Stock Markets Fall as Worries About Global Issues Persist

01-Sep (NY Times) — Keep the seatbelts on.

Stock markets around the world tumbled again on Tuesday, dashing hopes that financial markets would calm down after two weeks of turbulence.

Investors appear to be growing more nervous about the strength of the global economy. China released a weak report on manufacturing on Tuesday, and an influential international policy maker sounded a downbeat note on the outlook for Asian economies.

After steep declines in the stock markets of Asia and Europe, United States stocks also plummeted. The Standard & Poor’s 500 index fell to 1,913.85, down 2.96 percent. The benchmark is now nearly 10.2 percent off its all-time nominal high, putting it in a “correction,” the Wall Street name for such a decline.

As the selling continued, some analysts said it might be a while before the markets recover.


Posted in Markets |

South Korea exports plunge 14.7%

01-Sep (Financial Times) — South Korea has suffered its heaviest fall in exports for six years, bolstering expectations that the central bank will cut rates next week to tackle a rapidly darkening outlook.

Exports fell 14.7 per cent last month from a year before, the trade ministry said on Tuesday — the biggest decline since August 2009. Domestic consumption also slumped, pulling imports down 18.3 per cent in their biggest drop since February. The trade surplus fell to $4.35bn from $7.72bn in July.

South Korea has been hit hard by the economic slowdown in China, which accounts for about a quarter of its exports, with the value of shipments to the country falling 8.8 per cent in the period. Total exports were dragged down further by a still sharper decline in exports to Europe and Japan, both of which declined by more than a fifth.


Posted in Economy |

IMF’s Lagarde sees weaker than expected global economic growth

01-Sep (Reuters) — Global economic growth is likely to be weaker than earlier expected, the head of the International Monetary Fund said on Tuesday, due to a slower recovery in advanced economies and a further slowdown in emerging nations.

IMF Managing Director Christine Lagarde also warned emerging economies like Indonesia to “be vigilant for spillovers” from China’s slowdown, tighter global financial conditions, and the prospects of a U.S. interest rate hike.

“Overall, we expect global growth to remain moderate and likely weaker than we anticipated last July,” Lagarde told university students at the start of a two-day visit to Indonesia’s capital.


Posted in Economy |

The Daily Market Report: Gold First As Evidence of Global Slowdown Builds

01-Sep (USAGOLD) — Gold firmed on Tuesday, buoyed by renewed global stock volatility and a reversal of the recent rally in oil prices. This was initially triggered after more disappointing Chinese economic data.

China’s manufacturing PMI fell to 49.7 in August from 50.0 in July. The dip below 50.0 is indicative of a contracting manufacturing sector, and leaves the index at its lowest level in three-years. Obviously the continued decline in the all-important manufacturing sector also has negative implications for the broader Chinese economy.

Chinese stocks dropped sharply, but firmed into the close. While the Chinese government announced on Monday that they would no longer be making large-scale stock purchases to underpin the market. Nonetheless, rumors are rife that they were back in today.

Weaker manufacturing in the world’s second-largest economy has understandably weighed heavily on industrial commodities. Oil is off sharply today, retracing most of yesterday’s gains.

Statistics Canada confirmed today that the tenth-largest economy in the world is back in recession. Canadian Q2 GDP came in at -0.5%. Q1 GDP was revised lower to -0.8%.

This comes on the heels of last weeks announcement that Brazil, the eight-largest economy, is now in recession. The IMF warned today that weaker global growth should be expected. “Overall, we expect global growth to remain moderate and likely weaker than we anticipated last July,” said IMF managing director Christine Lagarde.

Lagarde also warned emerging economies to “be vigilant for spillovers” from China’s slowdown. South Korea is already feeling that pain as their exports plunged 14.7%. China accounts for 25% of all Sooth Korean exports.

South Korea has suffered its heaviest fall in exports for six years, bolstering expectations that the central bank will cut rates next week to tackle a rapidly darkening outlook. — Financial Times

As we have suggested in recent commentary, the real story is one of slowing global growth and the deflationary pressures that spring from those growth risks. It remains unlikely in my opinion that the Fed will raise interest rates in this environment.

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

US manufacturing ISM fell to 51.1 in Aug, below expectations of 52.7, vs 52.7 in Jul; prices fall to 39.0, vs 44.00 in Jul.

Posted in Economic Data |

US construction spending +0.7% in Jul, on expectations of +0.6%, vs positive revised +0.7% in Jun.

Posted in Economic Data |

Canadian economy in recession, GDP figures show

01-Sep (TorontoStar) — Canada’s economy recoiled for the second-straight quarter of 2015 — knocking the country backwards into a technical definition of recession, fresh Statistics Canada data revealed Tuesday.

The federal agency said real gross domestic product contracted at an annual pace of 0.5 per cent in the second quarter of the year, which followed a revised decline of 0.8 per cent during the first three months of 2015.

Statistics Canada says the first-quarter performance was weaker than originally estimated, forcing the agency to lower its GDP reading for the first three months of the year from an original estimate of 0.6 per cent.


Posted in Economy |

Canada in recession. Q2 GDP -0.5% (q/q saar), above expectations of -1.0%, vs negatively revised -0.8% (was -0.6%) for Q1.

Posted in Economy |

China jitters send global stocks tumbling

01-Sep (Reuters) — World stocks and commodity prices tumbled on Tuesday, as poor Chinese data saw fears about its economic health intensify.

After a few upbeat days for world markets, concern about China revived after surveys showed its manufacturing sector shrinking at its fastest pace in three years and its services sector also cooling.

Asian stocks, particularly in Japan and Australia , fell overnight, and the gloomy mood extended to Europe. The FTSEurofirst 300 dropped 2.3 percent, following its worst month in four years.

Futures prices also pointed to Wall Street opening 2 percent lower.


PG View: DJIA futures are down more than 400 points, -2.45%.

Posted in Markets |

Gold higher at 1141.69 (+6.38). Silver 14.618 (-0.007). Dollar lower. Euro higher. Stocks called sharply lower. US 10yr 2.16% (-5 bps).

Posted in Markets |

Palladium is up more than $77 (nearly 15%) since setting 5-year lows last week.

Posted in all posts |

It looks more and more that gold will impose itself as the de facto money

by Dan Popescu
31-Aug (GoldBroker) — There is no better way to describe the international monetary system today than through the statement made in 1971 by U.S. Treasury Secretary, John Connally. He said to his counterparts during a Rome G-10 meeting in November 1971, shortly after the Nixon administration ended the dollar’s convertibility into gold and shifted the international monetary system into a global floating exchange rate regime that, “The dollar is our currency, but your problem.” This remains the U.S. policy towards the international community even today. On several occasions both the past and present chairpersons of the Fed, Ben Bernanke and Janet Yellen, have indicated it still is the U.S. policy as it concerns the dollar.

Is China saying to the world, but more particularly to the U.S., “The yuan is our currency but your problem”? China’s move to weaken the Yuan against the US dollar is in fact a huge response to America’s resistance to reforming the international monetary framework. It’s telling American policy makers that the longer they delay acting on reforming the international monetary system, the harder and longer they are going to make it for the U.S. to climb out of their trade deficit and depreciate their currency to where they need it to be.

China has been preparing for this moment for several years by accumulating gold through its central bank but also by using banks/corporations and individuals. It has in recent years signed several international agreements to bypass the US dollar in international trade and use preferably the Yuan. It has created an alternative World Bank (Asian Infrastructure Investment Bank) and a gold fund to invest in gold mining for more than 60 countries. The project is being overseen by the Shanghai Gold Exchange (SGE) and it is likely that the newly mined gold will be either traded on the SGE or be sold directly to the PBoC and other central banks. It has also bought a large amount of gold and kept the exact amount as secret as possible.

…In the conflictual environment we are now in, it looks more and more to me that gold will impose itself as the de facto money. Jim Rickards, in Currencies after the Crash, edited by Sara Eisen, said, “When all else fails, possibly including a new SDR plan, gold is always waiting in the wings as a stable, widely accepted store of value and universal money. In the end, a global struggle between gold and SDRs for supremacy as “money” may be the next great shock added to the long list of historic shocks to the international monetary system.” Any fiat SDR international settlement currency will only be postponing the inevitable “big reset” to some form of gold standard.


Posted in Gold News, Gold Views |

Wall St. set for biggest monthly drop in more than three years

31-Aug (Reuters) — Wall Street was lower on Monday afternoon as investors worried that the Federal Reserve may start raising interest rates in September, although a rally in oil boosted energy stocks.

The market was poised for its worst monthly drop over three years after being pummeled in the past two weeks due to worries about the health of China’s economy and the timing of the first U.S. rate hike in almost a decade.

Comments on Saturday by Fed Vice Chairman Stanley Fischer added to fears that the central bank may raise rates when it meets next month.

Fischer said U.S. inflation would likely rebound as pressure from the dollar fades, allowing the Fed to raise interest rates gradually.

“What you see in the market today is caused by Fischer’s comments over the weekend. If they move in September, it’s going to cast a lot of doubt about where they will stop,” said Stephen Massocca, chief investment officer at Wedbush Equity Management LLC in San Francisco.


PG View: Meanwhile, it looks like gold will end the month nearly 4% higher.

Posted in Markets |

Zijin Mining sees China demand helping gold rise to $1,200/oz in 2016

31-Aug (Reuters) — China’s gold demand is expected to rise and help push the price of bullion back to about $1,200 an ounce next year, the chairman of Zijin Mining Group, the world’s biggest gold producer by market value, said on Monday.

“China’s government is expected to further increase gold reserves as it takes a very small portion of foreign exchange reserves, and demand from jewelry buying and manufacturing will also pick up,” Chen Jinghe said in an interview.


Posted in Gold News, Gold Views |

The Daily Market Report: Gold Consolidated Amid Continued Uncertainty About Fed’s Next Move

31-Aug (USAGOLD) — Gold is modestly higher within the recent range amid ongoing uncertainty as to the likelihood of the first Fed rate hike in nearly a decade. FedSpeak out of the Jackson Hole symposium continues to suggest lift-off is coming, but participants remain cryptic when it comes to the timing of such a move.

The absence of inflation is arguably the biggest hangup when it comes to raising rates. “There is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further,” said Fed Vice Chair Stanley Fischer. It’s good to be optimistic, but it’s not entirely clear what that optimism is based on.

Raising rates before those factors dissipate risks intensifying disinflationary pressures, as well as growth risks, which could lead to the recession that the Fed is so desperate to avoid. In light of this, a September rate hike strikes me as a long-shot.

The extreme market volatility seen last week, further complicates things for the Fed. That actually did more to diminish rate hike expectations than even the dismal Q1 GDP print. There is a pretty broad consensus that a rate hike would lead to further global volatility, and not the “good volatility” associated with sharp stock market gains.

Jobs data for August come out on Friday. There is perhaps some modest downside risk, given the negative trend that has emerged in recent months. Consensus is running about +214k nonfarm payrolls. A sub-200k print would almost assuredly be viewed as the final nail in the coffin for Sep hike, and perhaps the remainder of the year. The jobless rate is expected to tick lower to 5.2%.

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

US Dallas Fed index plunged to -15.8 in Aug, well below expectations of -4.0, vs -4.6 in Jul.

Posted in Economic Data |

US Chicago PMI fell to 54.4 in Aug, below expectations of 54.9, vs 54.7 in Jul.

Posted in Economic Data |

Gold falls, awaiting fresh clues on U.S. rate rise

31-Aug (Reuters) – Gold fell on Monday extending last week’s slide as indications the Federal Reserve may still raise interest rates this year, despite recent market turmoil, offset a retreat in the dollar.

Spot gold fell 0.4 percent to $1,129.01 an ounce by 1348 GMT, while U.S. gold futures for December delivery dropped $5.50 an ounce to $1,128.50. Gold fell 2.3 percent last week after a slide in Chinese equities rattled wider markets.

The Federal Reserve left open the possibility of a September rate rise at a central banking conference at Jackson Hole, Wyoming, at the weekend, though several officials indicated that prolonged financial market turmoil might delay such a move.


Posted in Gold News, Gold Views |

SNB Chairman Jordan says interest rates will stay negative “for some time” as franc remains “clearly overvalued.”

Posted in Currency Wars |

Gold lower at 1128.17 (-4.90). Silver 14.48 (-0.099). Dollar easier. Euro higher. Stocks called lower. US 10yr 2.15% (-3 bps).

Posted in Markets |

Latest SGE deliveries enormous: Physical gold may be nearing crunch point

SharpsPixley/Lawrie Williams/8-29-2015

“August is usually a weak time of year for such gold movements, yet the latest week’s figures are for withdrawals of 73 tonnes – the fourth highest demand week ever! And this follows on from deliveries during the month out of the Exchange of 65 tonnes the previous week and 56 tonnes for the first week of August, making a 3 week total of 194 tonnes of gold. If this kind of demand level continues for the final week of the month – figures should be released next Friday – August will be a remarkable month for SGE gold deliveries at 250 tonnes or more – around 90% of global newly mined gold output for the month. And remember this is physical gold, not paper gold! . . .

All this points to the potential for a real tightness in the supply of physical gold. In truth this has been building for some time now, but it could be getting near the crunch point. . .Sooner or later, physical gold supplies may thus become tight enough to start driving the markets – rather than the paper gold which has been doing so to date. This day may be fast approaching if current gold flows are maintained – or increase as they usually do in the latter part of the year.”

Posted in all posts |

End-of-week top gold stories

Friday, 28-Aug-2015

Ranjeetha Pakiam (Bloomberg) Gold Bucks Commodity Rout as Turmoil Sends Investors to Havens Gold was spared from the global market rout that’s sent commodities to the lowest level since 1999 as investors sought haven assets.

…Mounting concern that global growth is faltering pummeled shares, emerging-market currencies and commodities last week, and the selloff deepened on Monday.

Note: Gold displayed remarkable resilience during the latest “Black Monday” rout as safe-haven demand offset broad-based deleveraging pressures.

Anora Mahmudova (MarketWatch) U.S. stocks plummet at open; Dow drops 1,000 points U.S. stocks plunged to lowest levels since last October after a rout in Chinese stocks triggered a world-wide selloff of risky assets such as equities. The Dow Jones Industrial Average dropped 1000 points, or 6%, to 15,441. The S&P 500 opened 100 points, or 4.9%, lower at 1,874. The benchmark index is down more than 10% from its peak reached on May 21. The Nasdaq Composite began the day down 360 points, or 7.6%, to 4,349.

Note: Monday was an exciting day indeed for investors world wide . . . and generally not in a good way. While stocks recovered later in the week, many worry that the rout was a harbinger of things to come.

Koos Jansen (BullionStar) Theory On China’s Gold Strategy Koos Jansen’s latest study offers initial proof of a speculation we published here when China announced its change in the yuan price discovery mechanism. “China says it wants a say in the gold price and that’s why it established its own fix outside of London and New York’s purview. If the price of gold in yuan goes higher, it adds value to both Chinese gold reserves, which are likely much higher than recently announced, and to the asset structure of the Chinese people and banks that are hoarding it. In fact the low announcement may have been in anticipation of the devaluation strategy.

Note: The number of U.S. investors saving in gold remains disturbingly low. Take heed people! The dollar is part of the “rodeo” too and has dropped about 7% from the high set early this year.

Matt Egan (CNNMoney) Trading was halted 1,200 times Monday The selling on Wall Street was so dramatic Monday that it triggered unprecedented emergency freezes on stocks. Stocks and exchange-traded funds were automatically halted more than 1,200 times, according to Nasdaq.

The high level of trading pauses highlights just how extreme the selloff was in a short span of time. Fears about China’s economic slowdown caused the Dow to plummet over 1,000 points when the market opened. The Dow ended down 588 points, its worst decline since August 2011.

Note: Particularly interesting was the illiquidity of ETFs during the market rout. That should be an eye-opener for every investor, warranting a reexamination of your portfolio diversification. Do you have enough physical gold?

John Crudele (New York Post) Crudele says Washington attempting to rig the stock recovery, recommends “switching off” CNBC One of these mornings — or overnight — some mysterious buyer will suddenly start purchasing an abnormal amount of Standard & Poor’s 500 stock index futures. So we get down to direct intervention — just like China did. Only Washington, with Wall Street as its co-conspirator, won’t be as sloppy as Beijing was. That’ll get the stock market moving higher and everyone will pretend that the buyers are just ordinary people who suddenly think Wall Street is oversold.

MK Note: In this cogent piece written two days ago, the New York Post’s John Crudele accurately predicted events and provided a pretty good summary on the true forces at work. He is not happy about the cozy relationship between Wall Street and Washington nor the coverage at our favorite stock-hyping cable channel (which he says “tens of thousands” have already abandoned). This piece will confirm what a lot of you are already thinking. . . . .

(Bloomberg) China Sells U.S. Treasuries to Support Yuan China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.

Note: Interesting turn of events. Devalue against the dollar and then sell Treasuries to prevent the yuan from falling further against the dollar.

Michael J. Kosares (USAGOLD) Key trade in gold market signals China’s intentions WSJ: “In recent years, China has come to shape the very way in which commodities are bought and sold, traditionally the preserve of financial centers such as London and New York. Late last month, the price of gold fell sharply, to a five-year low, within minutes of Asian markets opening. That came after almost five metric tons of gold—close to $200 million of the metal—was sold on the Shanghai Gold Exchange, according to ANZ Bank. The trade was seen by market participants as a key moment reflecting how China had moved Asian commodity markets away from just following the overnight pattern of U.S. and European trading.”

MK Note: The premise of this article is that China will continue to play a key role in shaping commodities’ markets in the years to come, despite the current slowdown, based on its sheer scale. If you follow this blog, you already know of the infrastructure China is putting in place to influence the gold trade and insert itself as a third gold trading center along with London and New York. We should note that the five tonne trade cited above came after the price had dropped. Keep in mind that Shanghai is a physical market exchange. In other words, someone in China took advantage of the price drop to force the market into a delivery of five metric tonnes of the metal.

Posted in Gold News, Gold Views |

The case for retiring another ‘barbarous relic’

23-Aug (Financial Times) — The fact that people treat cash as the go-to safe asset when banks are teetering is heavy with historical irony. Paper money was once the symbol of monetary irresponsibility. But even as individuals have taken recent crises as reasons to stock up on banknotes, authorities would do well to consider the arguments for phasing out their use as another “barbarous relic”, the moniker Keynes gave to gold.

Already, by far the largest amount of money exists and is transacted in electronic form — as bank deposits and central bank reserves. But even a little physical currency can cause a lot of distortion to the economic system.

…Fortunately some benefits of electronic money can be reaped without banning all cash outright. Cash could remain accessible but at a cost, so that its users pay for the privilege of anonymity — and remain affected by monetary policy. Dated banknotes could see their value as legal tender gradually fall over time; banks could be charged for swapping electronic reserves for physical cash and vice versa. The benefits of cash are significant — but they need not be offered for free.


PG View: Positively insidious. In this scenario, you become a hostage of a banking system that pays you next to nothing (or less than nothing) for the use of your money. If you opt to hold physical cash, it comes with an expiration date.

Take some of your wealth out of the banking system and store it in gold. The yellow metal is shelf-stable, with no expiration date!

Posted in Gold News, Gold Views |

The Daily Market Report: Gold Rebounds Amid Mixed FedSpeak

28-Aug (USAGOLD) — Gold rebounded within the range in early trading on Friday, underpinned by some dovish FedSpeak from Jackson Hole and a downward revision to August consumer sentiment. The yellow metal remains comfortably in the upper half of the recent range.

Fed-people have been out in force in advance of the Jackson Hole symposium. Not surprisingly perhaps, it’s been a mixed back of dovish and hawkish comments, perhaps slightly biased to the former. However, nobody seems terribly willing to ‘officially’ take September off the table.

Recent market volatility and the Fed’s complete and utter failure to generate inflation anywhere close to target have been the key precipitating factors. Earlier in the week, NY Fed President William Dudley said, “From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago.”

Fed Vice-Chair Stanley Fischer weighed in today on that volatility with this comment: “If you don’t understand the market volatility—and I’m sure we don’t fully understand it now, there are many many analyses of what’s going on—yes it does affect the timing of a decision you might want to make.”

Minneapolis Fed President Kocherlakota doesn’t see a September rate hike as appropriate; warning that any such move could risk the Fed’s credibility. It certainly would suggest that the Fed doesn’t take its price stability mandate very seriously. Kocherlakota actually thinks it will be “several years” before the Fed’s 2% inflation target will be achieved.

The obvious question being: Then why hike now? According to the FT, “The dominant argument for beginning the tightening cycle is to have enough “ammunition” for a new stimulus when the next downturn comes.”

Kocherlakota not only thinks the Fed should hold off on raising rates, but went so far as to say he would be in favor of further accommodations if that option were presented. A thinly veiled hint at QE4.

“The fact is, any one who doesn’t imbibe in the Keynesian Kool-Aid dispensed by the central banking cartel can see in an instant that 80 months of ZIRP has done exactly nothing for the main street economy,” quipped David Stockman in a post today. Even the Kansas City Fed has acknowledged the declining efficacy of easy policy, noting that increases in monetary policy accommodation do not raise the economy’s productive capacity.

Slow recoveries followed recessions in 1990-91, 2001, and 2007-09, a contrast to the much more rapid recoveries that followed pre-1990 recessions. These slow recoveries occurred despite sizeable monetary accommodation from the Federal Reserve, primarily through reductions in short-term interest rates. — Federal Reserve Bank of Kansas City, Economic Review

Perhaps therein lies the simple answer to the “why now” question: ZIRP and QE have simply not worked. The aforementioned Stockman piece provides rather compelling answers as to why that is so.

I have maintained that the Fed will not tighten this year because they aren’t achieving their stated goals. I agree with Kocherlakota, that such a move may well result in a serious credibility crisis for the Fed. How would it look if they tighten now and precipitate the very recession they are hoping to prevent — only to turn around and cut rates again? Arguably the massive volatility in stocks is already reflecting diminished central bank credibility.

The August jobs report comes out at the end of next week. The market is going to watching those data very closely, as it always does, hoping for some clarity one way or the other on lift-off.

Median expectations for nonfarm payrolls is +205k, down from +210k in July. The jobless rate is expected to tick lower to 5.2%.

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

The Central Bankers’ Malodorous War On Savers

28-Aug (ZeroHedge) — Well, that didn’t take long!

After just three days of market turmoil the monetary politburo swung into action. This time they sent out B-Dud to promise still another monetary sweetener. Said the head of the New York Fed,

“From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago.”

Needless to say, “B-Dud” is a moniker implying extreme disrespect, and Bill Dudley deserves every bit of it. He is a crony capitalist fool and one of the Fed ring-leaders prosecuting a relentless, savage war on savers. Its only purpose is to keep carry trade speculators gorged with free funding in the money markets and to bloat the profits of Wall Street strip-mining operations, like that of his former employer, Goldman Sachs.

The fact is, any one who doesn’t imbibe in the Keynesian Kool-Aid dispensed by the central banking cartel can see in an instant that 80 months of ZIRP has done exactly nothing for the main street economy. Notwithtanding the Fed’s gussied-up theories about monetary “accommodation” and closing the “output gap” the litmus test is real simple.

…What these unspeakably dangerous fools argued was that cash should be abolished so that the central banks could get on with their job of stimulating “depressed” economies by setting interest at negative nominal rates.

In other words, it is apparently not enough that someone who saved $150,000 over a lifetime of work and foregone consumption should earn just $1 per day of interest on liquid savings deposits or treasury bills. No, the central bankers’ posse now wants to actually expropriate these savings by extracting a monthly levy, and by throwing anyone in jail who attempts to hide their wealth outside the controlled banking system by keeping it in private script or unconfiscated greenbacks.


Posted in Debt, Economy |

Greece’s Syriza to win election but face setback, poll shows

Former Greek Prime Minister Alexis Tsipras’ leftist Syriza will emerge as the biggest party after next month’s election but without the sizeable margin it was hoping for, the first major opinion poll since he resigned last week showed.

The survey also found that almost two thirds of voters felt Tsipras should not have sought a fresh mandate and that his favored coalition ally would not make it into parliament.

That suggested his gamble to call early elections to consolidate his power base could backfire, though over quarter of voters remained undecided, making the final outcome far from clear.


Posted in European Debt Crisis |

Fed’s Kocherlakota: 2015 rate rise not appropriate

28-Aug (CNBC) — Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said Friday he does not believe the central bank should raise interest rates this year, and policymakers may have to consider further quantitative easing.

“Barring big changes in the data between now and September … I don’t see a near-term increase in interest rates as being appropriate, and by near term I mean really through the course of 2015,” he said in an interview on CNBC’s “Squawk Box.”

If the Fed raises interest rates given the current inflation outlook, market watchers will conclude the central bank doesn’t think it can hit 2 percent inflation, he said. As a result, the Fed’s credibility in terms of people’s beliefs about its long-term inflation goals would suffer, he added.

“You’re already seeing that in market data, so this is not some economic theory. This is actually reality,” he said.

It will take a few years to get back to the Fed’s inflation target, he said.


Posted in Central Banks, Monetary Policy, QE |

University of Michigan sentiment (final) revised down to 91.9, below expectations of 93.2, vs 92.9 preliminary read and 93.1 in Jul.

Posted in Economic Data |

Gold pops 1% on latest dovish FedSpeak, negative consumer sentiment revision; now up more than $11 on the day.

Posted in Gold News, Gold Views |

Gold Prices Higher But Fed Rate Hike Prospects Cap Gains

28-Aug (Wall Street Journal) — Gold prices were slightly higher on the London spot market Friday, but the prospects of a stronger dollar and further good economic news out of the U.S. will likely keep a cap on the price of the metal in the coming weeks.

Gold missed out on the big gains across commodities on Thursday, as the positive U.S. economic data that pushed oil and metals higher dulled traders interest in safe haven assets and increased the likelihood of a September interest rate rise.

On Friday gold traded slightly higher on a day when many commodities appeared to lack firm direction.


Posted in Gold News, Gold Views |