Monday, March 14, 2016

A self-driving car for $20,000? Honda has one, kinda

New Civic to offer advanced-driver assistance system

It’s not KITT, but the Honda Civic is getting close.

The Obama administration has proposed spending $4 billion to accelerate autonomous-car technology during the next decade. For $20,440, you can get a Honda capable of driving itself pretty well on a highway today.
Honda Motor Co. HMC, +2.13% is releasing automated safety features on its entry-level vehicle Civic LX sedan, a step that takes some of the most sophisticated technology on the market available and makes it accessible to significantly more buyers, including younger ones. General Motors Co. GM, +1.43% , set to launch a new version of its small Chevrolet Cruze this year, is the next compact car in line to add advanced-safety bells and whistles.
This reflects a growing availability of advanced-driver assistance systems, or ADAS, such as lane-keeping assist, automatic braking or adaptive cruise control in the market. As auto makers offer the components needed to power these functions in option packages as low as $1,800, they are being snapped up at a far higher rate than electrified vehicles.

After a decade of spending much of its time and billions focused on boosting fuel-efficiency, Washington is increasing its focus on technology that could save lives.
The National Highway Traffic Safety Administration is considering ways to make ADAS features more ubiquitous, and Congress will hold a hearing Tuesday from Alphabet Inc.’s GOOG, +1.96% GOOGL, +1.73% Google X team and General Motors.
A test drive in Honda’s relatively cheap new Civic shows how today’s technology convincingly and economically attacks a growing problem.
On a 25-mile commute in Metro Detroit in Honda’s new Civic, much of the drive can be completed with hands off the wheel and foot off the accelerator as long as lane markings remain visible and another vehicle is in front of the car. A camera mounted at the rearview mirror watches the road, and the car’s central nervous system tells components when to slow down, swerve or slam the brakes.
Auto makers advise against treating ADAS-equipped cars as self-drivers. Questions about liability and a thicket of regulatory ambiguities lead to a cautious approach by marketers afraid of lawsuits or embarrassing situations.
An expanded version of this report appears on WSJ.com.

Asian markets up as Chinese real estate stocks surge

Developer China Vanke reports strong earnings, plans to buy stake in Shenzen Metro

The Beijing Hills residential development by China Vanke Co. stands in Beijing, China, on Monday, Sept. 8, 2014.

Shares were up in Asia early Monday, extending a four-week rally ahead of key meetings this week by central banks in the U.S. and Japan.
Japan’s Nikkei Stock Average NIK, +1.74% was up 2%, Hong Kong’s Hang Seng Index HSI, +0.89% gained 0.8%. Australia’s S&P/ASX 200 XJO, +0.37% was up 0.7% and South Korea’s Kospi SEU, +0.04% was essentially flat.
In China, a surge in property shares led up the Shanghai Composite Index SHCOMP, +1.75% by 1.5%. The gains came after the country’s largest developer, China Vanke Co., disclosed a plan on Sunday to buy assets in Shenzhen Metro Group, which boosted sentiment toward the entire sector.

Shares of China Vanke Co. 2202, +10.26% soared 6.3% in Hong Kong, after the world’s largest home builder by revenue also reported strong earnings last year. The Chinese government has been loosening administrative curbs and monetary policy to encouraging housing sales in recent months.
The region’s stocks are plowing ahead, adding onto four-straight weeks of gains. The MSCI Asia Pacific Index is up about 12% in the past one month through Friday’s close, with the help of stocks in markets like South Korea’s. The S&P 500 has rallied 8.4% in that same period.
Investors are now looking to the Federal Reserve’s meeting on March 15-16. The Fed is widely expected to hold off on interest-rate increases, although stronger U.S. data recently has kept a move later in the year on the table. Signs of strength in the U.S. economy, easing worries about a global oil glut and monetary stimulus last week from the European Central Bank have boosted markets around the world recently. The Bank of Japan is also expected to keep monetary policy unchanged after announcing a move to negative interest rates in late January.
In China, shares in the property sector were up 2.3%. Poly Real Estate Group Co. Ltd. 600048, +2.57% was up 3.2% while Gree Real Estate Co. Ltd. 600185, +2.96% was up 3.5%.
But shares of China Vanke Co. have remained suspended in Shenzhen since December, as the firm attempts to fend off a takeover by activist investors.
Broadly in China, sentiment improved on the back of comments by China’s new stock regulator Liu Shiyu over the weekend. Liu said that it is too early to talk about an exit from the market by China Securities Financial Corp., a key vehicle tasked to prop up the market during the market meltdown last year. He also said that studying a registration-based system for initial public offerings would require a long time, fueling speculation that authorities will delay IPO reform.
The Shanghai Composite is up just 1.7% over the past month through Friday, amid ongoing worries about liquidity and a slowing domestic economy. Chinese data over the weekend showed weaker-than-expected performance from factories and retailers in the first two months of the year.
Earlier Monday, authorities guided the yuan to 6.4913, roughly stable compared to its daily “fix” on Friday. The yuan had hit its strongest level against the dollar since early December in the offshore market last week, when China’s central bank boosted the currency’s fixed rate onshore to keep up with big gains in the euro. The currency trades within a band of the “fix” onshore, and freely offshore. The currency was last at 6.49 to one U.S. dollar offshore, after reaching as strong as 6.4711 to one U.S. dollar Friday.
In Hong Kong, shares were up even after Moody’s Investors Service lowered the outlook on the city’s long-term government debt to negative from stable, saying that increasing political linkages with China are likely to weigh on Hong Kong’s institutional strength.

Why the Fed should stun Wall Street with a rate hike

Getty Images

The Fed should shock the markets with an unexpected interest-rate hike just to set a precedent.

A team of strategists at BAML said the Fed should surprise the markets

When it comes to the tricky task of raising interest rates, the Federal Reserve likes to prep investors before pulling the ripcord. It sees this as a way to prevent markets from reacting violently to unexpected news.
But this approach failed in December, when a well-telegraphed rate hike was followed by weeks of extreme volatility.
On Friday, a team of currency and interest-rate strategists at Bank of America Merill Lynch suggested that it might be time for a new approach.

After studying Fed-funds futures data, the strategists discerned that the Fed has typically provided investors with plenty of warning before raising rates.
As the following chart shows, the Fed hasn’t raised interest rates unless the market assigned it at least a 60% probability of doing so. This seems to contradict the Fed’s desire that every meeting be viewed by investors as potentially “live,” meaning the central bank could make a rate move at any one of its confabs.

This is great for minimizing volatility, the team said in a note released Friday. But it constrains the central bank’s ability to raise interest rates, sometimes forcing them to wait for a meeting with a pre-scheduled press conference before announcing any big decisions.
There’s a way to break this cycle. The Fed could set the historical norm aside and make one of its impending rate hikes at a meeting where markets aren’t pricing one in — though they were careful to rule out this happening in March.
One such surprise should be enough to convince markets that every meeting during this tightening cycle is a “live” meeting,” said Mark Cabana, rates strategist at BAML.
By surprising the market once, the Fed would regain some of the flexibility it has lost for fear of disturbing the markets.
“The Fed has been very reluctant to surprise and we think that’s likely to continue,” Cabana said.
“If it thought that economic conditions were appropriate and it wanted the market to assign greater odds that the fed would go, so that if they did surprise it wouldn’t have such an impact on financial conditions,” Cabana said.
So far, the likelihood of a rate hike in coming months is slim to none. For the Fed’s next policy meeting March 15-16, the probability of the central bank lifting rates is nil, according to the CME Group’s FedWatch tool. Odds are just 22% for April, 47% for June and the market isn’t pricing in a more than 60% likelihood until September.

H&R Block: Customers paying twice as much to satisfy Obamacare penalty

By Tom Howell Jr. - The Washington Times - Tuesday, March 8, 2016

Halfway through tax season, uninsured filers are paying more than twice as much as they did last year to satisfy Obamacare’s penalty for lacking coverage, H&R Block said Tuesday in an analysis that found other customers are still struggling to match their incomes to tax credits they got from Uncle Sam.
The tax-prep giant said its customers are paying an average penalty of $383 because of the Affordable Care Act’s “individual mandate,” compared to $172 last year.
That’s because the mandate, a lever designed to bring healthy people into the new marketplace, rose from $95 or 1 percent of qualified income — whichever is greater — in 2014 to $325 or 2 percent of income for 2015.
H&R Block also said three out of five customers who received advanced tax credits to help them buy private plans on Obamacare’s web-based exchanges must pay a portion back to the IRS because they underestimated their actual income for 2015.
Together, the figures suggest filers are struggling with Obamacare, even though it is the law’s second waltz with tax season.
Starting in 2014, Obamacare’s subsidies were designed to lend a helping hand to low- and moderate-income Americans who do not hold insurance through jobs or a government program such as Medicaid, and cannot afford coverage on the individual market.

Yet by routing subsidies through the tax system, filers were forced to reconcile the financial help they received up front with their actual income during the year. If the two don’t match, then filers will either cough up more to the IRS or get more money back.
Only 52 percent had to repay a portion of government subsidy during last year’s tax season, compared to 60 percent this year — undercutting the belief that subsidized customers would get better at estimating their annual pay after a year of practice.
The average amount they’ve paid back to Uncle Sam has also gone up, from $530 last year to $579.
“With millions of new marketplace enrollees going through the reconciliation process for the first time we expected to see some confusion,” said Mark Ciaramitaro, vice president of H&R Block’s taxes and health care services. “But the fact a majority of returning marketplace enrollees are underestimating and having to pay back a portion of the [tax credit] signals there is still a steep learning curve on how to accurately estimate income in applying for the premium tax credit when enrolling in a marketplace plan.”
He said the problem could be due to high year-to-year volatility in how much low-income households take in each year.
H&R Block said customers who had to repay some subsidy still saw an average refund of $2,022, although it is less than what they would have received.
More than a third of taxpayers who claimed Obamacare tax credits overestimated their income and got extra money back from the IRS — $450 on average. Only 3 percent of customers didn’t see any impact on their refunds because of their exchange subsidies.
H&R Block’s analysis adds to data reported last month by TurboTax, a tax-filing company that said seven in 10 taxpayers using its online system this season claimed an exemption from the Obamacare mandate tax.
Many of those say even the cheapest plans available to them at work or on the exchanges are still too expensive, and so they claimed the IRS’s financial burden exemption in refusing to gain coverage. Others said they were exempt because they’d recently been evicted, had a close family member die, or had another hardship that excused them from the mandate.
Story Continues →

'Vast possibilities' for trade, says Iran's Foreign Minister

McCully says meeting with Zarif allows their nations to ‘refresh’ relationship.

Murray McCully and Mohammad Javad Zarif yesterday. Photo / Claire Trevett

Cannabis legalization would raise £1bn a year in tax – study

Legalizing cannabis and selling it to over 18s through specialist shops would raise £1 billion in tax annually, according to a far-reaching study.
Carried out by a group of experts including academics, police officers and scientists, the study will inform a new drugs policy for the Liberal Democrats.
The party will thrash out the details at its forthcoming spring conference, which takes place from Friday to Sunday in York.

Similar schemes have been tried in some US states, but the new study is the most far-reaching analysis of what liberalization would look like in the UK.
Plans include the creation of licensed shops through which to sell the drug, the establishment of a new regulating body, government control of the power and price of the product, and taxation arrangements.
The investigating panel was set up by former Liberal Democrat Health Minister Norman Lamb, who told the Guardian on Tuesday that the “groundbreaking” study would help shape the debate in Britain.
“Every year, billions of pounds are put into the pockets of organized criminals selling cannabis, and vast amounts of police time and resources are wasted going after those using the drug,” Lamb argued.
“We have to be ambitious. It is not good enough to continue pretending that everything is OK or that the current system is working,” he added.

The research is partially based on similar work done by former Deputy Prime Minister Nick Clegg while the Liberal Democrats were in coalition with the Tories between 2010 and 2015.
Clegg’s successor Tim Farron has also been outspoken in his calls for drugs law reform, telling the Telegraph newspaper on Monday: “We need a new, smarter approach and I welcome this report ahead of the debate at spring conference.”
He warned that the current practice of going after young people for cannabis is a “waste of police time” which could “saddle them with criminal convictions that can damage their future careers.”
“A legal market would allow us to have more control over what is sold, and raise a considerable amount in taxation,” Farron said.
Via RT. This piece was reprinted by RINF Alternative News with permission or license.

Bernie Sanders: Fascist for Mediocrity | Louder With Crowder

"Fascism" is a pretty fun catch word in today's politics. Usually applied to extreme "right-wingers", allow me to make a case for why Bernie Sanders is the most fascist candidate of them all...

On the front line: In Greece, 40% of loans and 55% of mortgages are not being paid down

(ATHENS) ON THE face of things, Greece’s four big banks are in their best shape in years. In November they received their third bail-out in as many years. The extra €14.4 billion ($15.9 billion) they got then (some of it from private investors) raised their capital ratios to 18%, well above the European average of 13%. Recent legal changes make it easier for them to repossess collateral and to sell loans to third parties. Better yet, recent data suggest the economy shrank by only 0.2% last year, much less than initially feared. The Bank of Greece predicts that growth could return as early as this summer. After eight years of crisis and recession, normality at last seems within reach.
But beneath the cushion of fresh capital, cracks remain. Greek banks are still losing money. Piraeus Bank, the country’s second-largest lender, this week reported a net loss of €1.9 billion in 2015. Deposits have barely begun to grow again after last year’s run; the capital controls it prompted remain in place. Fully 40% of loans and 55% of mortgages are not being paid down, compared with a European average of 5%. Big losses on non-performing loans (NPLs) and debt securities could erode the banks’ capital once again. Greece is rowing with the other members of the euro zone about the conditions of its bail-out, raising the spectre of another crisis. A fourth recapitalisation is not out of the question, says Josu Fabo of Fitch, a rating agency. The markets remain nervous: bank shares are down by 36% since the start of the year.
The banks are largely innocent bystanders in the endless back and forth between the Greek government and its creditors, but they are guilty of procrastination when it comes to their NPLs. Instead of restructuring the loans worth saving, calling the bluff of defaulters that could probably pay, and reclaiming and selling the collateral of the hopeless cases, they are counting on a return to growth to rescue delinquent borrowers. That, in turn, is impeding the flow of capital to ventures that might help revive the economy. Yannis Stournaras, the head of the central bank, recently demanded “bold and innovative initiatives” to clean up bad loans. “This cannot be ensured by the current ‘business as usual’ approach,” he added.
The banks could also cut costs, by closing branches and shedding assets, such as National Bank of Greece’s Turkish subsidiary, Finansbank. Governance, too, is ripe for scrutiny. Many of those in charge of Greece’s banks when things went horribly wrong remain at the helm. As a condition of their latest loans, Greece’s creditors demanded a review of bank board members’ qualifications.
As ever, however, the banks’ fate is largely out of their hands. An escalation of the government’s ongoing row with its creditors, a global economic downturn or a deepening of Europe’s migration crisis could all prolong and deepen Greece’s recession. The most immediate risk is that euro-zone governments and the IMF will withhold the next instalment of Greece’s bail-out, leaving the government unable to pay its bills this summer.
Even if a crisis is averted, Greek banks are in no shape to make lots of new loans. NPLs may be on the verge of peaking (“If you haven’t defaulted after eight years of recession”, notes one banker wryly, “you probably never will”), but they still tie up the banks’ capital. Liquidity is another problem, points out Miranda Xafa of the Centre for International Governance Innovation, a research institute. Greek banks have around €202 billion in outstanding loans yet only €122 billion in deposits (down from €237 billion in 2009). Deposit-holders pulled out over €40 billion in the first half of last year alone. Emergency loans from the European and Greek central banks make up the difference. Cash machines in Athens still greet customers with a reminder that they can withdraw no more than €420 a week. As long as they have to deliver such messages, Greek banks cannot be expected to prosper.

Another record-setting month for silver coin sales…

From Nathan McDonald at Sprott Money:

The U.S. Mint recorded their best ever sales for their American Silver Eagles. These coins are a staple in the world silver market for those looking to protect their wealth in precious metals.

The stunning performance throughout the month of February saw the mint sell a record-breaking 4,782,000 coins. This marks the 11^th-highest month of sales for this coin since its inception in 1986.
What is most stunning about this performance is the fact that it comes at a time when the mint is rationing sales of these rounds, and limiting their supply to wholesalers.
What this means is evident: these numbers would have been even higher if the free market allowed them to be. Perhaps we could have even broken all records and experienced the coin’s top-performing month of all time. It is an incredibly likely possibility.
It has been reported that the mint’s distributors have been buying hand over fist, purchasing every last round that has been made available to them. This showcases the incredible demand that exists in the physical silver market, and downplays the farce that is the paper silver markets.
In fact, demand was so intense that in the last week of February, when the mint announced they would be releasing 1 million rounds for the week, distributors bought 73.7% of the whole week’s supply by the end of the first day.
For once, the paper silver market also followed suit with physical demand, seeing a strong rise in the price of silver throughout the month of February, even though it faced continuous setbacks.
Last month’s sales were only beaten by 10 previous months, including January 2016. This means that silver demand has started out at incredible heights, and if it continues, we could see a record-breaking year – even at a time when supply is being artificially depressed.
The physical market is what needs to be looked at. It is the true market and it is telling us that it will not be ignored. Demand will continue until the supply restraints force paper prices to greater and greater heights, alleviating the pressure that low prices are currently having on the physical markets. Has an even higher rise already begun? We’ll find out soon enough.

If the masses are already rioting over Air Jordan sneakers, what do you think will happen when the food stamps stop?

by: Sarah Landers

(NaturalNews) In a riot that was shockingly similar to those seen during the Black Friday sales, shoppers at Eastland Center in Harper Woods, a suburb of Detroit, forced the mall to close on Saturday morning in their chaotic attempt to purchase the latest sneaker.
As reported by CBS Detroit, shoppers attending the release of the Air Jordan Retro 12 “Vivid Pink” became riotous, forcing their way through a gate as the mall opened at 8 am. General Manager William McClure stated, “It’s frustrating. It got unruly, the police shut it down.” The violence forced law enforcement officers to get involved, closing the mall soon after it opened. The mall attempted to reopen its doors again at 10 am, but the same thing happened a second time and the Kids Footlocker had no option but to stop selling the girls shoe on Saturday due to the unsafe behavior of the crowd.

All that mayhem over a shoe?

It may be a very nice shoe, but it’s still a shoe – retailing at $140. It’s the latest edition in the line of Air Jordon 12 Retro and a more feminine twist on the classic, with a bright pink midsole, lining and heel, according to Nike.com.
During Black Friday 2015, we saw a brawl in the food court of a Kentucky mall, a riot in a Texan Walmart over low-priced TVs and a similar fight over Air Jordon sneakers in Florence, Kentucky, as reported by Syracuse.com. But what will happen when people have more to fight over than a shoe?

The food stamp crisis

According to the Foundation for Government Accountability (FGA), the dependency of the US on food stamps is a crisis that is growing at an alarming rate. More than 48 million US citizens were enrolled in the food stamp program in 2013 and it is “now one of the fastest-growing welfare entitlements in our federal budget.”
The FGA states that the “skyrocketing enrollment” is due to “the recent explosion in enrollment among able-bodied childless adults” who should actually be in employment in order to qualify for food stamps, but whose requirements have been waived by the state after changes brought in by the Obama Administration.
So many states are waiving the work requirements that three in four childless adult households receiving food stamps are unemployed. When Maine implemented new rules requiring able-bodied, childless adults to work at least part time or undertake job training in order to receive benefits, the enrollment numbers dropped precipitously – by over 90 percent!
However, finding work in the current economic climate is becoming increasingly difficult, and the US government has declared that these waivers will expire in 2016, leaving as many as 1 million of our poorest able-bodied persons without food stamps. As reported by the Center for Budget and Policy Priorities, the return of a three-month limit on SNAP means that able-bodied, childless adults will lose their food assistance after three months.
If members of the US population in the current socioeconomic climate react that way over buying the latest tennis shoes – how will those affected by the food stamp crisis react when it is a matter of eating food or going hungry?
According to All News Pipeline, in past instances when EBT cards or other forms of welfare had temporarily become unavailable, stores have been looted, riots have started and the result has been chaos. Once the time limit on SNAP returns, riots might once more become common – for reasons other than shoes.
Sources include:

Detriot.CBS.Local
TV.NaturalNews.com
Nike.com

Liberty.news
Syracuse.com
TheFGA.org

CBPP.org
AllNewsPipeline.com

Sears Is Running Out Of Furniture To Burn

(BRIGID SWEENEY) Sears is running out of furniture to burn.
The once-mighty retailer has spent the past four years selling assets to cover its money-losing operations and will need to come up with at least another $1.5 billion this year unless CEO Edward Lampert can quickly figure out how to turn a profit from its Sears and Kmart stores, according to debt rating agencies Fitch and Moody’s.
That’s not in the cards, says the one equity analyst who still tracks Sears Holdings, Matt McGinley at Evercore ISI.
“The company needs to stabilize the business, but it has yet to show that it is capable of doing so,” Moody’s analyst Christina Boni says. “We anticipate a (cash) shortfall for the year and believe the company will continue to sell assets.”
Sears itself says that it plans to raise at least $300 million through unspecified asset sales before late July, when the first half of its fiscal year ends. The retailer, which began the year with only $238 million in cash, notes it can also borrow more than $300 million, though that would still leave it short.
That raises the question: What’s left to sell?
Sears still owns 294 unencumbered Sears and Kmart stores across the country. (It actually owns 419 stores, but 125 are held in reserve in a bankruptcy-remote entity and cannot be sold.)
Last year, the Hoffman Estates-based company raised $3.1 billion, mostly from transferring 235 Sears and Kmart locations to Seritage Growth Properties, a real estate trust the retailer created, for $2.7 billion. Lampert and outside investor Bruce Berkowitz are two of the largest shareholders in both companies.
Using the $11.5 million-per-location average from the Seritage sale, Sears’ remaining stores could be worth almost $3.4 billion. But the real value is likely lower, McGinley says. “The average store that went to Seritage is most likely better than the average one left over,” he says.
Fitch analyst Monica Aggarwal agrees that Sears’ remaining stores probably are not that valuable if they’re “in smaller markets or declining malls.” In a March 4 note, she adds, “There could be restrictions on the sale of some of these properties based on mall operating covenants.”
Those restrictions could turn off would-be buyers: Many remaining Sears stores are governed by reciprocal easement agreements between the retailer and the mall owners, which can preclude redevelopment. If Sears continues to shutter its locations, a new buyer could be left with an empty store that must remain a store—an unappealing prospect given the current state of big-box retail.
Sears Auto Centers, which have been on the auction block for several years, aren’t particularly enticing, either. According to the company’s most recent annual report, it had 675 auto centers in 2014. All but 27 of those are attached to full-line stores. That’s troubling because no one knows how many of those stores will be open three or four years from now, McGinley says.
Another treasure is Sears’ well-regarded Kenmore, Craftsman and DieHard brands. But any proceeds from a sale of those must go to fund the retailer’s pension plans under a five-year deal it inked with Pension Benefit Guaranty Corp. to lessen the hit to the federal agency if Sears were to go bankrupt and renege on its obligations to retirees.
Sears will be able to limp along for the foreseeable future, analysts agree. But if its cash burn continues apace—as is widely expected, given management’s inability to halt declining sales—a day of reckoning might arrive the following year. “We think there’s a very low probability of a turnaround,” McGinley says.
Sears spokesman Howard Riefs rebuts the doomsday sayers and says the company has enough money to not only meet its obligations but to fuel a long-promised turnaround. He points out that Sears had $4.1 billion of liquidity and liquid assets at Jan. 30, including $3.6 billion worth of inventory.
Sears “has a wide range of significant financing resources,” Riefs says via email, and “is highly focused on restoring profitability to the company.”

Global Leading Indicators Fall Sharply Into 2016

Forward-looking indicators for the global economy fell sharply for the month of February. The JPMorgan Global Manufacturing PMI (in blue) is now resting at 50, which is the key threshold separating expansion from contraction. At the end of last year, the services measure (in red), which increasingly comprises a larger share of global GDP, was sitting comfortably above contractionary territory near 53 and was as high as 55 toward the first half of last year. It has now fallen steeply to 50.7 and shows the global economy is on a much weaker footing compared to last year (all charts below courtesy of Bloomberg).

In the next chart we take a look at the recent bounce in commodities and oil. As you can see, it's all about the dollar. Here we've plotted the trade-weighted broad dollar index (inverted, in green) next to oil (in black) and commodities (in red). The correlation between the three is quite striking. If you are betting on oil and commodities to move higher, then you are betting on the dollar to weaken from here.

Do credit card delinquency rates help predict the onset of recession? See for yourself. Here are three measures we are watching that have a fairly high correlation over time, which also help to signal economic downturns. Credit card delinquency rates appear to be forming a bottom similar to 2005-2006, but the most troubling are delinquency rates on commercial and industrial loans (in blue), which are now clearly trending higher. In terms of the last economic cycle, this appears more similar to where we were in 2007.

Financial conditions in the US turned decidedly positive in the third quarter of 2012 and remained so until turning decidedly negative in the third quarter of 2015. The recent market rally off the February lows was unable to lift financial conditions back into favorable territory.

An area that strategists are closely watching for signs of improving or worsening financial conditions is the high yield market. High yield corporate bonds for each of the 10 major sectors have traded flat to negative since last year, with energy seeing the greatest damage. All 10 sectors of the high yield market are now rallying from their lows. Can this be sustained? Time will tell.

Here's another look at corporate spreads, both high yield and investment grade, compared to the S&P 500. Credit spreads were narrowing from 2012 until around 2014-2015 when they started to widen and signal greater pressure on the market. Echoing the chart above, they've since backed off their highs though it's unclear whether this is a change in trend or simply a pause before heading higher.

On a more positive note, initial jobless claims are not yet raising a recessionary red flag for the US. This agrees with the overall message coming from broad US leading economic indicators like the Conference Board's LEI (see here). We continue to watch the LEIs closely for signs of further deterioration or, conversely, a turnaround, however unlikely that may seem.

For a complete archive of our podcast interviews on finance, economics, and the market, visit our Newshour page here or iTunes page here. Subscribe to our weekly premium podcast by clicking here.

The Day the Dollar Bait-and-Switch Died… Gold May Boom

Did you know that Thursday was one of the most critical market days in recent memory, one that should be internalized by gold bulls, currency traders and equity investors alike.
It was the day the latest central banking “bait and switch” died.
What did we learn? The dollar is done tightening in any meaningful way. And the euro is done loosening.
In the past, we’d been told the opposite. The Fed was tightening and the euro was loosening.
But on Thursday, it became clear Mr. Market didn’t believe the Fed’s tightening fairy tale. The dollar dropped hard.
And the EU may be done with what “Money Druggie” Draghi once proclaimed was “anything it takes.” Anything but aggressive loosening as later on Thursday Draghi proclaimed the era of rate drops was suddenly over.
Bait and switch, finished. Over.
Why did they play such games? One reason was because the gold market follows dollar policy. As long as the Fed could pull off the ruse that considerable tightening was underway, gold demand stayed down.
And central bankers hate gold.
But now the lies are unraveling. No more baiting people into the dollar. No more pretending the euro has “switched” to aggressive loosening.
This is all a big deal. It’s fairly obvious that Fed tightening is over and this could finally let loose the Gold Bulls. Sure the Fed may continue to pretend that the “recovery” demands a tighter dollar to combat price inflation… but its recent 25 basis point hike crashed markets around the world. If the Fed can’t hike by 25 basis points, how is it going to push rates up for the rest of the year in any meaningful way?
And “Druggie Draghi” has reversed course too.
Thursday, the Day the “Bait and Switch” Came to an End
It didn’t look like it to begin with. The ECB cut its refi rate to zero from 0.05% and expanded negative interest rates from its deposit facility to 0.4% from minus 0.3% early on Thursday. It also announced it was expanding the size of its monthly bond purchases to 80 billion euros ($86.86 billion) and would include investment-grade, euro-denominated, nonbank corporate bonds in its purchases.
Euro Dollar Vigilante

This was easing indeed! And the currency markets reacted hard, sending the euro tumbling to an intraday low of $1.0822.
But then came the big news.
Draghi held a news conference and announced a significant portion of easing might be over! The ECB would continue easing, he indicated, but not with rate cuts. Going into negative territory – NIRP – had subjected the ECB to considerable criticism because Euro banks ended up paying the ECB to hold excess liquidity overnight. Draghi had had enough.
You know how central bankers can be. So sensitive.
They also lie a lot. Now the truth is clearer. This is why the US dollar fell against every currency on the planet.
The US central bank is losing its credibility quickly. Investors are beginning to see that the US financial bubble is the largest one, with more downside. What’s more, many currencies are in their third, fourth or fifth year of steep decline against the US dollar driven by two factors: the popping of the previous commodity bubble and the Fed tightening myth.
Important stuff: The bear market in foreign currencies has run its course and it’s the dollar’s turn to dive again.
This may not happen all at once. Current trends may linger for a while. But ultimately the reversal will take effect, barring other moves by the most important players – the Fed and the ECB.
Our investment strategist Ed Bugos has a lot to say about this in a just-released alert focused on this critical shift. Also, in our upcoming newsletter as well. He makes some very clear trade recommendations based on his insights.
Now is a good time to subscribe to the TDV newsletter. If you’re new to trading and investing and want to learn more about it, you’ll be pleased to know that subscribers can download our just-issued “Beginner’s Guide to Defensive Investing.”
The Guide, which is an entire e-book, provides readers with the basics of our equity and options strategies and puts them into the context of business-cycle investing and Austrian economics. It’s a simple but comprehensive read. We’re not stopping with the guide however. We’ve been working round the clock on an upcoming analysis of the 2016 Jubilee Year and its significance throughout the spring and summer headed into an explosive October.
Many of the sociopolitical and economic trends that we forecast in 2015 via our Shemitah analysis are extending into 2016 with significant consequences around the world. These are man-made event after all, and if you understand the mystery religion and how it has been extended into world affairs, then you can unlock a treasure trove of understanding about world events and investment returns.
Hope you join us for what’s going to be a wild ride. Many people are going to be significantly injured by what’s going to occur in 2016 and, in fact, they already have been. But if you have the right insights and understand what to do, you can benefit tremendously. And, with our new investment guide for beginners, even if you are new to all of this, you can get informed very quickly and get profiting from all this chicanery imposed by the central banks. Get access to it all HERE.

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences including his own, the world's largest anarcho-capitalist conference, Anarchapulco, as well as regularly in the media including CNBC, CNN and Fox Business.

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