Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
October Budget Deficit Surges 34% To $134 Billion, Worst In Five Years : https://www.zerohedge.com/economics/october-budget-deficit-surges-34-134-billion-worst-five-years
My Comment : You ain't seen nothing yet. Look for $2Trillion plus annual deficits.
Excerpt:
One month after the Treasury reported that in fiscal 2019 the US budget deficit hit $984 billion, a 26% increase from a year earlier, and the largest annual deficit since 2012's $1.1 trillion, today the US Treasury released the latest monthly deficit data which revealed that in October, the first month of Fiscal 2020, the US deficit shortfall hit $134 billion, a $34 billion, or 34%, increase to the $100 billion deficit in October 2018, bigger than the average forecast of $130 billion.
New Survey on U.S. Economy : http://nbr.com/2019/11/12/new-survey-on-u-s-economy/
My comment: The bullish analysts keep touting the resilient consumer as a primary argument for higher stock prices. I say the Fed is going to have to print a lot of money to keep things propped up going into the election. Recession will come and the longer it takes the worse it will be.
Excerpt:
A new survey shows two-thirds of adults fear a recession could come next year. Contessa Brewer reports on how a former Air Force veteran is making tough money decisions in order to plan for the future.
Riding The Type 3 Mega Market Melt Up Train : https://www.zerohedge.com/markets/riding-type-3-mega-market-melt-train
So while additional monetary stimulus won’t stimulate the economy, it will stimulate additional stock price distortions and asset price bubbles. Given the massive amounts of monetary intervention being undertaken we fear you ain’t seen nothing yet…
In fact, we may be in for the train ride of a life time: DOW 30,000? DOW 40,000? DOW 100,000? Why not?
The holy mountain quant agrees completely. [PT]
With Fed Chair Powell as conductor, and the third wild ride in the last 20 years underway, this melt up will be mega. Hence, we are classifying the melt up as: Type 3 Mega.
Quite frankly, the ride to DOW 30,000 – or higher – is not something to cheer and celebrate. For it is not a reflection of a booming, healthy economy. Rather, it is an expression of the pure madness and insanity of the world’s central bankers.
The resilient consumer ?!
The following link is to a NBR report which says that consumers are becoming dropping out of the housing market due to too much credit card debt (ie they can't add more debt). BINGO !!!
http://nbr.com/2019/11/08/losing-confidence-in-the-housing-market/
My comment: So the Fed has to get consumers buying more. I suppose they could bail the credit card companies out of their bad consumer loans and the credit card companies could then forgive all that bad debt. Consumers could then repeat the debt build up cycle. It's nuts.
Global Debt Tops $188,000,000,000,000 – Officially The Biggest Debt Bubble The World Has Ever Seen : https://www.zerohedge.com/personal-finance/global-debt-tops-188000000000000-officially-biggest-debt-bubble-world-has-ever
None of that matters. Only one thing matters : THE FED !
How we will get to $3,000 gold price, and it won’t be easy
https://www.kitco.com/news/2019-11-07/How-we-will-get-to-3-000-gold-price-and-it-won-t-be-easy.html
My comment: The longer it takes, the worse the consequences
Excerpt:
“What I look at is the balance sheet of Federal Reserve,” Oliver told Kitco News. “When [government] bonds finally break down, and they will break down someday because congress is insolvent, the only thing else on the Fed’s balance sheet is of course the gold, because they said they have 8,100 tonnes of gold.”
Wallbridge (WLBMF) closed at $0.4519, up 80% in the past week based on good drill results.
Disclosure: I own 25K shares of WLBMF, 20K shares I bought for $0.05/sh.
My comment : I'm still waiting on Condor Resources (CNRIF) to start moving. Patience. I currently have 750K shares of CNRIF with a lot bought at one and a half cents/sh.
US Budget Deificit Hits $984 Billion In Fiscal 2019, Up $205 Billion In One Year : https://www.zerohedge.com/economics/us-budget-deificit-hits-984-billion-fiscal-2019-205-billion-one-year
My comment : So, adding another $500Billion for off budget SS and Medicare/Medicaid, the added debt was $1.5Trillion. Once we fall into recession, the annual debt will exceed $2Trillion with the national debt projected to hit $40Trillion between 2026 and 2028. Got gold ?
The economy doesn't matter when the Fed is pumping $120B per week via the repo market. Of course, it's not just the US markets/economy that you need to watch. China is a real potential drag on the global economy.
Wallbridge Exploration Drilling Intersects 27.00 g/t Au over 38.39 metres in the Tabasco Zone : https://stockhouse.com/companies/bullboard?symbol=t.wm
My comment : This should boost the stock tomorrow.
Disclosure : I own 20K shares of WLBMF
I'm betting big on Condor Resources (CNRIF) with my 700K share position.
DOJ Accuses JPMorgan's Precious Metals Trading Desk Of Being A Criminal Enterprise : https://www.zerohedge.com/markets/three-jpmorgan-traders-charged-massive-gold-market-manipulation-fraud
Consumer Credit Card Debt Explodes In July Despite Rates At 18-Year Highs : https://www.zerohedge.com/news/2019-09-09/consumer-credit-card-debt-explodes-july-despite-rates-18-year-highs
My comment : Are consumers living on the edge ?
Excerpts:
Despite The Fed signaling rate-cuts as far as the eye can see, US credit-card interest rates have soared to the highest since 2001.
And despite credit card rates being at 18-year highs, US revolving debt (largely made up of credit card debt) has exploded in July to its highest on record.
This was the biggest MoM jump in revolving debt since Nov 2017...
Is the American consumer really that healthy? The recent exuberance over retail sales gains seems to be largely predicated on the back of an average joe who is forced to use his high-cost credit card to cover everyday expenses
Watch BREXIT (possibly long term negative) and China trade talks (possibly short term positive) for stocks.
re : Did Wall Street greed create the China problem? -
My comment : Yes, indeed. I've thought that for a very long time. US corporations are greedy and they think only about short term profits, not long term survivability. US corporations willing gave China their intellectual property in order to sell products to China and get cheap labor. How dumb is that ? Boeing is finding out the costs of doing things on the cheap..it costs a lot more in the end.
Blackrock CIO: The Endgame Is Coming And Central Banks Will Debase Everything To Spark Inflation : https://www.zerohedge.com/news/2019-09-05/blackrock-cio-endgame-coming-and-central-banks-will-debase-everything-spark
My comment : Just need a good way to short Italian bonds. Any ideas ? Also, I think real estate is in a bubble and is currently unaffordable. So, I expect RE to drop as unemployment increases.
Excerpts:
How should one position for such an endgame? As is probably evident, any nominal instrument will be devalued in real terms, so the solution is to hold an asset that maintains its real value – an asset that cannot be printed. We would include stocks (dividend yields are set on payout ratios, companies have some degree of pricing power, and shares outstanding are limited in number), real estate (it is difficult and expensive to expand the stock of real estate), and even commodity currencies, like gold (again, limited supply and expensive to extract). By definition, the worst asset to hold would be a sovereign bond with a negative yield, closely followed by paper money at zero yield, both with a theoretically infinite supply.
Coming back from these extreme policies is very difficult, particularly as the aging demographic and concurrent potential growth trends embedded in the system provide a ceiling on above-trend growth, which otherwise could aid the economy in soft-landing from these policies. And, potentially more importantly, extremely low rates can and will encourage fiscal actors to add more, and potentially dramatically more, debt to an already historically-levered set of economies (e.g. the increased discussion of MMT). Hence, all of this leads one today to consider assets that can participate in an inherent devaluation of the local currency, which is to say: equities, real estate, and even hard assets that have historic value-relevance, such as gold.
re: Gold in the next financial crisis -
Of course that's the big question : What happens to gold in the next financial crisis ? I'm expecting two things to happen:
1) the CBs will print to try to prevent the crisis
2) the associated recession/depression will mean sovereign debt will explode higher
I think gold will be bought as a safe haven. So, I'll be hanging onto my PM miners. Of course, I also expect many to sell expecting a repeat of 2008. That would be the time to add even more PM miners. How does the US handle a $40Trillion national debt which is projected for 2026-2028 ?
As for stocks, I'm waiting for some positive news from the trade talks to drive stocks even higher at which time I will be looking to short MA and possibly BA.
Fiat Currencies and the PMs -
Silver Is Getting There - Endeavour Silver Is Getting There Faster :
https://seekingalpha.com/article/4288978-silver-getting-endeavour-silver-getting-faster?dr=1
Excerpt:
Gold is moving higher because the value of fiat currencies is declining across the board. Years of accommodative central bank policies and a new wave of falling interest rates is eating away at the public's faith and credit worthiness of governments that issue legal tender. Therefore, speculative and investment buying that is widespread has the potential to push the price of silver substantially higher.
The Real "Helicopter Money": Since 2009, China Has Created $21 Trillion Of New Money, More Than Double The US : https://www.zerohedge.com/markets/real-helicopter-money-2009-china-has-created-21-trillion-new-money-more-then-double-us
re : Silver -
I'm holding onto my gold and silver mining shares for some time to come. Just wait till the global economy slows and falls into a severe recession/depression. The sovereign debt will explode higher. The US national debt is projected to hit $40 Trillion between 2026 and 2028. Cutting expenses and raising taxes will not work in a recession in order to reduce the deficits. I'm expect interest rates to rise (which will make the deficits worse) and for gold and silver to hit new all-time highs. I'm also expecting medicare to be means tested but old folks vote too.
Indeed. The next tweet could turn the markets. These are only short term moves though. The global economy is slowing and the CBs have very little resources to prevent a major economic recession/depression. The debt will drive the economy into the ground. A report last night stated that seniors over the age of 60 have $2Trillion in collective debt and the report questioned whether the government would do anything about it. One problem is the Millennials would not be pleased if seniors were bailed out given all of their student debt. Everyone thinks the government is the solution and that they can bail out all of the irresponsible people with money from the responsible people. I'm voting for Mr Yang for President because he wants to give everyone $1000/mo and have Amazon pay for it (problem solved).
Condor Resources (v.CN/CNRIF) is starting to move. Hopefully news soon on Pucamayo.
Disclosure : I hold 650,000 shares of CNRIF
Consumer Credit Rises To Record $4.1 Trillion As Student, Auto Loans Hit All Time High : https://www.zerohedge.com/news/2019-08-07/consumer-credit-rises-record-41-trillion-student-auto-loans-hit-all-time-high
My comment : The US consumer is going to be in deep trouble in the next recession.
'Quantitative Failure' Gives Gold A Chance At $2,000, Says BofAML : https://www.kitco.com/news/2019-08-06/-Quantitative-Failure-Gives-Gold-A-Chance-At-2-000-Says-BofAML.html
My comment : It's time to hold gold and just sit back and wait for the economic collapse.
Excerpt:
“Successive rounds of easing have delivered less bang for the buck and markets are much less enthusiastic about further stimulus. Quantitative failure, under which markets refocus on elevated debt levels or the lack of global growth would likely lead to a material increase in volatility,” the bank said. “Such a sell-off may prompt central banks to ease more aggressively, making gold an even more attractive asset to hold.”
I think V and MA will be the least of the government's worries in the next recession. There will be just too many holes in the dike and the deficits will soar in the next recession due to increased spending and reduced revenues. I fully expect rates to climb as a result.
"Credit Card Splurge" Suggests Imminent Storm : https://www.zerohedge.com/news/2019-07-25/credit-card-splurge-suggests-imminent-storm
My comment : Record credit card debt and 78% of Americans living paycheck to paycheck. Visa and MasterCard are going to take big loses in the next recession as consumers default on unsecured debt.
Higher rates in the next recession ? You betcha, due to the deficits -
Gundlach: Fed Will Be In "Panic Mode" When A Recession Hits : https://www.zerohedge.com/news/2019-07-24/gundlach-fed-will-be-panic-mode-when-recession-hits
Excerpts:
If the signs of a recession, like weakness in trucking volume and manufacturing PMIs, prove true, the Fed will be in panic mode, according to Jeffrey Gundlach. The economy will weaken, rates will go up and the Fed will have to “do something,” to protect against a “spiral” of higher rates feeding and slower growth.
Gundlach predicted a “high likelihood” of a recession before 2020 election. The leading economic indicators (LEIs) also point to a weakening economy. As rates rise, so will interest costs incurred by the government, which would translate to further weakness in the private sector. The underlying problem causing the spiral is the large and expanding federal deficit, according to Gundlach.
“We’re starting out before the recession with a huge debt problem,” he said, “that will grow faster in a recession.”
In response, Fed policy has become more “evolutionary,” he said. It has been talking about quantitative easing (QE) as a “normal” policy tool, instead of one whose use is restricted to crises. The Fed is softening people up, he said, so that if rates rise, it will do QE and then emulate the Bank of Japan and other central banks to take rates negative.
“There is a real risk of rising rates,” he said, which would slow economic growth and contribute to a more destructive recession. If a recession comes this year, the yield curve will steepen, he said. Indeed, that steepening has already started.
But there has never been a recession in the post-war period without the LEIs first going negative.
Economic weakness is already evident in metrics such as trucking volume and manufacturing PMIs, which he said are deteriorating but not at “problem levels” yet.
He was asked how negative monetary policy can go before there is a run on a bank. Based on Deutsche Bank, he said, it is “not far from now.”
The dollar has “lots of room to do down,” Gundlach said, because Fed policy will support that movement.
Risk parity strategies have done well this year, he said, because all asset classes are up. Risk parity is a long-only strategy and will do well in a positive market. If you really wanted to be up, he said, you would own gold miners, which are "crushing it."
U.S. equity investors will be disheartened to hear that he said we are “near the high of the year on the S&P.”
"There is a much greater chance than people appreciate that there will be a negative sign on the stock market performance at some point this year", Gundlach warned.
But he qualified that comment by saying it was not a high conviction prediction.
A Bank With $49 Trillion In Derivatives Exposure Is Melting Down Before Our Eyes : https://www.zerohedge.com/news/2019-07-20/bank-49-trillion-derivatives-exposure-melting-down-our-eyes
My comment: So, we don't really know what the trigger will be (my guess is China or derivatives), but whatever it is, it will topple a lot of very big dominoes very quickly. I see Jim Rogers is waiting for gold to collapse before he buys...I'm betting he is wrong and that gold only moves a lot higher from here. My own account is up 100% from the lows of a couple of months ago.
Options rely very much on timing and do best when something big triggers a reaction in the underlying stock. The Fed also makes options very difficult to bet on because they can control the market, not individual stocks, for now. Still, some big news item could make options very profitable. I still like MA puts, but I'm waiting for a push higher in the market.
I think it just means a lot more QE. But will QE help or hurt ? I think it will help gold, not so sure about stocks. And the sovereign debt, including the US national debt, will soar.
Dallas Fed President "Concerned" Cutting Rates Will Result In A "Painful" Bubble : https://www.zerohedge.com/news/2019-06-24/dallas-fed-president-concerned-cutting-rates-will-result-painful-bubble
My comment: The Fed is several years and a few $Trillion of stimulus too late for that kind of concern. The bubble is about to explode and Fed will caught flatfooted.
Excerpt:
Dallas Fed, Kaplan said that "monetary accommodation is not “free.” I am concerned that adding monetary stimulus, at this juncture, would contribute to a build-up of excesses and imbalances in the economy which may ultimately prove to be difficult and painful to manage."
US Government Spending Soars To All Time High As Deficit Hits Record For Month Of May : https://www.zerohedge.com/news/2019-06-12/us-government-spending-soars-all-time-high-deficit-hits-record-month-may
My comment: Throw in the off-budget Medicaid and Medicare expenses and the deficits will soon be $2Trillion annually for as far as the eye can see. Also, watch rates rise as the national debt soars to $40Trillion between 2026 and 2028.
Excerpt:
As a result, the budget deficit for the first eight months of the fiscal year shot up to $738.6 billion, a whopping 38.8% higher than the $532 billion reported for the same period last year, largely the result of soaring government spending, while receipts are starting to turn lower. As of May, year-to-date receipts were up 2.3%, while outlays rose 9.3%.
And since total debt, which recently surpassed $22 trillion having, and is only set to keep rising - once the latest pesky debt ceiling issue is resolved in a few months - expect interest on the debt to keep rising, especially if inflation comes back with a bang and the Fed reverts to its tightening trajectory, and hit $1 trillion per year as soon as 2021, making it one of the biggest spending categories, and on pace to surpass total US defense spending (roughly $950BN per year) in dollar terms in just two years.
Kyle Bass Closes Yuan Short After Nearly 4 Years : https://www.zerohedge.com/news/2019-05-14/kyle-bass-closes-yuan-short-after-nearly-4-years
Excerpt:
More recently, Bass published one of his first investor letters in three years, where he outlined a new bet against the Hong Kong dollar, which has been pegged to the greenback for 36 years. Bass argued that Hong Kong was on the cusp of a balance-of-payments crisis, and that it would soon be forced to abandon the peg, creating huge opportunities for short sellers willing to bet against the currency.
The Hong Kong Monetary Authority has spent 80% of its reserves over the past year or so, and if the monetary authority's cash reserves drop to zero, Bass believes rates in Hong Kong will spike, threatening the banking system and forcing the HKMA to act. Hong Kong "currently sits atop one of the largest financial time bombs in history," Bass said.
I expect both China and the US to take a hard stance on trade negotiations going forward. That will mean no deal anytime soon. But will it mean a much lower market ? A lot depends on the Fed and market support from other sources (eg PPT). It also depends on whether China adds stimulus. Trump seems content with imposing 25% tariffs on all Chinese imports. It will take time, but the end result will be a global slowdown and the Fed will react to that. In the end, it's like swimming against the tide.
$40T National debt by 2028 ? -
My comment: Here are some excerpts from John Mauldin's latest report, 'How I Learned to Love the Debt', at https://www.mauldineconomics.com/frontlinethoughts/how-i-learned-to-love-the-debt . I do not think the $40T national debt sometime in 2026- 2028 is an unreasonable expectation. At some point the debt just spirals out of control (a debt trap).
Excerpts:
The off-budget expenditures mean that, even without a recession, the debt will rise $1.6 trillion per year for the next decade. That means the national debt will be $40 trillion by 2029.
If, as I expect, there is a recession, we will reach that $40 trillion number sooner, sometime in 2026 through 2028. The deficit in a recession will be a minimum of $2 trillion per year and maybe much higher than those suggested above.
According to the Institute for International Finance, global debt was $244 trillion as of Q3 2018. More than half of it was financial and non-financial corporate debt. About 27% ($65 trillion) was government debt (not counting unfunded liabilities, which are huge).
The dominoes are starting to drop as expected. To review…
The entire world is up to its ears in debt, thanks to a decade of central bank action.
We are late in a growth cycle that is going to end, possibly soon.
Whenever it does, US government borrowing needs will skyrocket higher from already astronomical levels.
The Federal Reserve will end up monetizing this new debt.
Working off that debt will take years, possibly decades. Hence the long, slow Japanization I’ve described. I don’t think we will endure it for 30 years like Japan has. We will instead force a worldwide default, which I’ve dubbed the Great Reset.
Alarms Go Off As Credit Card Charge-Offs Soar To Seven Year High : https://www.zerohedge.com/news/2019-04-26/alarms-go-credit-card-charge-offs-soar-seven-year-high
Excerpt:
According to advance data from Bloomberg Intelligence, which will soon flow through to the S&P/Experian Bankcard Default Index, after staying largely flat for much of 2017 and 2018, the first three months of 2019 saw a troubling jump in the nationwide credit card charge-off, or default rate to 3.82%, the highest in seven years or since the second quarter of 2012. At the same time, the number of loans 30-days past due, a leading indicator of future write-offs, jumped at all seven of the largest U.S. card issuers.
That said, it's certainly not a crisis yet: charge-offs remain not far from historic lows as banks benefit from low unemployment rates in the US. On the other hand, with overall interest rates in the US still near historic, record lows, the fact that charge offs are already surging is just another reason why the Fed will find it impossible to hike rates higher, and in fact, if the deteriorating default trend continues, the central bank may have no choice but to cut rates soon. And while that may kick the can for a few quarter, all such a goosing of US consumer will achieve, is make the next recession - and financial crisis - that much worse when it finally hits, because if American's can(not) make their credit card payment when unemployment is a record low and GDP is - allegedly - growing above 3%, one wonder what will happen when the next recession does finally hit.
70% Of Consumers With Credit Cards Say They Can't Pay It Off This Year : https://www.zerohedge.com/news/2019-03-20/70-consumers-credit-cards-say-they-cant-pay-it-year
My Comment : Just wait till the recession. CC debt will be defaulted on and the CC companies will take a big hit.
Excerpts:
Zerohedge readers who follow our monthly consumer credit updates already knew, aggregate household debt balances jumped in 4Q18. As of late December, total household indebtedness was at a staggering $13.54 trillion, $32 billion higher than 3Q18.
More troubling is that 37 million Americans had a 90-day delinquent strike added to their credit report last quarter, an increase of two million from the fourth quarter of 2017. These 37 million delinquent accounts held roughly $68 billion in debt, or roughly the market cap of BlackRock, Inc.
Multiple reports show the consumer is on the cusp of a dangerous deleveraging, an ominous sign that the credit cycle has likely turned. Winter is here.
May is considering a 4th try for her Brexit plan. Also, no red days are allowed.
12 Statistics That Prove The US Is Facing A Consumer Debt Apocalypse :
https://www.zerohedge.com/news/2019-03-13/12-statistics-prove-us-facing-consumer-debt-apocalypse
Excerpt:
In the entire history of the United States, consumers have never been in so much debt. And that would not be a crisis as long as the vast majority of us were regularly making our debt payments, but as you will see below delinquency levels are starting to rise to extremely alarming levels. In fact, some of the numbers that are coming in are even worse than we witnessed at any point during the last recession. If things are this bad already, what are they going to look like once the economy really gets bad?
Because even though it appears that we are heading into a new recession, according to the Federal Reserve it has not officially begun yet. That means that much worse is yet to come. Just like last time, millions of Americans will likely lose their jobs, and without an income most of those that suddenly find themselves unemployed will not be able to pay their bills. The stage is set for the largest tsunami of consumer debt defaults that this country has ever seen, and that will absolutely devastate major financial institutions all across America.