Sell in May and go away?
Balderdash.
Summer slump?
Nonsense.
Stocks have had an amazing run through July and August, thanks to ultra-low bond yields driving money into stocks, momentum, and oodles of dollars going straight to Wall Street from the Federal Reserve.
As noted by countless economists, columnists, and stock enthusiasts, the backstops provided by the Fed have servd the interests of Wall Street in glorious ways, sending stocks soaring, the S&P and NASDAQ having made multiple record highs over the past eight weeks.
While the NYSE Composite Index and Dow Jones Industrial Average have not made it yet to new records, they're getting close and the Dow, specifically, will get a significant boost on Monday (the final trading day of August) when Exxon Mobil (XOM), Raytheon (RTX), and Pfizer (PFE) are replaced with Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
Already within 900 points of its all-time closing high (29,551.42, 2/12/20), it's within similar range of the intraday high of 29,568.57, which was also made on February 12. The added boost from the booting of three laggards with three high-fliers should send the industrials over the top, possibly this coming week.
Just how good the summer has been to investors is illustrated by the weekly closes for the past eight weeks, beginning July 6 and ending this past Friday, August 28. The slowpokes among the indices was the Dow and NYSE. The latter rose from a July 2 close of 11,991.52 to 13,170.96. It closed on the plus side seven of the eight past weeks for a 9.84% gain.
The Dow Industrials gained in five of the eight weeks, rising more than 2800 points from its July 2 close of 25,827.36, a gain of 10.94 percent.
The S&P closed at 3,130.01 on July 2, and added 378 points during the past eight weeks for a solid 12% upside, while the NASDAQ took home the top prize, vaulting from 10,207.63 eight weeks ago to its most recent record close of 11,695.63, a 14.6% gain. The S&P was up in seven of the past eight weeks while the NASDAQ finished in positive territory in six, including the last five straight.
So, whoever said the era of passive investing was over obviously hasn't taken account of the performance of index funds, which have sparkled recently, despite the narrative supplied to the market by the FAANMGs, the six tech stocks that have largely been responsible for the bulk of the gains in the NAZ and S&P. Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Microsoft (MSFT) and Alphabet, parent of Google (GOOG) account for roughly 25% of the market capitalization of the entire S&P 500. Throw in Elon Musk's Tesla (TSLA) and one could make a very strong point about picking the right stocks over passive investing.
Apple, which recently announced a 4-for-1 stock split, was up 39% over the past eight weeks. Tesla gained a whopping 54%, while Amazon gained only 19%, though it and the other FAANMG components have been steady outperformers for years.
Warren Buffett, who turns 90 today, made news this week when it was revealed he was selling off some banking stocks while picking up shares of Barrick Gold. The information came from the latest 13F filing from Bershire Hathaway, the holding company for Buffett's global portfolio.
The punditry of the investment world made plenty of noise over the move, especially since Buffett had previously claimed to not think much of gold as an investment. One of the most-cited quotes attributed to Buffett's disdain for gold is "[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility."
While Buffett's purchase of some Barrick Gold shares (roughly $600 million) may look like a departure from the Oracle of Omaha's norm, the truth of the matter is that the shares account for a smidge more than 0.2 percent of Bershire's 250 billion stock portfolio. What's interesting about the move was that Berkshire closed its position in Goldman Sachs (GS), eliminating the Vampire Squid entirely from its holdings. It also trimmed positions in JPMorgan Chase (JPM) and Wells Fargo (WFC), but upped its position in Bank of America (BAC), which is now the second-largest holding, well behind #1, Apple.
It will be another three months before we'll know whether Berkshire intends to keep buying Barrick or even other gold-related stocks. For all anyone knows, Buffett could have a secret stash of gold and silver coins buried in his back yard, just in case.
Speaking of reasons to own gold and silver, the second estimate of second quarter GDP was released on Friday, and it was a slight improvement from the initial reading, but not enough of one to matter. The decline, which was estimated to be a record 32.9%, was revised to a 31.7% loss, still the largest on record by far. Making matters more concerning, it's been a fact for some time that the government spending portion of the GDP calculation has been inordinately high, and it now accounts for more than 50% of GDP. The other roughly one-half of GDP is largely consumer spending, people buying things they don't need with credit cards they can't afford to pay.
In the oil patch, the slow, relentless rise in the barrel price of oil continued apace with WTI crude peaking at $43.34 on the 26th - the highest price since March 3rd - before settling at $42.97 on Friday afternoon. Theprice of WTI crude has been below $40 just twice since July 2nd, with the recent prices nearing the top of the recent tight range. With the Labor Day holiday a week off, prices for crude and gas at the pump may begin to decline as the traditional end of summer normally results in lower prices, though these days have been anything but normal.
Treasury yields peaked on Friday, with the 10-year note ending at 0.74% and the 30-year at 1.52%, both the highest since June 16. Shorter-dated maturities were little affected by market noise nor Fed Chairman Jerome Powell's virtual keynote for the Jackson Hole symposium in which he promoted increasing inflationary policy incentives at the Federal Reserve. Powell's insistence that inflation of two percent or more somehow equates to the Fed's mandate of "stable prices" serves to point out what an abject liar he is and what a complete failure the Federal Reserve as a whole has been since its inception more than 100 years ago. The Fed has failed spectacularly in achieving both of its mandates as the dollar has lost 97% of purchasing power since 1913 and full employment - the other mandate - is about as far from the minds of the regional Fed presidents and governors of the FOMC as the Earth is from planet Jupiter.
Gold regained some respect on Friday, up $35 to close out the week at $1,964.83. Since peaking at $2,063.54 on August 6, the trend has been lower, but $1900 an ounce appears to be very strong support. With supply strained and demand still very high, recent dips look more like consolidation than manipulation, even though the spot price is subservient to the eminently exploitable futures market where daily claims on precious metals often exceed a year's production. Eventually, the futures market will face an untenable situation when the punters stand for delivery of real metal rather than a paper equivalent of dollars, yen, or euros. Once the COMEX fails to deliver physical in a timely manner - a possibility that's growing increasingly worrying - it's game over for the paper markets, where the rigging has kept the true price of gold to be discovered for decades.
In order to prevent such an occurrence, the CME has been and will continue to raise margin requirements for futures trading in precious metals until none but the biggest players - central banks, bullion banks, private banks, investment and commercial banks, insurance companies, and sovereign trusts - will be able to afford the buying and selling of futures contracts. Thus, the compression of prices could continue indefinitely while physical premiums soar beyond the rooftops.
Silver also appears to be in a consolidation phase, ranging between $26.45 and $27.67 the past two weeks. It finished up Friday near the top end, at $27.50. Considering the recent smackdown sent silver from a high of $29.13 to $24.79 in the course of one day, the recent close puts the loss at less than six percent, a complete nothing-burger in the highly volatile silver market. The inability of the futures' players to keep a lid on silver indicates that the riggers are losing control. Silver's market is much smaller than gold's, and the demand for physical has bordered on a mania recently due to its affordability and monetary and commercial value.
Here are the most recent prices on eBay (shipping - often free - included) for selected items (numismatics excluded):
Item: Low / High / Average / Median
1 oz silver coin: 31.90 / 48.95 / 39.05 / 37.98
1 oz silver bar: 32.95 / 42.00 / 36.75 / 35.98
1 oz gold coin: 1,985.00 / 2,178.90 / 2,090.41 / 2,107.55
1 oz gold bar: 2,006.16 / 2,114.59 / 2,078.62 / 2,081.75
An historical survey of prices from April, 2020 to the present is available here.
Concluding this edition of the WEEKEND WRAP, a reminder: There are just 65 days until Election Day and 117 days until Christmas. With any luck, we'll all know who the president is by the time we're unwrapping presents.
At the Close, Friday, August 28, 2020:
Dow: 28,653.87, +161.60 (+0.57%)
NASDAQ: 11,695.63, +70.30 (+0.60%)
S&P 500: 3,508.01, +23.46 (+0.67%)
NYSE: 13,170.96, +102.15 (+0.78%)
For the Week:
Dow: +723.54 (+2.59%)
NASDAQ: +383.83 (+3.39%)
S&P 500: +110.85 (+3.26%)
NYSE: +261.89 (+2.83%)
Showing posts with label WTI crude oil. Show all posts
Showing posts with label WTI crude oil. Show all posts
Sunday, August 30, 2020
Sunday, June 21, 2020
WEEKEND WRAP: Fake COVID Data, Faulty HCQ Studies, Bailouts for Zombies, Secret Handshakes, Excessive Lying and Bunk
The level of fraud in the scientific community is absolutely out of control. It's even beyond that of the government and media, though the media probably holds the title of most disingenuous as it lies or distorts on practically everything.
On Friday, yet another clinical trial of hydroxychloroquine was halted, this time by the National Institutes of Health.
Citing that the drug has no ill effects on hospitalized patients - in opposition to previously unfounded claims that HCQ was dangerous - a data and safety monitoring board (DSMB) said the drug offered no benefit to hospitalized patients.
It's too bad that the mainstream medical authorities have to be so obviously stupid. HCQ is used as a preventative medicine. It helps the immune system fight off coronavirus, especially when used in a regular regimen with zinc and Azithromycin when asymptomatic or in early stages of infection as this study and many others have clearly shown.
Instead, the NIH, CDC, WHO and other "official" medical bodies refuse to release the proof of the effectiveness of hydroxychloroquine as what doctors call a prophylactic remedy, insisting that COVID-19 is a deadly disease and that billions must be spent in search of a vaccine, when they know a vaccine will likely never be developed.
These people, who first told the world that wearing a mask was a waste of time, then promoted the use of masks when it suited their purposes, should all be met with swift justice because it is they, not the virus, who are causing countless deaths that could have been saved if proper preventive measures had been taken. They, and the media which continues to promote COVID-19, lockdowns, quarantines, social distancing, absurdities like not allowing fans into sporting events, keeping restaurant customers six feet apart and other ridiculous notions should be tried for operating a criminal conspiracy.
Even this post, because it violates the dictatorial policy of Google, Twitter, or Facebook may be deemed conspiracy theory or in violation of their standards may be labeled with a warning or removed from public view.
The virus is a total scam. The rising cries of a coming "second wave" are nothing more than another attempt to scare people into rash behaviors using slanted statistics while playing on emotions. Places like Georgia, Texas, and Arizona have been cited as possible new hotspots for the virus, but the truth of the matter is that more testing has produced more cases, therefore increasing the daily bogus coronavirus counts. Additionally, all of the various tests have proven to show an abundance of false positives. Hospitalization and death statistics have been overstated since the beginning of the pandemic.
In other words, almost all of the data and scare-mongering from the media is bunk. Complete rubbish. Take off your masks and start living like a human being again. The chances of catching the virus are slim. It has mutated numerous times and most strains circulating are severe or deadly only to people over the age of 60 who have pre-existing health conditions or are obese, suffer from diabetes or heart disease. The general population is in no more danger from COVID-19 than from the common flu.
Get over it. Move on. Tell anybody who disagrees to take their opinions elsewhere. As it stands, there's no baseball this summer and there may not be football this fall. All this pandemic nonsense is about as important and vital as the BLM/Antifa protests. All of it needs to stop and the media is largely to blame for promoting false narratives.
The absurdities were on display at yesterday's Belmont Stakes, where no spectators were allowed into the sprawling Belmont Park facility and everybody on the grounds - except the horses - were required to wear masks. Even jockeys had to wear masks during the races. Please, somebody explain how a rider traveling at 25 to 40 miles per hour is going to catch the virus. It's as bad as the idiots who wear their masks while driving in their cars with the windows rolled up. Stupid. Banal. Idiotic. Is the world really populated by that many morons? If so, maybe the virus should relieve us of 30-40% of the population. More room for everybody. Happy days!
It's just all so annoying and stupid. This post was originally going to be about gold and silver, but the news of yet another HCQ trial being shut down changed those plans.
Go and check your local pharmacy or drug store or vitamin center. They're out of ZINC. Yeah, ZINC. Apparently, some people aren't buying the "we're all gonna die" narrative being shoved down the throats of the unsuspecting public. As the thrust of Money Daily posts over the past few days and weeks have been stressing, the media and government are doing you no good. You need to extricate yourself and your family from the clutches of creeping socialism and outright tyranny.
Let's get away from those who wish only to control everything and move forward to better lives. There is so much the word has to offer, having it ruined by a small minority of psychopathic monsters is a sin and an outrage.
Moving on to the markets and financial world from the week just past, stocks seem to have hit a stall space. The major indices, while all advancing for the week, have not recovered fully from the downdraft of Thursday, June 11. This week's gains were made mainly on Monday and Tuesday. Things slowed down in midweek and by Friday the bloom was off the rose once again.
Not to worry. There's a huge chance that the news will be cocked forward to produce a running start for the major averages and bourses around the world Monday morning. It's just how the Fed and the algorithm-pumping mechanisms operate these days. There's no market. There's no need to study charts or engage in fundamental analysis. Everything is fake, crooked, corrupted.
There is somewhat of a silver lining approaching for people who don't appreciate ever-rising stock prices when companies are showing dwindling profits or actually losing money, however. In a few weeks, publicly-traded companies will be releasing their second quarter financial reports and many of them figure to be absolute dumpster-diving material.
There's been a chart circulating recently showing the number of "zombie" corporations steadily increasing to a point at which nearly one in five US companies are insolvent. A zombie company is loosely defined as a business that has to borrow to survive and doesn’t make enough profit to cover the cost of its debt service. Simply put, these are companies being kept afloat by banks, or the Fed, or both. If it were possible to actually make sense of the books of large commercial banks like Wells Fargo (WFC), Bank of America (BAC) and Citibank (C) it's probable that the banks themselves would be zombies, underwater and headed to bankruptcy if not for the largesse afford them by the Federal Reserve.
The outcome from keeping zombie companies afloat is lower, slower growth in the overall economy. The Fed is actually exacerbating the effects of ultra-low interest rates and keeping insolvent companies alive with the most recent emergency measures that have the Federal Reserve buying debt from ETFs and corporate paper of individual (healthy and failing) companies. The Fed is also buying up municipal debt and may be positioning itself to fund states and cities that have deep budget deficits and buying individual stocks. Yes, the Fed may soon be buying stocks. And who said the markets weren't manipulated?
The bottom line is that we have a central bank producing counterfeit currency to buy assets offered by insolvent companies. Making matters worse, is that Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow believe the companies that have received bailouts or funding from the Cares Act should not be disclosed to the public. So, on top of it all, the underhanded workings of the government, the Fed and big business should be kept secret. Nice. Not.
Treasuries basically spent the week flopping around like a landed fish. The yield spread for the entire curve, from 1-month to 30 years ended at 1.31% on Friday, June 12. As of this past Friday (June 19) the spread was 1.34%. Some steepening, but not notable. The 10-year note ended the week one basis point lower than the previous Friday, at 0.70%.
The July futures contract for WTI crude oil closed at a three-month high Friday, at $39.75 a barrel. Like the stock market, oil prices have engaged in a V-shaped rebound, the bottom coming in mid-April when oil hit $11.57 a barrel. While there has been some demand recovery, there's still a worldwide overhang of supply. The price of oil, with almost a direct pathway to gas prices, is another manufactured number. Most US shale producers can't survive below $50 a barrel, much less $40. Thanks to renewables like solar, wind, and hydro-electric, the oil business is dying a slow death. There's abundant resources available, but inroads have been made by so-called "green energy", and efficiencies in newer vehicles are crimping the use of oil and distillates. In an economy on a slowing glide path, there's no good reason for oil prices to rise other than to support the ailing old companies that rely on pumping and consumer use of the greasy stuff.
In the precious metals space, both gold and silver were dumped in the futures market on Monday and then rallied over the course of the week. Silver, despite a generally positive end to the week, closed at the lowest week-ending price ($17.52) since May 11. Since the March 19 bottoming at $12 an ounce, the trend has been higher, though it's been a slow grind despite high demand, shortages, huge premiums, and shipping delays.
Gold was flattened to $1710.45 on Monday, but rebounded to the high of the week at the close of business in New York Friday, at $1734.75. Like silver, gold has been rangebound since mid-April, suggesting a breakout on the horizon, though it could go either way.
Here are the latest free market prices for select items on eBay (prices include shipping, which is often free):
Item: Low / High / Average / Median
1 oz silver coin: 26.50 / 39.90 / 31.52 / 31.12
1 oz silver bar: 24.75 / 46.00 / 31.35 / 28.70
1 oz gold coin: 1,803.85 / 1,963.52 / 1,875.30 / 1,865.36
1 oz gold bar: 1,780.00 / 1,852.38 / 1,833.92 / 1,840.45
Finally, Fearless Rick nailed the trifecta in the Belmont Stakes, making a public pick prior to the race for everyone. Such generosity! What a guy!
At the close, Friday, June 19, 2020:
Dow: 25,871.46, -208.64 (-0.80%)
NASDAQ: 9,946.12, +3.07 (+0.03%)
S&P 500: 3,097.74, -17.60 (-0.56%)
NYSE: 11,980.12, -92.48 (-0.77%)
For the Week:
Dow: +265.92 (+1.04%)
NASDAQ: +357.31 (+3.73%)
S&P 500: +56.43 (+1.86%)
NYSE: +112.95 (+0.95%)
On Friday, yet another clinical trial of hydroxychloroquine was halted, this time by the National Institutes of Health.
Citing that the drug has no ill effects on hospitalized patients - in opposition to previously unfounded claims that HCQ was dangerous - a data and safety monitoring board (DSMB) said the drug offered no benefit to hospitalized patients.
It's too bad that the mainstream medical authorities have to be so obviously stupid. HCQ is used as a preventative medicine. It helps the immune system fight off coronavirus, especially when used in a regular regimen with zinc and Azithromycin when asymptomatic or in early stages of infection as this study and many others have clearly shown.
Instead, the NIH, CDC, WHO and other "official" medical bodies refuse to release the proof of the effectiveness of hydroxychloroquine as what doctors call a prophylactic remedy, insisting that COVID-19 is a deadly disease and that billions must be spent in search of a vaccine, when they know a vaccine will likely never be developed.
These people, who first told the world that wearing a mask was a waste of time, then promoted the use of masks when it suited their purposes, should all be met with swift justice because it is they, not the virus, who are causing countless deaths that could have been saved if proper preventive measures had been taken. They, and the media which continues to promote COVID-19, lockdowns, quarantines, social distancing, absurdities like not allowing fans into sporting events, keeping restaurant customers six feet apart and other ridiculous notions should be tried for operating a criminal conspiracy.
Even this post, because it violates the dictatorial policy of Google, Twitter, or Facebook may be deemed conspiracy theory or in violation of their standards may be labeled with a warning or removed from public view.
The virus is a total scam. The rising cries of a coming "second wave" are nothing more than another attempt to scare people into rash behaviors using slanted statistics while playing on emotions. Places like Georgia, Texas, and Arizona have been cited as possible new hotspots for the virus, but the truth of the matter is that more testing has produced more cases, therefore increasing the daily bogus coronavirus counts. Additionally, all of the various tests have proven to show an abundance of false positives. Hospitalization and death statistics have been overstated since the beginning of the pandemic.
In other words, almost all of the data and scare-mongering from the media is bunk. Complete rubbish. Take off your masks and start living like a human being again. The chances of catching the virus are slim. It has mutated numerous times and most strains circulating are severe or deadly only to people over the age of 60 who have pre-existing health conditions or are obese, suffer from diabetes or heart disease. The general population is in no more danger from COVID-19 than from the common flu.
Get over it. Move on. Tell anybody who disagrees to take their opinions elsewhere. As it stands, there's no baseball this summer and there may not be football this fall. All this pandemic nonsense is about as important and vital as the BLM/Antifa protests. All of it needs to stop and the media is largely to blame for promoting false narratives.
The absurdities were on display at yesterday's Belmont Stakes, where no spectators were allowed into the sprawling Belmont Park facility and everybody on the grounds - except the horses - were required to wear masks. Even jockeys had to wear masks during the races. Please, somebody explain how a rider traveling at 25 to 40 miles per hour is going to catch the virus. It's as bad as the idiots who wear their masks while driving in their cars with the windows rolled up. Stupid. Banal. Idiotic. Is the world really populated by that many morons? If so, maybe the virus should relieve us of 30-40% of the population. More room for everybody. Happy days!
It's just all so annoying and stupid. This post was originally going to be about gold and silver, but the news of yet another HCQ trial being shut down changed those plans.
Go and check your local pharmacy or drug store or vitamin center. They're out of ZINC. Yeah, ZINC. Apparently, some people aren't buying the "we're all gonna die" narrative being shoved down the throats of the unsuspecting public. As the thrust of Money Daily posts over the past few days and weeks have been stressing, the media and government are doing you no good. You need to extricate yourself and your family from the clutches of creeping socialism and outright tyranny.
Let's get away from those who wish only to control everything and move forward to better lives. There is so much the word has to offer, having it ruined by a small minority of psychopathic monsters is a sin and an outrage.
Moving on to the markets and financial world from the week just past, stocks seem to have hit a stall space. The major indices, while all advancing for the week, have not recovered fully from the downdraft of Thursday, June 11. This week's gains were made mainly on Monday and Tuesday. Things slowed down in midweek and by Friday the bloom was off the rose once again.
Not to worry. There's a huge chance that the news will be cocked forward to produce a running start for the major averages and bourses around the world Monday morning. It's just how the Fed and the algorithm-pumping mechanisms operate these days. There's no market. There's no need to study charts or engage in fundamental analysis. Everything is fake, crooked, corrupted.
There is somewhat of a silver lining approaching for people who don't appreciate ever-rising stock prices when companies are showing dwindling profits or actually losing money, however. In a few weeks, publicly-traded companies will be releasing their second quarter financial reports and many of them figure to be absolute dumpster-diving material.
There's been a chart circulating recently showing the number of "zombie" corporations steadily increasing to a point at which nearly one in five US companies are insolvent. A zombie company is loosely defined as a business that has to borrow to survive and doesn’t make enough profit to cover the cost of its debt service. Simply put, these are companies being kept afloat by banks, or the Fed, or both. If it were possible to actually make sense of the books of large commercial banks like Wells Fargo (WFC), Bank of America (BAC) and Citibank (C) it's probable that the banks themselves would be zombies, underwater and headed to bankruptcy if not for the largesse afford them by the Federal Reserve.
The outcome from keeping zombie companies afloat is lower, slower growth in the overall economy. The Fed is actually exacerbating the effects of ultra-low interest rates and keeping insolvent companies alive with the most recent emergency measures that have the Federal Reserve buying debt from ETFs and corporate paper of individual (healthy and failing) companies. The Fed is also buying up municipal debt and may be positioning itself to fund states and cities that have deep budget deficits and buying individual stocks. Yes, the Fed may soon be buying stocks. And who said the markets weren't manipulated?
The bottom line is that we have a central bank producing counterfeit currency to buy assets offered by insolvent companies. Making matters worse, is that Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow believe the companies that have received bailouts or funding from the Cares Act should not be disclosed to the public. So, on top of it all, the underhanded workings of the government, the Fed and big business should be kept secret. Nice. Not.
Treasuries basically spent the week flopping around like a landed fish. The yield spread for the entire curve, from 1-month to 30 years ended at 1.31% on Friday, June 12. As of this past Friday (June 19) the spread was 1.34%. Some steepening, but not notable. The 10-year note ended the week one basis point lower than the previous Friday, at 0.70%.
The July futures contract for WTI crude oil closed at a three-month high Friday, at $39.75 a barrel. Like the stock market, oil prices have engaged in a V-shaped rebound, the bottom coming in mid-April when oil hit $11.57 a barrel. While there has been some demand recovery, there's still a worldwide overhang of supply. The price of oil, with almost a direct pathway to gas prices, is another manufactured number. Most US shale producers can't survive below $50 a barrel, much less $40. Thanks to renewables like solar, wind, and hydro-electric, the oil business is dying a slow death. There's abundant resources available, but inroads have been made by so-called "green energy", and efficiencies in newer vehicles are crimping the use of oil and distillates. In an economy on a slowing glide path, there's no good reason for oil prices to rise other than to support the ailing old companies that rely on pumping and consumer use of the greasy stuff.
In the precious metals space, both gold and silver were dumped in the futures market on Monday and then rallied over the course of the week. Silver, despite a generally positive end to the week, closed at the lowest week-ending price ($17.52) since May 11. Since the March 19 bottoming at $12 an ounce, the trend has been higher, though it's been a slow grind despite high demand, shortages, huge premiums, and shipping delays.
Gold was flattened to $1710.45 on Monday, but rebounded to the high of the week at the close of business in New York Friday, at $1734.75. Like silver, gold has been rangebound since mid-April, suggesting a breakout on the horizon, though it could go either way.
Here are the latest free market prices for select items on eBay (prices include shipping, which is often free):
Item: Low / High / Average / Median
1 oz silver coin: 26.50 / 39.90 / 31.52 / 31.12
1 oz silver bar: 24.75 / 46.00 / 31.35 / 28.70
1 oz gold coin: 1,803.85 / 1,963.52 / 1,875.30 / 1,865.36
1 oz gold bar: 1,780.00 / 1,852.38 / 1,833.92 / 1,840.45
Finally, Fearless Rick nailed the trifecta in the Belmont Stakes, making a public pick prior to the race for everyone. Such generosity! What a guy!
At the close, Friday, June 19, 2020:
Dow: 25,871.46, -208.64 (-0.80%)
NASDAQ: 9,946.12, +3.07 (+0.03%)
S&P 500: 3,097.74, -17.60 (-0.56%)
NYSE: 11,980.12, -92.48 (-0.77%)
For the Week:
Dow: +265.92 (+1.04%)
NASDAQ: +357.31 (+3.73%)
S&P 500: +56.43 (+1.86%)
NYSE: +112.95 (+0.95%)
Sunday, May 31, 2020
WEEKEND WRAP: Violent Protests... What Did You Expect? Civil Unrest Sweeps Across America
Twenty percent unemployment. 20%.
That's the number likely to be presented when the monthly data series, non-farm payroll is released Friday one hour before the opening bell.
More than 40 million Americans are out of work. Another 12-24 million are underemployed, meaning they are working at jobs in which they are overqualified or their work doesn't provide a full week's employment (under 35 hours). Add to that the millions on welfare or disability and what you have is roughly half the working age population - with the bulk of them under 40 years of age - with no work, either no income or income of a size insufficient to service their expenses, lots of time on their hands, and anger building.
While these unemployed Americans were forced to stay home over a period stretching anywhere from three weeks to two months (and counting) because of ordered lockdowns due to the coronavirus, they watched the US stock markets crash and recover, aided by trillions of dollars thrown to market makers, banks, brokerages, corporations, and financial intermediaries from the Federal Reserve. The unemployed were assisted in their plight by an additional $600 a week in benefits and a one-time $1200 special payment, which for many took weeks to arrive. All along, the people at home watched the stock market recover at a record pace, wondering how long it will take for their jobs, their lives to recover back to somewhere near prior levels.
On Memorial Day, when four policemen in Minneapolis murdered George Floyd in broad daylight right in front of protesting bystanders, the fuse was lit for an explosion of pent-up frustration and anger. By Tuesday, people in Minneapolis took to the street to vent and the result was widespread violence, looting, burning of buildings, and utter disregard for authority as the police actually retreated from the swelling, uncontrolled mobs.
Wednesday through Saturday saw the protests turn violent in other cities. Denver, Atlanta, Louisville, Kentucky, New York, Boston, Los Angeles, Washington, DC, Portland, Oregon were among dozens which witnessed growing mayhem. By Saturday night, protests were witnessed in more than 75 cities and curfews imposed - with varying degrees of effectiveness - in 30 cities.
At a very early point the protests became no longer about George Floyd and police mistreatment and more about the disproportionate distribution of wealth, substandard living conditions, and a host of related issues.
For the most part, Americans don't like being told what to do or when to do it. By nature, Americans are bred for independence and freedom. The lockdowns and shelter-in-place orders clamped down on freedoms and shredded free speech, the right to assemble, freedom of choice, and freedom of movement. Prior to the violence of the week just past there were already anti-lockdown protests all over the country.
Now that we are amidst the overwhelming civil unrest that many had predicted, it's important to step back and view the carnage with an eye toward analysis and understanding. Authorities, such as the Democrat governor of Minnesota, Tim Walls, have asserted that as many as 80% of the people demonstrating in the streets are not locals, but imports from other areas of the country, their intent to spread unrest and wreak havoc on cities.
While this may or may not be true - it actually sounds ludicrous considering the sheer numbers - it's unlikely that the same numbers would apply in other cities. After all, with protests in more than 30 cities, the outsiders would have to have come from somewhere. Besides it being logistically inefficient, there would have been massive traffic spikes on the interstates. It just doesn't add up.
No doubt there are outside agitators, but there would also be agents provocateur from the authoritarian side of the equation.
The killing of George Floyd set this episode of violence into motion, but there's evidence that the main protagonist, officer Derek Chauvin, who pressed his knee into Floyd's throat for more than eight minutes, should have been aware of the death of Eric Garner, who was killed under similar circumstances in New York city in 2014. At least one or more of the other three officers holding down the handcuffed Floyd had to be aware of the similarities. These police knew exactly what they were doing. To believe otherwise is naive. Floyd's death, in a city notorious for mistreatment of minorities by the police, was very likely a set-up, to engender a violent reaction, just as the lockdown orders were conditioning of the public by authorities.
By the way, Floyd's supposed "crime" was passing a counterfeit $20 bill at a convenience store. Is it simply a coincidence that the image on the $20 bill is that of Andrew Jackson, "Old Hickory," who shut down the Second National Bank of the United States on September 10, 1833, and survived an assassination attempt on January 30, 1835? Coincidence? Maybe. Irony? Absolutely.
When the violence began in Minneapolis, the police either backed off in fear of their lives or stood down purposely, allowing looting and burning of buildings, cars, and trash receptacles to take place without limit. Law and order proponents have made reference to left-wing groups such as ANTIFA for inciting the riots, but for whom does ANTIFA actually work? The case can be made that their agitation serves the interests of authorities in government. As the violence and mayhem spirals out of control, the mayors and governors build up their forces with more manpower and firepower, and now, military support, as nearly a dozen states have activated the National Guard.
California, Georgia, Minnesota, Missouri, Nevada, Ohio, Tennessee, Texas, Utah, and Washington state, in addition to the District of Columbia have called in Guardsmen to help quell the uprisings. Martial Law is the next logical step as the protests continue though there is likely to be a pause followed by random acts of civil disobedience on a massive, if unorganized scale. People have had more than enough of a financial systems that favors the rich over the poor and middle class, a two-tiered judicial system - one for the rich and connected, one for those who are not, extreme inflation in housing and educational costs, rising taxes without sufficient representation, injustices by the elite and the governing class going unpunished, and their emotions are boiling over into untenable conditions across the nation.
Television media continues to push a narrative that the protests and violence are an outgrowth of racial tensions, rather than address the truth that the protests are more about generational and institutional inequality as evidenced by the massive numbers of black, white and Hispanics engaged, the vast majority of them under 30 years of age.
As cities burn, the obnoxious culture that is Wall Street is certain to respond, most likely in the wrong manner. All that matters in the realm of the economics of big business and central banking is higher share prices for the most-favored public corporations. While 40 million people were being laid off, fired, disengaged from jobs and income, the stock market indices gained back more than half of the losses initially incurred in late February and March. In the pretzel logic that is the inexorable ties between the Federal Reserve, the Treasury, and Wall Street, major cities erupting in riots and fires might be reason enough for fresh all-time highs in equities.
For the week, stocks continued their ten-week-long rally, tacking on 1.75 to over four percent on the major averages. The NASDAQ is within four percent of reaching all-time highs.
Over the shortened four-day week, treasuries were volatile with yields on the long end rising over the first three days but recoiling back on Friday as protests spread nationwide. The 30-year bond yield rose from 1.37% last Friday to 1.47% on Thursday, only to drop down to 1.41% Friday. The 10-year note closed out the week at with a two-week low yield of 0.65%.
Overall, the curve steepened to a spread of 125 basis points between the 2-year and 30-year with inversion between the six-month (0.18%) and 2-year (0.16%), indicative of recessionary conditions.
Oil prices seem to be consolidating. The July futures contract on WTI crude oil closed at $35.34 on Friday, in a range that appears to be suitable for all parties, considering the unlevel conditions on the ground.
The most volatility was evidenced in the precious metals space, especially silver, which advanced from a low of $16.80 per troy ounce to $18.05, closing out on Friday at $17.84. Gold finished up at $1728.70, off recent highs ($1748.30, May 20), though much improved from the week's low of $1694.60 per troy ounce.
On eBay, premiums remain elevated as shown by the most recent sales of one-ounce coins and bars:
Item: Low / High / Average / Median
1 oz silver coin: 25.50 / 39.71 / 28.47 / 27.47
1 oz silver bar: 18.49 / 43.90 / 30.36 / 29.70
1 oz gold coin: 1,853.63 / 1,975.49 / 1,882.36 / 1,876.89
1 oz gold bar: 1,658.20 / 1,883.81 / 1,828.94 / 1,849.35
Looking ahead, it's incredible how quickly the media focus changed from the fading coronavirus to the escalating street unrest. These are macro-issues, covering large swaths of people who are neither coalescing nor collectively unifying. If leaders emerge from the city protests, which is natural in large public movements, then it can be safely assumed that these protests and the background issues are real. If no leaders emerge, it's all more fakery and planned demolition of society, just like the pandemic, aka plandemic.
In the 1960s protests, leaders and organized groups were plentiful. Jerry Ruben, Abbie Hoffman, Dr. Martin Luther King Jr., Jane Fonda, Tom Hayden, Malcolm X, Eldridge Cleaver, Huey Newton, Angela Davis, and others are among the more memorable individuals from the era. Students for a Democratic Society (SDS), the Weathermen, the Southern Christian Leadership Conference, Black Panthers and many more splinter groups comprised peaceful and violent elements.
Songs expressed the prevailing movements of anti-war (peace) and civil rights. Joan Baez, Bob Dylan, Phil Ochs, Arlo Guthrie, Judy Collins, Pete Seeger, Peter Paul and Mary, the Byrds, Country Joe and the Fish, and many of the groups that played at Woodstock in 1969 were among the more prominent voices among the peace and civil rights movements.
One would expect leaders and groups to emerge and musicians to show the way forward. While it might be considered cynical to believe that current events are orchestrated by a devious deep state or other bad actors, it is not outside the realm of possibility. As the world has learned so often in recent times, conspiracy theory often emerges as conspiracy fact.
At the Close, Friday, May 29, 2002:
Dow: 25,383.11, -17.53 (-0.07%)
NASDAQ: 9,489.87, +120.88 (+1.29%)
S&P 500: 3,044.31, +14.58 (+0.48%)
NYSE: 11,802.95, -1.97 (-0.02%)
For the Week:
Dow: +917.95 (+3.75%)
NASDAQ: +165.29 (+1.77%)
S&P 500: 88.06 (+3.01%)
NYSE: +470.98 (+4.16%)
That's the number likely to be presented when the monthly data series, non-farm payroll is released Friday one hour before the opening bell.
More than 40 million Americans are out of work. Another 12-24 million are underemployed, meaning they are working at jobs in which they are overqualified or their work doesn't provide a full week's employment (under 35 hours). Add to that the millions on welfare or disability and what you have is roughly half the working age population - with the bulk of them under 40 years of age - with no work, either no income or income of a size insufficient to service their expenses, lots of time on their hands, and anger building.
While these unemployed Americans were forced to stay home over a period stretching anywhere from three weeks to two months (and counting) because of ordered lockdowns due to the coronavirus, they watched the US stock markets crash and recover, aided by trillions of dollars thrown to market makers, banks, brokerages, corporations, and financial intermediaries from the Federal Reserve. The unemployed were assisted in their plight by an additional $600 a week in benefits and a one-time $1200 special payment, which for many took weeks to arrive. All along, the people at home watched the stock market recover at a record pace, wondering how long it will take for their jobs, their lives to recover back to somewhere near prior levels.
On Memorial Day, when four policemen in Minneapolis murdered George Floyd in broad daylight right in front of protesting bystanders, the fuse was lit for an explosion of pent-up frustration and anger. By Tuesday, people in Minneapolis took to the street to vent and the result was widespread violence, looting, burning of buildings, and utter disregard for authority as the police actually retreated from the swelling, uncontrolled mobs.
Wednesday through Saturday saw the protests turn violent in other cities. Denver, Atlanta, Louisville, Kentucky, New York, Boston, Los Angeles, Washington, DC, Portland, Oregon were among dozens which witnessed growing mayhem. By Saturday night, protests were witnessed in more than 75 cities and curfews imposed - with varying degrees of effectiveness - in 30 cities.
At a very early point the protests became no longer about George Floyd and police mistreatment and more about the disproportionate distribution of wealth, substandard living conditions, and a host of related issues.
For the most part, Americans don't like being told what to do or when to do it. By nature, Americans are bred for independence and freedom. The lockdowns and shelter-in-place orders clamped down on freedoms and shredded free speech, the right to assemble, freedom of choice, and freedom of movement. Prior to the violence of the week just past there were already anti-lockdown protests all over the country.
Now that we are amidst the overwhelming civil unrest that many had predicted, it's important to step back and view the carnage with an eye toward analysis and understanding. Authorities, such as the Democrat governor of Minnesota, Tim Walls, have asserted that as many as 80% of the people demonstrating in the streets are not locals, but imports from other areas of the country, their intent to spread unrest and wreak havoc on cities.
While this may or may not be true - it actually sounds ludicrous considering the sheer numbers - it's unlikely that the same numbers would apply in other cities. After all, with protests in more than 30 cities, the outsiders would have to have come from somewhere. Besides it being logistically inefficient, there would have been massive traffic spikes on the interstates. It just doesn't add up.
No doubt there are outside agitators, but there would also be agents provocateur from the authoritarian side of the equation.
The killing of George Floyd set this episode of violence into motion, but there's evidence that the main protagonist, officer Derek Chauvin, who pressed his knee into Floyd's throat for more than eight minutes, should have been aware of the death of Eric Garner, who was killed under similar circumstances in New York city in 2014. At least one or more of the other three officers holding down the handcuffed Floyd had to be aware of the similarities. These police knew exactly what they were doing. To believe otherwise is naive. Floyd's death, in a city notorious for mistreatment of minorities by the police, was very likely a set-up, to engender a violent reaction, just as the lockdown orders were conditioning of the public by authorities.
By the way, Floyd's supposed "crime" was passing a counterfeit $20 bill at a convenience store. Is it simply a coincidence that the image on the $20 bill is that of Andrew Jackson, "Old Hickory," who shut down the Second National Bank of the United States on September 10, 1833, and survived an assassination attempt on January 30, 1835? Coincidence? Maybe. Irony? Absolutely.
Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the Eternal God, I will rout you out.
– Andrew Jackson (1767-1845)
When the violence began in Minneapolis, the police either backed off in fear of their lives or stood down purposely, allowing looting and burning of buildings, cars, and trash receptacles to take place without limit. Law and order proponents have made reference to left-wing groups such as ANTIFA for inciting the riots, but for whom does ANTIFA actually work? The case can be made that their agitation serves the interests of authorities in government. As the violence and mayhem spirals out of control, the mayors and governors build up their forces with more manpower and firepower, and now, military support, as nearly a dozen states have activated the National Guard.
California, Georgia, Minnesota, Missouri, Nevada, Ohio, Tennessee, Texas, Utah, and Washington state, in addition to the District of Columbia have called in Guardsmen to help quell the uprisings. Martial Law is the next logical step as the protests continue though there is likely to be a pause followed by random acts of civil disobedience on a massive, if unorganized scale. People have had more than enough of a financial systems that favors the rich over the poor and middle class, a two-tiered judicial system - one for the rich and connected, one for those who are not, extreme inflation in housing and educational costs, rising taxes without sufficient representation, injustices by the elite and the governing class going unpunished, and their emotions are boiling over into untenable conditions across the nation.
Those who make peaceful revolution impossible will make violent revolution inevitable.
-- President John F. Kennedy
Television media continues to push a narrative that the protests and violence are an outgrowth of racial tensions, rather than address the truth that the protests are more about generational and institutional inequality as evidenced by the massive numbers of black, white and Hispanics engaged, the vast majority of them under 30 years of age.
As cities burn, the obnoxious culture that is Wall Street is certain to respond, most likely in the wrong manner. All that matters in the realm of the economics of big business and central banking is higher share prices for the most-favored public corporations. While 40 million people were being laid off, fired, disengaged from jobs and income, the stock market indices gained back more than half of the losses initially incurred in late February and March. In the pretzel logic that is the inexorable ties between the Federal Reserve, the Treasury, and Wall Street, major cities erupting in riots and fires might be reason enough for fresh all-time highs in equities.
For the week, stocks continued their ten-week-long rally, tacking on 1.75 to over four percent on the major averages. The NASDAQ is within four percent of reaching all-time highs.
Over the shortened four-day week, treasuries were volatile with yields on the long end rising over the first three days but recoiling back on Friday as protests spread nationwide. The 30-year bond yield rose from 1.37% last Friday to 1.47% on Thursday, only to drop down to 1.41% Friday. The 10-year note closed out the week at with a two-week low yield of 0.65%.
Overall, the curve steepened to a spread of 125 basis points between the 2-year and 30-year with inversion between the six-month (0.18%) and 2-year (0.16%), indicative of recessionary conditions.
Oil prices seem to be consolidating. The July futures contract on WTI crude oil closed at $35.34 on Friday, in a range that appears to be suitable for all parties, considering the unlevel conditions on the ground.
The most volatility was evidenced in the precious metals space, especially silver, which advanced from a low of $16.80 per troy ounce to $18.05, closing out on Friday at $17.84. Gold finished up at $1728.70, off recent highs ($1748.30, May 20), though much improved from the week's low of $1694.60 per troy ounce.
On eBay, premiums remain elevated as shown by the most recent sales of one-ounce coins and bars:
Item: Low / High / Average / Median
1 oz silver coin: 25.50 / 39.71 / 28.47 / 27.47
1 oz silver bar: 18.49 / 43.90 / 30.36 / 29.70
1 oz gold coin: 1,853.63 / 1,975.49 / 1,882.36 / 1,876.89
1 oz gold bar: 1,658.20 / 1,883.81 / 1,828.94 / 1,849.35
Looking ahead, it's incredible how quickly the media focus changed from the fading coronavirus to the escalating street unrest. These are macro-issues, covering large swaths of people who are neither coalescing nor collectively unifying. If leaders emerge from the city protests, which is natural in large public movements, then it can be safely assumed that these protests and the background issues are real. If no leaders emerge, it's all more fakery and planned demolition of society, just like the pandemic, aka plandemic.
In the 1960s protests, leaders and organized groups were plentiful. Jerry Ruben, Abbie Hoffman, Dr. Martin Luther King Jr., Jane Fonda, Tom Hayden, Malcolm X, Eldridge Cleaver, Huey Newton, Angela Davis, and others are among the more memorable individuals from the era. Students for a Democratic Society (SDS), the Weathermen, the Southern Christian Leadership Conference, Black Panthers and many more splinter groups comprised peaceful and violent elements.
Songs expressed the prevailing movements of anti-war (peace) and civil rights. Joan Baez, Bob Dylan, Phil Ochs, Arlo Guthrie, Judy Collins, Pete Seeger, Peter Paul and Mary, the Byrds, Country Joe and the Fish, and many of the groups that played at Woodstock in 1969 were among the more prominent voices among the peace and civil rights movements.
One would expect leaders and groups to emerge and musicians to show the way forward. While it might be considered cynical to believe that current events are orchestrated by a devious deep state or other bad actors, it is not outside the realm of possibility. As the world has learned so often in recent times, conspiracy theory often emerges as conspiracy fact.
At the Close, Friday, May 29, 2002:
Dow: 25,383.11, -17.53 (-0.07%)
NASDAQ: 9,489.87, +120.88 (+1.29%)
S&P 500: 3,044.31, +14.58 (+0.48%)
NYSE: 11,802.95, -1.97 (-0.02%)
For the Week:
Dow: +917.95 (+3.75%)
NASDAQ: +165.29 (+1.77%)
S&P 500: 88.06 (+3.01%)
NYSE: +470.98 (+4.16%)
Friday, May 29, 2020
Trump Ramps Up Social Media Battle; Argentina Continues Defaulting; Gold, Silver Premiums Persist
Not that anybody should be concerned, but Argentina defaulted on a $500 million interest payment a week ago, on May 22nd. Money Daily had been covering the story but slipped up and missed the breaking news over the Memorial Day Weekend. No excuse. We blew it. 20 lashes.
Anyhow, it's not over down Buenos Aires way, as representatives from both sides - the Argentine government and a gaggle of international creditors - continue to seek a solution, setting a June 2nd date for a plan to restructure $66 billion of the country's debt. Realistically, this being the ninth time Argentina has defaulted on its obligations and the third time this century, hopes of reaching any kind of deal that satisfies both the creditor and debtor seems well removed from the realm of the possible.
President Trump issued another executive order Thursday afternoon, this one coming after Twitter tagged a couple of his tweets with fact-checks.
The order calls for new regulations under Section 230 of the Communications Decency Act "to make it so that social media companies that engage in censoring or any political conduct will not be able to keep their liability shield," Trump said.
The tweets in question concerned Trump's opposition to mail-in ballots in the upcoming November election, which he believes would result in a cascade of fraud. Twitter added some fact-checking language stating that fraud isn't an issue with absentee ballots.
That, and his announcement of a press conference Friday to address growing concerns over China's dispute with Hong Kong (and now India), sent markets tumbling into the red after making small gains in Thursday's session.
Escalating the situation, early Friday morning, Trump tweeted about the ongoing violence in Minneapolis and elsewhere:
Accessing the President's tweet on the Twitter platform brings up the following message: This Tweet violated the Twitter Rules about glorifying violence. However, Twitter has determined that it may be in the public’s interest for the Tweet to remain accessible. Beside it is a button that gives the user the option to display the tweet or keep it hidden. That seems to be an exercise in futility on Twitter's part, possibly drawing even more attention to the tweet in question than had they just left it alone and allowed the public to decide and debate its appropriateness.
Twitter continues to dig its own grave because the President certainly isn't going to back down when he has the complete arsenal of the Department of Justice at his disposal. It's become rather obvious to just about everybody that Twitter, along with their social media counterparts, Google, Facebook, and others, that these companies have abused their free reign over what gets published and where on the internet for a long time without any oversight. Having set up their own rules and guidelines they've often trampled on first amendment rights of users, citing their status as private companies as cover for their subjective agenda.
It would appear that President Trump is serious about limiting their ability to shape opinion. It's certain that the issue will end up in the courts and may take years to resolve. Meanwhile, the mainstream TV networks, ABC, NBC, CBS, CNN, and Fox, and newspapers such as the New York Times and Washington Post continue to spread half-truths, fake news, and outright lies on a regular basis. Whether the president's wrath extends to limitations or punishments for biased reporting in other areas of the media remains to be seen, but there is sure to be intense focus on the media leading up to the November elections.
Elsewhere, confusion reigns supreme in the precious metals space. Since mid-March there has been a schism between the futures price of gold and the spot price, with the gap sometimes great enough to encourage arbitrage in a relatively risk-free trade. Usually, the spot price is a few dollars below the futures bid, but the spread has widened and exhibited volatile behavior recently. Silver has also joined the party, with spot and futures prices deviating sporadically.
Of course, the spot and futures prices are little more than bookmarks these days compared to the premium prices being paid for actual physical metal on eBay. Gold and silver are both sporting heavy premiums, with gold selling at the one ounce level at $120-180 over spot and one ounce silver going for $23-30 when the spot price has been hovering in the $16-17 range. Silver, probably the most undervalued commodity in the world, has approached 100% premiums in recent days.
As more people become aware of the fraudulent nature of futures trading where major players such as JP Morgan Chase are allowed to flaunt size limits and engage in spoofing, naked shorting, and are never forced to stand for delivery, physical markets are becoming the go-to for investors with serious intentions of protecting their wealth with precious metals.
Yields in the treasury space rose across the curve on Thursday, with the 30-year bond hitting 1.47%, a two-month high. The spread between the 2-year note (0.17%) and the 30 is now 130 basis points, 10 points higher than a week ago. Tighter lending conditions may not be in the Fed's best interests at this time, but the present issue is likely one of supply. The Fed has been begging fiscal authorities (congress and the president) to unleash more stimulus spending so as to facilitate the Fed's monetizing of the debt, spreading its largesse to equity market participants.
If the government isn't going to ramp up deficit spending, the Fed will be looking over its shoulder at rising rates with too little supply coming to market. This is just one of the unintended consequences of massive money printing on a global scale. At some point, with all hands outstretched, there's not enough to go around and a struggle is engaged for the scraps thrown to the market. The Fed is committed to buying everything, but if there's not enough everything around, they risk severe impairment of credit markets.
Congress needs to get on the bandwagon with all due alacrity lest the Fed run out of debt to monetize, jeopardizing the massive stock rally they have recently engendered.
Finally, in spite of the price of oil (once again, on the futures market) having roughly doubled over the past month, and with it, rising gas prices at the pump, there's still a massive glut on the supply side and slack demand against it. WTI crude in the $32-36 range is a resistance level the market will find difficult to overcome. Economies aren't roaring back to life following the global lockdowns, rather, they're reengaging in fits and starts, and not nearly at capacity. The major oil producers have done their level best to halt the price decline, but there's only so much production that can be cut from counties whose very existence relies upon regular selling of crude oil.
The summer, if authorities allow free movement, should be affordable, at least as concerns automotive touring.
Friday's trading session opens in a little more than an hour from this posting. With the Dow ahead by nearly 1000 points this week, unless there's a major pullback on Friday, Wall Street will shove another fat week of gains into America's face.
At the Close, Thursday, May 28, 2020:
Dow: 25,400.64, -147.63 (-0.58%)
NASDAQ: 9,368.99, -43.37 (-0.46%)
S&P 500: 3,029.73, -6.40 (-0.21%)
NYSE: 11,804.91, -32.62 (-0.28%)
Anyhow, it's not over down Buenos Aires way, as representatives from both sides - the Argentine government and a gaggle of international creditors - continue to seek a solution, setting a June 2nd date for a plan to restructure $66 billion of the country's debt. Realistically, this being the ninth time Argentina has defaulted on its obligations and the third time this century, hopes of reaching any kind of deal that satisfies both the creditor and debtor seems well removed from the realm of the possible.
President Trump issued another executive order Thursday afternoon, this one coming after Twitter tagged a couple of his tweets with fact-checks.
The order calls for new regulations under Section 230 of the Communications Decency Act "to make it so that social media companies that engage in censoring or any political conduct will not be able to keep their liability shield," Trump said.
The tweets in question concerned Trump's opposition to mail-in ballots in the upcoming November election, which he believes would result in a cascade of fraud. Twitter added some fact-checking language stating that fraud isn't an issue with absentee ballots.
That, and his announcement of a press conference Friday to address growing concerns over China's dispute with Hong Kong (and now India), sent markets tumbling into the red after making small gains in Thursday's session.
Escalating the situation, early Friday morning, Trump tweeted about the ongoing violence in Minneapolis and elsewhere:
....These THUGS are dishonoring the memory of George Floyd, and I won’t let that happen. Just spoke to Governor Tim Walz and told him that the Military is with him all the way. Any difficulty and we will assume control but, when the looting starts, the shooting starts. Thank you!
— Donald J. Trump (@realDonaldTrump) May 29, 2020
Accessing the President's tweet on the Twitter platform brings up the following message: This Tweet violated the Twitter Rules about glorifying violence. However, Twitter has determined that it may be in the public’s interest for the Tweet to remain accessible. Beside it is a button that gives the user the option to display the tweet or keep it hidden. That seems to be an exercise in futility on Twitter's part, possibly drawing even more attention to the tweet in question than had they just left it alone and allowed the public to decide and debate its appropriateness.
Twitter continues to dig its own grave because the President certainly isn't going to back down when he has the complete arsenal of the Department of Justice at his disposal. It's become rather obvious to just about everybody that Twitter, along with their social media counterparts, Google, Facebook, and others, that these companies have abused their free reign over what gets published and where on the internet for a long time without any oversight. Having set up their own rules and guidelines they've often trampled on first amendment rights of users, citing their status as private companies as cover for their subjective agenda.
It would appear that President Trump is serious about limiting their ability to shape opinion. It's certain that the issue will end up in the courts and may take years to resolve. Meanwhile, the mainstream TV networks, ABC, NBC, CBS, CNN, and Fox, and newspapers such as the New York Times and Washington Post continue to spread half-truths, fake news, and outright lies on a regular basis. Whether the president's wrath extends to limitations or punishments for biased reporting in other areas of the media remains to be seen, but there is sure to be intense focus on the media leading up to the November elections.
Elsewhere, confusion reigns supreme in the precious metals space. Since mid-March there has been a schism between the futures price of gold and the spot price, with the gap sometimes great enough to encourage arbitrage in a relatively risk-free trade. Usually, the spot price is a few dollars below the futures bid, but the spread has widened and exhibited volatile behavior recently. Silver has also joined the party, with spot and futures prices deviating sporadically.
Of course, the spot and futures prices are little more than bookmarks these days compared to the premium prices being paid for actual physical metal on eBay. Gold and silver are both sporting heavy premiums, with gold selling at the one ounce level at $120-180 over spot and one ounce silver going for $23-30 when the spot price has been hovering in the $16-17 range. Silver, probably the most undervalued commodity in the world, has approached 100% premiums in recent days.
As more people become aware of the fraudulent nature of futures trading where major players such as JP Morgan Chase are allowed to flaunt size limits and engage in spoofing, naked shorting, and are never forced to stand for delivery, physical markets are becoming the go-to for investors with serious intentions of protecting their wealth with precious metals.
Yields in the treasury space rose across the curve on Thursday, with the 30-year bond hitting 1.47%, a two-month high. The spread between the 2-year note (0.17%) and the 30 is now 130 basis points, 10 points higher than a week ago. Tighter lending conditions may not be in the Fed's best interests at this time, but the present issue is likely one of supply. The Fed has been begging fiscal authorities (congress and the president) to unleash more stimulus spending so as to facilitate the Fed's monetizing of the debt, spreading its largesse to equity market participants.
If the government isn't going to ramp up deficit spending, the Fed will be looking over its shoulder at rising rates with too little supply coming to market. This is just one of the unintended consequences of massive money printing on a global scale. At some point, with all hands outstretched, there's not enough to go around and a struggle is engaged for the scraps thrown to the market. The Fed is committed to buying everything, but if there's not enough everything around, they risk severe impairment of credit markets.
Congress needs to get on the bandwagon with all due alacrity lest the Fed run out of debt to monetize, jeopardizing the massive stock rally they have recently engendered.
Finally, in spite of the price of oil (once again, on the futures market) having roughly doubled over the past month, and with it, rising gas prices at the pump, there's still a massive glut on the supply side and slack demand against it. WTI crude in the $32-36 range is a resistance level the market will find difficult to overcome. Economies aren't roaring back to life following the global lockdowns, rather, they're reengaging in fits and starts, and not nearly at capacity. The major oil producers have done their level best to halt the price decline, but there's only so much production that can be cut from counties whose very existence relies upon regular selling of crude oil.
The summer, if authorities allow free movement, should be affordable, at least as concerns automotive touring.
Friday's trading session opens in a little more than an hour from this posting. With the Dow ahead by nearly 1000 points this week, unless there's a major pullback on Friday, Wall Street will shove another fat week of gains into America's face.
At the Close, Thursday, May 28, 2020:
Dow: 25,400.64, -147.63 (-0.58%)
NASDAQ: 9,368.99, -43.37 (-0.46%)
S&P 500: 3,029.73, -6.40 (-0.21%)
NYSE: 11,804.91, -32.62 (-0.28%)
Sunday, May 3, 2020
Stocks Flat As States Begin to Reopen; COVID-19 Still Wreaking Havoc on Lives, Markets
This installment of the WEEKEND WRAP is going to be one of the shortest since the onset of the coronavirus crisis because noting much of consequence occurred, other than the "breakthrough" with Gilead Science's remdesivir clinical trial.
Turns out, remdesivir, as was already known, has little effect on the virus and doesn't reduce mortality at all. The study was purposely shortened to include only the data that shows the drug reduces the time to recovery by about 30%. Big deal. You take it - at $1000 a dose - and you recover in ten days rather than 14, at a cost of some $6-8000. Yeah, great. Four fewer days with a bad cold and a big pharmacy bill.
Hydroxychloroquine with zinc supplements and healthy doses of Vitamins C, D3, and Quercetin (or red wine, onions, green tea, apples, berries) before infection will likely prevent one from contracting the virus, and, the same combination after infection (if started early) will shorten the duration and severity.
Proven.
Mainstream media and government won't allow this information to even be considered.
The release of the remdesivir story was timed to coincide with the release of first quarter GDP, which was a very disappointing -4.8 percent. It's worth noting that many mainstream economists, like those from Bank of America and Goldman Sachs, downplayed the first quarter and thought it was going to come in as a positive number, proving, once again, that expert opinions should be treated in a similar manner to online stock touts. Both are better avoided and trusting in your own gut.
Most states have at least partially re-opened their economies, lead by Georgia, Florida, Tennessee and other Southern and some Midwestern states, notably Iowa, the Dakotas, Kansas, Nebraska, Oklahoma, Missouri, Texas). Some eight states never actually issued lockdown orders in the first place.
Meanwhile New York, New Jersey, Connecticut, Massachusetts, Virginia, Michigan, California, and others are still operating under lockdown restrictions.
This Wired.com article from April 30 offer some accurate state-by-state reporting.
Stocks finished the week about where they started (see below).
Treasuries closed out the week with the 2-year note yielding 0.20%, the 10-year, 0.64%, and the 30-year, 1.27%. There was limited movement. The 2-year down two basis points, the 10-year up four, and the 30-year up 10. The curve steepened 10 basis points to 117, essentially all driven by the 30-year.
Oil seems to be stabilizing, but at a price that will slaughter some smaller producers. WTI crude finished the week at its high of $19.69 a barrel on the June contract. Predictions are for a sloppy termination of the current contract, though nothing quite like the end of the May contract when oil prices turned negative.
Precious metals continue to be massaged and depressed. Gold futures closed out on Friday at $1700.40 per troy ounce. Silver futures finished at $14.97. The gold/silver ratio stands at 113.6, near a 5000-year high. The sensible move, for investors would be to be buying silver for the foreseeable future, as premiums on both metals are high, though, on a percentage basis, the silver premiums are drastic. It's nearly impossible to purchase silver for under $20 an ounce in quantity. Smaller amounts, such as one ounce coins and bars carry premiums of 70 to 100% or higher, whereas gold premiums are about $130-160, less than 10%.
It's actually far easier to purchase silver than gold, especially on ebay, where delivery delays such as those being experienced by dealers, are cut down to a few days rather than weeks. Delivery delays are slowly abating, but minimum order sizes remain in place at many online dealers.
It appears as though stocks are going to tumble on Monday, as word leaked out that Berkshire Hathaway, the holding company of Warren Buffett, is going to be selling hard into the recent rally. A retest of the March lows could be underway as stocks finished dramatically lower Friday - which happened to be May 1 - wiping out the week's gains.
The Dow Jones Industrial Average has failed repeatedly to break through the 50% retrace line off the lows, and that could portend a significant shift in risk assessment.
At the Close, Friday, May 1, 2020:
Dow: 23,723.69, -622.03 (-2.55%)
NASDAQ: 8,604.95, -284.60 (-3.20%)
S&P 500: 2,830.71, -81.72 (-2.81%)
NYSE: 11,058.57, -313.77 (-2.76%)
For the Week:
Dow: -51.58 (-0.22%)
NASDAQ: -29.57 (-0.34%)
S&P 500: -6.03 (-0.21%)
NYSE: +40.68 (-0.37%)
Turns out, remdesivir, as was already known, has little effect on the virus and doesn't reduce mortality at all. The study was purposely shortened to include only the data that shows the drug reduces the time to recovery by about 30%. Big deal. You take it - at $1000 a dose - and you recover in ten days rather than 14, at a cost of some $6-8000. Yeah, great. Four fewer days with a bad cold and a big pharmacy bill.
Hydroxychloroquine with zinc supplements and healthy doses of Vitamins C, D3, and Quercetin (or red wine, onions, green tea, apples, berries) before infection will likely prevent one from contracting the virus, and, the same combination after infection (if started early) will shorten the duration and severity.
Proven.
Mainstream media and government won't allow this information to even be considered.
The release of the remdesivir story was timed to coincide with the release of first quarter GDP, which was a very disappointing -4.8 percent. It's worth noting that many mainstream economists, like those from Bank of America and Goldman Sachs, downplayed the first quarter and thought it was going to come in as a positive number, proving, once again, that expert opinions should be treated in a similar manner to online stock touts. Both are better avoided and trusting in your own gut.
Most states have at least partially re-opened their economies, lead by Georgia, Florida, Tennessee and other Southern and some Midwestern states, notably Iowa, the Dakotas, Kansas, Nebraska, Oklahoma, Missouri, Texas). Some eight states never actually issued lockdown orders in the first place.
Meanwhile New York, New Jersey, Connecticut, Massachusetts, Virginia, Michigan, California, and others are still operating under lockdown restrictions.
This Wired.com article from April 30 offer some accurate state-by-state reporting.
Stocks finished the week about where they started (see below).
Treasuries closed out the week with the 2-year note yielding 0.20%, the 10-year, 0.64%, and the 30-year, 1.27%. There was limited movement. The 2-year down two basis points, the 10-year up four, and the 30-year up 10. The curve steepened 10 basis points to 117, essentially all driven by the 30-year.
Oil seems to be stabilizing, but at a price that will slaughter some smaller producers. WTI crude finished the week at its high of $19.69 a barrel on the June contract. Predictions are for a sloppy termination of the current contract, though nothing quite like the end of the May contract when oil prices turned negative.
Precious metals continue to be massaged and depressed. Gold futures closed out on Friday at $1700.40 per troy ounce. Silver futures finished at $14.97. The gold/silver ratio stands at 113.6, near a 5000-year high. The sensible move, for investors would be to be buying silver for the foreseeable future, as premiums on both metals are high, though, on a percentage basis, the silver premiums are drastic. It's nearly impossible to purchase silver for under $20 an ounce in quantity. Smaller amounts, such as one ounce coins and bars carry premiums of 70 to 100% or higher, whereas gold premiums are about $130-160, less than 10%.
It's actually far easier to purchase silver than gold, especially on ebay, where delivery delays such as those being experienced by dealers, are cut down to a few days rather than weeks. Delivery delays are slowly abating, but minimum order sizes remain in place at many online dealers.
It appears as though stocks are going to tumble on Monday, as word leaked out that Berkshire Hathaway, the holding company of Warren Buffett, is going to be selling hard into the recent rally. A retest of the March lows could be underway as stocks finished dramatically lower Friday - which happened to be May 1 - wiping out the week's gains.
The Dow Jones Industrial Average has failed repeatedly to break through the 50% retrace line off the lows, and that could portend a significant shift in risk assessment.
At the Close, Friday, May 1, 2020:
Dow: 23,723.69, -622.03 (-2.55%)
NASDAQ: 8,604.95, -284.60 (-3.20%)
S&P 500: 2,830.71, -81.72 (-2.81%)
NYSE: 11,058.57, -313.77 (-2.76%)
For the Week:
Dow: -51.58 (-0.22%)
NASDAQ: -29.57 (-0.34%)
S&P 500: -6.03 (-0.21%)
NYSE: +40.68 (-0.37%)
Thursday, April 2, 2020
6.64 Million Unemployment Claims; Stocks Take a Hit; Gold, Silver Selling at Premium
(Simultaneously published at Downtown Magazine)
Wednesday was April Fool's Day, appropriate for the general public, which is being actively conned into giving up civil liberties at an alarming rate, and also for those who are stuck in passive investments like college or retirement funds, as stocks got hammered again on the day.
Meanwhile, mega banks and major corporations, which gorged themselves on stock buybacks and executive bonuses over the past decade, are being rewarded for their insouciant, self-serving behavior with loans and grants from the Treasury and Federal Reserve, which are rapidly coalescing into a single entity.
Since completing a near-perfect Fibonacci retrace of 38% to the 22,500 level on the Dow (22,552.17), the blue chip index has given up more than 1,500 points over the past two sessions and are threatening to retest the lows of March 23 (18,213.65). ADP private payroll data released Wednesday showed job losses of 27,000, which did not include the end of March when most of the recent layoffs and furloughs occurred. Despite exception of the brunt of a widespread voluntary quarantine imposed by most states the number was the first time ADP reported monthly job losses since 2017. Their next data release is expected to be much more sobering.
With the Federal Reserve firmly in control of the stock and bond markets, equity prices still have a long distance to travel on a downward slope to reach any reasonable level of valuation. While most heavily-traded stocks were wildly overvalued they are still trading at unsustainable levels, especially considering that business and commerce has very nearly ground to a halt globally.
There will be questions about the level of involvement in equity markets by the Fed, especially on days like Wednesday when losses cascaded down the wall of worry. While it's certainly the case that the Fed could buy up all the ETFs, stocks and mutual funds it pleases, their main approach is in the bond market, where they are actively purchasing commercial paper through its proxy, the Treasury. Guaranteeing that the corporations represented in the NASDAQ, Dow, S&P, and NYSE are still able to finance continuing operations is of primary concern. Price levels of individual stocks or even whole indices are of a secondary nature. Massive gains will be available to the Fed and their insider (congress) associates once stocks are reduced to a massive junk heap of debt, enriched management, and damaged operations.
Currently being touted by the financial insiders is the notion that the stock market and the nation will bounce back quickly once the coronavirus is conquered, though that concept is fatally flawed for a number of reasons. First, the goal is to have zero deaths from COVID-19, a near impossibility given that the infection number has not even cracked the one percent level, with the US currently at 217,000 confirmed cases with 5,137 deaths. Second, many small businesses will not reopen when the "all clear" is given, whether that be at the end of April, or some time in July. Third, with most working-age Americans at home or out of a job, the spending level upon the return to some semblance of normalcy will be vastly reduced. GDP growth is likely to be negative for the second and third quarters and the entire year of 2020 will go down as one in which the US economy was running in reverse.
At this point, anyone who has not taken steps to remove money from the stock and bond markets is facing a world of hurt which could have been avoided. The appropriate investment stance at this juncture would likely be 75% cash and 25% in hard assets (real estate, precious metals). Sadly, the gullible American passive investment class has been conditioned to believe stocks will always bounce back and that bonds represent safety. Neither claim can be proven within the present paradigm. Stocks may bounce back, but that bounce may not occur for many years. Bonds may be safe, but at interest rates that are comparable to stuffing matresses with Federal Reserve Notes. And, it's probably not beyond the realm of probability that the almighty dollar will not survive in its current form. At the very least, as severe devaluation is in the cards.
Treasury yields were smashed lower, the curve significantly flattened on the day, with the 30-year bond at 1.27%, the 10-year note at 0.62%, and the full breadth of the curve a mere 124 basis points, down from 130 a day ago and 145 a week prior. These are serious declines, significant moves in a market that is supposed to be stable. The portent is for more dislocation, desperation, and, eventually, negative rates which will obliterate the currency as is happening in Japan and Europe.
Gold and silver are still largely unavailable from regular dealers even though prices on the futures exchanges are dropping, defying the laws of supply and demand. The best place to purchase precious metals in any form is currently ebay, where the market is brisk and one ounce gold coins can be purchased and quickly delivered for prices between $1690 and $1861 while the futures price hovers around $1590.
Silver is in an even better position for sellers, tacking on premiums of up to 100% to the posted price of $14.25 on the futures exchanges. On eBay, the lowest price for a one ounce coin or bar is currently $21.50, with most ranging from $23.00 to $29.00 and uncirculated coins fetching more, up to absurd prices in the $40 and higher range. With mines shut down in many countries, the shortage of bullion is only just beginning. A metal mania is upon us.
Oil prices have caught bids early Thursday morning, with WTI crude priced at $22.37, Brent at $27.19 at the time of this writing. With a supply glut and the Saudis pumping at nearly-full capacity and offering discounts, it's likely that these prices do not reflect reality on the ground nor are they likely to maintain their gains for long.
As another trading day approaches, regular people may be wondering when they will receive their bailout $1200 check or direct deposit from the government and how they will pay their rent or mortgage without a job or some form of assistance. It has been two weeks since Treasury Secretary Steven Mnuchin and President Trump suggested that individuals would receive money within two weeks and nobody has seen a nickel. The bill to provide such assistance was passed last week by the Senate, House, and signed into law by President Trump.
On Wednesday, Mnuchin announced that Social Security recipients who do not regularly file tax returns will receive their checks or direct deposits without having to file "simple returns" as the IRS advised, according to TheHill.com. An actual date for dissemination of the monies was not disclosed, though it may be assumed that these recipients will receive their money along with their regular monthly payments. For the rest of the country, the waiting game continues, despite corporations already having trillions of dollars available to them via loans, loan guarantees or outright purchases of private debt issuance by the Federal Reserve, most of which is outside the Fed's normal chartered activities.
As for rent or mortgage payments, those are individual decisions. It is advisable to contact the landlord or mortgagee to work out payment options. Some landlords are deferring April rent payments while most lenders (represented in the main by servicers) have remained fairly tight-lipped on general guidelines relating to mortgage payments. Deferral is a likely solution, with the principal and interest being added to the end of the amortization schedule.
Just now, the Labor Department announced that unemployment insurance claims for the week ended March 28 doubled over the previous week to 6.64 million.
April and the second quarter is off to a very discouraging start.
At the Close, Wednesday, April 1, 2020:
Dow Jones Industrial Average: 20,943.51, -973.69 (-4.44%)
NASDAQ: 7,360.58, -339.52 (-4.41%)
S&P 500: 2,470.50, -114.09 (-4.41%)
NYSE: 9,844.85, -457.05 (-4.44%)
Wednesday was April Fool's Day, appropriate for the general public, which is being actively conned into giving up civil liberties at an alarming rate, and also for those who are stuck in passive investments like college or retirement funds, as stocks got hammered again on the day.
Meanwhile, mega banks and major corporations, which gorged themselves on stock buybacks and executive bonuses over the past decade, are being rewarded for their insouciant, self-serving behavior with loans and grants from the Treasury and Federal Reserve, which are rapidly coalescing into a single entity.
Since completing a near-perfect Fibonacci retrace of 38% to the 22,500 level on the Dow (22,552.17), the blue chip index has given up more than 1,500 points over the past two sessions and are threatening to retest the lows of March 23 (18,213.65). ADP private payroll data released Wednesday showed job losses of 27,000, which did not include the end of March when most of the recent layoffs and furloughs occurred. Despite exception of the brunt of a widespread voluntary quarantine imposed by most states the number was the first time ADP reported monthly job losses since 2017. Their next data release is expected to be much more sobering.
With the Federal Reserve firmly in control of the stock and bond markets, equity prices still have a long distance to travel on a downward slope to reach any reasonable level of valuation. While most heavily-traded stocks were wildly overvalued they are still trading at unsustainable levels, especially considering that business and commerce has very nearly ground to a halt globally.
There will be questions about the level of involvement in equity markets by the Fed, especially on days like Wednesday when losses cascaded down the wall of worry. While it's certainly the case that the Fed could buy up all the ETFs, stocks and mutual funds it pleases, their main approach is in the bond market, where they are actively purchasing commercial paper through its proxy, the Treasury. Guaranteeing that the corporations represented in the NASDAQ, Dow, S&P, and NYSE are still able to finance continuing operations is of primary concern. Price levels of individual stocks or even whole indices are of a secondary nature. Massive gains will be available to the Fed and their insider (congress) associates once stocks are reduced to a massive junk heap of debt, enriched management, and damaged operations.
Currently being touted by the financial insiders is the notion that the stock market and the nation will bounce back quickly once the coronavirus is conquered, though that concept is fatally flawed for a number of reasons. First, the goal is to have zero deaths from COVID-19, a near impossibility given that the infection number has not even cracked the one percent level, with the US currently at 217,000 confirmed cases with 5,137 deaths. Second, many small businesses will not reopen when the "all clear" is given, whether that be at the end of April, or some time in July. Third, with most working-age Americans at home or out of a job, the spending level upon the return to some semblance of normalcy will be vastly reduced. GDP growth is likely to be negative for the second and third quarters and the entire year of 2020 will go down as one in which the US economy was running in reverse.
At this point, anyone who has not taken steps to remove money from the stock and bond markets is facing a world of hurt which could have been avoided. The appropriate investment stance at this juncture would likely be 75% cash and 25% in hard assets (real estate, precious metals). Sadly, the gullible American passive investment class has been conditioned to believe stocks will always bounce back and that bonds represent safety. Neither claim can be proven within the present paradigm. Stocks may bounce back, but that bounce may not occur for many years. Bonds may be safe, but at interest rates that are comparable to stuffing matresses with Federal Reserve Notes. And, it's probably not beyond the realm of probability that the almighty dollar will not survive in its current form. At the very least, as severe devaluation is in the cards.
Treasury yields were smashed lower, the curve significantly flattened on the day, with the 30-year bond at 1.27%, the 10-year note at 0.62%, and the full breadth of the curve a mere 124 basis points, down from 130 a day ago and 145 a week prior. These are serious declines, significant moves in a market that is supposed to be stable. The portent is for more dislocation, desperation, and, eventually, negative rates which will obliterate the currency as is happening in Japan and Europe.
Gold and silver are still largely unavailable from regular dealers even though prices on the futures exchanges are dropping, defying the laws of supply and demand. The best place to purchase precious metals in any form is currently ebay, where the market is brisk and one ounce gold coins can be purchased and quickly delivered for prices between $1690 and $1861 while the futures price hovers around $1590.
Silver is in an even better position for sellers, tacking on premiums of up to 100% to the posted price of $14.25 on the futures exchanges. On eBay, the lowest price for a one ounce coin or bar is currently $21.50, with most ranging from $23.00 to $29.00 and uncirculated coins fetching more, up to absurd prices in the $40 and higher range. With mines shut down in many countries, the shortage of bullion is only just beginning. A metal mania is upon us.
Oil prices have caught bids early Thursday morning, with WTI crude priced at $22.37, Brent at $27.19 at the time of this writing. With a supply glut and the Saudis pumping at nearly-full capacity and offering discounts, it's likely that these prices do not reflect reality on the ground nor are they likely to maintain their gains for long.
As another trading day approaches, regular people may be wondering when they will receive their bailout $1200 check or direct deposit from the government and how they will pay their rent or mortgage without a job or some form of assistance. It has been two weeks since Treasury Secretary Steven Mnuchin and President Trump suggested that individuals would receive money within two weeks and nobody has seen a nickel. The bill to provide such assistance was passed last week by the Senate, House, and signed into law by President Trump.
On Wednesday, Mnuchin announced that Social Security recipients who do not regularly file tax returns will receive their checks or direct deposits without having to file "simple returns" as the IRS advised, according to TheHill.com. An actual date for dissemination of the monies was not disclosed, though it may be assumed that these recipients will receive their money along with their regular monthly payments. For the rest of the country, the waiting game continues, despite corporations already having trillions of dollars available to them via loans, loan guarantees or outright purchases of private debt issuance by the Federal Reserve, most of which is outside the Fed's normal chartered activities.
As for rent or mortgage payments, those are individual decisions. It is advisable to contact the landlord or mortgagee to work out payment options. Some landlords are deferring April rent payments while most lenders (represented in the main by servicers) have remained fairly tight-lipped on general guidelines relating to mortgage payments. Deferral is a likely solution, with the principal and interest being added to the end of the amortization schedule.
Just now, the Labor Department announced that unemployment insurance claims for the week ended March 28 doubled over the previous week to 6.64 million.
April and the second quarter is off to a very discouraging start.
At the Close, Wednesday, April 1, 2020:
Dow Jones Industrial Average: 20,943.51, -973.69 (-4.44%)
NASDAQ: 7,360.58, -339.52 (-4.41%)
S&P 500: 2,470.50, -114.09 (-4.41%)
NYSE: 9,844.85, -457.05 (-4.44%)
Wednesday, April 1, 2020
Dow, S&P Mark Worst 1st Quarters Ever; Stocks Poised for Lower Open; Gold, Silver Markets in Turmoil
Closing out the first quarter of 2020 with a whimper, stocks opened to the downside, briefly turned positive, but the minor rally quickly fell apart sending the main indices to a close near the lows of the day. On the session, the NASDAQ was the best performer of the majors, the Dow the worst, followed closely by the S&P 500.
Thanks to the Wuhan Flu, coronavirus, COVID-19 or whatever one wishes to call the pathogen making its way around the planet, stocks really took it on the chin to start off the year. The major averages were all lower, even after making all-time highs in mid-February.
It was the worst quarter for the S&P since 2008 and the poorest quarterly performance for the Dow Jones Industrials since 1987. Both the Dow and S&P suffered through their worst first quarter ever. The Dow lost more than 23% of its value in January through March, as the S&P 500 fell 20% in the quarter. The NASDAQ didn't set any records but lost more than 14% in the first quarter.
With supply chain issues affecting companies in February and the advance of the virus in March, there's a good chance that GDP has been so negatively affected through first quarter, growth figures may have a minus sign in front of them when the first estimate of GDP will be announced on the fourth Friday of April. Mark your calendars for April 24 to see if the US will be half way to a recession or barely hanging onto some remnant of growth, any of it likely having occurred in January and early February. Any positive number would uplift the markets, but that is still a long way off and first up are employment figures for March. Wednesday, ADP reports private payrolls for the month and Friday the BLS reports on non-farm payrolls for March. Friday's number ought to be a market mover considering the massive job losses over the past week which will be figured into the calculations.
Gold got clobbered again, losing $46.30 per ounce on the day, dipping from $1623.40 Monday to $1577.10 Tuesday. Silver lost eight cents, closing out at $13.92. These prices are for paper contracts on the COMEX and other futures markets and are not aligning with current physical market dynamics. Both gold and silver are in short supply and dealers worldwide are charging severe premiums and assigning minimum purchases in some cases. Silver generally can be had for $20 to $25 per ounce. Gold is selling at roughly the $1800 level, though delivery times are delayed with waiting times up to 45 days in some cases.
As the futures prices and physical market prices diverge and decouple, it's only a matter of time before the fraudulent practices of settling contracts in cash rather than metal at the COMEX will become common knowledge and an open scandal as buyers standing for physical delivery are denied their right. As the coronavirus panic and attendant market turmoil extends, expect precious metals to rise dramatically in price as true owners of the metal divorce themselves from the bogus futures market.
The same is already occurring in the oil market with Saudi Arabia offering steep discounts to the published prices. WTI price continues to trend around $20 per barrel with gas prices across the United States, Canada and throughout Europe (using the Brent crude standard) at multi-year lows.
Experiencing more flattening across the curve, the treasury complex saw yields rise at the short and long durations, with the belly (1-year through 7-year) flatlining. As was the case with equities, bonds were little moved on the day.
ADP announces March private payrolls at 8:15 am ET on Wednesday. Futures are nearing limit down heading toward the opening bell.
At the Close, Tuesday, March 31, 2020:
Dow Jones Industrial Average: 21,917.16, -410.32 (-1.84%)
NASDAQ: 7,700.10, -74.05 (-0.95%)
S&P 500: 2,584.59, -42.06 (-1.60%)
NYSE: 10,301.87, -132.88 (-1.27%)
Thanks to the Wuhan Flu, coronavirus, COVID-19 or whatever one wishes to call the pathogen making its way around the planet, stocks really took it on the chin to start off the year. The major averages were all lower, even after making all-time highs in mid-February.
It was the worst quarter for the S&P since 2008 and the poorest quarterly performance for the Dow Jones Industrials since 1987. Both the Dow and S&P suffered through their worst first quarter ever. The Dow lost more than 23% of its value in January through March, as the S&P 500 fell 20% in the quarter. The NASDAQ didn't set any records but lost more than 14% in the first quarter.
With supply chain issues affecting companies in February and the advance of the virus in March, there's a good chance that GDP has been so negatively affected through first quarter, growth figures may have a minus sign in front of them when the first estimate of GDP will be announced on the fourth Friday of April. Mark your calendars for April 24 to see if the US will be half way to a recession or barely hanging onto some remnant of growth, any of it likely having occurred in January and early February. Any positive number would uplift the markets, but that is still a long way off and first up are employment figures for March. Wednesday, ADP reports private payrolls for the month and Friday the BLS reports on non-farm payrolls for March. Friday's number ought to be a market mover considering the massive job losses over the past week which will be figured into the calculations.
Gold got clobbered again, losing $46.30 per ounce on the day, dipping from $1623.40 Monday to $1577.10 Tuesday. Silver lost eight cents, closing out at $13.92. These prices are for paper contracts on the COMEX and other futures markets and are not aligning with current physical market dynamics. Both gold and silver are in short supply and dealers worldwide are charging severe premiums and assigning minimum purchases in some cases. Silver generally can be had for $20 to $25 per ounce. Gold is selling at roughly the $1800 level, though delivery times are delayed with waiting times up to 45 days in some cases.
As the futures prices and physical market prices diverge and decouple, it's only a matter of time before the fraudulent practices of settling contracts in cash rather than metal at the COMEX will become common knowledge and an open scandal as buyers standing for physical delivery are denied their right. As the coronavirus panic and attendant market turmoil extends, expect precious metals to rise dramatically in price as true owners of the metal divorce themselves from the bogus futures market.
The same is already occurring in the oil market with Saudi Arabia offering steep discounts to the published prices. WTI price continues to trend around $20 per barrel with gas prices across the United States, Canada and throughout Europe (using the Brent crude standard) at multi-year lows.
Experiencing more flattening across the curve, the treasury complex saw yields rise at the short and long durations, with the belly (1-year through 7-year) flatlining. As was the case with equities, bonds were little moved on the day.
ADP announces March private payrolls at 8:15 am ET on Wednesday. Futures are nearing limit down heading toward the opening bell.
At the Close, Tuesday, March 31, 2020:
Dow Jones Industrial Average: 21,917.16, -410.32 (-1.84%)
NASDAQ: 7,700.10, -74.05 (-0.95%)
S&P 500: 2,584.59, -42.06 (-1.60%)
NYSE: 10,301.87, -132.88 (-1.27%)
Friday, March 27, 2020
Dow, S&P Gain Third Straight Day; Fed Buying Evident
There are signs everywhere that the Federal Reserve has taken an active role in the stock market, especially in the US, but probably abroad as well, in cahoots with their central bank partners, as stocks have recovered sharply over the past three days after being battered by fears stemming from the coronavirus global pandemic, or COVID-19.
Probably the most glaring evidence - outside of the Dow's near-500-point gain in the final 12 minutes of trading Thursday - is the ballooning of the Fed's balance sheet, which has grown by $507,323,000,000 ($507.323 billion) in just seven days, from March 18 to the 25th.
Being almost completely transparent, the Fed, in recent days has announced that they would purchase everything from municipal debt, to corporate debt, to exchange traded funds (ETFs) in the open market in order to "stabilize" the situation. There's one good reason why the Dow was up 1,351 points on a day that started with the announcement that more than three million Americans has lost their jobs in the past week, and it's because the Federal Reserve, with literally unlimited amounts of buying power, was actively in the market.
While this will come as a surprise to pretty much 90% of all Americans, central bank direct activity in equity markets has been an open secret in financial circles for at least the past decade. The Swiss National Bank (SNB) and Bank of Japan are major shareholders in many corporations, including Apple (AAPL) and many others. The BOJ has been buying ETFs in earnest since as early as 2012, when their balance sheet exploded from 150 trillion yen ($138 billion US) to 550 ($506 billion US). Today, the Bank of Japan owns stocks and bonds equal to the country's entire economic output, or 100% of GDP. In essence, the Bank of Japan owns the Japanese economy. It is the Japanese economy and a similar scenario is beginning to emerge in the United States, and likely in the European Union as well.
Other independent central banks in Australia, Canada, England, Brazil, and elsewhere are probably considering doing the same in their stock markets if they haven't already.
It's not as though central banks are complete foreigners to intervention in markets. They've completely distorted the capital markets for years, buying up agency (government) debt and mortgage-backed securities en masse before and after the Great Financial Crisis in 2007-09 to the point at which trillions of dollars in government bonds carry negative yields.
So, instead of just buying debt, why not stocks? Ask your broker. I'm sure he or she will have a ready answer after convulsing on the floor in either laughter or tears.
Elsewhere, treasury yields fell across the spectrum, the 10-year note checking in at 0.83%. Gold and silver have returned to being an afterthought in the futures market and largely unavailable in physical quantities. Gold is still testing recent multi-year highs, closing up $11.60 on Thursday to $1624.50 per ounce. Silver closed down slightly to $14.41 in the futures market. Meanwhile, dealers report widespread shortages amid massive demand for "everyman's gold."
Being that silver is so much less expensive than gold, it is available to anybody with a couple of sawbucks. Thus, it is THE prime target of central banks, as their greatest fear is to have a competing currency accepted by the middle and lower classes. It would kind of ruin their monopoly on currency. It's been going on for hundreds of years and isn't likely to change soon.
Oil was beaten down again on Thursday, with WTI crude closing out at $22.60 a barrel, down nearly two dollars from Wednesday's finishing price. Unleaded gasoline is cheap around the globe, the irony being, with so many coronavirus lockdowns or "stay at home" orders in place, gas is a bargain, but nobody can go anywhere.
At the Close, Thursday, March 26, 2020:
Dow Jones Industrial Average: 22,552.17, +1,351.62 (+6.38%)
NASDAQ: 7,797.54, +413.24 (+5.60%)
S&P 500: 2,630.07, +154.51 (+6.24%)
NYSE: 10,536.28, +574.89 (+5.77%)
Probably the most glaring evidence - outside of the Dow's near-500-point gain in the final 12 minutes of trading Thursday - is the ballooning of the Fed's balance sheet, which has grown by $507,323,000,000 ($507.323 billion) in just seven days, from March 18 to the 25th.
Being almost completely transparent, the Fed, in recent days has announced that they would purchase everything from municipal debt, to corporate debt, to exchange traded funds (ETFs) in the open market in order to "stabilize" the situation. There's one good reason why the Dow was up 1,351 points on a day that started with the announcement that more than three million Americans has lost their jobs in the past week, and it's because the Federal Reserve, with literally unlimited amounts of buying power, was actively in the market.
While this will come as a surprise to pretty much 90% of all Americans, central bank direct activity in equity markets has been an open secret in financial circles for at least the past decade. The Swiss National Bank (SNB) and Bank of Japan are major shareholders in many corporations, including Apple (AAPL) and many others. The BOJ has been buying ETFs in earnest since as early as 2012, when their balance sheet exploded from 150 trillion yen ($138 billion US) to 550 ($506 billion US). Today, the Bank of Japan owns stocks and bonds equal to the country's entire economic output, or 100% of GDP. In essence, the Bank of Japan owns the Japanese economy. It is the Japanese economy and a similar scenario is beginning to emerge in the United States, and likely in the European Union as well.
Other independent central banks in Australia, Canada, England, Brazil, and elsewhere are probably considering doing the same in their stock markets if they haven't already.
It's not as though central banks are complete foreigners to intervention in markets. They've completely distorted the capital markets for years, buying up agency (government) debt and mortgage-backed securities en masse before and after the Great Financial Crisis in 2007-09 to the point at which trillions of dollars in government bonds carry negative yields.
So, instead of just buying debt, why not stocks? Ask your broker. I'm sure he or she will have a ready answer after convulsing on the floor in either laughter or tears.
Elsewhere, treasury yields fell across the spectrum, the 10-year note checking in at 0.83%. Gold and silver have returned to being an afterthought in the futures market and largely unavailable in physical quantities. Gold is still testing recent multi-year highs, closing up $11.60 on Thursday to $1624.50 per ounce. Silver closed down slightly to $14.41 in the futures market. Meanwhile, dealers report widespread shortages amid massive demand for "everyman's gold."
Being that silver is so much less expensive than gold, it is available to anybody with a couple of sawbucks. Thus, it is THE prime target of central banks, as their greatest fear is to have a competing currency accepted by the middle and lower classes. It would kind of ruin their monopoly on currency. It's been going on for hundreds of years and isn't likely to change soon.
Oil was beaten down again on Thursday, with WTI crude closing out at $22.60 a barrel, down nearly two dollars from Wednesday's finishing price. Unleaded gasoline is cheap around the globe, the irony being, with so many coronavirus lockdowns or "stay at home" orders in place, gas is a bargain, but nobody can go anywhere.
At the Close, Thursday, March 26, 2020:
Dow Jones Industrial Average: 22,552.17, +1,351.62 (+6.38%)
NASDAQ: 7,797.54, +413.24 (+5.60%)
S&P 500: 2,630.07, +154.51 (+6.24%)
NYSE: 10,536.28, +574.89 (+5.77%)
Thursday, February 6, 2020
Stocks Continue to Soar as Threat of Global Pandemic from Coronavirus Fades
US stocks are so hot right now it's difficult to keep up with all the records and new all-time highs. Suffice to say that the Fed continues to pump billions of dollars into the hands of primary dealers, hedge funds, used car dealers, slot machines, you name it.
This market, because of the continuous flow of funny money from the central bank, is as phony as an Iowa caucus, but, if you're long, it's infinitely more enjoyable.
With the Dow up more than 1000 points in three days, most analysts and reporters have run out of superlatives.
Apparently, the threat of a global pandemic from the novel coronavirus has been discounted. Almost all of the reported infections and deaths have been centered in China. Only two deaths outside of China have been reported as having been due to the virus.
On Wednesday, President Trump was acquitted on both impeachment charges. Next time (probably in a few months or so) the Democrats might want to try accusing him of something more concrete than Abuse of Power or Obstruction of Congress, neither of which are crimes, much less high crimes. The only things high were the Democrat deep operatives who dreamt up their poor attempt at a coup d'etat.
In what has to be one of the more amusing stories of the past few days is the unprecedented rise and fall of Elon Musk's Tesla (TSLA) stock, which ran up from a close of 650.57 per share on Friday, January 30, to 887.06 at the close on Tuesday, February 4, and finished the session at 734.70 on Wednesday, the 5th, a loss of 152.36 points (-17.18%), and continues to fall in pre-market trading. One of the most widely-held and most-shorted stocks listed, everybody's a winner with the exploding electric car company.
Just in case there isn't enough juice in the markets to keep the rally alive, China announced overnight that it will cut by half tariffs on 1,717 goods imported from the United States beginning February 14 as part of its agreement to Phase 1 of the US-China trade deal.
Oil continues to hold steady near $50 per barrel of WTI crude, having fallen into a bear market from $64 just a month ago. The US national average for a gallon of regular unleaded gas is $2.47 a gallon, according to GasBuddy.com.
At the Close, Wednesday, February 5, 2020:
Dow Jones Industrial Average: 29,290.85, +483.22 (+1.68%)
NASDAQ: 9,508.68, +40.71 (+0.43%)
S&P 500: 3,334.69, +37.10 (+1.13%)
NYSE: 14,024.86, +162.02 (+1.17%)
This market, because of the continuous flow of funny money from the central bank, is as phony as an Iowa caucus, but, if you're long, it's infinitely more enjoyable.
With the Dow up more than 1000 points in three days, most analysts and reporters have run out of superlatives.
Apparently, the threat of a global pandemic from the novel coronavirus has been discounted. Almost all of the reported infections and deaths have been centered in China. Only two deaths outside of China have been reported as having been due to the virus.
On Wednesday, President Trump was acquitted on both impeachment charges. Next time (probably in a few months or so) the Democrats might want to try accusing him of something more concrete than Abuse of Power or Obstruction of Congress, neither of which are crimes, much less high crimes. The only things high were the Democrat deep operatives who dreamt up their poor attempt at a coup d'etat.
In what has to be one of the more amusing stories of the past few days is the unprecedented rise and fall of Elon Musk's Tesla (TSLA) stock, which ran up from a close of 650.57 per share on Friday, January 30, to 887.06 at the close on Tuesday, February 4, and finished the session at 734.70 on Wednesday, the 5th, a loss of 152.36 points (-17.18%), and continues to fall in pre-market trading. One of the most widely-held and most-shorted stocks listed, everybody's a winner with the exploding electric car company.
Just in case there isn't enough juice in the markets to keep the rally alive, China announced overnight that it will cut by half tariffs on 1,717 goods imported from the United States beginning February 14 as part of its agreement to Phase 1 of the US-China trade deal.
Oil continues to hold steady near $50 per barrel of WTI crude, having fallen into a bear market from $64 just a month ago. The US national average for a gallon of regular unleaded gas is $2.47 a gallon, according to GasBuddy.com.
At the Close, Wednesday, February 5, 2020:
Dow Jones Industrial Average: 29,290.85, +483.22 (+1.68%)
NASDAQ: 9,508.68, +40.71 (+0.43%)
S&P 500: 3,334.69, +37.10 (+1.13%)
NYSE: 14,024.86, +162.02 (+1.17%)
Wednesday, January 22, 2020
Stocks Take Extra Day Off As Impeachment Trial Opens, Virginia Protest Ends Peacefully
Almost everybody got back to work on Tuesday, following the Martin Luther King Jr. holiday, including those who traveled to Richmond, Virginia to rally in support of the second amendment and congress, which eagerly got started on the impeachment trial of President Donald J. Trump.
The scene in Richmond was inspiring, if not daunting to those who oppose gun rights in the United States and elsewhere. The display of firearms - from shotguns and .22s to ARs, semi-automatic weapons, handguns and even a .50-caliber tank-buster - was impressive to say the least. The massive demonstration of an armed populace acting in a very peaceable manner without incident (only one arrest was made) served as a reminder of what America is all about: a free people willing to defend their rights against tyranny.
In congress, it was another kind of spectacle, with the managers from the House of Representatives sparring over trial rules with the president's legal team. The arguments by the House members who stand as prosecutors fell largely on deaf Republican ears as every one of the eleven proposed amendments brought up by Democrat leader Chuck Schumer was defeated along party lines, 53-47, bar one. Maine Senator, Susan Collins voted with Democrats on the 10th amendment proposed by Schumer, which would have allowed more time for both sides to respond to trial motions, but it still went down in flames, 52-48.
The marathon session lasted well into the night, finally adjourning just before two o'clock am. The defeat of the Democrats was resounding and bodes well for the president as the parties will begin making their cases when the House managers begin three days of opening arguments on Wednesday at 1:00 pm ET.
While the rhetoric was fiery and impassioned by both sides, the issues raised by the president's lawyers seemed more authentic and serious. Most of the Senators seated in the chamber are well aware that the charges levied by the Democratically-controlled House - Abuse of Power and Obstruction of Congress - are neither crimes nor are their arguments particularly well-founded. The president and his team have roundly criticized the entire impeachment process as a "sham" and a political exercise, the charges not even close to rising as impeachable offenses.
Nevertheless, House managers will have three eight-hour sessions over the next three days in which to plead their case, taking the trial through Friday. The president's defense team will also have the same allotment of time - 24 hours - to offer their case, on Saturday, Monday, and Tuesday, also in three eight-hour sessions. It's looking like the president will be acquitted on both charges in a reasonably short manner.
While there is still the possibility of calling new witnesses and adding documents, the Republicans in the Senate are unlikely to move forward on those grounds, considering that the House should have done its job better to make its case against the president without having to conjure up new charges and ddrag the country through a drawn-out, ridiculous process that could stretch into months of useless debate.
Meanwhile, Wall Street wasn't very upbeat about anything, as stocks took a rare nosedive to open the week's trading. Led by the Dow Industrials, losses were not substantial and would likely not lead to any more selling activity. Besides the Fed's nearly-continuous pumping of fresh cash into the hands of hedge funds and primary dealers (big banks and brokerages), the global outlook is a few shades light of gloomy while the rich and not-so-famous convene at Davos, Switzerland this week for the 50th annual World Economic Forum.
Business and political leaders from around the world heard President Trump speak on the glories of his "America First" policies, followed by another round of adult-shaming by eco-warrior princess, Greta Thunberg. The two cancelled each other out to some degree, though Trump's speech was longer and much more compelling than Thunberg's seven-minute screed.
Even with stocks lower, gold and silver took substantial hits at the start of the day and failed to recover to any great degree. WTI Crude oil futures continued to test the upper resistance at $58/barrel and failing, while the 10-year note was bid, finishing below a 1.80% yield for just the second time this year.
All told, it was a good day for non-financial activity, though the trading hardly reflected that. Instead, markets are displaying the kind of activity seen when stocks are overbought, as they currently are. Short-term, there's potential for a more sizable pullback, though it would take a gargantuan effort to offset the machinations of the Fed, which now has wrested nearly complete control of almost all markets.
Until the Federal Reserve takes its foot off the liquidity gas pedal, stocks should continue to outpace all other investments.
At the Close, Tuesday, January 21, 2020:
Dow Jones Industrial Average: 29,196.04, -152.06 (-0.52%)
NASDAQ: 9,370.81, -18.14 (-0.19%)
S&P 500: 3,320.79, -8.83 (-0.27%)
NYSE: 14,109.98, -73.22 (-0.52%)
The scene in Richmond was inspiring, if not daunting to those who oppose gun rights in the United States and elsewhere. The display of firearms - from shotguns and .22s to ARs, semi-automatic weapons, handguns and even a .50-caliber tank-buster - was impressive to say the least. The massive demonstration of an armed populace acting in a very peaceable manner without incident (only one arrest was made) served as a reminder of what America is all about: a free people willing to defend their rights against tyranny.
In congress, it was another kind of spectacle, with the managers from the House of Representatives sparring over trial rules with the president's legal team. The arguments by the House members who stand as prosecutors fell largely on deaf Republican ears as every one of the eleven proposed amendments brought up by Democrat leader Chuck Schumer was defeated along party lines, 53-47, bar one. Maine Senator, Susan Collins voted with Democrats on the 10th amendment proposed by Schumer, which would have allowed more time for both sides to respond to trial motions, but it still went down in flames, 52-48.
The marathon session lasted well into the night, finally adjourning just before two o'clock am. The defeat of the Democrats was resounding and bodes well for the president as the parties will begin making their cases when the House managers begin three days of opening arguments on Wednesday at 1:00 pm ET.
While the rhetoric was fiery and impassioned by both sides, the issues raised by the president's lawyers seemed more authentic and serious. Most of the Senators seated in the chamber are well aware that the charges levied by the Democratically-controlled House - Abuse of Power and Obstruction of Congress - are neither crimes nor are their arguments particularly well-founded. The president and his team have roundly criticized the entire impeachment process as a "sham" and a political exercise, the charges not even close to rising as impeachable offenses.
Nevertheless, House managers will have three eight-hour sessions over the next three days in which to plead their case, taking the trial through Friday. The president's defense team will also have the same allotment of time - 24 hours - to offer their case, on Saturday, Monday, and Tuesday, also in three eight-hour sessions. It's looking like the president will be acquitted on both charges in a reasonably short manner.
While there is still the possibility of calling new witnesses and adding documents, the Republicans in the Senate are unlikely to move forward on those grounds, considering that the House should have done its job better to make its case against the president without having to conjure up new charges and ddrag the country through a drawn-out, ridiculous process that could stretch into months of useless debate.
Meanwhile, Wall Street wasn't very upbeat about anything, as stocks took a rare nosedive to open the week's trading. Led by the Dow Industrials, losses were not substantial and would likely not lead to any more selling activity. Besides the Fed's nearly-continuous pumping of fresh cash into the hands of hedge funds and primary dealers (big banks and brokerages), the global outlook is a few shades light of gloomy while the rich and not-so-famous convene at Davos, Switzerland this week for the 50th annual World Economic Forum.
Business and political leaders from around the world heard President Trump speak on the glories of his "America First" policies, followed by another round of adult-shaming by eco-warrior princess, Greta Thunberg. The two cancelled each other out to some degree, though Trump's speech was longer and much more compelling than Thunberg's seven-minute screed.
Even with stocks lower, gold and silver took substantial hits at the start of the day and failed to recover to any great degree. WTI Crude oil futures continued to test the upper resistance at $58/barrel and failing, while the 10-year note was bid, finishing below a 1.80% yield for just the second time this year.
All told, it was a good day for non-financial activity, though the trading hardly reflected that. Instead, markets are displaying the kind of activity seen when stocks are overbought, as they currently are. Short-term, there's potential for a more sizable pullback, though it would take a gargantuan effort to offset the machinations of the Fed, which now has wrested nearly complete control of almost all markets.
Until the Federal Reserve takes its foot off the liquidity gas pedal, stocks should continue to outpace all other investments.
At the Close, Tuesday, January 21, 2020:
Dow Jones Industrial Average: 29,196.04, -152.06 (-0.52%)
NASDAQ: 9,370.81, -18.14 (-0.19%)
S&P 500: 3,320.79, -8.83 (-0.27%)
NYSE: 14,109.98, -73.22 (-0.52%)
Thursday, October 10, 2019
Stocks Bounce Higher, Shrugging Off Global Funding and Recession Issues
Apologies for the brevity, on the road once again.
Suffice to say that equity investors shrugged off all concerns on the day and bid stocks higher against a backdrop of daily and weekly losses. The NASDAQ was hardest hit, as traders shunned the high tech sector.
Crude oil has been an interesting story. Since the mid-September attack on the Saudi production facility, oil prices had surged, but now have retreated to prior levels, with WTI crude hovering in the $52/barrel.
Apparently, a two-week shutdown of five percent of global production does not warrant a 15% increase in price, as the perpetrators of the obvious false flag attack had hoped.
Well, at least we can all rest assured that massive fraud and manipulation of markets isn't the sole province of central banks and politicians.
Enjoy the day. Smile through the angst. Go Cardinals!
At the Close, Wednesday, October 9, 2019:
Dow Jones Industrial Average: 26,346.01, +181.97 (+0.70%)
NASDAQ: 7,903.74, +79.96 (+1.02%)
S&P 500: 2,919.40, +26.34 (+0.91%)
NYSE Composite: 12,691.16, +100.25 (+0.80%)
Suffice to say that equity investors shrugged off all concerns on the day and bid stocks higher against a backdrop of daily and weekly losses. The NASDAQ was hardest hit, as traders shunned the high tech sector.
Crude oil has been an interesting story. Since the mid-September attack on the Saudi production facility, oil prices had surged, but now have retreated to prior levels, with WTI crude hovering in the $52/barrel.
Apparently, a two-week shutdown of five percent of global production does not warrant a 15% increase in price, as the perpetrators of the obvious false flag attack had hoped.
Well, at least we can all rest assured that massive fraud and manipulation of markets isn't the sole province of central banks and politicians.
Enjoy the day. Smile through the angst. Go Cardinals!
At the Close, Wednesday, October 9, 2019:
Dow Jones Industrial Average: 26,346.01, +181.97 (+0.70%)
NASDAQ: 7,903.74, +79.96 (+1.02%)
S&P 500: 2,919.40, +26.34 (+0.91%)
NYSE Composite: 12,691.16, +100.25 (+0.80%)
Monday, August 5, 2019
WEEKEND WRAP: Worst Week Of Year For Stocks
Stocks were pretty well hammered this week, as shown in the figures below.
What did them in was not that the FOMC eased for the first time since 2008, but that it was only 25 basis points. Everybody, including President Trump, was looking for a 50 basis point cut, and they didn't get it, so market participants, already concerned at the ongoing tariff war with China, sold the news (after buying the rumor).
The drop was hardly anything to get excited over as all markets were down less than four percent. The coming week may outdo this last one however, as China has upped the ante Monday by devaluing the yuan (further proof that the Chinese are currency manipulators, along with everything else we don't like about them) and halting US agricultural imports.
These developments are very bad for a jittery market and this one has a case of the DTs. Watch for either a cascading, waterfall type event or some intervention by our friends at the NY Fed, those hale and hearty fellows that saved the Dow with a 200-point boost in the final half hour of trading on Friday. They're likely to be quite busy buying stocks again this week.
Keep a close eye on the divergence between big caps and small-to-mid caps. The smaller stocks are in danger of entering correction or even bear markets for some. They're not supported by the funds nor the fed, so they may be the first dominoes to fall in a crisis, which is entirely possible at this juncture.
Since the federal government has already put in place a moratorium on the debt ceiling, don't expect a September swoon, as we've seen so often when the government can't agree on a budget. With the agreement signed last week, the Trump administration and the congress has committed to spending well beyond whatever is allocated or budgeted. A trillion dollar deficit has now become the norm, though tariff income may begin to whittle away at that (there is some silver lining to the tariffs).
Generally, markets are looking quite unstable and another 3-4% decline could be in the cards. There are few catalysts for upside development. Gold and silver are not going anywhere, despite the howls coming from the Goldbugs and Silver Surfers. The rally has topped out. There may be a little movement to the upside, but it won't be allowed to develop into anything outstanding. When gold goes past $1500 and silver sells for more than $18 an ounce, that may be the time to change one's outlook.
WTI crude is going to end up in the $40s per barrel price by October, if not sooner. There's a massive glut and the economy is by no means overheating. Besides, nobody in the oil business wants to correctly identify the impact of solar, wind, increased efficiency in auto engines, or conservation by US drivers (who are getting older by the day and thus drive less and less).
The world is not going to come to an end this week, but we may be treated to a preview of what it will look like. 2023 is the outlier.
BTW: The 10-year treasury note is likely to sink below 1.50% THIS YEAR. Good for bond sellers and debtors. There is no inflation than cannot be sidestepped with alternatives or smart shopping.
At the Close, Friday, August 2, 2019:
Dow Jones Industrial Average: 26,485.01, -98.41 (-0.37%)
NASDAQ: 8,004.07, -107.05 (-1.32%)
S&P 500: 2,932.05, -21.51 (-0.73%)
NYSE COMPOSITE: 12,839.51, -81.31 (-0.63%)
For the Week:
Dow: -707.44 (-2.60%)
Dow Transports: -402.24 (-3.73%)
NASDAQ: -326.14 (-3.92%)
S&P 500: -93.81 (-3.10%)
NYSE COMPOSITE: -396.00 (-2.99%)
What did them in was not that the FOMC eased for the first time since 2008, but that it was only 25 basis points. Everybody, including President Trump, was looking for a 50 basis point cut, and they didn't get it, so market participants, already concerned at the ongoing tariff war with China, sold the news (after buying the rumor).
The drop was hardly anything to get excited over as all markets were down less than four percent. The coming week may outdo this last one however, as China has upped the ante Monday by devaluing the yuan (further proof that the Chinese are currency manipulators, along with everything else we don't like about them) and halting US agricultural imports.
These developments are very bad for a jittery market and this one has a case of the DTs. Watch for either a cascading, waterfall type event or some intervention by our friends at the NY Fed, those hale and hearty fellows that saved the Dow with a 200-point boost in the final half hour of trading on Friday. They're likely to be quite busy buying stocks again this week.
Keep a close eye on the divergence between big caps and small-to-mid caps. The smaller stocks are in danger of entering correction or even bear markets for some. They're not supported by the funds nor the fed, so they may be the first dominoes to fall in a crisis, which is entirely possible at this juncture.
Since the federal government has already put in place a moratorium on the debt ceiling, don't expect a September swoon, as we've seen so often when the government can't agree on a budget. With the agreement signed last week, the Trump administration and the congress has committed to spending well beyond whatever is allocated or budgeted. A trillion dollar deficit has now become the norm, though tariff income may begin to whittle away at that (there is some silver lining to the tariffs).
Generally, markets are looking quite unstable and another 3-4% decline could be in the cards. There are few catalysts for upside development. Gold and silver are not going anywhere, despite the howls coming from the Goldbugs and Silver Surfers. The rally has topped out. There may be a little movement to the upside, but it won't be allowed to develop into anything outstanding. When gold goes past $1500 and silver sells for more than $18 an ounce, that may be the time to change one's outlook.
WTI crude is going to end up in the $40s per barrel price by October, if not sooner. There's a massive glut and the economy is by no means overheating. Besides, nobody in the oil business wants to correctly identify the impact of solar, wind, increased efficiency in auto engines, or conservation by US drivers (who are getting older by the day and thus drive less and less).
The world is not going to come to an end this week, but we may be treated to a preview of what it will look like. 2023 is the outlier.
BTW: The 10-year treasury note is likely to sink below 1.50% THIS YEAR. Good for bond sellers and debtors. There is no inflation than cannot be sidestepped with alternatives or smart shopping.
At the Close, Friday, August 2, 2019:
Dow Jones Industrial Average: 26,485.01, -98.41 (-0.37%)
NASDAQ: 8,004.07, -107.05 (-1.32%)
S&P 500: 2,932.05, -21.51 (-0.73%)
NYSE COMPOSITE: 12,839.51, -81.31 (-0.63%)
For the Week:
Dow: -707.44 (-2.60%)
Dow Transports: -402.24 (-3.73%)
NASDAQ: -326.14 (-3.92%)
S&P 500: -93.81 (-3.10%)
NYSE COMPOSITE: -396.00 (-2.99%)
Sunday, December 2, 2018
WEEKEND WRAP: Powell Puts Positive Spin On Rates, Economy; Stocks Respond With Banner Gains
As much as stocks were flattened last week, they gained back this week, and then some, rebounding mainly off the lips of Fed Chairman Jerome Powell, who uttered two words which are sure to become ensconced within the annuls of great Fed Chairman one liners, such as Alan Greenspan's notorious "irrational exuberance."
Having a way with words, especially concise two-word constructs, Powell uttered, in a speech at the Economic Club of New York, that interest rates were "just below" neutral, sending stocks spiraling upwards on Wednesday.
Those gains followed two prior sessions with more pedestrian advances, the Wednesday push a 617-point blast on the Dow which sent the industrials into positive territory not only for the month, but for the year as well. The week's gains were capped off by a window-dressing close on Friday, with the Dow posting a nearly 200-point gain, all of which came after 1:30 pm ET.
Events of the week - from Powell's speech to Trump's dealings at the G20 in Buenos Aires - managed to put a positive spin on the outlook for stocks going into the final month of the year and the holiday shopping season.
Effectively, what Powell's statement on interest rates did was virtually assure a 25 basis point hike in the federal funds rate and then a pause at what would have been the next logical rate increase, at the March FOMC meeting, and beyond. Whether the Fed's members actually believes that an overnight rate of 2.25-2.50% neither hinders nor aids the US economy is a question open for debate, as most believed that more rate hikes were necessary per the minutes of the last FOMC meeting earlier in November.
That sentiment put a bit of a damper on the market when released on Thursday, but, as Wall Street memories seem exceedingly short these days, the flattish close didn't have any lasting effect.
Once into 2019, the Fed is likely to continue to spin positively, as Janet Yellen's honorable mention entry in the two-word scrabble that is Fedspeak, "data dependent" should be rolling off the lips of more than a few Fed officials in the cold months of winter.
Undeniably, a dovish Federal Reserve can be nothing but good for stocks, which are the de facto underpinning of the US economy. The Fed - and Powell in particular - may have been taking a sideways glance at the housing market as well, another pillar in the economic construct. Rising mortgage rates have shut down advances in new and existing home sales, punishing home builder stocks like Lennar (LEN), D.R. Horton (DHI), and KB Home (KBH). A stagnant housing market may have been instrumental in the formation of Powell's suddenly-accomodative stance.
Even with the rebound this week, stocks still have a pretty large slope to scale to get back to September or October's all-time highs. The NASDAQ still has issues with falling tech stocks and GM's announcement that it was shuttering five factories and laying off 14,000 workers had a chilling effect on what was an overwhelmingly positive week.
Elsewhere, oil continued to hover at the $50 level for WTI crude, precious metals remained flat to negative, but other global markets perked up a bit.
When the FOMC meets on December 18-19, there will be little doubt about their direction. A rate hike of 0.25% is practically baked into the cake. After that, however, it certainly appears the Fed will consider its work done, for now, at least. The next rate hike - and there is almost certainly to be one or two in the next 12-18 months - will probably come after some gaudy economic data or fresh highs in the stock market.
Until then, the skies are blue and smooth sailing is ahead.
Dow Jones Industrial Average November Scorecard:
At the Close, Friday, November 30, 2018:
Dow Jones Industrial Average: 25,538.46, +199.62 (+0.79%)
NASDAQ: 7,330.54, +57.45 (+0.79%)
S&P 500: 2,760.17, +22.41 (+0.82%)
NYSE Composite: 12,457.55, +68.18 (+0.55%)
FOR THE WEEK:
Dow: +1,252.51 (+5.16%)
NASDAQ: +391.55 (+5.64%)
S&P 500: +127.61 (+4.85%)
NYSE Composite: +421.31 (+3.%0%)
Having a way with words, especially concise two-word constructs, Powell uttered, in a speech at the Economic Club of New York, that interest rates were "just below" neutral, sending stocks spiraling upwards on Wednesday.
Those gains followed two prior sessions with more pedestrian advances, the Wednesday push a 617-point blast on the Dow which sent the industrials into positive territory not only for the month, but for the year as well. The week's gains were capped off by a window-dressing close on Friday, with the Dow posting a nearly 200-point gain, all of which came after 1:30 pm ET.
Events of the week - from Powell's speech to Trump's dealings at the G20 in Buenos Aires - managed to put a positive spin on the outlook for stocks going into the final month of the year and the holiday shopping season.
Effectively, what Powell's statement on interest rates did was virtually assure a 25 basis point hike in the federal funds rate and then a pause at what would have been the next logical rate increase, at the March FOMC meeting, and beyond. Whether the Fed's members actually believes that an overnight rate of 2.25-2.50% neither hinders nor aids the US economy is a question open for debate, as most believed that more rate hikes were necessary per the minutes of the last FOMC meeting earlier in November.
That sentiment put a bit of a damper on the market when released on Thursday, but, as Wall Street memories seem exceedingly short these days, the flattish close didn't have any lasting effect.
Once into 2019, the Fed is likely to continue to spin positively, as Janet Yellen's honorable mention entry in the two-word scrabble that is Fedspeak, "data dependent" should be rolling off the lips of more than a few Fed officials in the cold months of winter.
Undeniably, a dovish Federal Reserve can be nothing but good for stocks, which are the de facto underpinning of the US economy. The Fed - and Powell in particular - may have been taking a sideways glance at the housing market as well, another pillar in the economic construct. Rising mortgage rates have shut down advances in new and existing home sales, punishing home builder stocks like Lennar (LEN), D.R. Horton (DHI), and KB Home (KBH). A stagnant housing market may have been instrumental in the formation of Powell's suddenly-accomodative stance.
Even with the rebound this week, stocks still have a pretty large slope to scale to get back to September or October's all-time highs. The NASDAQ still has issues with falling tech stocks and GM's announcement that it was shuttering five factories and laying off 14,000 workers had a chilling effect on what was an overwhelmingly positive week.
Elsewhere, oil continued to hover at the $50 level for WTI crude, precious metals remained flat to negative, but other global markets perked up a bit.
When the FOMC meets on December 18-19, there will be little doubt about their direction. A rate hike of 0.25% is practically baked into the cake. After that, however, it certainly appears the Fed will consider its work done, for now, at least. The next rate hike - and there is almost certainly to be one or two in the next 12-18 months - will probably come after some gaudy economic data or fresh highs in the stock market.
Until then, the skies are blue and smooth sailing is ahead.
Dow Jones Industrial Average November Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 11/1/18 | 25,380.74 | +264.98 | +264.98 |
| 11/2/18 | 25,270.83 | -109.91 | +155.07 |
| 11/5/18 | 25,461.70 | +190.87 | +345.94 |
| 11/6/18 | 25,635.01 | +173.31 | +519.25 |
| 11/7/18 | 26,180.30 | +545.29 | +1064.54 |
| 11/8/18 | 26,191.22 | +10.92 | +1075.46 |
| 11/9/18 | 25,989.30 | -201.92 | +873.54 |
| 11/12/18 | 25,387.18 | -602.12 | +271.42 |
| 11/13/18 | 25,286.49 | -100.69 | +170.27 |
| 11/14/18 | 25,080.50 | -205.99 | -35.72 |
| 11/15/18 | 25,289.27 | +208.77 | +173.05 |
| 11/16/18 | 25,413.22 | +123.95 | +297.00 |
| 11/19/18 | 25,017.44 | -395.78 | -98.78 |
| 11/20/18 | 24,465.64 | -551.80 | -650.58 |
| 11/21/18 | 24,464.69 | -0.95 | -651.53 |
| 11/23/18 | 24,285.95 | -178.74 | -830.27 |
| 11/26/18 | 24,640.24 | +354.29 | -475.98 |
| 11/27/18 | 24,748.73 | +108.49 | -367.49 |
| 11/28/18 | 25,366.43 | +617.70 | +250.21 |
| 11/29/18 | 25,342.72 | -23.71 | +226.50 |
| 11/30/18 | 25,538.46, +199.62 | -23.71 | +426.12 |
At the Close, Friday, November 30, 2018:
Dow Jones Industrial Average: 25,538.46, +199.62 (+0.79%)
NASDAQ: 7,330.54, +57.45 (+0.79%)
S&P 500: 2,760.17, +22.41 (+0.82%)
NYSE Composite: 12,457.55, +68.18 (+0.55%)
FOR THE WEEK:
Dow: +1,252.51 (+5.16%)
NASDAQ: +391.55 (+5.64%)
S&P 500: +127.61 (+4.85%)
NYSE Composite: +421.31 (+3.%0%)
Saturday, November 24, 2018
WEEKEND WRAP: Black Friday or Blue Friday? Oil Down 34%, S&P, NASDAQ, NYSE In Correction
The beatings will continue until morale improves.
While the exact origin of the above phrase is clouded, it certainly applies to the current stock trading regimen that has sent world markets spinning downward and US stocks to levels comparable to nearly a year ago.
The sad situation for stocks continued even into the holiday season, when the traditionally upbeat and optimistic Black Friday half-day session turned into a savage selloff that lasted right through to the 1:00 pm ET close.
Following a brief respite on Wednesday that saw the Dow end down less than one point, and the Thanksgiving Day holiday, investors took their cues from overseas markets, which were sold off on Thursday, extending the dour moods in Europe and the Pacific Rim. Friday's trading in foreign markets was mixed, though the outlier was Brazil, where the Bovespa lost 1,247.21 points (-1.43%), confirming the theme of a global, rolling, slow-motion crash in equity values.
According to respected sources (ZeroHedge and ETF Daily News), the Dow suffered its worst Black Friday loss since 2010 and the S&P saw its worst performance for the day after Thanksgiving since the mid-1930s.
While the Dow has not yet caught down to its deepest depths of 2018, it is approaching the 2018 bottom from March 23 (23,533.20), promoting the idea that the worst of this round o selling is not quite over.
Friday's session concluded another in a series of poor performances for stocks, nearly equalling the declines seen in the week of October 8-12, sending all of the major indices below their respective 50, 200, and 40-week moving averages.
While shoppers in the US were out buying electronics, toys, appliances, clothes, and assorted trinkets, Wall Street traders were selling off assets, not an encouraging start to the holiday season. All of the major averages ended the week below where they started 2018. Without a significant Santa Claus rally, 2018 looks to be one of the worst for traders since 2008, when the S&P 500 lost 38.49%. Since then, only twice - in 2011 and 2015 - has the S&P closed lower than the close from the previous year. Currently, the S&P is down less than two percent on the year.
Friday's losses sent there S&P 500 into correction territory, ending down 10.17% from the September 20 all-time high (2930.75). The NASDAQ sank further into correction, and is approaching an outright bear market. The NASDAQ is down 14,44% from its August 29 high (8109.69).
On October 3rd, the Dow Industrials closed at an all-time high of 26,828.39. On Friday, it closed down 9.48% from that level.
The NYSE Composite, which peaked on January 25 at 13,637.02, is down 11.74%, and the Dow Jones Transportation Index is down 10.39 since closing at 11,570.84 on September 14.
Finally, the big loser for the week - which will eventually be a boon to consumers - was oil, which was once again crushed, as WTI crude lost more than seven percent, to $50.42/barrel. On October 3rd, coincidentally the game day the Dow peaked, WTI crude sold for $76.41 per barrel. That's a decline of 34.02% in just over seven weeks. Now, that's a crash.
Dow Jones Industrial Average November Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 11/1/18 | 25,380.74 | +264.98 | +264.98 |
| 11/2/18 | 25,270.83 | -109.91 | +155.07 |
| 11/5/18 | 25,461.70 | +190.87 | +345.94 |
| 11/6/18 | 25,635.01 | +173.31 | +519.25 |
| 11/7/18 | 26,180.30 | +545.29 | +1064.54 |
| 11/8/18 | 26,191.22 | +10.92 | +1075.46 |
| 11/9/18 | 25,989.30 | -201.92 | +873.54 |
| 11/12/18 | 25,387.18 | -602.12 | +271.42 |
| 11/13/18 | 25,286.49 | -100.69 | +170.27 |
| 11/14/18 | 25,080.50 | -205.99 | -35.72 |
| 11/15/18 | 25,289.27 | +208.77 | +173.05 |
| 11/16/18 | 25,413.22 | +123.95 | +297.00 |
| 11/19/18 | 25,017.44 | -395.78 | -98.78 |
| 11/20/18 | 24,465.64 | -551.80 | -650.58 |
| 11/21/18 | 24,464.69 | -0.95 | -651.53 |
| 11/23/18 | 24,285.95 | -178.74 | -830.27 |
At the Close, Friday, November 23, 2018:
Dow Jones Industrial Average: 24,285.95, -178.74 (-0.73%)
NASDAQ: 6,938.98, -33.27 (-0.48%)
S&P 500: 2,632.56, -17.37 (-0.66%)
NYSE Composite: 12,036.24, -87.10 (-0.72%)
For the Week:
Dow: -1,127.27 (-4.44%)
NASDAQ: -308.89 (-4.26%)
S&P 500: -103.71 (-3.79%)
NYSE Composite: -364.04 (-2.94%)
Tuesday, November 13, 2018
Dow Down 100, NASDAQ Up 0.01; Crude Oil the Culprit
From the You Can't Make This Stuff Up Department:
The Dow was down 100 points (and 69 cents, but who's counting), while the NASDAQ finished a hectic day of trading with a gain of 0.01. All told, this was a losing session, as both the S&P 500 and NYSE Composite ended the day underwater.
One might have assumed that Tuesday's losses were an extension from Monday, with Apple leading stocks lower, but, even though the Cupertino computer colossus did finish lower by an even one percent, the biggest losers on the Dow were energy companies ExxonMobil and Chevron, which bracketed Boeing (BA), a 2.11% loser. XOM lost 2.29%. CVX was down 1.74%.
Volatility in stocks is making everybody crazy. The Dow was up 1075 points over the first six sessions in November, but has given back 905 in the past three sessions, leaving it up a mere 170 points for the month, one which traditionally is among the best for long players.
Thus, the answer to the question of what moved markets today is simple: the price of oil, as WTI crude lost ground for the 12th straight day. At $55.19, it's at the lowest level since November last year. Tuesday's decline was also the largest during the recent rout, down nearly eight percent.
Saudi Arabia reduced its estimate for global demand from two million barrels per day to 1.29 million, sending the price sharply lower. Oil peaked on October 3rd, above $76/barrel, and has been on a diagonal course lower since, now officially in a bear market.
While the Saudi's may be fretting over demand and promising production cuts in the near future, the real villain in the oil patch is supply. There's been a glut of oil forever, and the only movement in price was due to artificial crises, forced production cuts, and pure speculation. In June of 2017, WTI crude oil was going for $46/barrel, but was bumped up continuously over the next 16 months before the recent setback. From all indications, reduced demand and oversupply could push prices down below $50/barrel before Thanksgiving and further declines might be a welcome Christmas present for drivers and those who heat their homes with oil.
A lower price for oil, and, consequently, for gasoline and other derivatives, should act to boost the general economy, allowing consumers more disposable income to spend on necessities and/or holiday splurges, all of which should be positive for markets. However, the math isn't quite so simple, as Americans, beset with record credit card and other debt, might tighten their collective belts and pay down some of those nasty, recurring, monthly bills on credit cards with interest rates well beyond what used to be considered usury.
For the pair traders out there, that would mean shorting oil stocks and financials while buying consumer staples and cyclicals.
Fun for everyone.
Dow Jones Industrial Average November Scorecard:
At the Close, Tuesday, November 13, 2018:
Dow Jones Industrial Average: 25,286.49, -100.69 (-0.40%)
NASDAQ: 7,200.88, +0.01 (0.00%)
S&P 500: 2,722.18, -4.04 (-0.15%)
NYSE Composite: 12,328.23, -15.28 (-0.12%)
The Dow was down 100 points (and 69 cents, but who's counting), while the NASDAQ finished a hectic day of trading with a gain of 0.01. All told, this was a losing session, as both the S&P 500 and NYSE Composite ended the day underwater.
One might have assumed that Tuesday's losses were an extension from Monday, with Apple leading stocks lower, but, even though the Cupertino computer colossus did finish lower by an even one percent, the biggest losers on the Dow were energy companies ExxonMobil and Chevron, which bracketed Boeing (BA), a 2.11% loser. XOM lost 2.29%. CVX was down 1.74%.
Volatility in stocks is making everybody crazy. The Dow was up 1075 points over the first six sessions in November, but has given back 905 in the past three sessions, leaving it up a mere 170 points for the month, one which traditionally is among the best for long players.
Thus, the answer to the question of what moved markets today is simple: the price of oil, as WTI crude lost ground for the 12th straight day. At $55.19, it's at the lowest level since November last year. Tuesday's decline was also the largest during the recent rout, down nearly eight percent.
Saudi Arabia reduced its estimate for global demand from two million barrels per day to 1.29 million, sending the price sharply lower. Oil peaked on October 3rd, above $76/barrel, and has been on a diagonal course lower since, now officially in a bear market.
While the Saudi's may be fretting over demand and promising production cuts in the near future, the real villain in the oil patch is supply. There's been a glut of oil forever, and the only movement in price was due to artificial crises, forced production cuts, and pure speculation. In June of 2017, WTI crude oil was going for $46/barrel, but was bumped up continuously over the next 16 months before the recent setback. From all indications, reduced demand and oversupply could push prices down below $50/barrel before Thanksgiving and further declines might be a welcome Christmas present for drivers and those who heat their homes with oil.
A lower price for oil, and, consequently, for gasoline and other derivatives, should act to boost the general economy, allowing consumers more disposable income to spend on necessities and/or holiday splurges, all of which should be positive for markets. However, the math isn't quite so simple, as Americans, beset with record credit card and other debt, might tighten their collective belts and pay down some of those nasty, recurring, monthly bills on credit cards with interest rates well beyond what used to be considered usury.
For the pair traders out there, that would mean shorting oil stocks and financials while buying consumer staples and cyclicals.
Fun for everyone.
Dow Jones Industrial Average November Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 11/1/18 | 25,380.74 | +264.98 | +264.98 |
| 11/2/18 | 25,270.83 | -109.91 | +155.07 |
| 11/5/18 | 25,461.70 | +190.87 | +345.94 |
| 11/6/18 | 25,635.01 | +173.31 | +519.25 |
| 11/7/18 | 26,180.30 | +545.29 | +1064.54 |
| 11/8/18 | 26,191.22 | +10.92 | +1075.46 |
| 11/9/18 | 25,989.30 | -201.92 | +873.54 |
| 11/12/18 | 25,387.18 | -602.12 | +271.42 |
| 11/13/18 | 25,286.49 | -100.69 | +170.27 |
At the Close, Tuesday, November 13, 2018:
Dow Jones Industrial Average: 25,286.49, -100.69 (-0.40%)
NASDAQ: 7,200.88, +0.01 (0.00%)
S&P 500: 2,722.18, -4.04 (-0.15%)
NYSE Composite: 12,328.23, -15.28 (-0.12%)
Monday, November 5, 2018
WEEKEND WRAP: As Mid-Terms Approach, Stocks Gain, Volatility Remains
As October turned to November, volatility persisted with markets gyrating wildly, even as non-farm payroll data came in ahead of expectations and the US mid-term elections (Tuesday, November 6) approached.
Things looked like they were slipping away Friday afternoon, as the Dow registered a loss of 292 points approaching 2:30 pm ET. Near the lows of the day, out of the blue, buyers appeared suddenly, boosting the Dow 198 points in three minutes from 2:26 pm to 2:29 pm ET. A move like that had to be courtesy of the PPT, or, possibly massive, coordinated central bank buying (pretty much the same thing), because all the indices leapt higher at precisely the same time.
In case you think that's fishy, consider what would have happened if the Fed and their central bank cronies had NOT done such things over the past ten years. The world would be a far different place and stocks like Apple wouldn't have the absurd valuation of nearly a trillion dollars. The market's been rigged for a long time, and it's not going to change anytime soon.
Whether or not one ascribes to conspiracy theories, the undeniable truth lies in the nearly ten years of market gains and the week past was another example of how Wall Street manages to play the numbers like Vladimir Horowitz on a Steinway grand piano.
The week began and ended with losses, bracketing three days of upside moves, the result a winning week for stocks, led by a 2.88% move on the NYSE Composite. The other indices were all higher by more than two percent. The week was the second of the last six in which stocks have ended positively.
While the moves were dramatic, only the Dow Industrials managed to close above their 200-day moving average and the 40-week moving average. The other majors remain below key levels and still appear vulnerable. The mid-term elections may trigger a knee-jerk reaction by Wall Street, though any such move is unlikely to be long-lasting. What is apparent is that some big money is moving out of stocks, as distribution has been an obvious element on any upside move. Dip-buyers may have moved markets higher this week, but every rally has been met with selling, indicating a trimming of positions.
Amid the whipsawing of stocks, bonds were selling off, with the 10-year note ending the week at 3.21 and the 30-year long bond yielding 3.46%, the highest in more than five years (June 2014).
The until story is in oil. Both Brent and WTI crude have been losing pricing power for the last six weeks, with WTI settling in the low $60s. The persistent declines and current price of $62.78/barrel is resulting in lower prices at the pump, with the US national average below $2.75/gallon, the lowest level since April of this year.
Lower oil and gas prices are usually a boost for the general economy, as consumers end up with more disposable cash after filling up their vehicles. It's also a boon for homeowners, who see lower fuel costs during heating months.
The big event this week will be Tuesday's mid-term elections. The general thinking is that if Republicans can hold the House and Senate, it will be seen as a referendum on President Trump's first two years in office. The Democrats are counting on a change in the House, with as many as 100 races in the toss-up category. A win in the House for Dems would be seen as a win, though their chances of taking control of the Senate are seen as slim. If such a scenario occurs, the result will be nothing but gridlock in Washington, which is usually a good thing for Wall Street.
Politics aside, the current conditions call for caution. There has been no sign of volatility easing, so the triple-digit daily moves on the Dow and NASDAQ are likely to continue until Thanksgiving at least.
Dow Jones Industrial Average November Scorecard:
At the Close, Friday, November 2, 2018:
Dow Jones Industrial Average: 25,270.83, -109.91 (-0.43%)
NASDAQ: 7,356.99, -77.06 (-1.04%)
S&P 500: 2,723.06, -17.31 (-0.63%)
NYSE Composite: 12,321.80, -34.70 (-0.28%)
For the Week:
Dow: +582.52 (+2.36%)
NASDAQ: +189.78 (+2.65%)
S&P 500: +64.37 (+2.42%)
NYSE Composite: +344.85 (+2.88%)
Things looked like they were slipping away Friday afternoon, as the Dow registered a loss of 292 points approaching 2:30 pm ET. Near the lows of the day, out of the blue, buyers appeared suddenly, boosting the Dow 198 points in three minutes from 2:26 pm to 2:29 pm ET. A move like that had to be courtesy of the PPT, or, possibly massive, coordinated central bank buying (pretty much the same thing), because all the indices leapt higher at precisely the same time.
In case you think that's fishy, consider what would have happened if the Fed and their central bank cronies had NOT done such things over the past ten years. The world would be a far different place and stocks like Apple wouldn't have the absurd valuation of nearly a trillion dollars. The market's been rigged for a long time, and it's not going to change anytime soon.
Whether or not one ascribes to conspiracy theories, the undeniable truth lies in the nearly ten years of market gains and the week past was another example of how Wall Street manages to play the numbers like Vladimir Horowitz on a Steinway grand piano.
The week began and ended with losses, bracketing three days of upside moves, the result a winning week for stocks, led by a 2.88% move on the NYSE Composite. The other indices were all higher by more than two percent. The week was the second of the last six in which stocks have ended positively.
While the moves were dramatic, only the Dow Industrials managed to close above their 200-day moving average and the 40-week moving average. The other majors remain below key levels and still appear vulnerable. The mid-term elections may trigger a knee-jerk reaction by Wall Street, though any such move is unlikely to be long-lasting. What is apparent is that some big money is moving out of stocks, as distribution has been an obvious element on any upside move. Dip-buyers may have moved markets higher this week, but every rally has been met with selling, indicating a trimming of positions.
Amid the whipsawing of stocks, bonds were selling off, with the 10-year note ending the week at 3.21 and the 30-year long bond yielding 3.46%, the highest in more than five years (June 2014).
The until story is in oil. Both Brent and WTI crude have been losing pricing power for the last six weeks, with WTI settling in the low $60s. The persistent declines and current price of $62.78/barrel is resulting in lower prices at the pump, with the US national average below $2.75/gallon, the lowest level since April of this year.
Lower oil and gas prices are usually a boost for the general economy, as consumers end up with more disposable cash after filling up their vehicles. It's also a boon for homeowners, who see lower fuel costs during heating months.
The big event this week will be Tuesday's mid-term elections. The general thinking is that if Republicans can hold the House and Senate, it will be seen as a referendum on President Trump's first two years in office. The Democrats are counting on a change in the House, with as many as 100 races in the toss-up category. A win in the House for Dems would be seen as a win, though their chances of taking control of the Senate are seen as slim. If such a scenario occurs, the result will be nothing but gridlock in Washington, which is usually a good thing for Wall Street.
Politics aside, the current conditions call for caution. There has been no sign of volatility easing, so the triple-digit daily moves on the Dow and NASDAQ are likely to continue until Thanksgiving at least.
Dow Jones Industrial Average November Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 11/1/18 | 25,380.74 | +264.98 | +264.98 |
| 11/2/18 | 25,270.83 | -109.91 | +155.07 |
At the Close, Friday, November 2, 2018:
Dow Jones Industrial Average: 25,270.83, -109.91 (-0.43%)
NASDAQ: 7,356.99, -77.06 (-1.04%)
S&P 500: 2,723.06, -17.31 (-0.63%)
NYSE Composite: 12,321.80, -34.70 (-0.28%)
For the Week:
Dow: +582.52 (+2.36%)
NASDAQ: +189.78 (+2.65%)
S&P 500: +64.37 (+2.42%)
NYSE Composite: +344.85 (+2.88%)
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