While we have wondered on numerous occasions previously if the collapse in lumber prices is the far more accurate indicator of end demand for housing (as confirmed by the recent collapse in multi-family housing starts), perhaps an even better indicator of trends in housing (and by implication the broader economy) is private sector intermediate end demand, such as Caterpillar North America sales, which unlike government data, are far less subject to political intervention, interpolation, guesswork, seasonal adjustments and otherwise, general manipulation.
And even though we have previously reported on the woes ailing the world’s largest seller of bulldozers, excavators and wheel loaders, such focus was primarily targeted in the offshore markets, and especially China (the abysmal European market needs no mention). So maybe the time has come to shift attention to the US, where as Caterpillar just reported, not only are all foreign markets still trending at several impacted levels, but where US machine retail sales just saw the biggest tumble in three years, falling 18% Y/Y: the most since early 2010. What is more disturbing is that CAT equipment is used in far-broader economic activities than merely housing, and likely is a far more accurate indicator of true industrial end-demand than any other number cherry-picked by the government.
Whether one can extrapolate general trends in the US economy based on how Caterpiller is doing in its North American market, is an open-ended (rhetorical) question which we leave to readers.
However, maybe a far better question is whether CAT NA sales is the same true proxy for the state of the US economy, as electric consumption – that Achilles heel of Chinese economic data manipulation – is to China.
Compare and contrast the chart above, with the chart below, showing the collapse in Chinese electricity consumpion.
If the answer is yes, and if indeed both the US and Chinese economies are now operating at a true level not seen since 2010, then just how bad is the rest of the world, if somehow the US continues to be perceived as the cleanest dirty shirt while the world’s fastest marginal growing economy is in fact, crashing to earth?
Source: CAT Dealer Statistics
THE IMPORTANCE OF BERNANKE’S TESTIMONY
Fed chairman Ben Bernanke’s testimony to Congress will be important in setting the tone for the markets (particularly the dollar, equities and US treasuries), as traders hunt for clues on when the Fed is likely to ease its rate of asset purchases.
The greenback surged last week, with the dollar index reaching a three-year high, on the back of traders’ expectations that improving US economic data will lead the Fed to begin tapering its programme of quantitative easing, possibly as early as the middle of this year.
Minutes from the FOMC’s latest policy meeting in May will follow Bernanke’s testimony. However, it is likely that Bernanke’s testimony may take the edge off this release, in terms of market impact.
FOMC POLICYMAKER UNCERTAINTY
Bernanke’s testimony is crucial, given the mixed messages from Fed officials in recent weeks. For example, Charles Plosser has suggested decelerating the rate of asset purchases, also suggesting that the Fed shortens the duration of the bonds it currently holds.
Some FOMC members, like John Williams, are in favour of tapering asset purchases by the end of this year. On the other hand, Eric Rosengren has argued that now is not the time for the Fed to taper its asset purchases.
And this week, Richard Fisher came out in favour of slowing purchases of mortgage securities, saying the housing sector no longer needs the Fed’s support.
Sebastien Galy, an analyst at Societe Generale, says “the Fed is slowly moving out of the ultra-dovish camp, as the Bernanke clan reassesses the risks for the Fed balance sheet and the economy of ultra-easy conditions for so long.”
It appears as though the Fed is eager to push the debate into the public domain. Simon Smith, an economist at FxPro says that “[the Fed] is keen not to scare markets when the [tapering] does eventually happen, hence the propensity to talk openly about it.”
WHAT CAN WE EXPECT?
What is definitely known is that the Fed is intent on tapering asset purchases. When is less clear – it is generally accepted that it could be anytime from the middle of this year, all the way out to 2015 (assuming that the tone of economic data improves – especially unemployment and inflation).
However, it is worth noting that “the current debate over tapering QE does not stem from a satisfaction with state of the labour market or concern over inflation risks but a desire to limit the perceived financial stability costs of QE,” according to Divyang Shah, a strategist at IFR Markets.
Recent US economic data has softened, but is still encouraging. Retail sales notably beat expectations, rising by 0.1% in March. Consumer confidence has improved; the University of Michigan consumer sentiment index advanced to 83.7 in May, from 76.4 in aPRIL, as the mighty US consumer shakes off the impact of fiscal sequestration.
But challenges on the supply-side of the economy remain, as shown by both the Philly Fed and Empire State manufacturing surveys, which both fell below 0; industrial production also shrank by 0.5% in April. And the employment situation is mixed, with weekly jobless claims inching higher last week, after improving over the preceding weeks.
Nevertheless, Mansoor Mohi-uddin, an FX strategist at UBS, believes that there is still positive underlying growth momentum, pointing to the Philly Fed survey’s inventories sub-index, which rose from -26.3 to 0.7. And although housing starts fell by 16.5% in April, the forward-looking measure of building permits jumped by 14.3% month-on-month.
But Mohi-uddin believes that “it is still too early to expect the Fed to [taper asset purchases] in the summer.” This line of reasoning is underscored by the benign inflation outlook in the US. Core inflation – as measured by Private Consumption Expenditure, which is the Fed’s preferred gauge of inflation – has eased to 1.1% on an annualised basis.
A recent article in the Wall Street Journal by Jon Hilsenrath, a prominent Fed watcher, suggested that FOMC members are not alarmed by the deflation risks, and are satisfied that inflation expectations are stable. Traders consider the benign outlook as supportive of continued monetary stimulus. FxPro’s Smith reasons that “it seems unlikely that the Fed will step back from its commitment to buy $85 billion of securities per month in the near-term, with the economy still mixed and inflation pressures easing.”
Whether or not Bernanke will choose to communicate his personal views on when asset purchases will be tapered remains to be seen. Some speculate that any change to the Fed’s asset purchases will only come when Bernanke holds a press conference after the policy meeting, which would give him an opportunity to fully explain the FOMC’s rationale.
These press conferences are usually held in March, June, September and December, when the Fed also updates its economic forecasts. Mohi-uddin thinks that “June seems too early, while September and December seem more likely for the Fed to start reducing its pace of easing if the US economy re-accelerates.”
But staying focused on Bernanke’s testimony on Wednesday, Kathleen Brooks, research Director at Forex.com, says that there are two key questions that traders want answers to: “How will he explain the uptick in initial jobless claims last week? How will he react to the drop in core inflation to a two-year low at 1.7% for April? His answers to these potential questions from Congress could determine the medium-term outlook for the buck.”
UPDATE: Gas Prices reach all-time high in Oklahoma City
With the bond vigilantes still suppressed by the heavy boot of central bank intervention, the role of 'governor' of monetary (and fiscal implicitly) largesse has been left to the energy markets around the world. As we noted here, the Brent Vigilantes have indeed capped economic gains in the past few years (and perhaps more worryingly for investors, as we detailed here, have capped P/E expansion hopes). Sure enough, with a one-month lead, crude oil prices are leading retail gas prices higher (now near three-month highs) which point to a rally-ending, economy-sapping $3.80 price within the next few weeks (unless oil prices are rapidly suppressed too).
and as a reminder, seasonally, things are picking up…
and while we are still below record levels on the average, there are pockets where prices are already at record highs…
According to AAA Oklahoma's gas price tracking website, on Sunday, the average price in Oklahoma City for a gallon of self-serve regular gasoline is at its highest point ever, $3.963, breaking Saturday's price of $3.952, which was also a record high.
Charts: Bloomberg
Before the Big Bust happens, here are a few cautionary words for the hoi polloi:
One of the reasons for the existence of the stock market is to provide a vehicle for the liquidity of investments by investors in corporations.
But another reason for the existence of the stock market is to provide a casino for gambling and for the movement of capital from the pockets of small gambler “investors” to the pockets of big gambler “investors”–thus, the common name for the New York Stock Exchange–Las Vegas East. The process is often called “fleecing the lambs” by those who work the casino.
A special type of big gambler is a so-called “hedge fund” manager–an individual or group that supposedly pays careful attention to the market to optimize returns on invested or gambled capital–a mix of their own capital and other people’s capital. One prominent hedge fund, for example, apparently achieves as much as a 30 percent return on capital for its clients.
Now how is it possible to achieve a 30 percent return on capital across the board? Can it be accomplished merely by careful analysis? Probably not. The most clever and scientific honest analysis of the stock market has never produced such a return for a large portfolio.
In contrast, the easiest way to get a 30 percent return on “invested” capital is to have inside information about mergers, deals, losses, profits, and so on. In the old days, inside information was transmitted from insiders to outsiders one on one. But in these days of new technology, that’s becoming most unlikely, too inefficient, too dangerous. All one needs, for example, is a plant of a micro-bug in a conference room or hotel room or even on an unaware corporate individual to record conversations presumed to be secret. Given the amount of money involved, it’s reasonable to assume that every possible technological means will be used to obtain inside information about corporations whose stocks are bought by money managers. We already assume corporate-to-corporate technological espionage because there has been evidence for it. In this new century, it seems wise to assume money-manager-to-corporate technological espionage simply because the stakes are so high and the technology available.
There will be a bust. As soon as most of the small-gambler capital has been transferred to the big gamblers by the small gamblers buying the stocks owned by the big gamblers, the market will collapse, the big gamblers will go into the market to buy again, and the cycle will as usual be repeated.
Meanwhile, anyone who believes modern technology is not being used by “outsiders” to acquire inside information relevant to buying and selling stocks by the outsiders may be living in a dream world where greed is absent, ethics rules Wall Street, and money never trumps morality.
So if you’re part of the hoi polloi be warned. You’re free to enter the casino, but be aware there are people who have inside information about which wheels to play–and you don’t.
How bad is the wage gap for women in the workplace?
For college graduates, it’s so bad that it begins even before women begin their careers.
According to a study by AAUW, Graduating to a Pay Gap: The Earnings of Women and Men One Year After College Graduation:
Women and men pay the same amount for their college degrees, but they often do not reap the same rewards. Among 2007-08 college graduates, women and men typically borrowed similar amounts to finance their educations, about $20,000. Because women are paid less than men are paid after college, student loan repayments make up a larger part of women’s earnings. In 2009, among full-time workers repaying their loans one year after college graduation, just over half of women (53 percent) compared with 39 percent of men were paying more than what we estimate a typical woman or man could reasonably afford to pay toward student loan debt. These numbers have risen in recent years.
Outstanding student loans today total more than $1 trillion, surpassing credit card debt. Student loan debt has increased nearly 300 percent over the last eight years, according to a report by the New York Federal Reserve.
Is Congress doing anything about this problem? As a matter of fact they are. They’re making it worse.
This July, unless Congress acts, the interest rate on federally subsidized Stafford loans is set to increase from 3.4 to 6.8 percent. In another example of the Congress’ attitude of “don’t tax the rich, but tax the most vulnerable,” student loans are seen as a nice little moneymaker.
The federal government will make $34 billion this year on student loans. If Congress allows the interest rate on these loans to double, the federal government will bring in even more revenue — money that comes straight from the pockets of students who had to borrow money to go to college.
Of course, not everyone has to pay such a burdensome rate of interest on loans. Big banks can borrow money from the Federal Reserve at a rate of less than 1 percent. There’s something very wrong with this picture.
This week, I attended a breakfast meeting with Senator Elizabeth Warren (D. Mass.) where she spoke about the first piece of standalone legislation she is introducing in the United States Senate.
In a speech on the Senate floor, Sen. Warren said:
The Bank on Students Loan Fairness Act would allow students who are eligible for federally subsidized Stafford loans to borrow at the same rate that big banks get through the Federal Reserve discount window. For one year, the Federal Reserve would make funds available to the Department of Education to make loans to students at the same low rate offered to the big banks. This will give students relief from high interest rates while giving Congress time to find a long-term solution.
At our breakfast, I remembered that it was the mobilization of enormous grassroots support for the Consumer Financial Protection Bureau (then-Professor Warren’s brainchild) that kept pressure on Congress to pass the legislation that established that agency. Her fight to keep student loan interest rates low is her next big campaign, and women should pull out all the stops to support her.
AAUW’s findings tell us that women are disproportionately likely to take out loans; among 2007-2008 graduates, 68 percent of women borrowed money for college compared to 63 percent of men.
According to the AAUW report:
For many young women, the challenge of paying back student loans is their first encounter with the pay gap. “Student loan debt burden” is defined as the percentage of earnings devoted to student loan payments. A high student loan debt burden is an indicator that repayment may create hardship. Individuals with high student loan debt burden are less likely to own a home, have a car loan, or even make rent payments. High student loan debt burden is a challenge for a growing number of college graduates, men and women alike, but is particularly widespread among women, in large part because of the pay gap.
The National Organization for Women (NOW) has a long history of supporting equal pay, comparable worth and other policies that advance women’s economic security. NOW was proud to support Elizabeth Warren in her successful campaign for the U.S. Senate, and we are equally proud to support her urgently needed legislation to reduce the burden of student loan debt.
It’s hard to imagine how anyone could oppose a bill that simply requires the Fed to set interest rates for students at the same low rate the big banks get. But get this: an opponent of Sen. Warren’s bill reportedly suggested — presumably hoping we’ve all forgotten about the taxpayers’ bailout of the too-big-to-fail banks — that unlike students, the big banks deserve to pay a super-low interest rate because they never fail. And they say the 1 Percent has no sense of humor.
Elizabeth Warren has planted the flag for student loan reform by introducing her bill, and now it’s up to us to mobilize support and pressure Congress to pass it. This is grassroots democracy at its best. So, blog about this, write letters to the editor, lobby your senators and your representative.
Help ensure that a college education is a pathway to fulfillment and success for women, and not an opening to crushing debt.
WB7: We are now over 35,000 views on last week’s post concerning the mystery of deposit confiscation: Here
As a public service, I would urge all of you to do whatever you can to spread that article whether by email, social media and/or, yes, paper and ink.
While anecdotally we see again and again that equities rally on bad news (The Fed will save us) and good news (see The Fed saved us), none of that matters until it gets the Goldman Sachs stamp of approval. Sure enough, in a detailed study over the weekend, designed to defend their bullish equity view (specifically financials) and expectations for QE3 to continue to Q3 2014, the bank that does God’s work offered up these pearls of statistically sound wisdom: “while equity prices respond more to dovish surprises than hawkish surprises, the results suggest that equity prices typically go up regardless of whether the Fed policy surprise is positive or negative (“good news is good for equities, and bad news is good for equities”). But it is not at all clear why the equity market should systematically buy into this pattern.” So rest assured, buying wins; of course, that is, until it doesn’t.
Via Goldman Sachs,
…
Specifically, we find that a 25bp surprise [or QE implied equivalent] is usually associated with a 1% change in equity prices on the same day.
…
Taken literally, these results suggest that equity prices typically go up regardless of whether the Fed policy surprise is positive or negative (“good news is good for equities, and bad news is good for equities”).
Asymmetric Fed communication might help explain some of this pattern. When policy is tightened, Fed commentary tends to be bullish on the outlook and thus helps prevent equities from selling off. But when the funds rate is cut, Fed commentary is not correspondingly downbeat and so equities rally a lot. This asymmetry in Fed commentary, in itself, is not surprising as Fed officials are usually intent on emphasizing dovish policy changes (to help stabilize the economy) and downplaying hawkish ones (to avoid destabilizing markets).
But it is not at all clear why the equity market should systematically buy into this pattern.
An alternative explanation is that the asymmetry in the equity price effect is simply a statistical mirage due to a small sample that is driven by outliers.
As global capital becomes ever more powerful, giant corporations are holding governments and citizens up for ransom — eliciting subsidies and tax breaks from countries concerned about their nation’s “competitiveness” — while sheltering their profits in the lowest-tax jurisdictions they can find. Major advanced countries — and their citizens — need a comprehensive tax agreement that won’t allow global corporations to get away with this.
Google, Amazon, Starbucks, every other major corporation, and every big Wall Street bank, are sheltering as much of their U.S. profits abroad as they can, while telling Washington that lower corporate taxes are necessary in order to keep the U.S. “competitive.”
Baloney. The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible — and play off one country against another to keep their taxes down and subsidies up, thereby shifting more of the tax burden to ordinary people whose wages are already shrinking because companies are playing workers off against each other.
I’m in London for a few days, and all the talk here is about how Goldman Sachs just negotiated a sweetheart deal to settle a tax dispute with the British government; Google is manipulating its British sales to pay almost no taxes here by using its low-tax Ireland subsidiary (the chair of the Parliamentary committee investigating this has just called the do-no-evil firm “devious, calculating, and unethical”); Amazon has been found to route its British sales through a subsidiary in low-tax Luxembourg, and now receives more in subsidies from the British government than it pays here in taxes; Starbucks’ tax-avoidance strategy was so blatant British consumers began boycotting the firm until it reversed course.
Meanwhile, at a time when you’d expect nations to band together to gain bargaining power against global capital, the opposite is occurring: Xenophobia is breaking out all over.
Here in Britain, the UK Independence Party — which wants to get out of the European Union — is rapidly gaining ground, becoming the third most popular party in the country, according to a new poll for The Independent on Sunday. Almost one in five people plan to vote for it in the next general election. Ukip’s overall ratings have risen four points to 19 per cent in the past month, despite Prime Minister David Cameron’s efforts to wrest back control of the crucial debate over Britain’s relationship with the European Union.
Right-wing nationalist parties are gaining ground elsewhere in Europe as well. In the U.S., not only are Republicans sounding more nationalistic of late (anti-immigrant, anti-trade), but they continue to push “states rights” — as states increasingly battle against one another to give global companies ever larger tax breaks and subsidies.
Nothing could strengthen the hand of global capital more than such breakups.
ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest is an e-book, “Beyond Outrage,” now available in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
Imagine if your only choice for food came from genetically-modified crops. You might suffer regular health problems, be at a higher risk for numerous crippling diseases, and have no choice but to accept that as a fact of life. But what if, one day, you came across a farmer’s market where you could buy locally-produced, organically-grown, healthy fruits and vegetables at a fraction of the cost of GMO food. Wouldn’t you switch immediately and never go back? Your body would heal and you’d feel great.
Similarly, most U.S. states, with the exception of North Dakota (we’ll get there in a minute) have no choice but to depend on big Wall Street banks for the money necessary to build critical infrastructure, most of which comes with obscene interest rates and get-rich-quick schemes like capital appreciation loans. These are concocted by predatory bankers intending to bleed municipalities and counties dry, from Jefferson County, Ala. to Napa Valley, Calif. But public banking can be the antidote that will free us from our dependency on Wall Street and put monetary power in the people’s hands. In short, our economy would heal and we’d all feel great.
Despite its name, the Federal Reserve is a private corporation, unaccountable to our government and autonomous in its operation. Even though the president appoints the chairman and the board of governors, the Federal Reserve and its 12 regional branches in America’s major cities are dominated largely by Wall Street. Through the devious process of fractional reserve banking, have complete control over our monetary policy, as well as responsibility for price control and establishing long-term interest rates. It shouldn’t be any surprise to anyone that this private corporation allows Wall Street to withdraw billions of dollars at 0.75 percent interest while homeowners and college students depend on those same banks for loans have to pay far higher rates. The buddy-buddy relationship the Federal Reserve has with Wall Street was fully revealed after the Fed’s first official audit in 2011, when the Fed’s records showed they had dished out $16 trillion in bailouts to not just U.S. banks, but foreign banks as well. That’s a trillion dollars more than the United States’ entire GDP for 2011.
The Fed posted a whopping $77.4 billion in profit in 2011. While, to its credit, the Fed gave almost all of their profits back to the U.S. Treasury, those profits were made while buying up the same toxic mortgage-backed securities that Wall Street intentionally created to fail while enriching themselves. The Fed’s quantitative easing policy, known as QE3, is simultaneously shoveling $40 billion per week into the black hole of Wall Street’s coffers to keep buying up these worthless, obtuse financial instruments. The Fed claims that quantitative easing has helped create or save almost 2,000,000 jobs since 2008, and while that may be true, the people could probably find a much better way to spend $40 billion a month and create and save far more jobs.
The Bank of North Dakota, while ensconced in a deep Republican stronghold, is one of America’s best kept secrets. It began in the early 20th century as a way for farmers to deposit and borrow money without having to depend on the big, corrupt banks in New York and Chicago. The BND holds the state’s tax revenues instead of Wall Street, and makes loans to the community at a reasonable rate through a partnership with 80 other community banks across North Dakota. And as a public bank, the BND has a policy of not engaging in Wall Street gambling schemes like derivatives trading, subprime mortgage lending or the credit default swap market. Because of that, North Dakota’s public bank will never need a bailout from the taxpayers.
Because the privately-operated Federal Reserve still has a monopoly on our money supply, the BND still has to ultimately borrow money from the private banking cartel. However, the BND still supplies tens of millions of dollars to the state treasury every year that can be used for badly-needed investments in things like schools, health care and transportation infrastructure. Imagine if we could nationalize the Fed and our money supply, using the BND’s model for all 50 states to safely deposit their money and make low-interest loans available to everyday homeowners and small business owners! It would bring Wall Street to its knees.
Luckily, the Public Banking Institute is teaching everyone how we can make that happen at their 2013 conference at Dominican University from June 2-4 in San Rafael, Calif. Birgitta Jónsdóttir, a member of the Icelandic Parliament (and the Pirate Party), will be speaking about her fight to hold the Icelandic banks accountable that ruined her country’s economy. Investigative journalist Matt Taibbi, who has written extensively about Wall Street’s pillaging of local economies through obscure financial trickery, will be speaking as well. You can learn more about the conference by clicking here. Let’s take our money, our economy, and our power back.
Today’s get it now society wants more than just a cool phone with instant access to news, friends and family – they want dinner served up too.
Mealtime planning has shifted with the generations. In the 1950s, TV dinners became the convenient meal while takeout gained traction in the 70s. In the 1990s, speedy delivery became popular at pizza joints while in the Internet era, online ordering started gaining traction with techies and early adopters. Today, on-demand delivery is common for busy professionals and urbanites with a couple of clicks on a web site or through the tap of an app. Delivery helps drive revenue for local businesses, such as restaurants, across the U.S. by reaching more customers in the neighborhood. This new delivery focused mindset makes up Gen D — the delivery generation.
Industry analysts see one of the key growth drivers for the restaurant industry and other retail or service-oriented businesses is through offering delivery. According to NPD Group, food delivery is a $75 billion business and a survey from The Boston Consulting Group (BCG) found that already nearly 10 percent of online shoppers want same day delivery in their online shopping experience. BCG also found that affluent millennials are willing to pay up to $10 for same day delivery.
While larger chains are struggling with the shift from next day to same day, local businesses are already profiting from Gen D.
Hoboken, New Jersey’s Biggie’s Clam Bar has been family-run for four generations. Today, delivery is a substantial 35 percent of their business mix and they have regulars who order delivery as often as others come into the restaurant. “We get online orders from business pros leaving their Manhattan office asking for dinner to be delivered when they arrive home,” said Steve Ranuro, great-grandson of founder Joseph “Biggie” Yaccarino. “We have a personal connection with the folks who order online and find that they will order a wider selection of entrees off the menu while many of our in-store regulars stick with the burger or clams they always eat.”
Ranuro noted that delivery helps keep Biggie’s sales consistent, solving a real yield management problem for restaurant or store owners. “In the past, we might have a slow night when it rains or is less than ideal to travel. Now, our deliveries balance out the slower in-house periods of the day or week to keep our neighborhood customers engaged with Biggie’s even when they’re not in the restaurants.”
Good quality food runs in the family also at De Pasada, a Mexican restaurant in Chicago serving up tortas, tacos, tostados and more. While the restaurant has a small web presence, the owners consider online delivery “free marketing for the business”. Greg Espinoza convinced his father to add online delivery. He finds it more convenient for processing orders than fielding phone calls and the overall restaurant revenue is up approximately 30 percent.
In the restaurant business, it’s essential to manage against expenses. With high real estate costs for New York City-based restaurants delivery has become an essential component of managing the bottom line. 3 Star Diner, which is open 24-hours, gets half of their revenue from delivery. Nicholas Kirakakis, who runs the diner with his father, found online delivery a natural extension of their core business. He’s seen a generational shift of online orders coming primarily from younger customers, which also include emoticons like smiley faces in the special instructions. And he’s smiling from the higher average online order.
Gen D also shops their neighborhood whenever possible. In a recent delivery.com customer survey of 5,400 people across the USA, more than 65 percent said they shop from local stores and neighborhood restaurants. These locavores also order dinner for delivery at least once a week.
The local delivery landscape is ever changing as Gen D wants everything delivered. delivery.com offers instant ordering from spirits/wine and grocery stores, which are also seeing an increase in sales through new customers in their respective neighborhoods. “Delivery brings us closer to our neighbors who are a few blocks away in Gramercy,” said Michael Buckley, president, Gramercy Wine Cellars. “While many Manhattanites will pick up a bottle of wine from the shop closest to them, our customers are drawn to the convenience of online delivery, ordering a special scotch or robust red wine on their way out work of so it arrives when they get home.”
From spirits to split pea soup delivery, Gen D empowers the local economy by driving incremental sales for small businesses. These entrepreneurs are the job creators, creating two thirds of all new jobs and accounting for half the sales in the U.S. according to BCG. With small businesses looking for new ways to thrive in today’s economy, accessing Gen D with online delivery is the way to go.
From Ron Paul
The IRS’s Job Is To Violate Our Liberties
“What do you expect when you target the President?” This is what an Internal Revenue Service (IRS) agent allegedly said to the head of a conservative organization that was being audited after calling for the impeachment of then-President Clinton. Recent revelations that IRS agents gave “special scrutiny” to organizations opposed to the current administration’s policies suggest that many in the IRS still believe harassing the President’s opponents is part of their job.
As troubling as these recent reports are, it would be a grave mistake to think that IRS harassment of opponents of the incumbent President is a modern, or a partisan, phenomenon. As scholar Burton Folsom pointed out in his book New Deal or Raw Deal, IRS agents in the 1930s where essentially “hit squads” against opponents of the New Deal. It is well-known that the administrations of John F. Kennedy and Lyndon Johnson used the IRS to silence their critics. One of the articles of impeachment drawn up against Richard Nixon dealt with his use of the IRS to harass his political enemies. Allegations of IRS abuses were common during the Clinton administration, and just this week some of the current administration’s defenders recalled that antiwar and progressive groups alleged harassment by the IRS during the Bush presidency.
The bipartisan tradition of using the IRS as a tool to harass political opponents suggests that the problem is deeper than just a few “rogue” IRS agents—or even corruption within one, two, three or many administrations. Instead, the problem lays in the extraordinary power the tax system grants the IRS.
The IRS routinely obtains information about how we earn a living, what investments we make, what we spend on ourselves and our families, and even what charitable and religious organizations we support. Starting next year, the IRS will be collecting personally identifiable health insurance information in order to ensure we are complying with Obamacare’s mandates.
The current tax laws even give the IRS power to marginalize any educational, political, or even religious organizations whose goals, beliefs, and values are not favored by the current regime by denying those organizations “tax-free” status. This is the root of the latest scandal involving the IRS.
Considering the type of power the IRS excises over the American people, and the propensity of those who hold power to violate liberty, it is surprising we do not hear about more cases of politically-motivated IRS harassment. As the first US Supreme Court Chief Justice John Marshall said, “The power to tax is the power to destroy” — and who better to destroy than one’s political enemies?
The US flourished for over 120 years without an income tax, and our liberty and prosperity will only benefit from getting rid of the current tax system. The federal government will get along just fine without its immoral claim on the fruits of our labor, particularly if the elimination of federal income taxes are accompanied by serious reduction in all areas of spending, starting with the military spending beloved by so many who claim to be opponents of high taxes and big government.
While it is important for Congress to investigate the most recent scandal and ensure all involved are held accountable, we cannot pretend that the problem is a few bad actors. The very purpose of the IRS is to transfer wealth from one group to another while violating our liberties in the process, thus the only way Congress can protect our freedoms is to repeal the income tax and shutter the doors of the IRS once and for all.
In its most recent update on the status of foreclosure review checks, the Office of the Comptroller of the Currency (OCC) announced more than 2.4 million checks valued at $2.2 billion have been cashed or deposited as of May 16.
So far, Rust Consulting, the paying agent, has sent 3.9 million checks totaling $3.4 billion.
About 4.2 million borrowers are eligible for relief as part of the foreclosure review settlement reached in January between federal regulators and 13 servicers. As part of the settlement, the servicers—Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo-agreed to provide a total of $3.6 billion in cash to borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010. The agreement replaced the Independent Foreclosure Review.
The first batch of checks was sent April 12, and the final round of payments will be sent during the summer, the OCC stated.
Borrowers with questions regarding payments should contact Rust Consulting at 1-888-952-9105.
While we have become used to the almost daily trading-halts in Japanese government bonds, when the CME reports that Silver trading was halted four times overnight, it is increasingly clear that this market is anything but ‘normal’:
- *SILVER TRADING WAS HALTED FOUR TIMES OVERNIGHT, CME GROUP SAYS
- *SILVER TRADING WAS STOPPED FOUR TIMES IN 20-SECOND HALTS
- *SILVER TRADING WAS HALTED IN `STOP-LOGIC EVENTS’, CME SAYS
Yet somehow, amid all this ‘extreme’ volatility in ‘safe’ collateral assets, we still do not hear of funds blowing up (yet). While central bankers would seem to disagree, there really is no stability without volatility and the more that vol is suppressed, the more extreme the inevitable ‘event’.
Japan has fueled much of this latest rally in stocks, driving the marketing first with promises of money printing by the Prime Minister in November 2012, and then a massive $1.2 trillion QE program announced by the Bank of Japan last month.
The result of this has been a collapse in the Yen and a 70%+ rally in the Nikkei in the last six months.
This has been the fundamental driver of this latest risk on rally. Remember that the US Federal Reserve has begun changing its language regarding QE and has even hinted at tapering QE before the year-end. So it’s the Bank of Japan who’s in the driver’s seat for asset prices today.
If Japan has been bad for the Yen and good for stocks… it’s been an absolute disaster for Japanese bonds. Since the Bank of Japan announced its latest QE program, Japanese Government bonds have triggered circuit breaks no less than four times due to incredible volatility.
And last week, they briefly violated their multi-year trendline.
Many investors are probably looking at this chart and thinking, “who cares what happens to Japanese bonds… why does a trendline violation matter here?”
First and foremost, Japan is the second largest bond market in the world. If Japan’s sovereign bonds continue to fall, pushing rates higher, then there has been a tectonic shift in the global financial system. Remember the impact that Greece had on asset prices? Greece’s bond market is less than 3% of Japan’s in size.
For multiple decades, Japanese bonds have been considered “risk free.” As a result of this, investors have been willing to lend money to Japan at extremely low rates. This has allowed Japan’s economy, the second largest in the world, to putter along marginally.
So if Japanese bonds begin to implode, this means that:
- The second largest bond market in the world is entering a bear market (along with commensurate liquidations and redemptions by institutional investors around the globe).
- The second largest economy in the world will collapse (along with the impact on global exports).
Both of these are truly epic problems for the financial system. But even worse than any of them is the following:
If Japan’s bond market implodes, then global Central Bank efforts to hold the system together will have proven a failure.
Japan is truly the leader amongst global Central Banks when it comes to progressive and accommodating policy. The Bank of Japan has kept interest rates at ZERO for nearly two decades. It’s also launched NINE QE plans adding up to an amount equal to nearly 25% of Japanese GDP. So far it’s managed to do this with minimal consequences.
Central Bankers around the world have monitored these efforts and believed that they can implement similar plans. So if Japan’s bond market begins to collapse, then it’s Game. Set. Match. for Central Banker policy. And what follows will make Lehman look like a joke.
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Best Regards
Graham Summers
While the overnight collapse in precious metals has been notably retraced, the media is unable to take its eyes off the ball that the status quo is shaking focusing on the demise and what that must mean for the future. Well, it seems, the Indian finance minister is very clear. Speaking in New Delhi P. Chidambaram explained his lack of surprise at the increase in gold imports in April (as physical demand exploded amid falling paper prices) adding:
- *CHIDAMBARAM APPEALS TO PEOPLE TO CONTAIN PASSION FOR GOLD, and
- *CHIDAMBARAM: MORE STEPS PLANNED TO CURB GOLD IMPORTS IF NEEDED
So China/Hong Kong is importing near record amounts of the precious metal into reserves and India is not only seeing demand but enough to warrant further government intervention… makes perfect sense that (paper) prices should be falling – or are the planners plans backfiring once again? As we noted here, as long as the price suppression of paper gold prices continues, don’t expect any notable changes to these demand trends.
Today’s AM fix was USD 1,353.75, EUR 1,051.95 and GBP 890.86 per ounce.
Friday’s AM fix was USD 1,376.75, EUR 1,069.15 and GBP 903.62 per ounce.
Gold fell $22.20 on Friday to $1,364.90/oz and silver closed at $23.632.
Silver fell victim to heavy, concentrated selling overnight in thin, illiquid Asian trading. Silver was slammed by 10% and fell from $22.36/oz to $20.30/oz in just four minutes – from 23:05 GMT to 23:09 GMT.
XAG/USD Spot Exchange Rate – 1 Day (Tick)
Silver has recovered 7% of the price plummet and is now down 2.7% today at $21.60 an ounce.
Silver’s weakness may have contributed to gold falling 1% to $1,354/oz.
It is likely that the very aggressive selling in illiquid Asian markets overnight was by a large hedge fund or bank or a combination of hedge funds and banks with deep pockets. Reuters quoted an analyst at a Japanese bank who said that silver’s price falls were due to one “unidentified investor”.
XAG/USD Spot Exchange Rate – 3 Day (3 Minute)
Heavy concentrated selling likely led to stop loss orders being triggered at technical supports – particularly at the $22/oz level.
There is some confusion regarding pricing as different pricing feeds are showing different lows in spot silver. CNBC reports that at one point silver hit a low of $20.30, down 8.8% from the start of trade on Monday while Bloomberg report that silver for immediate delivery fell as much as 8.6% to $20.3395 an ounce.
The losses come after silver had fallen sharply last week. Silver futures for July delivery retreated 1.4% to $22.352 an ounce on the Comex Friday, extending the week’s decline to 5.5%, the biggest in a month.
Cross Currency Table – (Bloomberg)
Hedge-fund managers and other large speculators decreased their net-long position in New York silver futures last week, according to the U.S. Commodity Futures Trading Commission (CFTC) data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 10,794 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 2,857 contracts, or 21 percent, from a week earlier.
The gold-silver ratio is at its highest level since September 2010 with an ounce of gold currently buying 63 ounces of silver. That is twice as much as in April 2011, when silver was trading considerably higher.
Silver in USD, 5 Year – (Bloomberg)
This is silver’s lowest price since September 2010 which will lead to continuing and possibly increased demand for physical silver.
While speculators such as hedge funds have reduced long positions and increased their short positions, store of wealth physical demand remains robust internationally.
Premiums for coins and bars remain elevated and there continue to be delays in securing physical silver coins and bars in volume. These lower prices could exacerbate these supply issues as higher prices will be needed to increase supply.
Gold/Silver Ration Index, 1983-Present – (Bloomberg)
Contrarian silver buyers are rubbing their hands with glee and will continue to accumulate physical silver coins and bars in expectations of silver surpassing the nominal record high of $50/oz in the coming months.
Further weakness may be seen today and this week but the long term outlook remains positive due to robust industrial, investment and most importantly store of value demand.
Nothing has changed regarding the very bullish fundamentals in the silver bullion market and we continue to expect silver to surpass its inflation adjusted high of $130/oz in the coming years.
NEWS
Silver Plunges to Lowest Since 2010 as Gold Drops for Eighth Day - Bloomberg
Gold Bear Bets Reach Record - Bloomberg
South Africa’s NUM seeks 15-60% wage rises from gold producers – Reuters
Singapore’s Changi Airport Seeks Growth With Gold - Bloomberg
COMMENTARY
What’s Next For The Silver Price? - MoneyWeek
It’s Official: Gold Is Now The Most Hated Asset Class – Acting Man
Adding Insult To Injury, South African Gold Mining Union Demands Up To 60% Wage Hikes – Zero Hedge
Washington Signals Dollar Deep Concerns – Institute for Political Economy
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While we are told day after day that not only is Europe ‘fixed’ but that Cyprus was not a template, it seems the bankers in the peripheral nations are a little less confident (never mind their record amount of reach-around-based domestic bond buying). European “leaders need to moderate their language,” warned one bank CEO, and as the FT reports, another feared a “Cyprus virus,” adding that “you can’t keep playing with fire.” The comments come in the wake of the depositor haircuts in Cyprus as a rush of clients wanted to move cash from deposit accounts to vaults: “most clients in Portugal don’t trust deposit guarantees… they choose vaults instead.” Fixed indeed… and why would these bankers worry about the ‘precedent’ if it were not a ‘template’ for future bail-ins?
Via The FT,
Portugal’s top bankers have called on Europe’s leaders to stop “playing with fire” and moderate their stance towards the eurozone periphery, or risk instilling alarm among bank depositors in future.
…
“Leaders need to moderate their language. This could be very bad,” Ricardo Espírito Santo Salgado, chief executive of BES, told the Financial Times.
Nuno Amado, his opposite number at BCP, talked of a “Cyprus virus”, saying: “If someone had designed a plan to hurt the European market, it would be difficult to think of something better . . . You can’t keep playing with fire.”
…
“There was huge nervousness,” Mr Amado said.
…
“Most clients in Portugal don’t trust deposit guarantees and they have no means to open accounts abroad,” said one person close to BPI. “They choose vaults instead.”
From Bruno de Landevoisin at Slope Of Hope……..
It’s painfully clear for all to see that the majestic United States is now firmly caught in the rapacious stranglehold of financial elites which have completely captured it in a grotesque gamed monetary process. Our country’s once idealistic and industrious free market economy has been hijacked and is undeniably being fraudulently and overtly financialized by the craven clutches and maniacal machinations of a contemptible self-seeking banking class. They have become nothing more than avaricious parasites disgustingly feeding from the grand trough of our treasured human ingenuity and self-respecting industry.
Unproductive asset classes of every shape and form are surging in price everywhere as the pumped up folly of the perpetually spewing free money fire hose incessantly flows. Both privileged institutional and private favored recipients of the free flowing Fed funds are climbing all over themselves snatching up existing assets of all kinds, in a vulgar and narcissistic ferocious feeding frenzy. The gluttonous menu includes: Housing, Commercial Property, Farm Land, Fine Art, Vintage Collectibles, Classic Automobiles, Equity Indexes, ETFs, REITs, Options, Currencies, Futures, Precious Metals and Commodities………………………etc.
Just last week the NY auction house Christies, founded in 1766, posted its best week ever in its over 250 year old illustrious history. This is simply non productive wealth formation my twisted malfunctioning friends. It is profoundly unhealthy and decidedly unearned prosperity, as it provides little to no substantial growth value nor functional benefit for the actual working economy on the ground which so many depend upon. True prosperity comes from real authentic wealth creation through genuine tangible production with honest determined human endeavor, not speculative and discreditable self enrichment based primarily on asset inflation deliberately engineered by gross and dishonorable monetary largess.
The brilliance and magnificence of the United States was always characterized by its thriving, hard working and tremendously productive middle class. Today’s disgraceful paper printing artifice that we are currently witnessing is slowly but surely destroying that once proud, noble and unparalleled historic human achievement which was distinctively made in the USA. The diseased America has now set upon the degrading and ignoble course of abusing its hard earned reserve currency status via cheap and decadent monetary debasement in order to save its own deplorable hide, and much of the world is compelled to follow our disgraceful lead as the global financial system continues to circle the descending drain’s virulent vortex.
Astoundingly, even after the devastating economic hardship millions have recently endured, directly due to the destructive consequences of a deliberate, blatantly self serving and utterly unrestrained monetary policy, the Federal Reserve banking cabal remains entirely undeterred. Incredibly, our ignoble and reprehensible financial leadership has once again set out to grossly and irresponsibly inflate yet another set of still more disastrous asset bubbles via the sheer folly of their lethal ZIRP/QE overdose injections. However, this time around they have insanely outdone themselves, glibly generating two gigantic financial doomsday balloons which are rapidly flashing red warning signs of catastrophic consternation.
There can be little doubt that the bottled up bond market and the fanatically reflated stock indices will implode simultaneously as the dubiously engineered pressure cookers each sets off the other’s volatile fuse, igniting a financial fireball of incendiary monetary mayhem, the likes of which the world has never seen, which will surely bring with it economic chaos and human suffering of epic proportions.
My best guess is that this coming Fall season, as the leaves turn bright red, our hapless Government officials will once again demonstrate to the world that they are entirely incapable, unwilling or outright unable to curtail the country’s out of control fiscal deficit spending, while at the same time the Federal Reserve will attempt to put out the raging QE grease fire, at which point critical interest rates will most certainly react violently, suddenly and swiftly spiking sharply higher, which will assuredly blow up the acutely repressed bond market & jacked up stock casino at exactly the wrong time. BADADOOM!!!
#69a31e;”>
In the end, by going along to get along, we are all very much complicit in this wanton uncreative destruction. The Lord openly warned us long ago not to go down this treacherous path, through the unlikely actions of his peace loving son, who in a fit of rage, violently flipped over the tables of the detestable usurious money changers wielding their wicked web in the sacred temple.
Alas, mankind never seems to learn the altruistic and enlightened righteousness of a forthright even-handed means of true money exchange, and once again we will be brutally humbled for our malicious manipulated mendacity, same as it ever was. We should have unquestionably known better and categorically repudiated the repugnant treachery. Our founding fathers deserved so much more from us. We have utterly and miserably failed them.
Shameful indeed Bernanke & Co, we will all pay dearly for your fiat money malfeasance which those of us that certainly knew better so submissively permitted and so cowardly accepted. The unhinged approach of monetary debasement has been repeatedly attempted throughout civilized economic history and has always ended in abject failure. There exist no historical exception to this solemn fact. The only viable protection against the most threatening global monetary repression of all time is direct ownership of physical gold bullion held completely outside the fraudulent financial banking system. Got Gold?
Do not panic, but it seems the flood of liquidity and central bank largesse can only do so much. The much-discussed issuance of 10 year Rwanda debt at a 7% yield earlier in the month made more than a few of even the most die-hard momo junkies look up from their ‘Buy’ keyboards for a brief second. In the past few days, something rather disturbing has occurred in this ultimate arbiter of risk-on demand… Rwanda bonds are selling off… now up 15bps in yield since issuance. Have no fear though as we are sure Abe, Bernanke, or Draghi will be along shortly with a plan to help SME lending in Rwanda… or will promise to do ‘whatever it takes’ to ensure Rwanda yields are not manipulated by speculators…
Of course, all this ‘concern’ is unwarranted as in the three weeks since Rwanda issued its 10Y bond, US treasury yields have risen 30bps so ‘theoretically’ Rwanda’s risk has dropped around 16bps – all hail the central banker…
ASSOCIATED PRESS May 20, 2013 7:20AM
Updated: May 20, 2013 7:57AM
SAN FRANCISCO — Yahoo is buying online blogging forum Tumblr for $1.1 billion as CEO Marissa Mayer tries to rejuvenate an Internet icon that had fallen behind the times.
The deal announced Monday represents Mayer’s boldest move yet since she left Google 10 months ago to lead Yahoo’s latest comeback attempt. It marks Yahoo’s most expensive acquisition since the Sunnyvale, Calif., company bought Overture for $1.3 billion a decade ago.
Tumblr now figures to play a pivotal role in Mayer’s attempt to reshape Yahoo Inc.
Mayer is betting that Tumblr, a 6-year-old service started by high school dropout David Karp, will provide Yahoo with a hook to reel in more traffic and advertisers on smartphones and tablets.
The companies say Tumblr will remain independently operated and Karp will stay CEO.
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