Forbes: Bernanke Tells Congress: I Don’t Really Understand Gold

While Ron Paul is no longer part of  the Congressional committees that grill Ben Bernanke twice a year, the Fed Chairman was forced to answer questions about gold on Thursday again.  Asked about the falling price of gold, which is down nearly 25% this year, Bernanke admitted he doesn’t understand the yellow metal.

“No one really understands gold prices,” Bernanke told the Senate Banking Committee, adding he doesn’t get it either.

Gold prices, which have been under intense pressure since at least last September, were actually up on the day, gaining 0.5% to $1,284.20 an ounce by 12:47 PM in New York.


Click below for the full article.

Motley Fool: Bernanke’s QE Magic Trick

In May of this year, Federal Reserve Chairman Ben Bernanke suggested to a congressional panel that the Fed could taper its policy of Quantitative Easing (QE). The obvious happened — the stock market took a quick hit, and interest rates spiked.

So Bernanke pulled a quick change, saying the Federal Reserve will continue an open-ended policy of QE, which artificially suppresses interest rates but immeasurably helps the housing, bond and stock markets. This was a calculated act to test the reaction of the markets.Their negative response validated what Bernanke already knew to be true, that the Fed is trapped in its magic policy of Quantitative Easing, and it’s going to be much harder to make it disappear than anticipated.

Bernanke will be exiting the Federal Reserve stage at the end of his term in January 2014, and returning to academia. I imagine he is glad to do so, leaving the possible tapering of QE to his successor. And, with only months left in his tenure as chairman of the Fed, it’s understandable that he would not want to show his hand and risk rocking the stock market.


Click below for the full article.

Marketwatch: The slowdown is more than a soft patch, Goldman Sachs got it wrong before they got it right

For months, economists and the media have proclaimed that we are in full-recovery mode. While the markets were at record highs, unemployment had not improved, economic growth was stagnant and most corporate earnings had little to do with an increase in sales and revenue and were based on moves like laying-off thousands of people and shedding non-performing assets.

Last week, Goldman Sachs Group Inc. — one of those bullish outfits projecting enthusiasm — reversed its earlier upbeat message, saying that consumer spending is slowing down, which will likely have a negative impact on future growth. The significance is that most analysts and economists are coming to grips with the fact that the economic data doesn’t support stock-market valuations at these levels.

What economists and analysts failed to connect is the contrast between reality and the stock market — the low consumer spending, paltry economic growth, weak hiring by companies and reckless quantitative easing by the Federal Reserve while the stock market soared.

So, let’s look at everything Goldman Sachs (and many others) missed, and the chain of economic events.

The importance of consumption on the overall economy should not be overlooked. While in the economic cycle, it is production that comes first, as it provides the income necessary for individuals to consume, it is ultimately consumption that completes the cycle by creating the demand.

Despite repeated bailouts, programs, and interventions, economic growth remains mired at sub-par rates as consumers struggle in a low growth/high unemployment economy. Businesses, which have been pressured by poor sales, higher taxes and increased government regulations, have learned to do more with less. Higher productivity has led to less employment and higher levels of profits.

The dark side of that equation is that less employment means higher competition for jobs which suppresses wage growth. Lower wage growth and incomes means less consumption, which reduces the aggregate end demand. In turn, lower demand for products and services puts businesses on the defensive to “do more with less” in order to protect profit margins. Wash, rinse and repeat. This is why deflationary economic environments are so greatly feared by the Fed as that relationship between production and consumption is incredibly difficult to break.

I don’t believe that the current slowdown is just a “soft patch,” but is instead the end of the expansionary cycle that began in 2009. That belief is simply based on the fact that economies do not grow indefinitely but cycle between expansions and contractions.

In the current economic environment, where the consumer is caught in a balance sheet deleveraging cycle, economic contractions occur more frequently than they do under more normal economic conditions. This is not an indictment of fiscal or monetary policies, but simply a statement about the cycles of an economy.

So where does that leave us now and the remainder of 2013?

At some point, despite the ongoing interventions by the Federal Reserve, the stock market will revert to the underlying fundamental story which has been slowly deteriorating over time. The question that remains to be answered is simply how long can the Fed’s artificial intervention programs continue to elevate asset prices?

Click below for the full article.

The Motley Fool: Warren Buffett Shows His Faith in Housing

When Warren Buffett declared that housing was on the rebound last summer, he immediately put his money where his mouth is. His company, Berkshire Hathaway (NYSE: BRK-A )   (NYSE: BRK-B )  partnered with Brookfield Asset Management  (NYSE: BAM)  to create HomeServices of America last fall, which has been busily scooping up real estate brokerages — and recently revealed its new logo as the rebranded Berkshire Hathaway HomeServices.

Gobbling up brokerages left and right The new entity is gearing up to be a national, full-service real estate company and has incorporated its formerly separate Prudential Real Estate and Real Living brands under the new umbrella. The complete unveiling of the new company will continue throughout this year.

Meanwhile, BHHS has been acquiring other real estate companies to extend its reach, adding to purchases it had made early last year of Prudential realty brokerages in Oregon and Georgia. So far this year, it has purchased a large brokerage in California, Guarantee Real Estate, based in Fresno, as well as Prudential Gaslight Realtors near Kansas City, Missouri, in January. The Guarantee acquisition added 400 agents to its base of 53,000, and the purchase of Prudential Georgia Realty in March added another 1,000 salespersons to the company’s roster.

Other housing bets Despite admitting being “dead wrong” about a quick turnaround in housing, Buffett knows that the sector won’t stay in the dumps forever. Berkshire’s portfolio holds other housing investments, such as Benjamin Moore paints, Shaw Carpet, and Acme Brick. Clayton Homes, a manufactured home company owned by Berkshire, saw production jump 13.5% last year over the previous year’s output.


Click below for the full article.

Business Insider: Here’s What We Know About The Sad State Of Wall Street Now That Earnings Are All In

In the last week or so every Wall Street bank has reported its earnings, so now  it’s time for the takeaways.

As usual the headlines of the week didn’t tell the whole story.

A quick glance looks like this: JP  Morgan beat estimates with a 33%  jump in profits, Morgan  Stanley‘s profits dipped but the bank still  beat expectations, Goldman  Sachs is taking champagne  showers, Bank  of America is eeking  out some kind of improvement, and Citi  is finally coming into its own after shedding a load of toxic assets.

Now for the news you can read between the lines.

Sales and trading is on life support, especially if you trade fixed income,  currencies or commodities. The traders at Goldman Sachs did better than everyone  else, but as CNBC’s  John Carney pointed out, they were still down 7% for the quarter.

Bank of America’s S&T revenue fell 20% (run by Tom Montag, who still gets  paid more than BofA CEO Brian  Moynihan) and Morgan Stanley got killed, with its revenue falling 42%.

On the other hand, Wealth Management, once one of the most boring sectors on  The Street, is carrying banks. This is especially true at Morgan Stanley (where  the unit is up 48% from this time last year) and Bank of America, where  assets under management grew $67.7  billion year-over-year to $745.3 billion.

Another business where Wall Street is making some cash is in debt  underwriting. Thanks to our current low yield environment, companies that were  unable to issue bonds before can do so now. The demand to buy these bonds is  there from clients searching for yield any way they can get it. Wall Street is here to help.

Click below for the full article.

Wall St. Cheat Sheet: Are Your Income Taxes Fair?

With the official tax deadline in the rear view mirror, many Americans can now reflect on how much they paid Uncle Sam. If you feel like you are paying more than your “fair share,” you are not alone.

Unsurprisingly, Americans are losing faith in the fairness of income taxes. According to the latest Gallup survey, only 55 percent of Americans regard the income tax they pay as fair, the lowest reading since 2001. The results are based on Gallup’s Economy and Personal Finance poll and includes adults from all 50 states. It was conducted in the early part of April.

Click below for the full article.

Schiff: 2/3 of America to Lose Everything Because of This Crisis

A record breaking stock market is distorting a frightening  reality:  The U.S. is being eaten alive  by a horrific cancer that will ultimately destroy the economy and impoverish  the vast majority of its citizens.

That’s according to Peter Schiff, the best-selling author  and CEO of Euro Pacific Capital, who delivered his harsh warning to investors in  a recent interview on Fox Business.

“I think we are heading for a worse economic crisis than we  had in 2007,” Schiff said.  “You’re going  to have a collapse in the dollar…a huge spike in interest rates… and our whole  economy, which is built on the foundation of cheap money, is going to topple  when you pull the rug out from under it.”

Schiff says that, despite “phony” signs of an economic  recovery, the cancer destroying America stems from a lethal concoction of our  $16 trillion federal debt and the Fed’s never ending money printing.

Currently, Bernanke and company is buying $1 trillion of  Treasury and mortgage bonds a year. That’s about $85 billion per month against  a budget deficit that is about the same level.

According to Schiff, these numbers are unsustainable. And  the Fed has no credible “exit strategy.”

Click below for the full article.

More on the Stock Drop: Michael Belkin Predicts 40% Stock Market Drop; Other Opinions and Articles

Hedge Fund Consultant Michael Belkin spoke at The Big Picture conference, predicting a 40% stock market drop in the coming 12-15 months. Belkin joins Sam Mamudi to discuss his case for a market drop.

What do you think. Check out the video here:!A1C9660A-0321-4E82-BA0E-EFD4CD092D40

More Articles on Today’s Stock Crash:

AL.COM: Stock market takes biggest drop this year

Huffington Post: Stock Market Suffers Worst Drop Of The Year On China, Commodities Concerns

Yahoo News: Stock market takes biggest drop this year–finance.html

UK’s The Telegraph: Business news and markets: as it happened – April 15, 2013

Daily Finance: Dow Has Worst Day This Year as Commodities Plunge

NEW YORK (AP) – A steep fall in commodity prices led the stock market to its worst day this year on Monday, as worries about the global economy resurfaced.

The Dow Jones industrial average dropped 265 points, its biggest loss in five months.

The first trigger came from China. News that the world’s second-largest economy slowed unexpectedly pummeled oil, copper and other commodities. In the stock market, companies that produce oil and mine for metals fared the worst. A slowdown in China, a huge importer of basic materials like copper, would stymie profits at those companies.

Click the link below for the full aritcle.

More on the Gold Price Drop

Earlier we posted Peter Schiff’s thoughts on the gold price drop.  What do you think, is this a market correction?  Will the price of gold rise as the economy and the dollar weaken or has the economy stablized?

Below are a series of articles on the topic with information and varying opinions on the subject.

Gold plunges to lowest in more than 2 years

Zero-Hedge: What happened the last time we saw gold drop like this?

Daily Paul: Gold and Silver Doom and Gloom or Crack Up Boom?

Ben Bernanke Swamps the Gold Bugs

Business Insider: The Gold Collapse Is Personally Costing Ron Paul A Fortune

CNN Money: Gold plunges to two-year low

Reuters: Gold investors run for the exits, prices suffer biggest-ever drop