Week Ahead (April 1 to April 5, 2019) | Key data could end or defend recession fears as stocks notch best quarter in a decade

Patti Domm

GP: NYSE exterior Wall Street 
Pedestrians walk past the New York Stock Exchange before the closing bell in New York.
Bryan R. Smith | AFP | Getty Images
Stocks head into the second quarter propelled by the best quarter in nearly a decade as the long tepid IPO market starts to simmer again.
But the markets also face a reality check in the week ahead with some key data that could help clarify whether the economy is losing steam or just stumbling through a soft patch. The key release is Friday’s March jobs report, with economists expecting 170,000 new nonfarm payrolls, after February’s deeply disappointing 20,000 jobs, according to Refinitiv. There is also important manufacturing data from China over the weekend and the U.S. on Monday.
Lyft Inc’s big IPO Friday on the back of Levi Strauss the week earlier has boosted some optimism for a year of new offerings that some analysts say could rival or surpass the more than $100 billion record of new issues in the year 2000, if conditions remain good.
“The Levi Strauss IPO and the success it had last week encouraged many of these companies to accelerate their timing,” said Michael Arone, chief investment strategist at State Street Advisors. “IPO issuance has been modest relative to history for the last couple of years, so the fact we’re finally seeing some companies come to market may signal some kind of optimism or confidence, but it’s far from the type of thing we’ve seen historically in terms of the euphoria surrounding it.”
Art Hogan, chief market strategist at National Alliance said with $700 million in potential offerings in the wings, this year could surpass the all-time record reached in 2000, when the new issue market was viewed as overheated and many companies without earnings or prospects made it into the public arena during the tech bubble.
“In general, big IPOs tend to drive general enthusiasm for the overall market until they don’t do well,” said Hogan, noting the follow through trading in Lyft, the biggest IPO since Alibaba went public in 2014. Lyft, priced at $72, surged about 20 percent on the opening but closed up just about 8.7 percent at $78.29.
Stocks were higher in the past week, and the S&P 500 turned in its best first quarter performance since 1998. The 12.9 percent gain was also the best quarterly performance since the third quarter of 2009, just as the now 10-year-old bull market took off. The S&P is now less than 4 percent from its record high.
Earnings season kicks off in the next several weeks, and between now and then there could be some high profile warnings on the first quarter, expected to be the first quarter with negative earnings growth in three years.
Arone said while earnings are expected to be weaker, revenues are expected to grow by nearly 5 percent, a positive sign.
“That needs to be reconciled form my perspective. It wouldn’t shock me if companies doe better than expected, and end up with positive year-over-year comparisons,” said Arone.
Trade talks with China remain the overriding issue for markets. Chinese Vice Premier Lui He comes to Washington to meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, who traveled to Beijing this past week.
Analysts expect a deal in the coming months. “We’re likely to get some type of negotiated deal that both sides can claim victory on, where China will buy more U.S. goods, where there is some progress on U.S. intellectual property and technology transfers...But I don’t see a deal that’s going to be a game changer...a big move in one direction. I think the market has accepted that reality,” said Arone.
In the past week, stocks were higher but so were bonds, to the point where the 10-year yield reached a low of 2.34 percent before returning to the 2.40 percent level. Yields move opposite price.
The week earlier, the 10-year yield dipped beneath the yield on the 3-month bill, meaning the yield curve was inverted. When that happens and long-term rates are lower than short-term rates, it is viewed as a recession warning. Practically it would mean lenders, who borrow on a short term basis, would be lending at the lower longer term rates.
The bond market also moved to price in a Fed interest rate cut this year, after pricing in a hike just several months ago. That was in response to the Fed’s forecast for no more rate cuts this year, released after its March meeting. It had been forecasting two interest rate hikes previously. The fed funds futures now is priced for a quarter point of easing this year and another next year.
Markets calmed down as the week came to a close, but every piece of data has become more important. On a positive note, weekly jobless claims data, the most current look at the labor market, showed a downtick and the four week average is now 217,000, the lowest since January.
The economy’s growth definitely slowed down in the first quarter and growth was tracking at about 1.5 percent, after the 2.2 percent gain in the fourth quarter. Economists have expected the weakness in the first quarter, both due to the government shutdown and bad winter weather, to be temporary but the question is whether growth can get a jump start in the second quarter.
“The jobs number is key here,” said Wilmington Trust chief economist Luke Tilley. The February report showed just a tenth of the job creation many economists had expected. “Our best thinking it it’s statistical volatility, and it’s not a real indication of what’s going on in the labor market, and it will bounce back. That’s the most important thing that’s coming out next week....We think about 200,000 jobs were added. I think there’s some upside risks to that.”
Tilley said manufacturing data in the week ahead will be important, as it could show whether the sector remained sluggish at the end of the first quarter. March ISM manufacturing and PMI data will be released Monday, and durable goods, which includes business spending data, is important when it is released on Tuesday. Monthly vehicle sales are also released Tuesday.
Economists expect ISM manufacturing at 54.2, unchanged from the month earlier. China was also to release manufacturing PMI data over the weekend.
February’s delayed U.S. retail sales report is also expected on Monday. Retail sales are expected to have gained 0.3 percent in the month, up from 0.2 percent in January and December’s shocking decline.
Steve Massocca, managing director at Wedbush Securities, said he’s watching for any sign of inflation in wages when the jobs report is released Friday. The Fed’s preferred PCE inflation index showed sluggish inflation growth, up just 0.1 percent in February.
“I don’t think [the data] is as big an issue as it was when the Fed was actively talking about raising rates,” said Massocca.
“They said publicly they’re not going to raise rates for the rest fo the year.”
There are just a few Fed speakers, who will be of interest because of the change in market expectations for Fed interest rate policy. Cleveland Fed President Loretta Mester speaks Thursday, and Atlanta Fed President Raphael Bostic speaks both Wednesday and Friday.
What to Watch
8:30 a.m. Retail sales (February)
9:45 a.m. Manufacturing PMI
10:00 a.m. ISM manufacturing
10:00 a.m. Construction spending
10:00 a.m. Business inventories
Monthly vehicle sales
8:30 a.m. Durable goods
8:15 a.m. ADP payrolls
8:30 a.m. Atlanta Fed President Raphael Bostic
9:45 a.m. Services PMI
10:00 a.m. ISM nonmanufacturing
5 p.m. Minneapolis Fed President Neel Kashkari
8:30 a.m. Jobless claims
1 p.m. Cleveland Fed President Loretta Mester
8:30 a.m. Employment report
3:00 p.m. Consumer credit
3:30 p.m. Atlanta Fed’s Bostic

Source: CNBC

Breaking News | Kellogg nears deal to sell Keebler and Famous Amos business to Nutella owner Ferrero

Lauren Hirsch

A box of Kellogg's Famous Amos brand cookies is arranged for a photograph in Tiskilwa, Illinois.
Daniel Acker | Bloomberg | Getty Images
Kellogg is nearing a deal to sell its Keebler, Famous Amos and fruit snacks businesses to Nutella-owner Ferrero for between $1 billion and $1.5 billion, people familiar with the situation tell CNBC.
An announcement could come as soon as Monday, the people said, requesting anonymity because the information is confidential.
The deal is the latest in a string of acquisitions for Ferrero. The company, founded in Italy as a family business in 1946, has been on an acquisition spree over the past two years to build its presence in the U.S. Other deals include its purchase of of Nestle's U.S. candy business for $2.8 billion and Ferrara Candy Company for $1 billion.
Ferrero beat out lead contender Hostess Brands for the Kellogg cookie assets, the people said. The owner of Twinkies and Ho-Hos had been looking to acquire the Keebler business through "Reverse Morris Trust." The Reverse Morris Trust or RMT is an unusual deal structure that allows for a tax-efficient combination of two similarly sized companies.
Kellogg announced the sale of its cookie brands last year. Other brands up for sale include Murray and Mother's cookies and Stretch Island fruit snacks.
The sale comes as Kellogg is paring back its portfolio to focus on brands it can revive.
"We need to make strategic choices about our business and these brands have had difficulty competing for resources and investments within our portfolio," Kellogg CEO Steve Cahillane said in a statement last year, when announcing the planned divestitures.
Kellogg executives have pointed to Pringles, Cheez-Its and Rice Krispies Treats as brands it can revive with innovation and single-serve options.

The Corn Flakes-owner acquired Keebler in 2001 for $4.4 billion. At the time, part of its draw was the cookie brand's "direct-store delivery" platform, through which employees place the company's own products in stores, rather than ship from warehouses. So-called DSD gives a food company more control over ensuring proper display in grocery and convenience stores. But as in-store sales of products like cookies have fallen, it is less economical. Kellogg has since dropped DSD distribution.
Kellogg and Ferrero did not immediately respond to requests for comment.

Source: CNBC

World News | Erdogan faces test to keep cities as Turkey votes

Read more: Recep Tayyip Erdogan faces test in Turkey's local elections
How many are taking part?
  • Voting was underway at 200,000 polling stations to elect:
  • Mayors for 30 large cities, 51 provincial capitals and 922 districts, and
  • Tens of thousands of neighborhood or village administrators.
  • More than 57 million voters are eligible to cast ballots.
Read more: Turkish court dismisses case against DW contributor Pelin Unker
City control: Following a 2017 referendum which transferred central political powers to the presidency, control of Turkey's main cities is effectively the only center of power outside direct presidential command.
Referendum on Erdogan's rule: The Turkish capital, Ankara, and Erdogan's home city, Istanbul, are symbolically very important. Opinion polls have suggested Erdogan could lose control of both.
"Whoever wins Istanbul, wins Turkey," said Erdogan, whose political career began when he became the city's mayor in 1994.
That win "was a springboard for him to go on and dominate Turkish politics," said DW's Turkey correspondent, Dorian Jones.
"Given the fact that Turkey is in the midst of very difficult economic times, these elections are seen as posing a major test to Erdogan."
Polls will close at 4 p.m. (1300 UTC) in the east, and an hour later in the west.

Source: DW

World News | Israel reopens Gaza crossings after rocket strike

2-3 minutes

Israel has reopened its two crossings with the Gaza Strip after closing them for nearly a week. They were closed after militants fired a rare long-distance rocket from the Palestinian enclave.
Israel on Sunday reopened the Erez and Kerem Shalom crossings with the Gaza Strip after keeping them closed since a rocket fired by Palestinian militants hit a home near Tel Aviv six days earlier.
The strike wounded seven Israelis and led to a serious flare-up in violence during which Israel carried out several retaliatory attacks in the Gaza Strip on targets associated with Hamas, the Islamist group that controls the Palestinian enclave.
The reopening of the crossings came just hours after more rockets were launched from the Gaza Strip into Israel overnight. Israeli tanks fired at Hamas military posts in response. No casualties were reported on either side.
Read more: Trump's Golan recognition: A dangerous precedent?
Protests anniversary
A day earlier, four Palestinians were killed by Israeli fire amid mass protests on the Gaza-Israel perimeter fence. The protests capped a year of demonstrations calling for Palestinian refugees to be able to return to the homes they or their families were forced from in the 1948 war that accompanied Israel's creation.
Protesters taking cover (Reuters/M. Salem)
Israeli troops fired tear gas during Saturday's protests
The protests, during which some 200 Palestinians in all have been killed by Israeli fire, are additionally fueled by the poor living conditions in Gaza under a yearslong Israeli blockade.
They come as Israel prepares to go the polls in a general election on April 9. Prime Minister Benjamin Netanyahu, who is facing a strong challenge by former army chief Benny Gantz, is being widely seen as wanting to avoid any major escalation in violence, while trying to counter criticism that he is being too soft on Hamas.
Read more: Under legal pressure, Israel's Benjamin Netanyahu facing election challengers

Source: DW

Gerald Celente Video | White House Follows Celente's Trend Alert on Next Fed Move - Originally published on March 29, 2019.

FX | Currencies | Weak US economic data and risk-on move threaten to end three-day dollar rally

Weizhen Tan

RT: US Dollar currency money counter 100 dollar bills
An employee of a bank counts US dollar notes.
Kham | Reuters
The dollar index on Friday was flat as investor appetite for risk hurt safe-haven currencies and after U.S. inflation data came in weaker than expected, adding to the conviction that the country’s economy is losing momentum.
With many currencies on the defensive, the dollar had this week weathered a decline in benchmark Treasury yields to a 15-month low. But the buck was pulled lower on Friday morning by the twin forces of weak data and a global risk-on move.
U.S. consumer spending rebounded less than expected in January amid muted price pressures, as measured by the Personal Consumption Expenditure index (PCE), the Federal Reserve’s preferred measure of inflation, according to the Commerce Department, which also reported that incomes rose modestly in February. Consumer spending accounts for more than two-thirds of American economic activity.
With growth slower and inflation benign, Friday’s data bolstered the Fed’s case for ending its three-year monetary tightening campaign.
“It was a soft number,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets, referring the PCE inflation measure. “It is a relief that there’s no reason for the Fed to have to raise rates.”
In spite of the soft data, investors on Friday morning favored riskier assets such as stocks, over safe-haven currencies like the dollar, the Japanese yen and the Swiss franc.
“It’s quarter-end today and so people gear up for this for months,” said Anderson. Investors “came into it fearing a meltdown in dollar/yen, which didn’t happen.”
Against the Japanese currency, the dollar was 0.15 percent stronger, last at 110.79 yen.
The euro on Friday was headed for its worst month since October, weighed down by fears about economic growth and cautious signals from the European Central Bank. Policymakers cut growth forecasts for the euro zone economy earlier this month and launched a new round of cheap loans to its banks.
Weaker-than-expected economic surveys from Germany and dovish signals from the ECB have pushed hedge funds to reduce their long euro positions.
The euro was a tad higher at $1.122 but remained down about 1.2 percent for the month.
Sterling last traded 0.27 percent lower at $1.30 ahead of a crucial parliamentary vote on Prime Minister Theresa May’s deal to withdraw Britain from the European Union.
Although it does not appear that May has the votes to pass her twice-defeated Brexit deal, markets have begun to price in a long delay in the proceedings, Anderson said, which is boosting both sterling and risk assets.

Source: CNBC

Bond Yields Report on March 29, 2019 | US Treasury yields higher following weeklong decline

Silvia Amaro

U.S. government debt yields rose on Friday as traders monitor US-China trade talks.
At around 1:26 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.414 percent, while the yield on the 30-year Treasury bond was also higher at 2.82 percent. The yield on the 3-month Treasury bill held at 2.408 percent.
The U.S. and China resumed their trade talks this week – seen as a positive sign for many investors, as they believe that a deal could be imminent. “The talks will conclude. They have to,” Max Baucus, former U.S. ambassador to China, told CNBC’s Martin Soong at the Boao Forum for Asia.

U.S. Markets Overview: Treasurys chart

US 3-MOU.S. 3 Month Treasury2.405-0.0320.00
US 1-YRU.S. 1 Year Treasury2.4030.0070.00
US 2-YRU.S. 2 Year Treasury2.2640.0340.00
US 5-YRU.S. 5 Year Treasury2.2330.030.00
US 10-YRU.S. 10 Year Treasury2.4050.0160.00
US 30-YRU.S. 30 Year Treasury2.8150.0050.00
Meanwhile, the U.S. Treasury has no auctions planned.
The bond market is set to remain under close scrutiny amid concerns over global economic growth. Last Friday, the yield curve between the three-month Treasury bill and the 10-year bond inverted — this is usually perceived as a signal recession could be around the corner.

Source: CNBC

Wall Street Closing Report on March 29, 2019 | S&P 500 notches best start to a year since 1998, Dow rises more than 200 points on trade optimism

Fred Imbert

Stocks rose on Friday amid renewed optimism on the progress of trade talks between Washington and Beijing as Wall Street concluded a stellar quarter.
The Dow Jones Industrial Average traded 200 points higher as Boeing, UnitedHealth and Caterpillar outperformed. The S&P 500 advanced 0.7 percent, led by the industrials and health care sectors. The Nasdaq Composite also climbed 0.8 percent.
CarMax was the best-performing stock in the S&P 500, rallying 10.2 percent on strong earnings. Sentiment was also lifted by Lyft, as the ride-sharing company surged more than 12 percent in its first day of trading.
U.S. officials said China had made proposals on a range of issues that go further than it has before — including on forced technology transfer. Treasury Secretary Steven Mnuchin also said on Friday he had a “productive working dinner” with Chinese trade officials the previous night in Beijing, as both sides restart negotiations with the hope of bringing an end to their protracted trade dispute.
The world’s two largest economies have imposed tariffs on billions of dollars’ worth of one another’s goods over the past year, battering financial markets and souring business and consumer sentiment.
Specialist trader Michael Pistillo Jr. wears a dow 23,000 hat, after the dow briefly traded above 23,000, at his post on the floor of the New York Stock Exchange in New York, October 17, 2017.
Brendan McDermid | Reuters
“There is still some upside for the market” on the trade front, said Arian Vojdani, investment strategist at MV Financial. “That shadow still looms over this market. You see a lack of conviction in the market when it comes to any type of outcome because there is so much back and forth on that.”
“If we see a good headline come out of that, I think we will get a near-term bump,” Vojdani said. “Will that translate into the long-term? That’s hard to say because, regardless of whether a trade deal is struck, we’re seeing a slowdown in both China and the U.S.”
Chinese stocks surged overnight. The Shanghai Composite gained 3.2 percent overnight to lead stock indexes in the region. In the U.S., trade bellwethers Caterpillar and Boeing were both up more than 1 percent.
Friday’s gains added to the strong performance from the quarter. The S&P 500 was up 12.3 percent for the period, on pace for its biggest quarterly gain since the third quarter of 2009. The broad index was also on track for its best first quarter since 1998.
The Dow is up 10.3 percent this quarter through Thursday’s close — its best start to a year since 2013 — while the Nasdaq is on pace for its biggest quarterly gain since the first quarter of 2012.
This quarter’s rally is characterized by three factors: a sharp rebound off the Christmas Eve lows, increasing optimism in U.S.-China trade talks and a sharp reversal in the Federal Reserve’s monetary policy stance.
“The irrational moment of December was just that, a moment driven by tax selling, algorithms and people being extremely emotional about the headlines,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. But “while December was oversold, January and February were overbought. The reason why is, while stocks got cheap for a brief amount of time, the economy is not strong enough to drive a 12 percent return on the stock market in an environment like this.”
Concerns over a possible economic slowdown have thrown some cold water on the rally as global economic data continue to deteriorate. This has pushed down bond yields across the world. Recently, the Treasury 10-year note yield hit its lowest level since December 2017 and moved below its 3-month counterpart for the first time since 2007. This is known as a yield-curve inversion and investors see it as a sign that a recession may be on the horizon.
“When you look at the full quarter, the thing that stands out the most is the divergence in the direction of the stock markets across the world and the direction of the 10-year bond in the U.S. and in other countries,” said Tom Martin, senior portfolio manager at Globalt. “The data is poor. Interest rates have gone down as a reflection of that and expectations for future economic growth have also declined.”
The Atlanta Federal Reserve’s GDPNow tool forecast economic growth of 1.5 percent for the first quarter, well below the 2.2 percent print for the fourth quarter of 2018.
Earnings growth for the first quarter is also expected to be lackluster. FactSet data show analysts expect first-quarter S&P 500 earnings to fall by 3.7 percent on a year-over-year basis. Data from The Earnings Scout show analysts expect earnings growth to recover in the later quarters of the year, however.
Linda Duessel, senior equity strategist at Federated Investors, is still not worried, however.
“There is no reason to believe we won’t experience a so-called soft landing in the economy, particularly if the Fed is at bay,” Duessel said. “The bottom line is, if we can get to the end of the year and say inflation is benign and the Fed is still at bay, then I can say with some confidence, there is no recession on the horizon. This will be by August the longest economic cycle in the history of the land and will continue for longer than many people think.”
—CNBC’s Sam Meredith contributed to this report.

Source: CNBC

Crude Oil Price Report | Oil set for biggest quarterly rise since 2009 amid OPEC cuts, US sanctions

Tom DiChristopher

RT: Oil operations Permian Basin near Midland, Texas 180823
A worker walks through an oil production facility owned by Parsley Energy in the Permian Basin near Midland, Texas, August 23, 2018.
Nick Oxford | Reuters 
Oil prices rose on Friday amid the ongoing OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela, putting crude markets on track for their biggest quarterly rise since 2009.
The rebound comes after a swift and punishing collapse in oil prices during the final quarter of 2018.
U.S. West Texas Intermediate crude futures were up 79 cents, or 1.3 percent, at $60.09 per barrel around 12:40 p.m. ET (1640 GMT). WTI earlier touched $60.73, its highest level since Nov. 12.
WTI futures were set to rise for a fourth straight week and were on track to rise 32 percent in the first three months of the year.

International benchmark Brent crude futures rose 57 cents to $68.39 per barrel, after hitting a 2019 high at $68.89. Brent futures were set to rise 2 percent for the week and by 27 percent in the first quarter.
For both futures contracts, the first quarter 2019 is the best performing quarter since the second quarter of 2009 when both gained about 40 percent.
Oil prices have been supported for much of 2019 by the efforts of OPEC and non-affiliated allies like Russia, together known as OPEC+. The alliance has pledged to withhold around 1.2 million barrels per day of supply this year to prop up markets.
“Production cuts from the OPEC+ group of producers have been the main reason for the dramatic recovery since the 38 percent price slump seen during the final quarter of last year,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Britain’s Barclays bank said on Friday oil prices “are likely to move still higher in Q2 and average $73 per barrel ($65 WTI), and $70 for the year.”
OPEC+ are meeting in June to discuss whether to continue withholding supply or not.
OPEC’s de-facto leader Saudi Arabia favors cuts for the full year while Russia, which only reluctantly joined the agreement, is seen to be less keen to keep holding back supply beyond September.
However, the OPEC+ cuts are not the only reason for rising oil prices this year, with analysts also pointing to U.S. sanctions on oil exporters and OPEC members Iran and Venezuela as reasons for the surge.
Despite the surging prices, analysts are expressing concerns about future oil demand amid worrying signs the global economy may move into a recession.
“The biggest short-term risk to the oil market is likely to be driven by renewed stock market weakness,” said Saxo Bank’s Hansen.
Stock markets have been volatile this year amid signs of a sharp global economic slowdown.
“Business confidence has weakened in recent months ... (and) global manufacturing PMIs are about to move into contraction,” Bank of America Merrill Lynch said in a note, although it added that “the services sector ... continues to expand unabated.”
Given the OPEC+ cuts, however, Bank of America said it expected oil prices to rise in the short-term, with Brent prices forecast to average $74 per barrel in the second quarter.
Heading towards 2020, however, the bank warned of a recession.
— CNBC’s Tom DiChristopher contributed to this report.

Source: CNBC

Metals Price Report | Gold faces worst month since August; palladium eyes biggest weekly dip in 3 years

Jeff Daniels

Reusable Gold Bullion
Gold steadied on Friday, on track for its biggest monthly fall since August as a stronger dollar and equities pressured the market, while palladium pared sharp losses from the previous three sessions.
Palladium was on track to end the quarter about 9 percent higher, having surged to an all-time high last week on a sustained supply crunch. Bullion was also set for its second straight quarterly rise, helped mainly by a dovish U.S. Federal Reserve and concerns about the global economy.
Spot gold rose 0.5 percent to $1,297.36 per ounce. It declined on Thursday by about 1.5 percent, the most in more than seven months and breaking below key support around $1,300.
Gold was also headed for a second consecutive monthly fall, losing about 1.5 percent.
U.S. gold futures were up 0.6 percent on the day, at $1,302.60 an ounce.
“We may have had some physical buyers coming in the market. The price fall was fairly steep and when prices fall that quickly, (most) buyers tend to stay out of the market,” said Philip Newman, a director at Metals Focus.
The dollar hovered near its highest in more than two weeks hit in the previous session, while stock markets advanced on hopes of progress in trade talks between Beijing and Washington.
Meanwhile, spot palladium rose from two-month lows touched in the last session, gaining about 2 percent to $1,374.61 an ounce.
“It’s just some buyers coming in and thinking that these prices are of fair value and this is the opportunity to come into the market. They might have thought the declines yesterday were overdone and now is a good time to come in and build some positions modestly,” Newman said.
The metal, used to make catalytic converters for vehicle exhaust systems, had soared since last year on a sustained deficit.
The run stalled this week, with the metal sliding the most since January 2017 on Thursday, which analysts attributed to a possible drop in demand due to a weaker global economy.
“When you have an exponential price rise, at some point you will come back to fundamentals,” ABN AMRO analyst Georgette Boele said.
“Fundamentals like car sales in China and the rest of the world are not as strong as expected.”
Silver was up 0.7 percent at $15.12 an ounce, after hitting its lowest since late December at $14.94, while platinum rose about 1.9 percent to $853.15.

Source: CNBC

Europe Markets Closing Report | Europe stocks close higher after Brexit deal is rejected again

Ryan Browne

European shares closed off session highs higher on Friday after British Prime Minister Theresa May lost another crucial Brexit vote in the U.K. Parliament.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE7279.1944.860.62818877947
The pan-European Stoxx 600 index closed provisionally 0.56 percent higher on the last trading session of the month. For the week, the index of European blue chip stocks finished 0.78 percent higher.
May’s draft proposal to leave the EU, which has been signed off by EU officials in Brussels, was beaten by 344 votes to 286, a margin of 58 votes. Friday’s vote was considered slightly different as it only covered the “withdrawal deal” — a near 600-page treaty that agreed citizen’s rights after Brexit, a £39 billion ($51 billion) divorce deal and how to treat the Irish land border.
Market players also turned their focus to trade negotiations between Washington and Beijing, after fears of a potential U.S. recession put global equities under pressure earlier in the week. Chinese Premier Li Keqiang pledged Thursday to further open up market access to foreign lenders and insurance firms. And on Friday, Treasury Secretary Steven Mnuchin said in a tweet on Friday that he and U.S. Trade Representative Robert Lighthizer had concluded “constructive” trade talks in Beijing.
On Wall Street, stocks rose amid the renewed optimism on the progress of trade talks.
On the corporate front, H&M shares soared 9.56  percent after it reported a smaller than expected drop in first-quarter pretax profit.
Meanwhile, Swedbank and Nordea both saw heavy selling on Friday with reports that New York’s financial regulator has sent letters to both asking for detailed information about their dealings with Danske Bank. It’s another step in a long drawn out money-laundering scandal in the region.
In terms of data, German retail sales rose more more-than-expected in February, according to new figures. Meanwhile, the U.K. economy grew by an annual average of 1.4 percent in 2018, according to a final reading of official data, the weakest expansion since 2012.

Source: CNBC

Press Release | The Securities and Exchange Commission and the UK Financial Conduct Authority Sign Updated Supervisory Cooperation Arrangements

3-4 minutes

The Securities and Exchange Commission and the United Kingdom (UK) Financial Conduct Authority (FCA) have today reaffirmed their commitment to continue close cooperation and information sharing in the event of the UK’s withdrawal from the European Union (EU).
As evidence of their long-standing partnership, SEC Chairman Jay Clayton met with FCA CEO Andrew Bailey and signed two updated Memoranda of Understanding (MOUs) to ensure the continued ability to cooperate and consult with each other regarding the effective and efficient oversight of regulated entities across national borders.  At the meeting in London, Chairman Clayton and Andrew Bailey also discussed risks posed by jurisdictional share trading obligations, which could increase market fragmentation and impose unnecessary costs on investors.
SEC Chairman Jay Clayton said, “The SEC and the FCA have a long history of effective cooperation on supervisory and other matters.  The amended MOUs we entered into today reaffirm this commitment and collaboration with respect to the oversight of our respective registrants for the benefit of each of our markets and investors.”
FCA CEO Andrew Bailey said, “As part of our preparations for Brexit we have been working with our partners in the EU and globally to ensure there is minimal disruption. These MOUs will ensure the UK can continue to be a key market for funds and fund managers.  Today’s amendments will ensure continuity and stability for consumers and investors in the UK and US.”
The first MOU, originally signed in 2006, is a comprehensive supervisory arrangement covering regulated entities that operate across the national borders.  The MOU was updated to, among other things, expand the scope of covered firms under the MOU to include firms that conduct derivatives, credit rating and derivatives trade repository businesses to reflect (i) post-financial crisis reforms related to derivatives and (ii) the FCA’s assumption of responsibility from the European Securities and Markets Authority for overseeing credit rating agencies and trade repositories in the event of the UK’s withdrawal from the EU.
The second MOU, which is required under the UK Alternative Investment Fund Managers Regulations, was originally signed in 2013.  The MOU provides a framework for supervisory cooperation and exchange of information relating to the supervision of covered entities in the alternative investment fund industry. The updated MOU ensures that investment advisers, fund managers, private funds and other covered entities in the alternative investment fund industry that are regulated by the SEC and the FCA will be able to continue to operate on a cross-border basis without interruption, regardless of the outcome of the UK’s withdrawal from the EU.
These MOUs will come into force on the date EU legislation ceases to have direct effect in the United Kingdom.

Source: SEC

Keiser Report Video | Dead Unicorns ( E1363) - Originally Published on March 28, 2019.

Brexit live updates | Parliament again rejects Theresa May’s Brexit deal on day Britain was supposed to ‘take back control’

By Karla Adam 

Karla Adam
London correspondent covering the United Kingdom
BREAKING NEWS: March 29 was to be the day Britain left the European Union. Instead, the House of Commons voted against a partial version of the deal negotiated between the British prime minister and the E.U. Britain has until April 12 to propose a new way forward or crash out of the bloc without a deal.
This is a developing story and will be updated.
LONDON — Happy Brexit Day! Not! Yet? Ever? 
Instead, Prime Minister Theresa May will offer a stripped-down version of her twice-defeated Brexit deal to Parliament, in another “last ditch” and “cliff edge” attempt to exit from the European Union.
Painful to watch? Totally. So everyone is tuning in.
The vote in the House of Commons comes on the day Britain was due to “take back control” and depart the continental trading bloc.

Boris Johnson arrives at the Houses of Parliament on Wednesday. (Dominic Lipinski/AP)
But instead of Brexiteers gulping pints and waving Union Jack flags to celebrate what they were, once upon a time, calling “British Independence Day,” (copyright pending re: American Revolution) the parliamentarians are still debating how and whether they want to leave.
“Today should have been the day that the United Kingdom left the European Union. That we are not leaving today is a matter of deep personal regret to me,” May said, moments before lawmakers started voting.
“There are those who will say, ‘the House has rejected every option so far, you’ll probably lose, so why bother?’ I bother because this is the last opportunity to guarantee Brexit,” she said.
Despite last-minute wheeling and dealing, many observers suspect May’s exit plan will, on this third attempt, not pass — even after the prime minister promised to resign if her own Conservative Party could help deal over the line.
But there is movement. Some of the hardcore Brexiteers are crossing over.
In a series of tweets on Friday morning, Boris Johnson, Britain’s former foreign secretary and a favorite to replace May, explained his screeching U-turn. 
Recall: Johnson once described May’s deal as something akin to donning a “suicide vest,” but on Friday said that not voting for it posed the “risk of being forced to accept an even worse version of Brexit or losing Brexit altogether.”
Dominic Raab, the former Brexit secretary and another potential contender for May’s job, said he was now on board.
“I will vote for the motion,” he said, prompting cheers and jeers in the Commons on Friday. 
Backing it will “stave off a longer extension and prevent European elections in May,” Raab said
But May needs more than just Conservative Party “switchers.” She needs the Democratic Unionist Party, who on Thursday night said they would be voting against the government.
She also needs a handful of Labour lawmakers.
Labour leader Jeremy Corbyn told Parliament the deal was “bad for our democracy, bad for our economy and bad for this country” and he urged lawmakers “not to not to be cajoled for this third-time-lucky strategy and vote it down today.”
On Friday, the House of Commons will vote only the 585-page withdrawal agreement. That’s the part of the treaty that spells out, in a legally binding way, how much Britain will pay to leave the European Union ($50 billion), how the two-year transition will preserve the status quo for trade and travel (no change), and how Britain and the European Union will treat each other’s citizens in the interim (nobody gets kicked out of anybody’s country).
The withdrawal agreement also includes the controversial “Irish backstop,” an ironclad guarantee to preserve the open, invisible border between Northern Ireland and the Republic of Ireland — with trade-offs that have been a stopping point in the past.
Parliament will not vote Friday on the second part of the treaty, the political declaration, which sets out the aspirations for the future relationship on trade, security and borders.
The hope, from Team May, is that the withdrawal agreement on its own will win over more votes than the overall agreement. They’re also trying to get around a ruling by House of Commons Speaker John Bercow that the government cannot repeatedly present the same motion for a vote.
On Friday, Brexit dominated the front pages of British newspapers and websites — but not in the way Brexiteers might have imagined exactly two years ago, Britain gave its formal notice to the E.U. that it would be leaving the bloc on March 29, 2019.
“Darkest Hour for Democracy,” ran the front-page headline in the Daily Express, one of the most pro-Brexit newspapers. “One Last Chance,” said the Daily Mail, urging parliamentarians to “put your country first” and back May’s deal. “The day of reckoning,” said the Daily Telegraph.
On social media, the search term trending was “Kafka Brexit,” in a nod to the twisted, nightmarish qualities of Franz Kafka’s fictional world.
Also popular: A Banksy painting portraying the members of Parliament as chimps, on display at the Bristol Museum.
But still, May presses on. When a BBC reporter asked a cabinet minister why the prime minister would hold the vote when she almost certainly faces defeat, he was told: “F--- knows. I am past caring. It is like the living dead in here.”
On Friday, the newly-formed group of lawmakers known as the Independent Group applied to form a new political party called ChangeUK, which hopes to field candidates in the European elections if Britain takes part in them. The group is formed of 11 politicians who broke away from the Conservative and Labour Party over their handling of Brexit.
The E.U. gave Britain until the end of this week to approve the withdrawal agreement. If it does get rubber stamp today, then Brexit Day will be extended to May 22.
If today’s vote doesn’t pass, then Britain has until April 12 to propose a new plan, or leave the bloc without a deal.
"It is in fact really the last chance we have to vote for Brexit as we understood it," Liam Fox, Britain's international trade minister, told the BBC.
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New Home Sales | New-home sales rise in February to 11-month high, but earlier figures are revised lower

Andrea Riquier

Bloomberg News/Landov
Workers install roof trusses on a home under construction.
The numbers: New-home sales ran at a seasonally adjusted annual 667,000 pace in February, the Commerce Department said Friday. That was 4.9% higher than January’s rate, but just 0.6% above year-ago levels.
What happened: The pace of sales of newly-constructed homes in February was the highest since last March. It easily beat the MarketWatch consensus of a 625,000 annual pace, but downward revisions to prior months were hefty.
At the current sales rate, it would take 6.1 months to exhaust the available supply of homes. Over many decades, 6 months of supply has been the amount that’s generally considered a sign of a market evenly balanced between supply and demand.
The median price of a home sold during the month was $315,300, about 4% lower than at the same time last year.
The government’s home-construction reports are based on small samples, and are often revised heavily, making it hard to rely on any one month’s data for a complete picture of the housing market. For the year to date, sales were 2.8% higher than during the same period last year.
Read: Mortgage rates plunge at the fastest pace in a decade as growth fears resurface
Big picture: Since the housing crisis of a decade ago, it’s been hard for home builders to get back into a groove. They’ve struggled to balance secular, long-term headwinds with the fallout from the housing bust, and to meet customers at the price points they can afford. That’s kept conditions in the industry choppy.
Through the noise, however, there’s been steady — and growing — customer demand for new homes. The average existing home in America is 37 years old, according to an analysis by the National Association of Home Builders. And many current homeowners aren’t willing or able to sell their properties.
See: Why aren’t there enough houses to buy?
Market reaction: Those choppy industry conditions have made for a roller coaster ride for investors in the big builders. The iShares U.S. Home Construction ETF ITB, +0.20%   gained 36% over the course of 2017, lost 46% during 2018, and is up 18% in the year to date.
The Dow Jones Industrial Average DJIA, +0.47%  rose on Friday.
Related: Housing market is tipping in favor of buyers, real-estate agents say

Source: MarketWatch

Bulletin | Consumer sentiment improves for second straight month

Greg Robb

Author photo
Senior economics reporter
Shoppers carry bags on Market Street in San Francisco earlier this year.
The numbers: The University of Michigan’s consumer sentiment index improved to a reading of 98.4 in March from 93.8 in the prior month.
That was better than the mid-March reading of 97.8.
What happened: Current conditions and expectations indexes both improved in the month. Sentiment was aided by more favorable real income expectations. Expectations of inflation were lower. Consumers still expect the Federal Reserve to raise its benchmark interest rate this year.
The big picture: After slumping in January, due to the partial government shutdown, sentiment has rebounded.
“Overall, the data do not indicate an emerging recession but point toward slightly lower unit sales of vehicles and homes during the year ahead,” said Richard Curtin, the chief economist of the survey.
The index is slightly above the average of 97.2 recorded over the past 26 months.
The release of the summary of the Mueller report had no impact on the data, but said it could affect the April sentiment, Curtin said.
Market reaction: U.S. stocks SPX, +0.47%  moved higher after the data was released. The S&P 500 index was up 13 points to 2,829.

Source: MarketWatch

U.S. Net International Investment Position, Fourth Quarter and Year 2018.

12-15 minutes

Fourth Quarter 2018
The U.S. net international investment position decreased to −$9,717.1 billion (preliminary) at the end of the fourth quarter of 2018 from −$9,634.8 billion (revised) at the end of the third quarter, according to statistics released by the Bureau of Economic Analysis (BEA). The $82.4 billion decrease reflected a $1,695.4 billion decrease in U.S. assets and a $1,613.0 billion decrease in U.S. liabilities (table 1).
U.S. International Investment Position
The $82.4 billion decrease in the net investment position also reflected net financial transactions of −$199.2 billion and net other changes in position, such as price and exchange-rate changes, of $116.8 billion (table A).
The net investment position decreased 0.9 percent in the fourth quarter, compared with a decrease of 8.9 percent in the third quarter and an average quarterly decrease of 4.7 percent from the first quarter of 2011 through the second quarter of 2018.
U.S. Assets and Liabilities
U.S. assets decreased $1,695.4 billion to $25,398.6 billion at the end of the fourth quarter, reflecting decreases in portfolio investment and direct investment assets that were partly offset by increases in financial derivatives, other investment, and reserve assets.
  • Assets excluding financial derivatives decreased $1,942.1 billion to $23,652.6 billion. The decrease resulted from financial transactions of $136.5 billion and other changes in position of −$2,078.6 billion (table A).
    • Financial transactions reflected net U.S. acquisition of other investment deposit and loan assets and of direct investment equity assets that were partly offset by net U.S. sales of foreign securities.
    • Other changes in position were driven by foreign stock price decreases that lowered the equity value of portfolio investment and direct investment assets.
  • Financial derivatives increased $246.7 billion to $1,746.0 billion, reflecting increases in single-currency interest rate contracts.
Table A. Quarterly Change in the U.S. Net International Investment Position Billions of dollars, not seasonally adjusted
Change in position in 2018:IV Position,
Total Attributable to:
Other changes
in position 1
U.S. net international investment position -9,634.8 -82.4 -199.2 116.8 -9,717.1
   Net position excluding financial derivatives -9,692.0 -56.0 -179.1 123.2 -9,747.9
   Financial derivatives other than reserves, net 57.2 -26.4 -20.1 -6.3 30.8
   U.S. assets 27,094.0 -1,695.4 (2) (2) 25,398.6
      Assets excluding financial derivatives 25,594.7 -1,942.1 136.5 -2,078.6 23,652.6
      Financial derivatives other than reserves 1,499.2 246.7 (2) (2) 1,746.0
   U.S. liabilities 36,728.7 -1,613.0 (2) (2) 35,115.7
      Liabilities excluding financial derivatives 35,286.7 -1,886.2 315.6 -2,201.8 33,400.5
      Financial derivatives other than reserves 1,442.0 273.1 (2) (2) 1,715.2
1. Disaggregation of other changes in position into price changes, exchange-rate changes, and other changes in volume and valuation is only presented for annual statistics released in June each year.
2. Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.
U.S. liabilities decreased $1,613.0 billion to $35,115.7 billion at the end of the fourth quarter, reflecting decreases in portfolio investment and direct investment liabilities that were partly offset by increases in other investment liabilities and financial derivatives.
  • Liabilities excluding financial derivatives decreased $1,886.2 billion to $33,400.5 billion. The decrease resulted from financial transactions of $315.6 billion and other changes in position of −$2,201.8 billion (table A).
    • Financial transactions reflected net U.S. incurrence of other investment loan and deposit liabilities and of direct investment equity liabilities that were partly offset by net foreign sales of U.S. securities, especially of U.S. long-term debt.
    • Other changes in position were driven by U.S. stock price decreases that lowered the equity value of portfolio investment and direct investment liabilities.
  • Financial derivatives increased $273.1 billion to $1,715.2 billion, reflecting increases in single-currency interest rate contracts.
Updates to Statistics
Table B. Updates to Third-Quarter 2018 International Investment Position Aggregates
Billions of dollars, not seasonally adjusted
  Preliminary estimate Revised estimate
U.S. net international investment position -9,627.2 -9,634.8
   U.S. assets 27,150.7 27,094.0
      Direct investment at market value 8,468.6 8,451.3
      Portfolio investment 12,558.8 12,543.2
      Financial derivatives other than reserves 1,499.2 1,499.2
      Other investment 4,201.1 4,177.2
      Reserve assets 423.0 423.0
   U.S. liabilities 36,777.9 36,728.7
      Direct investment at market value 9,591.1 9,583.2
      Portfolio investment 19,882.9 19,882.9
      Financial derivatives other than reserves 1,442.0 1,442.0
      Other investment 5,861.9 5,820.6
Year 2018
The U.S. net international investment position decreased to −$9,717.1 billion (preliminary) at the end of 2018 from −$7,725.0 billion at the end of 2017. The $1,992.1 billion decrease reflected a $2,400.5 billion decrease in U.S. assets and a $408.4 billion decrease in U.S. liabilities. The decrease in the net investment position also reflected net financial transactions of −$519.6 billion and net other changes in position, such as price and exchange-rate changes, of −$1,472.6 billion (table C).
U.S. assets decreased $2,400.5 billion to $25,398.6 billion at the end of 2018, reflecting decreases in direct investment and portfolio investment assets that were partly offset by increases in financial derivatives and other investment assets.
  • Assets excluding financial derivatives decreased $2,524.0 billion to $23,652.6 billion. The decrease resulted from financial transactions of $301.6 billion and other changes in position of −$2,825.6 billion (table C).
    • Financial transactions reflected net U.S. purchases of foreign securities and net U.S. acquisition of other investment deposit assets that were partly offset by net U.S. withdrawal of direct investment equity assets. The net withdrawal of direct investment equity assets reflected U.S. parent repatriation of previously reinvested earnings in response to the Tax Cuts and Jobs Act. For more information, see the box "Effects of the 2017 Tax Cuts and Jobs Act on U.S. Direct Investment Assets.
    • Other changes in position mostly reflected foreign stock price decreases that lowered the equity value of portfolio investment and direct investment assets, and to a lesser extent, the depreciation of major foreign currencies against the U.S. dollar that lowered the value of foreign-currency-denominated assets in dollar terms.
  • Financial derivatives increased $123.5 billion to $1,746.0 billion, mostly in single-currency interest rate contracts and foreign exchange contracts.
Table C. Annual Change in the U.S. Net International Investment Position Billions of dollars
Change in position in 2018 Position,
Total Attributable to:
Other changes
in position 1
U.S. net international investment position -7,725.0 -1,992.1 -519.6 -1,472.6 -9,717.1
   Net position excluding financial derivatives -7,753.3 -1,994.7 -499.3 -1,495.4 -9,747.9
   Financial derivatives other than reserves, net 28.3 2.5 -20.3 22.8 30.8
   U.S. assets 27,799.1 -2,400.5 (2) (2) 25,398.6
      Assets excluding financial derivatives 26,176.6 -2,524.0 301.6 -2,825.6 23,652.6
      Financial derivatives other than reserves 1,622.5 123.5 (2) (2) 1,746.0
   U.S. liabilities 35,524.1 -408.4 (2) (2) 35,115.7
      Liabilities excluding financial derivatives 33,929.8 -529.3 800.9 -1,330.2 33,400.5
      Financial derivatives other than reserves 1,594.2 120.9 (2) (2) 1,715.2
1. Disaggregation of other changes in position into price changes, exchange-rate changes, and other changes in volume and valuation is only presented for annual statistics released in June each year.
2. Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.
U.S. liabilities decreased $408.4 billion to $35,115.7 billion at the end of 2018, reflecting decreases in portfolio investment and direct investment liabilities that were partly offset by increases in other investment liabilities and financial derivatives.
  • Liabilities excluding financial derivatives decreased $529.3 billion to $33,400.5 billion. The decrease resulted from financial transactions of $800.9 billion and other changes in position of −$1,330.2 billion (table C).
    • Financial transactions reflected net incurrence of liabilities in all major investment categories.
    • Other changes in position mostly reflected U.S. stock price decreases that lowered the equity value of portfolio investment and direct investment liabilities.
  • Financial derivatives increased $120.9 billion to $1,715.2 billion, mostly in single-currency interest rate contracts and foreign exchange contracts.

Effects of the 2017 Tax Cuts and Jobs Act on U.S. Direct Investment Assets

The earnings of foreign affiliates of U.S. multinational enterprises consist of repatriated earnings to the parent company in the United States in the form of dividends and reinvested earnings in foreign affiliates. When dividends exceed earnings in a given period, reinvested earnings (calculated as a residual) are negative, indicating a withdrawal of equity assets. In 2018, the $58.5 billion net withdrawal of direct investment equity assets reflected reinvested earnings of −$141.6 billion and net U.S. acquisition of equity other than reinvested earnings of $83.1 billion. The net withdrawal of direct investment equity assets in 2018 reflected the repatriation of accumulated prior earnings of foreign affiliates by their U.S. parent companies as dividends, in response to the 2017 Tax Cuts and Jobs Act (TCJA), which generally eliminated taxes on repatriated earnings.
The financial transactions highlighted in this release and related income transactions are reflected in the U.S. international transactions accounts. For more information about how the TCJA affected direct investment asset and income transactions, see "U.S. International Transactions: Fourth Quarter and Year 2018," which was released on March 27, 2019, and two BEA FAQs "How are the international transactions accounts affected by an increase in direct investment dividend receipts?" and "How does the 2017 Tax Cuts and Jobs Act affect BEA's business income statistics?"

Notice of Upcoming Update to the U.S. Net International Investment Position

The annual update of the U.S. net international investment position will be released along with preliminary estimates for the first quarter of 2019 on June 26, 2019. A preview of the annual update will appear in the April 2019 issue of the Survey of Current Business.
Next release: June 26, 2019, at 8:30 A.M. EDT
U.S. Net International Investment Position, First Quarter 2019, Year 2018, and Annual Update
*          *          *
U.S. Net International Investment Position Release Dates in 2019
Fourth Quarter and Year 2018 March 29
First Quarter 2019, Year 2018, and Annual Update June 26
Second Quarter 2019 September 30
Third Quarter 2019 December 27
Source: BEA

Wealth | U.S. government weighs social-media snooping to detect Social...

Mark Miller

CHICAGO (Reuters) - Getting followed on social media could soon gain a new meaning for workers applying for Social Security disability benefits. The Trump administration is working on a plan to let the Social Security Administration (SSA) check up on claimants on Facebook and Twitter in order to root out fraud and abuse in the disability program.
FILE PHOTO: A sign is seen on the entrance to a Social Security office in New York City, U.S., July 16, 2018. REUTERS/Brendan McDermid/File Photo
It is the latest move in a push by critics of Social Security Disability Insurance (SSDI) to crack down on alleged fraud and abuse. Conservatives have long argued that cheating is rampant in the program, and in recent years convinced Congress to fund expanded efforts by the SSA on anti-fraud efforts.
The idea of social media surveillance is getting a push from the conservative Heritage Foundation. Such monitoring already is done in some fraud and abuse investigations. For example, in 2014, the SSA’s Office of the Inspector General (OIG) utilized social media reviews to help arrest more than 100 people who defrauded SSDI out of millions of dollars. Investigators found photos on the personal accounts of disability claimants riding on jet skis, performing physical stunts in karate studios and driving motorcycles.
The SSA now is looking at expanding social media monitoring capability to front-line agency staff who work with claimants in the initial stages, before any investigations have been initiated.
The idea already is drawing fire from disability advocates. They argue that social media profiles can offer misleading evidence, since dates when photos were shot are not always clear and because not all legitimate disabilities prevent participation in activities that might seem suspicious.
“The proposal to allow disability adjudicators to monitor or review social media of disability claimants is an unjustified invasion of privacy unlikely to uncover fraud,” said Lisa Ekman, director of government affairs at the National Organization of Social Security Claimants’ Representatives.
The prospect of such governmental surveillance is as disturbing as it is eyebrow-raising. Consider that workers and employers split a 1.8  percent payroll tax to fund SSDI. Now, in return, the SSA may be empowered to snoop around their Facebook profiles. And it is premised on a questionable assertion - namely, that SSDI really is plagued by rampant fraud and abuse.
For starters, let me stipulate that SSDI is not a perfect program. One of the biggest problems is the staggering backlog in appeals cases, with applicants often waiting more than 600 days for decisions on claims. That problem stems from a history of unwise slashing of the SSA budget by Congress in recent years that has left the program dramatically short-staffed.
Fraud and abuse do exist in the program, and it should be weeded out to protect taxpayers and legitimate claimants. But any program this large - public or private-sector - is sure to be a target for people bent on taking advantage, and critics often argue by highlighting sensational cases.
Mark Hinkle, acting press officer for the SSA, notes that the agency uses data analytics and predictive modeling to detect fraud, and has created new groups dedicated to detection and prevention. Asked to comment on plans for expanded use of social media to detect fraud, he confirmed that SSA investigative units already use social media, and that the agency  has “studied strategies of other agencies and private entities to determine how social media might be used to evaluate disability applications.”
He added, “Social Security does not currently pursue social media in disability determinations, and we don’t have other information to provide at this time.”


Program statistics do not support the allegation that SSDI is riddled with fraud and abuse.
In the government’s fiscal-year 2018, the SSA’s Office of the Inspector General (OIG) reported about $98 million in recoveries, fines, settlements/judgments, and restitution as a result of Social Security fraud investigations. The OIG states that most the recovered funds were from recipients of SSDI and Supplemental Security Income (SSI), a means-tested welfare program for low-income seniors, blind and disabled people.
That sounds like big money. But in fiscal 2018, the SSA paid out $197 billion to beneficiaries of SSDI and SSI. And keep in mind that the recovered $98 million was for benefits paid out over several years, not just in 2018.
SSA data shows that the rate of overpayments for all its programs was well under 1 percent of benefit payouts in each of the last three fiscal years - and not all improper payments are fraud. More often, overpayments occur due to administrative delays at the SSA in making adjustments to benefit amounts due to errors and paperwork snafus.
A federal government list of programs at highest risk for making improper payments compiled by the Office of Management and Budget does not even mention Social Security.
Considering all that, I asked Rachel Greszler, a research fellow at the Heritage Foundation who studies Social Security, to justify the foundation’s steady drumbeat of accusations that SSDI is plagued by fraud and abuse.
She readily acknowledged that fraud rates are low. “Outright fraud is actually a pretty small component of the program’s problems,” she said. “Most people perceive fraud as a big issue but what they might consider fraud - people receiving benefits when they have the ability to work - is often just abuse of the system by taking advantage of certain rules and structures that allow people who can perform some work to nevertheless receive benefits.”
What constitutes abuse of the rules? An example, she said, would be claiming SSDI and receiving unemployment benefits at the same time, or claiming based on the argument that a disability prevents a worker from performing certain types of jobs.
Greszler and other SSDI critics often point to the rise of SSDI applications and award grants coincident with the rise of unemployment during the Great Recession as evidence of abuse. Some academic research has been done suggesting a cause-and-effect related to the unemployment rates, but this is hardly a settled matter among experts on SSDI.
Heritage has a broader agenda for SSDI reform. This week, it released a paper outlining 16 reforms aimed at improving the program’s solvency and integrity. ( It includes the plan to use social media surveillance in eligibility determinations, tighter eligibility definitions and replacement of SSDI's progressive benefit formula with a "flat anti-poverty benefit." It also urges greater use of private disability insurance, especially among higher-income workers.
This agenda draws its fuel from the fraud and abuse arguments. So any debate about reforms should also include rebalancing our perspective on where the problems are in SSDI - and where they are not.
Reporting and writing by Mark Miller in Chicago; Editing by Matthew Lewis.

Source: Reuters

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