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The Dollar's Demise & The Boom Of 2021
ZeroHedge.com Sunday, Dec 27, 2020 - 11:15Authored by Charles Gave via Evergreen Gavekal blog, Inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.” - Famed economist, Milton Friedman “Today’s Modern Monetary Theory world, with its double barreled fiscal and monetary stimulus, is crashing head on with an accumulation of years of declining investment in the basic industries such as materials, energy, and agriculture. In our analysis, the ‘end game’ for the Fed’s twin asset bubbles in stocks and bonds is inflation. We can already see it developing on the commodity front.” - Crescat Capital Most loyal EVA readers know, for the 15 years of this newsletter’s existence, I’ve been a believer in, and forecaster of, subdued inflation. In fact, I’ve often written that for nearly all of my 42-year career I’ve felt that inflation would stay low, despite some intermittent flare-ups late in economic expansions. Of course, 2% inflation over 40 years means a loss of 55% in purchasing power, which doesn’t exactly qualify as true price stability. However, for those of us old enough to remember the 1970s, 2% CPI bumps are mere rounding errors. When it comes to the Ghost of Inflation Past, though, the time may be nigh to go into your attics, pull out some dusty boxes like Steve Martin in “Father of the Bride”, and try to fit into those old “threads” from the Disco Decade. On that point, rarely do we run two Gavekal-based EVAs in a row. But an essay by the venerable Charles Gave recently hit my inbox that I thought was striking enough to warrant an exception to our self-imposed rule. In my opinion, this is one of the most critical topics for investors to consider today. First, please note that he’s using a dash of tongue-in-cheek humor when he refers to Gavekal’s “impeccable logic”. Like all forward-looking, future-anticipating firms (including Evergreen), our partners at Gavekal often are eminently “peccable”. Second, Charles prefers to use rules-based techniques – centered on a set of indicators that have proven their anticipatory attributes over many years – versus opining on what he thinks will happen. As you will read, he employs some fairly technical metrics to make the case that the “low-flation” world we’ve become accustomed to is about to experience an axial shift. In that regard, he’s making a key point about the velocity of money. As a number of our past EVAs have observed, the belief was rampant a decade ago, in the wake of the housing crash and the Global Financial Crisis, that the Fed’s initial quantitative easing (in plain English, fabricating a trillion dollars from its magical computers) would lead to an inflation surge. Instead, even three more rounds of multi-trillion-dollar quantitative easings (QEs) failed to cause an inflation bust-out. The key reason for the inflation no-show was the collapse in velocity, as I argued back in 2008 and 2009. In other words, the velocity, or circulation rate, of money in the system crashed, more than offsetting the Fed’s relentless binge printing. Of course, we now know—and pretty well did at the time—that the excess trillions made their way into asset prices of all types. In recent years, that has included the cryptocurrencies like Bitcoin. Presently, though, Charles’ velocity indicator is flagging a radical change. While it has certainly had upturns in the past, never has the gap between GDP growth and his velocity measure been as divergent as it is currently. The good news is that he believes the US economy is moving from the deflationary bust (at least for cyclical sectors) into an inflationary boom phase. As noted in our June 19th EVA, “The Sweet Spot”, the transition from bust to boom is a fun one. There is enough spare capacity left in the economy’s ecosystem—in this case, due to the Covid demand cliff-dive that affected wide swaths of the US economy—that inflation isn’t a problem. Fed Chairman Jay Powell just said as much in his press conference this week. In fact, he sees no risk of excessive upward price pressures anytime in the foreseeable future. (He also stated there are no asset bubbles out there which is a view I will vigorously challenge in next week’s EVA). Thus, the possibility of a bull market-killing Fed tightening campaign is about as likely as politicians following the laws and rules they expect the rest of us to obey. As Charles notes, what’s different this time are the staggering sums presently pending disbursement. The US Treasury’s General Account is the prime case in point. It has almost $1.5 trillion sitting in it, most of which should soon be spent. Additionally, a $900 billion follow-on stimulus package looks nearly certain to be passed by Congress. Then, there is the trillion plus amount of excess savings accumulated by consumers since the pandemic hit (juiced by the trillions of government aid that has already been distributed). To have all this coursing through the economy’s arteries at a time when it is reopening and confidence is rebounding, as should be the case of the next six months, is likely to heat things up very, very quickly. Actually, my belief is that heat will quickly morph into overheat—not by the first half of 2021 but probably before year-end, if not sooner. This is a view that both Charles and his son, my great friend and partner, Louis, share. Beyond Charles’ highly quantitative analysis, I would highlight the past history of massive government spending episodes that are financed by central bank money printing (as opposed to being funded by bond market borrowings). This approach is now known as Modern Monetary Theory (MMT), a topic first covered in-depth in these pages back in our April 2019 EVA titled “Can an Acronym Save The World?”. MMT has been tried repeatedly in the past and it has consistently led to asset booms initially, such as we have now, followed by asset price “corrections”. The thrill-kill is almost always inflation. With the Fed utterly relaxed about inflation crashing the party it has created in assets values of almost all types—just as it was oblivious about tech in late 1999 and housing in mid-2007—a student of history might be inclined to take the over…like way, way over 2% on the CPI by year-end 2021. Since it’s Christmastime, however, let’s focus on the good news – if Charles is right – that the next six months should bring. On that note, please let me wish all Evergreen clients and EVA readers, a happy and, especially, healthy Holiday Season. THE BOOM OF 2021 BY CHARLES GAVEMany readers will be familiar with my four quadrants representation of macroeconomic conditions, which like most Gavekal research is backed by impeccable logic. The tricky part, as ever, is linking the conceptual insight to current market conditions. To put it simply, the questions I want answered are: where are we today and where are we likely going next? Needless to say, I have worked on such questions since authoring the tool back in 1978. Over the years, I have come up with a few answers ranging from the straightforward to the rather complex, as expounded on in my 2016 book investigating Wicksellian analysis. Back to MV=PQIn this paper, I want to show that using tried-and-tested tools, which have not changed since they were built, I can, indeed, pinpoint where we are, and where we are going. Longtime readers will know that I place emphasis on the old equation MV=PQ, except that I consider V to be an independent variable, and not the result of the ex-post tautology V=PQ/M. They may even recall that around the turn of the millennium, I developed a leading indicator for Q (growth in volume), for P and for V, while M (M2) is provided to me by the Federal Reserve. Hence, a logical solution to my problem of mapping where we are in the four quadrants should be possible. My growth indicator will tell me whether we are on the left or right side of the four quadrant representation, while my P indicator will give indications of whether we are in the top or the bottom halves. And the V indicator should tell me whether interest rates are going to rise, or fall. Let’s start with the US growth/recession indicator, shown below, which incorporates mostly economic data. The indicator collapsed at the end of 2019 and the early part of 2020, but has now returned to positive territory. This reading suggests that the US recovery will continue, which is supported by my “control” tool— a diffusion index of economically sensitive prices—which incorporates only market prices. The diffusion indicator is telling me that a boom is coming in the US, which confirms the message of the growth/recession indicator that a US recession is highly unlikely in the near future. And thus, I can safely assume that we are on the right side of the four quadrants; either in an inflationary growth period (top right) or in a disinflationary boom time (bottom right). Having established that the US economy sits in the right side of the quadrant, I feel fairly sure that its precise position is in the upper (inflationary) quadrant as my “P indicator” of inflation has shot up. In the chart above, the P indicator is compared to the second derivative of the US CPI (ex-Shelter). Why the second derivative? Because what matters for financial markets is not the actual inflation rate but the “surprising” changes in this rate, either up or down. And surprises may be coming. The P indicator seems to expect, one year down the road, a rise of at least 200bp in US CPI, which would take it close to 3%, versus 0.8% today. In summary, my indicators tell me that US growth will be strong and we are on the right side of the four quadrants framework. As prices seem set to accelerate, we are moving into the upper half, which means that 2021 should see an inflationary boom in the US. The velocity of money turns upThis brings me to the velocity of money V, and to the reaction of the central bank to the US entering an inflationary phase. The amount of money injected into the US economy in the last 12 months has been stupendous. As a result, V has collapsed as never before. But most of this money is still in the accounts of economic agents (the Treasury, individuals, and companies) and is apparently starting to be used. As a result, velocity is starting to rise again, but I will know for sure by how much only with a considerable lag, due to the time needed for GDP data to be compiled. So, I need a tool to give me some “lead” on the likely direction of economic velocity. This is why I built the Gavekal Velocity Indicator using market-based data that gives a heads-up as to whether what I call economic velocity (PQ/M) is about to turn up, or turn down. The chart is shown below. The GVI—which is supposed to lead actual velocity by six months—“turned” up at the beginning of September 2020 and is now positive. This implies that cash balances held by economic agents are starting to move into the real economy. It confirms that activity is accelerating. I have argued before that if the velocity of money is rising, demand for money must be growing faster than the supply of money. This implies that the price of money—the interest rate—will rise. What could upset this logic would be the Fed continuing to print, so that M keeps rising. If this happens, it goes without saying that the US dollar exchange rate will fall big time. Conclusion
My advice today is to replace bunds with Chinese government bonds and hold cash in Asian currencies, which are tracking the renminbi. As an aside, Brazilian bonds and cash tend to offer exceptional returns and could be put in the aggressive part of the portfolio as a replacement for equities.
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A New World Monetary Order Is Coming
ZeroHedge.com Fri, 10/30/2020 - 22:20 Authored by Stefan Gleason via ActivistPost.com, The global coronavirus pandemic has accelerated several troubling trends already in force. Among them are exponential debt growth, rising dependency on government, and scaled-up central bank interventions into markets and the economy. Central bankers now appear poised to embark on their biggest power play ever. Federal Reserve Chairman Jerome Powell, in coordination with the European Central Bank and International Monetary Fund (IMF), is preparing to roll out central bank digital currencies. The globalist IMF recently called for a new “Bretton Woods Moment” to address the loss of trillions of dollars in global economic output due to the coronavirus. In the aftermath of World War II, the original Bretton Woods agreement established a world monetary order with the U.S. dollar as the reserve currency. Importantly, the dollar was to be pegged to the price of gold. Foreign governments and central banks could also redeem their dollar reserves in gold, and they started doing so in earnest in the 1960s and early 1970s. In 1971, President Richard Nixon closed the gold window, effectively ushering in a new world monetary order based solely on the full faith and credit of the United States. An inflation crisis followed a few years later. In response, the Federal Reserve took the painful step of jacking up interest rates to defend its wilting Federal Reserve Note and tame rising prices. Fast forward to 2020, and the Fed has assumed for itself novel policy mandates that are a precursor to a new monetary system. But the monetary masters aren’t contemplating a return to sound money. Rather, they’re planning for even more debt, more inflation, and picking of winners and losers in the economy. The Fed has unceremoniously thrown its statutory dual mandate of full employment and stable prices out the window. It now gives itself an unlimited mandate to inject stimulus and bailout cash wherever it sees fit (including, recently, “junk” bond exchange-traded funds). Instead of pursuing stable prices, the Fed is now explicitly embarking on an inflation-raising campaign with the goal of generating annual price level increases above 2% for an undefined period. The next frontier of the Fed’s unlimited mandate could be “FedCoin” – a central bank digital currency. Earlier this month Chairman Powell participated in an IMF panel on international payments and digital currencies. He touted electronic payments systems and raised the possibility of integrating them into a central bank digital currency regime. Powell has so far declined to outright endorse a move toward a fully cashless system which countries including China and Sweden are spearheading. But he is on board with the larger globalist agenda of expanding the role of monetary policy in shaping economic and social outcomes. IMF Managing Director Kristalina Georgieva sees expanded monetary tools being aimed at every issue under the sun: “We will have a chance to address some persistent problems – low productivity, slow growth, high inequalities, a looming climate crisis… We can do better than build back the pre-pandemic world – we can build forward to a world that is more resilient, sustainable, and inclusive.” The IMF is being pressured by debt campaigners to sell some of its gold reserves to cover payments owed by some of the world’s poorest countries. The IMF would issue pseudo-currency units known as Special Drawing Rights (SDRs) to cancel the debts of poor countries. In a world where central bank balance sheets have grown by more than $7 trillion, it’s not surprising that everyone wants a piece of the pie and that many now view gold as dispensable. Is gold merely a barbarous relic in this brave new digital world? If it were, then it would have collapsed in price this year, amid all the new central bank rollouts, instead of surging to an all-time high. Precious metals may be the ultimate hedge against the new world monetary order. In the event that the U.S. central bank launches a digital dollar and assigns every American a virtual wallet, there would be no escaping adverse monetary policy decrees except by exiting fiat currencies entirely. Under a central bank digital currency, authorities could impose negative interest rates on all holdings of currency units. They could do so without needing to get anyone to buy negative-yielding bonds or deposit money into negative-yielding bank accounts. Under a central bank digital currency, direct credits and debits could replace stimulus checks and taxes. It would be the vehicle through which modern monetary theory could be fully implemented – with the central bank becoming tax collector and funder of all government operations. If depreciating the value of the currency through the inflation tax wasn’t enough, the Fed could also stick dollar-holders with a direct tax in the form of negative interest rates. Once paper notes are phased out, holding cash itself would no longer be a way for individuals to escape negative rates. The only escape hatches would be volatile alternative digital currencies (such as Bitcoin) or hard money (gold and silver). Under a monetary order where electronic digits representing currency can be created out of thin air in unlimited quantities, the best hedge is the opposite – tangible, scarce, untraceable wealth held off the financial grid. Credit Card Debt Statistics for 2020 (so far)
(www.fool.com) What's the average credit card debt per person? What's the total credit card debt in the U.S.? How do debt figures break down by age? Are millennials borrowing as much as we think they are? We looked at the best and most recent data from government and institutional sources -- including the Federal Reserve, the Consumer Financial Protection Bureau, and Experian -- to answer your most pressing questions on credit card debt. Key findings
However, the average doesn't tell the whole story. Approximately 52% of Americans have credit card balances of $2,500 or less. Alaskan consumers have the highest credit card debt, with an average of $8,026. New Jersey residents are second, with an average credit card balance of $7,084. Iowa consumers have the lowest credit card debt, with an average balance of $4,744, followed by Wisconsin with an average of $4,908. Credit card balance in 2019Percentage of U.S. credit card holders$2,500 or less52.1% $2,500-$5,00015.5% $5,000-$7,5008.8% $7,500-$10,0005.7% $10,000-$15,0006.7% $15,000-$20,0003.8% $20,000-$30,0003.8% $30,000-$50,0002.5% $50,000 or more1.1% Data source: Experian (2019).Average credit card debt by credit scoreThe highest credit card balances are carried by consumers with credit scores in the 670–739 range, which is typically considered to be average credit. The lowest credit card balances are carried by consumers with poor credit scores, which makes sense because of their limited access to credit. Consumers with top-tier credit scores also carry below-average credit card balances. Credit score rangeAverage credit card debt300–579 (Poor)$3,446 580–669 (Fair)$6,489 670–739 (Average/Good)$9,712 740–799 (Great)$6,051 800–850 (Exceptional)$3,616 Data source: Experian (2019).Average credit card debt by ageTotal credit card debt increases over time until people reach the 50–59 age group. It then decreases steadily in the latter half of consumers' lives, according to data from the Federal Reserve Bank of New York. Age groupTotal credit card debt18–29$52.1 billion 30–39$151.4 billion 40–49$196.6 billion 50–59$213.2 billion 60–69$163.0 billion 70 and older$116.6 billion Data source: Federal Reserve Bank of New York (2020).The average credit card balance hits a peak of $7,100 for households aged 45–54 and declines steadily after that, according to the Federal Reserve Board's 2016 Survey of Consumer Finances. The fact that seniors' credit card debt accounts for a relatively large portion of their total debt is explained by a reduction in other kinds of debt, such as mortgages and auto loans. Average credit card debt by education level and occupational statusLooking at credit card debt by household education level, we find that the percentage of families holding credit card debt generally increases with education, though it drops off among Americans who have a college degree. Education level of head of household% Holding credit card debtAverage credit card debtNo high school diploma35.2%$3,800 High school diploma44.3%$4,600 Some college50.8%$4,700 College degree41.3%$8,200 Data source: Federal Reserve Board (2016).When looking at the average amount of credit card debt per household by education level, the trend changes a bit. Federal Reserve Board data shows that households where the head has no high school diploma carry $3,800 in debt on average, and those with a college degree carry more than twice as much at $8,200. When examining debt by occupational status, we find that those "working for someone else" were most likely to carry credit card debt at 50.4%, compared to 46.1% of those who were self-employed and 32.7% for retirees. However, self-employed people had the highest average credit card balance at $8,000, compared to $5,700 for those working for someone else and $4,600 for retirees. The high credit card balance for self-employed individuals could be due to an overlap of business and personal expenses on the same credit card. Average credit card debt by raceWhen it comes to credit card balances by race, non-Hispanic whites are at the bottom of the range, with 42.1% of families carrying a balance, according to Federal Reserve Board data. Hispanic and Latino families are at the top of the range at 49.6%. In the middle are African American families at 47.8% and "other" or "multiple-race" Americans at 44.1%. Despite having the lowest percentage of cardholders who carry a balance, white, non-Hispanic families had the highest average credit card debt at $6,500, followed by other/multiple-race families at $5,700, and African American and Hispanic/Latino families at $3,800. Race% With credit card debtAverage credit card debtWhite (non-Hispanic)42.1%$6,500 Hispanic/Latino49.6%$3,800 African American47.8%$3,800 Other44.1%$5,700 Data source: Federal Reserve Board (2016).When it comes to credit card usage by race, non-Hispanic whites are at the bottom of the range, with 42.1% of families carrying a balance, shows Federal Reserve Board data. Hispanic and Latino families are at the top of the range at 49.6%. In the middle are African American families at 47.8% and "other" or "multiple-race" Americans at 44.1%. Despite having the lowest credit card usage rate, white, non-Hispanic families had the highest average credit card debt at $6,500, followed by other/multiple-race families at $5,700 and African American and Hispanic/Latino families at $3,800. Total U.S. credit card debtTotal credit card balances in the United States are $893 billion as of the first quarter of 2020, according to the New York Federal Reserve. This has increased considerably over the past few years, but declined a bit in early 2020 as the COVID-19 pandemic hit. How many credit cards does the average American have?The average consumer with credit cards has four of them, with a combined limit of $31,015, according to Experian. 61% of Americans have at least one credit card. Consumers with higher credit scores tend to have more credit cards. FICO says the average consumer with a score of 800 or higher has 10 open revolving credit accounts. How many credit cards do Americans have?Americans have more than half a billion credit cards -- 511.4 million as of the first quarter of 2020. That's 95 million more credit cards than they had in 2015. YearNumber of credit card accounts2015415.8 million 2016435.6 million 2017454.6 million 2018466.9 million 2019482.7 million 2020511.4 million Data source: Federal Reserve Bank of New York. Note: Number of accounts as of the first quarter of each year.Credit utilizationAccording to the New York Federal Reserve Consumer Credit Panel and Equifax data, Americans have a total of $3.93 trillion in credit limits as of the first quarter of 2020. As mentioned in the last section, there is a total of $893 billion in credit card debt in the United States, which translates to approximately 23% of the total credit limit. Credit card origination statisticsOver the 10-year period ending April 2019, the number of credit cards originated per month climbed from 3.68 million to 5.89 million, according to the Consumer Financial Protection Bureau (CFPB). The number of new credit cards originated peaked in July 2016 at 6.86 million. The volume of new credit cards originated varies considerably by state. Minnesota, Rhode Island, Wyoming, and Delaware all had year-over-year origination volume increases of 25% or more, while Utah, Tennessee, and Vermont had originations fall by 25% or greater as of April 2019. COVID-19 credit card debt statisticsThe average American could save $88 per month if their credit card company agrees to waive interest on their credit card debt, according to The Ascent's calculations. Americans have actually become less worried about their credit card debt during the pandemic. In a survey on financial priorities during COVID-19 by The Ascent, fewer than 10% of respondents said their credit card debt was a top financial priority, compared with 14.8% before the pandemic. Employment and general financial survival have increased in priority. The survey of more than 1,500 Americans was conducted on April 3, 2020. 6.1% of Americans planned to use their stimulus check money for the specific purpose of paying off credit card debt. Credit card delinquency statisticsApproximately 9.1% of all credit card balances in the United States were 90 days or more delinquent as of the first quarter of 2020. The lowest recorded credit card delinquency rate was 7.1% in the third quarter of 2016 and the highest was 13.7% in the second quarter of 2010 in the wake of the Great Recession. Average credit card interest ratesThe average credit card interest rate in the U.S. is 14.52% as of May 2020. However, this includes both interest-charging accounts and accounts that are not assessed interest (promotional 0% APR offers, for example). If we just consider accounts that are assessed interest, the average interest rate is 15.78%, according to the Federal Reserve. Credit card interest rates are directly tied to the federal funds rate, so they have fallen since the COVID-19 pandemic hit. Sources
Citigroup is fined $4.5 million by U.S. CFTC for deleting subpoenaed audio recordings
By Jonathan Stempel NEW YORK (Reuters) - A U.S. regulator on Monday fined Citigroup Inc C.N $4.5 million for deleting millions of audio files, including recordings it had subpoenaed, after failing to fix a known design flaw in its audio preservation system. The U.S. Commodity Futures Trading Commission said the Nov. 2018 deletion of 2.77 million audio files included recordings of traders subpoenaed in Dec. 2017 for a probe, which Citigroup had promised would be preserved. Citigroup was accused of not following up on an employee’s warning in 2014 that the configuration of its audio preservation system might create a “ticking time bomb effect” that could, and did, cause mass deletions of audio files. The civil fine was imposed against Citibank NA, Citigroup Energy Inc and Citigroup Global Markets Inc for the New York-based bank’s failure to maintain sufficient internal controls over its technology. Citigroup did not admit or deny wrongdoing. A spokeswoman said the bank was pleased to settle. According to the CFTC, the deleted recordings comprised 683,296 calls for 982 individual users, including recordings covered by its subpoena, and 2,087,789 recordings from speakerbox or “Hoot n’ Holler” lines. The case is the latest to highlight problems with technology systems at the third-largest U.S. bank by assets. Citigroup is battling separately in Manhattan federal court to recoup $900 million of its own money that it accidentally paid to lenders for the cosmetics company Revlon Inc REV.N. Some hedge funds that lent money to Revlon and received payments from Citigroup have balked at repaying the bank, which blamed the incident on a clerical error. JPMorgan to pay $920 million for manipulating precious metals, treasury market
By Abhishek Manikandan, Michelle Price (Reuters) - JPMorgan Chase & Co JPM.N has agreed to pay more than $920 million and admitted to wrongdoing to settle federal U.S. market manipulation probes into its trading of metals futures and Treasury securities, the U.S. authorities said on Tuesday. The landmark multi-agency settlement lifts a regulatory shadow that has hung over the bank for several years and marks a signature victory for the government’s efforts to clamp down on illegal trading in the futures and precious metals market. JPMorgan will pay $436.4 million in fines, $311.7 million in restitution and more than $172 million in disgorgement, the Commodity Futures Trading Commission (CFTC) said on Tuesday, the biggest-ever settlement imposed by the derivatives regulator. Between 2008 and 2016, JPMorgan engaged in a pattern of manipulation in the precious metals futures and U.S. Treasury futures market, the CFTC said. Traders would place orders on one side of the market which they never intended to execute, to create a false impression of buy or sell interest that would raise or depress prices, according to the settlement. This manipulative practice, which is designed to create the illusion of demand, or lack thereof, is known as “spoofing.” Some of the trades were made on JPMorgan’s own account, while on occasions traders manipulated the market to facilitate trades by hedge fund clients, the CFTC said. The bank failed to identify, investigate, and stop the behavior, even after a new surveillance system flagged issues in 2014, the agency said. “The conduct of the individuals referenced in today’s resolutions is unacceptable and they are no longer with the firm,” said Daniel Pinto, co-president of JPMorgan and CEO of the Corporate & Investment Bank. He added that the bank had invested “considerable resources” in boosting its internal compliance policies, surveillance systems and training programs. In parallel settlements, the bank entered into a Deferred Prosecution Agreement with the Department of Justice and the United States Attorney’s Office for the District of Connecticut, staving off criminal prosecution on charges of wire fraud. It also agreed to pay $35 million to settle related charges with the Securities and Exchange Commission, although the bank’s payment to the CFTC would offset that fine, it said. In an unusual concession, JPMorgan also admitted wrongdoing in agreeing to the SEC and Justice Dept. settlements. “This record-setting enforcement action demonstrates the CFTC’s commitment to being tough on those who intentionally break our rules, no matter who they are. Attempts to manipulate our markets won’t be tolerated,” said CFTC Chairman Heath Tarbert. The CFTC and Justice Department have taken aim at spoofing in recent years, using sophisticated data analysis tools to spot potential wrongdoing that it could not previously detect. Reuters has reported that around 2017, the agency began using techniques it originally developed to spot healthcare fraud schemes to identify suspicious trading patterns, including by scanning activity on exchanges. “The idea was: let’s mine this data source to see who the worst actors are,” Robert Zink, a top Justice official who helped lead the effort, told Reuters in May here. The agency has already charged six JPMorgan traders for manipulating metals futures between 2008 and 2016. On Friday, meanwhile, two former Deutsche Bank AGDBKGn.DE traders were found guilty here by a federal jury of spoofing, the agency said The Supply Chain Is Broken And Food Shortages Are Here
ZeroHedge.com Sat, 09/26/2020 - 17:15 Authored by Robert Wheeler via The Organic Prepper, If you are a reader of this site, you might be more interested in the food supply chain than most, at least when things are good. So, if you have been paying attention recently, you might find that there have been some severe disturbances in that supply chain. Several months ago, the immediate disruptions began at the beginning of the COVID-19 hysteria, when factories, distribution centers, and even farms shut down under the pretext of “flattening the curve.” As a result, Americans found necessities were missing on the shelves for the first time in years. Items like hand sanitizer and Clorox wipes were, of course, out of stock. Soon other items became noticeably missing as well. People began to notice meat, and even canned vegetables and rice were soon missing from the shelves. Most of this was simply the result of mass panic buying, although “preppers” were blamed for “hoarding.” Therefore, people who had not been prepping all along and were suddenly caught with their pants down. But that’s not the whole story. Manufacturing and packaging facilities and slaughterhouses shut down due to intrusive totalitarian government reactions to an alleged pandemic. Combined with panic buying, those facilities’ ability to replace what was bought up was drastically reduced. As a result, consumers were forced to wait weeks before buying what they needed (or wanted) again. Even then, they had to show up in the morning. We are still experiencing those shortages, though better hidden. As anyone who shops regularly can tell you, you can find what you need, but you may have to go to three stores to get it, where one would have done in the past. In this article, you’ll find some advice about dealing with the limited varieties of inventory that people are currently noticing at stores. War launched on the economy by state governments put millions of Americans out of work. Now, when most rational people would be happy to have a job at all amid such high unemployment, they were prepared to stop the machine’s wheels from working.Workers suddenly started to organize, strike, and walk off the job conveniently when the food supply was already broken. Of course, these workers had not organized or initiated a strike at any time before when working conditions were bleak, and wages were low. While extraordinary times beget extraordinary reactions, the timing of the newfound sense of workers’ resolve cannot go unnoticed. At the same time, we witnessed farms dumping thousands of gallons of milk down the drain, meat producers slaughtering animals and burying them, and farmers destroying crops all over the country and the world. The reason for this is two-fold. First, many major producers would not want a glut of their product on the market and see their prices dropdown. Second, with the totalitarian measures forcing the shut down of restaurants across the country, many farms and producers lost a massive part of their market, thus destroying it. A government genuinely concerned with its people’s health would have bought that produce and either distributed it or freeze-dried and stored it for the coming apocalypse. Indeed, the Trump administration attempted this with some very minor success and high cost. Food banks at least benefited. But the damage to the food supply was already done. And then came the winds. As time moved forward, we saw devastating straight-line winds blow across places like Iowa, destroying massive amounts of crops and farming infrastructure, effects rarely advertised on mainstream media outlets. Following those winds, we saw massive wildfires along the West Coast’s entirety from Washington to California and as far east as Colorado, South Dakota, and Texas. One need only take a look at the map at fires seemingly heading east, burning up prairies and farmland all along the way to see that the food chain will experience yet even more hiccups once the smoke has cleared. But while leftists claim the fires are the natural result of “climate change” and conservatives blame lack of adequate forest management (which has some merit), both completely ignore the fact that close to ten people were arrested for setting these fires. Repeatedly, arsonists are being arrested for starting blazes though the motive is unclear. Those of us who have studied history, however, can speculate with some certainty. But these problems are not unique to the United States. Countries all over the world are experiencing supply chain problems. Australia, for instance, is about to run out of its domestic rice supply by December entirely. Now, here we are, with winter fast approaching and the food supply decimated. The world’s population is walking around masked and terrified of getting within six feet of another human, and the cities all across America are on fire with violent riots. Communists and the inevitable response are clashing in the streets and threatening to turn in to a possible American Civil War 2.0. What role will hunger play in this scenario? At the moment, we can’t say for sure. But what we can say with certainty is that this will be a very long, very trying winter. Food shortages are coming, and they aren’t too far away. You do not have much time left before the items you can grab now are gone and gone for good. Here are some tips for shopping when there aren’t many supplies left on the shelves, and here’s a list of things that are usually imported from China that we haven’t been receiving in the same quantities (if at all) since the crisis began. Many of the readers of this website will be prepared, no doubt, but others won’t. Not only do we advise you to prepare – but we also advise you to be ready for the unprepared. More than half of households in 4 largest U.S. cities struggled financially during pandemic, poll shows
https://theweek.com/ Tim O'Donnell There's no question the coronavirus pandemic has forced many Americans into financial hardship, but a new NPR/Harvard T.H. Chan School of Public Health/Robert Wood Johnson Foundation survey provided a clearer picture of the extent of the struggles in the United States' four largest cities. At least half of all households in those cities — 53 percent in New York City, 56 percent in Los Angeles, 50 percent in Chicago, and 63 percent in Houston — reported facing serious financial problems, including depleted savings, problems paying credit card bills, and affording medical bills. Black and Latino households in all four cities were particularly vulnerable. In New York, 62 percent of Black households and 73 percent of Latino households reported struggles. In Los Angeles those numbers are 52 and 71 percent, respectively, while 69 percent of Black households and 63 percent of Latino households in Chicago have faced the same. And, most drastically, in Houston, 81 percent of Black households and 77 percent of Latino households said their financial issues were serious. Interviews for the poll were conducted online and via telephone between July 1-Aug. 3 among 3,454 adults in New York, Los Angeles, Chicago, and Houston. The overall margin of error was 3.3 percentage points, while it was 5.4 percent for New York, 7.1 percent for Los Angeles, 5.4 percent for Chicago, and 6.3 percent for Houston. Goldman Sachs, Morgan Stanley lower stress capital buffers after Fed's correction
Elizabeth Dilts Marshall (Reuters) - Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) on Friday revised lower two key measures of the banks’ ability to deploy cash in an emergency, after the Federal Reserve said it made an error in its June stress test results. The Fed said Friday that it miscalculated hypothetical trading losses for Goldman and four other banks and issued corrected stress test results. In response, Goldman issued a statement saying it revised its stress capital buffer downward to 6.6% from 6.7%, and lowered the corresponding standard common equity tier 1 (CET1) ratio requirement to 13.6% from 13.7%. Morgan Stanley meanwhile lowered its stress capital buffer to 5.7% from 5.9% and its CET1 ratio to 13.2% from 13.4%. In June, the Fed examined big banks’ balance sheets to see if they had enough funds on hand to handle losses during two years of severe economic and market stress. Goldman’s loan portfolio suffered significantly higher hypothetical loss rates than those of peers. The Fed ordered Goldman to hold the most capital of the 34 banks it tested, requiring it to have a CET1 ratio of 13.7% by Oct. 1. Goldman said in June that it had already boosted capital measures and was on track to meet the Federal Reserve’s benchmark for October. Now that will be slightly easier to achieve. |
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