What Does He Know, That You Don’t? Commerce Secretary Wilbur Ross (Who Made His Money Working For Rothschild) Dumps Stocks, Buys Treasuries After “Ethics Warning”

Billionaire Wilbur Ross made his money working for Rothschild and has an apartment in the same building as Evelyn de Rothschild & Henry Kissinger.

Wilbur Ross

What Does He Know? Ross Dumps Stocks, Buys Treasuries After “Ethics Warning”:

Commerce Secretary Wilbur Ross has been reprimanded by federal ethics officials for failing to sell individual stocks that he had agreed to divest within three months of his confirmation (he was confirmed in February 2017), creating “the potential for a serious criminal violation.” Claiming that he had forgotten about the remainder of his stake, Ross earned himself an additional 15% return when he finally cashed out of his remaining Invesco shares as equity prices continued to rise after his confirmation. As part of his ethics agreement, Ross pledged to divest his Invesco holdings and other equities within 90 days of his confirmation, and more complex assets within 180 days, according to Bloomberg.

Then again, perhaps investors should interpret Ross’s decision to finally sell as a warning, given that one of the men in charge of the US economy has sold the rest of his stocks and is buying Treasury bonds – hardly an encouraging indicator for the economy.

In fact, Ross hasn’t just sold stocks – in some cases, he’s gone short, saying that he’s shorted shares of holdings to which he doesn’t have access. Ross has reportedly taken short positions in five stocks.

Read moreWhat Does He Know, That You Don’t? Commerce Secretary Wilbur Ross (Who Made His Money Working For Rothschild) Dumps Stocks, Buys Treasuries After “Ethics Warning”

Fed’s QE Unwind Accelerates Sharply

Fed’s QE Unwind Accelerates Sharply:

These are getting to be serious amounts.

The QE Unwind is ramping up toward cruising speed. The Fed’s balance sheet for the week ending May 2, released this afternoon, shows a total drop of $104 billion since the beginning of the QE Unwind in October – to the lowest level since June 11, 2014.

During the years and iterations of QE, the Fed acquired $3.4 trillion in Treasury securities and mortgage-backed securities. The mortgages underlying those MBS are guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. The “balance sheet normalization,” as the Fed calls it, was nudged into motion last October. But the pace accelerates every quarter until it reaches up to $50 billion a month in Q4 this year.

This would trim the balance sheet by up to $420 billion this year, and by up to $600 billion in 2019 and every year going forward, until the Fed considers the balance sheet to be adequately “normalized” — or until something big breaks, whichever comes first.

Read moreFed’s QE Unwind Accelerates Sharply

“We Understand The Chinese Government Has Halted Purchases Of US Treasuries”: SGH

“We Understand The Chinese Government Has Halted Purchases Of US Treasuries”: SGH:

On Friday, we reported that among the five “nuclear” options available to Beijing to retaliate against Trump’s latest $100BN in proposed import tariffs, was the choice whether to sell US Treasuries. But what if Beijing did not want to unleash a full-blown market nuke, and instead was hoping for a targeted, EMP hit?

Then it would simply stop buying US paper, instead of dumping it outright; in the process it wouldn’t hurt the US too much – avoiding a furious tit-for-tat response – but would still send a clear signal to the White House, whose fiscal spending plan will more than double net Treasury issuance this year from under $500BN to over $1 trillion, and which needs every possible marginal buyer of US paper, both domestic and foreign. 

Read more“We Understand The Chinese Government Has Halted Purchases Of US Treasuries”: SGH

Russia Is Hoarding Gold At The Fastest Pace In 12 Years

Russia Is Hoarding Gold At The Fastest Pace In 12 Years:

Russia is adding gold to its reserves at the fastest pace in 12 years …and dumping US Treasuries at the fastest pace since 2011.

The Central Bank of Russia (CBR) has been increasing its holdings of gold every month since March 2015. The country is currently the sixth-largest gold owner after the United States, Germany, Italy, France and China.

According to the CBR, gold reserves spiked to $455.2 billion between March 2 and 9 hitting a historic high not seen since September 2014.

“Our international reserves increased by $2.9 billion or 0.6 percent in a single week, mainly on the strength of positive re-evaluation,” said the regulator.

According to World Gold Council data, last year the CBR became a world leader in stockpiling gold.

The bank has more than doubled the pace of its gold purchases, statistics showed. It has been increasing Russia’s gold reserves to meet the goal set by President Vladimir Putin to make it less vulnerable to geopolitical risks. The Russian gold cache has increased by more than 500 percent since 2000.

And while the Russian central bank is buying gold with both hands and feet, it is dumping US Treasuries at the fastest pace for a January since 2011…

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US Treasury Posts Gigantic $1.16 Trillion Shortfall in Fiscal 2017, Hilariously Points out “Where We Are Headed” — So Budget Deficits Will REALLY Go Vertical – Mnuchin’s Wife Says: Don’t Worry

US Treasury Posts Gigantic $1.16 Trillion Shortfall in Fiscal 2017, Hilariously Points out “Where We Are Headed”:

Just add tax cuts and ballooning expenditures. The media chose to silence the report to death.  

“If a tree fell in a forest and nobody heard it, did it really make a sound?” asks our favorite fiscal gadfly and Director of Research at Truth in Accounting, Bill Bergman, referring to the media coverage that the Treasury Department’s “Fiscal Year 2017 Financial Report of the U.S. Government” has received, which was, at the time he wrote it 24 hours after the February 15 release of the report: “Nothing. Zip. Scratch.”

“Where We Are Headed”

That $1.156 trillion in Net Operating Cost occurred in fiscal 2017. But these are the good times, the boom years, if you will, when shortfalls should shrink into oblivion. So what will happen to the shortfall when the economy slows down or goes into a recession? That was a rhetorical question.

For fiscal 2018 and going forward, the tax cuts will lower revenues by about $150 billion per year on average over the next ten years. And for fiscal 2018 and 2019, Congress passed the two-year budget resolution that will add about $150 billion on average per year to the outlays. Both combined will drive up the deficit by about $300 billion a year on average.

“Where We Are Headed” a chapter heading (pages 9 and 14) says. I can supply my own chart, based US Treasury data, to show exactly “where we are headed” in terms of the US gross national debt:

*****

Budget Deficits Will Really Go Vertical – Mnuchin’s Wife Says: Don’t Worry:

Authored by MN Gordon via EconomicPrism.com,

United States Secretary of Treasury Steven Mnuchin has a sweet gig.  He writes rubber checks to pay the nation’s bills.  Yet, somehow, the rubber checks don’t bounce.  Instead, like magic, they clear.

How this all works, considering the nation’s technically insolvent, we don’t quite understand.  But Mnuchin gets it.  He knows exactly how full faith and credit works – and he knows plenty more.

In fact, Mnuchin’s wife, Louise Linton, says she admires him because “he understands the economy.”  And Mnuchin, no doubt, admires Linton, a Scottish actress 18 years younger, because “she loves SoulCycle Snapchat filters that make people look like puppies and piglets.”  Naturally, Mnuchin gets the importance of puppy and piglet filters and how this bizarre fad fits into the big picture of the economy.

Unlike Mnuchin, we find the economy, and its infinite and dynamic relationships, to be beyond comprehension.  But that doesn’t deter us from attempting to make some sense of it each week.  When it comes to Snapchat filters we know nothing – and we could care less.  Still, who are we to question Snap Inc.’s $24 billion market capitalization?

Read moreUS Treasury Posts Gigantic $1.16 Trillion Shortfall in Fiscal 2017, Hilariously Points out “Where We Are Headed” — So Budget Deficits Will REALLY Go Vertical – Mnuchin’s Wife Says: Don’t Worry