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January 27, 2020 | Yield Curve Inversions Again Stretch Out 7 Years

Huge portions of the the yield curve are inverted. Most of the inversions are by tiny amounts, but it’s another warning. With growing concern over the Coronavirus, yields dropped again today and portions of the yield curve are inverted out to seven years.For example, the yield on the 7-year not is lower than the yield […]

January 26, 2020 | US Futures Poised to Gap Down on Coronavirus Scare: What Then?

US futures are poised to gap down at the Monday opening. Things can easily change overnight but this is likely to stick. What is a Gap? A gap up occurs when the market or an individual issue opens higher than the high on the previous day. A gap down occurs when the market or an […]

January 23, 2020 | Misunderstanding the Supply of Bitcoin and Gold Leads to Silly Projections

Here’s a hoot: Bitcoin is allegedly on track to hit $100,000 by 2021. Bitcoin Q&A Q: Where will Bitcoin be in 2021? A: I don’t know, nor does anyone else. On Track? For What? Please consider BTC on track for $100,000 in 2021 by William Suberg. Stock-to-Flow measures the Bitcoin price using two factors: the stock — […]

January 21, 2020 | Recession Arithmetic: What Would It Take?

David Rosenberg explores Recession Arithmetic in today’s Breakfast With Dave. I add a few charts of my own to discuss. Rosenberg notes “Private fixed investment has declined two quarters in a row as of 2019 Q3. Since 1980, this has only happened twice outside of a recession.” Here is the chart he presented. Fixed Investment, […]

January 20, 2020 | Fed’s Core Mission Now Includes Climate Change

The Fed, ECB, Bank of England, and Bank of Japan have now embraced climate change as part of their mission. It’s bad enough that central bankers are clueless about inflation. They now want their hands in another thing they do not understand and cannot control even if they did. Fed’s Core Mission Change Lael Brainard, […]

January 19, 2020 | 737 Max “Fix” Causes Entire Computer System to Crash

Boeing is now testing its 737 Max fix in real planes. In doing so, Boeing has uncovered yet another problem. Well, It Worked in the Simulator Yet another problem came to light when testing a 737 Max fix designed to prevent fatal the crashes that have kept the plane grounded since March. This problem surfaced […]

January 18, 2020 | GDPNow Estimate Tumbles on Weak Retail Sales

The GDPNow forecast fell from 2.3% to 1.8% this week on weak retail sales. The Nowcast estimate rose 0.1%. The Atlanta Fed GDPNow Model forecast for the 4th quarter fell a half a point this week whereas the New York Fed Nowcast Model rose a tenth of a point . GDPNow Tracking The yellow highlight shows the half-point drop […]

January 17, 2020 | China Posts Slowest Growth in 29 Years But Still Overstated

China posted another quarter of 6% annualized GDP. That’s the slowest in 29 years. The Financial Times reports China GDP grows at slowest pace in 29 years China’s economy last year grew at the lowest rate since 1990 while the country’s birth rate fell to a record low, highlighting the domestic challenges facing Beijing despite a […]

January 16, 2020 | Retail Sales Mostly Solid But Department Stores Hit Again

Retail sales rose 0.3 percent in June, essentially in line with expectations after taking revisions into consideration. The U.S. Census Bureau announced the following Advance Estimates of U.S. Retail and Food Services Sales for December 2019. Retail sales were $529.6 billion, an increase of 0.3 percent from November and 5.8 percent above December 2018. Total sales for […]

January 14, 2020 | Orders at Boeing Drop to a 16-Year Low

New plane orders at Boeing are the lowest since 2005 and deliveries the lowest since 2005. Blame the Boeing 737 Max. Due to never-ending 737 Max issues, plane orders at Airbus have soared while Boeing Orders Fall to 16-Year Low. Quick Comparison Facts Boeing New Orders: 246 new orders for commercial jets of all types before […]

January 7, 2020 | Foreign Banks Benefit More From Fed Interest on Excess Reserves

A Fed study shows foreign banks can more easily take advantage of Interest on Excess Reserves (IOER) than US banks. PLease consider the New York Fed report How Did the Fed Funds Market Change When Excess Reserves Were Abundant? Major Participants in the Fed Funds Market When Excess Reserves Were Abundant Lenders – Federal Home Loan […]

January 6, 2020 | Ben Bernanke Just Won’t Stop Making a Fool Out of Himself

Former Fed Chair Ben Bernanke is back in action doing what he does best, making a fool out of himself. Been Bernanke’s Tool Shed Former Chairman Bernanke says Fed Has Many Tools to Deter Recession. In a paper presented at a conference in San Diego on Saturday, Mr. Bernanke said asset purchases and public communication—tools that […]

January 2, 2020 | Gold: How High in 2020?

Gold broke out of a six year consolidation. Things look up in 2020. Gold Monthly Chart 2004-Present Gold Monthly Chart 2010-Present Smart Money Shorts I ignore short-term COT “smart money” warnings although I would prefer there to be fewer bulls. For discussion of “smart money“, please see Investigating Alleged Smart Money Positions in Gold. Pater […]

December 31, 2019 | Jim Bianco Says This Is QE, Like Y2K

In contrast to Hussman, Jim Bianco, at Bianco Research says the Fed’s repo actions are QE. Earlier today I posted, Hussman Sides with Powell: It’s Not QE4. If Hussman convinced you the Fed was not conducting QE, I will give you a chance to change your mind again. “Not QE” Looks a Lot Like Y2K This […]

December 30, 2019 | How to Make Money: Buy Companies That Are Worthless

  Companies with tangible net value of less that zero have increasingly outperformed the market for decades. Bloomberg comments Capitalists Without Capital Are Ruling Capitalism Some 40% of public stocks quoted in the U.S. have negative tangible book value, meaning that their tangible assets aren’t worth enough to repay all their debt. Two decades ago, this […]

December 28, 2019 | Bills Now Due on Vacant Useless Chinese Properties

After years of malinvestment, the bills are now coming due in China. With more than $6 trillion worth of debt, Chinese SOEs and cities find it increasingly difficult to meet payment deadlines. Malinvestments aside, the Bills Come Due for China’s Local Governments. For decades, local governments in China borrowed heavily to build urban infrastructure, helping to […]

December 27, 2019 | Investigating Alleged Smart Money Positions in Gold

What if anything does does the futures position of commercial hedgers say about the price of gold? I received the following email from Tom McClellan with his thoughts on gold. The emphasis in italics below is mine. It is on points I am going to dispute. Gold Cot Data Calls for More of a Drop […]

December 26, 2019 | How Does Gold React to Interest Rate Policy?

From 1970 to present let’s investigate how gold reacted to various interest rate environments. A reader asked to see a chart of gold vs “real” interest rates. Real means inflation-adjusted. To calculate the real rate I subtracted year-over-year CPI from the Fed Fund Rate. Use of CPI as a measure of inflation is more than […]

December 24, 2019 | Capital Flight: Money Leaving China at Record Rate

China is fighting “abnormal” cash flows. It’s not surprising in the least. Record Capital Flight Please consider Money has been leaving China at a record rate. Beijing is battling to stem the tide Money was leaving the country at a record clip earlier this year through unauthorized channels, according to analysts. That’s bad news for China, […]

December 22, 2019 | Gold’s vs the US Dollar: Correlation Is Not What Most Think

Gold is not as correlated to the US dollar as most think. I commented on this a few days ago in Gold Surprisingly Correlated With the US Dollar. Gold has been positively correlated to the US dollar for well over a year. Most of the time gold is inversely correlated to the US dollar. The problem, […]

December 20, 2019 | Nowcast GDP Forecast Surges, GDPNow Forecast is Down a Bit

The GDPNow and Nowcast GDP forecasts for the first quarter of 2020 converged quite a bit today. Step Towards Convergence Whereas the GDPNow forecast fell from 2.3% to 2.1%, the Nowcast forecast jumped from 0.7% to 1.3%. The gaps between the two competing forecasts was 1.6 percentage points a week ago. Today the gap is 0.8 percentage points. Industrial […]

December 17, 2019 | Boeing Will Suspend 737 Max Production: Thousands of Jobs at Risk

Boeing has over-promised and under-delivered on getting the 737 Max back in service. In Jan, it will suspend production. The Boeing 737 Max was grounded by Trump on March 13 following fatal crashes in Indonesia and Ethiopia that claimed a combined 346 lives. Boeing expected flights to resume in a couple months, then by October, […]

December 16, 2019 | Gold and Silver Miners Outperforming the Metals

For the first time in a long time, gold and silver miners are outperforming the metal, generally a good signal for both. Starting November, on a daily chart, the XAU components started outperforming gold and silver. Miners vs the Metals Weekly A weekly chart shows these periods of overperformance and underperformance can last a long […]

December 15, 2019 | Christmas Impeachment Stocking: There’s Nothing In It

The Democrats have made the weakest case for impeachment since Andrew Johnson in 1868. Stocking Stuffer A quick check shows the Democrat impeachment stocking is stuffed with nothing. It’s the weakest case since 1868. Honey, We Shrunk the Impeachment Please consider the Incredible Shrinking Impeachment. So that’s it? That’s all there is? After all the talk […]

December 13, 2019 | Vatican Spends 90% of Donations for the Poor On Itself

Thinking of donating money to the Vatican to feed the poor? You may wish to reconsider. Please consider Vatican Uses Donations for the Poor to Plug Its Budget Deficit. Every year, Catholics around the world donate tens of millions of dollars to the pope. Bishops exhort the faithful to support the weak and suffering through the […]

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