Michael Kors said Wednesday it will shut down at least 100 stores following dismal quarterly sales results. The fashion brand’s total sales fell 11.2% to $1.06 billion in the most recent quarter ended April 1, and same-store sales plunged 14.1%. The company said it will close between 100 to 125 full-priced stores to improve profitability. Neil Saunders, CEO of the retail consulting firm GlobalData Retail, called Michael Kors’ sales results “catastrophic.” Businessinsider.com
-Payless ShoeSource could close another 408 stores, in addition to the 400 it shut down two months ago after filing for bankruptcy protection. The company is seeking to immediately close 112 locations and potentially shut down another 296 stores if it can’t get cheaper rent for those stores, according to court papers filed this week at federal bankruptcy court in St. Louis, Missouri. Fortune’s Phil Wahba first reported on the closures. The closures could impact more than 2,000 employees. Prior to filing for bankruptcy in April, Payless had 4,400 stores in 30 countries and employed nearly 22,000 people. Businessinsider.com
-About a quarter of US malls will most likely close within the next five years, according to a new prediction from Credit Suisse. In a research note published Tuesday, the bank estimated that 20% to 25% of the nation’s 1,100 shopping malls or roughly 220 to 275 shopping centers would shut down by 2022. Credit Suisse cited mass store closings, the rise of e-commerce, and the growing popularity of off-price chains which tend to be located outside shopping malls as reasons for the potential mall closings. About 3,600 store closings have been announced this year. Credit Suisse estimates that about 8,640 stores will ultimately close by December. The firm also estimates that e-commerce will grow from 17% of apparel sales today to 37% of apparel sales by 2030. Businessinsider.com
-Americans are the most upbeat about their finances in a decade, which will probably help consumer spending contribute more to the U.S. economy in the second quarter, Bloomberg Consumer Comfort Index figures showed Thursday. Overall gauge jumped to 51.2, second-strongest reading since 2001, from 50.9. Measure of personal finances rose to 63, highest since May 2007. Sentiment about national economy rose for the first time in five weeks to 44.2. Bloomberg
-Morgan Stanley Chief Executive Officer James Gorman said he’s very encouraged by the performance of the U.S. economy, even amid the need for progress on some of the Trump administration’s legislative proposals. “The dirty little secret here is the U.S. economy is doing just fine,” Gorman said in an interview with Bloomberg Television in Beijing. He pointed to falling unemployment, a recovery in house prices, stabilizing local and state government deficits and some signs of quickening inflation. Bloomberg
-Credit rating agency Standard and Poors lowered its rating on various bonds issued by Illinois one notch. S&P lowered the state’s general obligation bonds one notch from ‘BBB-‘ to ‘BB+’ while cutting state appropriation bonds from ‘BB’ to ‘BB-.’ “The rating actions largely reflect the severe deterioration of Illinois’ fiscal condition, a byproduct of its stalemated budget negotiations, now approaching the start of a third fiscal year,” S&P Global Ratings credit analyst Gabriel Petek said in the release. Petek also put Illinois on “CreditWatch negative” and warned that the state is at risk of entering a “negative credit spiral, where downgraded credit ratings would trigger contingent demands on state liquidity, further exacerbating its fiscal distress.” Illinois is on the verge of going a third straight year without a budget after lawmakers failed to pass one in the spring session, according to WGN. It has more than $14 billion in unpaid bills. Businessinsider.com
-NASA wants to fly into the sun. A probe will launch into the Sun’s outer atmosphere next year as part of the $1.5 billion mission. The project, 60 years in the making, will fill critical gaps in what we know about “space weather” and its risk to satellites, electrical grids, and telecommunications. Bloomberg
-Trump says the U.S. would withdraw from the Paris climate agreement and will seek to renegotiate the pact in a way that treats American workers better. Trump is kicking off a withdrawal process that will take until November 2020 to unfold creating an opening for him to reverse course and injecting it as an issue in the next presidential election. Bloomberg
-IMF expresses concern over ‘hot spots’ in Toronto and Vancouver housing markets. The International Monetary Fund says concerns over Canada’s housing market are valid, but that doesn’t necessarily mean there are systemic problems that need urgent attention. The agency revealed its annual review of Canada’s economy on Wednesday, and on the whole the outlook for Canada’s economy is positive, with an expectation of 2.5 per cent growth this year and 1.8 per cent growth after that. But despite the generally sunny forecast, the group does single out continuing concerns with Canada’s housing market, and suggests policymakers need to stay focused on the file.
The IMF’s mission chief for Canada, Cheng Hoon Lim, told reporters in Ottawa on Wednesday that the agency likes the steps Ottawa has taken in recent years to rein in the housing market, but would like to see more. “Further tightening is needed,” she said. Lim said that the latest move, last October, to make it harder to get an insured mortgage by forcing borrowers to undergo a “stress test” to gauge their ability to withstand higher rates seems to have the desired effect of slowing down the growth of mortgage debt. But it doesn’t seem to have put the brakes on rapidly rising house prices, she said.
“There is an effect but not as strong,” she said. While the IMF doesn’t think Canada’s housing market as a whole has systemic problems, some pockets need more attention. “The housing market is overheated but hot spots are concentrated in Vancouver and Toronto,” Lim said. Lim described issues at alternative mortgage lender Home Capital as “isolated” and unlikely to cause systemic problems, but she does have “broader concerns about housing.” Read more here-http://bit.ly/2rdnZQZ and http://bit.ly/2qDamvV
-Muddy Waters Founder Sees ‘Real Problems’ With Canada. Activist investor Carson Block says recent selloffs in Home Capital Group Inc. and Element Fleet Management Corp. show that investors in Canadian assets are getting nervous about soaring real estate prices and household debt. “I’m starting to believe that there could be some real problems with Canada,” the founder of Muddy Waters LLC said in a phone interview from San Francisco. Block was commenting on the plunge in Element shares Wednesday on unfounded speculation that Muddy Waters was shorting the Toronto-based leasing company. The investor is shorting Canadian miner Asanko Gold Inc., but hadn’t heard of Element until today.
“Particularly given what happened to Home Capital in recent weeks I kind of wonder if Canadian investors are really nervous about the stuff that they’re holding and that’s why there was so much sensitivity around Element this morning,” Block said. “When I see a reaction like we saw to a stock that I had never heard of because people were evidently concerned that we were about to short it, that tells me that maybe we’re at a point in Canada where investor denial is just starting to crack,” he said. Home Capital has plunged by about 60 percent in the past five weeks after a Canadian regulator accused it of misleading investors over an internal probe of fraudulent mortgage loan applications. That sell-off sparked concern it could deflate a soaring housing market that has seen prices soar more than 30 percent in Toronto and Vancouver.
“The conditions seem to exist for there to be some pain inflicted on the markets,” Block said in an interview with Bloomberg TV Canada. That suggests that Canada “is the hottest market in the world for short sellers; if not, it could be.” Canada’s real estate market has “been pushed by foreign money” to the kind of “buying frenzy” the U.S. experienced a decade ago, Block said in the phone interview. He recalled a visit to Toronto in 2011 in which he was stunned to see posters throughout the financial district encouraging people to borrow aggressively for consumption. “I was thinking, my God, didn’t we just go through this in the U.S.?” Meanwhile, there is a prevailing sense in Canada that the situation is different, and the collapse experienced by the U.S. in 2008 couldn’t happen here, he said. “Every time you hear that, you know that it can happen, and it’s going to.” Read more here-https://bloom.bg/2rlY2NF
-Canada Bids Farewell to Oil Shock With Its Economy on a Tear. If it wasn’t clear after the six-month run of strong economic data, the latest GDP numbers out of Canada confirm the country has bid adieu to its oil crisis. The economy accelerated to a 3.7 percent annualized pace in the first quarter, following gross-domestic-product gains of 2.7 percent and 4.2 percent in the prior two periods, Statistics Canada reported Wednesday from Ottawa. That’s the strongest three-quarter gain since 2010.
It had been a tough ride, as the nation suffered through a once-in-a-generation collapse in commodity prices and one of its worst-ever economic performances short of a recession. Even now, the markets’ lackluster response to the news Wednesday the Canadian dollar fell underscore worries the country will struggle to find a new catalyst, especially once interest rates begin to rise from historical lows. “Canada’s economy is humming along at a solid pace, and that has to be the lead for any story on the Q1 GDP numbers,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to investors. “Growth has left the earlier oil-price shock in the rear-view mirror.”
A report from the International Monetary Fund Wednesday highlighted the challenges, which have also kept the Bank of Canada on the sidelines even as the Federal Reserve has been raising interest rates. The IMF estimates growth is on track to average 1.8 percent over the medium term. The Bank of Canada has also warned about Canada’s long-term potential growth, even as stronger growth this year cuts into excess capacity and diminishes the need for lower rates. Economists forecast the Bank of Canada will start raising rates sometime next year. Read more here-https://bloom.bg/2qDgWON and http://bit.ly/2rroO9x
-Rich Americans Hasten a Trump Headache: Raising Debt Ceiling. Wealthy Americans have put off some of their tax bills this year, causing such a pinch to government revenue that the U.S. could face a default on its debt months sooner than the White House expected. High-income taxpayers may be anticipating a future tax cut from President Donald Trump. But they may also accelerate a political headache for him: persuading Congress to raise the government’s debt limit.
The wealthy may have deferred recognizing as much as 20 percent of their taxable income last year, according to independent estimates, a move that is legal and allows them to delay paying taxes on non-wage earnings including capital gains. Trump’s promise of tax cuts gives richer Americans “large incentives to shift non-wage taxable income from 2016 to 2017,” said Lucy Dadayan, a senior researcher at the Rockefeller Institute of Government. Treasury’s monthly budget statement for April showed weaker-than-expected income tax receipts.
The drop in tax revenue is significant enough to alarm top officials, including Treasury Secretary Steven Mnuchin, who has urged Congress to pass “clean” legislation raising the debt ceiling without policy riders by August. White House Budget Director Mick Mulvaney said last week the administration may soon announce an earlier debt-ceiling deadline, citing the fall-off in tax receipts. The Congressional Budget Office will release an estimate of May tax revenues on June 7, a highly anticipated report among investors. Read more here-https://bloom.bg/2rYSZW6
-S&P, Moody’s Downgrade Illinois to Near Junk, Lowest Ever for a U.S. State. Illinois had its bond rating downgraded to one step above junk by Moody’s Investors Service and S&P Global Ratings, the lowest ranking on record for a U.S. state, as the long-running political stalemate over the budget shows no signs of ending. S&P warned that Illinois will likely lose its investment-grade status, an unprecedented step for a state, around July 1 if leaders haven’t agreed on a budget that chips away at the government’s chronic deficits. Moody’s followed S&P’s downgrade Thursday, citing Illinois’s underfunded pensions and the record backlog of bills that are equivalent to about 40 percent of its operating budget.
“Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance,” Ted Hampton, Moody’s analyst, said in a statement. “During the past year of fruitless negotiations and partisan wrangling, fundamental credit challenges have intensified enough to warrant a downgrade, regardless of whether a fiscal compromise is reached.” Illinois hasn’t had a full year budget in place for the past two years amid a clash between the Democrat-run legislature and Republican Governor Bruce Rauner.
That’s left the fifth most-populous state with a record $14.5 billion of unpaid bills, ravaged entities like universities and social service providers that rely on state aid and undermined Illinois’s standing in the bond market, where investors have demanded higher premiums for the risk of owning its debt. Moody’s called Illinois “an outlier among states” after suffering eight downgrades in as many years. “The rating actions largely reflect the severe deterioration of Illinois’ fiscal condition, a by-product of its stalemated budget negotiations,” S&P analyst Gabriel Petek said in a statement. “The unrelenting political brinkmanship now poses a threat to the timely payment of the state’s core priority payments.” Read more here-https://bloom.bg/2rwL3Lt
-Global retirement ‘Timebomb’: Why you’ll have to work past 70. Hoping to retire before you turn 70? Too bad. World’s Major Economies to Come up $400 Trillion Short on Retirement Savings. The world’s richest countries need to drastically hike their retirement ages in order to prevent pension systems from collapsing, according to the World Economic Forum. Working until at least 70 should become the norm by 2050, the group recommends in a new report. The average retirement age is currently 65 for men in advanced economies and 63 for women. Here’s the problem: People are living longer than ever, but the average retirement age has remained static. Pension funds have been unable to keep pace.
It’s a trend that will only accelerate: Babies born today in many advanced economies can expect to live past 100. WEF described the shortfall in pension funding and a lack of personal retirement savings as a “timebomb.” The group estimated that just eight countries the U.S. U.K., Japan, Canada, Australia, India, China and the Netherlands face a combined shortfall of $400 trillion by 2050. “We must address it now or accept that its adverse consequences will haunt future generations, putting an impossible strain on our children and grandchildren,” said WEF official Michael Drexler.
Americans face the largest gap between what they’ll need and what they’ve saved: the collective shortfall hit $28 trillion in 2015 and will rise to $137 trillion in 2050. WEF said the gap has been fueled by aging populations, but “significantly lower” investment returns over the past decade have also played a role. Returns on stock investments are five percentage points below long-term averages, for example. WEF said that governments should quickly take action to protect their citizens. Read more here-http://cnnmon.ie/2qBL01t and https://bloom.bg/2qBILHh
-Birkin Bag Sets Record Auction Price of $380,000 for a Handbag. Christie’s set the record auction price for a handbag, selling a Birkin adorned with 18 karat gold and 10 carats of diamonds for HK$2.94 million ($380,000). The matte white crocodile-skin purse, made by Hermes International SCA in 2014, was sold to an unidentified bidder in a sale in Hong Kong, Christie’s said in a statement Wednesday. The price exceeded the top estimate of $258,000. Auctioneers have been making a slew of new records as prices for rare items increase. Sotheby’s set the record auction price for a pair of earrings earlier this month, selling a duo of blue and pink diamond jewels for $57 million in Geneva. Phillips also recently set the record for a Rolex. Read more here-https://bloom.bg/2qBRgGr
-Five Big Reasons Why People Are Still Skeptical About Bitcoin. Bitcoin’s astronomical rally has cryptocurrency bulls feeling vindicated. Not so fast, skeptics say. The digital currency’s more than 100 percent surge in the past two months looks eerily familiar, argue the bears, pointing to November 2013, when the price quintupled in short order to top $1,000 for the first time. By Valentine’s Day it was worth around half that, and spent the better part of the next two years languishing below $500. Then it absolutely exploded jumping more than $1,400 in two months.
At its height last week, one bitcoin could buy about two ounces of gold. Its champions touted the arrival of blockchain into the mainstream, the coin’s underlying technology which they say can lift the poor out of poverty and make transactions more secure, inexpensive and efficient. But signs of a top have emerged, detractors warn. On May 25, bitcoin surged more than $300 to a record only to turn tail and close little changed. The $600 round trip was the biggest daily swing in its history. It then slumped 8 percent the next day. Bitcoin was down 1.5 percent to $2,255.50 as of 12:35 p.m. in New York. For bears, that kind of volatility shows the asset’s unreliability as a store of value. Read more here-https://bloom.bg/2qGIbaI
-Bitcoin Is at Risk of No Longer Being the Biggest Digital Currency. Step aside, bitcoin. There’s another digital token in town that’s winning over the hearts and wallets of cryptocurrency enthusiasts across the globe. The value of ether, the digital currency linked to the ethereum blockchain, could surpass that of bitcoin by the end of 2018, according to Olaf Carlson-Wee, chief executive officer of cryptocurrency hedge fund Polychain Capital. “What we’ve seen in ethereum is a much richer, organic developer ecosystem develop very, very quickly, which is what has driven ethereum’s price growth, which has actually been much more aggressive than bitcoin,” said Carlson-Wee, in an interview on Bloomberg Television Tuesday. The San Francisco Bay Area-based fund has received investments from venture-capital firms including Andreessen Horowitz and Union Square Ventures. Read more here-https://bloom.bg/2roMUzz
-Teenagers Everywhere Don’t Understand Money. An international study finds that only 12 percent of 15-year-olds have high financial literacy. It turns out that most young people aren’t ready to be in charge of their own money. Only 12 percent scored at the highest level of financial literacy, and 22 percent “score below the baseline level of proficiency,” according to the Organization for Economic Cooperation & Development, which runs the Program for International Student Assessment, better known as PISA. The study results were released May 24. Students at the lowest level of financial literacy “cannot even recognize the value of a simple budget or understand the relationship between how much a vehicle is used and the costs incurred,” Angel Gurria, the secretary-general of the OECD, wrote in the preface of the report. Read more here-https://bloom.bg/2qBk8yt
-Waiting for The Big One to Shake San Francisco. What happens to the San Francisco Bay area when the next major earthquake strikes? That’s the question seismologists are pondering as a key milestone approaches for a quake on the so-called Hayward Fault, which runs along the East Bay waterfront occupied by Oakland, Berkeley and other towns. San Francisco is the second-most-densely populated city in the country, after New York; the Bay area is home to seven of the 10 largest U.S. technology companies by market capitalization and more than 25 percent of the country’s technology workers. Three years after an unexpected temblor shocked the wine country of Napa Valley, northeast of San Francisco, the wait continues for “The Big One.” Read more here-https://bloom.bg/2qB2JpH
-NOAA Predicts Above-Normal Hurricane Season. The 2017 hurricane season starts June 1, and the National Oceanic and Atmospheric Administration predicts above-normal activity: 11 to 17 tropical storms across the Atlantic, of which two to four could become major hurricanes. Cleanup costs could add up. Since 1980 when NOAA started keeping detailed records 32 hurricanes have resulted in at least $1 billion in insured and uninsured losses in the U.S. Seven of the eight costliest hurricanes have occurred since 2004. Read more here-https://bloom.bg/2qGaAgZ
-Nov 2013: Orange Diamond Sells for $36 Million at Christie’s. The largest fancy-vivid orange diamond known to exist sold for 32.6 million Swiss francs ($36 million) at Christie’s International in Geneva. The 14.82-carat pear-shaped stone’s price including fees was about $2.4 million per carat, according to the auction house at last night’s sale. This was a per-carat record for any colored diamond at a public sale. The gem also set a record for an orange diamond of its type, Christie’s said.
“There are buyers out there for these great rarities,” Bennett said in an interview Nov. 8. “There are moments to offer these things and there are moments when it just doesn’t feel right. This does feel like one of the right moments.” While pink and blue diamond’s regularly appear at auctions, the orange stones are much rarer. Christie’s diamond had been with the same anonymous owner for at least 30 years, the auction house said, describing its clarity as VS1. The stone exceeded its presale estimate of as much as $20 million, or $1.3 million per carat.
“As far as orange diamonds go, it has no peer,” Alan Bronstein, a consultant in colored diamonds who knows the stone, said before last night’s sale. The previous time an orange diamond of the same classifications appeared at auction, it weighed 5.54 carats. Known as “The Pumpkin Diamond,” it fetched $1.3 million at Sotheby’s in 1997, selling to Ronald Winston, a son of the Harry Winston founder. Read more here-http://bloom.bg/1cV56qz and http://dailym.ai/185gpsf and http://bit.ly/1j4Q8f7
-WSJ: Demand Soars for Colored Diamonds. Investors, seeking higher returns, have moved into an area once the preserve of wealthy collectors. Read more here-http://on.wsj.com/2s0a424
-Harry Winston Buys Top Lot at Christie’s Hong Kong. Christie’s sold $79.8 million (HKD 618.7 million) worth of jewelry at its Hong Kong auction this week, with luxury brand Harry Winston purchasing the most expensive diamond. Nayla Hayek, the jeweler’s CEO, bought the rectangular-cut, 3.98-carat, fancy vivid blue, VVS2 diamond for $8.9 million, or $2.2 million per carat, Christie’s said Tuesday. The price of the stone, which was mounted in a ring along with cushion- and triangular-shaped pink diamonds, fell within the pre-sale estimate of $8.3 million to $11 million. “I am so happy to have been able to secure this rare blue diamond, which will take a prominent place in our important collection of top gems,” said Hayek.
The auction also featured jewels from four Hong Kong designers: Adrian Cheng, Cindy Chao, Edmond Chin and Michelle Ong. These items went for a combined $12.4 million, with an emerald-and-diamond “palmette”-motif necklace by Chin achieving $6 million. Separately, a handbag featuring 205 diamonds with a combined weight of 10.23 carats all VVS clarity and ranging from F to G in color went under the hammer Wednesday for $379,261 at Christie’s “Handbags and Accessories” auction in Hong Kong. The item smashed its pre-sale high estimate of $257,909, setting a new world record for any handbag sold at auction, Christie’s said. Read more here-http://bit.ly/2skpz2a
-Christie’s Hong Kong Magnificent Jewels Sale, May 30 2017, Convention Hall Hong Kong China. Auction Results Here-http://bit.ly/2rLw29c
-CHART OF THE WEEK: How Much Gold Would Buy You a Home in Toronto? Toronto homes aren’t that expensive, if you pay in gold. Douglas Porter, chief economist at the Bank of Montreal, mined data showing that when expressed in terms of gold, house prices in Canada’s red-hot real estate market are far from record highs. An average home in Toronto today costs just over 540 ounces of gold, well below the record 655 ounces in 2005, Porter found. “The slightly more serious point is that gold is again close to a record high in Canadian dollar terms and no one is calling the gold market a bubble,” Porter wrote in a May 26 note. To be sure, sanity seems to be returning to Toronto’s property market.
After a double whammy of government intervention and the near-collapse of mortgage lender Home Capital Group Inc., sellers are rushing to list their homes to avoid missing out on recent price gains. Even so, strong population growth in Canada’s financial hub will probably support elevated home prices, Porter wrote. “As will low-low interest rates while the Bank of Canada indicated this week it was now more inclined to hike than cut, the hikes still look very far down the road,” he said.Not to mention that Rumpelstiltskin the fairy tale figure who spun straw into gold could still easily afford to buy into the market. Read more here-https://bloom.bg/2rptnPr
-CHART OF THE WEEK: Want to Know Where Gold Is Headed? Keep an Eye on the Japanese Yen. Investors have traditionally focused on gold’s inverse correlation with the U.S. dollar. But perhaps they should be looking at bullion’s recent synchronization with the yen. That’s the view of John Goldsmith, deputy head of equity at Montrusco Bolton in Toronto. In a recent internal research note, he pointed out that the yen has tracked gold more closely than any other major currency. The lower part of the graph shows the steadily increasing correlation.
Normally, gold moves in the opposite direction to the U.S. dollar. Factors that push up the greenback such as the prospect of higher economic growth and interest rates typically hurt bullion prices, and vice versa. That inverse price movement is shown on this graph.
But in the past year the strength of that negative correlation has been uneven. It was dramatically less from the middle of 2016, then strengthened steadily through the first part of this year. In the past month, it has become weaker again. Meanwhile, the spread between gold’s correlation to the yen and its correlation to the U.S. dollar has been widening. At 0.2942, it’s currently at the largest since 2013.
That’s partly explained by gold being supported less by inflation concerns than by geopolitics over the past year particularly since the U.S. presidential election, according to Scotiabank’s chief currency strategist Shaun Osborne. “The yen is viewed as a liquid safe-haven alongside gold,” Osborne said. “The U.S. dollar gets less of a bump in times of uncertainty because much of that geo-political concern is U.S.-centric, especially since November.” Both the yen and gold have strengthened this year, with bullion rising almost 10 percent.
Another explanation is that both the Japanese currency and gold are closely correlated with U.S. 10-year treasuries when yields fall, the yen tends to strengthen, and falling yields mean a lower opportunity costs of holding gold, which also boosts prices of the metal. “What if the reason they’re correlated is because they’re both correlated to a third thing, which is lower U.S. yields?” said Marc Chandler, senior vice president foreign exchange at Brown Brothers Harriman. Regardless of the cause, if the strong correlation holds, it means a bullish position on gold is also a bet in favor of the Japanese yen. Read more here-https://bloom.bg/2qLHP2z
-KWN: John Ing, Trump is Good for Gold. We believe that Trump’s deficits, the decline in civility and the lack of funding will fuel rates and that in turn will increase risk, causing a global demand for safe assets. Financial crises ten year ago still casts long shadows. The biggest question remains how to pay for America’s debts? Debasement led to the worst financial crisis since the 1930s. The problem is that there are too many different instruments that are the equivalent of money. While, monetary policy rather than fiscal policy has helped the recovery, the exponential build-up of debt is unsustainable.
Consequently, we believe that gold is the ultimate hedge against the risk that the government’s fiscal plans will run against the funding problems mentioned earlier. Unlike the “weapons of mass financial destruction”, there is no counterparty risk with gold. In sum, gold will continue to rise as long as the US budget remains in deficit, the US trade account is in deficit and Donald Trump is in the White House. Trust in Trump has disappeared both at home and now abroad. Ironically, Mr. Trump will be very reliable as an agent of dollar devaluation, which is good for gold. Gold’s new bull market has just begun. Read more here-http://bit.ly/2rqQBVA
-KWN: Ronald-Peter Stoeferle, Gold To Shine Again. In the past years, rate cuts and other monetary stimuli have affected mainly asset price inflation. Last year, we wrote: “Sooner or later, the reflation measures will take hold, and asset price inflation will spill over into consumer prices. Given that consumer price inflation cannot be fine-tuned by the central banks at their discretion, a prolonged cycle of price inflation may now be looming ahead.” 2016 might have been the year when price inflation turned the corner. However, the hopes of an economic upswing due to Trumponomics and the strong US dollar have caused inflation pressure to decrease for the time being. Upcoming recession fears resulting in a U-turn by the Fed, and the consequential depreciation of the US dollar would probably finalise the entry into a new age of inflation. This will be the moment in which gold will begin to shine again. Read more here-http://bit.ly/2qMjnhp
-KWN: John Embry, Be Patient. Historically, without exception, these debt-fueled expansions end badly. And this one, which has truly global dimensions, will end even more disastrously. Financial innovation has allowed the introduction of heretofore unheard of leverage in the system, with algorithms, high-frequency trading, derivatives, etc, facilitating such a development. I continue to believe real assets will become divorced from the eventual destruction of all pure fiat currency globally, and will eventually be the preferred assets.
The explosion in the price of cryptocurrencies, art, diamonds, etc, will eventually lead to a dramatic price rise in gold and silver when they finally escape the shackles of Western central bank sponsored price suppression. There is some initial evidence that the bullion banks are redressing their positions and are prepared for this development. However, investors won’t know for sure until gold and silver are enjoying price gains like those that were achieved recently by the cryptocurrencies. Very simply, gold and silver have been stores of values for thousands of years and they will soon reassert themselves, so be patient.” Read more here-http://bit.ly/2rKNc70
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
-The biggest question remains that when silver does decisively penetrate its key moving averages, will the near-certain rush by technical funds to buy cause the price to move in the manner I have suggested recently, namely, explosively? That, of course, depends on how aggressive the commercials and, particularly, JP Morgan respond to the technical fund buying. I don’t mean to repeat myself, but somethings must be repeated.
This is a process as mechanical as any motor engine. If JP Morgan and the other big commercials add aggressively to short positions on the next moving average upside penetration, they would appear to be quite capable of eventually snuffing out any silver rally caused by technical fund buying; and the exact same thing that has occurred on countless occasions over the years snuffed out silver rallies will occur again.
And I completely empathize with those (in the majority) who hold that to expect otherwise would be on the insane side of the ledger, you know, expecting different results from the same circumstances. I would stipulate further that if JPM and the other big commercials short aggressively, then silver prices would likely fall eventually and we go back to the very beginning of the wash, spin, repeat cycle. But there’s not much to be gained for assuming JP Morgan will load up on the short side again, until it does load up. That’s because as long as JP Morgan is not heavily short COMEX silver futures, there is little reason to expect significantly lower silver prices. A large concentrated short position in COMEX silver futures is always the prime (sole) reason to expect lower silver prices.
The lack thereof should not be feared. If it does turn out that the market crooks at JP Morgan again short silver futures aggressively, that will only come on higher prices and with generally fair warning. Specifically, if JP Morgan adds back much of the 16,000 short contracts it bought back over the past five reporting weeks (including last week’s increase), then my “big one” premise goes out the window. Look, I’m just the analyst/piano player, not a principle participant in the ongoing COMEX silver scam. If JP Morgan does end up adding aggressively to its price-controlling silver short position, that’s beyond my control in any event. Silver analyst Ted Butler May 31 2017 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-But what about the increase in short selling by JPMorgan this past reporting week? Assuming it was JPM selling short around 3,000 contracts, there may be an explanation that I just can’t shake. The explanation is quite speculative, but very much in keeping with recent price action. The biggest difference between gold and silver at this point is that gold has decisively broken above its key moving averages amid clear indications of heavy technical fund buying and commercial selling, while silver has yet to do so. That setup won’t last for long.
Sooner or later, silver will penetrate its key moving averages as well and the technical funds will buy or try to buy aggressively, same as they’ve just done in gold and on countless past occasions in silver. I can’t help but think that the apparent new short sales by JPMorgan were primarily intended to keep silver below its key 50 and 200-day moving averages. At yesterday’s close, silver prices are closer to the 50-day moving average ($17.45) and the 200 day moving average ($17.69) than at any time in the past month. But if I am correct about JPM’s short selling, it is a short term ploy at best, merely buying some time before silver does penetrate these moving averages. And that might be JPM’s intent, namely, temporarily delaying that penetration so that when the inevitable penetration does occur, it occurs more spectacularly than otherwise.
Let’s face it what will determine how dramatically (or not) silver penetrates its moving averages is a function of the degree of aggressiveness in commercial selling, not the aggressiveness of technical fund buying which is already baked into the cake. I think it possible that JPMorgan or whoever in the big 4 that sold may have been delaying the inevitable burst of technical fund buying in order to control the timing of the buying burst in order to make it more dramatic. Silver analyst Ted Butler May 27 2017 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-The big (near) surprise in silver in the last reporting week is that the technical funds actually added aggressively to short positions despite an increase in prices because the moving averages weren’t penetrated. Even though that’s what occurred this week as well, the prior reporting week featured a large increase in total open interest, suggesting something unusual was up. This week, total silver open interest is down, so I feel it would be too much to hope for a repeat of last week’s results (although I’d love to be wrong).
It seems to me that even though the key moving averages weren’t penetrated this reporting week, the one dollar increase in price over the past two weeks should have been enough to have persuaded some technical funds to buy back short positions on a loss-limiting basis. In fact, I think there might have been as many as 10,000 contracts of commercial selling and managed money short covering. I would guess that the commercial selling was mostly of the raptor long liquidation variety and I am not expecting that JP Morgan increased its short selling. Nor do I think many managed money longs were added, just shorts bought back.
Even if the silver report indicates an expected deterioration of 10,000 net contracts or so, it’s important to remember that there was an improvement of nearly 80,000 net technical fund contracts over the prior four reporting weeks, so the market structure in silver should still be good to go (for an explosion). The wonder is that here we are, nestled just slightly below the major technical fund buy signal of upward moving average penetration, [along] with a COT setup as good as I can remember. As The Wall Street Journal points out it’s increasingly a quant investment world. What it doesn’t point out is that the quants are on the wrong side of COMEX silver in a very big way. Silver analyst Ted Butler May 24 2017 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-KWN: Look At This Major Launch Point Set Up In The Silver Market. Read more here-http://bit.ly/2rKYwjH