FED CHAIR?

Guest Writer, October 20 2021

Everyone — from Vegas casinos to online startups DraftKings and PredictIt — is accepting bets for who will be the Fed’s next chair.

By Dave Allen for Discount Gold & Silver

Everyone — from Vegas casinos to online startups DraftKings and PredictIt — is accepting bets for who will be the Fed’s next chair.

As Axios' Kate Marino puts it, the explosion in retail trading “is one sign of the flush consumer's betting fervor.” 

The fever rush to wager on political outcomes — like whether Jerome Powell gets another term as Fed chair — is another.

Statistics from PredictIt show that trading activity for the next Fed chair is double what it was the last time there was a similar market on the political trading platform that's closely watched by traders and investors alike.

Last time was in 2017, when then-Fed chair Janet Yellen was up for renomination. 

Then, Powell led the betting market — although Kevin Warsh was ahead just a few days earlier.

PredictIt — and other sites like it — aren't always right. In fact, they’re wrong more often than not. 

But their probabilities are valuable in real time, because as Bianco Research’s Jim Bianco sees it, they "distill the consensus into a single number" — and Americans sure do like easy numbers.

Going into today, PredictIt shows a 76% chance of Powell being confirmed by the Senate — down from a high of 90% on September 12, although up from a 61% chance in late September (the chart above is from Thursday, when Powell was at 73%).

Those chances fell 15 percentage points a little more than two weeks later, on the 28th, the day after Robert Kaplan and Eric Rosengren announced they were leaving the Fed as regional presidents over trading scandals. 

On October 7th, PredictIt put the odds of a Powell renomination at 69%.” At the same time, the odds that Fed Governor Lael Brainard will be nominated have tripled to 18% from a low of 6% in September.”

So, going into the weekend, buying in on Powell's renomination costs $76.00 on PredictIt. 

If you're right, and he’s selected by Biden and confirmed by the Senate, you win $100.00. 

Put another way, PredictIt’s guessing market sees a 76% chance that Powell will get another four years as Fed chair. His separate 14-year term as a member of the Fed Board of Governors ends January 31, 2028.

The Commodity Futures Trading Commission has strict rules for political trading platforms like PredictIt, which fall under the regulator’s jurisdiction.

For instance, a single bettor can only put up to $850 on a single contract — a "yes" or "no" on a certain political outcome (e.g., will Powell be renominated as Fed chair?).

And just 5,000 people can hold shares in any contract at one time. Thus, mega bets on the next Fed chair aren't happening on PredictIt. 

That happens indirectly elsewhere, according to Courte...

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POST-MORTEM ON JOBS REPORT, DEBT CEILING, STAGFLATION AND GOLD

Guest Writer, October 16 2021

Wednesday’s article listed a handful of reasons why the coming months could be opportunistic for gold. Add one more to that list… 

Investors are beginning to worry about stagflation — a combination of lower growth and higher inflation — which hasn't been a thing since the early 1980s.

But too big to fail Goldman Sachs reported today that "stagflation" was the most common word in client conversations last week as equity market volatility remains elevated.

This week, their clients are focused on the risks posed to growth by supply chain challenges and rising energy costs.

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THE REBOUND HAS STALLED - Gold Is Positioning Itself to Take Off

Guest Writer, October 13 2021

Don’t look now, but the economic recovery, rebound or whatever you want to call it has stalled.

It’s not exactly drowning in quicksand (at least not yet), but it’s definitely mired in pools of thickening sludge.

The U.S. reported disappointing job growth for the second straight month and for the third time in six months.

Just 194,000 nonfarm jobs were added to what has got to be characterized as an restless economy in September — a significantly slower pace than the 366,000 number a month earlier. 

Economists had been expecting to reach at least 500,000 this time around.

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IS A PLATINUM COIN THE SOLUTION TO OUR DEBT CEILING DILEMMA? (Is a Ridiculous Solution the Answer to a Ridiculous Problem?)

Guest Writer, October 6 2021

Congress managed to avert a recurring crisis last Thursday, as it passed a short-term appropriations bill that will keep the lights on in the hallowed halls of Washington through December 3rd. 

That leaves members with the rest of what Hayes Brown calls “the to-do list from hell” — at the top of which is what to do about the debt ceiling.

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PRICES RISING AS HOLIDAY SEASON APPROACHES - Negative Real Interest Rates Good for Gold

Guest Writer, October 2 2021

Buy your holiday gifts now.

That’s the message from retail executives, who are warning that both shoppers and investors should brace for a challenging holiday season.

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BIG BUSINESS PLAYING INTO GOLD'S HANDS - Stock Buybacks Overshadow Capital Outlays

Guest Writer, September 29 2021

As Big Business continues raking in record profits so far this year, two things are popping out:

Businesses have been investing more on improvements than any point before the pandemic, according to Oxford Economics.

Yet, the Delta variant is keeping more companies cautious about how to invest the huge wad of cash they have at their disposal. 

And that’s led to corporate spending on stock buybacks outpacing capital expenditures in 2021. 

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Snippets

Bob Rinear, September 25 2021

So for the last ten + days I’ve been fighting a pretty nasty sinus infection. It’s clearing up, but much more slowly than any that I’ve had in the past. Maybe it’s age, maybe it’s more than a sinus infection? I don’t know, but it has been interesting.

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PANDEMIC AID KEPT MILLIONS OF AMERICANS OUT OF POVERTY

Guest Writer, September 18 2021

Data released by the Census Bureau this week show how the government’s stimulus programs since last March kept millions of Americans out of poverty and preserved their access to health care. 

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What Inflation?

Bob Rinear, September 15 2021

For millions of us, September 11, only has one meaning. But there’s a few people that like to celebrate a birthday on 9/11 and the birthday I’m speaking of was a woman named Mary Elizabeth Lease.

Read More...

You Know

Bob Rinear, September 11 2021

On Saturday it will be 20 years from one of the most significant events in human history. 9/11.

You know where you were. You know what you were wearing, who you were with, and what you were doing. You, like millions of others stared at your TV screen, with both wonder and fear, remorse and sadness. It couldn’t be… but…it was.

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Rolling Out

Bob Rinear, September 8 2021

I mentioned to my readers that the first few days of this week could get bumpy in the equity markets. So, seeing them come back from the Holiday weekend and send the DOW down 277 points in the first hour, that prediction was on its way to coming true.

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Labor Day and Jobs

Bob Rinear, September 4 2021

I think that of all the Holidays we celebrate throughout the year, Labor Day is the least understood.  For instance, on the 4th of July we celebrate Independence Day. Everyone sort of knows the story. Christmas, we celebrate the birth of Jesus. Memorial Day we acknowledge the fine servicemen and women who died defending our Nation. Most seem to know of all this.

But when it comes to Labor Day, I find an awful lot of folks, don’t quite know what it is they’re celebrating. So let’s take just a few minutes to remember what this is all about.

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Catching Up

Bob Rinear, September 1 2021

But I think there’s a much more sinister side to all of this in the works too. And, while I try to keep some of the more “dark” issues out of the letters, sometimes you just have to put it out there. So, what am I babbling about? Klaus and his World Economic Forum.

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BUSINESSES WORRIED ABOUT COVID RISK Ready for QE to Go and for Powell to Stay

Guest Writer, August 25 2021

As we know, sentiment — of investors, traders and plain ole households — can drive the day-to-day direction of markets as the players react to the headlines and other events.

According to Charles Schwab’s latest Active Trader Pulse survey, the pandemic is once again the leading risk factor among traders.

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FALLING CONSUMER SENTIMENT BAD NEWS FOR THE ECONOMY, GOOD NEWS FOR GOLD

Guest Writer, August 18 2021

In a further signal that the U.S. economy isn’t out of the woods, the widely followed consumer sentiment index that’s produced by the University of Michigan shows that consumer sentiment plummeted in early August.

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