News

Latest News Affecting Gold Price


  • Venezuela’s Grim Reaper – A Weekly Report

    Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

    The Grim Reaper has taken his scythe to the Venezuelan bolivar. The death of the bolivar is depicted in the following chart. A bolivar is worthless, and with its collapse, Venezuela is witnessing the world’s worst inflation. 

    As the bolivar collapsed and inflation accelerated, the Banco Central de Venezuela (BCV) became an unreliable source of inflation data. Indeed, from December 2014 until January 2016, the BCV did not report inflation statistics. Then, the BCV pulled a rabbit out of its hat in January 2016 and reported a phony annual inflation rate for the third quarter of 2015. So, the last official inflation data by the BCV is almost two years old. To remedy this problem, the Johns Hopkins – Cato Institute Troubled Currencies Project, which I direct, began to measure inflation in 2013. 

    The most important price in an economy is the exchange rate between the local currency and the world’s reserve currency — the U.S. dollar. As long as there is an active black market (read: free market) for currency and the black market data are available, changes in the black market exchange rate can be reliably transformed into accurate estimates of countrywide inflation rates. The economic principle of Purchasing Power Parity (PPP) allows for this transformation.

    I compute the implied annual inflation rate on a daily basis by using PPP to translate changes in the VEF/USD exchange rate into an annual inflation rate. The chart below shows the course of that annual rate, which peaked at 1823% (yr/yr) in early August 2017. At present, Venezuela’s annual inflation rate is 1538%, the highest in the world (see the chart below).

  • Gartman: "We Are A Bit Uneasy This Morning Being Short"

    Just two weeks after he staked his reputation that "The Bull Market Has Come To An End", "world-renowned" commodity guru Dennis Gartman is getting nervous, and as he writes in his latest daily letter, "we
    are a bit uneasy this morning being short."

    Here is how Gartman is slowly but surely pivoting away from his "red-line" bearish call on stocks:

    STOCKS HAVE RISEN A BIT SINCE YESTERDAY with our International Index having gained a marginal 19 points, with stocks in Asia moving sharply higher while stocks in Europe were weak. However, the markets in Asia are responding to what we perceive to be the best speech given yet by Mr. Trump last evening in which he made clear that the US will not stand down from its obligations abroad.

     

    Heretofore, President Trump… influenced of course by the manifestly anti-globalist philosophies of Mr. Bannon… seemed intent upon reducing the US position of global authority, but last evening that philosophy was abandoned, and with that the Asia stock markets and the US stock index futures turned briskly higher.

     

    Also, we note that the Fear & Greed Index here in the US made its way toward and below the all-important 20 level, having fallen to 15 as of the close yesterday and almost certainly to turn higher today given the strength in the stock index futures as we write. Previously, any time this index fell below 20 and turned higher, stocks which had been under pressure swiftly turned for the better and although the world’s stock market histories do not always follow the precise paths each time, they do have great and constant similarities.

    And the resultant trade adjustment:

    2. Short of Two Units of the NASDAQ 100; Long of Two Units of the S&P:

    We began the trade Tuesday, August 1st with the ratio at 2.37:1 and we added to the position on Friday, August 11th with the ratio at precisely the same level. It closed last evening at 2.38:1.

     

    We’ve reduced our “risk” point to 2.42:1 on a closing basis in New York and we’ll look for the ratio to make its way down to 2.15:1… noting that each 0.1% is a material shift in price, but we are a bit uneasy this morning being short.

    It would appear that the bull market is back on again, as for Gartman's stake reputation, well... he puts it best: 

    We are out of the office today, on the road home from Cookeville, Tennessee where we witnessed the Eclipse yesterday… however, we were actually about 5 miles from the perfect dead center of the event, but what we saw was spectacular! We’ll be back in the office late this afternoon for we are driving back home rather than flying.

  • Ron Paul Urges America "Oppose Fascism Of The Right & The Left"

    Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

    Following the recent clashes between the alt-right and the group antifa, some libertarians have debated which group they should support. The answer is simple: neither. The alt-right and its leftist opponents are two sides of the same authoritarian coin.

    The alt-right elevates racial identity over individual identity. The obsession with race leads them to support massive government interference in the economy in order to benefit members of the favored race. They also favor massive welfare and entitlement spending, as long as it functions as a racial spoils system. Some prominent alt-right leaders even support abortion as a way of limiting the minority population. No one who sincerely supports individual liberty, property rights, or the right to life can have any sympathy for this type of racial collectivism.

    Antifa, like all Marxists, elevates class identity over individual identity. Antifa supporters believe government must run the economy because otherwise workers will be exploited by greedy capitalists. This faith in central planning ignores economic reality, as well as the reality that in a free market employers and workers voluntarily work together for their mutual benefit. It is only when government intervenes in the economy that crony capitalists have the opportunity to exploit workers, consumers, and taxpayers. Sadly, many on the left confuse the results of the “mixed economy” with free markets.

    Ironically, the failure of the Keynesian model of economic authoritarianism, promoted by establishment economists like Paul Krugman, is responsible for the rise of the alt-right and antifa. Despite a recent (and likely short-lived) upturn in some sectors of the economy, many Americans continue to struggle with unemployment and a Federal Reserve-caused eroding standard of living. History shows that economic hardship causes many to follow demagogues offering easy solutions and convenient scapegoats.

    Left-wing demagogues scapegoat businesses and the “one percent,” ignoring the distinction between those who made their fortunes serving consumers and those who enriched themselves by manipulating the political process.

     

    Right-wing demagogues scapegoat immigrants and minorities, ignoring how these groups suffer under the current system and how they are disproportionally impacted by policies like the war on drugs and police militarization.

    As the Keynesian-Krugman empire of big government and fiat currency collapses, more people will be attracted to authoritarianism, leading to an increase in violence. The only way to ensure the current system is not replaced with something even worse is for those of us who know the truth to work harder to spread the ideas of liberty.

    While we should be willing to form coalitions with individuals of good will across the political spectrum, we must never align with anyone promoting violence as a solution to social and economic problems. We must also oppose any attempts to use the violence committed by extremists as a justification for expanding the police state or infringing on free speech. Laws against hate speech set a dangerous precedent for censorship of speech unpopular with the ruling elite and the deep state.

    Libertarians have several advantages in the ideological battle over what we will replace the Keynesian welfare model with. First, we do not need to resort to scapegoating and demagoguing, as we have the truth about the welfare-warfare state and the Federal Reserve on our side. We also offer a realistic way to restore prosperity. But our greatest advantage is that, while authoritarianism divides people by race, class, religion, or other differences, the cause of liberty unites all who seek peace and prosperity.


  • Mnuchin's Trophy Wife Blasted After Instagram Spat Goes Viral

    Treasury Secretary Steve Mnuchin's 36-year-old (he's 52 btw) trophy wife Louise Linton has landed herself in a bit of hot water this morning after an epic social media rant against a taxpayer who took issue with one of her Instagram posts.

    Apparently @jennimiller29 didn't appreciate Linton hastagging her entire expensive wardrobe (including #rolandmouret, #tomford, #hermesscarf, and #valnetinorockstudheels) while traveling on a taxpayer funded private plane, during her husband's trip to "check" if the gold at Fort Knox is still there, which prompted the following snarky comment:

    "Glad we could pay for your little getaway."

    And while most folks have learned to simply ignore the Twitter trolls, Linton apparently has not...which is great news for everyone else because it prompted the following epic rant in reply:

    “Cute! Aw!!! Did you think this was a personal trip?! Adorable! Do you think the US govt paid for our honeymoon or personal travel?! Lololol. Have you given more to the economy than me and my husband? Either as an individual earner in taxes OR in self sacrifice to your country? I’m pretty sure we paid more taxes toward our day ‘trip’ than you did. Pretty sure the amount we sacrifice per year is a lot more than you’d be willing to sacrifice if the choice was yours. You’re adorably out of touch. Thanks for the passive aggressive nasty comment. Your kids look very cute. Your life looks cute. I know you’re mad but deep down you’re really nice and so am I. Sending me passive aggressive Instagram comments isn’t going to make life feel better. Maybe a nice message [sic], one filled with wisdom and hunanity [sic] would get more traction. Have a pleasant evening. Go chill out and watch the new game of thrones. It’s fab!”

    Others quickly chimed in: “Quite the populist hashtags on Louise Linton’s Instagram (Mnuchin’s wife), following her taxpayer-funded day trip to Kentucky,” joked Matt McDermott, a pollster and Associate Director at Whitman Insight Strategies.

    “Curiously this Instagram post is no longer available. F–king hedge funders,” wrote one Twitter user. “Louise Linton is a hideous person, growing fat off of our tax dollars,” another said.

    At one point during the evening, someone even went so far as to change Linton’s Wikipedia page to reflect her IG comment. “Never forget she posted this on Instagram,” the page read as of 10:30 p.m.

    Alas, in the end, it seems that only the President is permitted to post outlandish social media rants as Linton's post has since been deleted and her account turned private.

    Link for Linton's Maxim photoshoot

  • One Body, "Some Remains" Found In Search For 10 Missing Sailors From USS John S. McCain

    One day after the US Navy announced it was placing global operations and patrols on temporary hold as it investigates the cause for the second deadly warship crash in two months, Navy and Marine Corps divers searched on Tuesday for 10 sailors missing from the USS John S. McCain which collided with a merchant ship near Singapore. According to the Navy’s Pacific Fleet Commander, at least one body and other unidentified remains have been found as the search so far. 

    "We have discovered other bodies during the diving on the McCain today,” Admiral Swift said at a news conference, held within sight of the damaged ship. “But it is premature to say how many or what the status of the recovery of those bodies is."

    As the WSJ reports, Malaysian search teams had reported one body found in the waters off the coast of Malaysia and east of Singapore, where the McCain collided with a civilian tanker early Monday. U.S. Navy and Marine Corps divers had located other remains inside sealed compartments of the vessel, Adm. Scott Swift said at a press conference in Singapore.  Swift said the Navy was seeking possession of the body found by Malaysian search-and-rescue teams and was in the process of trying to identify the remains inside the McCain. He said search operations would continue until the chances of finding any remaining sailors was exhausted. “That remains our focus,” he said.

    Swift declined to comment on the potential causes of the collision with the tanker, saying an investigation is still “in its earliest stages.”

    At his news conference Tuesday, Admiral Swift discounted suggestions that the crew of the McCain had been overworked or underprepared. He also said there were no signs of failure in the ship’s steering system or of a cyberattack, two possibilities that have been mentioned in news reports.

    He said the Navy hadn’t seen any indications of attempts to interfere with the ship through cyberattacks, but the investigation would consider all options.

    “We are not taking any considerations off the table and every scenario will be reviewed and investigated in detail,” he said.

     

    The admiral, who oversees 60% of the U.S. Naval global deployment, said exhaustion didn’t appear to be a problem for the McCain crew, but the investigation would determine whether negligence had occurred. He said the Navy didn’t have concerns about its readiness and capability despite recent incidents involving four of its ships.

     

    “I was on the McCain this morning looking at the eyes of those sailors,” he said. “I didn’t see exhaustion”

    As previously reported, the guided-missile destroyer had a hole torn open below the waterline on the left side in a collision with the oil-and-chemical tanker Alnic MC. The warship made it to Singapore’s Changi Naval Base under its own power, escorted by a Singaporean navy vessel. The Alnic, a much larger ship, suffered relatively minor damage.

    In Malaysia, Zulkifli Abu Bakar, the director general of the Maritime Enforcement Agency, said the collision had occurred in the country’s waters, at the highly congested entrance to the Singapore and Malacca Straits. Quoted by the NYT, he said 80,000 ships a year pass through the area. “It is in our waters, so we are leading the S.A.R. operations,” he said Monday, using an abbreviation for search and rescue. But he said any territorial dispute was secondary to the search effort. “We do not want to have another collision,” he said. “For the time being, I don’t think we should argue about whose waters, because I think the most important thing is to focus on the search and rescue effort.”

  • Are We Fiddling While Rome Burns?

    Authored by Charles Hugh Smith via OfTwoMinds blog,

    Solutions abound, but they require the retirement of obsolete systems that defend entrenched interests and soul-crushing inequalities.

    It turns out Nero wasn't fiddling as Rome burned--he was 60 km away at the time. Did Nero Really Fiddle While Rome Burned?

    The story has become short-hand for making light of a catastrophe, either out of self-interest (one theory had Nero clearing a site he desired for a palace with the fire) or out of a mad detachment from reality.

    Are we fiddling while Rome burns? I would say yes--because we're not solving any of the structural problems that are dooming the status quo. Instead, we're allowing a corrupt, corporate mainstream media to distract us with fake "Russians hacked our election" hysteria, false "cultural war" mania, and a laughably Orwellian frenzy over fake news which magically avoids mentioning the propaganda narratives pushed 24/7 by the mainstream media--narratives that are the acme of fake news.

    The media is only half the problem, of course; the audience doesn't want to hear about structural problems that can only be fixed by disrupting the status quo. If we don't accept that the financial system we inhabit is imploding, maybe all the problems will go away.

    The system is coughing up blood and we still want to believe it is "recovering" from a cold.

    Here's a short list of structural problems we should be tackling:

    1. Soaring inequality and the institutionalization of economic privilege. Systemic economic privilege doesn't exist in a vacuum--it's enforced by a centralized hierarchy, a dynamic I describe in my book Inequality and the Collapse of Privilege. Systemic inequality doesn't just undermine the economy--it also undermines the social and political orders.

    2. The central state (government) has one default setting: endless expansion into every nook and cranny of daily life. There are no mechanisms for contraction and no institutional memory of government reducing its control of every aspect of life.

    As I explain in my book Resistance, Revolution, Liberation: A Model for Positive Change, this concentration of power attracts concentrations of wealth which then buy the machinery of governance: democracy is reduced to an auction that excludes the bottom 99.9%.

    3. Finance has detached from the real-world economy, distorting every function via financialization, which concentrates income and wealth in the hands of the few. As I have often explained in the blog (and in my book Why Our Status Quo Failed and Is Beyond Reform), if we don't change the way we create and distribute credit-money, we change nothing.

    4. Our educational system is obsolete but the the current system is incapable of transformation for structural reasons. These include high sunk costs, bureaucratic sclerosis, self-serving fiefdoms that fear disruption of their gravy trains, a lack of understanding of the emerging economy, a dysfunctional centralized hierarchy and the state-funded exploitive machinery of student-loan debt.

    I explain all this and present a model that would cut costs by 90% in my book The Nearly Free University and the Emerging Economy.

    5. The economy and thus our society (i.e. our mode of production) are changing beneath our feet in dramatic ways. Highly centralized hierarchies (government, corporations) are the wrong unit size and structure to manage this transformation to the benefit of all rather than to the benefit of the few.

    I present a decentralized non-state, non-corporate, non-financialized model in my book A Radically Beneficial World: Automation, Technology & Creating Jobs for All.

    For individuals navigating these disruptive forces, I wrote an overview guide to the emerging economy, Get a Job, Build a Real Career and Defy a Bewildering Economy.

    Solutions abound, but they require the retirement of obsolete systems that defend entrenched interests and soul-crushing inequalities. The world is changing rapidly, and centralized systems that worked well in the past are failing because they are optimized for a world that no longer exists.

    The status quo is coughing up blood, and the situation is dire. Denial won't fix what's broken, and neither will magical thinking (the economy is "recovering," symbolic gestures and virtue-signaling will fix everything, etc.) Clinging to the absurd hope that the status quo just has a nagging cold will only increase the disorder when the system breaks down.

  • U.S. Treasury Secretary: I Assume Fort Knox Gold Is Still There

    U.S. Treasury Secretary: I Assume Fort Knox Gold Is Still There

    • US Treasury Secretary Steve Mnuchin visits Fort Knox Gold
    • Later tweeted ‘Glad gold is safe!’
    • Only the third Treasury Secretary to visit the fortified vault, last visit was 1948
    • Last Congressional visit was 1974
    • Speculation over existence of gold in Fort Knox is rife
    • Concerns over Federal Reserves lack of interest in carrying to an audit on gold
    • Gold was last counted in 1953, nine years before Mnuchin was born
    • Mnuchin may be looking to prevent countries and states from worrying about and repatriating their gold

    US Treasury Secretary 'assumes' the gold is still in Fort Knox, 64 years after it was audited.

    81 years after it was built Fort Knox received its third visit from a US Treasury Secretary yesterday, Steven Mnuchin.

    The fortified facility is reportedly surrounded by 30,000 soldiers, tanks, armored personnel carriers, attack helicopters, and artillery. Despite this, there is still concern as to whether the gold is there.

    As he headed in, Mnuchin told an audience “I assume the gold is still there…It would really be quite a movie if we walked in and there was no gold.”

    With a background in Hollywood it was unsurprising that Mnuchin’s imagination appeared to be getting carried away with tales of finding the $200 billion of gold missing.

    Missing gold: fact or fiction?

    An empty Fort Knox is an issue far removed from the hills of Hollywood  and has far more basis in reality than many give it credit for.

    For many decades campaigns have been led for the US Treasury and government to audit the gold and to testify to its existence.

    The gold has not been ‘counted’ since 1953. This was less than 20 years after Fort Knox was built. Since then there has been no official count or audit.

    The facility (purportedly) holds 147 million ounces of gold, worth around $186 billion. This is small compared to the amount purportedly held at the Liberty Street facility, in New York.

    As with Fort Knox, the New York gold is yet to be audited.

    At the moment, a tweet from a US Treasury Secretary is all we have when it comes to assurance over the gold’s existence.

     

     

    Lack of Fort Knox gold audit to prevent damage, will cause damage

    Congressman Ron Paul has argued previously that the US government ask Americans to trust that the Fort Knox gold is there plus gold stored elsewhere. They refuse to allow any checks and audits (whether independent or carried out by the government).

    Paul stated back in 2010, "if there was no question about the gold being there, you think they would be anxious to prove gold is there.”

    Mnuchin is no doubt aware of the damage that would be done to the US economy should it come to light that the gold is no longer where it's supposed to be.

    He has likely taken note of Goldfinger’s dastardly plan in the infamous Bond film. In Goldfinger the villain plans to contaminate the US gold holdings in order to boost the value of his and the Chinese’s own bullion.

    Whilst the gold in Fort Knox is unlikely to have been contaminated there is a strong argument that it isn’t there at all. Instead, it has been leased out many times over.

    Who has the gold?

    As GATA found out between 2008 and 2009 the Fed keeps a secret of its gold-swap arrangements with foreign banks.

    Unsurprisingly gold-swap arrangements potentially lead to the eventual problem that no-one’s sure whose gold is whose anymore. It can be a high-end, expensive game of pass-the-parcel.

    It’s worth remembering that the gold held by the US Government is not just owned by America, they hold gold for many countries, including Germany.

    There is an argument to be made over whether or not Germany, or anyone else storing gold in a central bank abroad, owns allocated gold or is merely a ‘creditor’ on a metal statement, given gold swap arrangements.

    Concerns have been so great over the United State’s lack of interest in auditing the gold bullion that countries have begun to repatriate the gold and demand statements.

    Venezuela and Germany are the two most high profile countries to have recently repatriated their gold. Both went to big efforts to publicise the existence of the gold as it was repatriated. Germany even published bar numbers.

     

    Missing gold has the states in a state

    The US has its own trust issues though when it comes to gold, thanks to the lack of checks in place. Two years ago the state of Texas were given the go ahead to build its own Bullion Depository, into which the state would repatriate over $1 billion worth of gold.

    The move by Texas highlighted mistrust in the Federal Government’s ability to not only keep the physical gold but also to not confiscate it should the monetary system run into problems.

    Gold going missing in the US is not a recent issue.

    Back in the 1920s Herr Hjalmar Schacht, then head of the German Central Bank, went to New York to see Germany’s gold. Despite the importance of the visit, Fed officials could not find the palette of Germany’s gold bullion.

    One would have thought this would have triggered an early start to the Second World War but instead Herr Schacht turned to the Federal Reserve Chairman, Benjamin Strong, and said ‘Never mind, I believe you when you when you say the gold is there. Even if it weren’t you are good for its replacement.’

    All of this serves as a timely reminder that we should learn from the mistakes of governments and central banks. Rather than offer up a blind trust to counterparties storing gold we should ensure that we have as much control as possible over our gold bullion.

    We believe that allocated and segregated gold bullion, stored in secure locations such as Singapore, Hong Kong and Zurich is the best way to store gold. When you do this with GoldCore you have control and a audit of your gold holdings so you know they are right where you want them, when you want them.

    News and Commentary

    Gold slips amid steady dollar; investors wary ahead of Jackson Hole meet (Reuters.com)

    Metals shine as stocks struggle near 5-1/2-week low (Reuters.com)

    A Cosmic Theory and 2-Inch Lump of Gold Drive Novo’s 500% Surge (Bloomberg.com)

    UK Rightmove house prices down in August (Telegraph.co.uk)

    Dalio Says the U.S. Is the Most Divided Since 1937 (Bloomberg.com)

    Gold's Rally Against Oil Is Just Beginning (Bloomberg.com)

    Stars Are Aligning for Gold Bugs (WSJEmail.com)

    US stocks may be more overvalued than they've ever been before (MoneyWeek.com)

    UK's biggest estate agent says Brexit negotiations are 'biggest risk' to housing market as growth slows (BusinessInsider.com)

    Stunning Photos Capture the Solar Eclipse Across America (Smithsonian.com)

    Gold Prices (LBMA AM)

    22 Aug: USD 1,285.10, GBP 1,000.71 & EUR 1,091.95 per ounce
    21 Aug: USD 1,287.60, GBP 999.82 & EUR 1,096.52 per ounce
    18 Aug: USD 1,295.25, GBP 1,004.34 & EUR 1,102.65 per ounce
    17 Aug: USD 1,285.90, GBP 998.12 & EUR 1,096.74 per ounce
    16 Aug: USD 1,270.15, GBP 985.13 & EUR 1,082.29 per ounce
    15 Aug: USD 1,274.60, GBP 986.92 & EUR 1,084.05 per ounce
    14 Aug: USD 1,281.10, GBP 987.34 & EUR 1,085.48 per ounce

    Silver Prices (LBMA)

    22 Aug: USD 17.02, GBP 13.27 & EUR 14.48 per ounce
    21 Aug: USD 17.02, GBP 13.20 & EUR 14.48 per ounce
    18 Aug: USD 17.15, GBP 13.30 & EUR 14.60 per ounce
    17 Aug: USD 17.02, GBP 13.23 & EUR 14.55 per ounce
    16 Aug: USD 16.68, GBP 12.96 & EUR 14.25 per ounce
    15 Aug: USD 16.89, GBP 13.12 & EUR 14.38 per ounce
    14 Aug: USD 16.97, GBP 13.09 & EUR 14.39 per ounce


    Recent Market Updates

    - Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words
    - Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High
    - Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard
    - World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2
    - Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”
    - Gold Has Yet Another Purpose – Help Fight Cancer
    - Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold
    - Great Disaster Looms as Technology Disrupts White Collar Workers
    - Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat
    - Silver Mining Production Plummets 27% At Top Four Silver Miners
    - Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
    - Gold Coins and Bars See Demand Rise of 11% in H2, 2017
    - Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”

    Important Guides

    For your perusal, below are our most popular guides in 2017:

    Essential Guide To Storing Gold In Switzerland

    Essential Guide To Storing Gold In Singapore

    Essential Guide to Tax Free Gold Sovereigns (UK)

    Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

  • Frontrunning: August 22
    • Trump commits to a 'fight to win' in Afghan war (Reuters)
    • Stay or Go? Some Trump Aides Are Pressed From All Sides (WSJ)
    • Futures higher as traders pick up beaten-down stocks (Reuters)
    • Divers Search Compartments of Ship for Missing Sailors (WSJ)
    • Why Do U.S. Navy Ships Keep Colliding? (BBG)
    • North Korea Threatens ‘Absolute Force’ as U.S., South Hold Drills (WSJ)
    • The Unintended Consequences of Quantitative Easing (BBG)
    • Ross Levinsohn Named CEO, Publisher of Los Angeles Times (WSJ)
    • Big protests expected as Trump plans Phoenix rally (Reuters)
    • Millennial Americans Are Moving to the 'Burbs, Buying Big SUVs (BBG)
    • Identity Thieves Hijack Cellphone Accounts to Go After Virtual Currency (NYT)
    • BHP Flags Exit From Shale as Full-Year Profits Surge Five-Fold (BBG)
    • Elliott Notches Win as BHP Eyes Sale of U.S. Shale Assets (WSJ)
    • Oil prices steady ahead of U.S. stocks data (Reuters)
    • After U.S. destroyer collision, Chinese paper says U.S. navy a hazard (Reuters)
    • Macy’s Hires eBay Executive Amid Management Shakeup (WSJ)
    • China's 'big four' banks raise billions for Belt and Road deals (Reuters)
    • Famed Plaza Hotel Is On the Block (WSJ)
    • Trump’s team and lawmakers making strides on tax reform plan (Politico)
    • Booming Metals Rally Signals Optimism on Global Growth (WSJ)
    • Could Puerto Rico Be the Next Hot Tax Haven? (BBG)
    • Muslim divorce law 'unconstitutional', rules India's top court (Reuters)
    • South Korea, U.S. fail to reach agreement on possible revision to FTA deal (Reuters)
    • California Crackdown on Cars Reinforced by Road Emissions Uptick (BBG)

    Overnight Media Digest:

    WSJ

    - President Donald Trump said he would expand the U.S. mission in Afghanistan but take a different approach from his predecessors by being tougher on Pakistan and refraining from telegraphing troop levels. on.wsj.com/2imqFJO

    - The U.S. Navy announced an "operational pause" and has begun a broad investigation after the USS John S. McCain collided with a merchant vessel, leaving 10 sailors missing, the second such incident in as many months. on.wsj.com/2im7vUB

    - Tronc Inc is undergoing a broad management shake up at its flagship newspaper, the Los Angeles Times, bringing in internet and media industry veteran Ross Levinsohn as its new chief executive and publisher. on.wsj.com/2ill46q

    - Activist investors scored a victory after BHP Billiton Ltd said it was looking to sell its onshore U.S. oil-and-gas operations. on.wsj.com/2illE46

    - CNN is launching a daily news show for Snapchat called "The Update," the latest reflection of how media companies are stepping up their interest in the mobile messaging platform. on.wsj.com/2imJZXq

    - Jeep, the crown jewel of Fiat Chrysler Automobiles NV and a world-wide symbol of American military and manufacturing might, has an interested Chinese suitor, Great Wall Motor Co Ltd, the latest sign of an industry in the midst of a global reshuffling. on.wsj.com/2imTohs

     

    NYT

    - In a growing number of online attacks, hackers have been calling up Verizon Communications Inc, T-mobile US Inc , Sprint Corp and AT&T Inc and asking them to transfer control of a victim's phone number to a device under the control of the hackers. nyti.ms/2vYNZAr

    - Tronc Inc, the parent company of The Los Angeles Times, abruptly replaced the newspaper's top leadership on Monday. Ross Levinsohn, a longtime media executive who held a senior position at Fox's digital group and was once considered a top candidate to lead Yahoo, was named publisher and chief executive of The Times. nyti.ms/2xn2jlZ

    - A Los Angeles jury on Monday ordered Johnson & Johnson to pay $417 million in damages to a medical receptionist who developed ovarian cancer after using the company's trademark Johnson's Baby Powder on her perineum for decades. nyti.ms/2vk41mu

    - The National Academies of Sciences, Engineering and Medicine, which was conducting a scientific study of the public health risks of mountaintop-removal coal mining said in a statement they were ordered to stop work because the Interior Department was conducting an agencywide budgetary review. nyti.ms/2x8iDrw

    - Statements and evidence provided to German investigators by Zaccheo Giovanni Pamio, former head of thermodynamics in Audi's engine development department, suggest that knowledge of emissions fraud reached higher in the ranks of management than Volkswagen has admitted. No members of the company's management board have been charged, although investigations are continuing. nyti.ms/2wz8fuN

     

    Britain

    The Times

    * The former chief executive of Lloyds Banking Group Plc and one of his top lieutenants are suing the bailed-out lender for hundreds of thousands of pounds in unpaid bonuses in a move that risks sparking public outrage. bit.ly/2g1MPAx

    * Nicholas Macpherson, the former Treasury mandarin who oversaw the introduction of quantitative easing eight years ago, has compared money printing to "heroin" for policymakers and said it is "time to move on". bit.ly/2g0erFY

    The Guardian

    * Ford Motor Co has announced a car and van scrappage scheme allowing customers to trade in and scrap any brand of older vehicle for at least 2,000 pounds ($2,578.80) in a bid to get dirtier vehicles off the roads and boost its sales in UK's flagging car market. bit.ly/2g03eoP

    * Activist group Avaaz has hired lawyers and launched the first steps of a judicial review against Ofcom following its report into the 11.7 billion pound bid by Rupert Murdoch's Twenty-first Century Fox for the 61 percent of Sky Plc it does not already own. bit.ly/2fZmzGV

    The Telegraph

    * French supermajor Total SA has become the second largest North Sea operator at a stroke with a surprise $7.45 billion (5.79 billion pounds) deal swoop on Danish oil and gas firm Maersk Oil. bit.ly/2g094GU

    * Britain is to keep all of Europe's business standards after Brexit by applying to remain a full member of Europe's three business standards agencies after March 2019, the head of the UK's official standards agency told the Telegraph. bit.ly/2g0v6cG

    Sky News

    * Theresa May is facing pressure to transform her approach to shaping Britain's post-Brexit trade links amid scepticism from business leaders about the scale and ambition of a forthcoming trip to Japan. bit.ly/2fZCLHS

    * British wealth manager Rathbone Brothers has confirmed that it is in talks over a 2-billion-pound merger with UK-based financial services provider Smith & Williamson, in a bold move that would accelerate the consolidation of the w‎ealth management sector. bit.ly/2g0YejK

     

  • "Blood On Your Hands": Protesters Blame City Council For Violence In Charlottesville

    “Why did you think you could walk in here and it would be business as usual?”

    That was one of many harshly worded questions and insults lobbed at the Charlottesville Va. city council during a Monday night meeting that was beset by protesters angrily demanding an explanation for what they alleged was the city’s botched response to Aug. 11 “Unite the Right” rally. The rally, which revived a national conversation about the line between heritage and hate speech that continues to this day, devolved into violence as white nationalists, who had earlier marched through the University of Virginia's campus carrying torches, clashed with counterprotesters. The weekend ended in tragedy when one of the young men in attendance rammed his Dodge Charger into a crowd of counter protesters, killing a 32-year-old woman, and injuring dozens of others.

    At the council meeting, protesters “shouted down the mayor, “took over city council chambers,” “broke out into furious chants of ‘shame’ and “gave four hours of impassioned testimony.” Their efforts resulted in a small victory: The city authorized a third-party review of the city’s planning and response to the rally, according to the New York Times.

    Of course, there was no shortage of drama:

    “’I’m outraged! said Tracy Saxon, 41. “I watched my people get beat and murdered. They let Nazis in here have freedom of speech, and they protect them? And we can’t have freedom of speech?”

     

    At one point, two people stood on the dais and unfurled a banner with the words “Blood on your hands!” as council members and the mayor left the room. The residents refused to cede control of the room until the authorities promised to release the residents who had been taken away and let people have their say.”

    As the chaos intensified, most of the council members and the mayor briefly left the meeting. The sole council member who stayed behind negotiated with the protesters and agreed to scrap the agenda to instead allow each person the opportunity to speak:

    Vice Mayor Wes Bellamy, the only African-American on the council, was the sole ember who remained. He negotiated with residents to restore order in exchange for scrapping the meeting’s regular agenda and giving each person one minute to speak.

     

    It took about a half-hour for order to be restored, and the meeting stretched for several hours, as speaker after speaker spoke about their anguish over what the community had experienced. Several people wept and said they had been unable to sleep since witnessing violence against their neighbors. "‘I’m not the same person I was that day,’ said Paul Hurdle, who shook as he described the mayhem on Aug. 12”

    At one point, three protesters were ejected by the police, drawing a chant of "let them go!" from the crowd.

    The councilmembers repeatedly pleaded with the protesters for calm, stressing the fact that it had tried to deny a permit for the “Unite the Right” rally, but had been overruled by a federal court. But for whatever reason, the protesters rejected the council’s version of events, which has been documented in the media.

    “'We tried really hard,’ Mayor Mike Signor said. “A federal judge forced us to have that rally downtown.”

     

    His account was met with jeers, and the shouting continued.

     

    Mr. Signer took the brunt of the community’s ire, as many people demanded his resignation."

    Once the chaos had subsided, the city council voted unanimously to drape statues of Robert E Lee and Stonewall Jackson in black. Maybe if protesters escalate their tactics, at the next meeting the council will simply decide to tear the statues down, resulting in a progression of even more escalating social discontent within a society that according to Ray Dalio has not been so polarized since 1937...

  • "Clearly Awful News": UK Subprime Lender Provident Crashes Most On Record, CEO Quits

    UK subprime lender Provident Financial Plc crashed the most on record, its stock plunging over 73%, on what analysts called a "quadruple whammy": a profit warning forecasting a full-year loss, scrapping its dividend, a regulator probe into its Vanquis Bank unit, and the departure of CEO, the aptly named, Peter Crook. “This is without doubt a disaster,” said Shore Capital's Gary Greenwood. “Future profit performance will depend on management’s ability to rescue the situation, which is highly uncertain. We expect that further heads will roll.”

    As a result, shares of the Bradford, UK-based company dropped more than 73% to 521 pence in London morning trade. The stock is down 82% this year, wiping more than 3 billion pounds from its market value.

    In what may be the beginning (of the end) of yet another subprime bubble bursting (we have lost count which one this is), in its second profit warning in two months, the subrime lender said it now expects a "pre-exceptional loss" for the home credit business of between 80 million pounds ($103 million) and 120 million pounds, after previously predicting a 60 million-pound profit. The company also cited further deterioration at its home credit business after a botched roll-out of new technology this year, when it scrapped a more-than-century-old model of self-employed door-to-door agents. Crook, who was CEO for a decade, said in June that many of its 4,500 salesmen and debt collectors quit or stopped working as hard when they were informed they would be replaced by a smaller number of iPad-toting full-time staff, according to Bloomberg.

    Peter Crook

    Meanwhile, the company said the U.K. Financial Conduct Authority is investigating the Vanquis Bank credit-card unit, and the regulator had previously ordered Provident to stop offering a particular repayment product, the company said Tuesday. Provident scrapped its interim dividend and said a full-year payout is also unlikely. Manjit Wolstenholme will temporarily run the firm as executive chairman. Provident said Tuesday that the FCA ordered the company to stop offering "repayment option plans" in April 2016. The products had been contributing about 70 million pounds in revenue a year.

    “Given that the FCA investigation has the potential to be material to the company, investors are likely to take the view that this investigation should have been disclosed when it was known,” RBC Capital Markets analyst Peter Lenardos said in a note. “The shares are not investible until greater clarity is received, which may not be until next year,” he said, calling the probe, loss, dividend suspension and CEO’s departure a “quadruple whammy.”

    As Bloomberg reports, While Provident didn’t make any mention of the broader U.K. economic environment or Brexit, its profit warning comes as the Bank of England cautions that the nation’s consumer credit market is overheating after years of low interest rates and low defaults bred complacency. Crook had previously said Provident’s business model was more resilient to an economic downturn than the big banks; he was wrong.

    Meanwhile, as revenue from its old sales force continues to decline, its new technology isn’t panning out either.

    The routing and scheduling software designed to help the 2,500 full-time digital-savvy staff replacing the door-to-door salesmen “has presented some early issues, primarily relating to the integrity of data,” Provident said, while “the prescriptive nature of the new operating model has not allowed sufficient local autonomy to prioritize resource allocation.”

     

    Debt collection performance has fallen to 57 percent this year from 90 percent at the end of 2016, according to the statement. Likewise, weekly sales were running at about 9 million pounds lower in the same period.

    Putting the company's operations in context, Provident serves 2.4 million British customers, many of them unemployed or on
    welfare.
    Extending credit to the working class had been good to
    Provident: its stock had tripled over a decade that saw other British
    banks collapse or get bailed out in the financial crisis; of course, it has given up most of it back now that the time has come to collect that money.

    Ironically, Provident was
    started in 1880 by Joshua Waddilove, a philanthropist and social
    reformer who saw extending door-to-door credit as a way to alleviate
    poverty.

    * * *

    Meanwhile, one look at the sellside commentary this morning reveals that virtually everyone thinks this particular subprime lender is about to be New Centuried:

    RBC (Peter K Lenardos)

    • Expect ongoing substantial losses for shares and “would not be buyers at any price”
    • Recent share correction was making RBC warm to Provident; today’s announcement means “shares are not investible until greater clarity is received, which may not be until next year at the earliest”

    SHORE CAPITAL (Gary Greenwood)

    • Dividend withdrawal and CEO resignation is a “disaster,” and company’s ability to rescue the situation is “highly uncertain at present, making accurate forecasting extremely difficult”
    • Sees risk the FCA decides to review sales of Repayment Option Plan product in the period prior to that announced
    • Cannot rule out the need for equity issuance and expects “further heads will roll” after CEO departure
    • Suspends recommendation (previously buy)

    JEFFERIES (Phil Dobbin)

    • “Clearly awful news” which will deeply impact the share price
    • FCA review adds more uncertainty on top of profit warning for home credit business
    • Notes that home credit is a short duration business and will need to see momentum turning soon

    LIBERUM (Portia Patel)

    • Notes 2016 NAV was 541p and given the uncertainty ahead and suspension of dividends, expects a realistic trading range to be 1x-2x NAV (541p – 1082p)

    Source: Bloomberg