Tag: news

Authored by Lawrence Thomas via GoldTelegraph.com,

For anyone following the gold industry, a significant development that many in the finance industry may not be paying close attention to is the emergence of Judy Shelton within the Federal Reserve. 

President Trump recently nominated Judy Shelton and Christopher Waller to fill the two vacancies on the Federal Reserve Board of Governors. If confirmed, Mrs. Shelton has publicly advocated for lower rates and also the reintroduction of a gold standard. The president has openly criticized Fed Chairman Jerome Powell about not lowering interest rates quickly enough. His four-year tenure as Fed chair expires in February 2022.

This is a very interesting development because one can only assume if Trump is reelected, he could potentially appoint Mrs. Shelton as the next chairman. Which logically, makes a lot of sense as Trump continues his hard negotiation with China on fair trade.

 “When governments manipulate exchange rates to affect currency markets, they undermine the honest efforts of countries that wish to compete fairly in the global marketplace. Supply and demand are distorted by artificial prices conveyed through contrived exchange rates. Businesses fail as legitimately earned profits become currency losses,” she wrote in a February 2017 opinion article in The Wall Street Journal.

With the insanity of negative interest rates starting to come to fruition across many economies, naturally, the reintroduction of gold into monetary policy does not seem unreasonable. The primary objective of money is typically to be a medium of exchange, unit of account, but also a store of value. Gold has been doing this for thousands of years as Judy understands:

“Forget hawks and doves – this job needs a woodpecker, someone who’ll hammer away at the importance of stable money. The goal: not a strong dollar or a weak dollar, but a dependable dollar,” she wrote in an October 2017 opinion piece in the Journal.

“The Fed should focus on stable money as a key factor in economic performance. Given that central banks today are the world’s biggest currency manipulators, it’s imperative that the next chairman prioritize the integrity of the dollar.”

Secondly, President Trump understands the gold market and its importance of it being a stabilizer in turbulent economic times.  He has publicly tweeted (see below) about gold which can confirm these claims:

Economically, maybe Trump assumes normalized interest rates are not coming back due to the endless money printing that took place after 2008. The world of negative yielding debt is beginning to be a natural reality which will continually debase  currencies globally and one of the only things to hedge this debasement is of course, gold. Shelton warned in 2019:

“Perhaps one of our elected representatives on Capitol Hill can explain to [The Fed] that when the low-grade fever of perpetual inflation becomes a full-blown economic malady – when the next financial bubble bursts with horrible consequences for the real economy – average Americans will pay the biggest price.“

There continues to be record central bank gold buying, negative interest rates around the world, unprecedented public and private debt and an economic setting where there are deep trade disputes (China and U.S phase one deal is not a resolution to the trade war)  to go alongside geopolitical tensions  which clearly signifies that the world is in unchartered waters.

In these uncharted waters look for governments to slowly revert back to the oldest form of money, gold.

After a slightly tailing 2Y auction priced earlier today as yields tumbled across the curve, the lack of motivated auction buyers was that much more on display moments ago when the Fed sold $41BN in 5Y paper, at a high yield of 1.448%, the lowest since August 2019, but also the biggest tail to the 1.437% When Issued since December 2018, when the tail was 2.3bps compared to today’s 1.1%bps.

It wasn’t just the tail however, with the Bid to Cover today sliding from 2.49 to 2.33, below the six auction average of 2.41 and the lowest since September.

The internals were also on the ugly side with Indirects taking down 60.0%, a drop from December’s 62.4% , if just below the 60.8% recent average. And with Dealers taking down a substantial 26.1%, the highest since September, it left Directs with just 13.9% of the auction, below the 14.6% average.

Overall, an uglier auction than this morning’s sale of $40BN in 2Y paper, if still solid enough to keep the 2s5s curve inverted on the day, the first time the 2s5s has traded below 0% since early December.

The FBI and federal prosecutors in New York say Prince Andrew has been uncooperative with their ongoing investigation into Jeffrey Epstein’s co-conspirators, according to AP, citing US Attorney Geoffrey Berman of the Southern District of New York.

In a Monday statement outside Epstein’s East 71st Street mansion on the Upper East side of Manhattan, Berman said that Andrew has yet to respond despite his public offer to cooperate in the investigation.

“To date, Prince Andrew has provided zero cooperation,” said Berman, appearing with members of nonprofit victim services agency Safe Horizon.

Federal prosecutors and the FBI have asked to interview Prince Andrew about Jeffrey Epstein but despite his public offer to cooperate he has not responded, US Attorney Geoff Berman said pic.twitter.com/GxufRQLjBH

— Aaron Katersky (@AaronKatersky) January 27, 2020

As we reported in November, attorneys for Epstein accusers have demanded Andrew’s participation in the investigation.

“It’s great that he’s stepping away from his royal duties, but it’s really not about that — it’s about justice and accountability for the victims, so it’s important that he says he’s going to cooperate with law enforcement,” said victims attorney Lisa Bloom.

Bloom said Prince Andrew should answer questions from all the accusers’ attorneys — in particular the attorney of Virginia Roberts Giuffre, who alleges she was coerced into having sex with Prince Andrew on three separate occasions when she was 17.

Giuffre has offered a detailed account of a March 10, 2001, encounter in which she said she danced with the prince at Tramp nightclub in London before he had sex with her.

Guiffre publicly released a photograph of her and Prince Andrew in which he has his arm around her waist, which she says was taken at the house of Ghislaine Maxwell, who an ex-girlfriend of Epstein’s who has been accused of acting as his “fixer” at the time. –Business Insider

Gloria Allred, who also represents Epstein accusers, urged the prince to provide any evidence that might help victims seek justice “without conditions and without delay,” including emails, texts and calendars – adding that the prince’s staff should also provide relevant information, according to the BBC.

Allred added that if the prince didn’t offer information voluntarily, he might be asked to speak under oath in a criminal investigation into potential Epstein co-conspirators, along with civil lawsuits brought by Epstein’s accusers.

“I haven’t made a determination yet as to … whether we will need to take Prince Andrew’s deposition,” said Allred, adding “But I’m saying he should provide it in any civil case as well, where his testimony might be relevant.“

What’s with royals and pedophilia?

Authored by Sven Henrich via NorthmanTrader.com,

It’s that time of the year again when another exuberant rally gets too cocky, produces massive overbought readings as everybody is trampling long into stocks, is ignoring all the warning signs and then some outside event pulls the plug. Soon the downside will be again blamed on the algos that are never at fault for pushing stocks to extremes to the upside and soon all hopes will rest again on the Fed to prevent any downside getting too scary.

The Fed will have that opportunity again this week and can once again take cover behind the phrase “uncertainty” to stay “accommodative”.

Problem of course is that this time that the apparent trigger, the coronavirus, may turn into something more serious.

If it does then the Fed will be severely tested for one has to wonder if they left themselves exposed having already aggressively intervened:

Good thing the Fed has been prudent in preserving their ammunition to deal with a real crisis instead of blowing their wad with a bunch of rate cuts & a massive balance sheet expansion at the first sign of an earnings slowdown inspiring a big fat asset bubble in the process.

Oh.

— Sven Henrich (@NorthmanTrader) January 27, 2020

Oh the hubris of it all. What if the Fed made a major mistake having been way to accommodative, exacerbating asset prices to the record tune of 157% market cap to GDP right in front of a major crisis? What if growth continues to slow as the bond market is suggesting? What if, gosh, it’s not different this time?

We can’t know the answers to these questions yet, but we can observe.

One of these observations points to a similarity in the monthly $NDX chart compared to the final rally run in 2007 versus now:

Is the Fed scared yet? pic.twitter.com/qY3nSsxFps

— Sven Henrich (@NorthmanTrader) January 27, 2020

That final exuberant rally that ignored all warning sings, the final rally that makes bears look stupid and bulls exuberant.

Again, too early to tell, but the similarity is there.

What can be said with certainty for now is that the uptrends since the Fed gunned markets higher with liquidity in October have been broken. On all the major index charts.

Yields broke their trend, banks broke their trend, $SPX broke its trend, $NDX broke its trend. $VIX broke its downtrend.

And we can observe that the $NDX sell signal has indeed produced downside:

Trend breaks often times precipitate larger drops. They don’t exclude the possibility of further rallies or even new highs on occasion. After all markets are becoming short term oversold and the Fed will take center stage this week and lots more earnings are coming out.

But these trend breaks now also inform resistance for future rallies.

Markets overshot to the upside and now they are paying the price and are at risk of having made a sizable short term top. Two down days not a bear market make, but every top starts somewhere.

Just a week ago people were gleefully calling for $DJIA 30,000. Suddenly the $DJIA is nearly 1,000 points lower. Wall Street kept telling people to buy. Nobody said to sell.

And poof, most of the gains in 2020 are gone with several indices now running negative on the year:

Whether this all turns into just a short term correction or something more meaningful remains to be seen. I’ve questioned the sustainability of these price extensions above the underlying size of the economy:

Especially in context of a broader earnings picture that appears to have favored financial engineering via buybacks and a central bank included TINA effects versus actual substance:

For now we have technical trend breaks on a highly valued market with suddenly a lot more uncertainty ahead then just a week ago. Things have changed.

*  *  *

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Now that health officials in China have admitted that patients infected with the novel coronavirus often become contagious long before symptoms emerge, and Canada may or may not have just confirmed its first case of human-to-human transmission, health officials around the world are finally listening to some of the experts who warned about the virus’s lethal potential (and were rewarded with accusations of being an alarmist).

And nowhere is that advice being followed more closely than Hong Kong, where the city government has already inspired riots after considering using a new public housing project as a quarantine for virus victims.

The pushback to that plan was surprising and appears to be an isolated incident. Because University of Hong Kong academics are urging the city’s government to embrace “draconian” measures to stop history from repeating itself.

Hong Kong was rocked by SARS 17 years ago, when the virus – one of seven coronavirus strains (a family that also includes nCoV and MERS) – tore through the city’s financial district, causing 300 deaths, according to the SCMP.

As we mentioned earlier, the dean of HKU’s med school revealed research during a presser on Monday showing that the virus had already infected nearly 44,000 people in Wuhan. Meanwhile, Professor Neil Ferguson, at least the second UK academic to publicly share his projections, said over the weekend that 100,000 people could already be infected with the virus around the world, according to the Guardian.

Lead researcher and dean of HKU’s faculty of medicine Gabriel Leung said their models indicated that the number of cases in China would double in 6.2 days. Officials around the world have only confirmed 2901 cases so far, while 2839 of those are in Mainland China.

Leung’s remarks were captured in a twitter thread.

HKU Med School head Gabriel Leung is meeting press with a mask on. He is going to announce new estimation of #nCoV2019 . pic.twitter.com/tZk2qlZegH

— Xinqi Su 蘇昕琪 (@XinqiSu) January 27, 2020

HKU Med School head Gabriel Leung apologised again for his inappropriate comment made on Friday that he and officials couldn’t speak with mask on . pic.twitter.com/qRDsr3O2h3

— Xinqi Su 蘇昕琪 (@XinqiSu) January 27, 2020

Key takeaway so far
1, Wuhan is estimated to have over 25,000 confirmed cases and over 43,000 infections
2, Wuhan lockdown doesn’t really help to stop spreading in other major cities in China
3, Chongqing can be the most affected,followed by Beijing Shanghai Guangzhou Shenzhen

— Xinqi Su 蘇昕琪 (@XinqiSu) January 27, 2020

4, April and May can see major outbreaks in the aforementioned four major cities. It may come one to two weeks earlier in Chongqing.
5, HK and Macau should not only look at directly traffic links with Wuhan (!)

— Xinqi Su 蘇昕琪 (@XinqiSu) January 27, 2020

“the Hong Kong government should…not really sort of go and answer the question should we do more about more Chinese major metropolises … but rather how can we sustain Hong Kong food supply, Hong Kong’s ability and capacity to deal with a major epidemic.“ – Prof Gabriel Leung.

— Xinqi Su 蘇昕琪 (@XinqiSu) January 27, 2020

Among other things, Leung said sustained human-to-human transmission has already been proven.

“We have to be prepared, that this particular epidemic may be about to become a global epidemic,” he said.

Though Leung warned that additional measures to contain the virus could improve projections, the team’s model predicted the number of infections in five mainland megacities – Beijing, Shanghai, Guangzhou, Shenzhen and Chongqing – would peak between late April and early May, and at the peak of the pandemic, as many as 150,000 new cases could be confirmed every day in Chongqing – China’s At the height of the epidemic, as many as 150,000 new cases would be confirmed every day in Chongqing alonebecause of its large population and intense travel volume with Wuhan.

Since Leung sits on Carrie Lam’s advisory committee, he said he would encourage “draconian” steps to stop the virus, including a travel lockdown, cancellation of all public gatherings, and forcing all companies to come up with work-from-home arrangements.

“Substantial, draconian measures limiting population mobility should be taken immediately,” he said, calling for the cancellation of mass gatherings, along with school closures and work-from-home arrangements.

Possibly with an eye toward Beijing, Leung called on the government to take “one, two, three or more steps” to broaden the scope of the border closure.

Before we go, it’s time for an admittedly macabre round of ‘point-counterpoint’. Some experts claim the virus’s lethal capacity is being exaggerated by the fact that there are probably hundreds or maybe thousands of Chinese who got the virus, but managed to tough it out on their own instead of seeking medical care. Others warn that at least some who were turned away from hospitals, or chose to never seek treatment out of fear, might have met an unfortunate fate.

Point: “There are many many more thousands of people in China who have gotten sick, just stayed home, gotten rest under comfy blankets, got better after a week, and are just fine. But they aren’t counted because they didn’t go to the hospital. This inflates the lethality rate.”

Counterpoint: “There are many more Chinese rotting in their apartments who died weeks ago but haven’t been counted”

Of course, nothing would put the market’s mind at ease like a vaccine. That’s why drug stocks have surged on Monday. In the meantime, some doctors are treating the illness with retrovirals used to combat AIDS. Still, experts are estimating a vaccine could take one-to-three months to develop.

HK wouldn’t be alone in taking extreme measures to stop the virus. Taiwan over the weekend announced it would bar all visitors from mainland China.

At one point, a guest who appeared on CNBC Monday said investors should take the figures released by China and multiply those numbers by ten to arrive at the true statistics.

Speaking of draconian measures, the Philippines has taken the most drastic step so far: According to media reports, it’s preparing to deport 500 Chinese to try and stop the virus’s spread.

Now, imagine if Trump tried to do something like evicting all Chinese nationals traveling in the US…