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40M Americans Bracing For End Of Student Loan Moratorium As Politicians Acknowledge “Unsustainable” Debt

40M Americans Bracing For End Of Student Loan Moratorium As Politicians Acknowledge "Unsustainable" Debt

President Joe Biden is still reportedly mulling whether to cancel up to $10K in student debt per borrower, a plan that, as we have pointe

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40M Americans Bracing For End Of Student Loan Moratorium As Politicians Acknowledge "Unsustainable" Debt

President Joe Biden is still reportedly mulling whether to cancel up to $10K in student debt per borrower, a plan that, as we have pointed out in the past, would mostly benefit the Democrats' wealthier, college-educated voters.

In Congress, several plans were kicked around earlier his year before President Biden's $1.9 trillion stimulus was ultimately passed. But analysts at Goldman Sachs believe a more scaled-down plan is the most likely. With the moratorium on student loan payments set to expire on Oct. 1, a critical headwind that has allowed (mostly middle-class) Americans to bolster their savings substantially.

According to Bloomberg, "there's an unwelcome side of the return of business-as-usual after the pandemic: They'll have to start repaying their student loans again."

"More than 40 million holders of federal loans are due to start making monthly installments again on Oct. 1, when the freeze imposed as part of Covid-19 relief measures is due to run out. It covered payments worth about $7 billion a month, the Federal Reserve Bank of New York estimated. Their resumption will eat a chunk out of household budgets, in a potential drag on the consumer recovery."

The problem is that even before the pandemic started, Americans were starting to slack on their student loan payments. In a sense, politicians were fortunate when COVID-19 hit, if only because it gave the government cover to impose the moratorium.

Source: Bloomberg

Politicians already recognize that America's student debt burden is already unsustainable. Of the government's $1.7 trillion student loan portfolio, almost one-third is unpaid. That $435 billion is comparable to the $535 billion that private lenders lost on subprime mortgages during the 2008 financial crisis.

Repaying is especially difficult when recent graduates are finding trouble earning high wages in the labor market And with the US economy is still 7.6 million jobs short of pre-pandemic levels, many more of them are likely to be out of work now..

Minority borrowers and older borrowers also struggled to keep up with payments before the pandemic.

Source: Bloomberg

And with today's desperate drop in bitcoin along with several meme stocks, a critical lifeline for retail traders is now in jeopardy. Young people who are already living with their parents because of their onerous student debt are wondering if they'll soon need to get a second (or, for some, a first).

The notion that college degrees have become an asset with diminishing returns (given the proliferation of low-value Liberal Arts degrees) has started to spread.

Many Democrats like Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez have called for write-offs of $50,000 or more per borrower. Local leaders are pressuring the Biden administration to take action. Even some Republicans have joined the cause, including  Wayne Johnson, the Trump Administration’s first student-aid chief, who said the student-loan system is fundamentally broken. He proposed not just $50K in debt relief, but also a similar sum in tax credits to those who paid off their loans already.

Source: Bloomberg

Of course, none of this will fix the overall system, and instead could encourage students to irresponsibly pile on more education-related debt.

For this reason, Biden has resisted calls to cancel loans via EO. In early April, he asked Education Secretary Miguel Cardona to prepare a memo on the president’s legal authority to cancel debt.

Still, as millions struggle, a few students who spoke with Bloomberg talked about feeling like they're "in a relationship" with their student debt.

Other steps the government has taken include allowing employers to contribute toward monthly student loan payments as a tax-free benefit. The pandemic relief bill in March last year allowed firms to reimburse employees up to $5,250 annually.

Malia Rivera, a 46-year old marketing executive with Austin, Texas-based Innovetive Petcare, says her employer has partnered with GiftofCollege.com, a platform that bridges automatic payroll deductions to student loans and college savings accounts.

Rivera says she’s made sure to keep up the payments on her own student loan even through the freeze. She says she’s learned after “racking up late fees over the years and navigating the trials and tribulations of career advancement” that automatic deductions as soon as she gets paid are the best route — and it’s helped lower her balance to about $8,000 from $38,000. 

That took time. “I have been in a ‘long-term relationship’ with my student loan,” says Rivera, recalling the initial payment that she made in the first month of her marriage. “My husband is celebrating his 15-year anniversary with me…and my student loan.”

The year-plus loan-payment moratorium was a welcome respite. But the debt for most borrowers is still there. Fortunately, with Dems still in the driver's seat, it's likelier than ever a jubilee will arrive eventually - just like reparations -  once all the studies have been finished and the reports are in.

Tyler Durden Tue, 06/08/2021 - 21:45

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VIDEO — Frank Holmes: Bullish on Gold, “Perfect Storm of Inflation” Ahead

"I think it’s quite easy this year (for gold) to take out last year’s high. It’s very easy to do that," said Frank Holmes of US Global Investors.
The post VIDEO — Frank Holmes: Bullish on Gold, “Perfect Storm of Inflation” Ahead appeared first on…

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The gold price reached a new all-time high nearly 12 months ago, and as the summer months set in again investors are wondering whether it may do the same thing this year. 

Speaking to the Investing News Network, Frank Holmes, CEO and chief investment officer of US Global Investors (NASDAQ:GROW), said he thinks it’s possible for the yellow metal to set a new record in 2021.

“I think it’s quite easy this year to take out last year’s high. It’s very easy to do that,” he said.

 

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“And once people start believing that the Consumer Price Index (CPI) number is (an) inaccurate forecast of inflation — that there have to be other factors, which has happened in previous cycles — then all of a sudden gold will get a brand new element to it.”

Holmes explained that the CPI is understated because it doesn’t track food and energy. In his view, rising inflation is “baked in” for the next couple of years given the amount of pent-up demand related to COVID-19, as well as continued money-printing efforts around the world.

The US Federal Reserve remains seemingly unconcerned about inflation, and has repeatedly described inflationary activity as “transitory.” When asked if he expects any meaningful changes at this week’s Fed meeting, which runs from Tuesday (June 15) to Wednesday (June 16), Homes said he does not.

“I don’t see any changes. The stock market is acting still pretty resilient,” he explained. “I think it’s full throttle of printing money around the world — we’re talking about trillions and trillions of dollars. And you still have this pent-up demand, so therefore you’re going to have the perfect storm of inflation, and if you can borrow inexpensively you’ll be ahead of the curve.”

Holme also has a positive outlook on bitcoin, and he noted that enthusiasm and acceptance for the cryptocurrency are on the rise. However, he still believes investors should allocate a larger amount of their portfolios to the yellow metal, which he views as more stable.

“(Bitcoin is) very volatile; it’s much more volatile than gold — it’s six times more volatile. So I’d advocate 10 percent into gold and gold-related quality stocks and 2 percent into crypto.”

Watch the interview above for more from Holmes on gold and bitcoin, as well as the potential he sees for the US Global Jets ETF (ARCA:JETS).

Don’t forget to follow us @INN_Resource for real-time updates! 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

 

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Stocks

10 Top Copper-producing Companies

Codelco is in first place, and it’s followed by Glencore and BHP. Read on to find out the rest of the top copper-producing companies.
The post 10 Top Copper-producing Companies appeared first on Investing News Network.

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Copper prices have made moves in 2021, rallying to record-high levels on expected demand growth amid a supply deficit.

While construction and electrical grids have long been big markets for copper, today the rise in demand for electric vehicles, electric vehicle charging infrastructure and energy storage applications are considered some of the biggest drivers of copper consumption.

CIBC analysts have forecast that copper prices will rise to US$5.25 per pound in Q4 2021 and into the first quarter of 2022. Prices are expected to average US$4.62 in 2021 and US$4.75 in 2022.

 

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Given those factors, investors may want to keep an eye on the world’s top copper-producing companies. According to the latest stats from financial market data provider Refinitiv, the following top copper-producing companies produced the most copper in 2020.

1. Codelco

Production: 1.76 million tonnes

The first top copper-producing company on the list is state-owned Codelco. As the world’s biggest copper producer, the company put out 1.76 million tonnes in 2020. Although there were concerns early in the year that operation curtailments due to the coronavirus pandemic would knock Codelco from its top spot, the Chilean company defied those expectations to meet its production guidance for the year.

In May 2021, Codelco announced the start of a US$1.4 billion project aimed at extending the life of its Salvador mine through 2068 by converting the underground mine to an open-pit operation. The project is a part of the company’s 10 year, US$40 billion plan to upgrade its many aging mines.

2. Glencore (LSE:GLEN,OTC Pink:GLCNF)

Production: 1.26 million tonnes

Major diversified miner Glencore produced 1.26 million tonnes of copper in 2020. After suffering an 11 percent drop in copper production for the first half of the year versus the same period in 2019, the company cut its annual production guidance for the full year to 1.23 million tonnes.

Rather than COVID-19 disruptions, Glencore attributed its production decline to its Mutanda mine being placed on care and maintenance in 2019. Operations at Mutanda, the world’s biggest cobalt mine, are set to resume sometime in 2022. In addition to cobalt, the mine has five copper production lines.

3. BHP (ASX:BHP,NYSE:BHP,LSE:BHP)

Production: 1.21 million tonnes

In 2020, BHP produced 1.21 million tonnes of the red metal. The Australian mining giant managed to keep its copper production numbers high despite the year’s COVID-19 disruptions and strikes at Escondida, the world’s largest copper mine.

Labor strife has continued for BHP into 2021 at the Escondida and Spence copper mines in Chile, although the company claims the current strikes have not impacted production.

 

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4. Freeport-McMoRan (NYSE:FCX)

Production: 1.08 million tonnes

Freeport-McMoRan recorded 1.08 million tonnes of copper production for 2020. Despite coronavirus-related production setbacks, strong copper prices helped to buoy profits for the company.

One of the company’s biggest copper assets is the Grasberg mine in Indonesia, the 10th largest copper mine in the world. The company continues to make significant investments in Grasberg to increase both its copper and its gold production.

5. Grupo Mexico

Production: 975,898 tonnes

Grupo Mexico’s mining division is the largest copper producer in the country. 2020 marked a year of record copper production for the company despite the global coronavirus crisis.

On its website, Grupo Mexico says expansion work at its Buenavista del Cobre mine in Mexico and Toquepala mine in Peru will make the company the world’s third largest copper producer.

6. First Quantum Minerals (TSX:FM,OTC Pink:FQVLF)

Production: 715,762 tonnes

Canada’s First Quantum Minerals produced more than 715,000 tonnes of copper in 2020. The company was able to increase its production guidance for the year despite temporary coronavirus shutdowns at its Cobre Panama mining operation.

In 2021, output is expected to be strong from Cobre Panama, as well as First Quantum’s other two key copper mines, Kansanshi and Sentinel in Zambia.

7. Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO)

Production: 548,074 tonnes

Rio Tinto’s copper production in 2020 totaled 548,074 tonnes. The company is one of the largest diversified mining companies in the world behind BHP — and like BHP, Rio Tinto was also negatively impacted by strikes at Chile’s Escondida mine. Rio Tinto holds a 30 percent interest in the project.

 

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8. KGHM Polska Miedz (FWB:KGHA.F)

Production: 543,672 tonnes

Poland’s KGHM Polska Miedz has operations in Europe, North America and South America, and says that it holds over 38 million tonnes of copper ore resources worldwide. In 2020, the company produced more than 543,000 tonnes of copper.

KGHM recently announced it’s cutting a few small assets from its portfolio, including the Carlotta copper mine in the US. In the first quarter of 2021, the company achieved its best operating and financial results in nearly a decade.

9. Antofagasta (LSE:ANTO,OTC Pink:ANFGF)

Production: 503,577.6 tonnes

Chilean copper miner Antofagasta operates four mines in Chile and produced more than 503,000 tonnes of copper in 2020. The company’s output was impacted by having to place its flagship Los Pelambres mine on care and maintenance, as well as by lower grades at its Antucoya operations.

Antofagasta recently pledged to cut its carbon emissions by 30 percent by 2025 by using renewable energy sources. By the end of 2020, the company reported that it was already powering 19 percent of its operations with renewable sources.

10. Norilsk Nickel (FWB:NNIC)

Production: 456,240 tonnes

Russia’s Norilsk Nickel produced more than 456,000 tonnes of copper in 2020. The company is also the world’s largest producer of nickel and palladium.

Moving forward, by 2030 Norilsk Nickel is looking to increase its copper production by 20 percent from its current level. The company is upgrading its production capacity at the Ruchey copper-nickel mine, replacing its obsolete Kola copper refinery with a state-of-the-art plant.

This is an updated version of an article originally published by the Investing News Network in 2016.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

 

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Economics

Slowly At First… Then All At Once

Slowly At First… Then All At Once

Authored by Lance Roberts via RealInvestmentAdvice.com,

Bull markets always seem to end the same – slowly at first, then all at once.

My recent discussion on why March 2020 was a “correction” and…

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Slowly At First... Then All At Once

Authored by Lance Roberts via RealInvestmentAdvice.com,

Bull markets always seem to end the same – slowly at first, then all at once.

My recent discussion on why March 2020 was a “correction” and not a “bear market” sparked much debate over the somewhat arbitrary 20% rule.

“Price is nothing more than a reflection of the ‘psychology’ of market participants. A potential mistake in evaluating ‘bull’ or ‘bear’ markets is using a ‘20% advance or decline’ to distinguish between them.”

Wall Street loves to label stuff.  When markets are rising, it’s a “bull market.” Conversely, falling prices are a “bear market.” 

Interestingly, while there are some “rules of thumb” for falling prices such as:

  • A “correction” gets defined as a decline of more than 10% in the market.

  • A “bear market” is a decline of more than 20%.

There are no such definitions for rising prices. Instead, rising prices are always “bullish.”

It’s all a bit arbitrary and rather pointless.

The Reason We Invest

It is essential to understand what a “bull” or “bear” market is as investors.

  • “bull market” is when prices are generally rising over an extended period.

  • “bear market” is when prices are generally falling over an extended period.

Here is another significant definition for you.

Investing is the process of placing “savings” at “risk” with the expectation of a future return greater than the rate of inflation over a given time frame.

Read that again.

Investing is NOT about beating some random benchmark index that requires taking on an excessive amount of capital risk to achieve. Instead, our goal should be to grow our hard-earned savings at a rate sufficient to protect the purchasing power of those savings in the future as “safely” as possible.

As pension funds have found out, counting on 7% annualized returns to make up for a shortfall in savings leaves individuals in a vastly underfunded retirement situation. Moreover, making up lost savings is not the same as increasing savings towards a future required goal.

Nonetheless, when it comes to investing, Bob Farrell’s Rule #10 is the most relevant:

“Bull markets are more fun than bear markets.” 

Of this, there is no argument.

However, understanding the difference between a “bull” and a “bear” market is critical to capital preservation and appreciation when the change occurs.

Defining Bull & Bear Markets

So, what defines a “bull” versus a “bear” market.

Let’s start by looking at the S&P 500.

Bull and bear markets are evident with the benefit of hindsight.

The problem, for individuals, always comes back to “psychology” concerning our investing practices. During rising or “bullish,” markets, the psychology of “greed” keeps individuals invested longer and entices them into taking on substantially more risk than realized. “Bearish,” or declining, markets do precisely the opposite as “fear” overtakes the investment process.

Most importantly, it is difficult to know “when” the markets have changed from bullish to bearish. Over the last decade, several significant corrections have certainly looked like the beginning of turning from a “bull” to a “bear” market. Yet, after a short-term corrective process, the upward trend of the market resumed.

So, while it is evident that missing a bear market is incredibly important to long-term investing success, it is impossible to know when the markets have changed.

Or is it?

The next couple of charts will build off of the weekly price chart above.

Identifying The Trend

“In the short run, the market is a voting machine but in the long run it is a weighing machine” – Benjamin Graham

In the short term, which is from a few weeks to a couple of years, the market is simply a “voting machine” as investors scramble to chase what is “popular.” Then, as prices rise, they “panic buy” everything due to the “Fear Of Missing Out or F.O.M.O.” Then, they “panic sell” everything when prices fall. However, these are just the wiggles along the longer-term path.

In the long-term, the markets “weigh” the substance of the underlying cash flows and value. Thus, during bull market trends, investors become overly optimistic about the future bid-up prices beyond the practical aspects of the underlying value. The opposite is also true, as “nothing has value” during bear markets. Such is why markets “trend” over time. Eventually, excesses in valuations, in both directions, get reverted to, and beyond, the long-term means.

While the long-term picture is relatively straightforward, valuations still don’t do much in terms of telling us “when” the change is occurring.

Change Starts Slowly, Then All At Once

“Tops are a process and bottoms are an event” – Doug Kass

During a bull market, prices trade above the long-term moving average. However, when the trend changes to a bear market, prices trade below that moving average.

The keyword is TREND. 

The chart below which compares the market to the 75-week moving average. During “bullish trends,” the market tends to trade above the long-term moving average and below it during “bearish trends.”

Since 2009, there are four occasions where the long-term moving average was violated but did not lead to a longer-term change in the trend.

  • The first was in 2011, as the U.S. was dealing with a potential debt-ceiling default and a downgrade of the U.S. debt rating. Fed Chairman Ben Bernanke started the second round of quantitative easing (QE), flooding the markets with liquidity.

  • The second came in late-2015 and early-2016 as the Federal Reserve started lifting interest rates combined with the threat of Britain leaving the European Union (Brexit). Given the U.S. Federal Reserve had already committed to tightening monetary policy, the ECB stepped in with their version of QE.

  • The third came at the end of 2018 as the Fed again tapered its balance sheet and hiked rates. The market decline quickly reversed the Fed’s stance.

  • Finally, the “pandemic shut-down” of the economy led to a price reversion in the market. The Fed intervened with massive liquidity injections and the start of QE-4.

Each of these declines only gets classified as “corrections.” The market did not sustain the break of the long-term trend, valuations did not revert, and psychology remained bullish.

Still A Bull Market

Today, Central Banks globally continue their monetary injection programs, rate policies remain at zero, and global economic growth is weak. Moreover, with stock valuations at historically extreme levels, the value currently ascribed to future earnings growth almost guarantees low future returns.

As discussed previously:

Like a rubber band stretched too far – it must get relaxed in order to stretch again. The same applies to stock prices that are anchored to their moving averages. Trends that get overextended in one direction, or the other, always return to their long-term average. Even during a strong uptrend or strong downtrend, prices often move back (revert) to a long-term moving average.”

The chart below shows the deviation in the market price above and below the 75-week moving average. Historically, as prices approach 200-points above the long-term moving average, corrections ensued. Thus, the difference between a “bull market” and a “bear market” is when the deviations occur BELOW the long-term moving average consistently. 

Since 2017, with the globally coordinated interventions of Central Banks, those deviations have started exceeding levels not seen previously. As of the end of May, the index was nearly 800 points above the long-term average or 4x the normal warning level. 

We can see the magnitude of the current deviation by switching to percentage deviations. Historically, 10% deviations have preceded corrections and bear markets. Currently, that deviation is 22.5% above the long-term mean.

Notably, the decline below the long-term average reversed quickly, keeping the “bull market” trend intact.

Conclusion

Understanding that change is occurring is what is essential. But, unfortunately, the reason investors “get trapped” in bear markets is that when they realize what is happening, it is far too late to do anything about it.

Bull markets are lure investors into believing “this time is different.” When the topping process begins, that slow, arduous affair gets met with continued reasons why the “bull market will continue.”  The problem comes when it eventually doesn’t. As noted, “bear markets” are swift and brutal attacks on investor capital.

As Ben Graham wrote in 1959:

“‘The more it changes, the more it’s the same thing.’ I have always thought this motto applied to the stock market better than anywhere else. Now the really important part of the proverb is the phrase, ‘the more it changes.’

The economic world has changed radically and will change even more. Most people think now that the essential nature of the stock market has been undergoing a corresponding change. But if my cliché is sound, then the stock market will continue to be essentially what it always was in the past, a place where a big bull market is inevitably followed by a big bear market.

In other words, a place where today’s free lunches are paid for doubly tomorrow. In the light of recent experience, I think the present level of the stock market is an extremely dangerous one.”

Pay attention to the market. The action this year is very reminiscent of previous market topping processes. Tops are hard to identify during the process as “change happens slowly.” The mainstream media, economists, and Wall Street will dismiss pickup in volatility as simply a corrective process. But when the topping process completes, it will seem as if the change occurred “all at once.”

Tyler Durden Tue, 06/15/2021 - 10:10

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