In Case You Missed It – Week Ended January 9, 2016.
Stories from the week ended January 9, 2016.
It was a big news week after two relatively quiet ones. The main news stories involved the tensions between Saudi Arabia and Iran after the former executed alleged Iranian terrorists. Korea claimed to have set off an underground nuclear test and Obama cried during the announcement of his executive action on gun control. Saudi Arabia also attacked Yemen
The main economic news of the week was the plummeting global stock markets. Stocks opened lower and went lower all week. Last week’s dismal equity showing followed the worse year for the U.S. Stock market since 2008. China’s stock market led the declines with a 7% drop on the first trading day of the year. Two days later, Chinese stocks cratered another 7% and the market was closed within twenty minutes of its opening.
Stock markets were “volatile” all week (CNBC speak for “lower”) while Fed officials and talking heads tried to decouple the Chinese crash with the state of the U.S. economy and its stock market.
Gold and silver
Gold closed last week at $1061.00 and closed this week at $1104.60
Silver closed last week at $13.82 and closed this week at $13.93
The gold and silver ratio is approaching 80:1
Here are the stories we wrote, followed or commented on.
WE Missed it!
From the week ended January 2, 2015:
Banking services at the post office?
January 2, 2016
What would the new year be without an anti gold story. Bloomberg served up the goods to start the year.
Bloomberg: Gold likely to remain tarnished in 2016 cites “weak demand”
Iranian Gold Rush – U.S companies to miss out
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January 3, 2016
Saudi Arabia and Iran
Iranian/Saudi Tensions Flare after killing of cleric
Russian oil output hit record in 2015
Russia also set a record for the amount of gold it added to its reserves in 2015..
Russia continues to add to its gold hoard even as the Rouble collapses.
Attempted Assassination attempt on Nigel Farage?
Bank of Japan, already dominant in its own bond market turns to intervention in its equity markets
Fed Vice Chairman Stanley Fisher talks negative interest rates, the same Fed official who also alerted us to U.S. Bank bail in plans.
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January 4, 20165
UAE downgraded diplomatic relations with Iran, following Saudi Arabia, Bahrain and Sudan severing ties with Tehran
Chinese stock market down 7% – halts trading
Fed’s Mester supports more rate hike, cites “confidence in the economy”
San Francisco Fed President offered these thoughts on CNBC:
China is pivoting away from manufacturing and will see slower growth. Not concerned with this development as “We have strong fundamentals in terms of consumer spending. We are in good shape” Williams expects 2pct GDP 2.5 million new jobs and 5 pct unemployment rate in 2016 “because we took aggressive monetary policy”
He also expects three to five rate hikes in 2015.
WSJ notes: Investors go for gold as market tumbles
Yamana Gold rallies as investors seek safety in gold
China Pumps $20 Billion into markets
Smaulgld noted the absurdity of some stock market valuations: Tesla delivered 50,580 cars in 2015 and has a market cap of $30 BILLION-Market valuing Tesla at $593K per car delivered
U.S. Economic Data
More poor U.S. economic data:
ISM Index 48.2 Exp 49.0 Prior 48.6
Construction Spending -0.4% Exp +0.8% Prior +0.3%
New Car sales plunge. Low interest rates have managed to stimulate new car sales in 2015 to a record. But the pace of sales appears to be letting up:
December US domestic auto sales were 13.46 million vs an expectation of 14.15 million and light vehicles were 17.34 million vs an expectation of 18 million.
Atlanta Fed Downgrades 4th Quarter GDP to just 1%
Last week we reported on Argentina’s Statistical Emergency
Looks like the US has one too but would never declare one.
January 5, 2016
China warns foreign banks to particpate in the upcoming Yuan gold fix, or else
Iran breaks treaty!
Obama issues Teary Gun Control Executive Order
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Fisher admits Fed front loaded market rally
China intervenes to try and stop stock market rout
January 6, 2016
We reported on the increased interest in gold consumables- does it indicate a peak in the stock bubble and bottom for the gold market when people are rich enough to eat gold and its cheap enough for them to do so?
Gold to Munch and Smoke
Asian Geo Politics
Koran Confirms Nuke Test
Fed Vice Chairman says more rate hikes coming – four or more this year
Fed Vice Chairman Fisher comments on China, North Korean and Fed rate hike path
Indian considering setting up Gold Board
Saudi Arabia wants stronger ties with Russia
Global markets continue to crater and the argument for decoupling Chinese economic weakness from U.S. weakness, weakens.
U.S. Economic Data
ADP employment 257K Exp 190K Prior 211K
Factory Orders -0.2% Exp 0.2% Prior 1.3%
ISM Services 55.3 Exp 56.4 Prior 55.9
Strong U.S. private payrolls data point to economy’s resilience
Two days after projecting U.S. GDP for the fourth quarter of 2015 to be 1%, the Atlanta Fed downgrades again:
Atlanta Fed Downgrades 4th Quarter GDP to just.08%
Mortgage applications plunge 27%
Fed Minutes from December rate hike meeting released
December Minutes Released – indicate plan for four rate hikes in 2016, an noted this gem; “Several upside risks to the U.S. outlook also were noted, including the possibility that declining energy prices could spur consumer spending more than currently anticipated [emphasis added].”
January 7, 2016
U.S Econommic Data
Challenger December Job Cuts Dec layoff intentions 23,622 vs. Nov 30,953
Initial Jobless Claims 277K exp 275K prior 287K
After Mastercard reporting last week that holiday says were up, we got this news from Macy’s today:
Macys lays off 4,000 after poor holiday season
Atlanta Fed President Lacker” “We will be watching closely, any China developments”. The Fed cross talk continues as Fed President Williams said earlier in the weak that China is contained.
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US Jewelry Imports hit seven year high
China reported its gold reserves increased 19 tonnes in December
Chinese gold reserves 2015
January 8, 2016
China Intervenes and the Shanghai Exchange closes higher
Chinese Market Crashes- Is A Yuan Devaluation Coming?
China’s ICBC Standard Bank buys Deutsche’s London bullion vault
South African Mines scavenge for gold
US Economic Data
Non Farm Payroll 292k Est 210k; Unemployment 5% est 4.9%; wage growth sputters. October and November payrolls revised higher
Report is touted as the strongest year since 1999.
CNBC jumps on the non farm payroll number to dismiss a weak US economy. Steve Liesman gushes “It’s not weakening it’s STRENGTHENING!!”
Goldman Sachs economist on CNBC: other than industry, the economy is in “solid” growth, jobs accelerating, no recession, rate hike in March, four rate hikes in 2016.
SF Fed President says it will take six years to normalize the Fed’s balance sheet
Bloomberg comments on the high gold silver ratio
“Silver Seen Beating Gold”
The Gold Silver Ratio approaches all time highs
The gold silver ratio is approaching 80:1.
Reuters catches on to the impact of lower oil prices on the U.S. fracking industry
We identified the problem in December 2014 and identified Saudi Arabia’s true motives in driving the price of oil down and why low oil prices would be bad for the economy (would NOT act as a “tonic” for consumer spending), persist and eventually lead to busts in shale oil companies and their lenders.
The Shanghai Gold Exchange ended the year with 2597 tonnes of gold withdrawn
The Shanghai Gold Exchange set a new record for withdrawals in 2015.
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