Saturday, June 18, 2016

Why is Sears failing? Another blood sucking wall street executive…

Wow, this is an excellent article on the reasons behind Sears death. Another goldman sacs blood sucking wall streeter buying back stock instead of investing in the health of the company. Worth the read…

When Sears was flush with cash, it took the form of billions of dollars of share repurchases, even if it meant the stores suffered years of underinvestment. Repurchases, or buybacks, are common among cash-rich companies, but also derided in some corners as a waste of a company’s resources as they only serve to create the appearance of improving earnings.
In the early days, Lampert was unapologetic about this. According to an executive at the company then, Lampert was genuine in his belief that Sears could be run differently than other retailers and that the shares were being acquired at a bargain price.
“Unless we believe we will receive an adequate return on investment,” he wrote in a 2007 letter to investors, “we will not spend money on capital expenditures to build new stores or upgrade our existing base simply because our competitors do. If share repurchases or acquisitions appear to be more productive, then we will allocate capital to those options appropriately.”

Bill Gross – Forget the Brexit. China’s Fading Economic Miracle Is Biggest Worry… The Country’s Total Private And Public Debt Now Ballooning To A 249% Debt To Gdp Ratio, Could Be “Fatal”

Bill Gross: China’s Fading Economic Miracle Is Biggest Worry
Forget the Brexit.
Bill Gross, the co-founder of Pacific Investment Management Co. who now runs the $1.2 billion Janus Global Unconstrained Bond Fund, said China is the most important country to monitor in the next year.
“We have to watch China the most,” he told CNBC. “Its leverage has doubled in recent years. It is at 250 percent of GDP where most of the developed world is, but it will be 300 percent before they can spit, and if they cannot keep their supposed economic miracle going at 6 percent of growth then the rest of the world has problems.”
China is treading a fine line between supporting its national currency to prevent capital flight and keeping the renminbi cheap enough to make its exporters competitive with southeast Asian countries that have lower wages.

“There is a chance that 12 months from now, China will have started some type of unwind that is unfavorable for financial markets,” Gross said.
Chinese Debt Called “Fatal” By Chinese Think Tank
China’s attempts to keep its economic engine revving at high speed, with the country’s total private and public debt now ballooning to a 249% debt to GDP ratio, could be “fatal,” a Chinese economist told reporters. Not only is debt growing, but the addiction to cheap money is hard to break.
GS China Debt jump

Leading Chinese economist calls debt addiction “fatal”

China’s borrowing to end 2015 touched new highs at 168.48 trillion yuan, or $25.6 trillion, Li Yang, a senior researcher with the leading government think-tank the China Academy of Social Sciences (CASS) wasquoted as saying. The exact debt in China has not been universally agreed upon. The total debt – which includes government, corporate and household borrowing – was less than some non-government estimates and underneath the US, which was reported at 331% debt to GDP.
While debt can build growth in the near term, such stimulative measures are not likely to result in sustainable economic growth but more like a sugar high. The problem with sugar highs is the result in crashes.
“The gravity of China’s non-financial corporate debt is that if problems occur with it, China’s financial system will have problems immediately,” Li was quoted as saying in the Guardian.
Local governments have been going on a significant debt spree, and this is creating “systemic risks” to the economy. Chinese banks, closely linked to the government, could lead to a seismic default and require an intervention.
“It’s a fatal issue in China. Because of such a link, it is probably more urgent for China than other countries to resolve the debt problem,” Li said.
Chinese Debt Called “Fatal” By Chinese Think Tank

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Layoffs Loom At McDonald’s As $500 Million In Cost Cutting Begins



In an attempt to stay relevant McDonald’s begins the daunting task of cutting $500 million in costs by the end of 2017.

The outdated chain continues to fall on hard times as customer count and public perception declines.
According to an email acquired by Meat+Poultry the layoffs are set to begin:
In an email statement to MEAT+POULTRY, McDonald’s spokesperson Terri Hickey said “As part of our announced efforts to deliver $500 million in savings by the end of 2017, we are restructuring many aspects of our business, including an accounting function.”
In a letter to city officials, McDonald’s announced plans to lay off 70 employees at the company’s Columbus Accounting Center. The letter stated that the layoffs were consistent with McDonald’s “…plans to permanently restructure its operations and eliminate a number of roles…”
Layoffs will begin July 15 and end Dec. 16.
And it gets better, off to India we go!
The New York Post reported that McDonald’s plans to outsource some jobs to India as part of the company’s cost-cutting measures.

BREAKING: Rio de Janeiro declares financial emergency – requesting federal funds for Olympics.

BREAKING: Rio de Janeiro declares financial emergency – requesting federal funds for Olympics.

Rio Declares State Of "Public Calamity", Warns Of Total Collapse In Security, Health And Transport

Earlier today, the IAAF announced that Russian track and field athletes would be banned from the Rio Oympics due to allegations of systematic doping. Rune Andersen, who heads the IAAF task force overseeing Russia's attempts to reform, said that a "deep-seated culture of tolerance, or worse, appears not to be materially changed". "No athlete will compete in Rio under a Russian flag," he said.
Perhaps instead of fighting this decision, Putin's response should be a simple "thanks" because just hours later, and just 49 days before the start of the Olympics, the Rio state government declared a state of "public calamity" (yes, that's the technical term) warning of a risk of total collapse in public security, health, transport and virtually everything else, because as the local government explained, the financial crisis is preventing it from fulfilling its requirements for the Games.
'State of calamity' decreed in Rio; the state is broke.

In other words, the money is gone... all gone, and as we jokingly predicted some time ago, as a result of the ongoing economic and now political catastrophe in the country, the 2016 Oympics may never even happen in the country gripped by what may be the worst depression in its history. Oh, and then the whole Zika thing.
As Bruce Douglas adds, the Rio state government fears "total collapse in public security, health, education, mobility, education, environment" due to financial crisis, and that Rio de Janeiro "will adopt exceptional necessary measures to rationalize all public services, with the aim of realizing the [Olympic] Games."
It was not clear what would happen if the rationalization fails. Finally, by declaring a state of public calamity, the state government of Rio de Janeiro aims to get access to federal cash.
The question is whether there is any left.
And then, on the background of this dire assessment, some humor:

The silver lining: no matter how bad Brazil's economy gets, it will always remain rich in natural resources

Ethereum Hacked…Loses 20% Of Value In Minutes

From Zerohedge:
As Cryptcoinnews reports, Ethereum co-founder Vitalik Buterin has asked digital currency exchanges to “pause” ether and activity on the decentralized autonomous organization, or DAO, activity following a hack of the DAO smart contract address. As a reminder Ethereum is the blockchain platform that enabled the DAO’s creation.
The DAO is currently being drained of ethers in a still-ongoing breach (as of this morning) to the unknown attacker’s ETH address. The ongoing hack and possible theft, deemed as an “attack” on the DAO by Vitalik Buterin, has the co-founder of Ethereum issue a plea seeking digital currency exchanges to pause ether (ETH) and DAO transactions.
“The DAO is being attacked. It has been going on for 3-4 hours, it is draining ETH at a rapid rate. This is not a drill.
Amusingly, the attacker’s ETH address is still accumulating Ethereum’s token currency, with a balance of 3,559,374 ethers, currently valued at $59.05 million USD.
As a result, the price of Ethereum took a drastic dive this morning as news of the hack spread. Millions of ether are moving to an unkown address with some suggesting that it may be a recursive split hack. As shown in the chart below, the value of Ether has plummeted following the breach, losing over 20% of its value.
Growing pains, or something more, indicating that any electronic systems may be compromised given enough time?
At any rate, it seems best to not put too many eggs into a new technology’s basket until enough time has passed to let the cast and the mice fight to a draw.


Billions of Barrels of Oil Vanish – Accounting Trickery

Another Major US Retailer Files For Bankruptcy, 126 Stores On The Chopping Block

by Thomas Dishaw

The economy continues to crush retailers big and small. Hastings, an outfit out of Texas that operates 126 stores, has filed for bankruptcy putting thousands of jobs at risk.

If you’re unfamiliar with Hastings it wouldn’t surprise me.  They are an outdated retailer that specializes in CD’s, DVD’s, movies, books, games and rentals, reminiscent of Sam Goody, Harmony House, Musicland and Blockbuster, all of which are extinct.
I think its time for a liquidation sale according to this Ada News report:
Hastings Entertainment filed Chapter 11 bankruptcy Monday, citing increasing numbers of competitors and the declining demand for physical media like music, movies, books, games and rentals.
In a press release posted on the company’s page, President and Chief Operating Officer Jim Litwak said the company needed additional financial support and had initiated a “comprehensive process to evaluate potential buyers for our business.”
Hastings’ corporate parent, Draw Another Circle, and sister brands Movie Stop and SPImages also have filed under Chapter 11, which will help the companies prepare for the possible sale while allowing them to continue operations, according to the release.
“Please be assured that Hastings stores and e-commerce businesses will remain open,” Litwak said in the release.
The Wall Street Journal reported Hastings’ debts included $80 million in loans, $59 million in trade bills, and in 2015, the company’s losses were $16.6 million on $401 million in revenue.
Stores will operate regularly, but some programs will undergo changes. Hastings will no longer accept or honor customer deposits for future movie purchases, but those deposits may be applied toward other purchases in the store; games will no longer be available for rent; gift cards will expire July 13; and the Hastings buyback program has been suspended.

Why You Don't Hear About All These Bankruptcies

by Anna Von Reitz

As I have explained many times before, what we are dealing with and what we have dealt with since the beginning of this country, is a situation where very lucrative government services contracts have been received by "governmental services corporations".  This fact has been obscured and partly hidden from the less-than observant public and over the years for lack of true oversight the situation has become abusive. 
In the beginning the Virginia Trading Company and several of the other old trading companies that financed the expansion into the New World banded together to form the United States (Trading Company).  That was bankrupted by Lincoln in 1863 and when the dust settled several new entities organized as corporations emerged, chief among them, The United States of America, Inc, the District of Columbia Municipal Corporation, and the United States of America, Inc., all of which were bankrupted and/or morphed into still other corporate entities.  It was the United States of America, Inc. that Franklin Delano Roosevelt bankrupted in 1933 and which stayed in reorganization until 1999.  It was used as a pass-through, like a siphon, for the creditors of this bankrupt privately owned corporation to suck the American People dry under false presumptions and equally false pretenses, but it was by far NOT the only pig at the trough. 
We have suffered through the US Corp which was the principal defense agency corporation during World War II, the USA, Inc., which has been famous for prison industry and other industry-related abuses, the US, Inc. which has similarly failed any mission of "Public Good", the WASHINGTON DC MUNICIPALITY, one of the most corrupt and inefficient governments to ever exist on planet Earth, and from 1944 onward, we have suffered all the slime-ball tactics of the UNITED STATES, INC., a French-sponsored IMF spin-off, here on our soil acting as the colluding partner to the United States of America, Inc., during its bankruptcy reorganization from 1944 to 1999 and since then operating as the overall "service provider" under March of 2015 when it finally went insolvent and couldn't even pay the interest on its debts.
Since then we have had yet another one of the "governmental services corporations" go bankrupt, this one calling itself THE UNITED STATES OF AMERICA, INC. 
The UNITED STATES (INC.) was so deplorably mismanaged that it cannot qualify for bankruptcy reorganization and is being liquidated.   THE UNITED STATES OF AMERICA, INC. is in Chapter 11 Reorganization and Mr. Obama has gratuitously named franchises of this bankrupt entity after each one of us.  You will note that mail addressed to your name in the form: JOHN K. DOE has begun arriving in your mailbox.  That's the name of the bankrupt franchise.  He is attempting to pull another FDR scam on us and set up a new siphon to drain us dry.
Another corporation calling itself the GOVERNMENT OF THE UNITED STATES (INC.) that picked up numerous subsidiary brand names like BLM and FBI is responsible for the entire fiasco in Oregon that resulted in the Wildlife Refuge standoff and the murder of LaVoy Finicum.  These are nothing but commercial companies in the business of providing "governmental services".  They have come in here and bought up the brand names and trade marks of older bankrupted corporations just like Proctor and Gamble might acquire the "Twinkies" and "Wonder Bread" brand names and trademarks and begin making its own version of both products without the public ever even knowing that these seemingly familiar "agencies" are under new management. 
People often ask me--- how is it possible that we haven't known this?  How is it possible that we haven't been aware of any of these bankruptcies, except the one in 1933---which hardly anyone has mentioned for years?  
These are all privately owned corporations.  These are all private bankruptcies.  And these bankruptcies can take place anywhere in the world.  The Trustees of these bankrupt entities can be anyone that the creditors agree to name.  In view of the false claims these vermin have made and all making on the American People, it is to their advantage to keep these bankruptcies "closely held" and out of the public eye. That way nobody has a chance to object to the false presumptions being made by the Trustees and very few people have the chance to bring forward their claims against the rats. 
So, that is what is going on and what has been going on since 1863.  If you buy a copy of our book, "You Know Something Is Wrong When.....An American Affidavit of Probable Cause" you will see a Public Lien being published which names the rats responsible, and in the back of the book, you will see a UCC-1 Financing Statement that tells just a small portion of the debt owed to the American People.
What has become abundantly clear is that vast numbers of corporations worldwide have been used and abused to create illegal and unlawful monopolies and they have operated as crime syndicates by buying up police forces and armies and most recently "government agencies" which they have run as commercial mercenary armies operating on our soil under color of law.  Good examples of this are the FBI actions at Ruby Ridge, the BATF and DOJ at Waco, and more recently, the BLM and FBI attack on LaVoy Finicum and the others in Oregon.
The FBI is a particularly egregious example, as it is often misdirected and employed in the cause of blatant crime, while failing to investigate and prosecute the exact forms of crime that it is tasked with combating. Early on, I informed the FBI about the reverse trust scam being operated by the banks in mortgage foreclosure cases.  I contacted them with complete information multiple times.  They did nothing. 
Because although the mission of the FBI is clearly stated and public, and they receive public monies on the assumption that they are performing the job they claim to be performing, their "private mission" is something else entirely.  In public, they are supposed to be combating crimes of interstate trafficking, commercial fraud including interstate banking fraud, illegal restraint of trade and numerous other related duties---in fact, they avoid doing these jobs and act as enforcers of private corporate objectives instead.  As most of those objectives have materialized as neglect of their public mission statement and have instead involved the murder of innocent people in the course of promoting such activities as illicit drug trade you may judge for yourselves what the mission of the FBI really is.

Similar circumstances apply to the misnamed "DEPARTMENT OF JUSTICE" and virtually every other "governmental services corporation" you can name.  Even the DEPARTMENT OF AGRICULTURE is in it up to their hips in expediting human trafficking and illegal taking of property that rightfully belongs to the people of this nation and these United States as opposed to "those" United States.
See this article and over 200 others on Anna's website
To support this work look for the PayPal button on this website. 

EU extends Russia sanctions over Crimea for 1 more year

The file photo shows the Euro logo pictured in front of one of its former facilities in Frankfurt am Main, western Germany. (AFP photo)
The file photo shows the Euro logo pictured in front of one of its former facilities in Frankfurt am Main, western Germany. (AFP photo)

The European Union extended Friday for one year its economic sanctions against Russia.
The EU said in a statement that its restrictive measures imposed over what it called Moscow’s illegal annexation of Crimea has been extended until June 23, 2017.
The sanctions, which have been in place for the past two years, prohibit certain exports and imports, and ban investment and tourism services by EU-based companies to Crimea. Moscow defends Crimea’s rejoining Russia as legitimate, saying more than 90 percent of the people in the Black Sea peninsula voted in favor of rejoining in the referendum of 2014.
The Crimea sanctions do not include a separate set of visa ban and asset freeze sanctions, which have been imposed against individual Russian and Ukrainian figures for backing the insurgency in eastern Ukraine. These measures run until September.
Some members of the EU have criticized the rollover of the sanctions as the EU itself has suffered from Russia’s retaliatory measures which ban import of food products from certain EU states.
The extension announcement came just one day after EU Commission President Jean-Claude Juncker met with Russian President Vladimir Putin in Saint Petersburg.
Putin has repeatedly insisted that Crimea will never return to Ukraine, calling EU’s sanctions over the case as pointless.
Putin said on Friday that Moscow was ready for a fresh start if the EU also played its part, stressing that it was the EU's introduction of sanctions which had led to the “collapse” in relations.
“We hold no grudge and are willing to reach out to our European partners but obviously this can't be a one-sided game,” Putin told a top economic forum in Saint Petersburg.

Andrew Hoffman: The Lehman of Europe, Deutschebank, on the verge of collapse

from Financial Survival Network
Where’s It Heading Wednesdays with Andrew Hoffman:
1. BrExit inevitable?
2. The Lehman of Europe, Deutschebank, on the verge of collapse
3. Record low sovereign yields

4. Plunging commodities, currencies, stocks anew
5. Biggest PBOC Yuan devaluation in 5½ years
6. Bitcoin to $700+
7. And LOL, today’s “most important FOMC meeting ever” – which last night, Jim Rickards claimed would catalyze gold’s inevitable surge to $10,000/oz!

We Have Reached The Final Stage, The Central Bankers Went Full Subprime, Goldman Internal Tracker Signalling A Recession.

Bank of America gets ready to layoff 8,000 employees. Obama goes through the backdoor and tries to push wage hike which will lead to employers cutting back. Core producer prices increase. Subprime is back, loans with low qualifications and high risk is the final stage to the economy on the verge of a collapse.Empire fed pops up once again. Industrial production declines. Goldman internal tracker signalling a recession.

$51.6 billion: ‘Litigation expense for one bank from 2010-2015’

“We Do Not Expect To Bear The Costs” – Banks Warns Law Firms Over Excessive Compensation
From 2010-2015, Bank of America has racked up an absolutely stunning $51.6 billion in litigation expense, placing the bank head and shoulders above its peers.

Which is why when the law firm of Cravath, Swaine & Moore LLP announced that it was boosting starting pay for its junior-most lawyers to $180k, causing many other law firms to do the same, BAC’s global general counsel David Leitch took action.
Upon learning of the news, Leitch sent an email to law firms which according to the WSJ, handle the bank’s litigation. In short, Leitch said that if any any firm expects to be passing on costs due to wage increases, they can forget about it because the bank isn’t paying.

Here is some of what Leitch wrote per the WSJ
“While we respect the firms’ judgment about what best serves their long-term competitive interests, we are aware of no market-driven basis for such an increase and do not expect to bear the costs of the firms’ decisions

“We value the work performed by our Litigation Roundtable firms and seek to maintain a true partnership that meets our reciprocal needs—thoughtful, strategic, and cost-competitive representation at rates and alternative billing arrangements that are attractive to our counsel
The note ended Leitch saying that BAC entrusts those receiving the email with its work because of their “legal expertise and entrepreneurial instinct”, and that he looks forward to continuing to partner with them.
BAC spent $1.2 billion on litigation in 2015 alone, and has trimmed the number of firms it hires to defend it in litigation to 30 from around 700.
While it’s clear why Bank of America needs to push back on any and all cost increases from its laundry list of lawyers the firm uses to fight its massive litigation battles, not everyone was so dramatic about learning of firms such as Cravath raising salaries. Edward Ryan, global general counsel for Marriott International said “law firms are responsible for their own cost structure” and that the only thing that matters is the value that is provided. Ryan did question whether or not clients would take their business elsewhere if law firms try to pass off those costs directly.
Perhaps instead of bullying law firms around regarding how they choose to compensate employees, Leitch should spend more time on helping the his employer avoid getting into legal messes in the first place. Also, it is unclear whether or not any law firms wrote back to Leitch letting BAC know that they wouldn’t be paying for Brian Moynihan’s 23% raise in 2015 as a result of any business that is done with the bank.


Icahn And Soros Make The Short Of A Lifetime

It’s one thing when some online commenter yells “fire” in the crowded stock market theater, expecting investors to jump ship and dump their investments before the “Crash of a Lifetime.” It’s another when multi-billionaires who made their fortunes from speculation take huge bearish bets in the market.
The billionaires are positioning themselves for a big butt kicking in the market.
One after the other, they are lining up their investment strategy for negative stock returns ahead. George Soros, who famously made $1 billion in a day shorting the British Pound, has made a massive short bet in the S&P 500.
Carl Icahn also made a huge bearish shift in his portfolio. According to Barron’s,he was 149% short at the end of the first quarter compared with 25% at the end of 2015 and 4% net-long a year ago.
George Soros - Icahn Soros Short StocksNow Paul Singer, less well-known than Soros and Icahn, but still an investment powerhouse in his own right, is joining the fray and loading up on gold.
Are these Wall Street legends making the right call? In my own opinion, the odds favor lower stock returns ahead. Much lower.
First, we are in the midst of one of the longest bull markets ever. Whenever there’s a little scare, a magical wave of buying comes into the market to prop up stock prices. Even the worst start to a year ever couldn’t stop stock prices from advancing in 2016. But, that is not sustainable.
Not only is this bull market long in the tooth, but valuations are also in nosebleed territory. The median / price sales ratio on the S&P 500 is at its highest ever. There is nowhere to hide.

How can I learn to short stocks?

So if you want to ride Soros’ and Icahn’s coattails, what can you do?
Well, there are a few ways to short the stock market. You can bet on a fall by buying put options. Of course, your timing might have to be impeccable in order to cash in on your bearish bet. There’s nothing worse than being right but having the wrong timing.
You can also get against an index like the S&P 500. In general, I think inverse funds are bad bets. For one, when you short the S&P 500 you are shorting companies like Apple [Nasdaq: AAPL] and General Electric [NYSE: GE].
Even worse are levered inverse funds that re-set their portfolio daily. The higher volatility of bear markets tends to chop up these funds over time. So, it’s possible that the market could fall 20% but you still lose money owning a levered inverse fund. Your outcome depends to a large extent on the progression of daily returns in the stock market. No one can predict that.
The largest companies in the U.S. market dominate the S&P 500 index. Why would you short the world beaters? Sure, they may go down, but will they go down as much as a third-tier company operating in one market that just saw its largest customer go bankrupt? Probably not.
That’s why, at Forensic Investor, we prefer to short individual companies. Companies that have aggressive accounting where management is pulling the wool over investors’ eyes and artificially propping up their stock price can lead to solid returns, even in a bull market.
But, in a bear market where there’s real selling and real blood in the streets, investors tend to sell these low-quality stocks first and ask questions later. That can lead to outsized returns from the Dark Side.
Sometimes we will short an entire sector, like technology, where the entire space may be exposed to low earnings quality. But, the real juice in a bear market comes from individual stocks imploding.
While the S&P 500 was cratering in 2008 there were many stocks falling 2x-2.5x what the market was doing.

Second Biggest U.S. Mall Owner Misses $144 Million Dollar Loan Payment

Things are not looking good for America’s shopping malls. General Growth Properties Inc, the second largest mall owner in the U.S., has missed a $144 million dollar loan payment.

This delinquency marks the beginning of the end for America’s favorite shopping destinations. According to Bloomberg almost $50 billion dollars in retail property loans will be due in the next 18 months spelling doom for Americas dying shopping malls, strip malls and struggling retailers.
Suburban Detroit’s Lakeside Mall, with mid-range stores such as Sears, Bath & Body Works and Kay Jewelers, is one of the hundreds of retail centers across the U.S. being buffeted by the rise of e-commerce. After a $144 million loan on the property came due this month, owner General Growth Properties Inc. didn’t make the payment.
The default by the second-biggest U.S. mall owner may be a harbinger of trouble nationwide as a wave of debt from the last decade’s borrowing binge comes due for shopping centers. About $47.5 billion of loans backed by retail properties are set to mature over the next 18 months, data from Bank of America Merrill Lynch show. That’s coinciding with a tighter market for commercial-mortgage backed securities, where many such properties are financed.
For some mall owners, negotiating loan extensions or refinancing may be difficult. Lenders are tightening their purse strings as unease surrounding the future of shopping centers grows, with bleak earnings forecasts from retailers including Macy’s Inc. and Nordstrom Inc., and bankruptcy filings by chains such as Aeropostale Inc. and Sports Authority Inc. Older malls in small cities and towns are being hit hardest, squeezed by competition from both the Internet and newer, glitzier malls that draw wealthy shoppers.
“For many years, people thought the retail business in the U.S. was a bit overbuilt,” said Tad Philipp, an analyst at Moody’s Investors Service. “The advent of online shopping is kind of accelerating the separation of winners and losers.”
Landlords that can’t refinance debt may either walk away from the property or negotiate for an extension of the due date. It can be hard to save a failing mall, leading to high losses for lenders on soured loans, Philipp said.

Brexit to Result in 'Catastrophe' for Swiss Economy - Swiss Lawmaker

The possible exit of the United Kingdom from the European Union would have a negative impact on the Swiss economy as it would further strengthened the national currency, thus hitting Swiss exporters, a Swiss lawmaker from the Christian Democratic People's Party told Sputnik on Thursday.

MOSCOW (Sputnik) — She added that Britain's potential exit from the bloc is also complicating the negotiation proceedings between Bern and Brussels, as Brussels has put all bilateral negotiations on hold until after the UK referendum. "Brexit would be a catastrophe for Switzerland. The Swiss franc will grow stronger and stronger. That would be very bad for our economy," Elisabeth Schneider-Schneiter, who is also a member of the National Council's Foreign Affairs Committee, said.
Earlier in the day, head of the Swiss National Bank Thomas Jordan told reporters that the Swiss economy could face turbulence if Britain opts to exit the bloc, vowing to "take measures if required."
The Swiss franc, long considered a safe haven currency and already overvalued, has seen its value surge again following the publication at the weekend of polls suggesting that Brexit could win the day in the June 23 vote.
A stronger franc negatively affects Swiss exporters, as it forces them to squeeze costs and lower prices to remain competitive on an international market.

2016 St Pete Econ Forum Opens - EU President Juncker, Italian PM Attend (Video)

Russia’s annual international economic forum, SPIEF, is opening, marking its 20th anniversary. Among the guests are European Commission President Jean-Claude Juncker, Italian Prime Minister Matteo Renzi and executives from the world’s leading companies.
Jean-Claude Juncker is expected to meet Russian President Vladimir Putin to discuss the current state and prospects for Russian-EU relations, and the problem of settling regional crises. Putin and Juncker will consider how to stabilize business ties which have been greatly affected by bilateral sanctions.

The EU is Russia's main trading partner (44.8 percent of Russia's foreign trade in 2015). Russia is the fourth largest trade partner of the EU after the US, China and Switzerland and also the biggest natural gas supplier to the EU and one of its biggest oil suppliers. However, trade between Moscow and Brussels has sharply dropped from $417.7 billion in 2013 to $235.7 billion last year.
They are also expected to touch upon the Nord Stream-2 pipeline, which is intended to provide 55 billion cubic meters of Russia gas per year to Germany via the Baltic Sea bypassing Ukraine. The controversial project is backed by Berlin, but heavily opposed by the Baltic States, Eastern Europe and the UK.

Putin will also meet Italian PM Renzi to discuss business and energy cooperation. Italy is Russia’s fifth largest trading partner after China, the Netherlands, Germany and Belarus. Trade between Moscow and Rome is a victim of political tension, too, down to $30.6 billion from $48.4 billion in 2014. Russian reciprocal sanctions cost Italy, according to some estimates, 0.1 percent of GDP and 80,000 jobs.
Funds from 18 countries, including Europe and the US, with assets of more than $10 trillion will be represented at SPIEF, according to Russian Direct Investment Fund (RDIF) CEO Kirill Dmitriev. This is twice as many as the year before, he said. A meeting of financers with Putin is due to be held at a forum business dinner.
Top managers from 230 foreign companies will also be represented. Among them are the UK’s HSBC and PwC, Germany’s Siemens and Volkswagen, Italy’s Enel and Pirelli, Anglo-Dutch Royal Dutch Shell, Societe Generale, Schneider Electric and Total from France, Glencore from Switzerland, Mitsui from Japan and China’s Alibaba.
Washington has warned against doing business with Russia as normal, but the forum will be attended by top management from ExxonMobil, Caterpillar, International Paper and others.
The economic forum will be held on June 16-18 with the theme ‘Capitalizing on the New Global Economic Reality’.

Gold Prices Surge to Highest in Nearly Two Years On FED and Brexit Haven Demand

Gold prices surged to their highest level in nearly two years yesterday on BREXIT concerns and deepening concerns that the Federal Reserve central banks are slowly losing control of the financial and monetary system.
Gold subsequently fell quite sharply below the key $1,300 level but remains roughly 1% higher for the week in all currencies and is on track for its third week of gains.
Asset Performance YTD 2016 (Finviz)
Ultra loose monetary policies are set to get even looser as the Federal Reserve confirmed zero percent interest rate policies are set to continue and negative interest rates deepened as Germany became the latest bond market to experience negative rates.
The backdrop of the most uncertain geo-political and economic conditions in many years is also leading to safe haven demand which pushed gold to the highest level since August 2014 touching $1,315/oz.
Sharp falls in European and Asian stock market indices this week and this year (see Table above) is also contributing to the precious metal gains. U.S. stock market indices remain buoyant for now but the fundamentals of the U.S. stock market continue to deteriorate and we look set to see a very significant correction or indeed worse in the coming months.
Gold and silver remain the top performing assets in 2016 with 21.1% and 25.4% returns in dollar terms respectively. They have seen even larger gains in sterling terms of 24.4% and 28.7% due to sterling’s depreciation on Brexit concerns.
The twin risk of terrorism and war were seen again this week after the massacre in the Orlando nightclub and deteriorating relations between Russia and the North Atlantic Treaty Organization (NATO) powers.
Nato has urged Russia to withdraw its troops and armour from Ukraine and accused Russia of “massive militarisation” around the fringes of Europe, as the alliance traded barbs with Moscow ahead of a major summit next month. The western military alliance’s plans to deploy four battalions close to Russian borders has further heightened tensions in an increasingly destabilised Europe.
The ‘clash of civilisations’ appears to be intensifying on a number of fronts alas.
On the monetary policy side of things, central banks appear increasingly desperate with the Federal Reserve now “legitimately” considering using “helicopter money” and the ECB creating euros to buy European junk debt and being urged to “lavish” consumers with “quantitative easing for the people (see News below).
The Federal Reserve confirmed Wednesday that zero interest rate policies (ZIRP) are set to continue and rates remain at a record lows. The Fed left interest rates unchanged as expected at 0.25 percent to 0.5 percent. They lowered projections for how much they expect to tighten monetary policy in the next few years due to the uncertain outlook and also cited the risks that BREXIT posed to markets in the short term.
The very patchy economic “recovery” in the U.S. and internationally have made the Fed even more dovish, with a greater number of officials now seeing scope for just a single rate increase this year, rather than two. This makes non yielding and non negative yielding gold more attractive to investors internationally.
Continuing ultra loose monetary policies by all major central banks is benefiting gold as is the increasing spectre of negative interest rates. Global sovereign debt with negative yields surpassed a whopping $10 trillion for the first time last month, according to Fitch Ratings.
Japan is by far the largest source of negative-yielding bonds. Other countries with negative bonds include Sweden, Hungary and Switzerland. The amount stood at $10.4 trillion on May 31, up 5% from $9.9 trillion on April 25, when the rating agency last measured the amount. $7.3 trillion of the total is long-term debt and $3.1 trillion is short-term debt.
draghi_helicopterECB is creating euros to buy junk debt
14 countries now have negative yields including Germany, whose bonds went negative this week. German 10 year bund yields went below zero on ‘Brexit’ fears and due to ultra loose monetary policies. The ECB’s ongoing QE became even more radical last week and now involves creating euros to buy European junk debt.
This is a radical monetary experiment that will in time almost certainly lead to a collapse in the “safe haven” government bond market and see all major currencies devalued internationally and a reset of gold and silver to much higher levels.

Gold and Silver News
Gold inches up, set for third straight weekly gain of 1% (Reuters)
Gold surges near 2-yr high on dovish Fed, ‘Brexit’ worries (Bullion Desk)
Global Central Banks Sound Brexit Alarm as ‘Leave’ Jitters Grow (Bloomberg)
Flight to safety spells danger for riskier assets (Australian)
EU politicians urge ECB to lavish ‘helicopter money’ on consumers (FT)
Perfect Storm Of Bad Political And Economic News Will Drive Gold Higher (Forbes)
Gundlach: “Central Banks Are Losing Control” – Full Presentation (Zero Hedge)
The Fed and other central banks have lost their magic powers (Marketwatch)
Never sell your gold—and buy more: trader (Yahoo Finance)
BREXIT Would See “Massive Run” In Gold (CNBC)
Read More Here
Gold Prices (LBMA AM)
17 June: USD 1,284.50, EUR 1,142.05 and GBP 899.41 per ounce
16 June: USD 1,307.00, EUR 1,161.14 and GBP 922.01 per ounce
15 June: USD 1,282.00, EUR 1,141.49 and GBP 903.04 per ounce
14 June: USD 1,279.40, EUR 1,140.84 and GBP 904.79 per ounce
13 June: USD 1,284.10, EUR 1,139.25 and GBP 909.27 per ounce
10 June: USD 1,266.60, EUR 1,121.07 and GBP 876.87 per ounce
Silver Prices (LBMA)
17 June: USD 17.37, EUR 15.43 and GBP 12.19 per ounce
16 June: USD 17.71, EUR 15.79 and GBP 12.54 per ounce
15 June: USD 17.41, EUR 15.51 and GBP 12.26 per ounce
14 June: USD 17.25, EUR 15.37 and GBP 12.17 per ounce
13 June: USD 17.32, EUR 15.37 and GBP 12.23 per ounce
10 June: USD 17.32, EUR 15.33 and GBP 12.01 per ounce
Recent Market Updates
– Gold Surges to $1,313/oz – Fed Concerned Re Outlook, BREXIT and May “Consider Using Helicopter Money”
– Gold Prices Higher For 5th Session On BREXIT and FED
– Gold In Euros Surges 6.5% In June and 17% YTD On BREXIT Concerns
– Soros Buying Gold On BREXIT, EU “Collapse” Risk
– UK Gold Demand Rises On BREXIT “Nerves”
– Pensions Timebomb in “Slow Motion Detonation” In UK, EU, U.S.
– Silver – Perfect Storm Brewing in the Market
– Martin Wolf: There Will Be Another “Huge” Financial Crisis

– Silver Price To Surge 800% on Global Industrial and Technological Demand

– BREXIT Gold Diversification As Vote Fuels Market Uncertainty
– Gold Forecasts Revised Higher – Citi Says “Buy the Dip”
– World’s Largest Asset Manager Suggests “Perfect Time” For Gold

Mark O'Byrne
Executive Director