Your Money and Financial News

Swiss America’s
Gold News Daily 

4.5.18 – High Debt Threatens Boomer Retirement

Gold last traded at $1,328 an ounce. Silver at $16.35 an ounce.

NEWS SUMMARY: Precious metal prices traded mixed Thursday on a firmer dollar and easing trade war fears. U.S. stocks traded higher led by tech following China trade-war concerns the previous trading day.

China, holding Treasuries, keeps ‘nuclear option’ in U.S. trade war –Reuters
“It took China just 11 hours to retaliate against the United States for proposing tariffs on some 1,300 Chinese products, but Chinese officials are holding back on taking aim at their largest American import: government debt. In a tit-for-tat response to the Trump administration’s plan for 25 percent duties on $50 billion of Chinese imports, China hit back with its own list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals. But officials signaled no interest for now in bringing their vast holdings of U.S. Treasuries to the fight. China held around $1.17 trillion of Treasuries as of the end of January, making it the largest of America’s foreign creditors and the No. 2 overall owner of U.S. government bonds after the Federal Reserve. Any move by China to chop its Treasury portfolio could inflict significant harm on U.S. finances and global investors, driving bond yields higher and making it more costly to finance the federal government….’If they wanted to pull the nuclear switch, if they committed to dumping Treasuries, it would have an immediate and temporary impact on money markets in the United States,’ said Jeff Klingelhofer, a portfolio manager who oversees more than $6 billion at Thornburg Investment Management Inc.”

Will Trump Launch a Currency War, Too? –Project-Syndicate
“Last month, Donald Trump personally announced a series of import tariffs and other measures to restrict the flow of Chinese goods and capital into the United States. Clearly, Trump views China as a significant economic threat, so it may be only a matter of time before he sets his sights on the renminbi as well. So far, the US has imposed sweeping import tariffs of 25% on steel and 10% on aluminum, which Trump personally announced early last month….It is also tightening restrictions on corporate acquisitions and investments by foreign firms; and it has signaled its intention to challenge China’s forced technology transfers at the World Trade Organization….Trump has already blocked a $117 billion bid by Broadcom – a Singapore-based firm with close ties to China – to acquire the US tech giant Qualcomm….To date, the Trump administration has not taken any direct action against the renminbi. But if it views Chinese exports and investments as a threat, it may be only a matter of time before it targets the Chinese currency, too….Most recently, China launched a new exchange for renminbi-denominated crude oil futures, which some observers see as a direct challenge to the dollar.”

Bond Market Has A $745 Billion Bet Against the Dollar –Bloomberg
“Foreign holdings of local-currency debt of developing nations have swelled to near a record $745 billion, according to data collected by Deutsche Bank AG. With much of their buying at the expense of the greenback, according to this metric investors have never been so exposed to a sudden turnaround in the U.S. currency. The trade has been lucrative, handing investors returns of more than 13 percent in the past year and a 4.7 percent gain in the first quarter as most risk assets succumbed to losses….’The short dollar trade is the biggest pain trade in financial markets right now and EM local currency is a natural extension of this,’ said Damian Sassower, a fixed-income strategist at Bloomberg Intelligence in New York. ‘It’s never been this cheap to hedge against a sharp rise in the dollar.'”

From rout to rally: The markets write off Trump’s trade-war talk –New York Post
“Some more undeniable facts: If Trump really does believe what he says and starts a trade war with China because it’s ‘good’ for the economy, or continues to hammer Amazon’s stock price over a belief the company is ripping off the Post Office and doesn’t stop his inane tweets about anything that pops into his head, he risks squandering all those economic gains – and his reelection. That was the message from the wildly gyrating stock market on Wednesday, when investors were initially so spooked by Trump’s clear economic naivete that it looked like we were headed for another 500-point-plus drop. Then came the new White House economic adviser, longtime free-market evangelist Larry Kudlow, to remind investors of Trump’s tax cuts and deregulation and to assure them that the president isn’t actually starting a trade war with China, just negotiating for better terms….And presto, the market rout turned into a rally – by one estimate, only the third time in history the Dow reversed a 500-point loss to end the day in the green. The big question is how long investors will ignore Trump’s absurd economic statements, whether it’s the outcome of a trade war (never good) or whether Amazon is actually screwing the US taxpayer (it isn’t)….At least for now, investors believe the BS coming from the current president is much more palatable than what they’ve had shoveled at them the past eight years. For them, the unpredictable Trump is pretty predictable.”

Growing debt among older Americans threatens their retirement –CNBC
“Debt among older Americans is rising fast. In 2016, the average debt in families in which the head of the household is age 75 or older was $36,757. That is up from $30,288 in 2010, according to a recent report by the nonprofit Employee Benefit Research Institute in Washington. High balances and calls from collection agencies can leave many older Americans feeling helpless. The average monthly Social Security check is $1,404, and more than 40 percent of single adults receive more than 90 percent of their income from that check, according to the government. Older Americans’ debt can threaten this….’There’s just fewer options you have at that stage of the game,’ said Justin Halverson, a financial advisor and co-founder of Great Waters Financial in Minneapolis. But the situation is far from hopeless. Here’s what you can do. 1) Get your budget in order….2) Do what you can….3) Consider lifestyle changes….4) Ditch the regret….’We all make mistakes,’ said Halverson. ‘The first step toward moving forward is looking backwards and forgiving yourself.'”