Economy

Does lousy growth + lousy construction spending = trouble for the U.S. economy? That’s what you have to wonder in light of the latest figures coming out of Washington.

Economic activity in Venezuela will fall 10% in 2016 – not 8% as previously stated - according to the IMF. General Mills, Bridgestone, Coca-Cola, Kimberly-Clark, Aeromexico, Lufthansa and LATAM Airlines have all suspended operations there in the past year. Upcoming debt payments are significant, and the country will most likely default as early as November of this year and no later than April of next year. International reserves are simply insufficient at a time when oil production declines and the economy contracts. Two questions in the air: Will China save Venezuela? Will it demand Maduro step down?

Investors globally have never faced risk of the magnitude that the we are now exposed to but, sadly, very few are aware of the unprecedented risks the world is facing. For the ones who understand risk and take the right decisions, it will “lead to fortune”. Only very few will choose that route, though. Instead most investors will continue to...

At the end of June, the BIS, or the central bank for central banks, produced its annual report, which is a must-read for investors interested in the global economy, macroeconomics, as well as gold, whose price is to a large extent shaped by macroeconomic factors. What does the report imply for the precious metals market?

It’s somewhat understandable - but highly regrettable - that Venezuela is parting with its gold so readily in the midst of this economic turmoil. Gold has traditionally been a source of security for countries looking to hedge against currency volatility; and heaven knows Venezuela has had more than its share of that. The bottom line? They’re giving up the only security they have left.

The PHLX Housing Index (HGX), subject of our Chart Of The Day, closed today at a 9-year high...yet, as the chart shows, while technically a new high...it’s a bit of a reach yet to declare this a “breakout”. That said, the chart has a few things going for it, if you are a bull on housing stocks. [Let me explain.]

There was a time when U.S. central bankers worried that inflation was too high, and they tried to bring it down. Now the opposite is true: the Federal Reserve is concerned that inflation has remained stubbornly low, and it’s trying to boost prices. The reason: persistently low inflation raises the risk that prices will actually start to decline. That’s bad news because it makes people less willing to borrow and spend—anticipating lower prices, consumers will put off spending—and could also lead to a fall in wages.

The following timeline of developments in China since last summer’s equity market crash should be a handy tool for businesses around the world trying to figure out what’s next.

We are not yet hoarding toilet paper and baked beans, but the prospect that we will be driven to do so has already been signalled to us. This article draws on the evidence of extreme overvaluations in equities and bonds worldwide, and concludes the explanation lies increasingly in a greater perception of risk against holding cash, or bank deposits.

The chart below shows the US Dollar Index value during the past 44 years (1972-2016). It is imperative to notice the two peak values occurred 16 years apart (1985 and 2001), when the US dollar had soared +101% and +50%, respectively. Consequently, if one assumes the 16 year cycle will indeed repeat, then the greenback may well again rise to a peak in 2017. Moreover, if we assume the US$ could rise the average of the two previous peaks, then we might see it peak next year (2017) to +75%.