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August 11, 2018 | Spectacular Gold COT Report: Prepare For A Huge Six Months

No need to mince words anymore. If the futures market still influences gold’s price, then that price is going to spike. And silver is better than gold. Since January, gold futures speculators have been trending from extremely bullish to scared short. And in the week ending last Tuesday (the most recent data available) they appeared […]

August 10, 2018 | Why Aren’t Widespread Labor Shortages Translating Into Roaring Wage Inflation?

Google “labor shortage” or “wage hikes” and the result is a picture of an overheating economy. Some examples from August 10: 911 Emergency: Call Centers Can’t Find Workers Why Disneyland’s $15-an-hour labor deal is a win for workers everywhere Colorado small businesses seek help with labor shortage Washington growers struggle with labor shortage Now hiring: […]

August 6, 2018 | Another Way Of Looking At The Pension Crisis, As “A Stealth Mortgage on Your House”

Money manager Rob Arnott and finance professor Lisa Meulbroek have run the numbers on underfunded pension plans and come up with an interesting – and highly concerning – new angle: That they impose a “stealth mortgage” on homeowners. Here’s how the Wall Street Journal reported it today: The Stealth Pension Mortgage on Your House Most […]

August 5, 2018 | Another Week, Another Improvement In Gold’s Prospects

The past few months have added some cred to the “sell in May and go away” rule of thumb for precious metals, as gold’s price action has been both boring and depressing. It’s now close to its 12-month low, while a lot of miners are providing material for the old joke: “Want to make a […]

August 3, 2018 | Global Housing Bubble Is Popping. Here Comes The “Reverse Wealth Effect”

Just a few months ago, real estate was on fire. Prices were blowing past records set during the previous decade’s housing bubble as desperate buyers bought whatever was available at above the asking price while homeowners, confident that prices would keep rising, held out for the next big pop to sell. Notice on the following […]

August 2, 2018 | New Age Fiscal Stimulus Is Unprecedented — And Ominous

In a normal business cycle, the economy expands for a while and businesses hire lots of new people at somewhat higher wages, generating enough tax revenue to shrink the government’s budget deficit – and in rare cases produce a surplus. So, for a while, the government borrows less money. Not this time. The current recovery […]

July 29, 2018 | Is The Interest Rate Death Spiral Finally Starting?

The yield on Italy’s 10-year bond is up by about 100 basis points from its 2018 low. Meanwhile, its government continues to borrow money and roll over its existing debt. But now it has to do so at ever-higher interest rates, which means it has to pay more interest, which means its deficits are rising, […]

July 23, 2018 | Welcome To The Third World, Part 28: The “Bottom Half” “Bolsters” The Economy By Going Into Debt

For maybe the best example of how financial trends are diverging at the opposite ends of the wealth spectrum, contrast the cash flowing into the accounts of the already-rich with the debt accumulating in the accounts of the “bottom half”: Mortgage, Groupon and card debt: how the bottom half bolsters U.S. economy (Reuters) – By […]

July 22, 2018 | Public Sector Pensions: The Parasite Devours Its Host

The Wall Street Journal recently highlighted a better method of analysing the impact of public sector pensions on state and local budgets. The results are ominous for government finances, the bond markets, and pretty much everything else: Why Your Pension Is Doomed A new study shows that benefits are rising faster than GDP in most […]

July 15, 2018 | US Housing Bubble Enters Stage Two: Suddenly-Motivated Sellers

Housing bubbles proceed in fairly predictable stages. Stage One is long and (initially) slow, fueled by excess central bank money creation or foreign demand or some other source of liquidity that encourages large numbers of people to buy houses. At first, sellers remember the peak prices from the previous bubble and aren’t willing to sell […]

July 14, 2018 | Student Debt Bubble Expands As Parents Do More Of The Borrowing

Not so long ago, student debt was mostly the responsibility of students. That is, you paid for college with loans and then paid off those loans with the proceeds of the good job you got with an advanced education. These days it’s a little different. The cost of higher education is soaring, the jobs available […]

July 13, 2018 | We Give Up! Part 3: China Stops Deleveraging, Tells Cities To Ramp Up Spending

China’s growth over the past decade has been not just impressive, but historically unprecedented. No single country has ever added this many factories, roads, airports and entire new cities in so short at time. But the transformation has come at a cost, in the form of a debt bubble that’s starting to look unstable. Beginning […]

July 10, 2018 | Rising Wages = Shrinking Corporate Profit Margins … And Falling Stock Prices?

Today’s Wall Street Journal contains a couple of charts that illustrate a relationship that’s not getting much media attention these days: The fact that tightening labor markets are forcing companies to raise wages, in the process squeezing their own profit margins. Historically this margin compression has been either a cause of or contributor to cyclical […]

July 8, 2018 | Inflation Is Back, Part 9: Two Sentences Say It All

Okay, one more look at wage inflation, followed by a short diatribe on the unfairness of life. As the labor markets get tighter, power is finally shifting from companies to workers. For some reason Iowa is leading the way (the promised two sentences are in bold): Say Hello to Full Employment — Want to know […]

July 5, 2018 | Inflation Is Back, Part 8: Labor Shortage Reaches “Critical” Point

Economist Peter Bookvar recently analyzed the the anecdotal evidence of capacity constraints piling up in recent industry surveys, including the following: “Business is strong in all regions. Materials are tight. Trucking continues to be a major challenge.” (Chemical Products) “Strong economic growth continues to put pressure/strain on capacity, lead time, availability and pricing across a […]

July 3, 2018 | Things Are Lining Up Nicely For Gold And Silver

Beginning in early Spring, gold and silver faced two serious headwinds: Seasonality – that is, the annual decline in bullion demand from China and India once wedding season ends – and the internal structure of the futures markets, where the big players in gold had lined up in ways that historically point towards weak prices […]

July 2, 2018 | US Political Center Is Being Devoured From Both Right And Left

President Trump will soon nominate his second Supreme Court justice. The first, Neil Gorsuch, has so perfectly replaced the late Antonin Scalia that it’s safe to assume retiring justice Anthony Kennedy’s successor will be in the same mold – which is to say formidable and unapologetically conservative. The result will be a solid conservative majority […]

July 1, 2018 | Emerging Market Crisis Spreads To The Core, Central Banks Face Catch-22

One of the things giving “data-driven” central banks wiggle room on their pledge to tighten monetary policy is the fact there are several definitions of inflation. In the US the thing most people think of as inflation is the consumer price index, or CPI, which is now running comfortably above the Fed’s target. But the […]

June 26, 2018 | Is China Part Of The “Emerging Market Crisis”?

Being huge, consequential and technologically advanced, China isn’t normally lumped into the “emerging” category with Brazil and Argentina. To most observers they’ve already left the kids table and are now seated with the developed-world adults. But that might be premature. A big part of China’s economic ascendance was purchased with borrowed money – including a […]

June 24, 2018 | If Bitcoin’s Rise Was Bad For Gold, Will Its Fall Be Good?

After an artificial pause in 2017, US government debt has resumed its inexorable climb… …the dollar has fallen by around 5%… … and inflation – even the massaged-beyond-recognition Consumer Price Index (CPI) – has shifted to a higher gear, driven by rising oil. All of which should be great for gold, right? Well, not so […]

June 22, 2018 | Will Disney’s Epic Buyout of Fox Mark The End Of The Everything Bubble?

As bubbles expand and hot money starts burning holes in corporate pockets, merger and acquisition deal terms begin to leave reality behind. Often one deal of such breathtaking size, scope and hubris is struck that — in retrospect – it heralds the end of the era. The junk bond bubble of the 1980s, for instance, […]

June 21, 2018 | Housing Bubble Pathologies, Part 2: Fewer Babies And More Stressed-Out Renters

Home prices are still rising pretty much everywhere in the US, with California as usual leading the way. State-wide, the median CA home is now above $600,000, up 9% year over year. In San Francisco County, homebuyers are paying an average of 18% above the asking price, and price per square foot is now more […]

June 18, 2018 | Failed States, Part 1: Hopeless European Millennials And The Populist Takeover

Europe is frequently held up as an example of how the rest of the world should behave on a variety of issues. But this comparison misses at least two things: First, “Europe” is actually a lot of different countries in a lot of different situations. Second, much of what seems to work over there only […]

June 17, 2018 | Oil, The Petrodollar, And The Next Emerging Market Crisis

Oil prices are up over the past year, which is bad if you’re, say, a developing country that imports a lot of the stuff. But the US dollar (aka the petrodollar) is also up, which compounds the problem because oil is priced in dollars. So Brazil, for instance, finds itself buying an appreciating necessity that’s […]

June 14, 2018 | Shocked! To Hear That Corporate Share Buybacks Line Execs’ Pockets

Here’s one for the Clueless Regulator Hall of Fame: Corporate executives are using stock buybacks to pad their own compensation, according to SEC official (CNBC) – Share buybacks have surged since the Republican-backed tax bill made it through Congress in December. Corporate executives are using tax cuts and share buybacks to boost their own compensation, […]

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