Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. Most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today, we look at the housing market in 2020. (See the Tangibles Investing section.)
Economy & Finance:
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At Zero Hedge: Mauldin: A Crisis Has Already Begun… We Just Don’t Know It Yet
Here is an excerpt:
“The Fed now has also become a big part of the monetization process via its purchases of T-bills which also drives banks into buying notes. The Fed’s balance sheet is now $335b higher than it was in September at $4.095 trillion. Again, however the Fed wants to define what it’s doing, market participants view this as QE4 with all the asset price inflation that comes along with QE programs.
It will be real interesting to see what happens in 2020 to the repo market when the Fed tries to end its injections and how markets respond when its balance sheet stops increasing in size. It’s so easy to get involved and so difficult to leave.
Declining foreign purchases are, in part, a consequence of the trade war.
The dollars China and Japan use to buy our T-bills are the same dollars we pay them for our imported goods. But interest and exchange rates also matter. With rates negative or lower than ours in most of the developed world, the US had been the best parking place.
But in the last year, other central banks started looking for a NIRP exit. Higher rate expectations elsewhere combined with stable or falling US rates give foreign buyers—who must also pay for currency hedges—less incentive to buy US debt.”
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How to strangle an economy: In 2020 record number of states cities and counties raise minimum wage
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OilPrice News had this report on Namibia: Is This The Next Great Oil Frontier?
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I missed seeing this article when it ran in early December: Derivatives industry asks regulators to clarify Libor phase-out terms
Forex & Cryptos:
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At Wolf Street: Status of US Dollar as Global Reserve Currency v. Euro, Yen, Chinese Renminbi, & Others. That article begins:
“The US economy and financial system – including being able to maintain and fund the gargantuan trade deficits and fiscal deficits – has become reliant on the dollar being the dominant global reserve currency. And the IMF just released its next installment on how this status has been changing.
Total foreign exchange reserves in all currencies combined declined 0.6% in the third quarter from the second quarter to $11.66 trillion, according to the IMF’s quarterly COFER data. US-dollar-denominated exchange reserves – such as Treasury securities, US corporate bonds, etc. held by foreign central banks – ticked down 0.4% to $6.51 trillion. But holdings denominated in other currencies fell faster, and the share of dollar-denominated reserves edged up to 61.8% of total exchange reserves. The dollar’s status has declined from a share of 66% in 2014 to a share of 61.8% in Q3 2019…”
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Avi Gilburt at Seeking Alpha: Sentiment Speaks: Another Bottoming Attempt For Bitcoin
Tangibles Investing (Housing Market):
Housing outlook 2020: A ‘good year to purchase,’ expert says. JWR’s Comment: I urge greater caution, especially in regions where house and land prices have become “frothy”. Metropolitan California cities, Seattle, and lower Manhattan Island in particular, have seen far too much frothiness. Do not buy at the top. And if you own any rental or “spec” properties there, then I suggest selling them, soon.
SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.
Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News from local news outlets that is missed by the news wire services is especially appreciated. And it need not be only about commodities and precious metals. Thanks!