Why the ‘Smart Money’ Is Bailing Out of the Bull Market

02-Mar (Fiscal Times, via Yahoo Finance) — Investors are feeling good right now. Really good. By some measures, bullishness has reached levels not seen in more than 10 years. But the positive vibes are at odds with some hard data that suggests we’re on the threshold of a “come back to reality” moment.

What data? How about the fact that forward earnings are rolling over at a pace that’s only been seen during recessions? Or that factory activity in the Chicago area slumped to a low not seen since July 2009? Or that overall U.S. economic data is disappointing in a way that it hasn’t quite since 2012? Or the wipeout in commodity prices over the last few months, the kind typically seen during recessions? Or that consumer prices, on the headline measure, declined outright for the first time since Lehman Brothers imploded?

Moreover, the problem is global. So far this year, 20 central banks around the world have cut interest rates. And most other countries — except Singapore, Ireland and Japan — are also seeing earnings downgrades.

[source]

Posted in Markets |

Fed’s Yellen Fretted Over Weak Recovery in 2009, Transcripts Show

04-Mar (Wall Street Journal) — Janet Yellen was doubtful in 2009 that an emerging U.S. economic recovery would be at all robust and argued regularly for the Fed to ramp up its efforts to boost growth, according to transcripts of 2009 policy meetings released by the central bank Thursday.

A preliminary reading of the Fed’s transcripts of its policy meetings, released Thursday, reveals fully for the first time the fraught debates at turning points in the aftermath of the financial crisis that nearly wrecked the U.S. economy.

“The economic and financial news has been grim,” Ms. Yellen said at a crucial March 2009 policy meeting when the Fed increased its efforts to boost the economy. “Things are now so bad that I actually open [Fed’s staff] economic projections with greater trepidation than my 401(k).”

…The Yellen that emerges in the 2009 meetings is an unmistakable policy “dove,” meaning somebody who argues forcefully for easy money policies. It contradicts, to a degree, her approach since last year as Fed chairwoman, when she has sought to build consensus and hasn’t staked out sharp policy positions at odds with other policy makers.

…Ms. Yellen’s views were colored by a dim view of the economic outlook. She said in September, the recovery, “will be tepid by historical standards, leaving unemployment unacceptably high for a long time to come,”

[source]

PG View: I think Yellen remains an unequivocal dove, now in ‘consensus-builder’ clothing as Fed chair. She was spot-on about the “tepid” recovery though.

Posted in Central Banks, Economy, Monetary Policy, QE |

The Daily Market Report: Gold Well Contained Ahead of ECB Meeting, NFP Report


04-Mar (USAGOLD) — Gold is well contained around the $1200 level as investors await further directional cues. Market impetus may come from tomorrow’s ECB meeting, or Friday’s release of U.S. jobs data for February.

The ECB is expected to release additional information on their aggressive QE program tomorrow; likely revealing further details about the type of assets it will buy and when those purchases will actually begin. Expectations are that the ECB will begin that €1 trillion+ asset purchase program pretty quickly, perhaps first thing next week.

Consensus for U.S. nonfarm payrolls is running around +240k. This morning’s release of the ADP employment survey was a modest disappointment, and the employment components of recent PMI data have been mixed.

Nonetheless, amid ongoing uncertainty over the timing of the first Fed rate hike, a NFP beat would likely pull those rate hike expectations back toward June. A miss, would push expectations back toward December. I personally remain skeptical that we’ll see a rate hike this year.

Chicago Fed governor Charles Evans — perhaps not surprisingly, given his dovish disposition — concurs. Citing “serious concerns about excessively low inflation,” Evans said today that he favors continued “patience” and no rate hikes until 2016.

Given the latest round of 11-year highs in the dollar index, the yellow metal has actually been pretty resilient of late. While dollar strength may be limiting the upside somewhat, there are plenty of risks out there, providing compelling reasons for buying gold at these levels.

Posted in all posts, Daily Market Report, Gold News, Gold Views |

Japan Public Debt is Keeping BNP’s Chief Credit Analyst Awake at Night

03-Mar (Bloomberg) — For most of her career, Mana Nakazora has taken a pre-dawn train to work regardless of whether she arrived home just hours earlier.

Her colleagues describe BNP Paribas SA’s Tokyo head of investment research as a powerhouse, and she was Japan’s No. 1 bond picker from 2010 to 2012 and No. 2 for the last two years in Nikkei Veritas newspaper polls. Even now, investors thank her for warning against getting into Lehman Brothers Holdings Inc. before the investment bank collapsed in September 2008.

“She’s frank and she says things that are difficult to say,” said Keisuke Tsumoto, the head of fixed income for Japan at Manulife Financial Corp.’s asset management unit in Tokyo, which manages money for Japan’s Government Pension Investment Fund. “What she can’t write down, she lets us know verbally.”

One thing keeping her up — analysis of Japan’s public debt, which is expected to climb to 1.06 quadrillion yen ($8.85 trillion) at the end of March. With a population that’s been shrinking for the past six years and annual debt servicing costs that are bigger than New Zealand’s gross domestic product, the world’s third-largest economy is quite simply running out of people who can pick up the tab.

[source]

PG View: Given the soaring debt burden and the realities of their demographic problem, I’m surprised anyone in Japan can sleep at night.

Posted in Debt |

Gold up on lower shares, but strong dollar weighs

04-Mar (Reuters) – Gold rose on Wednesday, following two straight sessions of losses, helped by lower European shares but a stronger dollar ahead of major U.S. economic data weighed.

Spot gold was up 0.3 percent at $1,207.10 an ounce by 1231 GMT. The metal had fallen to a one-week low of $1,194.90 on Tuesday, dented by an 11-year high of the dollar and expectations of a U.S. interest rate hike.

…”We have quite an event-heavy end of the week, with the U.S. payrolls data on Friday and the ECB meeting tomorrow, so we are unlikely to see much positioning ahead.”

The dollar hit its highest since September 2003 against a basket of leading currencies, bolstered by strong U.S. government bond yields this week.

[source]

Posted in Gold News, Gold Views |

US ADP employment survey +212k in Feb, below expectations of +220k, vs positive revised +250k in Jan.

Posted in Economic Data |

Gold better at 1206.42 (+1.81). Silver 16.28 (-0.04). Dollar higher. Euro lower. Stocks called lower. US 10yr 2.12% (unch).

Posted in Markets |

CBO: Debt limit will have to be increased by October or November

03-Feb (Politico) — Lawmakers will have to raise the government’s borrowing authority in October or November, the Congressional Budget Office warned Tuesday.

The administration will have to begin using the accounting maneuvers known as the “extraordinary measures” later this month to stave off default, the nonpartisan budget agency said. That’s because the last debt limit hike, approved by Congress in February 2014, suspended the borrowing cap through March 15, 2015.

After that, if, as is likely, Congress does not immediately lift the debt limit, Treasury will have to begin shuffling money around in order to avoid slamming into the debt ceiling.

It will likely run out of those maneuvers as well as cash by October or November, CBO said, though the exact timing is still uncertain.

[source]

Posted in Debt |

Rickards: A central banker’s worst nightmare

By James G. Rickards
03-Mar (Darien Times) — Inflation and deflation are two sides of the same coin. Inflation is marked by generally rising prices. Deflation is marked by generally falling prices. Both are deviations from price stability, and both distort the decisions of consumers and investors. In inflation, consumers may accelerate purchases before the price goes up. In deflation, consumers may delay purchases in the expectation that prices are going down and things will be cheaper if they wait.

Both inflation and deflation are challenging to investors who have to guess future returns based on changes in price indexes in addition to navigating the normal business risks of any investment. Inflation favors the debtor because the real value of his debts goes down as money becomes worth less. Deflation favors the creditor because the real value of amounts owed to him goes up as money becomes worth more. In short, both inflation and deflation make economic decisions more difficult by adding a wild card to the deck.

To investors, inflation and deflation are bad in equal, if opposite, measure. But, from a central banker’s perspective, inflation and deflation are not equally bad. Inflation is something that central bankers consider to be a manageable problem and something that is occasionally desirable. Deflation is something central bankers consider unmanageable and potentially devastating. Understanding why central banks fear deflation more than inflation is the key to understanding future central bank monetary policy.

[source]

PG View: This is a pretty thorough explanation as to why central banks and governments fear deflation far more than inflation, and the likely impact on monetary policy moving forward.

Posted in Central Banks, Deflation, inflation, Monetary Policy |

The Daily Market Report

03-Mar (USAGOLD) — Gold remains consolidative around the $1200 level as the market awaits some fresh impetus. The yellow metal has been limited on the upside by dollar strength, and limited on the downside by persistent growth, deflation and geopolitical concerns.

The dollar index eked out another new 11-year high today, underpinned by interest rate differentials that favor U.S. Treasuries. There is also still an expectation that the Fed could hike rates this year and further widen those differentials.

There has been plenty of economic evidence recently — suggesting the U.S. economy is far from robust — that may prevent the Fed from tightening any time soon. However, it is the deflationary pressures and the broader global trend toward easier monetary policy that may ultimately prompt the Fed to keep rates near zero.

In fact, the Wall Street Journal’s Ben Leubsdorf noted yesterday that inflation has fallen short of the Fed target for 33 consecutive months. Unless the Fed foresees some major shift in inflation — and I can’t imagine where they would find any such evidence — that alone is reason enough to hold steady on rates.

Jim Rickards provides a pretty thorough explanation of why central banks fear deflation more than anything in an article published in the Darien Times today:

Governments fear deflation because it causes people to save, not spend, it increases the burden of government debt, and it hurts tax collections. — James G. Rickards

Given the deflation risks, and the recent soft data, Rickards too concludes that “a Fed rate hike in 2015 seems unlikely.” However, he goes on to warn that if the Fed does hike, “possibly from fear of asset bubbles,” market reaction could be “extreme” possibly leading to more QE in early 2016.

I would suggest that if events unfold as Rickards’ portends, the reaction in gold would be “extreme” as well. The time to diversify your portfolio is before that happens; nay even before such a scenario becomes more likely.

Posted in Daily Market Report, Gold News, Gold Views |

Draghi’s Rescue Plan Has Created a $103 Billion Problem

03-Mar (Bloomberg) — There’s a corner of the pension world that needs to brace itself for Mario Draghi.

His European Central Bank’s 1.1 trillion euro ($1.2 trillion) bond-buying plan might have already blown a 92 billion-euro hole in defined-benefit pension plans by depressing bond yields, Standard & Poor’s said Feb. 26. And if the actual start of QE pushes yields further, for longer, companies may have to take drastic measures to make ends meet, and could face a hit to their credit ratings.

The ECB is expected to announce further details of its asset-purchase program after it meets in Cyprus Thursday.

S&P estimates that the anticipation of quantitative easing in Europe squashed bond yields so much that the liabilities of defined-benefit pension plans rose by up to 18 percent last year.

[source]

PG View: Print a trillion euros to goose growth and attempt to staunch deflation. . .and blow a huge hole in the Continent’s pension plans in the process. The whole QE thing is part of the reason U.S. pensions plans are so underfunded as well.

Posted in Central Banks, Monetary Policy, QE |

India’s Failure to Cut Import Duty on Gold Hurts Prices

02-Mar (Wall Street Journal) — India’s decision to maintain an import duty on gold surprised investors, dealing a fresh blow to a metal that has been hit hard this year by a strengthening U.S. dollar and a series of policy shifts around the globe.

…Investors had been hoping India would reduce the duty, likely boosting demand for gold from the world’s largest consumer. The decision adds to broad crosscurrents for gold, which tends to appreciate at times of economic uncertainty but does less well in more placid periods because it offers buyers no periodic payments, or yield.

[source]

PG View: Gold closed lower on Monday and probed back below $1200 overseas, but has since snapped back to trade higher on the day.

Posted in Gold News, Gold Views |

Gold appetite in February highest in nearly a year

03-Mar (MarketWatch) — Investors had a yen for gold last month. BullionVault’s Gold Investor Index climbed from a five-year low to 54.5 in February — its highest level in 22 months and its fastest increase since April of 2013.

The index, run by the Internet-based metals exchange operator BullionVault, tracks the balance of private investors starting or growing their gold holdings on online precious-metals market against those who cut or sold off their holdings. So a reading above 50 suggests that there are more buyers than sellers in the market for the precious yellow metal.

In fact gold appetite, as measured by BullionVault, hit its highest level despite gold futures on Comex suffering a decline of roughly 5% for the month of February — their largest monthly percentage decline since September of last year.

…So far this year, many of the gold buyers are coming from Europe. “With the European Central Bank now embarking on QE bond purchases, cash inflows from Eurozone users of BullionVault have risen 34% in 2015 to date from the same period last year,” noted Ash.

[source]

Posted in Gold News, Gold Views |

Gold better at 1207.89 (+1.00). Silver 16.45 (+0.035). Dollar firm. Euro weak. Stocks called lower. US 10yr 2.09% (+1 bp).

Posted in Markets |

U.S. Inflation Undershoots Fed’s 2% Target For 33rd Straight Month

03-Mar (Wall Street Journal) — A key gauge of U.S. consumer prices sank in January due partly to cheaper oil, undershooting the Federal Reserve’s goal of 2% annual inflation for the 33rd consecutive month. But a gauge of underlying price pressures remained resilient headed into 2015.

The price index for personal consumption expenditures, which is the central bank’s preferred inflation gauge, rose 0.2% in January from a year earlier. That followed annual growth of 0.8% in December, 1.2% in November and 1.4% in October, the Commerce Department said Monday.

It was the lowest reading for headline inflation since October 2009, when prices rose just 0.1% from a year earlier following seven months of year-over-year price declines as the 2007-09 recession ended.

[source]

Posted in Central Banks, inflation, Monetary Policy |

The Negative Way to Growth?

by Nouriel Roubini
28-Feb (ProSyn) – Monetary policy has become increasingly unconventional in the last six years, with central banks implementing zero-interest-rate policies, quantitative easing, credit easing, forward guidance, and unlimited exchange-rate intervention. But now we have come to the most unconventional policy tool of them all: negative nominal interest rates.

Such rates currently prevail in the eurozone, Switzerland, Denmark, and Sweden. And it is not just short-term policy rates that are now negative in nominal terms: about $3 trillion of assets in Europe and Japan, at maturities as long as ten years (in the case of Swiss government bonds), now have negative interest rates.

At first blush, this seems absurd: Why would anyone want to lend money for a negative nominal return when they could simply hold on to the cash and at least not lose in nominal terms?

…Over time, of course, negative nominal and real returns may lead savers to save less and spend more. And that is precisely the goal of negative interest rates: In a world where supply outstrips demand and too much saving chases too few productive investments, the equilibrium interest rate is low, if not negative. Indeed, if the advanced economies were to suffer from secular stagnation, a world with negative interest rates on both short- and long-term bonds could become the new normal.

[source]

Posted in Central Banks, Debt, Monetary Policy |

The Daily Market Report: Gold Retreats from Overseas Gains


02-Mar (USAGOLD) — Gold firmed in overseas trading to set a 7-session high at 1223.30, but these gains proved unsustainable as the dollar index eked out a new 11-year high. The dominant meme here is that ultra-low U.S. interest rates are still better than negative rates elsewhere.

The quest for yield also continues to push investors into riskier assets, such as shares. Even retired investors, whose portfolios would typically be weighted more toward fixed income products at this point, are exposing themselves to greater risks because they fear their money won’t last through retirement.

It’s a pretty sorry state of affairs when you think about it: Our very own central bank forcing seniors and pension plan managers out along the risk curve. The Fed is one policy miscue away from a potential catastrophe.

Even if the Fed hikes rates this year, it would be a miniscule 25 bps (or less). It would likely be a considerable period (to borrow some Fed phraseology) before there were another incremental hike. I think it’s just a case of the central bank trying to claw back some ammunition so they have room to cut again when the economy inevitably stalls again, without having to go negative.

Wall Street Journal Fed watcher Jon Hilsenrath warns that the central bank is ushering a new era of uncertainty on rates.

Central-bank policy makers on average see rates going nearly twice as high as futures markets indicate in coming years, for a variety of reasons. — Jon Hilsenrath

On this front, one need look no further than the Fed’s forecasting track record to discern who is more likely right. The last time the Fed hiked the Fed funds rate was June 2006; more than 8½-years ago. An uptick from 0% would not a new trend make.

In fact, the latest round of weak U.S. data, persistent global deflationary pressures and the latest rate cuts from the PBoC leaves my skeptical that the Fed will be able to edge off the zero-bound at all this year. We have become Japan, hurdling toward the conclusion of our first lost decade.

Posted in Daily Market Report, Gold News, Gold Views |

Greece in talks for third bailout of up to €50bn, Spain says

02-Mar (Financial Times) — Negotiations have begun on a third bailout package for Greece worth between €30bn and €50bn, the Spanish economy minister said on Monday.

“We are negotiating a third rescue for Greece,” Luis de Guindos told a conference in Pamplona. The minister added that the Spanish government, which has been locked in an escalating war of words with Athens in recent days, would contribute 13-14 per cent of the new bailout. The new accord would provide for “flexibility” and would include new conditions for Greece.

…It has long been expected that Greece would have to seek yet another bailout to cover its financing needs. But Mr de Guindos is the first European minister to declare publicly that negotiations had begun, and to specify the amount of money at stake.

[source]

PG View: Use bailout 2 to pay down bailout 1. Use bailout 3 to pay down bailouts 1 and 2. Where does it end?

Posted in Debt, European Debt Crisis |

Russian central bank seen holding rates as inflation soars

02-Mar (Reuters) – Russia’s central bank will hold its interest rates steady this month as inflation stays in double digits despite an economic slump, a Reuters poll predicted on Monday.

The economy is set to see its first recession this year since the aftermath of the global financial crisis as sanctions imposed on Moscow for its role in the Ukraine conflict and a sharp drop in oil prices bite.

These pressures have also led to a steep fall in the value of the rouble.

Out of 15 analysts who gave a rate forecast, 11 predicted that the bank would hold its key policy rate at 15 percent in March, with three predicting a cut and one a raise.

[source]

Posted in Central Banks, inflation, Monetary Policy |

US Markit manufacturing PMI revised up to 55.1 in Feb, above expectations of 54.3, vs 54.3 preliminary print.

Posted in Economic Data |

US manufacturing ISM fell to 52.9 in Feb, below expectations of 53.2, vs 53.5 in Jan; prices steady at 35.0.

Posted in Economic Data |

US construction spending -1.1% in Jan, well below expectations of +0.3%, vs positive revised +0.8% in Dec.

Posted in Economic Data |

Apple poised to goose gold as economic numbers start flying

02-Mar (MarketWatch) — . . .Gold prices don’t appear to be too concerned that stocks are moving higher in the early hours. Why would they be? Apple, at least according to our call of the day, could be about to goose prices by buying up unfathomable amounts.

[source]

Posted in Gold News |

US personal income +0.3% in Jan, below expectations of +0.4%, vs +0.3% in Dec. PCE -0.2% on expectations of -0.1%, vs -0.3% in Dec.

Posted in Economic Data |

China’s Central Bank Cuts Interest Rates

28-Feb (Wall Street Journal) — China’s central bank cut interest rates for the second time in less than four months, in a fresh sign that the country’s leadership is becoming more aggressive in trying to arrest flagging economic growth.

The rate cut by the People’s Bank of China, announced Saturday, came sooner than some analysts and investors had expected and reflects growing worries over the world’s second-largest economy as it struggles with an array of ills: a slumping property market, more money being sent offshore and growing risks of falling prices that, in effect, are pushing up borrowing costs for businesses.

Deflationary risk and the property market slowdown are two main reasons for the rate cut this time,” said a central bank official in an interview late Saturday.

[source]

Posted in Central Banks, Currency Wars, Deflation, Monetary Policy |

Gold higher at 1218.40 (+5.55). Silver 16.66 (+0.081). Dollar easier. Euro higher. Stocks called mixed. US 10yr 2.00% (+1 bp).

Posted in Markets |

Could China actually have 30,000 tonnes of gold in reserves?

Lawrence Williams/MineWeb/3-1-2015

“My attention has just been drawn to a note put out by a very well respected analyst and China follower which postulates that China could actually be holding as much as 30,000 tonnes of gold in various government accounts and that within the next three years the nation will link the yuan to gold. The nation’s official holding is only 1,054.6 tonnes as reported to the IMF, but there is widespread belief that it has been accumulating additional gold over the past several years, perhaps to the tune of around 5,000 tonnes while holding this in separate non-reportable (as China considers them) accounts. But, of course, this does not include previously high volumes of gold which may also have been bought, and stored, in the past, and again never reported as official holdings.’

Also see Why China thinks gold is the buy of the century (Review & Outlook, October  2014)

Posted in all posts |

End-of-week top gold news

Friday, 27-Feb-2015

Tyler Durden (ZeroHedge) This Is The Biggest Problem Facing The World Today: 9 Countries Have Debt-To-GDP Over 300% “It also shows the biggest problem facing the world today, namely that at least 9 countries have debt/GDP above 300%, and that a whopping 39% countries have debt-to-GDP of over 100%!”

Note: Such an obvious problem, and yet countries keep racking up additional debt at an alarming pace. While debt is cheap now — in some cases even garnering a negative yield — it won’t always be thus, and then there will be a moment of reckoning like nothing we’ve ever seen before.

Jan Strupczewski and Matthias Sobolewski (Reuters) Euro zone backs Greek reform plan, 4-month aid extension “Greece secured a four-month extension of its financial rescue on Tuesday when its euro zone partners approved a reform plan, as Athens backed away from some proposed measures and promised that spending to alleviate social distress would not derail its budget.”

Note: And speaking of debt. . .Greece secured a 4-month kick of their debt can, but I can’t think of anyone who doesn’t believe that Greece will be right back in crisis mode come June.

Marcy Nicholson and Jan Harvey (Reuters) Gold climbs as Fed signals no rush to raise rates “Gold rose on Wednesday, recovering from the previous day’s seven-week lows, after comments from Federal Reserve Chair Janet Yellen suggested the central bank was in no rush to raise interest rates.”

Note: Data that came out later in the week revealed an economy that is right back limping along at the same tepid pace that has been seen throughout much of the so-called “recovery”.

Peter Spence (Telegraph) US falls back into deflation for first time since crisis “The US economy has fallen back into deflation for the first time since 2009, amid an ongoing slump in oil prices.”

Note: Heightened deflationary pressures, in the U.S. and elsewhere in the world, is also likely to give the Fed pause when it comes to rate hikes.

Cecilia Jamasmie (MINING.com) Apple buying a third of world’s gold to meet demand for iWatch “Josh Centers, from TidBits, estimates that each gold watch will contain 2 troy ounces (62.2 grams) of gold. So, based on the estimated sales figure, he concludes that Apple will need 746 tons of gold a year, or about 30% of the world’s annual production.”

Note: So suddenly 30% of the world’s annual gold supply will go toward making a shiny discretionary consumer item. Sort of puts the whole supply side of the equation in perspective.

(Financial Times) Gold extends gains as investor anxiety mounts “Analysts are attributing the bounce to a combination of growing investor anxiety and the return of Chinese buyers following the end of the Lunar Year holiday in Asia. On the first point, while an extension to the Greek bailout has been agreed in principle, analysts at Deutsche Bank said concern is now over how this will unfold and what might happen afterwards.”

Note: What happen afterwards is that Greece still won’t be able to pay its debts; so the whole silly process will start all over again.

Michael Kosares (USAGOLD) British Sovereigns in Greece no doubt expensive at this juncture, but in high demand nonetheless “The best time to buy gold is not when you find yourself at the crisis’ epicenter, but well before – when prices are in a normal range and availability is not an issue.”

Note: Truer words were never spoken. Our Sovereigns remain comparably priced to similarly sized contemporary bullion coins.

Posted in Gold News, Gold Views |

The Daily Market Report: Gold Poised for Higher Weekly Close


27-Feb (USAGOLD) — Gold is trading within Thursday’s range, but appears poised to break of the string of four consecutive lower weekly closes. In fact, a higher weekly close will confirm a simple hook reversal.

Continued dovishness from Fed chair Yellen this week, along with the return of Asian physical buyers after the long Lunar New Year holiday has been mildly supportive to gold. Today’s negative Q4 GDP revision and another disappointing regional PMI miss lends further credence to the expectation that the Fed will not raise rates by June.

Q4 GDP was revised down to a 2.2% annualized pace, from a 2.6% preliminary print. However, the pace of growth has more than halved since the final Q3 number of 5.0%. Chicago PMI for February tumbled to 45.8, well below expectations of 58.2, versus 59.4 in January.

Basically growth has collapsed back to the rather tepid pace that has dominated since the “recovery” began six-years ago. And we’ve expended a lot of time, energy and money to maintain ‘lackluster’. On top of that, there continue to be massive market distortions that put what little we have gained in great peril.

The people of Greece know exactly what I’m talking about. They have received billions in bailouts that have done little to improve their situation. Arguably it has made it worse.

Now, it looks like they have secured a four-month extension, but they are not going to have any better chance in June of resolving their crisis than they do today. In fact, the trache of funds they will receive as part of their extension will go toward servicing the debt they’ve already incurred.

The people of Greece know this is just a very short-term kick-of-the-can and many of them are buying gold as a means to preserve the wealth they still have. “[P]eople up and down the income ladder are emptying bank accounts in anticipation of more financial system chaos in the future – including fear of abandoning the euro and re-introduction of the drachma,” wrote our own Michael Kosares in a post this morning.

Mike goes on to remind us:

“The best time to buy gold is not when you find yourself at the crisis’ epicenter, but well before – when prices are in a normal range and availability is not an issue.”
Posted in Daily Market Report, Gold News, Gold Views |

We’ve Just Received a Bunch of Disappointing News on U.S. Manufacturing

27-Feb (Bloomberg) — Here’s some data you should be watching.

Various regional surveys of manufacturers that have been released over the past couple of weeks have all missed expectations.

Feb. 17: Empire State Manufacturing Survey: 7.78, down from 9.95 previously. Slight miss on expectations of 8.0.
Feb. 19: Philadelphia Fed Business Outlook: 5.2, down from previous 6.3. Far below expectations of 9.0.
Feb. 23: Dallas Fed Manufacturing Activity: -11.2, down from previous -4.4. Far below expectations of -4.0.
Feb. 24: Richmond Fed Manufacturing Index: 0.0, down from previous 6.0. Far below expectations of 6.0.
Feb. 26: Kansas City Fed Manufacturing Activity: 1, down from previous 3. Below expectations of 3.
Feb. 27: Institute for Supply Management–Milwaukee: 50.32, down from previous 51.60. Below expectations of 54.0.
Feb. 27: Chicago Purchasing Managers: 45.8, down from previous 59.4. Far below expectations of 58.0.

While two weeks don’t make a GDP quarter, it is notable that all these survey data points missed both their previous levels and their expectations.

[source]

PG View: Given that Q4 suffered a negative revisions today as well, things don’t seem as rosy as I keep hearing. . .

Posted in Economic Data, Economy |