Diamond News Archives
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The signs are starting to add up that the United States is at the top of the economic cycle, and therefore headed down, likely into a bear market and recession, an increasing number of economists and money managers say. The main culprit for the looming downturn, they say, is the Federal Reserve, which is expected to again raise U.S. overnight interest rates on Wednesday.
Led by new Chair Jerome Powell, the Fed is slowly bringing interest rates up from zero, where they stood for around a decade, attempting to stabilize the economy and keep inflation from creeping higher. While few argue that interest rates should remain at zero forever, many are expecting the withdrawal of the liquidity cushion the U.S. central bank has provided for the economy to lead to some negative consequences.
“When the music stops I do think it’s going to be pretty ugly,” said Jonathan Beinner, chief investment officer of global fixed income at Goldman Sachs Asset Management.
Stock markets have generally moved into the green for this year, but a number of fund managers are warning that they don’t expect this to last. (AP Photo/Sadiq Asyraf)
Beinner highlights the increase of global debt, now upwards of $237 trillion[1] and the way the debt has been dispersed as risks to the economy. Rather than banks holding most of the debt as it happened in the financial crisis, this time it’s hedge funds, private equity and investment managers holding most of it. Also worrisome, he says, ratings agencies are again being overly generous with their appraisals allowing for companies with very high debt levels to gain investment-grade ratings.
“We’ve sown the seeds for the next downturn and there’s a lot of...
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David Stockman's Contra Corner is the only place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. Subscribe now to receive David Stockman’s latest posts by email each day as well as his model portfolio, Lee Adler’s Daily Data Dive and David’s personally curated insights and analysis from leading contrarian thinkers. ...
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How many people do you know who truly understand that in so many ways, the game is over. The US will never be able to repay its debt, and our “representatives” in government, after at least pretending to care for so many years (even as they voted to continue to overspend and run deficits while decrying these very actions), now hardly mention the nation is actively drowning in debt.
And we’re too far below the surface to ever get back. Yet logical panic has not set in. 40,000 leagues under the sea and counting, we breathe in debt as deeply and surely as a Scuba diver breathes in air. Yet he knows his time underwater is limited and never goes so deep he can’t resurface in time. The ability to get back to such an equilibrium, for the US, are long past.
John Mauldin calls is “The Great Reset.”
In the corporate sector, almost fully half of all corporate debt is rated BBB, which is to say, one step above junk. One step above “Yeah, they probably won’t be able to pay this back.” And this doesn’t even take into account that the rating agencies are notoriously lenient in their ratings.
Moody’s was recently ordered to pay a fine of $864M[1] (S&P was previously fined $1.375B) because it rated all sorts of subprime garbage as essentially risk-free. Because the companies that issued that debt paid these ratings agencies off. Their very existence is fraught with conflicts of interest.
Regardless, for now, we spend, spend, spend, while we still can. Wall St. banks are more leveraged now than they were just prior to the 2008 crisis and subsequent Great Recession. Still, the unanswerable question that...
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Nomi Prins: Central Bank-Inspired "Major Credit Squeeze" Will Trigger Next Crisis | Zero Hedge Skip to main content [1]References
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(IDEX Online) – De Beers' decision to launch a laboratory-grown diamond jewelry brand called Lightbox was likely prompted by a desire to create clear segmentation of the lab-grown and mined diamond industries to protect its revenues from the mined diamond business, ABN Amro Bank says in a report.<?xml:namespace prefix = "o" ns = "urn:schemas-microsoft-com:office:office" /?> "Gem-quality laboratory-grown diamonds threaten the business case of miners," the bank wrote in the report. "For most diamond miners and producers, gem-quality laboratory-grown diamonds have been a threat for several reasons. For a start, undisclosed mixing of laboratory-grown diamonds with natural diamonds had a serious impact on confidence in the industry. However, since the introduction of the detection machines the fear of mixing laboratory-grown diamonds with natural diamonds has eased. Moreover, the miners have not only been confronted with a substitution product but also the entrance of a large number of new market participants who threaten to end the oligopolic industry structure. Furthermore, the marketing campaign of the miners to defend their turf has not been particularly successful up to now. In fact, there are signs that the laboratory-grown diamond producers have the upper hand. "De Beers is known for being proactive, the industry’s leader in many ways. First, it used the knowledge of its laboratory-grown diamond production unit (Element 6) to build machines that can early detect laboratory-grown diamonds in parcels of natural diamonds. Moreover its diamond grading service – International Institute of Diamond Grading & Research or IIDGR – has the knowledge to detect laboratory-grown diamonds. Second, it announced in January 2018 that it aims to launch the first industry-wide blockchain this year to track gems each time they change...