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4.17.19 - Stock's Central-Bank Joy Ride About to End

Gold last traded at $1,276 an ounce. Silver at $14.93 an ounce.

NEWS SUMMARY: Precious metal prices steadied near 4-month lows Wednesday on a weaker dollar. U.S. stocks struggled as sharp losses in the health-care sector offset strong quarterly earnings results.


Gold Has Been Rallying. Now It's Silver's Turn. -Barrons
Silver has been a lackluster performer this year, but as investors' appetite for gold improves, silver might share in the yellow metal's prosperity. 'It is difficult to be pessimistic about silver at these levels,' with prices that don't provide an incentive to boost supply, says Maria Smirnova, senior portfolio manager at Toronto-based Sprott Asset Management....'We expect silver to outperform gold,' says Smirnova,. 'Silver has lacked retail investment demand, so a sustained rally in gold will lead to the speculators coming and buying silver.'....The World Silver Survey found that global investment in silver bars and coins grew 20% last year, with bar demand alone up 53%. The study also revealed a third consecutive annual decline in global production of the metal. It fell 2% in 2018, to 855.7 million ounces. 'Silver is cheap, at $15 [an ounce] as it is not encouraging new supply,' says Smirnova."

Read Swiss America's 2019 Silver Report to discover the reasons why silver may present the opportunity of a lifetime.


MMT Modern Monetary Theory flunks the smell test -Baum/Marketwatch
"Perhaps you've heard or read something recently about Modern Monetary Theory...that is sweeping the nation, aided and abetted by progressive members of Congress in their push to guarantee free everything. Modern Monetary Theory, or MMT, is based on the notion that deficits don't impose any constraints on countries that borrow in their own currency, such as the U.S. or Japan. MMTers believe that the government can spend money on public priorities, such as keeping everyone employed, without raising revenue; that the only limit on government spending is inflation; and that interest rates should be permanently set at zero....Instead of the Federal Reserve acting to stimulate or curtail economic growth by lowering or raising interest rates, MMT delegates that role to the federal government....MMTers seem to gloss over the issue of how the government's spending initiatives would be financed...MMTers assume that the Fed will accommodate the spending by printing money....Why, oh why would anyone assign the most important economic-management function to the political class? The economy is too important to be left to the politicians."


No Fix for Recession Without a Financial Crisis -Charles Hughes Smith Blog
"The saying 'never let a crisis go to waste' embodies several truths worth pondering as the stock market nears new highs. One truth is that extreme policies that would raise objections in typical times can be swept into law in the 'we have to do something' panic of a crisis....A second truth is that crises and solutions are generally symmetric: a moderate era enables moderate solutions, crisis eras demand extreme solutions. The Federal Reserve and other central banks are ready for bubble-related financial crises: they have the extreme tools of zero-interest rate policy (ZIRP), negative-interest rate policy (NIRP), unlimited credit lines, unlimited liquidity, the purchase of trillions of dollars of assets, etc. But what if the current speculative credit bubbles in junk bonds, stocks and other assets don't crash into crisis? What if they deflate slowly, losing value steadily but with the occasional blip up to signal 'the Fed has our back' and all is well? A slow, steady decline is precisely what we can expect in an era of credit exhaustion....As expanding credit no longer generates real-world growth, growth slows. This erosion is so gradual, it doesn't qualify as a crisis, and therefore central banks can't unleash crisis-era fixes. There are no extreme 'fixes' to secular declines in sales, profits, employment, tax revenues and asset prices....The Fed and other central banks are trapped in more ways than one."


Stock market's central-bank joy ride is coming to an end -Marketwatch
"Welcome to the calm before the storm....Our call of the day, from Hussein Sayed, chief market strategist at broker FXTM, agrees, as he says it's time for investors to start holding Wall Street itself responsible for further stock market gains. 'The boost provided to equity markets from the shift in central banks seems to be exhausted with the S&P 500 standing 1.7% away from an all-time high. Investors hoping for an interest rate cut may not see one coming any time soon, suggesting that they shouldn't continue betting on monetary policy to push equities further,' he told clients Thursday. Pundits have been telling us for a while that central banks can't keep rescuing this stock market after years of easy-money policies, though the Fed managed to do just that at the start of the year. In Wednesday's minutes from its March meeting, the U.S. central bank showed no indication of any cuts to come, with some members even saying they'd consider a hike, depending on data....'The index has risen 15.2% so far year-to-date, and for the rally to be sustained, investors need assurance that we're not going to hit an earnings recession. A dovish Fed won't be enough to keep the party on,' he says. Last word goes to asset manager Guggenheim Investment, which told clients in a recent research note...stocks could get crushed due to lofty valuations and one more thing - lack of central bank firepower."


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