Author Archives: News

Daily Market Report: Gold Remains Defensive as Risk Appetite is Stoked


USAGOLD/Peter Grant/04-25-17

Gold extended modestly lower, exceeding yesterday’s low at 1265.12 as risk assets continue to benefit from the French election results and the prospect of much lower U.S. corporate taxes. The weaker dollar and geopolitical risks continue to offer some support.

“Between the France election and the prospects of corporate tax cuts being proposed in the next few days, it’s clearly a risk-on backdrop.” — Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Group Ltd

The Trump administration’s pitch for a 15% corporate tax rate has stock market investors all excited, but it strikes me as unlikely such a low rate will actually get through Congress. This could be typical Trump negotiating tactics; ask for the moon and negotiate to some compromise.

Nonetheless, stocks are charging higher and the dollar index has fallen to levels not seen since November. According to Reuters, ECB sources are suggesting there could be a hawkish signal in June.

Three sources on and close to the European Central Bank’s Governing Council told Reuters that with the threat of a run-off between two eurosceptic candidates in France averted, and with the economy on its best run in years, many rate setters see scope for sending a small signal in June towards reducing monetary stimulus. — Reuters

The next ECB policy announcement is actually tomorrow, but they are widely expected to hold steady. Even so, there could be some sense of relief communicated that might be a harbinger of a more hawkish tone in June.

In Japan however, BoJ Governor Kuroda sees QE continuing for some time. Kuroda said a stronger yen could delay attainment of their 2% inflation goal, so of course that’s the last thing the BoJ wants.

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

U.S. FHFA home prices index +0.8% to 244.8 in Feb. Case Shiller 20-citites index (nsa) +0.4% to 193.5 in Feb.

Posted in Economic Data |

U.S. new home sales +5.8% to .621M in Mar, above expectations of .585M, vs negative revised .587M in Feb.

Posted in Economic Data |

U.S. consumer confidence slipped to 120.3 in Apr, below expectations of 123.0, vs negative revised 124.9 in Mar.

Posted in Economic Data |

Gold eases in French election afterglow; N.Korea woes limit losses


Reuters/Swati Verma/04-25-17

Gold prices eased on Tuesday as investor sentiment remained skewed towards riskier assets in the wake of the French election results last weekend, though concerns over Korean peninsula limited the safe-haven’s losses.

…”People are going on the risk-on scenario (after French election results), but gold didn’t really fall too far away,” said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.

“There are more people who are still worried about not only France but other European countries, Trump policies and North Korean worries…investors prefer to hold gold rather than sell it off.”

Posted in Gold News, Gold Views |

White House considers ‘art of compromise’ to avoid shutdown

CNN/Jeremy Diamond/04-25-17

Less than a week before the federal government is scheduled to shut down absent a funding bill, the White House’s battle lines remain fuzzy.

…Hours after Trump touted the importance of building a wall, a White House official signaled later Monday that the President won’t insist on that funding in a spending bill to keep the government running past Friday. The official said that even some funding for “border security” could satisfy the President at this point, with the expectation that wall funding would come in future spending bill negotiations.

Posted in Politics |

Morning Snapshot: Gold retests yesterday’s post French election lows

USAGOLD/Peter Grant/04-25-17

Gold remains defensive as markets reverse out the French election risks, and look ahead to the May 7 run-off, where centrist candidate Emmanuel Macron is expected to handily beat Marine Le Pen. Investors will be watching the polls closely in the weeks ahead to see if Le Pen can narrow the differential.

Weakness in the dollar that is associated with the rebound in the euro will help to limit the downside in gold. Elevated geopolitical tensions provide an underpinning to the yellow metal as well.

North Korea staged a massive artillery drill today to celebrate the anniversary of their army’s founding. So far, no ballistic missiles or nukes have been tested. Meanwhile the nuclear submarine USS Michigan arrived in the area.

U.S. consumer confidence, new home sales, Case-Shiller home prices and the Richmond Fed index are out later this morning. Tomorrow the ECB will announce policy. They are expected to hold steady.

Posted in Gold News, Gold Views, Snapshot |

Gold lower at 1268.62 (-9.13). Silver 17.81 (-0.183). Dollar lower. Euro higher. Stocks called higher. U.S. 10-year 2.30% (+3 bps).

Posted in Markets |

The U.S. Makes It Easy for Parents to Get College Loans—Repaying Them Is Another Story

WSJ/Josh Mitchell/04-24-17

Millions of U.S. parents have taken out loans from the government to help their children pay for college. Now a crushing bill is coming due.

Hundreds of thousands have tumbled into delinquency and default. In the process, many have delayed retirement, put off health expenses and lost portions of Social Security checks and tax refunds to their lender, the federal government.

Student loans made through parents come from an Education Department program called Parent Plus, which has loans outstanding to more than three million Americans. The problem is the government asks almost nothing about its borrowers’ incomes, existing debts, savings, credit scores or ability to repay. Then it extends loans that are nearly impossible to extinguish in bankruptcy if borrowers fall on hard times.

…Roughly eight million Americans owing $137 billion are at least 360 days delinquent on federal student loans, nearly the number of homeowners who lost their homes because of the housing crisis. More than three million others owing $88 billion have fallen at least a month behind or have been granted temporary reprieves on payments because of financial distress.

Posted in Debt |

White House to brief full Senate as Trump calls North Korea ‘real threat to the world’

MarketWatch/Robert Schroeder/04-24-17

The Trump administration is preparing to brief all 100 senators this week on the situation in North Korea, as President Donald Trump calls the country a “real threat to the world” and confers with the leaders of China, Japan and Germany.

The unusual full-Senate briefing is scheduled for Wednesday, according to reports, and comes after Trump criticized North Korea’s “continued belligerence” in a phone call with President Xi Jinping of China on Sunday. In a separate call with German Chancellor Angela Merkel on Monday, Trump discussed “the urgent security challenge posed by North Korea,” the White House said.

The administration has expressed concern over Pyongyang’s missile tests and nuclear ambitions.

Posted in Geopolitical Risks |

Far-right French presidential candidate Marine Le Pen is stepping down from head of National Front

AP, via BusinessInsider/04-24/17

French presidential candidate Marine Le Pen has announced that she is temporarily stepping down as head of her National Front party.

Monday’s move appears to be a way for Le Pen to embrace a wide range of potential voters ahead of the May 7 runoff between herself and Emmanuel Macron, the independent centrist who came in first in Sunday’s first round.

“Tonight, I am no longer the president of the National Front. I am the presidential candidate,” she said on French public television news.

Posted in Politics |

The Daily Market Report: Gold Pressured on Revived Risk Appetite


USAGOLD/Peter Grant/04-24-17

Gold remains lower on the day, as “risk-on” seems to be the order of the day following the French election results. However, the yellow metal is already more than $10 off the intraday low, buoyed by persistent geopolitical risks and a weaker dollar.

The outcome of the French election was pretty much as expected, with Macron and Le Pen advancing to the May 7 run-off. Europhile centrist Macron is widely expected to be the winner of that contest, which has reignited risk appetite amid a belief that there is little chance of a Frexit vote under his leadership.

Gains in the euro have pushed the dollar lower, with the dollar index engaged in a retest of the late-March low at 98.86. A breach of this level would mark a 6-month low in the greenback, providing additional support for gold.

North Korea is threatening to sink the USS Carl Vinson carrier group, while China is asking for both the DPRK and U.S. to exercise restraint. Chinese President Xi reportedly said that he “hopes all parties remain restrained instead of intensifying the situation.”

There is speculation that tomorrow’s anniversary of the Korean People’s Army on Tuesday will be marked by either a nuclear or ballistic missile test. That could be the provocation that elicits a military response from the U.S.

Meanwhile, in the Middle East, the top U.S. general in Afghanistan suggested that the Russians may be providing material support, including weapons, to the Taliban. If found to be true, it would be a serious escalation of tensions between the U.S. and Russians.

Oil prices have extended to the downside for a fourth consecutive day, touching the $49 level for the first time in about a month. The retreat in energy prices undermines the Fed’s contention the inflation is picking up, further tempering rate hike expectations for June.

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

Oil Falls Sixth Day as U.S. Rig Count Gain Seen Boosting Output

Bloomberg/Mark Shenk/04-23-17

Oil fell a sixth day as the ramp-up of U.S. drilling signaled further production gains in the world’s biggest crude-consuming nation.

Futures extended last week’s 6.7 percent decline in New York. U.S. explorers added 5 rigs last week to cap the longest stretch of gains since 2011, Baker Hughes Inc. data show. An OPEC committee concluded that a six-month renewal of an output-cut deal is needed, delegates with knowledge of the matter said. Money managers boosted wagers that U.S. oil futures would increase in the week to April 18, government data showed. Oil rose earlier along with global equities while the dollar weakened after the first round of the French presidential election.

Posted in Deflation, inflation, Markets |

Dallas Fed index slips to 16.8 in Apr, below expectations of 17.5, vs 16.9 in Mar.

Posted in Economic Data |

Trump and Congress eye shutdown showdown over border wall

Politico/Rachael Bade, Burgess Everett & Kyle Cheney/04-23-17

President Donald Trump and Congress are on a collision course over government funding this week, as the White House demands money for a border wall with Mexico and Democrats vow it will never see a penny.

But just five days out from a government shutdown, Trump appears headed for disappointment. Democrats are signaling they’re unlikely to cave, and Hill Republicans are already pressing the administration to fight another day.

Posted in Politics |

U.S. Chicago Fed Index fell to 0.08 in Mar, vs negative revised 0.27 in Feb (was 0.34).

Posted in Economic Data |

Hedge Funds Jump on Gold for Life Raft as Dollar Ship Sinks


Bloomberg/ Luzi-Ann Javier/04-24-17

Hedge funds increased their wagers on a gold rally to the highest since November, betting that this year’s 11 percent advance has more to go. Investors are also loading up on the metal through exchange-traded products, pouring $487 million into SPDR Gold Shares on Wednesday. That was the biggest daily inflow into the world’s top bullion ETF in seven months.

Gold is shining bright as the dollar trades near the lowest since November, lifting the appeal of alternative assets. At the same time, escalating tensions between the U.S. and North Korea have boosted demand for a haven, while delays in implementation for President Donald Trump’s campaign promises to cut taxes and pursue a pro-growth agenda are clouding the outlook for earnings.

“There’s an appetite for storehouses of wealth at this point,” said Peter Sorrentino, the Dallas-based chief investment officer of Comerica Asset Management Group, which oversees $43 billion, including gold ETFs. “Rather than run the risk of having your dollars eroded on a relative basis, you can use gold as a life raft to sort of avoid a sinking ship.”

Posted in Gold News, Gold Views |

Gold slides after French election revives risk appetite

Reuters, via CNBC/Maytaal Angel/04-24-17

Gold fell more than 1 percent on Monday, marking its biggest tumble in more than a month, after the market’s favored candidate won the first round of the French election, easing worries over a political shock in the second round. Centrist Emmanuel Macron took a big step towards the French presidency on Sunday by winning the first round of voting, with the latest opinion polls showing him as strong favorite to beat far-right candidate Marine Le Pen in the final vote.

The news represented a huge defeat for anti-European Union forces on the right and left of French politics. It also sent European shares vaulting higher, boosted the euro by as much as 2 percent at one point and sparked a sell-off in safe-haven bullion.

Posted in Gold News, Gold Views |

Morning Snapshot: Gold falls on revived risk appetite after French election

USAGOLD/Peter Grant/04-24-17

Gold retreated below the 1270 level as global risk appetite surged in the wake of the French election results. As anticipated, Emmanuel Macron and Marine Le Pen will advance will advance to the run-off election on May 7, with the former favored to win.

This is the first time in more than sixty-years that the two main political parties in France do not have a candidate in the run-off, reflecting the ongoing dissatisfaction with the political status quo. To the relief of many, at least one of the finalist is a euro-friendly centrist that started his own party to get into the race.

The revived risk appetite has caused the euro and equities to surge. The dollar index fell to pressure the 98.86 low from late March, which has limited the downside in the yellow metal somewhat. Persistent geopolitical tensions continue to help underpin gold as well.

Posted in Gold News, Gold Views, Snapshot |

French election: Emmanuel Macron and Marine Le Pen to fight for presidency

BBC/04-24-17

Centrist Emmanuel Macron has gone through to the second round of the French election, where he will face far-right leader Marine Le Pen.

Mr Macron, a former banker, is seen as a political newcomer – and ran without the backing of an established party.

After topping Sunday’s vote, he is now favourite to win the run-off on 7 May.

It is the first time in six decades that neither of France’s main left-wing or right-wing parties has had a candidate in the second round.

Posted in Politics |

Gold lower at 1270.74 (-13.68). Silver 17.84 (-0.085). Dollar lower. Euro higher. Stocks called higher. U.S. 10-year 2.29% (+4 bps).

Posted in Markets |

Paris shooting casts shadow over French vote

FT/Michael Stothard, Anne-Sylvaine Chassany & Harriet Agnew/04-21-17

The murder of a policeman in the centre of Paris has dominated the final day of France’s volatile presidential election campaign, fuelling security fears and sparking concern that undecided voters would be influenced by the terror attack.

…Bernard Cazeneuve, the prime minister, called on the French people not to let the attacks shift their vote, saying they should “not succumb to fear, manipulation, division”. He added that “nothing must hamper this democratic moment, essential for our country”.

Posted in Markets, Politics |

The Daily Market Report: Gold Firms Into Weekend and French Election


USAGOLD/Peter Grant/04-21-17

Gold has rebounded intraday to approach the 5½-month highs set early in the week. Silver on the other hand remains defensive below $18, pushing the gold/silver ratio to a 14-week high approaching 72.

Gold is being underpinned by persistent geopolitical risks and uncertainties associated with the French election this weekend. Silver may be suffering from renewed worries over disinflation as oil gives back most of the gains accrued over the over the previous 3-weeks.

Crude has plunged more than 7% this week after gains earlier in the month stalled ahead of the important $55 level. Rising U.S. production and concerns that the OPEC production cut agreement — and perhaps OPEC itself — will fall apart, have all weighed on oil.

A sustained drop in energy prices will further temper inflation expectations, that are already on the ropes in the wake of the weak CPI data that were reported last week. The dimming of price risks has tempered rate hike expectations, driving U.S. yields lower and contributing to a weaker dollar over the past two weeks.

Fed Vice Chair Fischer told CNBC today that he still sees three rate hikes this year, but added “we’re not tied to three.” He expressed concern — as Janet Yellen has recently — about the slowing economy. The Atlanta Fed’s GDPNow forecast for Q1 is a scant +0.5%.

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

Hedge fund legend Paul Tudor Jones says this ‘terrifying’ chart should freak out the Fed

CNBC/John Melloy/04-21-17

[Paul Tudor Jones], who made a large part of his fortune by calling the infamous stock market crash in October 1987, referred to a chart of the market’s value relative to the country’s economy and said it should be “terrifying” to central bankers, namely Federal Reserve chief Janet Yellen, according to the report.

…The trader said that low interest rates instituted by central bankers around the world have ballooned U.S. stock market valuations back to 2000 levels, right before the dot-com bubble burst and shares plunged.

This chart is sometimes called the “Buffett Indicator” because the Berkshire Hathaway chairman once referred to it in an interview as one of the key measures of valuation he tracks.

Posted in Economy, Markets |

Oil falls below $50 a barrel as OPEC cut doubts put oil on pace for big weekly drop


Reuters, via CNBC/04-21-17

Oil prices fell more than 2 percent on Friday and were on course for their biggest weekly drop in a month due to doubts that an OPEC-led production cut will restore balance to an oversupplied market.

…The chief executive of France’s Total warned this week that prices could fall further due to rising U.S. production.

Posted in Markets |

U.S existing home sales +4.4% in Mar to 5.710M pace, above expectations of 5.550M, vs negative revised 5.470M in Feb.

Posted in Economic Data |

U.S. Markit flash manufacturing PMI fell to 52.8 in Apr, below expectations of 53.8, vs 53.3 in Mar; services 52.5 on expectations of 53.2.

Posted in Economic Data |

Gold steady as investors turn cautious ahead of French polls


Reuters/Sethuraman N R/04-21-17

Gold held steady on Friday, with safe-haven demand remaining intact as investors kept an eye on the upcoming French presidential vote that is seen as too close to call.

…”I would expect investors to stay on the fence… they would likely be market-watching rather than market-trading ahead of the French elections on Sunday, especially when there is no clarity,” OCBC analyst Barnabas Gan said.

“Into the near term, if the geopolitical tensions intensify, there is a chance that gold prices will reach $1,300 or more.”

Posted in Gold News, Gold Views |

Grab Your Pitchforks, America, Your 401(K) May Need Defending from Congress

WSJ/Jason Zweig/04-21-17

The lucky participants in one of the best retirement plans around are coming after yours with a meat cleaver.

In the early stages of negotiating tax reform, Congress is already considering whether to reduce the benefits of contributing to a 401(k) and similar retirement plans — even as U.S. representatives and senators bask in the safety of the pension system that taxpayers fully fund for federal employees.

Alongside several million U.S. government workers, members of Congress participate in the Federal Employees Retirement System, which wraps their current savings and future pensions in a cushion of comfort that most American workers can only dream of.

PG View: The war on saving continues . . .

Posted in all posts |

A ‘disaster for France’ if Melenchon, Le Pen go head-to-head in presidential runoff

MarketWatch/Mike Bird & Christopher Whittall/04-19-17

With the start of the French election just days away, investors are contemplating their nightmare scenario: a choice between far-left and far-right candidates.

In recent days, a surge in opinion polls has placed Jean-Luc Mélenchon, a left-wing firebrand who promises higher wages and fewer working hours, as a potential candidate to move past this Sunday’s first round of voting. That could set up a second-round vote in May 7 with Marine Le Pen, an economic nationalist who wants to pull France out of the euro.

…A runoff between Ms. Le Pen and Mr. Mélenchon “would be a disaster for France…[and] a disaster for Europe,” said Patrick Zweifel, chief economist at Pictet Asset Management.

Under that scenario, investors would dump the debt of France and of weaker European economies and send the euro sharply lower, analysts say.

PG View: Apparently some people are thinking about this possibility . . .

Posted in Politics |