Tag: news

Authored by Chloe Anagnos via The American Institute for Economic Research,

Student-loan debt hit an all-time high of $1.4 trillion in the first quarter of 2019, Experian claims. Considering that this is an increase of 116 percent in the last decade, it’s safe to say that young adults are starting their lives with a crushing debt burden. But student loans aren’t the only reason they are struggling: auto loans and credit cards are also hurting their pocketbook.

When compared to other generations, millennials are much less likely to have credit card debt. However, that doesn’t mean they are completely immune to it. As a matter of fact, most of the debt millennials between the ages of 25 and 34 carry comes from credit card use.

According to WalletHub’s latest Credit Card Debt Study, Americans of all ages repaid $38.2 billion in credit card debt during the year’s first quarter, making this the fourth-largest quarterly payoff ever. But despite this large sum, WalletHub estimates that consumer credit card debt will increase $70 billion for 2019 alone. Considering that Americans now owe more than $1 trillion, millennials are in as much trouble as their older counterparts. And as experience shows us, it is precisely as we age that we start to rely more on credit cards. Will millennials act differently?

To WalletHub CEO Odysseas Papadimitriou, current trends seem to indicate that they won’t.

When talking about how little of their debt Americans paid in the first quarter of 2019, Papadimitriou said that the fact that Americans are paying back less of what they owe proves that “consumers aren’t quite as healthy as some other metrics may indicate.”

With “the average household currently [owing] roughly $8,390,” he added, and the first-quarter paydown being so small, it might not be far-fetched to expect millennials to lose some of their net worth over time thanks to credit card debt.

Government and Personal Responsibility

The fact that the government created the current student-loan crisis is a well-established truth at this point. However, what few people talk about is how credit card debt can also be traced back to government’s bad monetary policies.

Credit card companies offer cards with high-interest rates because consumers who rely on credit cards are more likely to default. In order to make sure they can cover their costs and make some profit, these companies attach high-interest rates to their products, even when competing with other companies to appeal to a greater audience.

But the fact that so many people rely on credit cards for basic purchases and even to pay bills says something else about the country’s economy: the dollar’s purchasing power hasn’t kept up with inflation.

After the 2007 financial crisis, the Federal Reserve’s go-to policy was keeping interest rates low and expand its balance sheet, effectively creating a greater reserve of U.S. currency and putting more paper money into circulation.

While those who put their hands on this money first, such as Wall Street junkies, do make a profit, everyone else loses in the long run as the government’s policy of expanding the money supply and artificially inflating the prices of resources, as a result, devalues the currency. If living life wasn’t as expensive as it is now thanks to the country’s misguided monetary policies, then perhaps Americans wouldn’t rely on credit cards as much.

It is true that consumers would also be less likely to rely on a credit card, to begin with, if they understood what it meant to their finances in the long run. Unfortunately, they lack basic financial literacy and often see credit cards as a part of life.

In the end, both ignorance regarding their financial decisions and the government’s misguided policies are creating a ticking time bomb.

via ZeroHedge News http://bit.ly/2KrBsQi Tyler Durden

A United Nations expert and special rapporteur has submitted a 101-page report calling on UN secretary-general António Guterres to initiate a “follow-up criminal investigation” after finding “sufficient credible evidence” that the grisly Oct. 2 murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul was on the direct orders of crown prince Mohammed bin Salman (MbS) and other high level officials. 

Agnes Callamard, the UN special rapporteur on extrajudicial executions, described in her report that Khashoggi was the “victim of a deliberate, premeditated execution, an extrajudicial killing for which the state of Saudi Arabia is responsible under international human rights law”.

The report, the culmination of a six month investigation, said further: “Indeed, this human rights inquiry has shown that there is sufficient credible evidence regarding the responsibility of the crown prince demanding further investigation,” according to FT.

Callamard was granted rare access to a number of the recordings of conversations inside the consulate – during and surrounding the murder – which involved Khashoggi’s body likely being hacked up, according to prior reports. 

“The Turkish authorities undoubtedly have more information and intelligence about events in the Saudi Consulate than they were willing or able to share with the inquiry,” the report said.

However, the new UN report contains more shocking details from the recordings concerning the gruesome manner of Kashoggi’s death. According to a CNN summary of this section of the report:

According to the report — which cites evidence from Turkish and other intelligence agencies — after entering the consulate, Khashoggi was injected with a sedative and then his head put inside a plastic bag and suffocated.

It quotes an audio recording from inside the consulate, in which Khashoggi is heard being told he will be taken to Saudi Arabia.

“We will have to take you back. There is an order from Interpol,” a Saudi man tells the journalist, who replies that “there isn’t a case against me” and warns them that people are waiting for him outside the consulate.

The men instruct Khashoggi to write a text message to his son, and argue over what he should say before a voice says, “cut it short.”

“There is a towel here. Are you going to give me drugs?” Khashoggi asks.

“We will anesthetize you,” a man responds.

A struggle can then be heard, after which a man asks whether Khashoggi has passed out.

“He raises his head.”

“Keep pushing.”

“Push here; don’t remove your hand; push it.”

It has previously been reported that after Khashoggi was killed, his body was dismembered and removed from the consulate in separate bags. It has not been found.

And further the special rapporteur found evidence that the crime scenes were likely “thoroughly, even forensically, cleaned” — suggesting that the Saudi investigation was “not conducted in good faith, and that it may amount to obstructing justice.”

Crucially, the report goes so far as to recommend international sanctions against crown prince MbS as a broader final UN investigation unfolds, similar to those already brought against top MbS aide Saud al-Qahtani and over a dozen others by the US and some European countries.

The report recommended that “such sanctions ought also to include the Crown Prince and his personal assets abroad” unless he is able to definitively prove no responsibility in the murder. 

MbS has consistently denied any role in Khashoggi’s death; instead, Riyadh put 11 Saudi suspects on trial that were part of what officials claimed was a “rogue operation” – an allegation met with deep skepticism among Saudi allies and international human rights groups. 

via ZeroHedge News http://bit.ly/31EFquh Tyler Durden

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Since President Trump first discussed firing Jerome Powell, out of a sense of frustration that his Fed Chair pick was not dovish enough, he has regularly expressed his displeasure at Powell’s lack of willingness to do whatever it takes to keep the economy booming beyond its potential. Strong economic growth serves Trump well as it boosts the odds of winning a second term.

This thought of firing the Fed Chair took an interesting turn yesterday when Mario Draghi, Jerome Powell’s counter-part in the ECB, commented that he was open to lowering interest rates and expanding quantitative easing measures if economic growth in the E.U. didn’t start to pick up soon.

This led to the following Trump tweet:

Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.

— Donald J. Trump (@realDonaldTrump) June 18, 2019

The bottom line is that the ECB will push Trump harder to lean on the Fed to be more aggressive with lower rates and QE. Trump’s urgency for Fed action also increases the odds that Powell could be replaced or demoted, as such a discussion was rumored to have been discussed. Look for fireworks on Trumps Twitter page today if the Fed does not take a dovish tact. We remind you:

“[Powell]’s my pick — and I disagree with him entirely,” Trump said last week in an interview with ABC News.

“Frankly, if we had a different person in the Federal Reserve that wouldn’t have raised interest rates so much we would have been at least a point and a half higher.”

The following article was published last October and is even more relevant today. If Powell becomes an impediment to aggressive Federal Reserve policy and therefore hurts Trump’s chances of winning in 2020, we might just see Chairman Powell get fired or demoted. Is that possible?

On Donald Trump’s hit TV show, The Apprentice, contestants competed to be Trump’s chief apprentice. Predictably, each show ended when the field of contestants was narrowed down by the firing of a would-be apprentice. While the show was pure entertainment, we suspect Trump’s management style was on full display. Trump has run private organizations his entire career. Within these organizations, he had a tremendous amount of unilateral control. Unlike what is required in the role of President or that of a corporate executive for a public company, Trump largely did what he wanted to do.

On numerous occasions, Trump has claimed the stock market is his “mark-to-market.” In other words, the market is the barometer of his job performance. We think this is a ludicrous comment and one that the President will likely regret. He has made this comment on repeated occasions, leading us to conclude that, whether he believes it or not, he has tethered himself to the market as a gauge of performance in the mind of the public. We have little doubt that the President will do everything in his power to ensure the market does not make him look bad.

Warning Shots Across the Bow

On June 29, 2018, Trump’s Economic Advisor Lawrence Kudlow delivered a warning to Chairman Powell saying he hoped that the Federal Reserve (Fed) would raise interest rates “very slowly.”

Almost a month later we learned that Kudlow was not just speaking for himself but likely on behalf of his boss, Donald Trump. During an interview with CNBC, on July 20, 2018, the President expanded on Kudlow’s comments voicing concern with the Fed hiking interest rates. Trump told CNBC’s Joe Kernen that he does not approve [of rate hikes], even though he put a “very good man in” at the Fed referring to Chairman Jerome Powell.

“I’m not thrilled,” Trump added. “Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.”

“As of this moment, I would not see that this would be a big deal yet but on the other hand it is a danger sign,” he said.

Two months later in August of 2018, Bloomberg ran the following article:

Trump Said to Complain Powell Hasn’t Been Cheap-Money Fed Chair

“President Donald Trump said he expected Jerome Powell to be a cheap-money Fed chairman and lamented to wealthy Republican donors at a Hamptons fundraiser on Friday that his nominee instead raised interest rates, according to three people present.”

On October 10, 2018, following a 3% sell-off in the equity markets, CNBC reported on Donald Trump’s most harsh criticism of the Fed to date.  Trump said, “I think the Fed is making a mistake. They’re so tight. I think the Fed has gone crazy.”

Again-“I think the Fed has gone crazy”

These comments and others come as the Fed is publicly stating their preference for multiple rate hikes and further balance sheet reduction in the coming 12-24 months. The markets, as discussed in our article Everyone Hears the Fed but Few are Listening, are not priced for the same expectations. This is becoming evident with the pickup in volatility in the stock and bond markets.  There is little doubt that a hawkish tone from Chairman Powell and other governors will increasingly wear on an equity market that is desperately dependent on ultra-low interest rates.

Who can stop the Fed?

We think there is an obstacle that might stand in the Fed’s way of further rate hikes and balance sheet reductions.

Consider a scenario where the stock market drops 20-25% or more, and the Fed continues raising rates and maintaining a hawkish tenor.

We believe this scenario is well within the realm of possibilities. Powell does not appear to be like Yellen, Bernanke or Greenspan with a finger on the trigger ready to support the markets at early signs of disruption. In his most recent press conference on September 26, 2018, Powell mentioned that the Fed would react to the stock market but only if the correction was both “significant” and “lasting.”

The word “significant” suggests he would need to see evidence of such a move causing financial instability. “Lasting” implies Powell’s reaction time to such instability will be much slower than his predecessors. Taken along with his 2013 comments that low rates and large-scale asset purchases (QE) “might drive excessive risk-taking or cause bubbles in financial assets and housing” further seems to support the notion that he would be slow to react.

Implications

President Trump’s ire over Fed policy will likely boil over if the Fed sits on their hands while the President’s popularity “mark-to-market” is deteriorating.

This leads us to a question of utmost importance. Can the President of the United States fire the Chairman of the Fed? If so, what might be the implications?

The answer to the first question is yes. Pedro da Costa of Business Insider wrote on this topic. In his article (link) he shared the following from the Federal Reserve Act (link):

Given that the President can fire the Fed Chairman for “cause” raises the question of implications were such an event to occur.  The Fed was organized as a politically independent entity. Congress designed it this way so that monetary policy would be based on what is best for the economy in the long run and not predicated on the short-term desires of the ruling political party and/or President.

Although a President has never fired a Fed Chairman since its inception in 1913, the Fed’s independence has been called into question numerous times. In the 1960’s, Lyndon Johnson is known to have physically pushed Fed Chairman William McChesney Martin around the Oval Office demanding that he ease policy. Martin acquiesced. In the months leading up to the 1972 election, Richard Nixon used a variety of methods including verbal threats and false leaks to the press to influence Arthur Burns toward a more dovish policy stance.

If hawkish Fed policy actions, as proposed above, result in a large market correction and Trump were to fire Fed Chairman Jerome Powell, it is plausible that the all-important veil of Fed independence would be pierced. Although pure conjecture, it does not seem unreasonable to consider what Trump might do in the event of a large and persistent market drawdown. Were he to replace the Fed chair with a more loyal “team player” willing to introduce even more drastic monetary actions than seen over the last ten years, it would certainly add complexity and risk to the economic outlook. The precedent for this was established when President Trump recently nominated former Richmond Fed advisor and economics professor Marvin Goodfriend to fill an open position on the Fed’s Board of Governors. Although Goodfriend has been critical of bond buying programs, “he (Goodfriend) has a radical willingness to embrace deeply negative rates.” –The Financial Times

Such a turn of events might initially be very favorable for equity markets, but would likely raise doubts about market values for many investors and raise serious questions about the integrity of the U.S. dollar. Lowering rates even further leaves the U.S. debt problem unchecked and potentially unleashes inflation, a highly toxic combination. A continuation of overly dovish policy would likely bolster further expansion of debt well beyond the nation’s ability to service it. Additionally, if inflation did move higher in response, bond markets would no doubt eventually respond by driving interest rates higher. The can may be kicked further but the consequences, both current and future, will become ever harsher.

via ZeroHedge News http://bit.ly/2IsEFgk Tyler Durden

President Trump kicked off his reelection campaign at the 20,000 seat Amway Center in Orlando, Florida on Tuesday night – packing the stadium to the brim as he revealed a few clues clues about his 2020 strategy to the hyped crowd. 

“Our country is more thriving, prospering and booming and truly it is soaring to new heights,” proclaimed Trump, adding that America is experiencing “perhaps the greatest economy” in US history. 

As expected, Trump laid into his enemies; Democrats, the establishment, Robert Mueller (against whom Trump says he “won”), and of course – the “fake news media” which he repeatedly pointed to and mocked at several points. 

Trump also laid out a dismal future if he loses in 2020 – arguing that life would get much worse under Democrats, who he says “want to destroy you and our country as we know it” with “un-American conduct.” 

As The Hill‘s Jordan Fabian and Jonathan Easley note, Trump offered the following five takeaways (emphasis ours): 

***

Trump will cast Democrats as socialists and extremists

On everything from abortion rights to immigration, Trump plans to cast Democrats as far-left extremists, oftentimes in harsh terms.

Trump warned on Tuesday that Democrats had become “depraved” on the matter of border security, arguing that “the Democrat position on open borders is morally reprehensible” and a “betrayal of the American middle class.”

The president also seized on the abortion debate that ignited when Alabama passed one of the most restrictive anti-abortion laws in the country, saying that “virtually every top Democrat” supports “ripping babies straight from the mothers’ womb.” That fight is certain to energize the president’s base of evangelical supporters.

And regardless of their thoughts on socialism, Trump plans to paint the entire 2020 Democratic field as the enemies of capitalism and the American way of life.

Of the 2020 presidential contenders, only Sen. Bernie Sanders (I-Vt.) has openly embraced socialism. Most of the 2020 Democratic presidential contenders are eager to separate the party’s progressive policy proposals, such as “Medicare for All” and the Green New Deal, from the debate over socialism.

Nonetheless, Trump’s approach is an attempt to set himself up as a populist fighter against political elites and an “angry, left-wing mob.”

“They went after my family, my business, my employees, almost everyone that I’ve ever known or worked with, but they’re really going after you,” the president told the crowd.

Trump (mostly) holds fire on individual 2020 Dems

While the president spent much of his speech excoriating the Democratic Party, he largely avoided attacking his possible challengers.

During one 30-minute stretch of his remarks, Trump mentioned 2016 Democratic presidential nominee Hillary Clinton seven times even though she will not be on the ballot this time.

The president by comparison mentioned former Vice President Joe Biden, the Democratic front-runner, just twice and Sanders only once. Trump called Biden a “sleepy guy” but stuck to hitting him over his handling of China and manufacturing during the Obama administration and did not wade into other personal attacks. He also hit Sanders to drive home his argument about socialism.

Trump’s performance should please his advisers, who want him to paint Democrats with a broad brush, rather than get drawn into individual fights at this stage of the race.

But it appears unlikely that will hold: the president is reportedly planning to live tweet next week during the Democrats’ first primary debate.

Little talk of agenda

Trump barely scratched the surface when it comes to explaining to voters what he would do if they give him four more years in the White House.

The president touched on the unfinished business looming over his reelection race: his long-promised border wall and a new health care plan. But he offered few details about how he plans to get each accomplished.

He also paid lip service to the immigration plan he rolled out last month, but which has not gained traction on Capitol Hill.

He also appeared indifferent about striking a trade deal with China, saying he is fine with talks falling through, perhaps in an effort to show his base he will stay tough on Beijing.

While Trump may plan to argue voters should keep him in office as a good steward of the economy, the gaps in his agenda could open him up to attacks from Democrats that he does not have a plan to address issues like health care and the wage gap.

Trump wants to take on the very establishment he’s part of

Is it possible for an incumbent president in charge of one-third of the federal government to run as a Washington outsider?

Trump is going to find out.

Over the course of his speech, the president railed against the “unholy alliance” of lobbyists and special interests, and warned that nefarious entities in “Washington back rooms” want to “take away your dignity.”

Trump complained about the “rigged system” he said was blocking him from achieving his goals, and said the “swamp is fighting back so viciously and violently against him.”

“The people trying to stop our movement are the same Washington insiders who spent their careers rigging the system so your losses will be their gains, you know that,” Trump said. “These are the same career politicians who presided over decades of lost wages, the loss of our manufacturing jobs …a growing wealth gap and one ruinous trade deal after another.”

The president will have a hard time convincing Washington insiders that his administration has been a breath of fresh air for government accountability. Countless administration officials have been forced out, or even indicted, for the type of conflicts of interest or scandals that Trump is railing against.

But still, there is a sense among Trump’s supporters that they delivered a blow to the establishment when they helped elect Trump.

On Tuesday night, the president leaned into the grievances his supporters hold against the Washington political and media elites, whom he accuses of looking down their noses at ordinary Americans.

“They called us deplorables. That was a mistake. That was a big mistake,” Trump said.

***

Meanwhile:

Trump Rally Orlando vs. Joe Biden Rally Iowa @RealDonaldTrump #4MoreYears pic.twitter.com/4BzUVBQL14

— Jim Hoft (@gatewaypundit) June 19, 2019

Watch the full rally below:

via ZeroHedge News http://bit.ly/2ISe2Ad Tyler Durden

WTI is modestly lower overnight, back below $54, after a ‘meh’ inventory report from API following the oil market’s best day in 5 months. This slide comes despite Saudi Arabia, Iraq, and the U.A.E. all agreeing they want to keep restraining production in a bid to buttress crude amid signs of faltering demand.

As Bloomberg notes, however, investors will focus on refinery consumption and imports for their impact on total supply.

“Historical data indicates another rise in utilization; shipping data indicates imports at best remaining unchanged,” says Thomas Finlon, director of Energy Analytics Group Ltd in Wellington, Florida. “This should result in a drawdown in crude inventories”

API

• Crude -812k (-1.75mm exp)

• Cushing +520k (+30k exp)

• Gasoline +1.46mm (+900k exp)

• Distillates -50k (+700k exp)

DOE

• Crude -3.106mm (-1.75mm exp)

• Cushing +642k (+30k exp)

• Gasoline -1.692mm (+900k exp)

• Distillates -551k (+700k exp)

After two weeks of surprisingly large crude builds, expectations (and API confirmed) were for a modest draw but DOE data surprised with the largest crude draw in six weeks…

With the ongoing slide in rig counts, expectations continue to view production levels declining over the next few months and they did for the second week in a row…

On the price action side, WTI broke above its 5-, 8-, and 13-DMAs yesterday, testing towards 21DMA resistance, before it started to fade overnight.

WTI hovered around $53.70 ahead of today’s inventory data but spiked to overnight highs after the surprise inventory draw…

via ZeroHedge News http://bit.ly/2FnIdyq Tyler Durden

“It’s going to happen. He will get subpoenaed.”

Those were the words of Rep. Jim Himes just one day after House Intelligence Chairman Adam Schiff warned that “time is running out” to get Robert Mueller on the hill to testify, according to Mediaite. 

He made them on an episode of Morning Joe where host Joe Scarborough spent a majority of the show screaming and raving about what an “outrage” it was that Mueller had not yet testified, despite Mueller having previously said “my testimony is in the report”. 

Scarborough screamed at Himes during the interview: 

“I want to know why Robert Mueller thinks he’s above coming to Capitol Hill and testifying for Americans? It’s outrageous! I want to know something else, Jim. Why don’t you subpoena him? This is absolutely ridiculous.”

In return, Himes said: 

“Two things to say: Number one, it’s going to happen. He will get subpoenaed. Look, we have a profound interest inside the intelligence committee in hearing about something we have not heard about nearly enough.”

Himes continued:

“The other thing which you’re talking about so animatedly is getting Bob Mueller, for all of the reasons you state, getting Bob Mueller simply to say what he said in the report, which by the way he said he would do. He said my testimony is in that report. But as you pointed out, not an awful lot of people got through the 500 pages. There is a virtue on that. You’re being pretty tough on Bob Mueller here. I do not blame him for not wanting to join the partisan fray. But you know this man. He’s a patriot. Will he do what he’s asked to do.”

As Scarborough continued to rant, Himes, a Democrat, concluded: “Take the coffee cup away from Joe.”

 

 

via ZeroHedge News http://bit.ly/31Knezs Tyler Durden