Oil hits 2019 high on U.S. plan to tighten squeeze on Iran

Source: Reuters

“Oil topped $74 a barrel on Monday, the highest since November, as the United States announced a further clampdown on Iranian oil exports, raising concern of tighter global supplies. The United States on Monday said it will eliminate in May all waivers granted to eight economies allowing them to buy Iranian oil without facing U.S. sanctions, as it ratcheted up pressure to choke off Iran’s oil income. ‘This does bring a lot more uncertainty in terms of global supplies,’ said Olivier Jakob, analyst at Petromatrix. ‘It is a bullish surprise for the market.’….Secretary of State Mike Pompeo on Monday reiterated that Washington’s goal was to bring down exports of Iranian oil to zero and added the United States had no plans to give any grace period beyond May 1 for countries to comply….An end to the exemptions would hit Asian buyers hardest. Iran’s biggest oil customers are China and India, both of which have been lobbying for an extension to the sanction waivers.”

Iran Threatens To Close Strait Of Hormuz If US Blocks Its Oil Exports

Source: Zero Hedge

“Tehran has gone on the offensive and on Monday a senior Iranian military official said the Islamic Republic will close the Strait of Hormuz if it’s prevented from using it, the state-run Fars news agency reported. ‘The Strait of Hormuz based on international law is a waterway and if we are prevented from using it, we will close it,’ Reuters reported, citing Alireza Tangsiri, head of the revolutionary guards navy force….To be sure, this is not the first time Iran has made such a threat: back in December Iran warned it would close the global oil chokepoint, when it said that ‘if someday, the United States decides to block Iran’s oil (exports), no oil will be exported from the Persian Gulf.’….The Strait of Hormuz is a narrow waterway carrying a third of the world’s traded oil that Iranian officials have threatened to block in retaliation for sanctions targeting the country’s nuclear program. The U.S. has said it would move to stop any Iranian attempt to block the waterway…Whether or not Russia and China back Iran could mean the difference between a localized conflict and World War III.”

Social Security Costs to Exceed Income in 2020, Trustees Say

Source: Wall Street Journal

“Social Security’s costs are expected to exceed its income in 2020 for the first time since 1982….By 2035, the trust funds for both programs will be depleted, and Social Security will no longer be able to pay its full scheduled benefits unless Congress steps in to shore up the program, according to the report….’Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing,’ the trustees wrote, urging lawmakers to take action sooner rather than later to give policy makers enough time to phase in changes. Without changes, by 2035 Social Security recipients will get only about three-quarters of their scheduled benefits. The costs of both programs are projected to soar as a share of the economy over the coming years, as a wave of retiring baby boomers increases the number of program beneficiaries, and lower birthrates over the past few decades hold back employment growth and economic output…Both programs together account for 45% of federal spending….The report also said Medicare’s hospital-insurance fund would be depleted in 2026, unchanged from last year’s report, as lower payroll-tax collections and reduced income from the taxation of Social Security benefits weighed on the trust fund’s income.”

Why you need to own gold

Source: Moneyweek

“‘Deficits don’t matter.’ That’s the rallying cry for those who support the idea of modern monetary theory (MMT). It’s a simple enough idea. The government can spend as much money as it wants – whether to fund the healthcare service; pay for policing, firemen and teachers; or to build aircraft carriers, roads and railways. The only time it needs to worry about the quantity of money it is spending is when inflation increases. Every consumer is familiar with inflation, but economists just don’t seem to see it. When we look at what we are spending on rent, cars, petrol, insurance, train tickets, Sky, Netflix, Microsoft, food and schooling, we can see prices rising….As the saying goes: ‘there is many a slip between cup and lip’. If you really want to know where the recent surge in populism has sprung from, it’s down to this gap between the experience of regular people and the perception of the academics who make policy decisions…That’s what we are now seeing with the debates over MMT….When a government spends money it doesn’t have, for what are often vanity projects or appeasement payments to workers who feel disenfranchised, that is directly inflationary….When real rates are negative…That is when money really starts to move into precious metals and gold in particular. Politicians globally have now observed that experiments with money printing and deficit spending have not yet led to the collapse of the financial system, or galloping inflation. So they are starting to promise huge spending programs to capture the imaginations and votes of those who are dissatisfied with the status quo. They know as well as the rest of us that the politician who makes the biggest promises usually wins the election. As a result, the base case has to be that we are heading for negative real rates, and gold is going to take off. If you don’t already own some – either to hedge against inflation or against financial mismanagement – it’s time to think about allocating some of your capital to the yellow metal.”

What if America Tried Capitalism?

Source: Bonner And Partners

“We’ve seen over the last few days that socialism – in all its forms – doesn’t work very well. You soon run out of other people’s money…But today, we turn our attention to those who say we need to ‘reform’ capitalism to save it….The first thing we notice is that anyone who says he wants to ‘reform’ or ‘improve’ capitalism must not know what it is. Capitalism doesn’t allow you to pick winners and losers. There is no way to improve it. It is a free spirit… wandering around, with no knowable destination… going where it wilst, at its own speed, in its own way…Which is precisely what so aggravates the world improvers. AOC and Bernie Sanders whoop for socialism because they think capitalism has failed….America’s economy is not really capitalist. It is a form of late, degenerate state-controlled, crony-manipulated, empire-addled, pseudo-capitalist claptrap. A quarter of the economy is directly run by the feds. Another quarter – including medical care and education – is guided and approved by them. And the remainder is chock-a-block with rules and regulations… We don’t know what America would look like if capitalism were permitted. But it would certainly be a whole lot richer. Especially the working stiffs….It was not capitalism that boosted stock prices close to 150% of GDP while wages flattened. Normally, the stock market is worth about 80% of GDP….Where did that money come from? The feds were lending fake money at fake rates, so the corporations could earn fake profits and buy back their own shares with free money. The result? A huge shift of wealth from the middle classes of Main Street to the upper classes of Wall Street, Washington, and cronies everywhere.”

World’s Central Banks Want More Gold

Source: Bloomberg

“India’s central bank is likely to join counterparts in Russia and China scooping up gold this year, adding to its record holdings and lending support to worldwide bullion demand as top economies diversify their reserves. The Reserve Bank of India’s purchases are part of a wider picture across developing economies that are looking at de-dollarizing their foreign-exchange reserves, according to Ross Strachan at Capital Economics Ltd. The RBI may purchase 1.5 million ounces in 2019, or about 46.7 tons, according to Howie Lee, an economist at Oversea-Chinese Banking Corp….The rising U.S. deficit and the Federal Reserve signaling a pause on interest rate hikes could be factors that may potentially compel the RBI to add more to its gold holdings, according to Shekhar Bhandari, the Mumbai-based business head of global transaction banking and precious metals at Kotak Mahindra Bank Ltd….’This is an argument for further buying,’ said Carsten Fritsch, senior commodity analyst at Commerzbank AG in Frankfurt.”

Don’t be ‘fooled’ by these fresh highs for stocks

Source: Marketwatch

“Our call of the day, from Naeem Aslam, analyst at ThinkMarkets UK, says investors should be wary of these latest gains for equities. He warns clients ‘not to be fooled…as smart money is ready to short.’ Aslam explains that even as nearly 79% of S&P 500 companies have beaten forecasts in the first-quarter reporting season thus far, hedge funds or institutional investors don’t seem to have bought into this….Latest data shows that bullish sentiment for the S&P decreased by 36%, meaning more of those investors are betting on a fall for stocks, or a taking ‘short’ position. ‘This shows that smart money is ready to bank big if the market falls again. Moreover, one thing is for certain when it comes to smart money, it doesn’t like to play the catch-up game,’ said Aslam….Aslam says…one thing keeping institutional investors out is the view that stocks are too expensive – a debate that rages on. In the space of a week, investors have shifted from plain greedy to extremely greedy, says CNN’s aptly named Fear & Greed Index.”

Adult children cost many parents their retirement savings

Source: CBS News

“Half of American parents are unable to save as much as they’d like to for retirement, and their grown offspring – whom they still count as dependents – are to blame, according to a new Bankrate.com study….There’s a generational divide when it comes to perceptions of parents supporting adult children, the study found. Millennials between the ages of 23 and 38 believe they should be supported for longer, and expect some expenses, like student loans, to be covered up to the age of 23, according to the study. Baby boomers, meanwhile, think parents should wean children off their bank accounts sooner across almost every category of expense, including cell phone bills, car payments and travel costs….It’s overwhelmingly a bad idea for parents to support their adult children, mental health experts say. Providing one’s progeny with a financial lifeline well into adulthood can deprive them of developing important tools that will serve them later in life. If they don’t take care of their own finances, they don’t learn to manage bills, make sacrifices or be autonomous.”

Americans’ Stress, Worry and Anger Intensified in 2018

Source: Gallup

“Even as their economy roared, more Americans were stressed, angry and worried last year than they have been at most points during the past decade. Asked about their feelings the previous day, the majority of Americans (55%) in 2018 said they had experienced stress during a lot of the day, nearly half (45%) said they felt worried a lot and more than one in five (22%) said they felt anger a lot. Additionally, Gallup’s latest annual update on the world’s emotional state shows Americans were more likely to be stressed and worried than much of the world. In fact, the 55% of Americans who experienced stress was one of the highest rates out of the 143 countries studied and it beat the global average (35%) by a full 20 percentage points. The U.S. even ties statistically with Greece, which has led the world on this measure every year since 2012….Younger Americans between the ages of 15 and 49 are among the most stressed, worried and angry in the U.S. Roughly two in three of those younger than 50 said they experienced stress a lot, about half said they felt worried a lot and at least one in four or more felt anger a lot….Higher levels of stress, anger and worry nudged Americans’ overall Negative Experience Index to 35 — three points higher than any previous score to date. The disconnect between a strong economy and Americans’ increasing negative emotions illustrates how GDP and other hard economic data only tell part of the story.”

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