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.

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%)

Thursday, May 28, 2020

Violence Erupts In Minneapolis As Stocks Edge Higher, Closer to All-Time Levels, Fueling America's Outrage; 40 Million Unemployed

Nothing happens in a vacuum.

Violence has broken out in Minneapolis, where four policemen held down and killed George Floyd in broad daylight, one officer holding Floyd down with his knee on his throat, while Floyd, who was already handcuffed, repeatedly said he couldn't breath and onlookers pled with police to ease up on their restraint.

Floyd, 46, was killed on Monday, Memorial Day, in a manner shockingly similar to the death of Eric Garner in New York City, back in 2014. Garner was brought down and eventually killed by cops for supposedly selling "loosies," loose cigarettes.

Floyd's crime has yet to be revealed, though the incident occurred as police were investigating the possible use of counterfeit currency.

Wednesday night, a black man was shot and killed amid setting of fires and widespread looting and vandalism throughout the city.

It's difficult to understand how these Minneapolis police could not have known exactly what they were doing, considering the widespread coverage of the 2014 Garner killing. All four officers have been fired and will likely face charges, though they have not been, even though Minneapolis Mayor Jacob Frey has called for criminal charges to be levied against all four.

The resultant outburst from the frustrated community was to be expected. It's what happen when those in positions of power and authority oppress the public, as has been the case nationally since the outbreak of coronavirus. Lockdowns and stay-at-home orders by governors of almost every state have put people on a razor's edge and all that was needed was a spark - like Floyd's murder - to set the violent pattern in motion.

More violence will follow, as certain as night follows day. American citizens are angry and about to erupt as their freedoms have been limited, their employment vanishing, and their rights overridden.

On Thursday morning, the Labor Department announced that another 2.1 million Americans filed initial unemployment claims. Over the past ten weeks, more than 40 million have filed for unemployment nationally.

Meanwhile, stocks continue to feed off the easy Fed currency to send stocks higher and higher. Whatever the market is doing, as unemployment and the associated distress and anger swells, the optics are not good. Everyday Americans have been railing against the huge disparity in wealth between to top one percent (or 10 percent) and the rest of the country for years. A consistent rally in the face of what looks to be coming depression only adds fuel to the fire. The NASDAQ is within five percent of its all-time high. The S&P is a little more than 10 percent away from its record close back in February.

On Wednesday, stocks gained again, as gold and silver were pounded lower, though both are rebounding prior to Wall Street's opening bell.

Most states are heading into a second phase of reopening their economies, though results have been mixed. It's a near-certainty that the economy will suffer a massive failure for the second quarter, along the lines of a 40% decline in GDP, but for now at least, Wall Street seems content to look beyond that, charging higher, as earnings continue to disappoint.

Equity markets are out of control, now fully functioning under the thumb of the Federal Reserve and their now-$7 trillion balance sheet. This relentless rally off the March lows has huge trouble written into it.

At the Close, Wednesday, May 27, 2020:
Dow: 25,548.27, +553.16 (+2.21%)
NASDAQ: 9,412.36, +36.58 (+0.39%)
S&P 500: 3,036.13, +44.36 (+1.48%)
NYSE: 11,837.53, +234.53 (+2.02%)

Wednesday, May 27, 2020

Fed Reduces Bank Reserve Requirements to ZERO Nationwide; Hydroxychloroquine Proves Effective; Stocks Gain; Gold, Silver Mashed

A few developments in the financial sphere over the holiday weekend were worth noting.

Reserve Requirements

As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

Did anybody see or hear that announcement from the Fed?

It must have been announced via double-secret handshake pinky-swear written in invisible ink on flash paper. Thankfully, Mike Maloney has been keeping tabs on the out-of-control Fed and released the information in a video over the Memorial Day weekend.

Actions by the Federal Reserve concerning currency in circulation evokes memories of this famous South Park clip:

Also developing over the weekend (when nobody was paying attention), the World Health Organization announced a "temporary pause" to clinical trials on hydroxychloroquine (HCQ) as a treatment for COVID-19, based on a report from the medical journal, The Lancet, on May 22 which had published an observational study on HCQ and chloroquine and its effects on COVID-19 patients that have been hospitalized.

The study included some very sketchy data and besides being "observational", rather then relying on the gold standard: randomized double blind clinical trial, the study looked at patients already hospitalized from COVID-19, when the benefits of HCQ, especially when taken in conjunction with zinc, is effective as a preventative drug and also has shown in various anecdotal cases to be effective as a treatment for asymptomatic people who tested positive for COVID-19 and also those showing early symptoms of the virus.

A Texas nursing home treated patients and staff with HCQ, Azithromycin (Zithromax, Z-Pak) and zinc with amazing results, only one death from 56 residents and 33 staff who tested positive. Great video coverage in this report.

Costa Rica has been using HCQ effectively to combat COVID-19 with exceptional results. Costa Rica’s reported fatality rate of 1.2 per 1,000,000 population is one of the lowest in the world.

Coronavirus Treatment: India Expands Use Of Trump's Hydroxychloroquine As WHO Halts Trials

Dr. Chris Martenson, who has no bias or agenda, and has been producing some of the most informative and extensively-researched video reports on the virus since January, offers much more:

Oh, yeah, we can't test HCQ because it's so dangerous... to Big Pharma's bottom line. The generic drug costs roughly 10 cents per dose to produce.

And, in case you missed it, President Trump signed an executive order on May 19, which instructed all federal agencies to...
"address this economic emergency by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law and with protection of the public health and safety, with national and homeland security, and with budgetary priorities and operational feasibility."

This was presented earlier on Money Daily, but advisors believe the president's executive order was created to keep federal and state agencies on short leases as regards enforcement of stay-at-home, lockdown, social distancing, and other orders and restrictions on the American public and especially on small business.

The markets on Tuesday were the usual mix of stocks and oil up, gold and silver smashed, bonds flat.

At the Close, Tuesday, May 26, 2020:
Dow: 24,995.11, +529.95 (+2.17%)
NASDAQ: 9,340.22, +15.63 (+0.17%)
S&P 500 2,991.77, +36.32 (+1.23%)
NYSE: 11,603.00, +271.03 (+2.39%)

Sunday, May 24, 2020

WEEKEND WRAP: Governments Throw $$$ Billions At Drug Companies; Mall Rents Go Unpaid; Unemployment Soaring; Stocks Higher

Spurred by an announcement by Moderna (MRNA) that early trials of a possible COVID-19 vaccine were positive, stocks rode a big Monday rally to better than three percent gains across the major indices. All but the NYSE Composite closed at 11-week highs, the Comp. falling just points short.

The irony of the rally was that Moderna, a company that has never made a single dime of profit (they've lost $1.5 billion since 2016), closed last Friday at 66.68, finished Monday at an even $80 per share, but closed out the week at 69.00. In between, there were some big paydays for insiders. If that wasn't proof enough that the market is a crony capitalist playground, then something's wrong with people's world views.

It was the ultimate slap in the face to the American public by the rich and connected, the one-percenters, who made a show of fake news over something ultimately immaterial. It was a very sad display of fascism in practice.

To make matters even worse, Moderna received up to $483 million in federal funding to accelerate development of its coronavirus vaccine. Governments around the world are throwing money at well-heeled companies working on a vaccine. In the United States, the Biomedical Advanced Research and Development Authority (BARDA), a federal agency that funds disease-fighting technology, has announced investments of nearly $1 billion to support coronavirus vaccine development and the scale-up of manufacturing for promising candidates. Johnson and Johnson, Sanofi, and GlaxoSmithKline are among about 100 companies being funded for research toward a coronavirus vaccine by countries from Canada, to Singapore, to France.

The US government committed up to $1.2 billion to fund Oxford University and drug maker, AstraZeneca, in a race to produce a vaccine by October, it was announced on Friday.

The quickest a vaccine has ever been developed is four years from phase one trials to working vaccine on the market. No vaccine for a coronavirus has ever been successfully developed. SARS and MERS are variants of coronaviruses. There are no vaccines to protect against them.

This is just the common folly of the age in which we live. Instead of spending time explaining to people how to strengthen their individual immune systems - the best defense against all diseases and viruses - world governments spend taxpayer dollars funding companies that don't need any extra money. It's an incredible waste of capital, but you can bet the executives of the Big Pharma companies (one of Washington's biggest lobbying groups) and high-ranking scientists are making bank on your dollar.

Meanwhile, back in the real world, the "official" unemployment figure is 14.7%, with more than 36 million Americans out of work. Wall Street continues to party while Main Street gets the shaft, as usual. Lockdowns and social distancing restrictions have blown a hole in small businesses, many of which will never recover and will be bankrupt within months, if not already.

Malls are going broke. The biggest mall in the country, Minnesota's Mall of America, is two months delinquent on it's $1.4 billion loan. Other mall landlords report collecting less than 25% of rent due from April and May. With June approaching quickly, many retailers will be three months behind on rent payments and subject to lockouts, forced liquidations, and other draconian measures written into their leases.

Bankruptcies are mounting and delinquency notices are flying around everywhere. With retail operations - from clothing stores to hair salons to baseball card shops and everything in between - suffering as a result of the nearly nationwide two-month lockdown, many employees who were furloughed will not have jobs to go back to when everything begins to get back to some semblance of normal. That means extended unemployment for millions, poverty and homelessness set to soar.

The federal government's additional $600 a week in unemployment benefits via the CARES act will run out at the end of July, just in time for back-to-school sales that may not happen because some schools won't be reopening and many colleges are planning to allow only limited on-campus activity, with many classes offered via the internet only.

The world has changed, and is changing, though it doesn't appear to be for the better, at least at first blush.

Gold and silver caught bids on the paper markets this week with gold trading as high as $1756.90 per ounce, closing out at $1732.70 bid. Silver was an even better performer, ripping through the $17 per ounce price on Monday, trading as high as $17.57 per ounce before settling in at $17.19 on Friday.

In the physical market, premiums have begun to ease after an incredible supply-demand tug-of-war. Dealers are still facing shortages of certain items, but on eBay, at least, prices were lower for the week, although still well above spot prices.

Here are the most recent prices (Sunday, May 24) for specific items on eBay:

Item / Low / High / Average / Median
1 oz silver coin / 22.74 / 38.98 / 30.72 / 29.60
1 oz silver bar / 25.45 / 39.50 / 29.84 / 26.98
1 oz gold coin / 1,855.00 / 1,985.00 / 1,894.48 / 1,894.27
1 oz gold bar / 1,839.93 / 1,987.95 / 1,869.38 / 1,855.52

Oil was up, treasuries were fairly flat for the week. It's a beautiful holiday weekend, so we're calling this a wrap, right here.

Get out and get some sun!

At the Close, Friday, May 22, 2020:
Dow: 24,465.16, -8.94 (-0.04%)
NASDAQ: 9,324.59, +39.71 (+0.43%)
S&P 500: 2,955.45, +6.94 (+0.24%)
NYSE: 11,331.97, -19.63 (-0.17%)

For the Week:
Dow: +779.74 (+3.29%)
NASDAQ: +310.03 (+3.44%)
S&P 500: +91.75 (+3.20%)
NYSE: +384.65 (+3.51%)

Friday, May 22, 2020

Stocks Take A Break, But Should Not Be At These Obscene Levels; Dividend Cuts Rampant

For a day at least, reality set into equities, as early gains on the major indices were thwarted by waves of selling throughout the session.

The Dow Jones Industrial Average, which was higher by more than 140 points, peaked before 10:30 am and ended the day 101 points lower. Stuck at a very stubborn resistance level in the 24,300-24,650 range, this current attempt to break out is the fourth since the market collapse of March. Repeated efforts to surge through to new recent highs has met with considerable pressure on the sell side of the equation for the past two months and it appears that the rally has either lost all of its momentum or the investment community has become skeptical of the move higher so early in the cycle.

While the real economy has not even bottomed out yet, stocks seem to be of a mind of their own, pricing in every positive development but failing to realize the overall negative consequences from lockdowns and a dramatically reduced global economy.

More to the point, first quarter earnings for the bulk of companies on the exchanges have been recorded and they were, for the most part, uninspiring, with more than a handful of companies issuing cautious forward guidance and a slew of firms cutting dividends or eliminating them altogether. The recent gains have been fueled only by excessive amounts of Fed currency seeking a temporary place to park. Thus, share prices are unlikely to remain elevated for much longer.

More than 100 companies cut their dividend payout in the week ending April 16, and that number is on top of hundreds of other companies that have slashed and burned shareholders with dividend reductions or eliminations.

The folks at keeps track of these important developments on a weekly basis and the numbers are scary for anyone investing in stocks for steady income.

What happens when second quarter GDP numbers arrive in July and show the economy slowing by 40% or further? Along with companies cutting their dividends, there's the likelihood of declines in the value of their shares as well, as profitability is eroded as markets shrink.

With Wall Street giddy with Fed fun money, it's something to thank about going forward.

Funny thing is, stocks are right about where they were just after the moonshot open Monday morning. They've managed to hold onto most of the gains from that huge gap up open, but have not moved forward since. How long stocks can maintain the facade of robustness when 20-25% of the working population is out of a job or thousands of companies are cutting dividends is unknown. What is known, however, is that financial fakery has been rewarded, but the probable end game is something completely different, with many more losers than winners.

Like it or not, the economic crisis is real and just getting started.

At the Close, Thursday, May 21, 2020:
Dow: 24,474.12, -101.78 (-0.41%)
NASDAQ: 9,284.88, -90.90 (-0.97%)
S&P 500: 2,948.51, -23.10 (-0.78%)
NYSE: 11,351.60, -68.44 (-0.60%)

Thursday, May 21, 2020

Dear President Trump: Please Fire Dr. Fauci and Dr. Birx and Shut Down the CDC

Dear President Trump and all Americans:

Have you had enough of the news and fear-mongering over coronavirus, or COVID-19, or Wuhan Flu, or whatever they're calling it today?

For months the media and government agencies have been cramming this infectious disease down our throats - not literally, mind you, but don't put that past them - closing public places (paid for with your tax dollars), issuing non-enforceable stay-at-home orders, telling everybody to stay six feet apart (as though standing within four feet or seven feet is going to make a difference), telling us to prepare for a "second wave" even as the first wave is winding down.

All along, the CDC has managed to put forward inconsistent and misleading information, including telling people that wearing masks was not an effective measure in controlling the spread of the virus. Extensive data from around the world - particularly in Japan, Singapore, and Hong Kong, where mask-wearing is routine and acceptable behavior - proves the CDC wrong. The CDC also likes to remind everybody to wash their hands and not touch their faces, but never once have they advised taking vitamins C, D, and Zinc, or to take regular doses of elderberry syrup to improve one's immune system.

They've promoted drugs that haven't been proven effective against the virus, like remdesivir, while at the same time bad-mouthing treatments that have been used extensively around the world in preventing and reducing the severity of illness, such as hydroxychloroquine with zinc. Additionally, the CDC spokespeople, Drs. Anthony Fauci and Deborah Birx, have suggested that a vaccine might be found when, as doctors and scientists, they surely know that the most likely outcome from billions of dollars spent on research will be wasted because no vaccine against coronaviruses has ever been developed. None. Zero.

COVID-19 (also known as SARS-CoV-2) is a strain of SARS-CoV, which is a coronavirus that spread rapidly from China in November, 2002 and was brought under control by 2003. 774 people died from SARS. SARS-CoV-2 is the seventh coronavirus known to infect humans. The CDC's original estimate was that it could kill up to two million Americans.

They told us it could be spread by touching objects with traces of the disease on them and also said that it could be spread by people couching or sneezing up to six feet away, when actual science has proven that droplets from people just talking normally could travel as far as 29 feet. They also never warned anybody about how easily the virus could spread in enclosed spaces, especially those with modern ventilation systems (central air).

High on the hit list of things the CDC was completely wrong about was the use of ventilators. As it turns out, ventilators, as a last resort, are not recommended against this virus. Over 80% of people who were put on ventilators eventually died.

Now they're telling us that after wiping down everything from your kitchen counter to packages from Amazon, that the virus is not very infectious from surfaces. Thanks for the heads up, losers.

“It may be possible that a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes. This is not thought to be the main way the virus spreads, but we are still learning more about this virus,”

-- New CDC Guidelines

The CDC has been nothing but a headache and an annoyance throughout this viral episode. The agency, as most government agencies, is nothing more than a conduit for Big Pharma and multi-national drug companies.

Br. Deborah Birx is a lifelong public employee. She's never had a job outside of government, so, at age 64, she's probably socked enough money away to take a semi-early retirement. Good riddance to you and all your scarves, none of which have ever been pulled up over your mouth and nose, where they belong.

From 1983 to 1986, Birx completed two fellowships in clinical immunology in the areas of allergies and diagnostics, where she worked in Anthony Fauci's lab, so the two are well acquainted.

In January 2014, President Barack Obama nominated Birx to be the Ambassador at Large and U.S. Global AIDS Coordinator as part of the President's Emergency Plan for AIDS Relief (PEPFAR) program. Fauci played a significant role in the early 2000s in creating the PEPFAR, an agency that has wasted billions of tax dollars on AIDS prevention in Africa, with mixed results.

For more on PEPFAR, see Is AIDS US $90B Taxpayer Dollars A Global Slush Fund?

Fauci, who will turn 80 on December 24 (we should all be so lucky to look as well as he does at that age, have to give him that), is also a lifetime government employee. In 1968, he joined the National Institutes of Health (NIH) as a clinical associate in the Laboratory of Clinical Investigation (LCI) at the National Institute of Allergy and Infectious Diseases. In 1974, he became Head of the Clinical Physiology Section, LCI, and in 1980 was appointed Chief of the Laboratory of Immunoregulation. In 1984, he became director of NIAID, a position he still holds today.

To see how deeply in bed with big drug companies the CDC is, one need only do some cursory research on the internet. It's all there. Here are a few (of many) examples: The CDC, NIH, Big Pharma, Big Medicine, AAP, AMA Bill Gates Plan to Abolish the Informed Consent Ethical Principle and Vaccinate Everybody Is the CDC Sleeping With Drug Companies? You Decide

Science Defies Politics: COVID-19 Panel Gilead Ties

National File: The Dark Truth About Fauci and Birx, Bill Gates And Globalist Elites

Those are just for starters. There are hundreds, if not thousands of reports of the extensive, deep ties Drs. Fauci and Birx and the CDC have to Big Pharma, Bill Gates, and the discredited, corrupt World Health Organization (WHO).

Get rid of these people and their agency, please, before they inflict more pain and suffering on the American public. We've had enough.


Fearless Rick Gagliano
Publisher,, Money Daily

But wait, there's more!

Here's Gregory Mannarino, the Robin Hood of Wall Street, with his hair on fire on May 19 over the President's Executive Order that calls for "rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery" and Congressional testimony from Treasury Secretary, Steven Mnuchin, and Federal Reserve Chairman, Jerome Powell.

President Trump's Executive Order is here. Anybody who operates a business or enterprise anywhere, doing anything, should make multiple copies of this order and distribute them widely throughout the business community and shove them in the face of any government regulator who wants information on anything related to any business.

You can be sure that the Wall Street hotshots will be using this order to get around any and all regulations that would, in even the slightest way, affect their profitability negatively. President Trump has effectively de-regulated the entirety of American business. Read it and think about it.

Stocks were up again on Wednesday, but that's becoming a side show for rubes.

And, by the way, the Bank of England issued bonds with a negative yield for the first time on Wednesday and another 2.4 million people signed up for initial unemployment benefits last week.

At the Close, Wednesday, May 19, 2020:
Dow: 24,575.90, +369.04 (+1.52%)
NASDAQ: 9,375.78. +190.67 (+2.08%)
S&P 500: 2,971.61, +48.67 (+1.67%)
NYSE: 11,420.04, +171.06 (+1.52%)

Brave New World Beckons As Algos Gone Wild Erase Vaccine Hopes, Feds Try Keeping Up With Lockdown Liftings

Stocks took a pretty major blow in the final hour of trading Tuesday, when Stat News, which is focused on health-related material, reported that Moderna's phase one trial of a COVID-19 vaccine was thin on critical data according to experts, in contrast to the glow that permeated Wall Street Monday over the same trial.

When that story crossed the wires, it wiped out - in a matter of minutes just before 3:00 pm ET - all of the sparse gains on the day for the NASDAQ and S&P, and sent the Dow Industrials tumbling in a textbook case of how stock-trading algorithms distort and disrupt what used to be markets run by human beings.

Moderna (MRNA) dropped nearly 10.5% on the day, after gaining 20% on Monday, wiping out most of that one-day wonderfulness. Moderna closed Friday at 66.68, rose to close at 80.00 on Monday and finished up Tuesday at 71.67.

Easy come, easy go.

The Dow, which was in the red almost all day, dropped more than 200 points in 10 minutes. Gains on other exchanges were wiped out in one fell swoop. Such is the fickle nature of equity markets in the days of fake news and extreme momentum chasing and yield seeking.

Elsewhere, Home Depot (HD) took a $640 million after-tax hit due to its response to the pandemic, which included expanded paid time off for hourly employees, weekly bonuses, and extended dependent-care benefits. Earnings per share for the first quarter came in at $2.08, down from $2.27 in the prior-year period and $0.18 below analyst expectations. Home Depot was down 7.25, a loss of nearly three percent on the day.

Walmart blew everything away in its quarterly, reporting adjusted earnings per share of $1.18, up from $1.13 in the prior-year period. Total sales for the big box giant jumped 8.6% to $134.6 billion, handily beating analyst estimates by $3.7 billion. Comparable-store sales in the U.S. soared 10%, driven by strong demand for food, consumables, and health and wellness products.

Even those blockbuster numbers couldn't stop investors from unloading Walmart stock, which finished the day down 2.71 (-2.12%). The stock made a 52-week high less than a month ago.

Housing starts were down 30.2% in April. Building Permits down 20.8% for the most recent month.

Other than all that, there wasn't much excitement on Wall Street, which thrives on gains, no matter where they're sourced.

The major issue facing stocks and the overall economy is how well the Federal Reserve can keep up with the rolling knock-on effects from the coronavirus and government response to it. With the national lockdown winding into a roving re-opening phase, some areas are seeing business and communities getting back to some semblance of normalcy, which is now a moving target. Schools remain closed almost nationwide, while rural communities have fared much better in terms of case incidence and economic slowdown than urban areas.

Having just passed the midway point of the second quarter, there's little doubt anywhere that the blow to GDP will be tremendous. The latest estimates for second quarter GDP range from -42% to -20% and those guesses may be overly optimistic. Being that just about everything was shut down for the entire month of April and most cities - where economic activity is paramount - just beginning to open up to vehicle and foot traffic, there's a very real possibility that the current quarter could collapse by more than 50 percent. Much is dependent on the consumer mindset, which is currently a mixed one.

Having already received bailout currency from the federal government and generous additions to unemployment insurance, lawmakers in Washington are slow-footing the follow-up. House Democrats launched a $3 trillion second stimulus measure on Friday, but Republicans in the Senate are calling the bill dead on arrival, preferring to take time to assess the result from round one before committing to more fun money for small business and individuals.

One unmistakable aspect of the government's bailout efforts is the unexpected consequences from giving people who were laid off or furloughed in the early days of the lockdown movement an additional $600 a week in unemployment compensation. As it turns out, a very large percentage (up to 70% according to some estimates) of workers are making more now sitting at home collecting benefits than they were when they were gainfully employed and many of them are refusing to go back to their old jobs. Would anybody have suspected that hard-working Americans would rather stay home and cash checks from the government rather than grind out a 9-to-5 existence?

It shows, yet again, that government is always the problem and never the solution. Welcome to socialism 101 and a test run of Universal Basic Income (UBI). Alongside Modern Monetary Theory (MMT), now in live alpha testing by the Federal Reserve, the federal government and its central bank have slingshot the American public into a brave new world of radical economics, the long-term effects known by exactly nobody, though skeptics believe it will eventually result in either a worldwide depression, neo-feudalism (Max Keiser and others easily figured that one out), hyper-inflation, and a growing divide between haves and have-nots, already a chasm-sized gap.

Best bet is to be ready for all of the above by investing in hard assets, growing a garden, learning as much as possible about animal husbandry (at least chickens), and obtaining skills necessary to eek out a meager existence without the benefit of a central authority. Younger people will increasingly find such advice tiresome and boring, but the jobs and careers they were engaged in before the crisis occurred will almost certainly be greatly affected, with an emphasis on the negative.

Along those lines, unless local governments begin the process of trimming their robust budgets, cities and towns face imminent crises, the bigger ones looking at enormous needs that neither the federal government nor the Federal Reserve can fulfill.

Life will gradually return to a dystopian almost-normal in coming months. Thankfully, Summer is on the horizon, along with warmer weather and outdoor activities which should provide relief from the mask-wearing, social distancing, and fear mongering so prevalent in the current environment. On the other hand, things are heating up pretty quickly on all fronts. Expecting more disruption, displeasure, discontent, disparate government actions, fraud, fakery, and general dysfunction would be a solid frame of reference for anyone wishing to come out on the other side of this - circa 2022 - somewhat sane and intact.

At the Close, Tuesday, May 19, 2020:
Dow: 24,206.86, -390.51 (-1.59%)
NASDAQ: 9,185.10, -49.72 (-0.54%)
S&P 500: 2,922.94, -30.97 (-1.05%)
NYSE: 11,248.97, -153.26 (-1.34%)

Tuesday, May 19, 2020

Profiteering Politicians, Slick Money Managers Make Hay on Possible COVID-19 Vaccine Headlines

Two headlines:

JCPenney says it will close about 240 stores after filing for bankruptcy

Moderna says test results for possible COVID19 vaccine 'positive'

Only one mattered. Moderna's positive spin over fairly insignificant early stage trials for a vaccine against COVID-19 sent stocks into orbit. Actually, sending stocks skyward was more the work of the Federal Reserve's relentless currency printing press, running full speed since late March. The Fed has created so much liquidity - for nothing, out of thin air - that there's a global glut, just like oil, and it has to find somewhere to go, and that place is usually in risk assets, like stocks, because, well, it's just extra money.

It's kind of like this: Suppose you went to the race track with some friends and hit a superfecta for $15,000. You'd probably splurge over a night on the town, treating your friends to dinner at a great restaurant and endless drinks at some club. In other words, you'd basically just blow some of it because it was an unexpectedly large sum of dough.

Getting back to the cover story from Moderna, never mind that the company has been working with the National Institute of Allergy and Infectious Diseases (NIAD), headed by Dr. Anthony Fauci, since January, or that Moncef Slaoui resigned from Moderna's board of directors just last week when he was tapped by the Trump administration to head up Operation Warp Speed, the president's fast-track search for a COVID-19 vaccine.

Slaoui is reportedly going to divest all of his stock options for 156,000 shares of Moderna, which shot up nearly 20% (MRNA, 80.00, +13.31 (+19.96%) At close: May 18 4:00PM EDT) on the news.

Coincidence? Perhaps. Insider trading? Definitely, though nobody wants to talk about that.

Between the Fed's meddling and the White House's understanding of the situation (surely, anybody who is anybody in Washington, DC was aware that this news would break Monday morning), the whole COVID-19 racket is beginning to look like another major scandal to be piled atop all the other government scandals over the past 40 years. Nobody will be charged with anything. Nobody will go to jail. There probably won't even be an investigation, and, even if there is, it will reveal nothing. Business as usual for the rich and infamous in DC and on Wall Street.

Apparently, it wasn't enough to enrich politicians and send stocks to the moon. The Federal Meddlers made sure that the massive gains in gold and silver were squelched, quickly, and with undue force.

Gold was cruising along around $1762, up $20 just prior to the opening of the NYMEX (8:15 EDT). Over the course of the day, it reversed and fell, finally closing in New York at $1732, down $10 on the day.

Since it is so wickedly undervalued, it stood to reason that silver fared a little better, up nearly a dollar just before the NYMEX open, at $17.50. It was hammered back down to $16.97 at the close. Still a gain, but hardly of the magnitude that was building before the maligners became involved.

Money Daily has said this before, multiple times, in many ways: the elitist politicians and Wall Street insiders are among the most corrupt connivers in history. The levels of dishonesty, self-dealing, and bad faith practices are at extremes and they commit their financial and societal crimes in full view, without remorse. We're all just along for the show.

This show should have been cancelled long ago.

Let's not forget, unemployment, with more than 36 million out of work, is well over 20% and second quarter GDP is expected to post a 42 percent decline, numbers not seen since the Great Depression.

At the Close, Monday, May 18, 2020:
Dow: 24,597.37, +911.95 (+3.85%)
NASDAQ: 9,234.83, +220.27 (+2.44%)
S&P 500: 2,953.91, +90.21 (+3.15%)
NYSE: 11,402.23, +454.91 (+4.16%)

Sunday, May 17, 2020

WEEKEND WRAP: Stocks Split, Dow Suffers; Gold, Silver May Be Headed For Record Prices

The week just past was not a particularly enthralling one for stock investors, as the Dow and NYSE Composite took it on the chin while the S&P and NASDAQ put up fractional, unsubstantial gains.

As economic and COVID-19 developments were concerned, it was mostly politicking over substance, as President Trump backhanded Dr. Anthony Fauci, head of the CDC, over predictions related to states' reopening their economies and the potential for a second wave of the virus in the coming fall or winter.

For the most part, stocks refrained from further insane advances, though the gains toward the back end of the week reeked of malingering by the Federal Reserve, moving stocks off their lows into green territory in both Thursday and Friday's sessions. With the Dow Jones Industrial Average forming a pretty obvious short-term head-and-shoulders pattern, the equity markets are set up for a breakout either higher or lower, though the least resistant path may be down another six to eight percent over the next week to two weeks. With the traditional third Friday of the month options expiry in the rear view mirror (May 15), the markets will need some kind of catalyst to move forward. Otherwise, expect the Dow and NYSE Composite to both head back below the bear market defined level of -20 percent.

If that were to happen, the NASDAQ, already ridiculously valued, and S&P should fall in sympathy with the Blue Chips.

The week was a very solid one for oil, though the June contract is set to expire on Tuesday (May 18). Producers do not want to see a repeat of the May futures expiration when the price went negative and buyers were being paid to haul oil off to the tune of $41 a barrel.

June futures closed last Friday (May 8) at $24.61 a barrel and this week at $29.43. Monday will likely give a signal as to whether another collapse is imminent, though with US states and most of Europe reopening their economies, it would appear that the massive glut has at least partially abated and demand is rising. There is still no open air for the futures to fly in, however, as the spread between the current month all the way out to the December 2021 contract is pretty slim. 35.78 is the last quoted price for December 2021.

Yields on treasuries continued lower through the week and are presumptuously headed below zero, into the brave new world of negative rates. With the two-year yielding 0.16% and the five-year at 0.31, it would seem only a matter of when, not if rates go underwater. With deflationary forces at work, the low yields on short-dates bills and notes may be attractive as a hedge against asset price declines. Yields cannot fall much more from these levels before going negative in real terms. Those seeing inflation ahead could easily be urged into paying to hold capital.

Gold and silver absolutely exploded this week on eBay, a market where true price discovery can be ascertained.

For the first time since Money Daily began tracking prices a month ago for one troy ounce gold and silver coins and bars, one ounce gold coins sold for more than the all-time record closing spot price ($1895.00, September 5 and 6, 2011) on an average and median basis. The average price for a one ounce gold coin on eBay was $1,917.41, and for a one ounce bar, $1,898.62. Buyers are looking at a premium of over $150 for either coins or bars. Notably, smaller denominations of gold coins and bars (1/10 ounce to 1/2 ounce) are routinely selling at prices that relate to over $225 per ounce.

These actual sale prices are in stark contrast to the easily-corrupted gold COMEX prices where gold closed with a bid of $1742.20 on Friday afternoon.

Silver also showed enormous gains over last week as the average price of a one ounce coin gained from $30.50 on May 10 to $33.71 this Sunday. Price appreciation for silver bars was even more dramatic, gaining from last week's average price of $26.77 to $34.57 this week. That is more than double the COMEX paper silver price bid of $16.61 as of Friday's close.

We employ the same methodology, looking at the most recently-closed sales on eBay, eliminating any coins or bars that may have numismatic or collectible value as best as possible to come up with a standard, reliable price tracking model.

Here are the most recent prices:

Item: Low / High / Average / Median
1 oz silver coin: 20.51 / 47.00 / 33.71 / 32.42
1 oz silver bar: 26.25 / 44.50 / 34.57 / 34.50
1 oz gold coin: 1,833.08 / 2,030.50 / 1,917.41 / 1,907.02
1 oz gold bar: 1,845.37 / 2,035.00 / 1,898.62 / 1,874.09

Parts of Saturday and Sunday mornings were spent viewing some very interesting and important videos.

Mike Maloney's narrative over charts from offers an historic perspective of the American condition.

Refinitiv shares a wide-ranging interview with Real Vision’s CEO and co-founder, Raoul Pal, who provides distinct trading strategies and a serious view of what's ahead for the world's economies.

Gregory Mannarino supplies a look ahead for Stocks, Bitcoin, Gold and Silver.

Something to make note of as the world cascades through the covid crisis and beyond is that all of the important videos on youtube and various websites are being made by people who are generally shunned by mainstream media.'s Mike Maloney, Adam Taggert and Chris Martenson of Peak Prosperity, Real Vision's Raoul Pal, Max Keiser and Stacy Herbert of the Kaiser Report, and, to a lesser extent, various guests of Keith McCullough's Hedgeye can be seen only on the internet, while Fed officials, government bigwigs like Treasury Secretary Steven Mnuchin, and old line investors like Warren Buffett are the staple of mainstream TV media.

It's quite a contrast when you view it from that perspective and realize that the stories being told and the predictions being made about the future of the crisis and of the world are radically different. There's a choice to be made. Just which narrative are you going to believe? Who's advice will you follow, and where will you end up, socially, politically, and financially.

At the Close, Friday, May 15, 2020:
Dow Jones Industrial Average: 23,685.42, +60.12 (+0.25%)
NASDAQ: 9,014.56, +70.84 (+0.79%)
S&P 500: 2,863.70, +11.20 (+0.39%)
NYSE: 10,947.32, +19.92 (+0.18%)

For the Week:
Dow: -645.90 (-2.65%)
NASDAQ: +70.84 (+0.79%)
S&P 500: +11.20 (+0.39%)
NYSE: -407.02 (-3.58%)

Friday, May 15, 2020

Stocks Post Weak Gains Ahead of April Retail; Gold, Silver Bid, Approaching Breakout Levels

Following a weak open, which looked to see stocks extend their losing streak to a third straight session in the red, stocks pivoted, gradually rising off the lows (the Dow down more than 400 points early on) to eventually finish with fair, though hardly secure gains, the advance prompted right at the Dow Jones Industrials' 50-day moving average.

For the seventh time in the past eight weeks, the major averages put on gains in the face of staggering employment losses, as new unemployment claims came in hotter than anticipated, with 2.98 million fresh filings, bringing the two-month total over 36 million out of work.

Equity moves were likely not correlated well to the unemployment data, as the gains all appeared after the news had been known for hours. The more likely scenario was one which has been playing out since the Federal Reserve stepped up its bond-buying activity, but quantitatively and qualitatively. Flush with cash, primary dealers and cohorts ramped into stocks, erasing some of the losses from the prior two sessions.

The move, which is mostly market noise rather than anything substantial, is likely to have been in vain. With investors eyeing what are certain to be horrific April retail sales figures Friday morning, futures are pointing down two hours prior to the opening bell.

Sensing weakness in equities, precious metals caught a long-overdue bid, with gold bounding as high as $1732.70, and silver breaking out to a high in early Friday morning trading of $16.48 per troy ounce.

Premiums on both gold and silver remain high, with popular one-ounce silver bars and coins selling in a range of $23-30, while gold fetches well above $1840 routinely for one ounce coins, rounds, or bars. Despite whatever nonsense the mainstream financial media is throwing out as justification for stocks over real money, demand for precious metals is, and has been, at extremely high levels since early March with no abatement seen on the horizon. The outsized demand has created a supply shortage and has miners and smelting operations working at breakneck speed to maintain at least some modicum of reliability.

With input costs around $1250 for gold miners, exploration and excavation should continue at a strong pace as prices rise and demand continues strong. Undervalued for the past seven years at least, gold and silver mining companies may be looking at solid, if not spectacular, profits in coming quarters.

Bond traders were also able to capitalize on the recent weakness in stocks. The yield on the 10-year note has fallen from a May high yield of 0.73% on Monday to close at 0.63% on Thursday. The 30-year closed Monday at 1.43%, its highest level since March 25, but finished Thursday yielding 1.30% and under pressure.

Oil continues to be a favorite plaything of the speculative class, making a two-month high at $28.25 on hopes that some pickup in demand has occurred since states began getting back to business from May 1 forward. Despite an enormous glut on the supply side, specs and oil company execs are latching onto any rumor or fantasy to get the price off the recent decades-deep lows.

The world continues in a state of shock and despair over the coronavirus debacle and various government attempts to both stem its advance and keep their economies on life support. Indications are that some of it's working, but not very well, overall.

Stocks will need a three percent gain on Friday to avoid a negative print for the week. Only the rosiest prognosis would believe that even remotely possible, though the Fed's heft has overcome dire predictions more than once during the current crisis.

Stay liquid. Next posting will be Sunday's WEEKEND WRAP. Life on Wall Street may be not so sweet if all the currency thrown into markets doesn't produce anything more than a 50% spike off the lows, but that head-and-shoulders pattern on the Dow - now with a sloping right shoulder - is beginning to appear ominous.

At the Close, Thursday, May 14, 2020:
Dow: 23,625.34, +377.37 (+1.62%)
NASDAQ: 8,943.72, +80.56 (+0.91%)
S&P 500: 2,852.50, +32.50 (+1.15%)
NYSE: 10,927.41, +97.97 (+0.90%)

Thursday, May 14, 2020

Intent on Self-destruction, the Fed and Washington Politicians Should Be Encouraged to Get On With It

Two straight days of losses should have some investors a little concerned that all the money the Federal Reserve is using to prop up markets may not be enough.

Especially frightful is the short term head and shoulders pattern the Dow has printed, raising the possibility for another serious downturn that could leave the Fed outflanked, flummoxed, and low on ammunition.

Considering that the recent move forward off the March lows was anything other than an aberration predicated on the vacuuming up of voluminous amounts of debt by the central bank is just wishful thinking. After all, the entire planet is being ravaged - societally and economically - by a pandemic, the likes of which have not been seen in over 100 years. Stocks should have been sold right into the trash pile. Instead, the past six weeks have primarily demonstrated the Fed's ability to meddle in the natural functions of what used to be a free market. While profits were deteriorating at a manic pace the Fed saw fit to massage market integrity with bubble-gum, candy, and ice cream, looking past the most obvious and painful resolution to overpriced, overvalued equities: a quick crash and revaluation at lower levels, bankruptcies for the least protected or most egregiously offensive, and a sober look at systemic solvency.

Acting more like an overprotective soccer mom than a steward of principled financial policy, the Fed managed the nearly impossible feat of taking an already-overvalued market to even greater levels of investment insanity, throwing ridiculous amounts of capital and liquidity into a hyperventilated landscape on the verge of collapse.

It's high time for the Fed and the president to back away from the punch bowl of fiat fantasy and allow the market to determine for itself where it wishes to go, though the likelihood of that happening are about the same as Dr. Fauci speaking out of only one side of his mouth.

The president wants negative rates and while the Fed protests against the lunacy of capital destruction, they will eventually comply because that's all they know how to do. When all you have is a hammer, everything looks like a screw, so it's a safe bet that when push comes to shove - sending the major indices back into bear market territory where they belong - the Fed will no doubt begin to engage in financial hari kari.

By introducing negative rates, they will have effectively given up all hope for salvation of the capitalist system, punishing investors and savers even more than a zero-interest rate policy has for the past two decades, now insisting that bond holders lose money and currency is flattened under the steamroller of failed radical policy.

It's one thing to want to rescue a company or an industry from default or liquidation, but the folly and sheer egotistical panache of trying to save an entire economic system is on the table and being gorged upon by the inmates at the Federal Reserve. The panicky regional presidents and FOMC governors are about to put on a show for the ages, demonstrating, for anyone interested, how a group of supposedly intelligent men and woman can openly conspire to their own demise. With every shovelful of capital they feed to the market, the deeper they dig their own grave, with ample assistance from Washington politicians intent on not being outdone. Congress will compete with the Fed for lunatics of the century by doing on the fiscal side about what the Fed is doing on the monetary side, abandoning any remnant of financial discipline by exploding the federal budget with deficits wider than the Grand Canyon.

The American public should allow it. In fact, we should cheer on their efforts emphatically from our stay-at-home prisons. Since the public isn't allowed to go to sporting events or concerts, garden shows or lectures, the least they can do is encourage the people who masterminded this economic mishmash to demolish the antiquated, decrepit, malfunctioning miasma of governance, economy, and policy as quickly as possible, because then, a new functioning system can begin to evolve, one that hopefully does not include elected morons and economic theorists of central planning.

As predictable as day turns to night, the old gives way to the new. If those atop the pyramids of power wish to willfully fling themselves from the their perches, they should be allowed and even encouraged to do so.

It will hasten the pain and speed the healing.

At the Close, Wednesday, May 13, 2020:
Dow: 23,247.97, -516.81 (-2.17%)
NASDAQ: 8,863.17, -139.38 (-1.55%)
S&P 500: 2,820.00, -50.12 (-1.75%)
NYSE: 10,829.44, -226.14 (-2.05%)

Wednesday, May 13, 2020

Stocks Triggered By Federal Reserve EFT Buys, Negative Interest Rate Fears; PTJ Buys Bitcoin

Once more, the Dow Jones Industrial Average failed to break above a key level, giving up morning gains after President Trump reiterated his desire for the Fed to entertain negative interest rates. Bank stocks were especially hard hit as the belief is that rates below zero would further hamper their ability to control the spread and turn profits despite the ability to skim directly from deposit accounts via the minus sign on yields.

Alongside the president's tweeting, the Federal Reserve began purchasing corporate debt ETFs, beginning with investment grade bonds but eventually swinging down the ladder to high yield, among the most dodgy and riskiest of fixed income products. The intent was announced on March 23, as a response to the coronavirus epidemic, and put into practice during Tuesday's session, with investment firm, BlackRock, as the intermediary, using funds from the Fed and US Treasury.

Seen as the ultimate backstop for stocks and the debt market, the scheme is one of nine separate facilities the Fed is employing to help stabilize - or in most cases, pump higher - markets.

The various backstops being deployed by the Fed, in conjunction with the currency-killing qualities of negative interest rates should eventually result in a gigantic bubble in the Fed's balance sheet, holding investment vehicles that are headed straight to the fiat scrapyard, another sign that the world is heading toward a currency crisis and a new monetary regime.

The attempt to vault beyond the 50% retrace of the March collapse was the third in the past month. The Dow peaked on April 17 when it closed at 24,633.86. After Tuesday's selloff, the head-and-shoulders chart pattern is clearly defined, a strong signal that a major decline is likely.

In recent days, and just prior to its halving, Paul Tudor Jones has bought into Bitcoin, expressing his view that the cryptocurrency will act as a hedge against the inflation he sees coming from central bank money-printing, telling clients it reminds him of the role gold played in the 1970s.

In a quote that is certain to become his trademark, Jones, founder and CEO of Tudor Investment Corp., said:
“The best profit-maximizing strategy is to own the fastest horse.”

Unabashedly, Jones believes Bitcoin will win the investment race over the coming years, along with gold, silver and other hard assets.

Jones' entry into the crypto-market stands in stark contrast to famed investor Warren Buffet and his holding company Berkshire Hathaway. Buffet has openly stated that he would never invest in gold or Bitcoin. After selling off his positions in the airlines at a sizable loss, Buffet's Berkshire Hathaway is sitting on some $150 billion in cash, loathing the concept that he finds nothing of compelling value to purchase presently.

Obviously, one of these investing titans is going to be proven wrong. It appears that at the present time, Jones may be holding the winning hand, or, in racing parlance, the live long shot.

At the Close, Tuesday, May 12, 2020:
Dow: 23,764.78, -457.21 (-1.89%)
NASDAQ: 9,002.55, -189.79 (-2.06%)
S&P 500: 2,870.12, -60.20 (-2.05%)
NYSE: 11,055.58, -225.78 (-2.00%)

Tuesday, May 12, 2020

Universal Basic Income (UBI) On the Table in Washington, DC; Gold, Silver Looking More Enticing

Hop-scotching the financial and political universe:

While the news wants to focus on President Trump and the close proximity of coronavirus to President Trump and Vice President Pence, the figures coming back from states that have re-engaged their economies are intriguing, indicative of increased testing with precautions having been tossed to the roadside in many cases.

Possibly, some states jumped the gun in getting the people at least partially back to work and some stores may have opened prematurely, though it's too early to make a definitive judgement. In some cases, the general public wasn't ready to get back to and kind of routine, be it shopping and strolling, punching a clock or dinner at a restaurant. Elsewhere, people were eager to re-connect.

It's only natural and mathematically predictable that with increased virus testing, the numbers of infected will be rising and the media is poised to pounce all over states that were quick off the line. Thus far, there's no true trend detected. That will take a month or longer, as most states began partial re-openings May 1 and deaths from the virus take a month or longer from infection to expiration.

Look for the media to cherry-pick the state-by-state data and come up with the scariest "second wave" headlines possible within a few weeks, if not sooner. The mainstream is always over-eager when it comes to promoting the pornography of demise, aka, doom porn.

Bernie Sanders, Ed Markey, Kamala Harris put forward a bill Friday (May 8) that would provide $2000 a month to roughly 175 million American adults - and another $2000 for each family member under the age of 18 - for as long as the crisis exists.

In one form or another, the bill has support among Democrats while Republicans are holding their cards close to their chests, for now. With money out on the table, it's only a matter of time before congress approves a monthly stipend for Americans, especially if partial re-openings in states result in increased incidence of infection from COVID-19.

$2000 a month may seem a bit over the top, but there will be pressure on Republicans to not look like a modern-day Scrooge in the face of the pandemic. Millions are out of work, and the long lines at food banks will be a useful prop for Democrats to push their agenda. While the politicians work out their differences, expect to see some form of monthly universal basic income (UBI) agreed upon by the spendthrifts-at-large, likely in the range of $1200-1500 per adult per month, and $500 for dependent children.

The monthly tab for such a scheme would fall somewhere between $325 and $400 billion a month, and could last as long as six months (November elections), perhaps longer. A total of $2 trillion would be touted as "reasonable" considering the heft already thrown to Wall Street and small businesses. Besides, anything spent past September would be rolled into next year's budget. With the 2020 budget already $4 trillion in the red, anything under $5 trillion over budget in 2021 will be appealing to the vote-buyers in Washington.

It's coming. The political calculus favors the Democrat free-spending plan without much pushback from the opposition. Expect direct deposits or checks in the mail to begin arriving sometime in June at the earliest, July at the latest. The nation's political leaders just can't help themselves when it comes to over-spending and trying to appear meritorious and compassionate.

Many thanks to GATA for supplying a link to Nick Laird's fabulous charts and commentary detailing the recent volatility storm in gold and silver.

Scottsdale Mint continues to advise clients of shipment delays of 20+ days. Other dealers have similar warnings, some demanding minimum order sizes due to an ongoing supply shortage and massive uptick in demand.

Fearless Rick's Commentary

Everybody has some kind of normalcy bias that leads to hoping this corona-demic will subside sooner rather than later. We're all tired of it.

In February, I thought this would all be over in a month. Two weeks hence, I recalculated out to six weeks, which became two months, then three and now, careening into June, having tracked events since late January when the virus began ravaging China and then the world, the crisis appears to be an endless one.

Realistically, whether this event is staged or real doesn't matter. The media, governments, and medical community will lead the vast sheeple population into believing what they want and doing their bidding, right down to idiotic suggestions like baseball games with no fans in the stands (not profitable from an ownership perspective), wearing cloth masks (might as well just wear a Howdy Doody Halloween mask as it will have the same effect), keeping six feet apart from people you live with day-to-day, and other abstract restrictions and recommendations.

I'd like this all to be over and done with, but I know it won't be. I am trying hard to abandon my own normalcy bias and beginning to realize that this "new world dis-order" is going to be with us for a long time. The elites can't resolve anything themselves except to keep the stock market inflated, people distracted or starving or angry, and the planet teetering on self-destruction.

I'm resolved that it's all going to get worse. I'm focused on my garden, my personal well-being, stacking and prepping now for winter, which is inevitable.

A year from now, we'll all still be reading and fretting about the virus, lockdowns, death, etc. without an end date. Best to just carry on with life in as usual a manner as one can command. The government is only going to help for a while and in a limited capacity. Once the elections (which is all anybody in Washington DC cares about) are over and done, a cruel, harsh winter is the most likely outcome. Cold weather seems to bring out the worst in people, and if the federal and state governments don't have a handle on both the economy and the virus by then, they'll be facing an even angrier, colder, more determined populace seeking retribution for what they believe was avoidable.

Try to think at least six months ahead of the herd. That way, you'll be more likely to outrun the stampede.

At the Close, Monday, May 11, 2020:
Dow: 24,221.99, -109.33 (-0.45%)
NASDAQ: 9,192.34, +71.02 (+0.78%)
S&P 500: 2,930.32, +0.52 (+0.02%)
NYSE: 11,281.37, -72.98 (-0.64%)

Sunday, May 10, 2020

WEEKEND WRAP: Fed Fiat Funny Money Has Managed to Short-Circuit the Crisis, for Now

Against a backdrop of Great Depression-like numbers - 33 million Americans out of work and an "official" unemployment rate of 14.7% - equity investors enjoyed a remarkably positive week, with all major indices rising by at least 2.50%, with the NASDAQ leading the way with a six percent gain.

The NASDAQ's advance was not only remarkable, but it is also ludicrous. The tech-heavy index has advanced beyond both its 50 and 200-day moving averages and is within 720 points of its all-time high. Investors in the speculative sector of the market have either divorced themselves from reality or are seeing something the rest of the world is missing. Money has to go somewhere, even money from the Federal Reserve, released to companies across the investing spectrum, but most of it appears to be heading toward Silicon Valley.

No doubt, chasing momentum has amplified the absurd move to the NASDAQ, which is likely a dangerous precedent. Many of the companies moving higher sport P/E ratios well above the norm, even the norm in a major bull market, a position that was shattered eight weeks ago.

Some of the standouts in the nebulous NASDAQ unicorn universe include Alphabet, parent of Google (GOOG), bottomed out at 1056.62 on March 23, and closed Friday at 1388.37.

Netflix (NFLX) fell out at 298.84 on March 16, but has since rebounded to Friday's close of 435.55.

Amazon (AMZN) reached an all-time high of 2474.00 on April 16, after dropping to 1676.61 on March 12, an amazing gain of 47.6% in just over a month. Amazon may be a superb, dynamic company, but it's arguably extremely overvalued, with a P/E of 113.

Facebook (FB) finished at 146.01 on March 16 and closed at 212.35 on Friday.

Some investors have been getting fat while the larger economy has, for the most part, imploded.

As almost all states (47 of 50 as of Saturday, May 9) have at least partially reopened their businesses and relaxed stay-at-home and other restrictions on the populace, anecdotal reports show that business is still a long distance from anything approaching normal, i.e., prior to the COVID-19 pandemic.

Wall Street is pushing a narrative that the country and the economy is all well and good, the recovery - in terms of stock prices - well underway, even as cases of coronavirus are still prevalent and rising in some cases and deaths continue at a run rate of over 1,000 a day. How well that works out for investors won't likely be known for some time. For now, investors, and the companies getting the most attention, are sitting pretty.

Crude oil continued to be under pressure from both a supply glut and slack demand, hovering in the mid-20s throughout the week. The June contract on WTI crude rose from $19.78 last Friday (May 1) to $24.74 a barrel this Friday (May 8). The contract expires within two weeks and there hasn't really been much improvement on the supply side of the equation, though demand has improved as the United States and most other countries around the world have begun getting back to business.

The treasury curve steepened over the course of the week. The entire complex is covered by 129 basis points as of Friday, up from 117 the prior week. All of the yield gains were at the long end. As money rushed out of bonds and back into stocks on Friday, the 10-year note added six basis points, to 0.69. The 30-year bond yield gained from 1.31 to 1.39.

Precious metals continued to be among the most-desired asset class since the onset of the pandemic. Both gold and silver are selling at massive premiums (up to $200 for gold, 40-80% for silver) and dealers are still experiencing supply issues with many popular items out of stock, though available to order. Delivery times have come back a bit, with gold and silver in quantity available within two weeks of placing orders.

Here are representative recent prices (5/9-5/10) on eBay for standard gold and silver coins and bars (prices include shipping):
Item: Low / High / Average / Median
1 oz silver coin: 24.45 / 38.00 / 30.58 / 30.48
1 oz silver bar: 23.00 / 30.95 / 26.77 / 26.20
1 oz gold coin: 1,750.00 / 1,946.65 / 1,854.84 / 1,841.99
1 oz gold bar: 1,799.99 / 1,871.52 / 1,843.90 / 1,851.47

In cryptocurrency-land, the Bitcoin Halving approaches. Fr those unfamiliar with the concept, the "halving" is the predetermined moment when Bitcoin’s block subsidy gets cut in half. The halving of Bitcoin’s block subsidy occurs every 210,000 blocks (approximately every four years) and is a key feature of Bitcoin. It is because of the Halving that there is a capped supply of 21 million bitcoin that will ever exist. The halving is scheduled to take place Monday at approximately 6:49 pm ET.

Bitcoin surpassed the $10,000 mark in US dollars, but fell back to the $8850 range in anticipation of the event.

And, just to throw another spanner into the works, the government of Argentina failed to reach agreement with creditors by its self-imposed Friday deadline, essentially defaulting on $65 billion worth of bonds, though talks between the two sides are continuing. Argentina will formally default on May 22, as it missed a $503 million payment last month and the grace period is expiring.

Talks were extended through Monday in hopes that Argentina could avoid its ninth sovereign default.

At this juncture, everything is at risk. According to recent economic data, the global economy is flat on its back. Most developed countries are either in a recession or about to enter one. The response to the coronavirus has ramped up unemployment and knocked down GDP estimates.

Thanks to massive infusions of capital from the Fed and other central banks to both business and individuals, the crisis has been managed to a degree, but the future remains a guessing game. Whether or not QE to infinity will save the day - and the underlying currencies - is a real gamble.

At the close, Friday, May 8, 2020:
Dow: 24,331.32, +455.43 (+1.91%)
NASDAQ: 9,121.32, +141.66 (+1.58%)
S&P 500: 2,929.80, +48.61 (+1.69%)
NYSE: 11,354.34, +232.68 (+2.09%)

For the Week:
Dow: +607.63 (+2.56%)
NASDAQ: +516.37 (+6.00%)
S&P 500: +99.09 (+3.50%)
NYSE: +295.77 (+2.67%)

Friday, May 8, 2020

Are Markets Awakening to Reality? Gold, Silver, Bonds Higher; Stocks, Oil Lose Momentum As Argentina Approaches Default, US April Job Losses 20.5 Million

Stocks, bonds, oil and precious metals all had their ups and downs on Thursday, as the focus early was on stocks, which put on impressive gains, only to give half of them back in afternoon trading.

Oil was higher in early trading, spiking to $26.27 a barrel for WTI crude before collapsing all the way down to $23.13.

With a turn right after noon, money began to flow away from riskier assets and into safe havens, with bonds, gold, and silver all being bid as the day wore onward.

Silver started the day at $14.81, languished early, and finished sharply higher, at $15.36. Gold was also cold in the morning, but found its legs later, moving from Wednesday's NY close of $1684.10 to finish at $1718.00.

Treasuries were bought with unusual gusto on the long end. The yield on the 5-year note moved from 0.37% to 0.29% on the day, the 10-year yield went from 0.72% to 0.63%, and the 30-year dropped 10 basis points, from 1.41% to 1.31%. The curve flatted out by 10 basis points, 121 bips covering the entire complex.

All of this activity was against a backdrop of 3.2 million initial unemployment claims, bringing the recent total to 33 million over the past seven weeks.

April non-farm payrolls were also on the mind, with the number - expected to be a record for one month - due out Friday morning.

Argentina (silvery) is about to default on $65 billion of its foreign debt today, Friday, May 8, as bondholders and the government are at loggerheads over a restructuring, though the government appeared to be willing to make some concessions late Thursday. A harder deadline comes May 22, when the country could enter certain default, as a grace period for $500 million of interest payments comes to an end. The clock is ticking for the nation that has defaulted on debt eight times previously.

Argentina could be the doomsday clock the financial world is watching. Other nations are sure to be on the brink of debt default and currency crises after weeks and months of lockdowns, supply chain breakdowns, social unrest, and deaths caused by COVID-19.

Is this the beginning of the end of the stock market rally and a rush to the safety of hard assets? The Dow popped above 24,000 intraday, but it's been unable to surpass the seven-week high of 24,633.66, which is roughly a half retrace of the March pullback. Another failure at this level would signal a short-term selling condition.

Just moments ago, the BLS reported April non-farm payrolls, registering a loss of 20.5 million jobs, pushing the unemployment rate to 14.7%.

With COVID-19 continuing to cause dislocations in everything from meat distribution to pro sports to education, the debate over whether this economic maelstrom will eventually result in a sharp rebound or a long, drawn out recession or even a depression.

Siding with the sharp rebound are those who gave up the ghost back in March with lockdowns, the government, media, and most of the financial community following the lead of the Federal Reserve.

Naysayers, viewing the global economy at a severe breaking point with no good solutions, include James Rickards, Mike Maloney of, Peak Prosperity's Chris Martenson, Peter Schiff (a fiat money perma-bear and gold perma-bull) and others.

Greg Mannarino, the Robin Hood of Wall Street adds some perspective:

At the Close, Thursday, May 7, 2020:
Dow: 23,875.89, +211.25 (+0.89%)
NASDAQ: 8,979.66, +125.27 (+1.41%)
S&P 500: 2,881.19, +32.77 (+1.15%)
NYSE: 11,121.67, +121.68 (+1.11%)

Thursday, May 7, 2020

Deflation, Inflation, Hyperinflation, Signal to Noise Ratio, Gold, Silver, and the End of the Dollar

Everything that has happened so far was predictable.

The worldwide government response to the COVID-19 pandemic was as easy to see for cynics and skeptics as the eventual lying that would take place. First, back in January and early February, the federal government told the public that the threat to Americans from the coronavirus that was ravishing China was minimal. Gradually, that advice was replaced by travel restrictions to and from mainland China, then to and from Europe, until finally, infections and deaths from the virus began to multiply in America.

By mid-March and into the first days of Spring, the veil had been lifted and the virus was spreading rapidly across the United States, thanks to millions of international travelers on ships and airplanes that had been allowed to come and go as they pleased through the winter. Individual cases turned into clusters and clusters to severe outbreaks, especially in New York City, not surprisingly a hub for international travel.

By the time congress got around to passing emergency legislation, lockdowns and shelter-in-place recommendations were put into play by governors of the individual states. The legislation contained the usual: massive injections of currency into Wall Street (because we can't have a stock market crash), a pittance for the public, and payments to hospitals for treating patients infected with COVID-19: $13,000 for each patient admitted; $39,000 for each patient put on a ventilator.

Anybody who has been following government and Federal Reserve policy knew that the response would be to throw massive amounts of currency at the problem because that's all they know about how to handle crises.

And here we are. The government is now readying a fourth "stimulus" bill, chock full of more handouts, bailouts, and currency drops. This time, the public gets nothing. States and municipalities are going to get tons of currency to bail out their broken, drained public coffers and keep millions of teachers, cops, firemen, and paper-pushers on the job and their pensions partially funded because having the Fed backstop municipal bonds simply wasn't enough. Hospitals will get more currency. Small businesses will get another tranche of loans, pressing cynics to respond that cities get grants, while businesses have to pay it back.

All of this currency printing and government deficits won't amount to a hill of beans because the transmission mechanism for the velocity of money is broken. Cops, teachers, and firemen will get paid, but they'll be scared to take on new debt and will spend much of their money paying down credit card bills and overpriced mortgages. After another crash to lower levels, the stock market will stabilize.

The US will have deflation, widely, in big-ticket assets like stocks (market crash), bonds (rolling defaults), real estate (forbearance today leads to foreclosure tomorrow), trickling down to things like furniture (no interest for 5, 6, 7 years), cars (rebates, cash back, 0% financing), and appliances (oversupply). Food, especially meat, which is getting a bit pricey right now due to chinks in the supply chain, will not be affected much. Food was the one thing that didn't go up or down much during the Great Depression of the 1930s. It was cheap enough so that people didn't starve, though meats were generally considered close to being luxuries, so no worries there, until hyperinflation. Besides, even if you have a tiny back yard, you can grow some vegetables of your own to offset any price rises in meats. Why do you think your mother was always telling you to eat your vegetables? Sometimes there just isn't enough meat.

After six to 18 months of deflation, all the while the Fed printing dollars like maniacs and the government running massive deficits (probably over $8 trillion this fiscal year alone (through September 30), prices will seem to stabilize. By this time next year (2021), many will think the crisis has passed, mostly because that's what they'll be telling you on TV. But, it's just a lull. Inflation will return as all that currency begins to be spent into the economy. As the velocity of money ramps up, the Fed will respond by raising interest rates, but it won't matter. The game is on, with hyperinflation underway, the currency will continue losing value and eventually, there will be a massive default on dollar debt.

Forget, for for a few weeks or a few months what's happening on a day-to-day basis. It's mostly noise. The signal to noise ratio (SNR or S/N), a measure used in science and engineering that compares the level of a desired signal to the level of background noise, in today's economy, politics, and society, is very low, meaning the signal is barely transmitting the message as it is being drowned out by the noise.

In terms of decibels, to hear what's really happening in the world, the signal has to be about 60, the level of sound as conversational speech. If the noise is that of a rocket launch (180), the SNR is 0.33 and the noise drowns out the signal. When the SNR gets to above one (1), the signal can be heard. Putting that in perspective, a signal sound of a balloon popping is 125, a toilet flushing is 75, producing a SNR of 1.67. Those are appropriate today, as the balloon popping can metaphorically represent the debt bubble bursting and the toilet flushing the sound of US dollars losing value, going down the drain. That hasn't happened yet, but, as time progresses, the SNR will rise, pass 1.00 and the signal will eventually be loud and clear, one that everybody can hear. That's when inflation proceeds to hyperinflation, with prices rising faster than the Fed can print new currency.

It is at that point that you'll want to have gold, but especially, silver, because it will outperform the currency, just by standing still. Truth of the matter is that gold and silver don't really rise in price. An ounce of silver or a gram of gold is still an ounce or a gram. But the purchasing power of the currency is falling because there's more money circulating. Thus, in a very natural correspondence, gold and silver rise in value as the currency falls, which is why three 1964 dimes (90% silver) can buy more gas at the pump today, in 2020, than in 1964.

In the year 1964, the average retail price of gas in the U.S. was $0.30. So, back then, you could put a gallon of gas in your car with three 1964 (or earlier) dimes. Today, three dimes from 1964 or earlier are worth a silver melt value of about $1.10 each, so, with gas prices currently deflating to around $1.50 a gallon, you could buy more than two gallons of gas, even with silver (and gold) prices being suppressed. That's deflation. One could buy just one gallon and use the other roughly dime-and-a-half to help pay for the increased price of pork or beef. That's inflation. Inflation and deflation can and will occur - in different products or services - simultaneously.

Silver, even under the severe constraints imposed by the futures, central banks, the BIS, and other manipulators, has increased in value 1100% since 1964, an annual, non-compounded return of 16.67%. Try getting that from stocks or bonds. And silver is going higher. Much higher. The price of an ounce of silver in dollars is likely to double in the next few years, then double again, and again, as the dollar is gradually debased, losing all that's left of its purchasing power. Your 1964 dime will buy at least a gallon of gas or the equivalent in bread or beef or whatever items you wish to purchase. It will have value, as precious metals have for more than 5000 years. The dollar, and with it, the pound, yen, euro, yuan, and any other currency not backed by or tethered to a tangible asset (it doesn't have to be gold; it can be anything) will revert to its intrinsic value of ZERO, or close to it because every other country will be going through similar scenarios as the United States.

That's where this is all headed. Price deflation with currency inflation through Spring or Summer 2021, relative calm from 2021 to maybe the beginning of 2023, but likely before then, with inflation ramping up; then hyperinflation for two years before a complete monetary system reset is the only solution. It's not the length of time for these varying processes to occur that's importance, it's the sequence (deflation, calm (some inflation), inflation, hyperinflation) and the ability to spot the subtle changes that matters most.

Completely wrecking a global economy takes time. The Fed's been at it since 1913, and in 107 years have reduced the purchasing power of the dollar by about 97%. The last three percent - and the sopping up of all the malinvestment and toxic assets will take time... about three to four years.

Anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile.

We have been fragilizing the economy, our health, political life, education, almost everything… by suppressing randomness and volatility. Much of our modern, structured, world has been harming us with top-down policies and contraptions… which do precisely this: an insult to the antifragility of systems. This is the tragedy of modernity: As with neurotically overprotective parents, those trying to help are often hurting us the most.

-- Nasim Taleb

It would be nice if we started listening to the people who have been right rather than the people who have theories.

-- Mike Maloney, The Hidden Secrets of Money, Episode 7, Velocity & the Money Illusion

At the Close, Wednesday, May 6, 2020:
Dow: 23,664.64, -218.45 (-0.91%)
NASDAQ: 8,854.39, +45.27 (+0.51%)
S&P 500: 2,848.42, -20.02 (-0.70%)
NYSE: 10,999.99, -135.41 (-1.22%)