Consumer Debt Grows Faster Than Expected

By Bloomberg – Re-Blogged From Newsmax

U.S. consumer debt rose in November at a faster- than-estimated pace as Americans continued to borrow to finance purchases.

Total credit rose $22.1 billion from the prior month, exceeding the median estimate of economists, following a downwardly revised $25 billion gain in October, Federal Reserve figures showed Tuesday. Non-revolving debt rose the most in a year.

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Some Predictions For 2019

By Michael Pento – Re-Blogged From Pento Portfolio Strategies

Bond Yields Continue to Fall in First Half of Year

The epoch bond bubble continues to build and become a dagger over the worldwide economy and markets. Wall Street Shills are fond of claiming that global bond yields remain at historically low levels due to central bank manipulations, but this argument is no longer tenable. It was once true, but QE on a net global basis has now gone negative. And the data shows the amount of U.S. publicly traded debt relative to GDP is much greater today than it was prior to the start of the Great Recession—even after adjusted for the size of the Fed’s balance sheet–in other words, taking into account all the debt the Fed has purchased and is still rolling over.

The amount of publicly traded debt in the U.S. has soared to 58% of GDP. This is up from 29% in 2007 when the U.S. 10-year Note was yielding 5%. The Fed is now selling $50b of bonds each month, with an extra $7.8T in publicly traded debt that it doesn’t own; and that equates to nearly 2x the amount of debt compared to GDP than what existed just prior to the Great Recession. This debt must now be absorbed by the private market and at a fair market price, instead of just purchased mindlessly by the Fed…and yet yields are still falling. This means investors are piling into sovereign debt for safety ahead of the global economic crisis even though they understand that debt is, for the most part, insolvent.

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Markets Are All About Flows

By Alasdair Macleod – Re-Blogged From GoldMoney

This article looks at prospective supply and demand factors for financial assets in the New Year and beyond. Investors should take into account money flowing into and out of financial assets as well as stock flows, particularly escalating government bond issuance, which looks likely to accelerate significantly in the coming years. It adds up to the fundamental case for physical gold and silver.

At this time of year, the thoughtful soul considers prospects for markets. Pundits are laying out their forecasts, and they fall into two broad camps. There are brokers and fund managers who talk of value. Their income and assets under management depend on continually inflating prices. Then there are the pessimists, a ragbag of doom-mongers who sweepingly point to risks on a grand scale. The collapse of Italy, Deutsche Bank, China, Brexit… take your pick. Very few engage on the subject that really matters, and that is the underlying monetary flows into and out of financial markets.

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California Is In Great Financial Shape – And Headed For An Epic Crisis

By John Rubino – Re-Blogged From Dollar Collapse

California Governor Jerry Brown inherited a $27 billion deficit from Arnold Schwarzenegger eight years ago. This month he’s leaving his successor a $13.8 billion surplus and a $14.5 billion rainy day fund balance. Pretty good right? Approximately 48 other governors would kill for those numbers.

Unfortunately it’s all a mirage. California, as home to Silicon Valley and Hollywood, lives and dies with capital gains taxes. In bull markets, when lots of stocks are rising and tech startups are going public, the state is flush. But in bear markets capital gains turn into capital losses and Sacramento’s revenues plunge. Put another way, the state’s top 1% highest-income taxpayers generate about half of personal income taxes. When their incomes fall, tax revenues crater.

That’s happening right now, as tech stocks plunge, IPOs are pulled and billion-dollar unicorns endure “down rounds” that shave major bucks from their valuations. So if this is a replay of the 2008-2009 bear market, expect California’s deficits to return to the double-digit billions.

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Corporate Debt Crises Could Come Faster and Harder in 2019

By Bloomberg – Re-Blogged From Newsmax

At first glance, 2019 might look like a quiet year for distressed-debt investors, judging by the small list of troubled bonds coming due. But the light schedule may be obscuring how quickly some issuers will unravel.

As Toys “R” Us demonstrated, weak sales and nervous trade creditors can bring down a company long before the maturity dates for loans and bonds. What’s more, secured debt isn’t as secure as it used to be: Top-heavy capital structures and loose covenants could leave little for junior creditors to recover if an issuer goes bust.

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Deflation Continues As The Driving Force In The Stock Market

By Mark Lundeen – Re-Blogged From Gold Eagle

Publishing Note:  I’m taking three weeks off for Christmas and New Year’s, and then a week for myself. Unless something huge happens in the coming month, expect my next article to be out the weekend of 19&20 January.

Mr Bear has begun clawing back inflated market valuations in the stock market.  The Dow Jones has deflated by over 6% since last Friday’s close; everyone can see Mr Bear’s handy work in the BEV chart below.

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Stock Buy-Backs Go Bust

By Michael Pento  Re-Blogged From Silver Phoenix

The perfect storm of zero percent interest rates that existed concurrently with a debt-disabled economy lured executives at major corporations into a decade-long stock buyback program. The Fed pumped money into the economy thru its various Quantitative Easing programs to force interest rates near zero percent, with the expectation corporations would borrow money at the lowest rates in history and then invest in their businesses in the form of Property Plant and Equipment (capital goods). This in turn would expand productivity and help foster a low-inflation and strong growth environment.

But many corporate executives found a much more enticing path to take in the form of EPS manipulation. That is, they boosted both their companies share price and, consequently, their own compensation, by simply buying back shares of their own stock.

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