Bonds & Interest Rates

Powell’s Fantasy: The Economy Should Grow Faster Than Debt

Posted by Lance Roberts

on Friday, 22 November 2019 10:01

In recent testimony to Congress’s Joint Economic Committee, Jerome Powell stated:

“The debt is growing faster than the economy — that’s unsustainable. It’s not the Fed’s job to say how the government should cut the deficit, but we need to get the economy to grow faster than the debt. Otherwise, future generations will be paying more of their taxes to cover the government’s debt costs than for other things like health care, etc.

I think the new normal now is low interest rates, low inflation and probably lower growth. Even with the lower interest on its debt, the government still needs to reduce its budget deficit.” 

Interestingly, these were not the first time we heard these words. In 2012, then-Fed Chair Ben Bernanke told Congress:

“Rising federal budget deficits are posing a significant threat to the U.S. economy and are likely to cause a crisis if not brought under control. Having a large and increasing level of government debt relative to national income runs the risk of serious economic consequences. Over the longer term, the current trajectory of federal debt threatens to crowd out private capital formation and thus reduce productivity growth.”

Looking back now, it was clear that Bernanke was correct. Over the last 30-years, the rising level of Federal Debt relative to National Income has retarded Productivity in the U.S. CLICK for complete article

Why Aurora Cannabis, Canopy Growth, and HEXO Shares Are Jumping Today

Posted by Keith Speights

on Thursday, 21 November 2019 9:55

Shares of Canopy Growth (NYSE:CGC) were jumping 15% higher as of 11:51 a.m. EST on Wednesday, with two of its peers also enjoying nice gains. Aurora Cannabis (NYSE:ACB) shares were also up 15%, while shares of HEXO (NYSE:HEXO) rose 8.8% after vaulting as much as 14.8% higher earlier in the day.

There were several reasons for the upward moves for these Canadian marijuana stocks. Bank of America analyst Christopher Carey upgraded Canopy Growth stock to a buy rating from a neutral rating. This upgrade appears to have had a halo effect to some extent on Canopy’s peers, especially Aurora and HEXO. In addition, Aurora announced on Tuesday that 94% of the holders of its convertible debentures that mature in March 2020 have elected to accept the company’s offer to convert the debt into stock.

It’s great that Aurora won’t have to scramble to raise 230 million Canadian dollars to pay off its debt within the next few months. It’s also encouraging that a top analyst is now more positive about Canopy Growth. But the underlying reason behind these three stocks’ jumps today is that some investors now think that the sell-off from the last several months that’s affected nearly every Canadian marijuana stock finally went too far….CLICK for complete article

The Canadian Real Estate Industry Just Downplayed The Biggest October In 10 Years

Posted by BetterDwelling

on Wednesday, 20 November 2019 9:50

Canadian real estate markets are on fire. Canadian Real Estate Association (CREA) data shows sales across the country jumped in October. The rise was actually so large, last month was the biggest for the industry in over a decade. This is the opposite of what the government wants to see ahead of rolling out new demand stimulus.

Canadian Real Estate Sales Rise Over 12%

The headline number used by the industry is seasonally adjusted, which downplayed growth. There was 42,970 seasonally adjusted sales in October, flat from a month before. Unadjusted however, sales reached 44,499 in October, up 12.9% from the same month last year. FYI seasonally adjusted numbers are compared using consecutive periods. Unadjusted numbers are compared on a year-over-year basis…CLICK for complete article

Meth, We’re On It.

Posted by Paul Watson

on Tuesday, 19 November 2019 10:54

Paul Watson, Summit News – Yes, this really is the tagline. South Dakota’s Department of Social Services has spent nearly half a million dollars on an anti-meth ad campaign with the tagline “Meth. We’re On It.” No, this is not The Onion…Click to read full article.

Billionaires Are Licking Their Chops Over Distressed U.S. Oil And Gas Assets

Posted by ZeroHedge

on Tuesday, 19 November 2019 10:43

Like the vultures Elizabeth Warren claims they are, billionaires are now circling over the soon-to-be dead corpses of companies in the U.S. oil and gas patch, as they look to pick up assets on the cheap.

This comes at the same time that the volatility (read: decimation) of the oil and gas industry has scared off many other investors, according to Bloomberg.

Names like Sam Zell, Tom Barrack Jr., and Jerry Jones are all being tossed around as investors who are looking at distressed assets. Zell has teamed up with Barrack Jr. to look at oil assets in California, Colorado and Texas. Jones’ company, Comstock Resources, is looking to acquire natural gas assets from Chesapeake Energy.

Companies are eager to sell at cheap prices to try and get ahead of an upcoming credit crunch. 

The U.S. has become the world’s largest oil producer due to the shale revolution, but the investors behind that drive have little to show for their efforts. Many companies have plowed through their cash while providing poor returns, as independent oil and gas drillers are down more than 40% since 2014.

Easy money enabled the boom, and we have noted here on Zero Hedge over the last several years how poor resource allocation, crowded wells and overly optimistic estimates have caused a turn for the worse for U.S. oil and gas investors. Now, its time to face the consequences.

With oil prices still low, the number of active drilling rigs in the U.S. has declined and some of the biggest players in the industry have lowered their growth plans… CLICK for complete article