Fed Reiterates All-In Language; Treasury Bonds Yielding All-Time Lows; 2Q GDP Up Next

As expected, the FOMC of the Federal Reserve kept rates at "near-zero" and reiterated that they would keep rates at that level until the US economy picks up, which, depending on who you ask, might be anywhere between "never" and "next quarter."

Such is the stuff of populous economics in the age of the constant panic.

The Fed's announcement on Wednesday set off yet another stock-buying spree of over-valued, highly-indebted companies, most of them listed on the major exchanges, particularly the S&P 500, which put in a solid gain of 40 points on the nose, leaving it a mere 128 points, or, less than four percent, off it's all-time closing high of 3,386.15 (February 19, 2020).

This, of course, is absolute madness. Here we are, supposedly in the midst of a pandemic which has killed over 150,000, sickened many times that, shuttered businesses, cost over 30 million jobs (that number is a moving target), and pretty much wrecked not just the US economy but that of the entire civilized world (the uncivilized parts of the world having barely noticed any changes at all).

What the stock market and the Fed are relaying via their asset-boosting measures and ever-rising stock prices is that the global economy should have a crisis of this magnitude at least once a year. Sure, some people got hurt during the February-March decline, but they are rubes, obviously not attuned to the new rigors of investing, which is to hold stocks for mere weeks or months, not years, and, in the world of those wearing big boy pants, the best trades last mere minutes.

With the S&P bottoming out at 2,237.40 on March 23rd, the gains through Wednesday amount to a windfall of just over 45 percent. Annualized, that's 135%. If sustained, that would mean your $100,000 investment would be worth $235,000 in a year, and all of this comes under zero-interest-rate-policy (ZIRP).

Easy money!

But what about bonds? We thought you'd never ask.

As of today, a one-month treasury bill yields an exciting 0.09%. The ten-year note fell to its second-lowest yield ever, at 0.58%. And, for those of you with shorter investment horizons, yields on the one, two, three, five, and seven-year notes all made historic all-time lows on Wednesday, thanks to the confidence inspired by our brave central bank. Those yields are 0.13%, 0.12%, 0.15%. 0.25%, and 0.43%. So, if you would like to lend the US federal government $10,000 for five years, they'll pay you back a whopping $25 per year or $125 in total for the privilege. And, with luck, you'll get the principal back at the end.

This does not inspire much confidence in the continued smooth operation of our federal government. It speaks volumes to the sustainability of state governments and their bloated pension obligations. (This brings up an interesting point, a little off-topic: many teachers have not been in a classroom actually teaching since March. Many of these teachers - via their unions - are complaining that they don't want to go back into a classroom to teach when the school year begins again in a few weeks. Well, teaching in a classroom isn't kind of a job, it is their job, so why are they continuing to be paid?)

For those still interested, the entire treasury complex, from one-month out to 30-years, is now covered by 113 basis points, which isn't much, just more than one percent. Basically, lending to the federal government is a losing proposition if there's any time value of money or inflation whatsoever.

Cheers! (The crowd goes wild.)

Naturally, in the face of this obvious failure of the fractional-reserve, debt-based fiat currency system currently in play, the price of gold and silver went... wait for it... down. Well, that would be on the criminal exchanges known as the futures markets, obviously overseen and controlled (we don't like to use the word "manipulated" any more, makes it sound like a conspiracy theory) by the world's greatest gangsters in the world's largest criminal skimming enterprise, the consortium of sovereign central banks.

As of this writing, gold has been tamped down five times, as has silver, but the latter to a much greater degree. Seems that while the central bank gang doesn't like gold very much (it competes with their paper currencies), they like silver even less. Silver touched $26 a few days ago, but the big boys in their fancy suits saw best to slam it back to $22.98 this morning, though it has recovered to 23.20, presently.

The spot price and futures exchanges are becoming increasingly irrelevant. Try buying any quantity of silver at anything under $27 an ounce. You'll be laughed out of the coin shop. On eBay, single ounce bars and coins are going for anywhere from $27 to $40. Morgan silver dollars (90% silver, 10% copper, 26.73 grams) are going for upwards of $35. Numismatically prized specimens can fetch hundreds of dollars.

So, we're at war. Yes, war, but no guns have been fired yet unless you include the ones that went off either accidentally or on purpose at a few of the BLM protests over the past few weeks.

The war is being waged by the seven billion people on the planet who are not in the top 1% of wealth hoarders. They are fighting the government (whatever country you're in, plus all other governments of all other countries), the central banks (ditto) and their fiat currencies, mainstream media and the "official" medical community which fails to understand the simple equation: HCQ + Zinc + Z-Pac = NO COVID.

The weapons currently employed are words, currencies (vs. real money, gold and silver), brains, street smarts and assorted pamphlets, Molotov-cocktails, laser beams, rocks, barricades, fists, batons, spit, and finger-pointing.

Judging by the number of people "voluntarily" wearing masks and staying six feet away from the nearest co-habitant of the planet, the bad guys are winning. The tide needs to be turned.

With that, a reminder that we'll be back in about an hour to report on the release of second quarter US GDP, which figures to be a doozy on several levels. Downtown Magazine's current best guess is -41%, but, knowing how Wall Street and the number massagers at the BLS and Census operate, the figure is likely to come in at a cool -30%, because, as we all are aware, that would exceed estimates of -34.5% and will thus "beat the street" and encourage even more buying of stocks. Horray for us! We're not as poor as we thought!

See you again around 8:45 am ET.

At the Close, Wednesday, July 29, 2020:
Dow: 26,539.57, +160.29 (+0.61%)
NASDAQ: 10,542.94, +140.85 (+1.35%)
S&P 500: 3,258.44, +40.00 (+1.24%)
NYSE: 12,669.62, +178.40 (+1.43%)