Month: March 2019

Authored by Simon Black via SovereignMan.com,

Here’s when you know that you’ve made it into popular culture…

It’s when you get credit for a great quote, but no one really knows who said it first.

If there’s any doubt, people’s go-to list is usually either Albert Einstein, Mark Twain or the former New York Yankees catcher, Yogi Berra.

For example, there’s the quote, “predictions are hard, especially about the future,” which is often attributed to Berra. And “compound interest is the eighth wonder of the world,” attributed to Einstein. For Twain, pick a random quote, and people may give him the credit.

Another guy who has the investing world quoting him – but hasn’t yet made it into popular culture – is legendary investor Rick Rule. Rick is the President and CEO of Sprott US Holdings and an expert natural resource analyst…

But Rick’s knowledge goes well beyond just natural resources.

Regarding economic cycles, Rick has famous, often-repeated quips like, “Bear markets are the author of bull markets, and bull markets are the author of bear markets.” In his 40 years as an analyst, Rick has lived through the highly cyclical commodities markets.

Low prices in a sector cause lots of producers to shut their doors. Eventually supply of that commodity starts to drop and prices level off. Then, when demand eventually returns, there isn’t enough supply or companies producing to the commodity to meet demand. Prices soar. And the cycle starts all over again…

We spoke with Rick in December of last year for our premium publication, Sovereign Man: Confidential. He was one of the people on our all-star panel that we asked for their thoughts and big predictions for 2019.

So, with one quarter in 2019 nearly gone, I thought we could check-in on Rick’s 2019 look-ahead on gold so far…

Notes readers know we’re bullish on gold.

We haven’t had a major gold discovery in the past 15 years (and miners have cut their exploration budgets to 11-year lows to survive tough times).

And after a grinding, eight-year bear market, the gold price is starting to tick up.

Remember, bull markets always follow bear markets. Gold is about to get more expensive. Rick agrees…

In December, he suspected that a gold market had started or was about to begin.

Besides nearly a decade of low gold prices, America’s increasing debt will also drive prices higher.

“We need to ponder the fact that our communal debt, federal, state, and local, both on balance sheet and also off-balance sheet by way of entitlements, is estimated by the Congressional Budget Office to be nudging $200 trillion.”

Meanwhile, “household net worth across the United States, assets minus liabilities, not including our communal liability… is about $100 trillion.”

Simply put, the US has stacked up its liabilities, without the assets to back them up.

With this much outstanding debt, the US will have to either turn on the printing presses full-blast and devalue the US dollar, which would dramatically increase the gold price.

Or, the US could risk a default, which would have investors scrambling away from the dollar, and again, would increase the price of gold.

This growing debt bomb is actually becoming relevant in 2019.

Buyers of US government debt, like China, are getting the picture and decreasing their exposure to US liabilities. And the Federal Reserve isn’t buying as much debt as it did in the last decade.

Rick sums it up, saying “Our ability to continue business as usual is beginning to be constrained by arithmetic.” Just last week, Treasury Secretary Mnuchin suspended investments in two federal retirement funds to prevent exceeding the debt ceiling.

For all these reasons, Rick’s investment solution for 2019 is to return to fundamentals.

“I think 2019 will be probably an excellent year to establish positions in investments that one is attracted to on a fundamental, rather than a momentum, basis.”

There’s nothing more fundamental than gold. It’s been a proven store of value for over 5,000 years. It’s protected people’s wealth during times of runaway inflation, wars and massive government debt.

And today, gold is one of the few asset classes that’s not been bid up to near historic highs. If the world begins to lose faith in the US dollar – as Rick thinks is possible – then we’re in the beginning stages of what could be a historic bull run.

Gold has plenty of room to run from here.

I encourage you to diversify at least a portion of your wealth into precious metals.

And to continue learning how to safely grow your wealth, I encourage you to download our free Perfect Plan B Guide.

via ZeroHedge News https://ift.tt/2T0zNRr Tyler Durden

Last week, the owner of a Tesla Model S in China reportedly wound up “going along for the ride” as his beloved EV “accelerated on its own” and drove right into a river that was close the Supercharging station he was near.  The Model S wound up driving itself through a fence before winding up submerged near the Tesla Qingpu District Supercharger in Shanghai. Driver Xiao Chen was pulling away from the Supercharger when he claims that the car accelerated “out of control”. 

A Chinese media report had more details on the freak accident:

“When the reporter rushed to the scene in Qingpu District, the owner Xiao Chen had just been rescued ashore, and the gray Tesla was still lying in the river and was soaked in the water. Xiao Chen is still in shock, he told reporters: I was from the beginning stepping on the brakes, and the car suddenly rushed out of control! It turned out that Xiao Chen and his wife drove the car to school in the morning of the incident. After the delivery, they came to the Tesla Supercharger station to prepare for charging. According to Xiao Chen, he kept driving very slowly, stepping on the brakes, but when he got there, the car was out of control.

Video of the car being lifted out of the water also surface on Twitter last week.

Meanwhile in China, Tesla owner accidentally drives Model S into the river at the Supercharger Station. local media coverage? (Part 3)#Tesla #TeslaChina #TeslaCrash #China $TSLA #特斯拉 pic.twitter.com/6nA2ASxKJa

— JayinShanghai (@ShanghaiJayin) March 6, 2019

This is hardly the first incident of Tesla vehicles accelerating on their own that has made the news over the last several years.

In May 2018, we reported on one of the other more recent instances of “unintended acceleration”, when a Model S in Autopilot was found to have sped up before slamming into a stopped firetruck in Salt Lake City. Back in 2016, we reported that Tesla was being sued by a Model X owner who claimed that his vehicle “suddenly accelerated while being parked, causing it to crash through the garage of his home and into his living room, injuring the driver and a passenger.” The lawsuit, at the time, sought class action status noting at least seven other complaints from owners of similar incidents.

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Less than 24 hours after we exposed the dash-for-trash strategy that has worked so well this year – buying the most-hated/most-shorted stocks – one of the most-shorted names in the market provides a perfect case study.

Stitch Fix, the apparel company that uses software to predict what customers want, exploded higher after posting earnings results that beat estimates and issuing a better-than-expected sales forecast for the current quarter.

Stitch Fix reported fiscal second-quarter adjusted profit of 12 cents per share on sales of $370.3 million Monday evening. Both exceeded the highest analyst estimates compiled by Bloomberg. Stitch Fix also projected third-quarter sales that topped the average estimate and said that active clients rose to 3 million during the quarter, an increase of 18 percent compared with the same period last year.

SFIX is up a stunning 27% pre-market in a massive short-squeeze…

Over the past six months, as the stock lost more than two-thirds of its value, short interest in Stitch Fix surged, inching even higher during the past week, with about 33% of shares available to borrow on loan to short sellers on Monday, according to S3 Analytics data. That’s up from 31% a week ago.

The question is – will Stitch Fix go full VW as hedge funds are forced out of their shorts?

via ZeroHedge News https://ift.tt/2UyIP9I Tyler Durden

Authored by Mike Krieger via Liberty Blitzkrieg blog,

One of the most famous, and prescient, financial cartoons in American history is the above depiction of the Federal Reserve Bank as a giant octopus that would come to parasitically suck the life out of all U.S. institutions as well as free markets.

The image is taken from Alfred Owen Crozier’s U.S. Money Vs Corporation Currency, “Aldrich Plan,” Wall Street Confessions! Great Bank Combine, published in 1912, just a year before the creation of the Federal Reserve. 

On Sunday night, the current high priest of money printing, asset bubbles and inequality, Jerome Powell, appeared on 60 Minutes. Interviewer Scott Pelley mentioned the fact that such discussions are rare and noted the last time a Fed head appeared for such a chat was Ben Bernanke back in 2010.

As such, what I find most interesting about this event wasn’t Powell’s boilerplate, bureaucratic propaganda about how the economy’s doing fine and how much central bankers love average Americans, but why he and the institution he heads felt a need to do this now.

There’s no doubt something has the Fed spooked otherwise Powell never would have done this. One factor is they know the economic ground’s starting to shift beneath them, and they need to push a particular narrative ahead of time so central bankers can once again do as they please when “the time to act” arrives.

This is why Powell pushed the blame on the current economic slowdown on China and Europe. The Fed is no different than your average politician. It takes full credit when things go well, but endlessly deflects and blames outside forces when things fall apart.

Rule number 1 of the Federal Reserve:  It’s never the Fed’s fault.
Rule number 2 of the Federal Reserve:  It’s never the Fed’s fault.
Rule number 3 of the Federal Reserve…

You get the point. If central bankers accept blame, or admit they got anything over the past decade terribly wrong, then they can’t justify doing more of the same and worse in the future. And that’s exactly what they plan to do, by the way.

Which brings me to the purpose of this piece. The reason I’ve started writing about such topics again after a multi-year hiatus is because the chickens are finally coming home to roost. The recent global slowdown and concurrent central banker panic is proof we’ve arrived at a very important inflection point. The central bankers hope they can prolong this already historic and obscene financial asset bubble a little longer via manipulation and propaganda, but they also understand it may be the end of the road for this cycle.

As such, every person in the world needs to understand what the Fed and other central banks did during the last crisis, and what they plan on doing the next time around (more of the same and worse). If you judge an economy based on stock market performance and aggregate GDP, you might think the Fed did a great job over the past decade, but if you judge it based how we’ve turned an entire generation of young people into debt slaves, arrived at levels of inequality unseen since just before the Great Depression and catalyzed an explosion of populist politics throughout the western world, you might be ready to grab a pitchfork.

What central banks have achieved over the past decade is a surreptitious transfer of risk and cost away from elites and onto the general public. They sent benchmark interest rates down to zero, but only the corporate and financial class really benefits from such distortions. They’re the ones who bought up all the foreclosed upon real estate (hello Blackstone) only to rent it right back to those who were evicted. They’re the ones who can issue debt on the cheap to buyback shares in order to dump their personal holdings onto their own corporations. At the same time, credit card interest rates for the average person are at record highs of 17.64%. So who really benefits from the Fed’s record low rates?

Powell: Not everyone is experiencing this widespread prosperity we have.

No contradiction there or anything.

— Michael Krieger (@LibertyBlitz) March 11, 2019

What I also think has the Fed spooked is the fact the public is slowly but surely catching on to its scam. The increased popularity of MMT in the public conversation is proof of this. People are starting to wonder why the central bank can print money and buy assets to save the portfolios of baby boomers, yet the public can’t simply print money for stuff like healthcare, education and roads. The Fed intentionally obfuscates what it does (money printing) with terms like “quantitative easing,” but people are starting to get the joke.  The Fed doesn’t want people thinking about such things.

Another sign that non-financial types are starting to pay more attention to such topics was made clear when I saw Michael Hudson interviewed on the Jimmy Dore show. If you haven’t seen it, take a watch.

The monetary system is slowly being exposed for the scam that it is. It’s merely an opaque and unaccountable mechanism to bail-out and entrench the wealthiest and most powerful segments of society at the expense of the general public. This is one reason the Fed is currently panicking and so desperate to craft and promulgate an alternative narrative.

The Fed will try to do what it did ten years ago (and then some) the next time the economy craters. They already transferred trillions from future generations and society at large to financial industry elites once in the past decade. Will we let them do it again?

*  *  *

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Headline consumer price inflation has now slowed for 6 of the last 7 months and dropped to just +1.5% YoY – the weakest since September 2016, amid falling prices for autos and prescription drugs. Core CPI also slipped once again to its weakest since Feb 2018.

Both headline and core CPI printed below expectations.

 

The index for all items less food and energy increased 0.1 percent in February, its smallest monthly increase since August 2018.

Under the hood, it was a mixed picture:

The index for personal care increased 0.6 percent in February, its largest monthly increase since April 2018. The apparel index, which rose 1.1 percent in January, increased 0.3 percent in February. The education index increased 0.3 percent, and the indexes for household furnishings and operations, airline fares, tobacco, motor vehicle insurance, and alcoholic beverages also rose in February.

The medical care index declined in February, falling 0.2 percent after rising in each of the five previous months. The index for prescription drugs fell 1.0 percent, and the index for hospital services decreased 0.7 percent. In contrast, the physicians’ services index rose 0.1 percent.

The recreation index declined in February, falling 0.4 percent after rising 0.3 percent in January. The index for used cars and trucks fell 0.7 percent, and the index for new vehicles declined 0.2 percent; both indexes increased the prior month.

Finally, the shelter index increased 0.3 percent in February for the fourth consecutive month. The indexes for rent and owners’ equivalent rent both rose 0.3 percent, and the index for lodging away from home increased 1.3 percent.

The shelter index rose 3.4 percent over the last 12 months, a larger increase than the 3.2-percent increase for the 12 months ending January.

Of course, this is exactly what The Fed wants to see – slowing inflation enabling their “patient” outlook.

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The U.S. National Security Council issued a direct warning to Italy last weekend for its coziness with China. The country has been considering participating in China’s Belt and Road Initiative (BRI), where one segment of the global economic effort aims to unite Europe with China.

“Italy is a major global economy and a great investment destination. Endorsing BRI lends legitimacy to China’s predatory approach to investment and will bring no benefits to the Italian people,” tweeted the US National Security Council.

Italy is a major global economy and a great investment destination. Endorsing BRI lends legitimacy to China’s predatory approach to investment and will bring no benefits to the Italian people.

— NSC (@WHNSC) March 9, 2019

Italian Prime Minister Giuseppe Conte believes otherwise. Conte has overruled the foreign ministry and joined right-wing Eurosceptics in his push for closer cooperation with China.

“With all the necessary precautions, Italy’s accession to a new silk route represents an opportunity for our country,” Conte said Friday.

President Xi Jinping is expected to travel to Italy from March 22-24, and Conte said Rome and Beijing are expected to agree to a framework deal during the state visit. Conte also announced his plan to attend an upcoming BRI summit in China.

The Italian leader’s plan to attend a BRI summit in Beijing next month has caused panic in Brussels and Washington, as Italy is on course to become the first G7 country to gravitate to China’s trade initiative that US and EU officials have intensely criticized.

“Italian governments have always had a keen eye on the belt and road, as the attention with which the current administration follows developments is largely inherited from the previous governments,” said Giovanni Andornino, a China expert based at the University of Torino in northern Italy.

“What is different now is that this government is much happier in having interaction with China, as opposed to being a driving force in the process of the EU-wide negotiation with China,” Andornino said.

Wang Yiwei, director of the Centre for EU Studies at the Renmin University of China, said Rome’s resistance against Washington and Brussels stemmed from the Eurosceptic roots of its populist government.

“The current Italian government has always opposed the European Union, so they are less prejudiced against [China’s initiative] than the traditional political parties in Europe,” said Wang, who was a diplomat at the Chinese mission to the European Union from 2008 to 2011.”

Like many other nations in southern Europe, Italy is attempting to pull itself out of a deep economic recession that started at the end of 2018. Italy can’t turn to Brussels nor Washington because they currently don’t have a viable plan to restore economic growth. So right-wing Eurosceptics are increasingly resorting to aligning with China (and often, Russia), a move that has left Washington furious.

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In a troubling sign of potential imminent escalation, the US announced late on Monday night that the remaining diplomatic staff at the American embassy in Venezuela will be withdrawn by the end of the week, citing the ongoing and deteriorating political and humanitarian conditions in the socialist nation. Cited by Fox News, secretary of State Mike Pompeo’s announcement came as Caracas grapples with continuing power outages and protests amid a deepening political crisis.

“Like the January 24 decision to withdraw all dependents and reduce embassy staff to a minimum, this decision reflects the deteriorating situation in Venezuela as well as the conclusion that the presence of U.S. diplomatic staff at the embassy has become a constraint on U.S. policy,” read a statement obtained by Fox News.

In late January, all U.S. diplomats were ordered by Venezuela’s embattled president Maduro to leave Venezuela in response to President Donald Trump’s support of challenger Guaido. However, Maduro retreated his decision and allowed them to stay. The U.S. still withdrew the dependents of embassy personnel as well as some of its staff.

The decision comes as Venezuela continues to grapple with a paralyzing power outage that began Thursday evening, leaving people with little power, water, and communications.

On Monday, schools and businesses were closed, long lines of cars waited at the few gasoline stations with electricity and hospitals cared for many patients without power. Generators have alleviated conditions for some of the critically ill.

Maduro said on a national television Monday night that progress had been made in restoring power in Venezuela, adding that two people who were allegedly trying to sabotage power facilities were captured and were providing information to authorities, though he gave no details. According to the Venezuelan Union of Journalists (SNTP), one of the detained was Caracas-based journalist Luis Carlos Diaz, who was reportedly taken into custody while on his way home.

Maduro also accused the U.S. of sabotaging the power grid with a “cyberattack,” claims that Guaido and the U.S. have said are an attempt to divert attention from the government’s own failings. And while engineers restored power in some parts of Venezuela, it often goes out again.

The U.S. on Monday also imposed sanctions on a Moscow-based bank jointly owned by Russian and Venezuelan state-owned companies, alleging it tried to circumvent U.S. sanctions on the South American country. The U.S. said it is targeting Evrofinance Mosnarbank for supporting Petroleos de Venezuela SA, the state oil company previously targeted by sanctions in January.

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