March Consumer Spending Hits Three-Year Low For Average Americans
Tyler Durden on 04/06/2015 10:43 -0400
In “sad but true” news, we recently reported that even as wage growth for 80% of America’s workforce has sputtered and stalled, there’s never been a better time to be a “supervisor”:
With more than three quarters of US workers trapped in what we will call “wage growth hell,” and whose only chance at seeing a pay hike appears to rest on holding out for a promotion that’s probably not forthcoming, it doesn’t exactly come as a surprise that self-reported consumer spending hit a three-year low for March last month and has trended sharply lower this year when compared to 2014.
Of course those with higher incomes hiked their spending by 75% more than those with middle- and lower-incomes. Here’s more via Gallup:
Average self-reports of spending in March increased by $7 among upper-income Americans — those with annual household incomes of $90,000 a year or more — to reach $144. Among middle- and lower-income Americans, those with incomes that are less than $90,000, spending increased by $4 from February to reach $75 in March.
The broad trend shows spending recovering after reaching lows during the Great Recession and its aftermath, but for the first months of 2015, spending has been lower than it was for most months last year.
Jim Sinclair’s Commentary
Thanks to the short sellers, both legal and naked shorts, gold mineable held by gold producing companies has not been this cheap in the last century. That is the number of ounces of mineable gold held by a company divided into the value of the company’s capitalization. It defies all logic and proves the complete disconnect between the price of gold shares and gold.
We’ve Never Seen This Before In The Gold Market
Submitted by Tyler Durden on 04/06/2015 13:40 -0400
Submitted by Dave Forrest via OilPrice.com,
It might prove to be a one-off. But one group in the gold industry this week forged ahead with a unique strategy – which might just change the market.
The group is India’s largest jewellery-maker, Rajesh Exports. Which said that it is taking an unusual step in securing gold supply for its operations.
Buying gold mines.
The firm’s owner, Rajesh Mehta, told reporters in Australia this week that he is visiting the country to vet potential mining acquisitions. Adding that his company has hired investment bankers to identify assets that could “ensure a reliable and permanent gold supply-line to our company”.
The buys are apparently sizeable. With Mehta indicating that he may spend up to $700 million to acquire “equity or loan” interests in mining projects.
“We would also like to invest in the retail jewelry sector in Australia,” he said. “That is, take the gold from here, process it in India and then supply the jewelry back here in the retail line that we set up here.”
Of course, the words of one company don’t make an industry trend. But in the case of Rajesh Exports, the firm does have substantial clout in terms of gold demand — currently consuming about 140 tons per year of the metal. Equal to about 15% of India’s total yearly gold import volume.
It also signals an interesting trend in natural resources of late. Where end users of metal globally are becoming some of the most active parties in funding new mining projects.
We’ve seen similar moves from state-owned metals firms in Asia — in markets ranging from copper to platinum to coal. But the Rajesh Exports asset buy would be one of the first-ever project transactions by an end user for the gold market. Watch for announcements on specific investments for the firm.
Fed Rate Rise Would Smoke Derivatives-Bill Holter
By Greg Hunter’s USAWatchdog.com (Early Sunday Release)
Financial writer Bill Holter says don’t expect the economy to get better anytime soon. Holter says, “We’re probably in recession again . . . the economy has been quite weak. It looks to me we could be breaking down in the stock market. This is going to be a really critical week.”
On the Federal Reserve raising interest rates, Holter contends, “From a credibility standpoint, the Fed has to raise rates. In a real world, I don’t think they can raise rates. If they raise rates, my guess within two weeks you will see all the markets close. A rate rise, even a quarter of a point in Fed Funds, would smoke derivatives. You would see a chain reaction, and we would probably see a chain reaction even before they raise rates.”
Holter contends the banking system is interconnected and very weak and explains his point by saying, “Look at what happened when the Swiss dropped their peg to the euro. That basically has tanked the Austrian banking system. The Austrian banking system is on the verge of collapse because they lent in Swiss Francs. The strength in the Swiss Franc makes those loans much more difficult to pay back. That’s thrown the entire (Austrian) banking system out of kilter. If you do that with the dollar and you raise rates, and the dollar gets strong or spikes up 5% or 10% overnight, what’s that going to do to banks all over the world? That’s going to create a smoking black hole of derivatives.”
On the possibility banks bailing themselves out with depositor money, or so-called bank bail-ins, Holter predicts, “I think it’s highly likely. Once this goes, it’s going to go really quickly. I’ve said this before, this will go completely around the world within 48 hours. Would they bail-in the banks within 48 hours? Probably not, but our banks would not be open, and we would probably have a banking holiday. That means your credit card, ATM or nothing works.”
Holter says his top picks that will cause the system to crash this year are Greece, Ukraine and Austria. Holter explains, “Ukraine has a dire financial situation and talking about a big payment due in June that they can’t pay. They don’t have the money. We also heard news that 50 Abrams tanks were sent from the U.S. on the way to Ukraine. That’s terrible news. That, on its own, can start a war. . . . If that war went hot and a nuke was lit up, within 48 hours the entire system would be shut down.” Holter goes on to say the third big top in what he calls a three ring circus is Austria. Holter says, “It’s basically the Austrian system over a very small payment, a $600 million payment is throwing them off kilter. It’s come about because of the loans made in Swiss Francs. The Swiss Franc was revalued (30%) higher. So, now you have a whole bunch of loans in Austria where the loan is valued higher than the property itself. . . . That’s thrown the Austrian banking system into bankruptcy, and Austria is one of the strong European countries.”
Thailand hopes for trade and energy cooperation with Russia — prime minister.
April 06, 11:21 UTC+3
BANGKOK, April 6. /TASS/. Thailand wants to develop cooperation with Russia in trade, energy and tourism, Prime Minister Prayut Chan-o-cha said in an exclusive interview with TASS director general Mikhail Gusman dedicated to Russian Prime Minister Dmitry Medvedev’s upcoming visit to Bangkok on April 7-8.
Chan-o-cha said considers the meeting with Medvedev “very important” and feels “a little nervous” ahead of the Russian prime minister’s visit. “I am waiting for a meeting with the Russian prime minister as with a friend whom I made friends with in Myanmar,” the politician noted. Chan-o-cha and Medvedev met at the East Asia Summit in 2014 in Naypyidaw.
The talks in Bangkok will be devoted to “a wide range of issues,” Chan-o-cha said. He expressed hope for expanding trade relations with Russia, as Thailand is the largest rice producer in the world and one of the largest seafood exporters. “In talks with the Russian prime minister, I hope to reach such agreements that may be implemented right away, without delay,” he said.
Thailand intends to improve the quality of products exported to Russia and attract investment from Moscow. “Fishing industry is a very important topic. We have fishing vessels, a lot of them, but they are obsolete. We can establish joint enterprises [with Russia], modernize our vessels and simultaneously use yours, catching fish together,” Chan-o-cha said.
The prime minister said he would also like to discuss cooperation in the financial sphere with Medvedev. “Many countries participate in our financial sector. I want Russia to take part, too,” he stressed.
Issues of cooperation in the oil and gas sphere will also be high on the agenda. “Despite long distance that separates us [with Russia], we need to think about ways to cooperate on mutually beneficial conditions,” Chan-o-cha said.
Tourism will also be discussed at the meeting between the prime ministers. “We will set up a Thai-Russian center for tourism development. A document for this is ready,” Chan-o-cha noted.
Author : Bill Holter
Published: April 6th, 2015
We seem to have finally arrived at some sort of moment of truth regarding Greece and their inclusion in the EU. The speculation is they will be out of money by April 9th, this Thursday, unable to make a less than 500 million euro payment. Please keep in mind they have already been raiding the country’s pension plans to fund day to day services. How large of a “dent” they have already made remains to be seen but that is not the point. The point is this, any person, corporation or government who needs to dig into retirement savings for daily operations is like buying a carton of cigarettes with a credit card at 14.99% …and then carrying the balance!
Before laying out their potential options, please keep in mind that Mr. Varoufakis was in New York this past weekend meeting with Christine Lagarde , Mr. Tsipras plans a trip to Moscow for Tuesday. Are they pleading for unpaid bailout funds from the IMF? And if they don’t get them, do they cut a deal and fall into Russia’s arms? This, just as so many nations have pledged their allegiance to the East and the AIIB bank (topic for tomorrow), Greece may be forced into a pivot toward the rising Sun. They do however have something left to offer, they stand between Turkey and Eastern Europe, they can provide a route for Russian gas to flow to Europe.
What options does Greece have left? As I see it, they really only have three, and all with blurry edges. First, they can cut some sort of deal with Germany (the EU) and the IMF. They can kick the can down the road by extending maturities of existing debt and restructuring it. The IMF still owes past monies pledged in bailouts, will they really throw new money away knowing it cannot be paid back? Obviously this does nothing to face the real problem, Greece simply has too much debt for the size of their economy (this is a global problem but not “admitted yet”). This option may have been taken off the table on Friday. As a side note, it was reported Friday by Der Spiegel the IMF evacuated their Athens office. Why would they do this? I can only come up with one or two scenarios. The IMF is giving up and know it is over … or, they are getting out of town while they still can. Maybe they realize massive social unrest will be unleashed and don’t want to see their employees hanging from lamp posts? This was denied by Saturday but interesting nonetheless!
Their second option is to just default. If they cannot make debt payments, they simply don’t pay and thus become classified as a default. The next question is whether or not they would stay in the EU? Would they want to? Or even be allowed to? Option number three, an offshoot of number two, is Greece defaults and they decide to leave the EU (or are kicked out) and join team Russia.
My guess is we will see Greece default, leave the EU and cut a gas pipeline deal with Russia becoming a stepping stone for China’s “silk road”. At this point, it’s the only thing that makes any sense …if you are Greek and try to do what is best for Greece. A story also making the rounds on Friday was preparations to re issue the “drachma“. If this is true, I would say the decision to leave the EU has already been made except for the formalities! The next question is the biggie, and one which will affect the entire world. How do the markets and financial systems react to this?
April 6, 2015
Last week, the government of China closed the enrollment window to join its new Asian Infrastructure Investment Bank (AIIB) as a ‘founding member’.
The AIIB, if you haven’t heard of this yet, is designed to essentially displace the Western-controlled IMF and World Bank.
And prior to last Tuesday’s deadline, dozens of nations around the world from New Zealand to Denmark signed up to join.
Even staunch US allies like the United Kingdom and Israel agreed to be part of AIIB.
This is a huge coup for China, and probably the most obvious sign yet that the global financial system is in for a giant reset.
Under the weight of nearly incalculable debt and liabilities, the United States is in terminal decline as the dominant superpower.
From Ancient Rome to the British Empire, this has happened many other times in history.
This time is not different. And everyone else in the world seems to get it. . . except for the US government.
They act as if the financial universe will revolve around America forever—that they can print money, indebt future generations, and wage war as much as they want without consequence.
But they’re completely blind.
Practically the entire world is lining up against them to form a brand new financial system that is no longer controlled by the US government.
In an editorial published in the Financial Times, former US Treasury Secretary Larry Summers summed it up plainly saying that this “may be remembered as the moment the United States lost its role as the underwriter of the global economic system.”
The consequences of this shift away from a US-controlled financial system cannot be understated.
No more endless spending. No more solving problems with more debt and more money printing.
Suddenly it will be time for painful decisions in the US—like slashing Social Security benefits, drastically scaling back the military, and selectively defaulting on the debt.
Make no mistake, this transition is going to be bumpy.
China may already be the largest economy in the world by many measurements. But the Chinese economy is in for some serious strain over the coming months and years as its massive credit bubble bursts.
So in addition to America’s fiscal and monetary challenges, the world is going to have to suffer through a potential Chinese crisis as well.
But this does not affect the long-term story. Remember, nothing goes up or down in a straight line.
On its road to becoming the global superpower in the 20th century, the United States suffered its own series of deep economic setbacks—from the Panic of 1907 to the Great Depression, and several recessions in between.
China’s path will likely be similar.
This is one of the most important trends of our time. And it’s happening right in front of our eyes.
The world is rapidly throwing off US financial domination. The global financial system is starting to reset. Global financial and political dominance is shifting.
As with any great change, there are going to be people who get completely wiped out—primarily, people who didn’t see the change coming or chose to ignore the trend.
The flip side of this is that, for anyone with the intellectual courage and independence of mind to be paying attention, this is a time of extraordinary opportunity.
Some of the wealthiest people in Europe were minted in just a few years during the Weimar hyperinflation of the 1920s.
And some of the greatest fortunes in the world (some of which still exist today) were made in the early days of the United States as the country rose to dominance.
That’s ultimately the opportunity we have today. We can’t do anything about the trend. It’s happening.
What we can control is how we react to it: ignore it at our own peril, or seize the opportunities that come from it.