Radio Show Newsletter
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: Draghi Says Officials ‘Aren’t There Yet’ as ECB Keeps Stimulus. Mario Draghi said policy makers are still waiting for inflation to catch up with the economic recovery as they put off discussions on winding back stimulus until after the summer. “We are finally experiencing a robust recovery where we only have to wait for wages and prices to follow course,” the European Central Bank president told reporters at a news conference in Frankfurt on Thursday. “We need to be persistent and patient and prudent, because we’re not there yet.”
Draghi read out an assessment of the economic outlook that was very similar to the one he offered in June, when he called for colleagues to allow the central bank’s stimulus time to work. With less than half a year of quantitative easing left, policy makers have been debating publicly as to when they might start reducing asset purchases. “While the ongoing economic expansion provides confidence that inflation will gradually glide toward levels in line with the inflation aim, it has yet to translate into stronger inflation dynamics,” Draghi said. “A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up.” Read more here-https://bloom.bg/2tY1jT3
-CHART OF THE WEEK: Lean Inventory Fueling Home-Price Gains in 20 U.S. Cities. Steady price gains in 20 U.S. cities in May indicate that a tight supply of properties paired with increased demand is boosting home values, according to figures from S&P CoreLogic Case-Shiller on Tuesday. An shortage of listings is still behind the rapid appreciation of home prices, particularly in high-demand areas such as Portland, Oregon, and Seattle, where values have surpassed pre-recession peaks. Housing demand is supported by a solid labor market, steadily rising wages and low mortgage rates. While lofty asking prices are making it difficult for some Americans to become homeowners for the first time, they’re encouraging owners of more expensive properties to put their houses up for sale, as trade-up demand remains solid. Read more here-https://bloom.bg/2tWE7EX
-CHART OF THE WEEK: Fund Managers and Strategists Think the Bull Market Is Ending Next Year. America’s second-longest bull run in stocks on record will end by late 2018, when U.S. credit also will enter its first bear market since the global crisis, according to a Bloomberg survey of fund managers and strategists. The poll of 30 finance professionals on four continents showed a lack of consensus on the asset judged as most vulnerable now, with answers ranging from European high yield to local-currency emerging-market debt though they were mostly in the bond world. Among 25 responding to a question on the next U.S. recession, the median answer was the first half of 2019.
The would-be end of a great cycle for financial markets would come just about when central bank balance sheet contraction is expected to kick into high gear. By mid-2018, the Federal Reserve’s wind-down may be well under way, and the European Central Bank might have joined the Bank of Japan in tapering asset purchases. While none of the respondents signaled a 2007-09 style meltdown, even smaller-scale downturns have wreaked large-scale damage in the past. The 2002 bear market in U.S. stocks wiped out more than $7 trillion of value. “Consequences could be very painful,” said Remi Olu-Pitan, who manages a multi-asset fund at Schroder Investment Management Ltd. in London. “We have had a liquidity-fueled bull market. If that is taken away, there is a pressure point,” she said. Read more here-https://bloom.bg/2vXMCkj
-Chipotle on Tuesday said the $1 billion in value the chain lost was caused by a single employee coming to work sick. The sniffly staffer spread the norovirus around a suburban Washington DC, store, sickening more than 130 customers. The headlines about the outbreak sent Chipotle’s shares on a five-day slide cutting more than $1 billion off the Denver company’s market cap. Marketwatch
-“The bottom line is speculators’ gold-futures and silver-futures short positions have soared to near-record and record extremes in recent weeks. These elite traders are hyper-bearish, and betting heavily for more precious-metals downside. But gold and silver soon soared on short-covering buying following all past episodes of excessive and record short selling. There’s nothing more bullish for gold and silver than extreme shorts! All futures sold short must soon be offset by proportional near-term buying to close out those trades. It quickly feeds on itself thanks to the incredible leverage of gold futures and silver futures. The resulting sharp short-covering rally soon entices in new long-side futures speculators and later investors with their vastly-larger pools of capital. Excessive and record futures shorts are the best gold and silver buy signals available.” Adam Hamilton
-“I am somewhat fascinated by the strength in the Canadian dollar and the optimism about our economy. Canada is experiencing a historic building boom, and approximately 7 percent of the employed population is now working in that field. The fact that number is roughly twice the percentage in the US should give cause for some concern. Ironically, an increasing amount of the residential real estate is beyond the average Canadian’s capacity to purchase at current prices, and a lot of the purchases of new buildings represents a de factor wandering operation for money flooding out of third world countries. This is yet another manifestation of the monetary policies globally. There still appears to be an oil glut globally, and with the Canadian oil industry struggling mightily, a much stronger Canadian dollar seems inappropriate, and it is perhaps more representative of the weakness in the US dollar, rather than any particular merits of the Canadian dollar.” John Embry
-Watch out for the zombies. The plethora of companies propped up by the European Central Bank will limit policy makers’ ability to withdraw monetary stimulus that’s been supporting the continent’s bond market since the financial crisis, according to strategists at Bank of America Corp. About 9 percent of Europe’s biggest companies could be classified as the walking dead, companies that risk collapse if the support dries up, according to the analysts. After the crash of Lehman Brothers sent global markets into a tailspin, a decade of easy-money policies gave breathing room for nations to get their balance sheets in check and allowed for a spirited revival in corporate profits. But as central bankers look to pull back stimulus for fear of overheating, the potentially grim outlook for vulnerable companies may give them pause, according to Bank of America. Bloomberg
-Banks could face a “Kodak moment” where they approach obsolescence in five to 15 years at the hands of new financial-technology companies, according to former Barclays Plc Chief Executive Officer Antony Jenkins. Traditional banks are already seeing the start of an “Uber moment,” whereby the industry is being transformed by technology such as smartphones and contactless cards, Jenkins said in an interview with Bloomberg Television on Wednesday. “The Kodak moment is completely different that’s where customers realize there’s a totally better and different way of doing what they want to do, and the incumbent becomes obsolete,” Jenkins said. “The Kodak moments are the ones that I think will come in that five-to-15 year period.” Bloomberg
-The U.K. became the latest European country to mark the end of the line for diesel and gasoline fueled cars as automakers such as Volvo race to build electric vehicles or face the consequences of getting left behind. In London, the government said it will ban sales of the vehicles by 2040, two weeks after France announced a similar plan to reduce air pollution and become a carbon-neutral nation. For some in the auto industry, the plans are too much too soon while environmental campaigners say exactly the opposite. “We could undermine the U.K.’s successful automotive sector if we don’t allow enough time for the industry to adjust,” said Mike Hawes, chief executive officer of the Society of Motor Manufacturers and Traders. “Outright bans risk undermining the current market for new cars and our sector, which supports over 800,000 jobs across the U.K.,” he said. “The industry instead wants a positive approach which gives consumers incentives to purchase these cars.” Bloomberg
-Saudi Arabia, OPEC’s biggest oil producer, plans to step up pressure on nations that aren’t complying with their commitment to cut output, including a proposal to start monitoring exports. “Some countries continue to lag” in their compliance, Saudi Oil Minister Khalid Al-Falih said Monday in St. Petersburg, Russia, where he’s attending a meeting of OPEC and non-OPEC producers. It’s “a concern we must address head on.”
OPEC’s supply in July will be the highest this year, data from tanker-tracker Petro-Logistics SA show. The group’s compliance with its November deal to curtail output dropped to 92 percent in June from 110 percent in May, according to a person familiar with the data. The Organization of Petroleum Exporting Countries and its partners, including Russia, agreed late last year to cut output by as much as 1.8 million barrels a day to drain bloated global stockpiles. The curbs apply to production rather than exports, and the reported compliance with the deal hasn’t been matched by shipments, according to Al-Falih. Bloomberg
-Oil’s bear market may finally be taking its toll on the shale boom. Hours after Halliburton Co. warned Monday that explorers are “tapping the brakes” on drilling, Anadarko Petroleum Corp. said it’s trimming spending in the first earnings report this quarter from a major shale producer. That could make this week a turning point for the troubled global oil market the moment when shale companies showed signs of bowing to the low prices they helped inflict. The surge in U.S. production this year has stymied efforts by OPEC and other major oil exporters to unwind a supply glut that’s weighed on the crude market for three years. Bloomberg
-The biggest U.S. oil-import hub wants to grab a piece of surging North American crude exports. Louisiana Offshore Oil Port, the only terminal along the U.S. Gulf Coast able to handle a fully laden supertanker, is gauging interest from shippers in sending crude overseas on the world’s biggest ships by early next year. The port would continue to take in foreign oil, LOOP LLC said in an emailed statement. Ports are competing to fill the needs of domestic oil producers looking for outlets for their growing supply. At the same time, the boom from U.S. shale fields and Canadian oil-sands mines has reduced refiners’ need for imported oil. LOOP’s ability to handle tankers capable of carrying 2 million barrels in their holds would reduce shipping costs for companies looking to send crude to refiners in Asia. Bloomberg
-Greece will return to the bond market after a three-year hiatus, banking on investor interest in its recovery story. The country, which was the epicenter of the European sovereign crisis that began in 2009, is looking to sell five-year bonds, according to an Athens Stock Exchange filing. It is also inviting holders of 4.75 percent bonds due in 2019 to tender the notes for cash. The bonds are expected to be priced on Tuesday. With the sale, the government of Prime Minister Alexis Tsipras is seeking to chalk out a path for an exit from the current bailout program, which ends in August 2018, while also capping the country’s financing needs in 2019 expected to be about 19 billion euros ($22.1 billion). After not being able to convince creditors to reduce its debt burden and being left out of the European Central Bank’s bond-purchase program, Greece is testing the market. Bloomberg
-A decade after the housing market crashed, the homeownership part of the American Dream has become more elusive, according to a new study from Pew Research Center. The report, which analyzed Census Bureau housing data, showed that more United States households “are headed by renters than at any point since at least 1965.” Between 2006 and 2016, the U.S. added 7.6 million households, but “in part because of the lingering effects of the housing crisis,” according to Pew. During that 10-year period, the number of households renting their homes jumped from 34.6 million (31.2% of the total) to 43.3 million (36.6%). That tops the relatively recent high watermark of 36.2% renting in 1986 and 1988, while coming in just below 1965’s 37% renters rate. CNNMoney
-Inexperienced, yield-hungry French retail investors are pouring money into real estate funds, pushing up prices for the best European commercial properties to unsustainable levels, according to Fidelity International Ltd. Inflows into so-called societe civile de placement immobilier, French collective-investment vehicles that purchase properties and other assets across Europe, reached 5.6 billion euros ($6.5 billion) last year, a third higher than in 2015, Fidelity said in a report. Money is pouring into these funds in search of higher returns compared with stocks and bonds and because of their favorable tax treatment. As a result, prices for prime commercial properties in cities including Berlin, Paris, Madrid and Zurich are now well above their their 2007 peaks, according to Fidelity. Bloomberg
-Illinois has just barely avoided the dishonor of becoming America’s first “junk” state. Moody’s decided on Thursday that it won’t downgrade Illinois because the cash-strapped state finally passed its first budget in more than two years. S&P Global Ratings similarly removed the threat of an imminent downgrade last week. Moody’s concluded that the Illinois budget deal which includes a 32% tax hike is enough to ease the enormous financial pressures facing the state. Illinois had built up $15 billion in unpaid bills, affecting everything from mental health services for teens to funding for state colleges and universities. Even though Illinois has dodged another downgrade bullet, the state remains in financial disarray. After decades of mismanagement, Illinois has built up a stunning pension shortfall of $251 billion that will continue to grow, according to Moody’s. That’s why Moody’s is keeping a “negative” outlook on the state, signaling further action could come in the next 12 to 24 months if Illinois gets back into trouble. CNNMoney
-The world is leaning less on its biggest economy to sustain the global recovery, according to the International Monetary Fund. The fund left its forecast for global growth unchanged in the latest quarterly update to its World Economic Outlook, released Monday in Kuala Lumpur. The world economy will expand 3.5 percent this year, up from 3.2 percent in 2016, and by 3.6 percent next year, the IMF said. The forecasts for this year and next are unchanged from the fund’s projections in April.
Beneath the headline figures, though, the drivers of the recovery are shifting, with the world relying less than expected on the U.S. and U.K. and more on China, Japan, the euro zone and Canada, according to the Washington-based IMF. The IMF estimated U.S. growth at 2.1 percent this year and again in 2018, consistent with what the fund said June 27 in its annual assessment of the U.S. economy. In the April world economic outlook, it had forecast U.S. growth of 2.3 percent and 2.5 percent, respectively, in 2017 and 2018. The economy expanded by 1.6 percent in 2016. Bloomberg
-Apple, Google and Microsoft are sitting on a mountain of cash and most of it is stashed far away from the taxman. Those three tech behemoths held a total of $464 billion in cash at the end of last year, according to a Moody’s report published Wednesday. Apple alone had a stunning quarter-trillion dollars of cash thanks to years of gigantic profits and few major acquisitions. That’s enough money to buy Netflix three times. It’s also more cash than what’s sitting on the balance sheet of every major industry except tech and health care. All told, non-financial U.S. companies studied by Moody’s hoarded $1.84 trillion of cash at the end of last year. That’s up 11% from 2015 and nearly two and a half times the 2008 level. CNNMoney
-‘Shrinkflation’ has hit over 2,500 consumer products over the past five years. More than 2,500 consumers products have shrunk in size over the past five years despite being sold for the same price, official data shows. According to the Office for National Statistics items the so called “shrinkflation” effect has hit items ranging from chocolate bars, toilet rolls, coffee and fruit juice. However most of the items getting smaller were food products. Over the same period 614 products had become larger between 2012 and 2017. Read more here-http://bit.ly/2uDlibG
-More than a third of California households have virtually no savings, are at risk of financial ruin, report says. More than 37 percent of California households have so little cash saved that they couldn’t live at the poverty level for even three months if they lost a job or suffered another significant loss of income. The scorecard also shows that 46 percent of households in the Golden State didn’t set aside any savings for emergencies over the past year, a higher percentage than the national rate of 43.7 percent. It doesn’t help that 21.1 percent of California jobs are in low-wage occupations. Read more here-http://bit.ly/2vKG09Q
-S&P 500’s Biggest Pension Plans Face $382 Billion Funding Gap. People who rely on their company pension plans to fund their retirement may be in for a shock: Of the 200 biggest defined-benefit plans in the S&P 500 based on assets, 186 aren’t fully funded. Simply put, they don’t have enough money to fund current and future retirees. The situation worsened for more than half of these funds from fiscal 2015 to 2016.
A big part of the reason is the poor returns they got from their assets in the superlow interest-rate environment that followed the financial crisis. It’s left a hole of $382 billion for the top 200 plans. Of course, the percentage of workers covered by traditional defined benefit plans those that pay a lifetime annuity, often based on years of service and salary has been declining for decades as companies shift to defined contribution plans such as 401(k)s. But each time a pension plan is terminated, canceled or altered, thousands of workers are affected. Last month, the 70,000 participants in the United Parcel Service Inc. pension plan learned they won’t earn increased benefits if they work after 2022.
Late last year DuPont Co. announced it would stop making payments into its pension plan for 13,000 active employees, and Yum! Brands Inc. offered some former employees a lump-sum buyout to offload some of its pension liabilities. General Electric Co. has a major problem. The company ended its defined benefit plan for new hires in 2012, but its primary plan, covering about 467,000 people, is one of the largest in the U.S. And at $31 billion, GE’s pension shortfall is the biggest in the S&P 500. Read more here-https://bloom.bg/2vJV6fL
-Fed Says Balance-Sheet Unwind to Start ‘Relatively Soon.’ Federal Reserve officials said they would begin running off their $4.5 trillion balance sheet “relatively soon” and left their benchmark policy rate unchanged as they assess progress toward their inflation goal. The start of balance-sheet normalization possibly as soon as September is another policy milestone in an economic recovery now in its ninth year. The Fed bought trillions of dollars of securities to lower long-term borrowing costs after cutting the main interest rate to zero in December 2008. “Near-term risks to the economic outlook appear roughly balanced,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington.
“Household spending and business fixed investment have continued to expand.” Fed watchers had anticipated that the inclusion of the term “relatively soon” would signal the central bank could announce the timing of the balance-sheet reduction program at its next meeting, scheduled for Sept. 19-20. U.S. stocks rose slightly and 10-year Treasury yields fell following the Fed’s statement. “I expect an announcement of the onset of the balance-sheet reduction at the conclusion of the September meeting, effective on the first of October,” Carl Tannenbaum, chief economist at Northern Trust Corp. in Chicago, said after Wednesday’s statement.
-Loonie Rises to 80 U.S. Cents as Canada Booms. The Canadian dollar strengthened to 80 U.S. cents for the first time in more than a year amid mounting evidence the economy is gathering speed and expectations the central bank will continue tightening monetary policy. The loonie has advanced almost 10 percent from a 16-month low on May 4, making it the best-performing major currency tracked by Bloomberg over that period. The Bank of Canada raised borrowing costs for the first time in seven years on July 12, taking its main rate 25 basis points higher to 0.75 percent. “Robust fundamentals along with a central bank that’s not exactly rowing back expectations of rate hikes to come are the two key culprits here,” said Bipan Rai, Toronto-based senior foreign-exchange and macro strategist at Canadian Imperial Bank of Commerce.
The loonie strengthened 0.2 percent to 79.91 U.S. cents at 12:49 p.m. in Toronto after touching 80.10 cents earlier, its highest intraday since May 2016. It traded at C$1.2515 per U.S. dollar. There’s a 79 percent probability that policy makers led by Governor Stephen Poloz will increase rates again this year, according to overnight index swaps data compiled by Bloomberg. Wholesale sales rose more than expected in May, according to data released on Monday, adding to higher-than-forecast growth in retail and manufacturing sales, as well as a surge in new jobs that capped the best quarter since 2010.
Canada will lead Group of Seven countries in growth this year, expanding at a 2.5 percent rate, up 0.6 percentage points from its April forecast, the International Monetary Fund said in a quarterly update to its World Economic Outlook. However, the fund cut its projection for Canadian growth next year to 1.9 percent, down 0.1 point. Hedge funds and other speculators flipped their wagers on the loonie to net long less than two months after amassing record short positions against the currency, according to Commodity Futures Trading Commission data released July 21.
The market may be at a point where a lot of good news is priced into the Canadian dollar already, according to Shaun Osborne, chief foreign-exchange strategist in Toronto at Bank of Nova Scotia. “We might still be able to test C$1.24, but the Bank of Canada rate of 1 percent is more or less fully priced and markets are perhaps a little too complacent on the Fed,” Osborne said. “It’s hard to imagine the Bank of Canada charging ahead with more rate hikes in 2017 if the Fed does not deliver on the tightening in December.” Read more here-https://bloom.bg/2tY27r3 and http://bit.ly/2uvyBN7
-Hedge Funds Wager the Loonie Rally Has Legs. It took the first Bank of Canada rate hike in seven years, but hedge funds are finally convinced that the loonie’s strength is here to stay. Less than two months after amassing record short positions against the Canadian dollar, hedge funds and other large speculators have done an about-face. As of last week, they’re wagering that the loonie’s rally has room to run, flipping to a net bullish stance for the first time since March, Commodity Futures Trading Commission data released July 21 show.
The Canadian dollar reached C$1.2484 Monday, its strongest since May 2016. Its rally took off after the Bank of Canada indicated in June that its next move would be to tighten, spurring hedge funds to unwind short positions. A faltering U.S. dollar has accelerated the loonie gains. It took some time for the market to switch to a net-bullish stance because of the sheer size of the short position, at about 99,000 contracts at its largest in May, said Credit Agricole SA strategist Valentin Marinov. Read more here-https://bloom.bg/2tKJSdy
-Loonie Gain Packs Less Punch for Canada’s Continental Firms. The Canadian dollar didn’t boost manufacturers as much as hoped on its way down. That probably means it won’t hurt them as much as feared on the way up. The loonie hit 80 U.S. cents for the first time in more than a year on Monday, up about 10 percent since early May, raising concerns that manufacturing exports could shrink just as they were beginning to gain traction. But the Canadian economy is better equipped to handle a stronger currency than it used to be, said Benjamin Reitzes, director of Canadian rates and macro strategist at BMO Capital Markets.
“We’re not as sensitive to the exchange rate as we once were,” Reitzes said in a phone interview. “Because the global economy and manufacturing in particular is so globally integrated now, over time that exchange-rate factor matters a little bit less than it did 10 or 20 years ago.” Like many major economies, manufacturing has shrunk in Canada as a growth driver. The last time the loonie started a long-term appreciation cycle in late 2002, manufacturing accounted for about 14 percent of the economy. Today, that number is 10 percent. Read more here-https://bloom.bg/2vJEVis and https://bloom.bg/2ePtLF0
-Core Inflation Uptick Backs Case for Second Canada Rate Hike. Canada’s core consumer prices and retail sales came in faster than expected, signaling that overall inflation may turn around to clear the way for another rate increase this year. The average of the central bank’s three core inflation measures rose to 1.4 percent in June, Statistics Canada said Friday from Ottawa, up from a May reading of 1.3 percent that was the lowest since 1999.
Retail sales doubled economist forecasts for May with a 0.6 percent increase, bringing the year-over-year gain to 7.3 percent, more than double the average over the last decade. Canada’s dollar strengthened a fourth day as the reports lined up with Bank of Canada Governor Stephen Poloz’s argument that inflation will shrug off some temporary weakness and move back toward his 2 percent target over the next year. Poloz lifted the key rate to 0.75 percent this month, the first such move in seven years, and said further tightening depends on how fresh data changes the inflation outlook.
“Seeing the core measures trend up, that’s quite comforting for the bank,” Fred Demers, chief Canada macro strategist at TD Securities, said by phone from Toronto. The retail gain also puts the economy on track for another quarter of growth at faster than a 3 percent annualized pace, meaning another rate increase in October “is a very likely scenario,” he said. The economy grew at a 3.7 percent pace in the first three months of the year, the kind of expansion Poloz has said will bring the country to full output around the end of this year. Read more here-https://bloom.bg/2h1O7eJ
-U.S. Signals Clampdown on Red-Hot Digital Coin Offerings. U.S. regulators said they have jurisdiction over one of the hottest new areas of finance: initial coin offerings of digital currencies. Companies that raise money through the sale of digital assets must adhere to federal securities laws, the Securities and Exchange Commission said Tuesday. Issuers must register the deals with the government unless they have a valid excuse, as should exchanges that offer trading of cryptocurrencies like bitcoin and ether, the regulator said. “It’s been a long time coming and this is a big deal,” said Angela Walch, associate professor at St. Mary’s University School of Law.
“People have been waiting for some kind of signal from regulators on ICOs.” This is the most detailed the SEC has been about how digital currencies and the exchanges where they trade fit into financial markets, she said. “It’s a reminder that basic consumer protection principles still apply” in the digital asset world, she added. “The tech people coming in don’t necessarily realize they’re playing with fire.” Startups have raised hundreds of millions of dollars selling such tokens in 2017, bypassing traditional initial public offerings of shares — a process overseen by the SEC — in favor of so-far mostly unregulated ICOs. The commission examined the sale of tokens to fund a startup known as the DAO last year, which raised about $150 million over four weeks, according to the SEC’s investigative report released Tuesday. Read more here-https://bloom.bg/2uXAd3d and https://bloom.bg/2tYQjoG and https://bloom.bg/2h40UNG
-Mnuchin Cautions Congress About Cost of U.S. Debt-Limit Impasse. U.S. Treasury Secretary Steven Mnuchin warned lawmakers that there’s a cost to delaying an increase to the government debt limit and said prolonging the decision burdens taxpayers and creates unease among investors. While the secretary reiterated that the government can finance itself through September, he urged lawmakers to raise the debt limit as soon as possible. The government has been relying on special accounting maneuvers since March to stay under the nearly $20 trillion current debt cap.
Aside from the “implied cost” of market uncertainty, special measures to stave off a default have pushed up interest rates for some government borrowing, Mnuchin told a Senate Appropriations subcommittee on Wednesday. The Treasury is using cash-management tactics such as suspending investments in pension funds for federal workers. “There is a real cost to doing that,” he said. “There is also an implied cost of uncertainty into the market. And the longer we wait, the more that uncertainty will be.” Read more here-https://bloom.bg/2v8sSxY
-One of Warren Buffett’s favorite investors listed the ingredients for a bubble and warned many are present today. Billionaire Howard Marks has no problem with being cautious. Marks’ investment firm, Oaktree Capital, is considered one of the leading investors in distressed debt, essentially riskier debt. He counts Warren Buffett as a friend and a fan. “When I see memos from Howard Marks in my mail, they’re the first thing I open and read,” Buffett once said. In a memo out to clients, Marks outlined his concern that the markets are entering “too bullish territory” and that a bubble could be forming. Marks said some might say his warning is premature, but that doesn’t bother him. Read more here-http://read.bi/2ePhtMB and http://read.bi/2tEsRO4
In the memo, Marks outlines the 9 ingredients that can make up both a boom or a bubble. They are as follows:
- A benign environment – Good times make investors complacent.
- A grain of truth – The catalyst of a boom is typically real, but it gets overblown.
- Early success – The folks who made big gains early on will turn to the so-called “fool in the end” to cash out of their investment.
- More money than ideas – Folks pour money into lackluster investment ideas because of a glut of capital.
- Willing suspension of disbelief – People convince themselves that “this time is different” and a correction could never happen.
- Rejection of valuation norms – Think dot.com bubble. This is when people start saying the price of an asset is never too high to get in.
- The pursuit of the new – Young people or new entrants start making more money than everyone else.
- The virtuous circle – When people think the truths underpinning an asset will never change and can only push its price higher.
- Fear of missing out – FOMO can be a powerful thing. So powerful that when all the other ingredients are present, people will ignore them because they don’t want to lose out on making money.
-Why You Should Never Eat Food on Planes, and Other Jet-Set Tips. The cabin crew’s secret to avoiding jet lag. I eat nothing on flights. I’ve talked to a lot of stewardesses about it, and it’s a stewardess secret. Ten years ago, it was [a cabin crew member] on Singapore Airlines on what was, at the time, the longest flight in the world (17 hours from Singapore to New York). She told me that her tried-and-true trick was not eating in-flight. Basically, at superhigh altitude, your digestive system shuts down completely. Someone said to me it’s like being under anesthesia.
So when you get off the plane, everything restarts and [your digestive system] has so much more work to do and so it makes you more tired. Most people overeat because it’s a diversion, or a way to pass the time; but even the best plane food is oversalted and preserved so it can be microwaved. So I have something to eat a couple hours before getting on the plane, but otherwise it’s nothing but lots and lots of water. Really and truly, I live by it and I feel so much better. I flew to Paris last week, for example, and I got off the plane at maybe 10 a.m., and when I landed I went for a fabulous lunch, which I didn’t feel guilty about in the slightest. Read more here-https://bloom.bg/2tAW0K2
-JPMorgan Whistle-Blowers Set to Reap Record $61 Million Bounty. Two whistle-blowers are set to share a record $61 million award from the Securities and Exchange Commission for helping make the case that JPMorgan Chase & Co. failed to disclose to wealthy clients that it was steering them into investments that would be most profitable for the bank. The SEC issued letters on Wednesday notifying six whistle-blower applicants of the preliminary decision. The letters said that two of them would share almost a quarter of the record asset-management settlement that the SEC reached with the bank in December 2015. JPMorgan agreed to pay $307 million, with $267 million going to the SEC and $40 million to the Commodity Futures Trading Commission. The SEC wrote Wednesday that one person would receive 18 percent of the SEC portion of the settlement and the other 5 percent, which would translate to $48 million and $13 million. Read more here-https://bloom.bg/2vGvss6
-Patek Allegedly Meant for Putin Fetches $1.2 Million in Auction. A Patek Philippe timepiece allegedly meant for Russian President Vladimir Putin was sold for 1.05 million euros ($1.2 million) in a Monaco auction. The timepiece sold to an unidentified Asian buyer after a 15-minute bidding battle between three parties over the phone and internet, Monaco Legend Group said by phone on Thursday. It didn’t disclose the seller. The platinum-cased Patek Philippe Ref. 5208 was estimated to be worth as much as 1.15 million euros by the auction house, which held the sale with partner Antiquorum. The timepiece retails for about $1 million but is sold only by invitation. Read more here-https://bloom.bg/2tAE9CJ
-NYT: How Much for That Fancy Red Diamond? It’s Kind of a Secret. When the mining company Rio Tinto shows its latest batch of rare naturally coloured diamonds – stones with hues of pink, red and even “deep-grey violet” – executives are delighted to go on about their beauty and scarcity. But details about pricing? That is when the lips draw shut. “It’s quite confidential,” said a laughing Mr. Arnaud Soirat, the chief executive of Rio Tinto’s copper and diamond group. Welcome to the exclusive world of the coloured diamond trade, a market where the buyer pool is slim, the supply is constricted and a carat can fetch US$1 million (S$1.4 million) or more. On Wednesday (July 26), Rio Tinto came to Manhattan to introduce its latest and best coloured diamonds, in the start of a tour that will include a stop in Hong Kong and another one in New York.
The company’s latest cache, 58 stones, sparkled in glass cases on the 21st floor of a Chelsea skyscraper. With names like the Argyle Liberte and Argyle Isla, the total weight of all the stones was 49.39 carats, suggesting a collective value in the tens of millions – even though they all could fit in a pants pocket. The company brings such diamonds to market once a year, unearthing the stones from its Argyle mine in Western Australia, where it might sift through 100 tons of a rock called kimberlite to collect a single carat. As it showcases its wares, Rio Tinto invites a select few collectors, wealthy people, dealers and others to submit sealed bids for the stones in the batch. It is a selling process that has few peers in opaqueness. Besides Rio Tinto, no one knows how much bidders offer for the stones, and the company does not report how much the winning bidders pay. Potential buyers are careful about sharing too much information.
One such buyer, Mr. David Shara, said he would chase after the star of this year’s lot, a diamond called the Argyle Everglow, but he declined to reveal his offer. “I’m going to bid way too much,” he said. “If I tell you, somebody else is going to hear, and they’ll bid a dollar more.” Mr. Shara, 42, the owner of Optimum Diamonds in New York, has been trading in naturally coloured diamonds for about 15 years. He describes himself as a “treasure hunter” but also a dealer and collector. His particular focus is on the “vivid and deep” coloured diamonds, a reference to a grading scale that starts at “faint” and ends with “fancy vivid”. Standing in front of the Argyle Everglow, a “fancy red” diamond weighing in at 2.11 carats, Mr. Shara was ebullient. In the Argyle mine’s 33-year history, just 23 other fancy reds, a designation of the depth of its colour, have come out of the ground. “It’s the ultimate prize,” he said. “It’s literally the ultimate prize.”
Ms. Olya Linde, a partner in the Moscow office of the consultants Bain & Co, said coloured diamonds were “governed by a different logic” from the more typical clear diamonds. The market for them, she said, is more similar to how fine art is bought and sold. There is some price information about naturally coloured diamonds, much of it emerging at auctions organised by houses such as Sotheby’s and Christie’s. The record auction price for a fancy red diamond is US$5 million, paid three years ago in Hong Kong, according to materials distributed by Rio Tinto. That transaction also set the record for the per-carat price, US$2.4 million. Mr. David Rosenberg, the owner of a namesake diamond and jewellery company in Boca Raton, Florida, estimated that a one-carat “vivid pink” diamond that was round in shape and had flawless clarity would fetch about US$800,000 on the wholesale market.
That is more than double the price five years ago. “These stones are definitely being spotted and people are noticing them,” said Mr. Rosenberg, who plans to participate in Rio Tinto’s current offer. Their supply is expected to further diminish. Rio Tinto will keep the Argyle mine in operation until 2021. When it closes, naturally coloured diamonds will probably become even more scarce: The mine produces 90 per cent of naturally coloured pink diamonds in the world, according to Mr. Soirat, the Rio Tinto executive. He said prices for the coloured diamonds were rising by double-digit percentages in recent years. But asked if he expected further price increases upon the closing of the Argyle, Mr Soirat kept his poker face. “It’s a market that follows the rules of demand and supply,” he said. Read more here-http://nyti.ms/2ePzsTb and http://bit.ly/2uyJQUK
-Rio Tinto reveals its largest red diamond at world exclusive preview in New York. Rio Tinto has unveiled the largest Fancy Red diamond in the history of its Argyle Pink Diamonds Tender, during a world exclusive preview in New York. The 2.11 carat polished radiant cut diamond, known as The Argyle Everglow™, is the dazzling centrepiece of the 2017 Argyle Pink Diamonds Tender an annual showcase of the rarest diamonds from Rio Tinto’s Argyle mine. Rio Tinto Copper & Diamonds chief executive Arnaud Soirat said “We are delighted to announce this historic diamond at our Tender preview, a testament to the unique Argyle ore-body that continues to produce the world’s rarest gems.”
Unprecedented in size, colour and clarity, The Argyle Everglow™ has been assessed by the Gemological Institute of America (GIA) as a notable diamond with a grade of Fancy Red VS2. In the 33-year history of the Argyle Pink Diamonds Tender there have been less than 20 carats of Fancy Red certified diamonds sold. Argyle Pink Diamonds manager Josephine Johnson said “The Argyle Everglow™ represents rarity within rarity and will drive global demand from collectors and connoisseurs in search of the incomparable.”
The 2017 Argyle Pink Diamonds Tender is named ‘Custodians of Rare Beauty’ in honour of its rich provenance and honourable pedigree. The 58 diamonds in the Tender weigh a total of 49.39 carats including four Fancy Red diamonds, four Purplish Red diamonds, two Violet diamonds, and one Blue diamond. The collection comprises five “hero” diamonds selected for their unique beauty and named to ensure there is a permanent record of their contribution to the history of the world’s most important diamonds:
- Lot 1: Argyle Everglow™, 2.11 carat radiant shaped Fancy Red diamond
- Lot 2: Argyle Isla™, 1.14 carat radiant shaped Fancy Red diamond
- Lot 3: Argyle Avaline™, 2.42 carat cushion shaped Fancy Purple-Pink diamond
- Lot 4: Argyle Kalina™, 1.50 carat oval shaped Fancy Deep Pink diamond
- Lot 5: Argyle Liberté™, 0.91 carat radiant shaped Fancy Deep Gray-Violet diamond
-Christie’s Magnificent Jewels Sale, May 17 2017, Geneva Switzerland. Auction Results Here-http://bit.ly/2pQQZ2a
-Lot 228: LA LÉGENDE. A DIAMOND AND CULTURED PEARL SAUTOIR NECKLACE, BY BOEHMER ET BASSENGE. Set with a heart-shaped diamond, weighing approximately 92.15 carats, between two circular-cut diamonds, to the cultured pearl sautoir, 93.0 cm, mounted in platinum. Signed Boehmer et Bassenge. Accompanied by report no. 5171874150 dated 20 September 2016 from the GIA Gemological Institute of America stating that the 92.15 carat diamond is D colour, Flawless clarity, with excellent polish and excellent symmetry; and a Diamond Type Classification letter stating that the diamond has been determined to be Type IIa. Estimate CHF 14,000,000.00-20,000,000.00. Lot Sold 15,525,126.95 USD. See more here-http://bit.ly/2uZf2xv
-Lot 204: A COLOURED DIAMOND RING. Set with a fancy intense blue cushion-shaped diamond, weighing approximately 7.97 carats, between baguette-cut diamond shoulders, ring size 6 ½, mounted in platinum. Accompanied by report no. 6187159503 dated 13 February 2017 from the GIA Gemological Institute of America stating that the diamond is Fancy Intense Blue colour, VS1 clarity. Estimate CHF 2,500,000- 3,000,000. Lot Sold 13,171,591.00 USD. See more here-http://bit.ly/2uDDVw8
-Lot 221: A COLOURED DIAMOND RING. Set with a fancy deep blue square cut-cornered diamond, weighing approximately 4.05 carats, to the plain hoop, ring size 6 ¼, mounted in platinum
Accompanied by report no. 5171955696 dated 14 October 2016 from the GIA Gemological Institute of America stating that the diamond is Fancy Deep Blue colour, VS1 clarity. Estimate CHF 4,200,000-5,200,000. Lot Sold 4,457,470.00 USD. See more here-http://bit.ly/2uZ5aDP
-Lot 255: A DIAMOND AND COLOURED DIAMOND RING, BY DAVID MORRIS. Set with a fancy purple-pink rectangular cut-cornered diamond, weighing approximately 6.07 carats, to the pear-shaped diamond gallery, the hoop pavé-set with circular-cut pink diamonds, ring size 6, mounted in gold. Signed David Morris, no. 436. Accompanied by report no. 13102713 dated 2 March 2017 from the GIA Gemological Institute of America stating that the 6.07 carat diamond is Fancy Purple-Pink colour, SI1 clarity. Estimate CHF 800,000-1,200,000. Lot Sold 1,143,412.00 USD. See more here-http://bit.ly/2h4kj17
-Lot 207: A DIAMOND AND COLOURED DIAMOND RING. Set with a fancy intense yellow rectangular cut-cornered diamond, weighing approximately 15.01 carats, between marquise-cut diamond three-stone shoulders, ring size 6, mounted in platinum and gold. Accompanied by report no. 2181154611 dated 3 February 2017 from the GIA Gemological Institute of America stating that the diamond is Fancy Intense Yellow colour, VVS1 clarity; also with a working diagram indicating that the clarity of the diamond is potentially Internally Flawless. Estimate CHF 200,000-300,000. Lot Sold 462,047.00 USD. See more here-http://bit.ly/2u0WYi4
-Lot 40: A COLOURED DIAMOND RING. Set with a fancy yellow cushion-shaped diamond, weighing approximately 12.05 carats, to the plain hoop, ring size 6 ½, mounted in gold. Accompanied by report no. 2175425795 dated 18 December 2015 from the GIA Gemological Institute of America stating that the diamond is Fancy Yellow colour, VS2 clarity. Estimate CHF 120,000-150,000. Lot Sold 157,728.00 USA. See more here-http://bit.ly/2uDJivl
-Spot Gold Advances as Fed Holds Rates Steady, Assesses Inflation. Spot gold touched a session high after the Federal Reserve left its benchmark policy rate unchanged and said it’s “monitoring inflation developments closely.” “Near-term risks to the economic outlook appear roughly balanced,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington. The statement highlighted that a period of weak inflation continues.
“On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined and are running below 2 percent.” Fed fund futures are pricing in a 39 chance of an interest rate increase by year-end, down from 45 percent before the Fed’s statement. Gold has been little changed this month as traders await clues from the central bank on the course of monetary policy. “The gold price is firmly in the green territory as traders believe that the Fed is not going to increase the interest rate,” Naeem Aslam, chief market analyst at Think Markets U.K. Ltd., said in an email. “The main reason is that inflation is so low.” Read more here-https://bloom.bg/2vKotyA
-Clive Maund: Reconciling the Us Dollar Outlook with the Super Bullish Gold and Silver COT’s. Read more here-http://bit.ly/2w1OWXB
-KWN: John Ing, Gold To Skyrocket 75% Within 18 Months. Ironically despite setting stock market daily records, the American economy remains in a funk. Nine years after the worst financial crisis, the US runs twin deficits and has more than $20 trillion in debt or over 100 percent of GDP. Yet money continues to flow into the United States. The US dollar until recently was as good as gold and well, gold wasn’t as good as the dollar. After flirting with $1,300 an ounce, gold recently tested the $1,200 floor on fears of higher interest rates.
Nonetheless, gold has outperformed the stock markets this year despite rates rising four times. Few recall that between 2005 and 2006, interest rates went up 17 times while gold went up 50 percent. Gold’s first bull leg lasted 11 consecutive years for a gain of 600 percent, peaking at $1,900 an ounce. We believe gold’s correction is behind us, bottoming in 2015 and the second leg which started last year will see gold topping $2,200 an ounce within 18 months. Read more here-http://bit.ly/2tFiUji
-Gold Is Getting Really Bored With the World. As political leaders find ways to shock like never before, the world’s favorite haven investment hasn’t been calmer in years. In the past four months, gold prices moved in a 7.6 percent range, the least in 10 years, while 120-day volatility is at the lowest since 2005. That’s amid unprecedented uncertainty over U.S. President Donald Trump’s legislative program and divisions in the U.K. over plans to leave the European Union. Gold is partly following a trend in other markets, with assets supported by sustained low interest rates, but also reflects factors unique to the metal.
Miners have given up hedging future production under pressure from shareholders concerned that it pushes metals prices lower. At the same time, central bank trading has dried up, handing more control of the market to jewelers who tend to buy on dips and sell on rallies. “Since Brexit, volatility has been coming down, down, down,” said Matthew Turner, an analyst at Macquarie Group Ltd. in London. “Much of this reflects wider markets but it also seems like many of the shocks that rippled through the gold market in the past have disappeared.” Gold’s 120-day historic volatility hit a two-year high above 18 percent around the time Britain voted to leave the EU. It has since fallen to about 10 percent, the lowest since 2005.
While irritating for traders who make a living betting on strong moves, the sleepy gold market also reflects stability in other assets, with measures of global shares at record highs. Investors from currencies to equities have been boxed in between concerns over a weakening dollar and speculation that central banks will tighten money supply. “When gold is as uninteresting as this, it usually means that other assets are riding along quite nicely,” said Tom Kendall, head of precious metals strategy at ICBC Standard Bank Plc. “But it’s pretty dismal from anyone’s perspective who wants to trade it.” Read more here-https://bloom.bg/2uDtSqY
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
-I have been expecting a price explosion in silver since early May, when the COMEX positioning extremes in silver hit then-record levels (Remember the unprecedented 17 days of consecutive price declines?). But incorporated in my price explosion premise was that the raptors would be ready sellers of their big long positions as prices rose. With the new COT report indicating that not only have the raptors not begun to sell on higher prices, they actually added new longs. If this was no fluke and is indicative that the raptors may be in no rush to sell, then who the heck is going to sell to the technical funds when they plow onto the buy side?
There’s no question that the technical funds will rush to buy (or attempt to buy) many tens of thousands of COMEX gold and silver contracts on higher prices from here; the only question is who will sell to them? If it isn’t the raptors, it is a near-certainty that prices will explode. This is the perfect set up for a selling vacuum and price explosion that I have long envisioned, but not with such clarity. If there’s ever been a better time to be positioned to the maximum for a silver rally than now, that time is unknown by me. Silver analyst Ted Butler July 22 2017 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-“JPMorgan may have been the largest single entity buying COMEX silver contracts over this time (more than 20,000 net contracts), but the raptors were the largest collective buyers. Moreover, JPMorgan is still net short in COMEX silver futures, while the raptors are decidedly net long meaning the raptors will take profits by selling at higher prices, whereas JPMorgan, should it decide to sell, will be adding to short positions to control and manipulate prices, not to take profits. That’s an important distinction that has been lost on the regulators until now.”
“What this means in practical terms is that it must be expected that the raptors in both gold and silver will sell and take profits on their large net long positions as gold and silver prices rise – this is in their financial interest and is why they trade. Any such raptor sales will have somewhat of a price depressant effect as the contracts are sold, but these traders are also interested in maximum profits and they know how to make the technical funds reach up in price when they move to buy. The raptors, in my opinion, are less interested in capping gold and silver prices than they are in taking as much money as they can from the technical funds. It will be the additional short sales by JPMorgan (or lack thereof) that will determine whether silver prices get capped on this next go-around.” Silver analyst Ted Butler July 19 2017 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-Clive Maund: Silver Alert! One Of The Best Buying Opportunities For Years. There will be no equivocating, fence sitting or any kind of hedging or expression of doubt in what is written in this update. Let me be absolutely clear: we are now at the threshold of a barnburner rally in the Precious Metals sector, and silver is set to scream higher driven by a massive short covering panic, because short positions in it have ballooned in recent weeks to levels way above what we saw in December 2015, when silver hit its final bearmarket bottom, before the big sector rally during the 1st half of 2016. Read more here-http://bit.ly/2uZQGUs
-Frank Holmes: SWOT Analysis Silver In the Spotlight. Read more here-http://bit.ly/2v0PXC6
-KWN: All-Time Record Silver Short Covering Spree Continues. Read more here-http://bit.ly/2v0Jd75
-China H1 2017 Silver imports climb to highest level in nearly seven years. China’s silver imports have been robust so far this year, pointed out Commerzbank. Rising demand for silver in two of the world’s largest consumers, China and India, since the beginning of this year is seen raising hopes of a better price performance for the metal. A precious metal and industrial metal at once, silver generally follows the footsteps of its more sought-after sibling, gold. The first half of this year has been no different. In the initial months, silver prices rose two per cent on strong investment demand and in line with gold. Analysts at Commerzbank cited a data from customs authorities showing that China imported around 330 tons of silver in June, which is up 34% from last June. The figures show that 1,984 tons of silver were imported in the first half year – 37% more than in the same period last year and the highest first-half-year silver imports in seven years, Commerzbank added. Read more here-http://bit.ly/2v8Qz9t
-13 Stunning Visualizations of Silver Put Global Debt Into Perspective. See more here-http://bit.ly/2v0gRd7
-Silver Institute: The Silver News for June 2017. Read more here-http://bit.ly/2uZmNDE
-Platinum Set to Suffer as Diesel Demand and Jewelry Sales Soften. Anglo American Platinum Ltd. sees a surplus of platinum-group metals this year as demand from makers of jewelry and car catalytic converters drops, weighing on prices and adding to pressure on miners. Lower demand follows falling sales of diesel vehicles in Europe, which use platinum to cut pollution, and a slowing Chinese jewelry market, the Johannesburg-based company said in a statement Monday.
Amplats, as the miner majority owned by Anglo American Plc is known, is the world’s biggest producer of the metal. “The PGM basket price is likely to remain subdued in the near term and as a result we’ll continue to manage the business for a low price environment,” Chief Executive Officer Chris Griffith said on a call with reporters. Platinum prices are down almost by half in the past six years as the metal lost popularity as a haven investment.
Supply from top producer South Africa has remained high even as demand has flagged from an auto industry moving toward emission-free electric vehicles. As the largest producer with some of the industry’s lowest cost mines, Amplats is better placed than some. About 65 percent of the industry is loss making and a further 5 percent is “on the breadline,” Griffith said. “This kind of production environment is undoubtedly likely to lead to further production cuts.” Read more here-https://bloom.bg/2uCLS4C