Monthly Archives: November 2017

House Plans Two-Week Spending Bill to Avoid Shutdown

Bloomberg/Erik Wasson & Anna Edgerton/11-30-17

House Republican leaders plan to seek a two-week spending bill to fund the government until Dec. 22 and avoid a shutdown next week, giving more time for negotiations with Democrats on a longer-term funding plan, two senior House GOP aides said Thursday.

The plan hasn’t been finalized and current funding is set to run out after Dec. 8.

PG View: You had to know another attempt to kick the can was coming . . .

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Posted in Debt, Politics |

The Daily Market Report: Gold Retreats Into Lower Half of Range


USAGOLD/Peter Grant/11-30-17

Gold is down today, slipping to a two-week low within the well defined range. The yellow metal is being weighed by building optimism that tax reform is going to get passed, which has pushed stocks to record highs.

However, the stock market seems to be largely ignoring the very small window to get the Senate and House tax bills reconciled ahead of year-end. There also is the impending threat of a government shutdown at the end of next week, as well as the growing threat of war between the U.S. and North Korea.

Efforts to kick the can on the budget and debt ceiling are already underway. A stop-gap spending bill in the House would keep the government funded through December 22. That would reportedly be followed by a second temporary measure to get the government to the end of January.

One thing is certain, regardless of the outcome on the tax plan, the debt ceiling is going to have to be raised or suspended and the inevitable march higher will continue. That raises the question, who is going to be the buyer of all that new debt? Especially when you consider that the Fed is trimming its balance sheet.

The PCE data that came out this morning was a bit of a mixed bag, but the important core inflation reading rose to 1.4% y/y; still well below the Fed’s target of 2.0%. The spin will be that the uptick portends higher inflation in the months ahead, but the truth is that the trend for the year remains unquestionably negative.

The market still sees a 90.2% probability of a December rate hike. That FOMC meeting is December 12-13.

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

Haley: North Korea has brought the world ‘closer to war’

CNN/Zachary Cohen/11-30-17

Members of the United Nations Security Council strongly condemned North Korea’s successful launch of an intercontinental ballistic missile during an emergency meeting in New York on Wednesday, during which US Ambassador to the UN Nikki Haley said the rogue regime’s actions have brought the world “closer to war.”

“The dictator of North Korea made a choice yesterday that brings the world closer to war, not farther from it,” Haley said. “We have never sought war with North Korea, and still today we do not seek it. If war does come, it will be because of continued acts of aggression like we witnessed yesterday.”

“And if war comes, make no mistake, the North Korean regime will be utterly destroyed,” she added.

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Posted in Geopolitical Risks, North Korea |

Inevitable Stock-Market Correction To Push Gold Out Of Range – Analyst


KitcoNews/Neils Christensen/11-30-17

Record-high equity markets remain the sector to watch as a correction could be the catalyst needed to push gold out of its narrow trading range, according to one market analyst.

While gold remains resilient with prices holding above its 200-day moving average, Fawad Razaqzada, technical analyst at Forex.com said that he can’t get excited about gold until it pushes above the October high at $1,306 an ounce. However, he added that it could only be a matter of time before this happens.

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Posted in Gold News, Gold Price, Gold Views |

Chicago PMI fell to 63.9 in Nov, above expectations of 63.0, vs 66.2 in Oct.

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Posted in Economic Data |

Morning Snapshot: Gold Remains Defensive Within Range

USAGOLD/Peter Grant/11-30-17

Gold is down, maintaining a defensive tone within the well defined range. The yellow metal is being weighed by heightened risk appetite, driven by tax cut optimism, which keeps focus on frothy stocks.

U.S. personal income rose 0.4% in October, above expectations of +0.3%. PCE also bested expectations, although moderated considerable from the negative revised +0.9% in September.

Core PCE inflation — the Fed’s preferred measure of inflation — rose to 1.4%, but remains well below the 2.0% target. Inflation has been trending lower this year, which prompted the central bank to pause the tightening cycle in September.

So, does this uptick signal a reversal of that trend, or merely a brief reprieve? That’s a question the FOMC will have to wrestle with in a couple weeks.

The dollar index was unable to sustain a probe above the 100-day moving average in earlier trading, keeping focus on the downside. Continued weakness in the dollar should help protect the low end of the range in gold as well.

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Posted in Gold News, Gold Price, Gold Views, Snapshot |

PCE chain price index +0.1% in Oct, vs +0.4% in Sep; +1.6% y/y. Ex-food & energy +0.2%, vs upward revised +0.2% in Sep; +1.4% y/y.

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Posted in Economic Data, inflation |

U.S. personal income +0.4% in Oct, above expectations of +0.3%, vs +0.4% in Sep. PCE +0.3% on expectations of +0.2%, vs negative revised +0.9% in Sep.

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Posted in Economic Data |

U.S. initial jobless claims -2k to 238k in the week ended 25-Nov, below expectations of 241k.

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Posted in Economic Data |

Gold lower at 1280.10 (-4.31). Silver 16.48 (-0.09). Dollar better. Euro easier. Stocks called higher. U.S. 10-year 2.39% (unch).

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Posted in Gold Price, Markets, Silver Price |

5 very real scenarios that could lead to a government shutdown

Washington Post/Amber Phillips/11-28-17

Sometime in the next month, Congress could come to the brink of shutting down the government.

Congress has to pass some sort of spending bill by Dec. 8 to keep the lights on, but they may just kick the can down the road until Christmas.

…There are just too many things that could go wrong: a contentious tax debate; intractable policy fights over immigration, health care and spending; and an unpredictable president who, on Tuesday morning, signaled he’s not willing to compromise with Democrats. Democratic leaders returned fire by canceling their negotiating visit to the White House at the last minute.

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Posted in Politics |

The Daily Market Report: Gold Retreats To Midpoint of the Range


USAGOLD/Peter Grant/11-29-17

Gold fell back into the range in early U.S. trading, driven by heavy selling in the futures market after an upward revision to Q3 GDP. That puts the yellow metal back around the midpoint of the well defined 1260.10/1306.04 range that has dominated for more than a month.

Generally good economic data of late has reinforced expectations of a December rate hike, even though Janet Yellen continues to be surprised by “subdued” core inflation. Supposedly, that’s the main reason that the Fed decided to pause their tightening cycle back in September.

October PCE data are out tomorrow, so we’ll see if the central bank’s preferred measure of inflation picked up at all last month. While Yellen continues to think the weakness is transitory, one has to wonder how long this must go on before she changes her tune.

Also weighing on gold is ongoing strength in the stock market, which has been bolstered by optimism about the GOP tax overhaul, which includes a substantial cut to corporate taxes. If the Senate votes along party lines the legislation will clear the Senate, but the Republicans can ill afford any defectors or abstentions.

Senators Ron Johnson (R-WI) and Steve Daines (R-MT) they oppose the legislation in its present form. There are also at least four Republican Senators that have legitimate concerns about how this legislation will impact deficits and the national debt, and even more on the fence for various other reasons.

Nonetheless, the market likes the fact that the legislation continues to move through the process. Whether something gets to the President’s desk before year-end is still very much in doubt.

Perhaps further complicating the matter is the fact that Congress needs to come up with a budget plan by the end of next week, and raise or suspend the debt ceiling. “I don’t see a deal,” said President Trump via Twitter yesterday. Or of course, they could kick that can yet again.

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

Gold ‘breakout’ coming soon to ‘eerily quiet’ market, metals expert says


CNBC/Stephanie Landsman/11-29-17

Gold’s trading activity has been unusually calm this year, but that may be about to change.

…”It’s tough with the events coming up — whether it’s the Fed or tax reform which is very, very important. I think that could lead to volatility,” Dudas said Tuesday on CNBC’s “Futures Now.”

…His 2018 year-end target calls for gold to hit $1400, an 8 percent gain from current levels. According to Dudas, higher inflation expectations in 2018 should be strong enough to push gold prices even higher.

PG View: Dudas sees a 19-20 handle for silver.

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Posted in Gold News, Gold Price, Gold Views |

U.S. NAR pending home sales index +3.5% to 109.3 in Oct, above expectations of 107.6, vs negative revised 105.6 in Sep.

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Posted in Economic Data |

Graham: U.S. ‘headed to war if things don’t change’ with North Korea

Politico/Cristiano Lima/11-28-17

Sen. Lindsey Graham on Tuesday warned that the U.S. could be hurtling toward a war with North Korea “if things don’t change” after the country’s latest weapons test.

Graham, an outspoken defense hawk, told CNN during an interview that he believes “every test puts them closer” to a military conflict.

“We’re headed toward a war if things don’t change,” he told CNN’s Wolf Blitzer.

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Posted in Geopolitical Risks, North Korea |

Morning Snapshot: Gold Retreats Into Range After Q3 GDP Revision

USAGOLD/Peter Grant/11-29-17

Gold is down in early U.S. trading after Q3 GDP was revised higher. The dollar rose, pushing the yellow metal back into the recent range as stronger growth provides further justification for a rate hike in December.

U.S. Q3 GDP was revised up to 3.3%, in line with expectations, versus 3.0% previously and 3.1% in Q2. However, it is widely expected that growth is slowing in Q4. We saw some downward revisions yesterday on the surge in the trade deficits.

While the uptick in growth is encouraging, Janet Yellen will reiterate today before the JEC that core inflation “has remained surprisingly subdued.” According to her prepared testimony, released earlier this morning, she will go on to say “the recent lower readings on inflation likely reflect transitory factors.”

It seems like we’ve been hearing that for an awfully long time. We’ll get the latest inflation reading tomorrow with the release of October PCE data tomorrow. If inflation remained steady or increased in October, the market will remain convinced that the hike is on. If inflation slowed, rate hike expectations will be tempered.

Later this morning we get the October Pending Home Sales Index and EIA crude stocks for last week.

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Posted in Gold News, Gold Price, Gold Views, Snapshot |

U.S. Q3 GDP revised up to 3.3%, in line with expectations, vs 3.0% previously and 3.1% in Q2.

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Posted in Economic Data |

Gold lower at 1287.88 (-6.34). Silver 16.72 (-0.18). Dollar higher. Euro lower. Stocks called higher. U.S. 10-year 2.37% (+4 bps).

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Posted in Gold Price, Markets, Silver Price |

Trump shutdown threat puts Washington, economy on uncertain course

Washington Post/Damian Paletta/11-28-17

Government funding negotiations between President Trump and congressional leaders fell apart before the parties could even get in the same room on Tuesday, moving the federal government a step closer to a partial shutdown and setting up the growing economy for a potential shock in the final weeks of 2017.

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Posted in Politics |

Gold is down slightly ahead of the close, despite DPRK missile launch as tax plan optimism lifts stocks.

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Posted in Gold News |

North Korea fires new ballistic missile, South Korea says

BBC/11-28-17

North Korea has fired a ballistic missile, South Korean media say, quoting military officials.

The news was confirmed by a US government source, according to Reuters news agency.

South Korean news agency Yonhap reported that the missile flew eastward from Pyongsong in South Pyongan province.

It is not clear how far it went or whether it flew over Japan as other missiles did earlier this year.

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Posted in Geopolitical Risks, North Korea |

The Daily Market Report: Gold Remains Firm Near 6-Week Highs


USAGOLD/Peter Grant/11-28-17

Gold is up slightly, despite some robust economic data and some hawkish FedSpeak from Jerome Powell. The yellow metal remains underpinned and within striking distance of yesterday’s 6-week high at 1299.30 as a result of political and geopolitical uncertainty.

Both consumer confidence and the Richmond Fed index significantly beat expectations. U.S. home prices continued to rise in September as well, as indicated by the Case-Shiller and FHFA indexes. All of this bodes well for the highly anticipated December rate hike.

However, an unexpected surge in the trade deficit in October has prompted some negative revisions to Q4 GDP expectations. Goldman Sachs trimmed their outlook from 2.6% to 2.3%, while BofA cut their forecast from 2.3% to 1.8%.

Fed chair nominee Jerome Powell said, “The case for raising interest rates at our next meeting is coming together,” during testimony before the Senate Banking Committee. I’d say the case hasn’t really been made until there is some real evidence of rising inflation. PCE is out on Thursday.

Powell contends that it’s time for normalizing interest rates, but it’s pretty clear that old concept of “normal” no longer applies. I don’t believe anyone asked him at what level Fed funds would be considered “normalized.” Nonetheless, and largely as expected, this testimony seems to verify that Powell is inclined to continue the gradual tightening cycle started by Janet Yellen.

On the political front, President Trump tweeted this morning that he was pessimistic about reaching a deal with Congressional Democrats to fund the government beyond December 8th (that’s just a little more than a week away!). Chuck Schumer and Nancy Pelosi quickly pulled out of a meeting with the President that was scheduled for today. “We believe the best path forward is to continue negotiating with our Republican counterparts in Congress instead,” they said in a joint statement.

While Rand Paul has said he will vote for the Senate tax overhaul, there are still a couple of Republican holdouts. A vote may happen as early as Thursday, but Goldman Sachs sees passage before year-end as about a 50-50 proposition. Certainly if a funding deal isn’t reached by the end of next week, those prospects are likely to dim considerably.

North Korea has reportedly conducted a ballistic missile test. The Japanese Coast Guard has apparently reported that that the missile fell into the sea near Japan. This news is breaking as I write and there will be further updates.

This latest provocation comes after South Korea Unification Minister Cho Myoung-gyon warned that the DPKR is “developing their nuclear capabilities faster than expected and we cannot rule out the possibility Pyongyang may declare the completion of their nuclear program in a year.” This is rather ominous as both the Trump administration and military leaders have declared such a situation as unacceptable.

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

Nancy Pelosi and Chuck Schumer pull out of meeting with Trump

USAToday/Eliza Collins/11-28-17

Democratic leaders pulled out of a meeting scheduled with President Trump on Tuesday after the president tweeted that he didn’t see any possibility of striking a deal with them on immigration or other issues.

“Given that the President doesn’t see a deal between Democrats and the White House, we believe the best path forward is to continue negotiating with our Republican counterparts in Congress instead,” House Minority Leader Nancy Pelosi of California and Senate Minority Leader Chuck Schumer said in a statement.

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Posted in Politics |

Trump’s tax bill faces potential Senate Republican opposition

Reuters/David Morgan/11-27-17

A U.S. Senate Republican tax bill strongly backed by President Donald Trump faced potential opposition on Monday from two Republican lawmakers who could prevent the sweeping legislation from reaching the Senate floor.

Senators Ron Johnson and Bob Corker, both members of the Senate Budget Committee, said they could vote against the tax package at a Tuesday hearing that Republican leaders hoped would send the legislation to a full Senate vote as early as Thursday. Each senator is seeking different changes to the legislation.

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Posted in Politics |

Gold Flirts With $1,300


Bloomberg/Susanne Barton/11-27-17

Gold futures climbed above $1,300 an ounce for the first time in six weeks as the dollar wavered and investors braced for an onslaught of economic data and political news.

Bullion rose for the third time in four days as a gauge of the dollar traded close to the lowest since September. A report later this week is forecast to show the Fed’s preferred gauge of inflation slowed in October, after Chair Janet Yellen cautioned last week that raising rates too quickly risks stranding inflation below the central bank’s target.

Bullion is up almost 13 percent since Dec. 31, on course for the best year since 2010, as geopolitical uncertainty underpins demand for the metal as a haven and divisions among U.S. central bankers persist over the path of rate policy.

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Posted in Gold News, Gold Price, Gold Views |

Richmond Fed Index surged to 30 in Nov, well above expectations of 14, vs 12 in Oct.

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Posted in Economic Data |

U.S. consumer confidence surged to 129.5 in Nov, above expectations of 124.0, vs positive revised 126.2 in Oct.

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Posted in Economic Data |

Trump: ‘I don’t see a deal’ to avoid government shutdown

The Hill/Rebecca Savransky/11-28-17

President Trump on Tuesday cast down on Washington’s ability to avoid a government shutdown, writing on Twitter that he didn’t believe a deal could be reached with Democrats.

…A current funding bill, brokered in a September surprise deal between Trump and Democrats that caught Republicans off-guard, expires on Dec. 8.

Trump’s tweet suggests he may be less interested in a deal this time.

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Posted in Politics |

Gold eases from six-week high ahead of Fed chair confirmation

Reuters/Jan Harvey/11-28-17

Gold eased back on Tuesday from the previous day’s six-week high as the dollar edged up ahead of a confirmation hearing for U.S. Federal Reserve chair nominee Jerome Powell.

In prepared remarks for the hearing released by the Fed on Monday, Powell defended the Fed’s use of its crisis-fighting powers, suggesting a broad extension of current Chair Janet Yellen’s stance on monetary policy.

However, there is some risk around the event which is supporting the dollar after its slide to two-month lows on Monday, analysts said.

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Posted in Gold News, Gold Price, Gold Views |

U.S. Case-Sheller 20-city invest +0.4% (nsa) in Sep; +6.2% y/y. FHFA home price index +0.3% in Sep.

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Posted in Economic Data |