Bank of America CEO: ‘We want a cashless society’
Source: Yahoo Finance
“Bank of America CEO Brian Moynihan embraced the digital money movement on Wednesday, saying his firm has ‘more to gain than anybody’ from the booming trend of non-cash transactions. ‘We want a cashless society,’ Moynihan, who heads up the second largest U.S. bank, told attendees at Fortune’s Brainstorm Finance conference. He pointed out that more than half of all money transactions are already processed electronically, with the rise of cryptocurrencies, and payment systems like PayPal, Zelle, and digital wallets. A 2018 San Francisco Federal Reserve report found that ‘cash continues to be the most frequently used payment instrument, representing 30 percent of all transactions and 55 percent of transactions under $10.’….The banking sector has ‘already digitized,’ Moynihan said on Wednesday. ‘The business has moved digitally and it will continue to move that way.'”
“The Dollar Is Becoming Toxic” – Russian Intel Chief Slams “Aggressive, Unpredictable” US Behavior
Source: Zero Hedge
“China is following Russia’s lead and reducing its US Treasury exposure (to two-year lows), as it increases its gold reserves (for six straight months), the unipolar US hegemon faces an ugly trend among the ‘rest of the world’ attempting to de-dollarize, as Sergey Naryshkin, director of the Russian Foreign Intelligence Service, calls the US dollar is an anachronism of the modern world economy. Countries across the globe, including Russia, China, India, and others, have been working to diversify their foreign reserves away from the greenback. RT reports, the head of the Russian intelligence service has now voiced those concerns clearly – that the use of the dollar presents risks and more nations are looking into finding alternative tools for doing business. ‘It seems abnormal that the United States, behaving so aggressively and unpredictably, continues to be the holder of the main reserve currency…Gradually, the dollar is becoming toxic.’….So far, Moscow has managed to partially phase out the dollar from its exports, signing currency-swap agreements with a number of countries, including China, India, and Iran. Russia has recently proposed using the euro instead of the US dollar in trade with the European Union. This comes on the heels of Malaysian Prime Minister Dr. Mahathir Mohamad proposing a gold-backed currency as a unit of account for trade between East Asian nations.”
The Fed Prepares for Mistake #3
Source: Bonner/Bonner And Partners
“You’ll recall that Mistake #2 is raising interest rates to try to mitigate the damage done by Mistake #1 (leaving rates too low for too long). Mistake #3 is dropping them too sharply to try to undo the damage caused by Mistake #2….Investors believe that central banks control stock prices – which, of course, they do… to a point…The tide of hope and optimism that had begun with the Reagan Administration crested in 1999. It has been downhill ever since. Since then, GDP growth rates have gone down; real incomes for real people – in America – have declined…From a positive-sum, win-win world… it ebbed back to a zero-sum, win-lose world. From Greed to Fear, that is. That’s what we’re calling the big moves in our Dow-to-Gold gauge. It peaked out in 1999 at over 40 (it took more than 40 ounces of gold to buy the Dow). Today, it’s around 20. Three times in the last century, the gauge went below 5. Our guess is that it would have reached its rendezvous with destiny again – below 5 ounces of gold to the Dow – in 2009, had the Fed not intervened. But the Fed panicked. It then disguised, delayed, and denied the truth of this tidal shift by falsifying the most important price signal in capitalism – the price of capital itself. Mispricing capital – by setting artificially low interest rates – made the downtrend worse. Growth slowed further. The Swamp deepened. The empire grew bigger and more corrupt. The downward trend is not limited to the U.S. Europe, Japan, and China all show the same symptoms.”
Social Security Is Staring at Its First Real Shortfall in Decades
Source: New York Times
“Next year, for the first time since 1982, the program must start drawing down its assets in order to pay retirees all of the benefits they have been promised, according to the latest government projections. Unless a political solution is reached, Social Security’s so-called trust funds are expected to be depleted within about 15 years. Then, something that has been unimaginable for decades would be required under current law: Benefit checks for retirees would be cut by about 20 percent across the board. ‘Old people not getting the Social Security checks they have been promised? That has been unthinkable in America… it’s just too horrible,’ said Alicia Munnell, the director of the Center for Retirement Research at Boston College. ‘Action has to be taken to prevent it.’ While the issue is certain to be politically contentious, it is barely being talked about in Washington and at 2020 campaign events….Social Security has a long-known basic math problem: more money will be going out than coming in. Roughly 10,000 baby boomers are retiring each day, with insufficient numbers of younger people entering the work force to pay into the system and support them. And life expectancy is increasing. By 2035, Social Security estimates, the number of Americans 65 or older will increase to more than 79 million, from about 49 million now.”
Bond king Jeffrey Gundlach bets on gold and rings alarm bell on potential U.S. recession
Source: Marketwatch
“Investors seem eager to insure themselves against geopolitical tensions that have flared up in the Middle East and Hong Kong this week, with gold vaulting on Friday. Meanwhile, U.S. technology stocks might not win any popularity contests as a red flag cropped up over how the trade war is biting that industry….Trade tensions are also one reason DoubleLine Capital Chief Executive Officer Jeffrey Gundlach now sees a bigger chance of a recession hitting U.S. shores in the not-too-distant future. Providing our call of the day, Gundlach predicted a 40% to 50% chance of a U.S. recession within the next six months and a 65% chance of that happening in the next 12 months, in a webcast to clients late Thursday….Gundlach is not expecting an interest-rate cut when the Fed meets next week. Instead, he notes the bond market is tipping two or three cuts by the end of the year. As for where Gundlach is putting his money, he said he is ‘certainly long gold,’ given expectations the dollar, which stands to take a hit if the Fed lowers interest rates, will close the year weaker.”
If Morgan Stanley Is Right, The World Is Now In A Recession
Source: Zero Hedge
“Morgan Stanley’s ‘prophet of doom’, chief US equity strategist Michael Wilson, who writes this morning that he ‘sees an increasingly risky environment as deteriorating data and a dovish Fed stand off.’…The strategist writes, ‘data points and analyst sentiment are falling and we think PMIs and earnings revisions are next.’ Wilson warns, ‘be prepared for a sharp fall in Manufacturing Purchasing Managers’ Index (PMI)’ as the MSBCI suggests the Mfg PMI New Orders component will fall to 40 over the next few months, which would be down approximately 25% on a y/y basis. Another way of putting it – if Morgan Stanley’s indicator is right, the world is already in a recession….Shifting to markets, Wilson notes that the Fed has tightened ‘a lot’ since 2014, when one accounts for QE and QT. In fact, based on the Atlanta Fed ‘Shadow’ Fed Funds rate, the current tightening cycle has hiked not by 2.25% (or nine times), but by a whopping 6.25%! Extending Morgan Stanley’s QE/QT adjustment extrapolation, Wilson repeats what he noted two weeks ago, namely that the 3M/10Y yield curve inverted all the way back in November. And as a reminder, it is the subsequent steepening that crushes markets. The inverted curve has now bottomed….This cyclical bear market…has some unfinished business – i.e., a deeper retracement than most are expecting. The policy mistakes were fiscal + tariffs, not monetary – i.e., the Fed can’t ‘fix’ it.”
Facebook unveils ‘its most invasive and dangerous form of surveillance yet’ with launch of Libra cryptocurrency
Source: The Sun
“FACEBOOK is launching cryptocurrency next year that will allow people to move money from their smartphone into a digital ‘wallet’. Experts have branded the move a dangerous power grab that marks Facebook’s ‘most invasive’ form of surveillance yet. So far, Facebook has enlisted 28 firms, including Spotify and Uber, who each had to invest a minimum of $10 million to be a founding member of the Libra Association, an independent not-for-profit membership organization. It wants to attract 100 businesses in time for launch, which it is aiming for the first half of 2020….Facebook will operate its own digital wallet for people to spend Libra, known as the Calibra Wallet, which will be available in WhatsApp, Facebook Messenger and as a standalone app. Users will be able to send money to each other initially, at low to no cost, the social network said….Phil Chen, Decentralized Chief Officer at HTC, said the move was part of a ‘dangerous’ power grab by Facebook. ‘If you’re concerned with Facebook knowing too much or having too much access to your private data or social graph, the GlobalCoin will give Facebook even more direct access to your financial information,’ he told The Sun. ‘It’s not just access to the information of your transactions, it’s direct access to your wealth and capital. This project is the antithesis of bitcoin and is another step towards total control of data and users.'”
Facebook value goes crypto
Source: Ponte/WND
“Facebook, the social network, announced on Jan. 30, 2018, that it would ban all ads for Bitcoin and other cryptocurrencies in order to stop promotions that it sees as ‘frequently associated with misleading or deceptive promotional practices.’…Eighteen months later, on June 18, Facebook planned to issue a White Paper unveiling details of its own cryptocurrency, to be known as Libra….Unlike wildly speculative cryptocurrencies such as Bitcoin, the Libra will be a ‘stablecoin’ whose value is reliably pegged to a ‘basket’ of various government paper fiat currencies, as well as low-risk stocks, and perhaps even gold to provide the new coin counter-cyclic insurance….On the day it launches, Libra will have a larger customer base than most of the world’s central banks. This could be the entire population of every nation south of Earth’s equator plus India – one-third of humankind….Because the Libra coin will be openly trackable and taxable by government, and will offer no more privacy than Facebook grants its other customers, critics say it should not even be called cryptocurrency….Libra could quickly become widely used money in many Third World nations, where banking is unreliable, corrupt, expensive or difficult to use. This means that Libra joins Russia and China in undermining America’s lucrative ‘exorbitant privilege’ as printer of the U.S. dollar, the world’s reserve currency, as well as speeding the ‘cashless society.’ Mark Zuckerberg could expand from being only the world’s leading left-leaning free speech censor to one of the world’s most powerful bankers, which could make him emperor on a par with China’s ‘social credit’ conformist dictatorship.”
A Growing Problem in Real Estate: Too Many Too Big Houses
Source: Wall Street Journal
“Large, high-end homes across the Sunbelt are sitting on the market, enduring deep price cuts to sell. That is a far different picture than 15 years ago, when retirees were rushing to build elaborate, five or six-bedroom houses in warm climates, fueled in part by the easy credit of the real estate boom. Now, many boomers are discovering that these large, high-maintenance houses no longer fit their needs as they grow older, but younger people aren’t buying them. Tastes – and access to credit – have shifted dramatically since the early 2000s. These days, buyers of all ages eschew the large, ornate houses built in those years in favor of smaller, more-modern looking alternatives, and prefer walkable areas to living miles from retail….The area around Scottsdale, Ariz., popular with wealthy retirees, had 349 homes on the market at or above $3 million as of February 1 – an all-time high, according to a Walt Danley Realty report. Homes built before 2012 are selling at steep discounts – sometimes almost 50%, and many owners end up selling for less than they paid to build their homes, said Walt Danley’s Dub Dellis….The problem is expected to worsen in the 2020s, as more baby boomers across the country advance into their 70s and 80s, the age group where people typically exit homeownership due to poor health or death, said Dowell Myers, co-author of a 2018 Fannie Mae report, ‘The Coming Exodus of Older Homeowners.'”
Gold Surges to 14-Month High: ETFs to Tap
Source: Yahoo Finance
“Gold price climbed to more than $1,350 per ounce, touching a 14-month high and gaining for the fourth straight week – the longest run since January. Hopes of a Fed rates cut and investors’ flight to safety fueled by a myriad of woes fueled the rally in the metal. The Fed early this month hinted at interest rates cut if needed, given the implications of trade tensions on the economy. Speculation increased all the more with the latest weak job data and subdued inflation. Lower rates will continue to weigh on the dollar against the basket of currencies, raising the yellow metal’s attractiveness as it does not pay interest like fixed-income assets. Global growth worries driven by deepening U.S.-China trade tensions, disappointing economic data across the globe, and geopolitical tensions spurred demand for safe-haven assets….Further, factory activity contracted in the United States, Europe and Asia last month while China’s industrial output growth slowed to a more than 17-year low of 5% in May. The World Bank recently slashed its global growth outlook from 2.9% projected in January to 2.6% – the slowest growth in three years – citing trade conflicts, financial strains and unexpectedly sharp slowdown in wealthier countries. Against this backdrop, gold is considered a great store of value and hedge against market turmoil. Moreover, investors poured into exchange-traded funds backed by gold, with holdings rising to the highest since late February.”
The American Dream Is Alive and Well – in China
Source: Brown/Truthdig
“Home ownership has been called ‘the quintessential American dream.’ Yet today less than 65% of American homes are owner occupied, and more than 50% of the equity in those homes is owned by the banks. Compare China, where, despite facing one of the most expensive real estate markets in the world, a whopping 90% of families can afford to own their homes. Over the last decade, Americanwages have stagnated and U.S. productivity has consistently been outpaced by China’s. The U.S. government has responded by engaging in a trade war and imposing stiff tariffs in order to penalize China for what the White House deems unfair trade practices. China’s industries are said to be propped up by the state and to have significantly lower labor costs, allowing them to dump cheap products on the U.S. market, causing prices to fall and forcing U.S. companies out of business. The message to middle America is that Chinese labor costs are low because their workers are being exploited in slave-like conditions at poverty-level wages. But if that’s true, how is it that the great majority of Chinese families own homes?….In China, the cost of living is significantly lower. The Chinese government subsidizes not only its industries but its families – with educational, medical and transportation subsidies….Unlike the U.S. government, the Chinese government supports its workers and its industries…In the 21st century, it is time to upgrade our economic model from one of feudal exploitation to a cooperative democracy that recognizes the needs, contributions and inalienable rights of all participants.”
How To Kill Off Civilization
Source: Independent Mind
“There are lots of ways to kill off a civilization. Wars, politics, economic collapse. Rome did it. Could we do it? If we follow the Progressives and allow them to implement crackpot ideas like Modern Monetary Theory we could be on our way. Ancient Rom…had an advanced civilization. They had running water, sewers, flush toilets, concrete, roads, bridges, dams, an international highway system, mechanical reapers, water-powered mills, public baths, soap, banking, commerce, free trade, a legal code, a court system, science, literature, and a republican system of government. What…happened to Rome? Dictators. After 500 years, the famous Roman Republic ended with the dictator Julius Caesar taking power. 400 years later his progeny and usurpers ran the Empire into the ground and Rome fell to invading barbarians…How did the Caesars do that? They were profligate spenders….They did two disastrous things to solve their deficit. First, they kept raising taxes which became punitive…Second, they debased the currency which led to inflation….Much of Rome’s economic history is quite familiar in modern times. Even after thousands of years of evidence of repeated failure, bad ideas simply don’t die….One bad idea with ancient precedents is Modern Monetary Theory (MMT). MMT is the New Thing among Progressives in America. Politicians like Alexandria Ocasio-Cortez (AOC) and Bernie are quite excited about MMT. They think they have discovered the Holy Grail of economics. Progressives believe that government can and should cause economic growth and prosperity. They believe government can do this by various controls, regulations, spending programs, and monetary manipulation….The idea of MMT takes this one step further. They believe that the government can spend/buy whatever it wants and print pieces of greenish paper to pay for it….MMT is a crackpot idea… It has been tried many times over the centuries and it has never worked. In every case where governments have printed money to pay for things, the result has been cycles of boom and bust, inflation (and hyperinflation), economic stagnation, and social disorder.”
2 black swans could come out of nowhere and kill stocks this summer
Source: Yahoo Finance
“Investors always need to be prepared for black swans descending onto the markets during the low volume summer months….A black swan event is one that completely surprises a particular asset class. Think along the lines of the dreaded flash crash that sent some stocks instantly to $0 or a worse than expected hurricane in May that could prove devastating to insurance companies (stocks, too)….’If tariffs [on China] go up to 25% and there is an adjustment in the renminbi and it moves much more sharply that could be very de-stabilizing for global capital markets – that to me is a very real clear and present danger. That would trigger outflow pressures from China, destabilize their domestic system,’ cautioned Ironsides Macroeconomics managing partner Barry Knapp on Yahoo Finance’s The First Trade. Don’t think Knapp is off base here in calling a potentially destabilizing event for markets due to yuan weakness…Veteran strategist Scott Clemons at Brown Brothers Harriman said beware of a surprise uptick in inflation. If inflation picks up out of the blue, the Federal Reserve may not deliver on the interest rate cuts markets have priced in and stocks could react harshly. ‘I think one is well-advised to worry about the things no one else is worried about. Nobody is worried about inflation. I just can’t help but to think that as wages accelerate, as the labor market continues to tighten I wonder if at some point that turns into an acceleration in prices. That’s my black swan,’ Clemons said.”
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