Sell in May and go away?
Balderdash.
Summer slump?
Nonsense.
Stocks have had an amazing run through July and August, thanks to ultra-low bond yields driving money into stocks, momentum, and oodles of dollars going straight to Wall Street from the Federal Reserve.
As noted by countless economists, columnists, and stock enthusiasts, the backstops provided by the Fed have servd the interests of Wall Street in glorious ways, sending stocks soaring, the S&P and NASDAQ having made multiple record highs over the past eight weeks.
While the NYSE Composite Index and Dow Jones Industrial Average have not made it yet to new records, they're getting close and the Dow, specifically, will get a significant boost on Monday (the final trading day of August) when Exxon Mobil (XOM), Raytheon (RTX), and Pfizer (PFE) are replaced with Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
Already within 900 points of its all-time closing high (29,551.42, 2/12/20), it's within similar range of the intraday high of 29,568.57, which was also made on February 12. The added boost from the booting of three laggards with three high-fliers should send the industrials over the top, possibly this coming week.
Just how good the summer has been to investors is illustrated by the weekly closes for the past eight weeks, beginning July 6 and ending this past Friday, August 28. The slowpokes among the indices was the Dow and NYSE. The latter rose from a July 2 close of 11,991.52 to 13,170.96. It closed on the plus side seven of the eight past weeks for a 9.84% gain.
The Dow Industrials gained in five of the eight weeks, rising more than 2800 points from its July 2 close of 25,827.36, a gain of 10.94 percent.
The S&P closed at 3,130.01 on July 2, and added 378 points during the past eight weeks for a solid 12% upside, while the NASDAQ took home the top prize, vaulting from 10,207.63 eight weeks ago to its most recent record close of 11,695.63, a 14.6% gain. The S&P was up in seven of the past eight weeks while the NASDAQ finished in positive territory in six, including the last five straight.
So, whoever said the era of passive investing was over obviously hasn't taken account of the performance of index funds, which have sparkled recently, despite the narrative supplied to the market by the FAANMGs, the six tech stocks that have largely been responsible for the bulk of the gains in the NAZ and S&P. Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Microsoft (MSFT) and Alphabet, parent of Google (GOOG) account for roughly 25% of the market capitalization of the entire S&P 500. Throw in Elon Musk's Tesla (TSLA) and one could make a very strong point about picking the right stocks over passive investing.
Apple, which recently announced a 4-for-1 stock split, was up 39% over the past eight weeks. Tesla gained a whopping 54%, while Amazon gained only 19%, though it and the other FAANMG components have been steady outperformers for years.
Warren Buffett, who turns 90 today, made news this week when it was revealed he was selling off some banking stocks while picking up shares of Barrick Gold. The information came from the latest 13F filing from Bershire Hathaway, the holding company for Buffett's global portfolio.
The punditry of the investment world made plenty of noise over the move, especially since Buffett had previously claimed to not think much of gold as an investment. One of the most-cited quotes attributed to Buffett's disdain for gold is "[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility."
While Buffett's purchase of some Barrick Gold shares (roughly $600 million) may look like a departure from the Oracle of Omaha's norm, the truth of the matter is that the shares account for a smidge more than 0.2 percent of Bershire's 250 billion stock portfolio. What's interesting about the move was that Berkshire closed its position in Goldman Sachs (GS), eliminating the Vampire Squid entirely from its holdings. It also trimmed positions in JPMorgan Chase (JPM) and Wells Fargo (WFC), but upped its position in Bank of America (BAC), which is now the second-largest holding, well behind #1, Apple.
It will be another three months before we'll know whether Berkshire intends to keep buying Barrick or even other gold-related stocks. For all anyone knows, Buffett could have a secret stash of gold and silver coins buried in his back yard, just in case.
Speaking of reasons to own gold and silver, the second estimate of second quarter GDP was released on Friday, and it was a slight improvement from the initial reading, but not enough of one to matter. The decline, which was estimated to be a record 32.9%, was revised to a 31.7% loss, still the largest on record by far. Making matters more concerning, it's been a fact for some time that the government spending portion of the GDP calculation has been inordinately high, and it now accounts for more than 50% of GDP. The other roughly one-half of GDP is largely consumer spending, people buying things they don't need with credit cards they can't afford to pay.
In the oil patch, the slow, relentless rise in the barrel price of oil continued apace with WTI crude peaking at $43.34 on the 26th - the highest price since March 3rd - before settling at $42.97 on Friday afternoon. Theprice of WTI crude has been below $40 just twice since July 2nd, with the recent prices nearing the top of the recent tight range. With the Labor Day holiday a week off, prices for crude and gas at the pump may begin to decline as the traditional end of summer normally results in lower prices, though these days have been anything but normal.
Treasury yields peaked on Friday, with the 10-year note ending at 0.74% and the 30-year at 1.52%, both the highest since June 16. Shorter-dated maturities were little affected by market noise nor Fed Chairman Jerome Powell's virtual keynote for the Jackson Hole symposium in which he promoted increasing inflationary policy incentives at the Federal Reserve. Powell's insistence that inflation of two percent or more somehow equates to the Fed's mandate of "stable prices" serves to point out what an abject liar he is and what a complete failure the Federal Reserve as a whole has been since its inception more than 100 years ago. The Fed has failed spectacularly in achieving both of its mandates as the dollar has lost 97% of purchasing power since 1913 and full employment - the other mandate - is about as far from the minds of the regional Fed presidents and governors of the FOMC as the Earth is from planet Jupiter.
Gold regained some respect on Friday, up $35 to close out the week at $1,964.83. Since peaking at $2,063.54 on August 6, the trend has been lower, but $1900 an ounce appears to be very strong support. With supply strained and demand still very high, recent dips look more like consolidation than manipulation, even though the spot price is subservient to the eminently exploitable futures market where daily claims on precious metals often exceed a year's production. Eventually, the futures market will face an untenable situation when the punters stand for delivery of real metal rather than a paper equivalent of dollars, yen, or euros. Once the COMEX fails to deliver physical in a timely manner - a possibility that's growing increasingly worrying - it's game over for the paper markets, where the rigging has kept the true price of gold to be discovered for decades.
In order to prevent such an occurrence, the CME has been and will continue to raise margin requirements for futures trading in precious metals until none but the biggest players - central banks, bullion banks, private banks, investment and commercial banks, insurance companies, and sovereign trusts - will be able to afford the buying and selling of futures contracts. Thus, the compression of prices could continue indefinitely while physical premiums soar beyond the rooftops.
Silver also appears to be in a consolidation phase, ranging between $26.45 and $27.67 the past two weeks. It finished up Friday near the top end, at $27.50. Considering the recent smackdown sent silver from a high of $29.13 to $24.79 in the course of one day, the recent close puts the loss at less than six percent, a complete nothing-burger in the highly volatile silver market. The inability of the futures' players to keep a lid on silver indicates that the riggers are losing control. Silver's market is much smaller than gold's, and the demand for physical has bordered on a mania recently due to its affordability and monetary and commercial value.
Here are the most recent prices on eBay (shipping - often free - included) for selected items (numismatics excluded):
Item: Low / High / Average / Median
1 oz silver coin: 31.90 / 48.95 / 39.05 / 37.98
1 oz silver bar: 32.95 / 42.00 / 36.75 / 35.98
1 oz gold coin: 1,985.00 / 2,178.90 / 2,090.41 / 2,107.55
1 oz gold bar: 2,006.16 / 2,114.59 / 2,078.62 / 2,081.75
An historical survey of prices from April, 2020 to the present is available here.
Concluding this edition of the WEEKEND WRAP, a reminder: There are just 65 days until Election Day and 117 days until Christmas. With any luck, we'll all know who the president is by the time we're unwrapping presents.
At the Close, Friday, August 28, 2020:
Dow: 28,653.87, +161.60 (+0.57%)
NASDAQ: 11,695.63, +70.30 (+0.60%)
S&P 500: 3,508.01, +23.46 (+0.67%)
NYSE: 13,170.96, +102.15 (+0.78%)
For the Week:
Dow: +723.54 (+2.59%)
NASDAQ: +383.83 (+3.39%)
S&P 500: +110.85 (+3.26%)
NYSE: +261.89 (+2.83%)
Sunday, August 30, 2020
Friday, August 28, 2020
The Whole Story Out of Jackson Hole Is Inflation; "Woke" Protests Cancel Sporting Events
Just in case you weren't invited to this year's annual celebration of all things central banking at Jackson Hole, Wyoming, fear not. The usually cozy conclave is being held virtually this year, as in "online" so that the Fed can be seen as holding up their end of the SCAMDEMIC COVID-19 bargain, like any of these globalist counterfeiters don't already have the antidote.
As a sideshow, Jackson Hole is pretty convenient. It usually allows the stuffed shirts which generally populate the world of finance, get into flannels and jeans out in the wild. Well, not so much this year.
Federal Reserve Chairman Jerome Powell set the agenda with his keynote address, signaling that the Fed is hellbent on creating inflation, targeting two percent, even if they have to go beyond it sometimes. It's not enough that the Fed has the following programs already operating on the US economy (killing it while boosting stock prices):
That's a lot of facilities. They need one more: a hospital facility to house the mentally ill economists running the world's currencies and businesses into the ground.
The Fed has gone full retard on inflation, which benefits who exactly. Most people don't really insist on higher prices all the time. Lower prices would be a welcome change, but, in the Fed's mind, the part of their mandate being price stability is somehow interpreted as two percent inflation. Yes, full retard. They'll soon be sending money directly to corporations negatively affected by not just COVID-19, but just about anything.
The Fed's message is crystal clear and applies to everything from food to consumer goods to houses to stocks:
BUY NOW BEFORE PRICES GO UP!
As far as full retard mode being in effect, the Fed and Wall Street may have to take a back seat to professional sports. Not only has the NBA pretty much destroyed any remaining shred of credibility by cancelling playoff games Wednesday night, they topped that off by cancelling (postponing) three more playoff games on Thursday. Not to be outdone, players from 14 MLB teams caused the postponement of seven games, including the scheduled Thursday night national telecast on Fox of the Phillies-Nationals game.
Not that anybody cared much. The Phillies are sub-.500, while the Nationals - last season's World Series winners - are in last place in the NL East. No fans were affected since MLB is still not allowing any fan presence at any games. Plenty of other games - like the WNBA, which nobody watches anyway - were also cancelled.
All of these protests are over the shooting of a black man who was in violation of an order of protection, threatening an ex-girlfriend and upon whom restraint and tasers had already failed, was trying to get inside his car to retrieve a knife for some reason, after police had told him not to enter the car and had guns drawn. Some guy named Jacob or something. We are supposed to honor criminal behavior now?
Well, that's why sports players play sports. Most of them are too stupid to do anything meaningful. If they protest and "boycott" their own games, for which they are paid ridiculous sums of money, maybe the owners will just lay them all off, cancel the whole season, dissolve the leagues and go into some other business where the workers don't stage revolutions every two weeks.
Thankfully, the weekend is upon us and we can all relax(?) for a few days, unless there's a pandemic, hurricane, cop shooting or something else to set people off on looting and rioting. It's kind of like that old hockey joke: "I went to a boxing match and a hockey game broke out," except this time, it's "I went to a basketball game and a protest broke out."
Yikes. We're screwed.
At the Close, Thursday, August 27, 2020:
Dow: 28,492.27, +160.37 (+0.57%)
NASDAQ: 11,625.34, -39.76 (-0.34%)
S&P 500: 3,484.55, +5.82 (+0.17%)
NYSE: 13,068.81, +26.31 (+0.20%)
As a sideshow, Jackson Hole is pretty convenient. It usually allows the stuffed shirts which generally populate the world of finance, get into flannels and jeans out in the wild. Well, not so much this year.
Federal Reserve Chairman Jerome Powell set the agenda with his keynote address, signaling that the Fed is hellbent on creating inflation, targeting two percent, even if they have to go beyond it sometimes. It's not enough that the Fed has the following programs already operating on the US economy (killing it while boosting stock prices):
- Primary Dealer Credit Facility
- Money Market Mutual Fund Liquidity Facility
- Primary Market Corporate Credit Facility
- Secondary Market Corporate Credit Facility
- Term Asset-Backed Securities Loan Facility
- Paycheck Protection Program Liquidity Facility
- Main Street Lending Program
That's a lot of facilities. They need one more: a hospital facility to house the mentally ill economists running the world's currencies and businesses into the ground.
The Fed has gone full retard on inflation, which benefits who exactly. Most people don't really insist on higher prices all the time. Lower prices would be a welcome change, but, in the Fed's mind, the part of their mandate being price stability is somehow interpreted as two percent inflation. Yes, full retard. They'll soon be sending money directly to corporations negatively affected by not just COVID-19, but just about anything.
The Fed's message is crystal clear and applies to everything from food to consumer goods to houses to stocks:
BUY NOW BEFORE PRICES GO UP!
As far as full retard mode being in effect, the Fed and Wall Street may have to take a back seat to professional sports. Not only has the NBA pretty much destroyed any remaining shred of credibility by cancelling playoff games Wednesday night, they topped that off by cancelling (postponing) three more playoff games on Thursday. Not to be outdone, players from 14 MLB teams caused the postponement of seven games, including the scheduled Thursday night national telecast on Fox of the Phillies-Nationals game.
Not that anybody cared much. The Phillies are sub-.500, while the Nationals - last season's World Series winners - are in last place in the NL East. No fans were affected since MLB is still not allowing any fan presence at any games. Plenty of other games - like the WNBA, which nobody watches anyway - were also cancelled.
All of these protests are over the shooting of a black man who was in violation of an order of protection, threatening an ex-girlfriend and upon whom restraint and tasers had already failed, was trying to get inside his car to retrieve a knife for some reason, after police had told him not to enter the car and had guns drawn. Some guy named Jacob or something. We are supposed to honor criminal behavior now?
Well, that's why sports players play sports. Most of them are too stupid to do anything meaningful. If they protest and "boycott" their own games, for which they are paid ridiculous sums of money, maybe the owners will just lay them all off, cancel the whole season, dissolve the leagues and go into some other business where the workers don't stage revolutions every two weeks.
Thankfully, the weekend is upon us and we can all relax(?) for a few days, unless there's a pandemic, hurricane, cop shooting or something else to set people off on looting and rioting. It's kind of like that old hockey joke: "I went to a boxing match and a hockey game broke out," except this time, it's "I went to a basketball game and a protest broke out."
Yikes. We're screwed.
At the Close, Thursday, August 27, 2020:
Dow: 28,492.27, +160.37 (+0.57%)
NASDAQ: 11,625.34, -39.76 (-0.34%)
S&P 500: 3,484.55, +5.82 (+0.17%)
NYSE: 13,068.81, +26.31 (+0.20%)
Thursday, August 27, 2020
NASDAQ Up 75% Since March 23; 30 Million Unemployed; 2Q GDP Down 31.7%
Stocks had another nice day on Wednesday. For the NASDAQ a nearly two percent gain on virtually no news, so it's become rather obvious that the tech space has become quite the crowded trade.
The rise of the NASDAQ has been impressive to say the least. Since bottoming out at 6,631.42 on March 23, Wednesday's close at 11,665.06 is a 75.9% gain in just five months' time, so, if there's a better way to make money, Wall Street investors aren't interested. They have found the pot of gold at the end of the COVID-19 rainbow.
What makes the rally off the March lows all the more cynical and confounding is that the index - the Dow and S&P have performed well, but not quite at the level of the NASDAQ - has risen meteorically while at least 30 million people are out of work, whole cities and states had been shut down at some time, GDP shrunk in the second quarter by 31.7% (just reported), and protests have turned into major crimes scenes replete with looting, rioting, and arson in some cities.
So, what is the American public missing that Wall Street apparently has a grasp upon? The answer is tacit backing of every bank, financial and non-financial corporation listed on the various exchanges, to the tune of three trillion dollars and more to come.
When Wall Street gets a bailout these days, they do it with gusto. The American people, not so much. Congress remains on vacation, purportedly until Labor Day. With any luck, some of the more senior members of the august bodies we call the House of Representatives and the Senate will forget to come back to DC or get hopelessly lost on their way back.
Another million people filed first time unemployment claims last week.
That's all for today. Enjoy.
At the Close, Wednesday, August 26, 2020:
Dow: 28,331.92, +83.48 (+0.30%)
NASDAQ: 11,665.06, +198.59 (+1.73%)
S&P 500: 3,478.73, +35.11 (+1.02%)
NYSE: 13,042.54, +40.55 (+0.31%)
The rise of the NASDAQ has been impressive to say the least. Since bottoming out at 6,631.42 on March 23, Wednesday's close at 11,665.06 is a 75.9% gain in just five months' time, so, if there's a better way to make money, Wall Street investors aren't interested. They have found the pot of gold at the end of the COVID-19 rainbow.
What makes the rally off the March lows all the more cynical and confounding is that the index - the Dow and S&P have performed well, but not quite at the level of the NASDAQ - has risen meteorically while at least 30 million people are out of work, whole cities and states had been shut down at some time, GDP shrunk in the second quarter by 31.7% (just reported), and protests have turned into major crimes scenes replete with looting, rioting, and arson in some cities.
So, what is the American public missing that Wall Street apparently has a grasp upon? The answer is tacit backing of every bank, financial and non-financial corporation listed on the various exchanges, to the tune of three trillion dollars and more to come.
When Wall Street gets a bailout these days, they do it with gusto. The American people, not so much. Congress remains on vacation, purportedly until Labor Day. With any luck, some of the more senior members of the august bodies we call the House of Representatives and the Senate will forget to come back to DC or get hopelessly lost on their way back.
Another million people filed first time unemployment claims last week.
That's all for today. Enjoy.
At the Close, Wednesday, August 26, 2020:
Dow: 28,331.92, +83.48 (+0.30%)
NASDAQ: 11,665.06, +198.59 (+1.73%)
S&P 500: 3,478.73, +35.11 (+1.02%)
NYSE: 13,042.54, +40.55 (+0.31%)
Wednesday, August 26, 2020
Dow Jones Industrial Average About To Undergo Huge Changes Adding Amgen, Honeywell and Salesforce.com
With the S&P 500 recently reaching new all-time highs and the NASDAQ having done so more than two months ago (June 5), the granddaddy of equity indices, the Dow Jones Industrial Average, has some catching up to do. Even though it has been on a roll recently, it's still 1300 points off its all-time high, or about five percent from the promised land.
So, what to do?
Need to have the Dow Jones Industrial Average make new all-time highs? No problemo, señor.
It was announced on Monday that Exxon Mobil (XOM), Raytheon (RTX), and Pfizer (PFE) would be removed from the index on August 31, replacing them with Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
This CNBC article suggests that the changes have much to do about Apple's announced 4-for-1 split, which will take the technology group within the Dow from 27.6% down to 20.3%, but there are some serious doubts as to the veracity of that argument. There's more to it than meets the usually-jaundiced investor eye, so, how do these companies stack up, by comparison?
Let's take a look.
ExxonMobil closed Tuesday at 40.82. It's 52 Week Range is 30.11 - 75.18, with those gaudy numbers in the 70s all occurring in late 2019, prior to the coronavirus scare. The stock hit a closing low of 31.45 on March 23, the culmination of a two-month long price slide. It has recovered only slightly since.
The removal of this oil and gas giant from the Dow is a serious matter, leaving Chevron (CVX) as the sole big energy producer in the index. This speaks volumes about the Dow re-arrangers' understanding of the economy. They obviously don't expect oil and gas to be doing much. With WTI crude in the $40-$45-a-barrel range in the middle of summer, one can guess they think the prospects for higher oil prices are low, since ExxonMobil's performance is tied quite tightly to the price of crude.
Another company hit hard and hardly recovered from the March crash is Raytheon (RTX), which closed Tuesday at 60.95, better than its March 23 low of 47.17, but well off its high of 98.70 on February 7. With 195,000 employees worldwide, Raytheon is a big time government contractor focused on aerospace and missile technology. Any conclusions drawn from the removal of this industrial/tech giant will likely be wrong. The managers of the S&P Dow Jones Indices - who are in charge of making these changes and keeping the Dow somewhat representative of American business - basically just swapped out Raytheon for Honeywell, which is also in the aerospace business but is much more diversified and up-to-date. It doesn't hurt that Honeywell, which closed Tuesday at 164.53, hit a high of 183.23 on January 17 and bottomed out at 103.63. It's recovery has been much swifter and stronger than that of Raytheon.
Pfizer has been a dog of the Dow for a long time and it's hardly surprising that it was finally dumped. Even though its close Tuesday at 38.41 is close to its record close at 40.71 on January 23, the low of 28.49 doesn't offer much in the way of range for this big pharma constituent. The highest price Pfizer traded at was 46.23, back in November of 2018. The company simply isn't the big performer that the Dow needs.
Now, Amgen (AMGN), that's a company with two things the Dow desperately needs: a high stock price and upward momentum. It got hit in the March selloff, but not so badly. It hit a high of 243.06 in December, 2019, dropped down to 182.24 on March 12, and has since made new highs, reaching the pinnacle at 260.95 on July 20. It closed Tuesday at 248.22, on a one-day gain of more than five percent. Amgen does basically the same things Pfizer does, but it doesn't carry legacy baggage like its rival. Amgen has 23,400 employees compared to Pfizer's 88,300. It's a mean, green, pharma machine. Taking this switcheroo into account, guess which company is not going to get government approval for a COVID-19 vaccine. Hint: it's not Amgen.
Salesforce (CRM) is the oddball of the bunch, basically replacing an energy company (XOM) with a pure tech play. The ticker symbol (CRM) is an acronym for Customer Relations Management, otherwise known in the business as data mining, or targeting. Headquartered in San Francisco, the company has 49,000 employees into everything from applications development to blockchain, the technology that powers cyrptocurrencies like BitCoin.
Salesforce closed at 216.05 Tuesday, but, get this, as of this writing, in pre-market trading, it's up nearly 15%, at 247.94, a gain of 31.94, should the advance hold through the open. The company's stock made a new all-time high on July 6, bouncing off its March low of 124.30, and has gone higher from there.
Could the swap out of ExxonMobile for Salesforce have anything to do with massive cultural changes in America and worldwide? You bet your life it does. This one huge change is telling us that society is going to be less mobile and more tech oriented, with distances of hundreds or thousands of miles which used to be traversed by planes, trains, and automobiles are largely going to be the province of video software, the internet, and broadband, a change which has been evolving for decades but is finally coming to fruition.
While Salesforce.com's surge after hours and into the pre-market had much to do with its earnings report and outlook, could the company be poised to be a big part of a digital currency offering by the Federal Reserve? It's obvious that the Fed would go looking to the private sector for a partner in the technology end of such a development and the nation's central bankers have already indicated that cyrpto is in their future, and thus, of all Americans and most of the world's population.
Even discounting that proposition, the changes to the Dow Industrials set to kick off in less than a week (Monday, August 31) are going to provide significant upside to the 124-year-old stock gauge.
At the Close, Tuesday, August 25, 2020:
Dow: 28,248.44, -60.02 (-0.21%)
NASDAQ: 11,466.47, +86.75 (+0.76%)
S&P 500: 3,443.62, +12.34 (+0.36%)
NYSE: 13,001.99, +29.11 (+0.22%)
So, what to do?
Need to have the Dow Jones Industrial Average make new all-time highs? No problemo, señor.
It was announced on Monday that Exxon Mobil (XOM), Raytheon (RTX), and Pfizer (PFE) would be removed from the index on August 31, replacing them with Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
This CNBC article suggests that the changes have much to do about Apple's announced 4-for-1 split, which will take the technology group within the Dow from 27.6% down to 20.3%, but there are some serious doubts as to the veracity of that argument. There's more to it than meets the usually-jaundiced investor eye, so, how do these companies stack up, by comparison?
Let's take a look.
ExxonMobil closed Tuesday at 40.82. It's 52 Week Range is 30.11 - 75.18, with those gaudy numbers in the 70s all occurring in late 2019, prior to the coronavirus scare. The stock hit a closing low of 31.45 on March 23, the culmination of a two-month long price slide. It has recovered only slightly since.
The removal of this oil and gas giant from the Dow is a serious matter, leaving Chevron (CVX) as the sole big energy producer in the index. This speaks volumes about the Dow re-arrangers' understanding of the economy. They obviously don't expect oil and gas to be doing much. With WTI crude in the $40-$45-a-barrel range in the middle of summer, one can guess they think the prospects for higher oil prices are low, since ExxonMobil's performance is tied quite tightly to the price of crude.
Another company hit hard and hardly recovered from the March crash is Raytheon (RTX), which closed Tuesday at 60.95, better than its March 23 low of 47.17, but well off its high of 98.70 on February 7. With 195,000 employees worldwide, Raytheon is a big time government contractor focused on aerospace and missile technology. Any conclusions drawn from the removal of this industrial/tech giant will likely be wrong. The managers of the S&P Dow Jones Indices - who are in charge of making these changes and keeping the Dow somewhat representative of American business - basically just swapped out Raytheon for Honeywell, which is also in the aerospace business but is much more diversified and up-to-date. It doesn't hurt that Honeywell, which closed Tuesday at 164.53, hit a high of 183.23 on January 17 and bottomed out at 103.63. It's recovery has been much swifter and stronger than that of Raytheon.
Pfizer has been a dog of the Dow for a long time and it's hardly surprising that it was finally dumped. Even though its close Tuesday at 38.41 is close to its record close at 40.71 on January 23, the low of 28.49 doesn't offer much in the way of range for this big pharma constituent. The highest price Pfizer traded at was 46.23, back in November of 2018. The company simply isn't the big performer that the Dow needs.
Now, Amgen (AMGN), that's a company with two things the Dow desperately needs: a high stock price and upward momentum. It got hit in the March selloff, but not so badly. It hit a high of 243.06 in December, 2019, dropped down to 182.24 on March 12, and has since made new highs, reaching the pinnacle at 260.95 on July 20. It closed Tuesday at 248.22, on a one-day gain of more than five percent. Amgen does basically the same things Pfizer does, but it doesn't carry legacy baggage like its rival. Amgen has 23,400 employees compared to Pfizer's 88,300. It's a mean, green, pharma machine. Taking this switcheroo into account, guess which company is not going to get government approval for a COVID-19 vaccine. Hint: it's not Amgen.
Salesforce (CRM) is the oddball of the bunch, basically replacing an energy company (XOM) with a pure tech play. The ticker symbol (CRM) is an acronym for Customer Relations Management, otherwise known in the business as data mining, or targeting. Headquartered in San Francisco, the company has 49,000 employees into everything from applications development to blockchain, the technology that powers cyrptocurrencies like BitCoin.
Salesforce closed at 216.05 Tuesday, but, get this, as of this writing, in pre-market trading, it's up nearly 15%, at 247.94, a gain of 31.94, should the advance hold through the open. The company's stock made a new all-time high on July 6, bouncing off its March low of 124.30, and has gone higher from there.
Could the swap out of ExxonMobile for Salesforce have anything to do with massive cultural changes in America and worldwide? You bet your life it does. This one huge change is telling us that society is going to be less mobile and more tech oriented, with distances of hundreds or thousands of miles which used to be traversed by planes, trains, and automobiles are largely going to be the province of video software, the internet, and broadband, a change which has been evolving for decades but is finally coming to fruition.
While Salesforce.com's surge after hours and into the pre-market had much to do with its earnings report and outlook, could the company be poised to be a big part of a digital currency offering by the Federal Reserve? It's obvious that the Fed would go looking to the private sector for a partner in the technology end of such a development and the nation's central bankers have already indicated that cyrpto is in their future, and thus, of all Americans and most of the world's population.
Even discounting that proposition, the changes to the Dow Industrials set to kick off in less than a week (Monday, August 31) are going to provide significant upside to the 124-year-old stock gauge.
At the Close, Tuesday, August 25, 2020:
Dow: 28,248.44, -60.02 (-0.21%)
NASDAQ: 11,466.47, +86.75 (+0.76%)
S&P 500: 3,443.62, +12.34 (+0.36%)
NYSE: 13,001.99, +29.11 (+0.22%)
Tuesday, August 25, 2020
How Much Is An Ounce Of Gold Really Worth? First Attempt At Valuation
While the prices of gold and silver take a beating in the futures market, two weeks out from the wanton slaughter (8/11) and a week since the infamous Money Daily post declaring their historic comeback (8/18), the past week has seen a nearly continuous dilution in the price of both metals, for no apparent good reason.
Gold and silver continue to be in high demand and short supply. Perhaps the supply issues are not as pronounced as they were at the start of the COVID-19 pandemic scare, but they are still pre-eminent, demonstrated by continued high dealer premiums, quantity limits, and shipping delays. It's been a harrowing time for dealers trying to keep up with demand while at the same time attempting to stay profitable. Wild price swings render their operations unwieldy and difficult. Stability might serve them - and the buying pubic - better.
As the prices of both metals soared and then soured, the question of value has to come to mind, if only to allay fears that recent buying might not be found to be in vain. Buyers from dealers and open markets such as eBay are still paying premiums, and those open market buyers are getting delivery at a faster pace. Price is always and everywhere a prime consideration, so seriously, how much is an ounce of gold really worth?
For the purposes of this exercise - the first of its kind (with hopefully many more to come) - let's put aside the arguments over the inflated value of fiat currencies and other considerations centered on floating values as are the major currencies in use today. They are a measurement tool for now. Nothing more, nothing less, and are handy for the purpose of determining a price point for gold, and by extension, everything.
The world's know gold supply is roughly 200,000 tons. That's a rough estimate, but useful, even if somewhat inaccurate, in this arguably simplistic quest for valuation. 200,000 tons is equivalent to 6,400,000,000 (six billion, four hundred thousand) ounces. One ton equates to 32,000 ounces, and that's standard, not troy, but the numbers are good enough for this exercise. That's roughly how much gold has been mined and is in somebody's hands, or in vaults, central bank reserves, etc.
Now, there are nearly eight billion people living on planet Earth. That's a number that can change, and with it, so too should the price of gold. If the natural path of civilization - or, what's left of it - continues, the gorwth of the world's population is calculable and that should be a contributing factor to pricing gold because in the end, it's people who should own gold, especially if it's going to be regarded as currency, and, yes, it should be global.
So, we have 6.4 billion ounces of gold and 7.8 billion people, which is not enough gold for even every person to own one ounce. If that should become a standard (1 ounce per person), that would necessitate using a divisor to determine price and that same divisor could be and should be adjusted at some set schedule, be it continuously (a dangerous prospect, prone to manipulation and gaming) or monthly, quarterly, or annually.
It should be kept in mind that gold production will also increase the amount of proven gold above ground, so it is possible that the divisor would be somewhat constant, as gold production - as we can clearly see from the numbers - roughly keeps pace with population growth.
In an entirely egalitarian environment, everybody would have one ounce of gold. When a person died, that ounce would be handed down to the next newborn, and that process would be repeated constantly, globally. While that's an impractical scenario, it serves the purpose of this experiment.
So, the divisor for one ounce of gold per person on the planet would be a single, simple equation, the number of ounces of gold, divided by the global population, or, presently, 6.4(B)/7.8(B) = 0.82.
The next step would be to determine at what level - in some currency, be it yen, euro, dollar, pound, etc. - an ounce of gold would be reasonably worth.
Let's arbitrarily determine that human life is worth something, anything, remembering that fiat currencies are wildly inflated in value as opposed to purchasing power. Let's say an ounce of gold would be equivalent to a down payment on a modest, 1000 square foot house and let's assume the price of such a house in the US would be $100,000, requiring a 20% down payment, or $20,000.
Then, we take our completely arbitrary figure of $20,000 and apply the divisor, thus ($20,000 X 0.82) to arrive at a price for one ounce of gold. Our result is $16,400, and that price would then be the global standard which could be used as a determinant for everything else, such as silver, which, using one of the time-honored ratios of either 16:1 or 12:1 or even 10:1, depending on how one calculates the overground global supply of silver, would be either $1025, $1367, or $1640, respectively.
Bear in mind that this is just a mind exercise. It does not mean that gold should be $16,400 an ounce or that silver should be $1000 an ounce or anything else. It does point up that gold at $2000 and silver at $26 per ounce seems a bit on the short side. Using our derived method, at that price, one would be putting down $2000 on a house with a value of a mere $10,000, which might be enough for a shanty hut in the outer regions of Indonesia, but hardly suitable for living quarters in New York city, Marseille, France, or even rural Iowa.
Of course, there can be more variables, or other determinants. One could calculate the price of gold as compared to the price of a live chicken, for example, or use any other widely-used commodity as a relation. What's a hammer priced in gold? A watch, an iPhone, a window, a fattened cow... The possibilities are endless, but what's essential is some form of standard beyond faith in a floating currency which has no intrinsic value. We could have a gold-iPhone standard, a chicken-gold standard, even a acreage-silver standard.
A straight gold standard with silver as a useful currency is reasonable and actually practical.
Hope you enjoyed this little experiment. Arguably, this exercise was done hastily and with many arbitrary and changeable numbers. There could be errors, but the point is that a better means must be devised for valuation of all things. The era of fiat money, created out of thin air, at interest, is coming to an end. It is imperative that some other form of measurement be established to bring global order. Gold serves this purpose as an ultimate arbiter of value, given that a reasonable and reliable value can be put upon it itself.
Come back soon. This was hopefully illustrative and promise to do more.
At the Close, Monday, August 24, 2020:
Dow: 28,308.46, +378.13 (+1.35%)
NASDAQ: 11,379.72, +67.92 (+0.60%)
S&P 500: 3,431.28, +34.12 (+1.00%)
NYSE: 12,972.88, +163.81 (+1.28%)
Gold and silver continue to be in high demand and short supply. Perhaps the supply issues are not as pronounced as they were at the start of the COVID-19 pandemic scare, but they are still pre-eminent, demonstrated by continued high dealer premiums, quantity limits, and shipping delays. It's been a harrowing time for dealers trying to keep up with demand while at the same time attempting to stay profitable. Wild price swings render their operations unwieldy and difficult. Stability might serve them - and the buying pubic - better.
As the prices of both metals soared and then soured, the question of value has to come to mind, if only to allay fears that recent buying might not be found to be in vain. Buyers from dealers and open markets such as eBay are still paying premiums, and those open market buyers are getting delivery at a faster pace. Price is always and everywhere a prime consideration, so seriously, how much is an ounce of gold really worth?
For the purposes of this exercise - the first of its kind (with hopefully many more to come) - let's put aside the arguments over the inflated value of fiat currencies and other considerations centered on floating values as are the major currencies in use today. They are a measurement tool for now. Nothing more, nothing less, and are handy for the purpose of determining a price point for gold, and by extension, everything.
The world's know gold supply is roughly 200,000 tons. That's a rough estimate, but useful, even if somewhat inaccurate, in this arguably simplistic quest for valuation. 200,000 tons is equivalent to 6,400,000,000 (six billion, four hundred thousand) ounces. One ton equates to 32,000 ounces, and that's standard, not troy, but the numbers are good enough for this exercise. That's roughly how much gold has been mined and is in somebody's hands, or in vaults, central bank reserves, etc.
Now, there are nearly eight billion people living on planet Earth. That's a number that can change, and with it, so too should the price of gold. If the natural path of civilization - or, what's left of it - continues, the gorwth of the world's population is calculable and that should be a contributing factor to pricing gold because in the end, it's people who should own gold, especially if it's going to be regarded as currency, and, yes, it should be global.
So, we have 6.4 billion ounces of gold and 7.8 billion people, which is not enough gold for even every person to own one ounce. If that should become a standard (1 ounce per person), that would necessitate using a divisor to determine price and that same divisor could be and should be adjusted at some set schedule, be it continuously (a dangerous prospect, prone to manipulation and gaming) or monthly, quarterly, or annually.
It should be kept in mind that gold production will also increase the amount of proven gold above ground, so it is possible that the divisor would be somewhat constant, as gold production - as we can clearly see from the numbers - roughly keeps pace with population growth.
In an entirely egalitarian environment, everybody would have one ounce of gold. When a person died, that ounce would be handed down to the next newborn, and that process would be repeated constantly, globally. While that's an impractical scenario, it serves the purpose of this experiment.
So, the divisor for one ounce of gold per person on the planet would be a single, simple equation, the number of ounces of gold, divided by the global population, or, presently, 6.4(B)/7.8(B) = 0.82.
The next step would be to determine at what level - in some currency, be it yen, euro, dollar, pound, etc. - an ounce of gold would be reasonably worth.
Let's arbitrarily determine that human life is worth something, anything, remembering that fiat currencies are wildly inflated in value as opposed to purchasing power. Let's say an ounce of gold would be equivalent to a down payment on a modest, 1000 square foot house and let's assume the price of such a house in the US would be $100,000, requiring a 20% down payment, or $20,000.
Then, we take our completely arbitrary figure of $20,000 and apply the divisor, thus ($20,000 X 0.82) to arrive at a price for one ounce of gold. Our result is $16,400, and that price would then be the global standard which could be used as a determinant for everything else, such as silver, which, using one of the time-honored ratios of either 16:1 or 12:1 or even 10:1, depending on how one calculates the overground global supply of silver, would be either $1025, $1367, or $1640, respectively.
Bear in mind that this is just a mind exercise. It does not mean that gold should be $16,400 an ounce or that silver should be $1000 an ounce or anything else. It does point up that gold at $2000 and silver at $26 per ounce seems a bit on the short side. Using our derived method, at that price, one would be putting down $2000 on a house with a value of a mere $10,000, which might be enough for a shanty hut in the outer regions of Indonesia, but hardly suitable for living quarters in New York city, Marseille, France, or even rural Iowa.
Of course, there can be more variables, or other determinants. One could calculate the price of gold as compared to the price of a live chicken, for example, or use any other widely-used commodity as a relation. What's a hammer priced in gold? A watch, an iPhone, a window, a fattened cow... The possibilities are endless, but what's essential is some form of standard beyond faith in a floating currency which has no intrinsic value. We could have a gold-iPhone standard, a chicken-gold standard, even a acreage-silver standard.
A straight gold standard with silver as a useful currency is reasonable and actually practical.
Hope you enjoyed this little experiment. Arguably, this exercise was done hastily and with many arbitrary and changeable numbers. There could be errors, but the point is that a better means must be devised for valuation of all things. The era of fiat money, created out of thin air, at interest, is coming to an end. It is imperative that some other form of measurement be established to bring global order. Gold serves this purpose as an ultimate arbiter of value, given that a reasonable and reliable value can be put upon it itself.
Come back soon. This was hopefully illustrative and promise to do more.
At the Close, Monday, August 24, 2020:
Dow: 28,308.46, +378.13 (+1.35%)
NASDAQ: 11,379.72, +67.92 (+0.60%)
S&P 500: 3,431.28, +34.12 (+1.00%)
NYSE: 12,972.88, +163.81 (+1.28%)
Sunday, August 23, 2020
WEEKEND WRAP: Superficial Stability In Markets Mask Advancing Underlying Economic Issues
Wildfires are raging across the state of California, devastating hundreds of thousands of acres of land, buildings, homes, ruining lives, killing farm animals and wildlife.
While the natural disaster besieging the Golden State, the man-made disaster forwarded by Governor Andrew Cuomo and New York city mayor Bill De Blasio is wreaking havoc in the Empire State.
People are fleeing the Big Apple in record numbers as crime statistics have gone through the roof. Many people are afraid to leave their homes or apartments at night in the city. More than 13,000 apartments are now vacant in the city's five boroughs, the most in 14 years and the trend continues as violent crime spirals out of control. Last week, there were a reported 60+ shootings in the city, leaving 76 people injured.
All of New York's cultural attractions, from Broadway shows, to art galleries and museums, to Lincoln Center have been closed since March. Most restaurants and bars are closed. Those that have managed to reopen can only allow outside dining. According to the state liquor authority, dancing has been banned at bars and social gatherings, even wedding receptions. Ticketed or advertised live entertainment has been banned statewide. Comedians have been barred from performing.
All of this is the response from out-of-touch politicians, Andrew Cuomo and Bill De Blasio, who are killing the state and the city economically and socially. Food banks are overwhelmed, just trying to keep up with burgeoning demand as layoffs and business closures have thrust thousands into poverty. New York’s top property owners and managers are lobbying some of the city’s biggest employers -- including the likes of Goldman Sachs, Blackstone and BlackRock -- to speed up the return of workers, but only about a quarter of workers at the 146 major employers in the city are expected back by year-end, and roughly half by next summer.
With many companies realizing the multitude of advantages of having employees at remote locations, i.e, working from home (reduced office space rent, fewer managers needed, less wasted office socializing), its possible that up to 35% of distanced workers will not be returning to the skyscrapers of Manhattan and the other borough any time soon. The strain on commercial landlords, and in turn, mortgage payments and tax receipts will have a long-lasting negative effect on the vibrancy of New York and other large city business districts.
While the official statistics say 32,000 people died from the coronavirus, New York's response to the disease is likely to kill many more. Similar circumstances are playing out in big cities across America.
That's the real story of the pandemic. Cities like New York, Chicago, Seattle, Los Angeles, Atlanta, Minneapolis, Houston, Portland, and elsewhere are teetering on the verge of financial insolvency. Social unrest throughout the summer, highlighted by violent protests, looting, arson, and rioting, have led to police forces being neutered, many cops retiring early or leaving for work in other places. Large cities are fast becoming free-fire zones, with hoodlums and criminals operating without much in the way of deterrent. Assaults are becoming common, as are holdups, burglaries, rapes and shootings. The level of violence in some cities is unprecedented.
Meanwhile, sleepy Wall Street had another ho-hum week, its second in a row. With the Dow flatter than a pancake, the S&P and NYSE traded gains and losses of 0.72%. Only the NASDAQ showed any sign of life, rising another 2.65% to multiple record closes.
Retesting support, gold and silver lost a bit of their luster during the week. Spot gold fell from $1945.12 per ounce the prior Friday to close slightly lower, at $1940.48 on the 21st of August. Silver actually gained marginally, rising from $26.45 to $26.79 on Friday's close.
Oil prices continue to gradually rise. WTI crude oil on the NYMEX saw its highest price per barrel in five months, trading as high as $42.93 before settling out at $42.34.
Treasuries rallied following the prior week's blood-letting. Yield on the 30-year bond fell 10 basis points to 1.35%, while the 10-year note shed five bips, to 0.64%. 2s-30s steepened to 119 basis points, with all of the action on the long end. 2-year yields have been stuck between 0.13 and 0.16 for two weeks. Meanwhile, the Fed has been sopping up every loose fixed income security it finds, especially corporate high yield (HY) and investment grade (IG) bonds.
According to Bloomberg, "US corporate investment-grade issuance reached a record $1.346 trillion Monday, surpassing 2017’s full-year total in less than eight months." Companies binging on cheap credit threatens to put a lid on any nascent recovery in the US economy as more money will be directed at paying off debt than expanding business facilities or re-hiring laid-off workers.
The dollar's role as the global reserve currency, long viewed by market participants as "conspiracy theory" or other disingenuous terms, now has some real numbers to back the claim that the US is no longer viewed as the only dominant currency in the world. According to the Financial Times, "in the first quarter of 2020, the dollar’s share of trade between Russia and China fell below 50% for the first time on record… The greenback was used for only 46% of settlements between the two countries. At the same time, the euro made up an all-time high of 30%, while their national currencies accounted for 24%, also a new high."
The story remains the same, however, in the precious metals space. Limited supply and incessant demand have kept premiums elevated. The most recent prices on eBay in our weekly survey (including shipping) are listed below and on our historical survey page with prices of the same items starting in April, when Money Daily began tracking:
Item: Low / High / Average / Median
1 oz silver coin: 31.00 / 38.99 / 35.06 / 35.00
1 oz silver bar: 28.99 / 43.98 / 36.32 / 35.95
1 oz gold coin: 1,898.99 / 2,306.00 / 2,105.96 / 2,099.63
1 oz gold bar: 2,004.75 / 2,161.14 / 2,063.90 / 2,061.95
What can be gleaned from these prices pad is that silver is still carrying, on average, a premium of roughly eight to nine dollars over spot, and gold's premium is over $150 for one-ounce coins which appear to be in shorter supply this week, and $120 beyond spot for silver bars. Numismatics and collectibles, never represented in the Money Daily sampling, are approaching astronomical levels.
Closing out this edition of the WEEKEND WRAP, it appears that Meredith Whitney, who predicted a municipal bond blowout on CBS' 60 Minutes back in December of 2010, saying there would be "50 to 100 sizable defaults" in the U.S. municipal market in the coming year, totaling "hundreds of billions of dollars."
Whitney may be guilty of being too far ahead of her time, which Howard Marks, chairman and co-founder of Oaktree Capital Group LLC famously said in 2007, "is indistinguishable from being wrong."
This year, more than 50 municipal-bond issues worth $5 billion have defaulted, the most since 2011, according to Municipal Market Analytics. Whitney was right about muni defaults a decade ago; she just had the magnitude wrong. With interest rates surrounding the zero-bound globally, the muni market is stressed out to the point at which no muni issuance of 30 years or less offers a yield of more than two percent.
While munis are tax-free, combined with the real, growing possibility of default (i.e., as if getting minimal return on your money wasn't insult enough, you may not get a return of your money, the ultimate injury) and low interest rates, they may not be making as much sense for the high-income investors as corporates might. It's a matter of risk preference and tax brackets. Airports and cities, the main drivers of municipal bond issuance, are suffering like never before, a condition that is not likely to find resolution soon or soon enough to bail out the muni bond market.
Well, channeling both Peter Falk as Columbo and Steve Jobs as himself, "just one more thing..."
Legendary investor Jim Rogers expounds upon current and future economic conditions, investing in what you know best, what peasants always do, and the importance of due diligence in the video below.
At the Close, Friday, August 21, 2020:
Dow: 27,930.33, +190.60 (+0.69%)
NASDAQ: 11,311.80, +46.85 (+0.42%)
S&P 500: 3,397.16, +11.65 (+0.34%)
NYSE: 12,809.07, -3.79 (-0.03%)
For the Week:
Dow: -0.69 (0.00%)
NASDAQ: +292.50 (+2.65%)
S&P 500: +24.31, (+0.72%)
NYSE: -93.43 (-0.72%)
While the natural disaster besieging the Golden State, the man-made disaster forwarded by Governor Andrew Cuomo and New York city mayor Bill De Blasio is wreaking havoc in the Empire State.
People are fleeing the Big Apple in record numbers as crime statistics have gone through the roof. Many people are afraid to leave their homes or apartments at night in the city. More than 13,000 apartments are now vacant in the city's five boroughs, the most in 14 years and the trend continues as violent crime spirals out of control. Last week, there were a reported 60+ shootings in the city, leaving 76 people injured.
All of New York's cultural attractions, from Broadway shows, to art galleries and museums, to Lincoln Center have been closed since March. Most restaurants and bars are closed. Those that have managed to reopen can only allow outside dining. According to the state liquor authority, dancing has been banned at bars and social gatherings, even wedding receptions. Ticketed or advertised live entertainment has been banned statewide. Comedians have been barred from performing.
All of this is the response from out-of-touch politicians, Andrew Cuomo and Bill De Blasio, who are killing the state and the city economically and socially. Food banks are overwhelmed, just trying to keep up with burgeoning demand as layoffs and business closures have thrust thousands into poverty. New York’s top property owners and managers are lobbying some of the city’s biggest employers -- including the likes of Goldman Sachs, Blackstone and BlackRock -- to speed up the return of workers, but only about a quarter of workers at the 146 major employers in the city are expected back by year-end, and roughly half by next summer.
With many companies realizing the multitude of advantages of having employees at remote locations, i.e, working from home (reduced office space rent, fewer managers needed, less wasted office socializing), its possible that up to 35% of distanced workers will not be returning to the skyscrapers of Manhattan and the other borough any time soon. The strain on commercial landlords, and in turn, mortgage payments and tax receipts will have a long-lasting negative effect on the vibrancy of New York and other large city business districts.
While the official statistics say 32,000 people died from the coronavirus, New York's response to the disease is likely to kill many more. Similar circumstances are playing out in big cities across America.
That's the real story of the pandemic. Cities like New York, Chicago, Seattle, Los Angeles, Atlanta, Minneapolis, Houston, Portland, and elsewhere are teetering on the verge of financial insolvency. Social unrest throughout the summer, highlighted by violent protests, looting, arson, and rioting, have led to police forces being neutered, many cops retiring early or leaving for work in other places. Large cities are fast becoming free-fire zones, with hoodlums and criminals operating without much in the way of deterrent. Assaults are becoming common, as are holdups, burglaries, rapes and shootings. The level of violence in some cities is unprecedented.
Meanwhile, sleepy Wall Street had another ho-hum week, its second in a row. With the Dow flatter than a pancake, the S&P and NYSE traded gains and losses of 0.72%. Only the NASDAQ showed any sign of life, rising another 2.65% to multiple record closes.
Retesting support, gold and silver lost a bit of their luster during the week. Spot gold fell from $1945.12 per ounce the prior Friday to close slightly lower, at $1940.48 on the 21st of August. Silver actually gained marginally, rising from $26.45 to $26.79 on Friday's close.
Oil prices continue to gradually rise. WTI crude oil on the NYMEX saw its highest price per barrel in five months, trading as high as $42.93 before settling out at $42.34.
Treasuries rallied following the prior week's blood-letting. Yield on the 30-year bond fell 10 basis points to 1.35%, while the 10-year note shed five bips, to 0.64%. 2s-30s steepened to 119 basis points, with all of the action on the long end. 2-year yields have been stuck between 0.13 and 0.16 for two weeks. Meanwhile, the Fed has been sopping up every loose fixed income security it finds, especially corporate high yield (HY) and investment grade (IG) bonds.
According to Bloomberg, "US corporate investment-grade issuance reached a record $1.346 trillion Monday, surpassing 2017’s full-year total in less than eight months." Companies binging on cheap credit threatens to put a lid on any nascent recovery in the US economy as more money will be directed at paying off debt than expanding business facilities or re-hiring laid-off workers.
The dollar's role as the global reserve currency, long viewed by market participants as "conspiracy theory" or other disingenuous terms, now has some real numbers to back the claim that the US is no longer viewed as the only dominant currency in the world. According to the Financial Times, "in the first quarter of 2020, the dollar’s share of trade between Russia and China fell below 50% for the first time on record… The greenback was used for only 46% of settlements between the two countries. At the same time, the euro made up an all-time high of 30%, while their national currencies accounted for 24%, also a new high."
The story remains the same, however, in the precious metals space. Limited supply and incessant demand have kept premiums elevated. The most recent prices on eBay in our weekly survey (including shipping) are listed below and on our historical survey page with prices of the same items starting in April, when Money Daily began tracking:
Item: Low / High / Average / Median
1 oz silver coin: 31.00 / 38.99 / 35.06 / 35.00
1 oz silver bar: 28.99 / 43.98 / 36.32 / 35.95
1 oz gold coin: 1,898.99 / 2,306.00 / 2,105.96 / 2,099.63
1 oz gold bar: 2,004.75 / 2,161.14 / 2,063.90 / 2,061.95
What can be gleaned from these prices pad is that silver is still carrying, on average, a premium of roughly eight to nine dollars over spot, and gold's premium is over $150 for one-ounce coins which appear to be in shorter supply this week, and $120 beyond spot for silver bars. Numismatics and collectibles, never represented in the Money Daily sampling, are approaching astronomical levels.
Closing out this edition of the WEEKEND WRAP, it appears that Meredith Whitney, who predicted a municipal bond blowout on CBS' 60 Minutes back in December of 2010, saying there would be "50 to 100 sizable defaults" in the U.S. municipal market in the coming year, totaling "hundreds of billions of dollars."
Whitney may be guilty of being too far ahead of her time, which Howard Marks, chairman and co-founder of Oaktree Capital Group LLC famously said in 2007, "is indistinguishable from being wrong."
This year, more than 50 municipal-bond issues worth $5 billion have defaulted, the most since 2011, according to Municipal Market Analytics. Whitney was right about muni defaults a decade ago; she just had the magnitude wrong. With interest rates surrounding the zero-bound globally, the muni market is stressed out to the point at which no muni issuance of 30 years or less offers a yield of more than two percent.
While munis are tax-free, combined with the real, growing possibility of default (i.e., as if getting minimal return on your money wasn't insult enough, you may not get a return of your money, the ultimate injury) and low interest rates, they may not be making as much sense for the high-income investors as corporates might. It's a matter of risk preference and tax brackets. Airports and cities, the main drivers of municipal bond issuance, are suffering like never before, a condition that is not likely to find resolution soon or soon enough to bail out the muni bond market.
Well, channeling both Peter Falk as Columbo and Steve Jobs as himself, "just one more thing..."
Legendary investor Jim Rogers expounds upon current and future economic conditions, investing in what you know best, what peasants always do, and the importance of due diligence in the video below.
At the Close, Friday, August 21, 2020:
Dow: 27,930.33, +190.60 (+0.69%)
NASDAQ: 11,311.80, +46.85 (+0.42%)
S&P 500: 3,397.16, +11.65 (+0.34%)
NYSE: 12,809.07, -3.79 (-0.03%)
For the Week:
Dow: -0.69 (0.00%)
NASDAQ: +292.50 (+2.65%)
S&P 500: +24.31, (+0.72%)
NYSE: -93.43 (-0.72%)
Friday, August 21, 2020
With Virus Fear Waning, The Political Election Cycle May Bore Americans To Death
So, here we are, right on the cusp of the end of a second straight uneventful week.
If this is what the "new normal" is supposed to look like - stocks setting all-time records, congress on recess, a non-stop, perpetual presidential campaign, 30 million people out of work, sporadic protests and occasional riots, coast-to-coast mask-wearing drones - then peak stupid has been achieved.
Americans have been dumbed down enough over the past 40 years to believe just about anything that comes out of the mouths of either politicians, actors, or TV reporters and that's been the driving force ushering in the era of complacency, wherein every dumb idea, every extra dollar thrown at the problem of the moment, every incremental erosion of liberty and individual rights is met with a yawn and a smirk since there's nothing anybody can do about it, so everybody just goes along to get along.
This is what you get in planned economies, of which the US economy is just one of many in the post-COVID world of make-believe economics and governance. There is no news. There are only events and propaganda, and events with propaganda. Reportage is curated, so that only what the media moguls want the public to see or hear or read is present at the front of the report. Events are staged, propaganda is scripted, and events with propaganda are news stories littered with the unsolicited opinions of reporters or presenters.
Mainstream media offers little in the way of real journalism and less in regards to reporters, who have morphed over time from bold inquisitors and investigators of the truth into presenters and script-readers for the narrative of the day. "News" has become an anachronism. Information is spoon-fed from sources to carriers to your ears and eyes.
Judging from the just-completed Democratic National Convention, those looking forward to a lively and spirited fall season of campaigning are likely to be disappointed come September, and thoroughly exhausted come October. By November, most probable voters are going to be glad it's almost over, after being bombarded by hours of sound-bite coverage, ceaseless advertising, back-biting instagram and twitter noise.
All style and little substance the elections of 2020 will pass without little change. we will elect some people who eventually will do little to change the current course of economy, polity, and society. They will toast themselves as victors and governors, padding their wallets while strip-mining the country's wealth and status.
For what it's worth, politics shouldn't be the focus of every story and event. Emitting mostly hot air and tax increases, politicians in this day and age are no better - and maybe a whole lot worse - than those of any other era. Entrenched and new alike won't make a difference in the lives of most Americans. Their policies will continue to favor established big businesses at the expense of anybody trying to play in their sandbox and contribute mostly to the detriment of society rather than its enhancement. Lobby groups, kickbacks, side deals, influence peddling, graft and corruption will continue at the forefront of the political circus and likely increase.
The political season ramping up while the coronavirus scare cools down be ready for more consecutive weeks just like this one, and the one before and the one before that. To those already established in media-induced comas, everything looks like a blank slate that doesn't change. By November 3rd, we'll all be sufficiently stupefied to believe that voting might actually matter to somebody, somewhere, sometime.
The elections will be over (though the counting may take weeks if not months to complete, guaranteeing another round of breathless coverage by the networks), the virus will be gone.
Safe in our homes, wearing our masks, staying six feet away from each other, we'll all eventually die from obsolescence and boredom.
At the Close, Thursday, August 20, 2020:
Dow: 27,739.73, +46.83 (+0.17%)
NASDAQ: 11,264.95, +118.49 (+1.06%)
S&P 500: 3,385.51, +10.66 (+0.32%)
NYSE: 12,812.86, -47.02 (-0.37%)
If this is what the "new normal" is supposed to look like - stocks setting all-time records, congress on recess, a non-stop, perpetual presidential campaign, 30 million people out of work, sporadic protests and occasional riots, coast-to-coast mask-wearing drones - then peak stupid has been achieved.
Americans have been dumbed down enough over the past 40 years to believe just about anything that comes out of the mouths of either politicians, actors, or TV reporters and that's been the driving force ushering in the era of complacency, wherein every dumb idea, every extra dollar thrown at the problem of the moment, every incremental erosion of liberty and individual rights is met with a yawn and a smirk since there's nothing anybody can do about it, so everybody just goes along to get along.
This is what you get in planned economies, of which the US economy is just one of many in the post-COVID world of make-believe economics and governance. There is no news. There are only events and propaganda, and events with propaganda. Reportage is curated, so that only what the media moguls want the public to see or hear or read is present at the front of the report. Events are staged, propaganda is scripted, and events with propaganda are news stories littered with the unsolicited opinions of reporters or presenters.
Mainstream media offers little in the way of real journalism and less in regards to reporters, who have morphed over time from bold inquisitors and investigators of the truth into presenters and script-readers for the narrative of the day. "News" has become an anachronism. Information is spoon-fed from sources to carriers to your ears and eyes.
Judging from the just-completed Democratic National Convention, those looking forward to a lively and spirited fall season of campaigning are likely to be disappointed come September, and thoroughly exhausted come October. By November, most probable voters are going to be glad it's almost over, after being bombarded by hours of sound-bite coverage, ceaseless advertising, back-biting instagram and twitter noise.
All style and little substance the elections of 2020 will pass without little change. we will elect some people who eventually will do little to change the current course of economy, polity, and society. They will toast themselves as victors and governors, padding their wallets while strip-mining the country's wealth and status.
For what it's worth, politics shouldn't be the focus of every story and event. Emitting mostly hot air and tax increases, politicians in this day and age are no better - and maybe a whole lot worse - than those of any other era. Entrenched and new alike won't make a difference in the lives of most Americans. Their policies will continue to favor established big businesses at the expense of anybody trying to play in their sandbox and contribute mostly to the detriment of society rather than its enhancement. Lobby groups, kickbacks, side deals, influence peddling, graft and corruption will continue at the forefront of the political circus and likely increase.
The political season ramping up while the coronavirus scare cools down be ready for more consecutive weeks just like this one, and the one before and the one before that. To those already established in media-induced comas, everything looks like a blank slate that doesn't change. By November 3rd, we'll all be sufficiently stupefied to believe that voting might actually matter to somebody, somewhere, sometime.
The elections will be over (though the counting may take weeks if not months to complete, guaranteeing another round of breathless coverage by the networks), the virus will be gone.
Safe in our homes, wearing our masks, staying six feet away from each other, we'll all eventually die from obsolescence and boredom.
At the Close, Thursday, August 20, 2020:
Dow: 27,739.73, +46.83 (+0.17%)
NASDAQ: 11,264.95, +118.49 (+1.06%)
S&P 500: 3,385.51, +10.66 (+0.32%)
NYSE: 12,812.86, -47.02 (-0.37%)
Thursday, August 20, 2020
Mask Wearing: A Primer For Idiots, Zealots, and Skeptics
Warning: Readers may or may not agree with some - or any - of the statements made in this post. That's OK. As Americans, we all have the right to agree or disagree with any opinion, and this post is full of opinion. It is 100% opinion.
If you are wearing a mask because you think it will help stop the spread of COVID-19, you qualify for idiot or zealot status.
If you are wearing a mask because you think it's Halloween, you need to get a new calendar.
If you're wearing a mask to appease others, such as stores which won't allow you to enter unless you're wearing one, you're probably a skeptic.
If you actually think it's necessary to wear masks, keep a social distance of at least six feet apart from other people in order to "flatten the curve" so as to not overwhelm hospitals with severe cases of COVID-19, the narrative has passed by you. In the main, hospitals have not been overwhelmed, overcrowded, or under any duress whatsoever. A few here and there were stressed, but most hospitals in the United States handled any increased case load from COVID-19 just fine.
Since there's no real danger of hospitals becoming overwhelmed, wearing masks in public has become about as useful as wearing sunglasses at night. Those who are still wearing masks because they've been ordered to or some official body has recommended doing so would probably wear sunglasses at night or walk in the street rather than on the sidewalk if the government told them to do so. These are the types who will willingly subject themselves a vaccine, if and when one become available, whether it's been proven safe or net, effective or not.
These are the sheep. The useful idiots the government uses to promote their policies. Whether government polices are in what used to be called the "public interest" doesn't really matter these days. All that matters is that a large enough number of the population follows sheepishly along behind the leadership of a Dr. Fauci or a Gretchen Whitmer or even a blind rat. Judging by the overall acceptance of the narrative projected by the mainstream media propaganda machine, the government has achieved nearly complete control over the populace, and, for them, that's been the goal.
Eventually, we will all be led by a blind rat, and probably a blind rat that's not even a rat but rather a hologram or robot, and may not even be blind. Such is the level of tyranny facing the United States and the world.
People who don't wear masks other than to pacify the zealots and idiots who do are skeptical of the narrative and the rest of the public should be thankful they're still able to express their individual opinions and fashion their lives around their own principles, not those foisted upon them by decree or fiat, such as is the case with the COVID-19 restrictions, conventions, and regulations.
Getting people to wear face masks in public is the goal of the government controllers. All they want is control over you, your money, your kids, your life. That's all. It has nothing whatsoever to do with any health condition or virus or anything other than control.
The tinpot despots posing as governors, senators and members of the House of Representatives - Republican and Democrat alike - do not have your best interest at heart. They have their best interest at heart and that includes controlling the narrative that controls how you conduct yourself in your daily life. Their best interest also includes getting you to re-elect them and they'll tout their "leadership" in the COVID-19 crisis as proof that they are worthy of your continued support and vote. In case they are challenged, many of them have conveniently ascribed to mail-in voting, by which they can make sure the tallies are in their favor.
Thus far, the must-wear-a-mask controllers have managed to cause work outages, business closures, sent trillions of dollars to Wall Street firms and little to the American people (one $1200 check and extended unemployment benefits which has run out and is unlikely to be extended), stoked inflation, shut down sports, prohibited fans from attending any sporting events, cancelled all manner of concerts, trips, travel, imposed lockdowns and border patrols in places like New York and New Jersey, caused riots, looting, arson, and general mayhem, and a slew of other antisocial restrictions.
When will it all be too much? When will the idiots and zealots start paying attention to the skeptics? When the food runs out? When the currency dies? When it's already too late? (It may already be.)
Just in: Weekly initial unemployment claims rose last week to 1.1 million. Getting worse before it gets better.
At the Close, Wednesday, August 19, 2020:
Dow: 27,692.88, -85.19 (-0.31%)
NASDAQ: 11,146.46, -64.38 (-0.57%)
S&P 500: 3,374.85, -14.93 (-0.44%)
NYSE: 12,859.88, -50.45 (-0.39%)
Corey Hart, Sunglasses at Night
If you are wearing a mask because you think it will help stop the spread of COVID-19, you qualify for idiot or zealot status.
If you are wearing a mask because you think it's Halloween, you need to get a new calendar.
If you're wearing a mask to appease others, such as stores which won't allow you to enter unless you're wearing one, you're probably a skeptic.
If you actually think it's necessary to wear masks, keep a social distance of at least six feet apart from other people in order to "flatten the curve" so as to not overwhelm hospitals with severe cases of COVID-19, the narrative has passed by you. In the main, hospitals have not been overwhelmed, overcrowded, or under any duress whatsoever. A few here and there were stressed, but most hospitals in the United States handled any increased case load from COVID-19 just fine.
Since there's no real danger of hospitals becoming overwhelmed, wearing masks in public has become about as useful as wearing sunglasses at night. Those who are still wearing masks because they've been ordered to or some official body has recommended doing so would probably wear sunglasses at night or walk in the street rather than on the sidewalk if the government told them to do so. These are the types who will willingly subject themselves a vaccine, if and when one become available, whether it's been proven safe or net, effective or not.
These are the sheep. The useful idiots the government uses to promote their policies. Whether government polices are in what used to be called the "public interest" doesn't really matter these days. All that matters is that a large enough number of the population follows sheepishly along behind the leadership of a Dr. Fauci or a Gretchen Whitmer or even a blind rat. Judging by the overall acceptance of the narrative projected by the mainstream media propaganda machine, the government has achieved nearly complete control over the populace, and, for them, that's been the goal.
Eventually, we will all be led by a blind rat, and probably a blind rat that's not even a rat but rather a hologram or robot, and may not even be blind. Such is the level of tyranny facing the United States and the world.
People who don't wear masks other than to pacify the zealots and idiots who do are skeptical of the narrative and the rest of the public should be thankful they're still able to express their individual opinions and fashion their lives around their own principles, not those foisted upon them by decree or fiat, such as is the case with the COVID-19 restrictions, conventions, and regulations.
Getting people to wear face masks in public is the goal of the government controllers. All they want is control over you, your money, your kids, your life. That's all. It has nothing whatsoever to do with any health condition or virus or anything other than control.
The tinpot despots posing as governors, senators and members of the House of Representatives - Republican and Democrat alike - do not have your best interest at heart. They have their best interest at heart and that includes controlling the narrative that controls how you conduct yourself in your daily life. Their best interest also includes getting you to re-elect them and they'll tout their "leadership" in the COVID-19 crisis as proof that they are worthy of your continued support and vote. In case they are challenged, many of them have conveniently ascribed to mail-in voting, by which they can make sure the tallies are in their favor.
Thus far, the must-wear-a-mask controllers have managed to cause work outages, business closures, sent trillions of dollars to Wall Street firms and little to the American people (one $1200 check and extended unemployment benefits which has run out and is unlikely to be extended), stoked inflation, shut down sports, prohibited fans from attending any sporting events, cancelled all manner of concerts, trips, travel, imposed lockdowns and border patrols in places like New York and New Jersey, caused riots, looting, arson, and general mayhem, and a slew of other antisocial restrictions.
When will it all be too much? When will the idiots and zealots start paying attention to the skeptics? When the food runs out? When the currency dies? When it's already too late? (It may already be.)
Just in: Weekly initial unemployment claims rose last week to 1.1 million. Getting worse before it gets better.
At the Close, Wednesday, August 19, 2020:
Dow: 27,692.88, -85.19 (-0.31%)
NASDAQ: 11,146.46, -64.38 (-0.57%)
S&P 500: 3,374.85, -14.93 (-0.44%)
NYSE: 12,859.88, -50.45 (-0.39%)
Corey Hart, Sunglasses at Night
Wednesday, August 19, 2020
What Really Matters When The Wheels Fall Off And By What Authority Will Rights Be Protected
"When the Wheels Fall Off" is an analogy for the breakdown of any system, device, or contraption. It's becoming more applicable to government and society as days progress through the madness of the COVID-19 panic, incredibly fake news and outright propaganda in the mainstream, financial intermediation by the Federal Reserve, government ineptitude or impotence, and the growing need for individuals to control their own destinies.
In a little more than two months it will be election day in the United States, a day which used to have meaning, say twenty or thirty years ago, though the advent of absentee balloting, early voting and the soon-to-arrive mail-in voting have rendered "election day" an anachronism and relic of the past.
In a society in which fewer than 60 percent of the eligible electorate chooses to engage, in a system in which various jurisdictions (the 50 states) operate elections under different rules, and in a system in which a bankrupt, decrepit, overburdened postal system is about to be the guinea pig in a live test, will the results of the elections be valid, validated, enforceable, or otherwise useful to the electorate?
What has proceeded from the outbreak of the COVID-19 virus and the ham-handed approach by federal and state governments to provide guidance and ad hoc rule-making for the control and prevention of such is an acceleration in the breakdown of institutions - already well under way prior to 2020 - to the point that the world is about to witness federal, state, and local elections that could possibly be deemed invalid, and, for practical purposes, will probably be invalidated in action by the supposed "electorate."
Leaving aside for a moment presidential politics and elections in general for a moment, there are other extenuating circumstances that can readily be seen for means of potential breakdown and break-up of societal norms that are being challenged due to extraordinary circumstances.
Reams of paper would probably be needed to list all of the potential societal "deal-breakers" on the horizon, but the most salient, prevalent, and provocative of them are:
The above list is just a sampling of the chaos already well underway. Governments at all levels have largely lost the ability to govern, either through their own choices or by happenstance. Lawlessness has already taken over parts of some larger cities and a state of anarchy is prevailing and spreading.
Civil society requires an overarching system of laws and punishments for breaking them. Barring such a system, elements of society will turn to localism, common law, private law, or, at worst, laws of nature (survival of the fittest) to settle disputes, both criminal and civil. Our existing system of courts of law and equity, either overwhelmed or backlogged by caseload, downtime, lack of compliance and competence, cannot be relied upon to deliver justice swiftly, equitably, or even-handedly. Further, enforcement of their findings and rulings will likely not be executed diligently or at all as numbers swell and burgeon to unwieldy levels, making them unenforceable for all practical purposes, leaving litigants and defendants more or less on their own.
In time, legal matters will be adjudicated by disinterested third parties, by agreement, by force, or not at all.
The case can be made that within a short time, say one to two years, the entirety of what was previously known as the United States of America will become vast plain of inequity, uncertainty, wantonness, desperation, and tyranny by anyone with sufficient resources by which to impose it. Instead of a powerful nation-state, powers will devolve first to the individual states, then to municipalities, counties, and cities, and ultimately into the hands of ultra-local jurisdictional authorities either by force or will of the local populace.
Being secure in one's rights and properties will fall to the individual, business or corporation to provide for itself because no rights will be inherently protected in the absence of consensual authority.
An example of the potential for a kind of "Wild West" scenario would be basic property rights. People who default on debts and commit to bankruptcy courts may find themselves without protection as law breaks down. Banking or government agents may just seize property they find desirable (low-hanging fruit) without regard to the court's ruling, seizing upon the opportunity to take justice into their own hands because they see limited opposition to their actions.
If somebody steals your car or truck, who can be be relied upon to catch the criminals and return the vehicle to the rightful owner when there are hundreds of car thefts daily?
Landlords who evict tenants for non-payment face the real possibility of dealing with squatters on their own, as police and courts have limited (or no) ability and/or jurisdiction to deal with thousands of such instances. In such a circumstance, abandonment of real property will become a distasteful, but prudent option for property owners. In cases where mortgages are outstanding - not just in rentals and commercial properties, but in residential property as well - banks will hold notes and eventually have to sue for title (foreclosure) and deal with squatters or non-paying renters on their own. The devolving process will take years to play out.
No matter the process for devolution and destruction of institutions, laws, and eventually rights, the end result will be the same: failed government, failed economy, widespread chaos, starvation, poverty, dissolution of society.
This does not have to occur in whole or in part if governments and the people in charge of them would be true to their word and their constitutional duties, to preserve and protect the rights of its citizens. The United States congress, for one, has already abrogated their responsibility in its handling of coronavirus emergency measures.
To wit, these words:
Would the Fed Chairman be true to his words by oversight from the congress, the trillions of dollars spent to shore up insolvent banks and corporations would have instead gone to individuals, families, owners of small businesses. Instead, the Federal Reserve made Wall Street whole, leaving people and small businesses flailing about in the wind while congress stood idly by and did nothing.
The American people have been betrayed by its leaders, its currency, and its press. All freedoms are at stake. Liberty, in so far as one can maintain it, needs to be preserved and protected at the individual level.
Any wonder gun sales, particularly purchases by individuals residing in marginal neighborhoods, are through the roof?
At the Close, Tuesday, August 18, 2020:
Dow: 27,778.07, -66.84 (-0.24%)
NASDAQ: 11,210.84, +81.12 (+0.73%)
S&P 500: 3,389.78, +7.79 (+0.23%)
NYSE: 12,910.33, -25.78 (-0.20%)
In a little more than two months it will be election day in the United States, a day which used to have meaning, say twenty or thirty years ago, though the advent of absentee balloting, early voting and the soon-to-arrive mail-in voting have rendered "election day" an anachronism and relic of the past.
In a society in which fewer than 60 percent of the eligible electorate chooses to engage, in a system in which various jurisdictions (the 50 states) operate elections under different rules, and in a system in which a bankrupt, decrepit, overburdened postal system is about to be the guinea pig in a live test, will the results of the elections be valid, validated, enforceable, or otherwise useful to the electorate?
What has proceeded from the outbreak of the COVID-19 virus and the ham-handed approach by federal and state governments to provide guidance and ad hoc rule-making for the control and prevention of such is an acceleration in the breakdown of institutions - already well under way prior to 2020 - to the point that the world is about to witness federal, state, and local elections that could possibly be deemed invalid, and, for practical purposes, will probably be invalidated in action by the supposed "electorate."
Leaving aside for a moment presidential politics and elections in general for a moment, there are other extenuating circumstances that can readily be seen for means of potential breakdown and break-up of societal norms that are being challenged due to extraordinary circumstances.
Reams of paper would probably be needed to list all of the potential societal "deal-breakers" on the horizon, but the most salient, prevalent, and provocative of them are:
- An explosion of evictions and foreclosures within the next two months.
- Debt default by individuals, businesses, and corporations.
- Food shortages, either by design or people lacking the ability to afford it.
- Uncontrolled violence unable to be contained by unwilling police forces, mayors, city councils, governors.
- Rampant personal and property crime, including burglary, larceny, arson, insurance fraud, hold-ups, car-jacking, muggings, beatings, assaults, rapes, and murders.
- Acceleration of already out-of-control wealth disparity, with stocks on Wall Street heading to record highs while the underlying economy crumbles.
- Rapid and massive devaluation of the currency and resultant inflation in consumer goods and services
- Fiat money ($US in addition of other central bank monstrosities like the euro, yen, yuan, pound, franc) devolving to its intrinsic value (ZERO).
- A unexpected variant of "schools without walls" as the entirety of the educational system becomes virtual, non-effective, and chaotic.
- Bankrupt local governments, unable to process basic needs or collect taxes readily and efficiently, enforce local ordinances and laws and adjudicate same.
The above list is just a sampling of the chaos already well underway. Governments at all levels have largely lost the ability to govern, either through their own choices or by happenstance. Lawlessness has already taken over parts of some larger cities and a state of anarchy is prevailing and spreading.
Civil society requires an overarching system of laws and punishments for breaking them. Barring such a system, elements of society will turn to localism, common law, private law, or, at worst, laws of nature (survival of the fittest) to settle disputes, both criminal and civil. Our existing system of courts of law and equity, either overwhelmed or backlogged by caseload, downtime, lack of compliance and competence, cannot be relied upon to deliver justice swiftly, equitably, or even-handedly. Further, enforcement of their findings and rulings will likely not be executed diligently or at all as numbers swell and burgeon to unwieldy levels, making them unenforceable for all practical purposes, leaving litigants and defendants more or less on their own.
In time, legal matters will be adjudicated by disinterested third parties, by agreement, by force, or not at all.
The case can be made that within a short time, say one to two years, the entirety of what was previously known as the United States of America will become vast plain of inequity, uncertainty, wantonness, desperation, and tyranny by anyone with sufficient resources by which to impose it. Instead of a powerful nation-state, powers will devolve first to the individual states, then to municipalities, counties, and cities, and ultimately into the hands of ultra-local jurisdictional authorities either by force or will of the local populace.
Being secure in one's rights and properties will fall to the individual, business or corporation to provide for itself because no rights will be inherently protected in the absence of consensual authority.
An example of the potential for a kind of "Wild West" scenario would be basic property rights. People who default on debts and commit to bankruptcy courts may find themselves without protection as law breaks down. Banking or government agents may just seize property they find desirable (low-hanging fruit) without regard to the court's ruling, seizing upon the opportunity to take justice into their own hands because they see limited opposition to their actions.
If somebody steals your car or truck, who can be be relied upon to catch the criminals and return the vehicle to the rightful owner when there are hundreds of car thefts daily?
Landlords who evict tenants for non-payment face the real possibility of dealing with squatters on their own, as police and courts have limited (or no) ability and/or jurisdiction to deal with thousands of such instances. In such a circumstance, abandonment of real property will become a distasteful, but prudent option for property owners. In cases where mortgages are outstanding - not just in rentals and commercial properties, but in residential property as well - banks will hold notes and eventually have to sue for title (foreclosure) and deal with squatters or non-paying renters on their own. The devolving process will take years to play out.
No matter the process for devolution and destruction of institutions, laws, and eventually rights, the end result will be the same: failed government, failed economy, widespread chaos, starvation, poverty, dissolution of society.
This does not have to occur in whole or in part if governments and the people in charge of them would be true to their word and their constitutional duties, to preserve and protect the rights of its citizens. The United States congress, for one, has already abrogated their responsibility in its handling of coronavirus emergency measures.
To wit, these words:
People are undertaking sacrifices for the common good. We need to make them whole. To the extent we have the ability to make them whole we should be doing that as a society. They didn’t cause this. Their business isn’t closed because of anything they did wrong. They didn’t lose their job because of anything they did wrong.
-- Federal Reserve Chairman Jerome Powell, April 12, 2020, Reuters
Would the Fed Chairman be true to his words by oversight from the congress, the trillions of dollars spent to shore up insolvent banks and corporations would have instead gone to individuals, families, owners of small businesses. Instead, the Federal Reserve made Wall Street whole, leaving people and small businesses flailing about in the wind while congress stood idly by and did nothing.
The American people have been betrayed by its leaders, its currency, and its press. All freedoms are at stake. Liberty, in so far as one can maintain it, needs to be preserved and protected at the individual level.
Any wonder gun sales, particularly purchases by individuals residing in marginal neighborhoods, are through the roof?
At the Close, Tuesday, August 18, 2020:
Dow: 27,778.07, -66.84 (-0.24%)
NASDAQ: 11,210.84, +81.12 (+0.73%)
S&P 500: 3,389.78, +7.79 (+0.23%)
NYSE: 12,910.33, -25.78 (-0.20%)
Tuesday, August 18, 2020
Gold, Silver Making Historic Bounce Back From Last Week's Raid
Just a week ago, gold and silver futures were smashed lower after running up incredibly over the prior six months. Gold had reached a record high in dollar terms and silver had put on a nearly 60% gain from its mid-March bottom.
Then came the not-unexpected selloff that sent silver down nearly 15% and gold off by more than $100 in just one day (Tuesday, August 11). Some pundits of stocks and other paper currency derivatives were calling it the end of the bull run, but serious holders of precious metals were unswayed by the day's events. Many bullion dealers reported that instead of people rushing in to sell them their gold and silver, they saw record sales. Buyers were responding to the lower price as an incentive to buy more on the cheap.
As time progress to the present, the prices of both metals have recovered quite nicely, thank you very much. Silver, which had been testing the $29 mark, is currently trading in a range between $28.35 and $28.50, not far from the point at which it was pummeled a week prior. Gold is once again above $2000 an ounce, and looks to be heading higher. As of this pre-market writing, it's priced at $2015 on the futures market. The point from which it had fallen - $2050 - is once again targeted and all indications are that gold will continue to make new highs against the US dollar - and most other major currencies - for the foreseeable future.
The quick bounce in price off the shock selloff indicates the overwhelming demand for precious metals that has persisted since the start of the pandemic in March, with premiums at near-record levels and shortages reported throughout the bullion markets for everything from one ounce coins to 400-ounce bars, from London to Zurich, to Hong Kong and New York. People are rushing to buy gold and silver primarily for one reason and one reason only: they mistrust their governments and their central bank currency.
Nobody can dispute that the vast majority of sovereign currencies (likely all of them) have lost value over any period of time measured, be it just the past six months or the past six or 60 years. Otherwise known as inflation, the decimation of purchasing power in the major currencies (especially the UK pound sterling and US dollar) has been profound. Backed by nothing other than faith and trust in government institutions and the central banks which finance them, national currencies are being roundly rejected by the illuminati and people of progressive thinking.
Millennials may be flocking to other forms of safety, particularly crypto currencies like Bitcoin and Etherium, but baby boomers and beyond are old school hoarders of gold and silver, the effects seen in the day-to-day transactions by online bullion dealers, local coin shops and trading sites such as eBay.
(Check the latest "people's prices" on our gold and silver tracking page, which evidences the high premiums over spot being paid.)
The metals have bounced back well for now. What's next? New highs or another overnight raid?
At the Close, Monday, August 17, 2020:
Dow: 27,844.91, -86.11 (-0.31%)
NASDAQ: 11,129.73, +110.42 (+1.00%)
S&P 500: 3,381.99, +9.14 (+0.27%)
NYSE: 12,936.11, +33.61 (+0.26%)
Then came the not-unexpected selloff that sent silver down nearly 15% and gold off by more than $100 in just one day (Tuesday, August 11). Some pundits of stocks and other paper currency derivatives were calling it the end of the bull run, but serious holders of precious metals were unswayed by the day's events. Many bullion dealers reported that instead of people rushing in to sell them their gold and silver, they saw record sales. Buyers were responding to the lower price as an incentive to buy more on the cheap.
As time progress to the present, the prices of both metals have recovered quite nicely, thank you very much. Silver, which had been testing the $29 mark, is currently trading in a range between $28.35 and $28.50, not far from the point at which it was pummeled a week prior. Gold is once again above $2000 an ounce, and looks to be heading higher. As of this pre-market writing, it's priced at $2015 on the futures market. The point from which it had fallen - $2050 - is once again targeted and all indications are that gold will continue to make new highs against the US dollar - and most other major currencies - for the foreseeable future.
The quick bounce in price off the shock selloff indicates the overwhelming demand for precious metals that has persisted since the start of the pandemic in March, with premiums at near-record levels and shortages reported throughout the bullion markets for everything from one ounce coins to 400-ounce bars, from London to Zurich, to Hong Kong and New York. People are rushing to buy gold and silver primarily for one reason and one reason only: they mistrust their governments and their central bank currency.
Nobody can dispute that the vast majority of sovereign currencies (likely all of them) have lost value over any period of time measured, be it just the past six months or the past six or 60 years. Otherwise known as inflation, the decimation of purchasing power in the major currencies (especially the UK pound sterling and US dollar) has been profound. Backed by nothing other than faith and trust in government institutions and the central banks which finance them, national currencies are being roundly rejected by the illuminati and people of progressive thinking.
Millennials may be flocking to other forms of safety, particularly crypto currencies like Bitcoin and Etherium, but baby boomers and beyond are old school hoarders of gold and silver, the effects seen in the day-to-day transactions by online bullion dealers, local coin shops and trading sites such as eBay.
(Check the latest "people's prices" on our gold and silver tracking page, which evidences the high premiums over spot being paid.)
The metals have bounced back well for now. What's next? New highs or another overnight raid?
At the Close, Monday, August 17, 2020:
Dow: 27,844.91, -86.11 (-0.31%)
NASDAQ: 11,129.73, +110.42 (+1.00%)
S&P 500: 3,381.99, +9.14 (+0.27%)
NYSE: 12,936.11, +33.61 (+0.26%)
Sunday, August 16, 2020
WEEKEND WRAP: A Quiet Week Disrupted By Bond and Bullion Smackdowns; Congress Remains Of Questionable Value
If the week just past seemed rather dull to you, it's not myopia or boredom. Everything just appears to be in a state of suspended animation.
The biggest event of the prior seven days was no doubt the massive takedown on gold and silver futures. While such raids are completely expected events, this most recent one was rather harsh. On Tuesday, spot gold crashed from $2,027.34 to $1,911.89, a decline of 5.7%, but, it was outdone by silver, which was spanked a nasty 14.9%, from $29.13 to $24.79.
Both metals recovered from the massacre, gold ending the week at $1,945.12, silver at $26.45 per ounce. Silver is still sporting a year-to-date return of 48.14%, tops among tradable assets worldwide. Gold's up 28.20%. Despite the recent smackdown, both metals are beating the pants off equities and fixed income.
Ted Bulter supplies a reasoned commentary on the selloff, with some technical assumptions and his usual wealth of market wisdom.
Andrew Mcguire's comments on the plunge were featured in Friday's Money Daily and is an equally compelling account.
Crude oil continued to be stuck in it's own sludge. The current price of $42.01 is near the top of the recent range, which has been slight. Since July 1, WTI crude has traded between $39.82 and $42.67, falling below $40 per barrel (on a closing basis) only once during that span (July 30, $39.92).
Oil's stability has kept prices at the pump in equilibrium with most Americans' thinner wallets. According to AAA, the average cost of a gallon of unleaded gas is $2.18. The average is skewed upwards by California, which has the highest price in the contiguous 48 states, at $3.205. Driving is cheapest in the Southeast, with most states under $2.00. Mississippi has the lowest average in the country, at $1.823. Jones county, MS, has the lowest average price, checking in at $1.692.
The only other place any movement was seen was fixed income. Long-dated treasuries tacked on yield, sending prices plummeting. Yield on the 30-year bond rose from 1.23% last Friday (Aug. 7) to 1.45% on August 14. The 10-year tacked on 14 basis points, from 1.57% to 1.71% on Friday. Shorter-dated maturities might as well be yielding nothing. Anything 2 years of shorter yields less than 0.15% and are negative in real terms.
It's hard to determine whether rising bond prices or zero-bound yields are a bigger headache for the Fed. On the one hand, yields below 1.5% (the entire complex) aren't exactly enticing to buyers nor do they inspire confidence in the economy going forward. Rising yields threaten to cause flight from stocks, tighter conditions and higher borrowing costs, a trifecta of bad outcomes.
The Fed has itself in a naughty fix. Its attempt at controlling the curve may be akin to trying to thread a needle from 100 miles out. Pinpoint accuracy is required, but real world conditions prevent any attempt at being even close to the mark. The best the Fed can do is pretend they have control via occasional speech-giving by member presidents and the usual cry of "no change" at the usual FOMC meetings and press conferences.
So, that just about covers the waterfront. Besides the Dow's 1.81% and the composite's 1.07% gains on the week, stocks were literally frozen in place, a position amplified by Friday's performance, a complete flattening out across all the major indices.
Blah might be the prevailing sentiment as the slog through August continues and congress drags on its holiday without providing relief to the American public with any kind of stimulus bill, needed or not. The churlish and childish approach to governance displayed by the current occupants of congressional seats amrks a new low in American politics, with the bar already pretty close to ground level.
The only way for the politicians to go seems to be up. Almost anything they do would qualify as an improvement over their performance the past three months wherein they've accomplished absolutely nothing. Perhaps, if lowered expectations are to be the norm, Americans might be best off ignoring anything they do, propose, or pontificate upon. As a group, they've proven themselves about as useful as a band-aid would be on a broken arm.
Less dependence on the whims, actions, and predilections of elected (and non-elected) masters in Washington DC, or even at state and local levels might not be a novel idea, but it is one which, unfortunately, the country is moving away from at an alarming pace. From Wall Street to the neighbors next door, everybody seems to have their hands out, seeking solutions from people who not only don't have any, but are the proximate cause for the fix we're in to begin with. COVID-19 has accounted for illness and some additional deaths, but government's response will result in fracturing an already fragile society and severe damage to the national psyche, and we're still not even close to the horrors that await us come the elections in November.
We might as well sacrifice lambs to a mythical sun god for all the good the politicians are doing.
Maybe if everybody just stayed home and refrained from voting at all, some of these posers and self-appointed magistrates of rule-making might get the message that they're neither needed nor wanted.
Fat chance of that. And please, whatever you do, do not watch or support any sporting event on TV that does not allow fans into the arena or stadium. Games without fans is like having a steak without seasoning nor a baked potato or vegetable, or a hot dog without mustard or even a bun. It's just not very appealing.
With that, here's a look at recent prices for popular precious metal items on ebay (shipping - often free - included):
Item: Low / High / Average / Median
1 oz silver coin: 32.52 / 37.99 / 35.01 / 35.00
1 oz silver bar: 32.99 / 36.90 / 35.49 / 35.99
1 oz gold coin: 2,010.00 / 2,152.82 / 2,072.02 / 2,061.61
1 oz gold bar: 2,000.00 / 2,153.95 / 2,077.05 / 2,073.58
The result of our review here is interesting in that silver, which suffered a nearly 15% decline in the futures market, barely skipped a beat. This is primarily due to two overriding factors: first, the price of spot silver locked in on Friday August 7 was $28.33, which wasn't far from the closing - post-smackdown - price on Friday, August 14, $26.70. The $1.63 change is hardly notable, being a decline of just over five percent. Second, silver is still - relative to gold - very inexpensive, thus, the very active physical market is still willing to pay hefty premiums to acquire the metal. Normally quite volatile, silver futures and spot prices do not change from Fridays at 5:00 pm ET to Sundays at 6:00 pm ET.
Prices paid for gold coins and bars were more consequential, down, on average, $74-$80. The median gold coin was down by more than $100 compared to the prior week.
Downtown Magazine has also launched a new page showing historical prices for these same items since Money Daily began tracking them on April 18. Prices are recorded every Sunday morning at approximately 8:00 - 10:00 am. Numismatics and specialty items are excluded, resulting in a regular, rational reading on what people are actually paying, an advancing necessitating diversion from the atypical gyrations in the futures markets.
While futures and spot prices have been the norm for some time, they may have outlived their usefulness for millions of savers, stackers and small speculators who seek a semblance of regularity and steadiness in their investments and currencies. We hope to expand upon tracking historical prices to include prices from the more popular dealers on the internet in the near future. We trust their cooperation may prove to unshackle the precious metals from the tyranny of arbitrary paper price discovery and the machinations of central bankers and their cohorts.
At the Close, Friday, August 14, 2020:
Dow: 27,931.02, +34.30 (+0.12%)
NASDAQ: 11,019.30, -23.20 (-0.21%)
S&P 500: 3,372.85, -0.58 (-0.02%)
NYSE: 12,902.50, -16.64 (-0.13%)
For the Week:
Dow: +497.54 (+1.81%)
NASDAQ: +8.32 (+0.08%)
S&P 500: +21.57 (+0.64%)
NYSE: +136.66 (+1.07%)
The biggest event of the prior seven days was no doubt the massive takedown on gold and silver futures. While such raids are completely expected events, this most recent one was rather harsh. On Tuesday, spot gold crashed from $2,027.34 to $1,911.89, a decline of 5.7%, but, it was outdone by silver, which was spanked a nasty 14.9%, from $29.13 to $24.79.
Both metals recovered from the massacre, gold ending the week at $1,945.12, silver at $26.45 per ounce. Silver is still sporting a year-to-date return of 48.14%, tops among tradable assets worldwide. Gold's up 28.20%. Despite the recent smackdown, both metals are beating the pants off equities and fixed income.
Ted Bulter supplies a reasoned commentary on the selloff, with some technical assumptions and his usual wealth of market wisdom.
Andrew Mcguire's comments on the plunge were featured in Friday's Money Daily and is an equally compelling account.
Crude oil continued to be stuck in it's own sludge. The current price of $42.01 is near the top of the recent range, which has been slight. Since July 1, WTI crude has traded between $39.82 and $42.67, falling below $40 per barrel (on a closing basis) only once during that span (July 30, $39.92).
Oil's stability has kept prices at the pump in equilibrium with most Americans' thinner wallets. According to AAA, the average cost of a gallon of unleaded gas is $2.18. The average is skewed upwards by California, which has the highest price in the contiguous 48 states, at $3.205. Driving is cheapest in the Southeast, with most states under $2.00. Mississippi has the lowest average in the country, at $1.823. Jones county, MS, has the lowest average price, checking in at $1.692.
The only other place any movement was seen was fixed income. Long-dated treasuries tacked on yield, sending prices plummeting. Yield on the 30-year bond rose from 1.23% last Friday (Aug. 7) to 1.45% on August 14. The 10-year tacked on 14 basis points, from 1.57% to 1.71% on Friday. Shorter-dated maturities might as well be yielding nothing. Anything 2 years of shorter yields less than 0.15% and are negative in real terms.
It's hard to determine whether rising bond prices or zero-bound yields are a bigger headache for the Fed. On the one hand, yields below 1.5% (the entire complex) aren't exactly enticing to buyers nor do they inspire confidence in the economy going forward. Rising yields threaten to cause flight from stocks, tighter conditions and higher borrowing costs, a trifecta of bad outcomes.
The Fed has itself in a naughty fix. Its attempt at controlling the curve may be akin to trying to thread a needle from 100 miles out. Pinpoint accuracy is required, but real world conditions prevent any attempt at being even close to the mark. The best the Fed can do is pretend they have control via occasional speech-giving by member presidents and the usual cry of "no change" at the usual FOMC meetings and press conferences.
So, that just about covers the waterfront. Besides the Dow's 1.81% and the composite's 1.07% gains on the week, stocks were literally frozen in place, a position amplified by Friday's performance, a complete flattening out across all the major indices.
Blah might be the prevailing sentiment as the slog through August continues and congress drags on its holiday without providing relief to the American public with any kind of stimulus bill, needed or not. The churlish and childish approach to governance displayed by the current occupants of congressional seats amrks a new low in American politics, with the bar already pretty close to ground level.
The only way for the politicians to go seems to be up. Almost anything they do would qualify as an improvement over their performance the past three months wherein they've accomplished absolutely nothing. Perhaps, if lowered expectations are to be the norm, Americans might be best off ignoring anything they do, propose, or pontificate upon. As a group, they've proven themselves about as useful as a band-aid would be on a broken arm.
Less dependence on the whims, actions, and predilections of elected (and non-elected) masters in Washington DC, or even at state and local levels might not be a novel idea, but it is one which, unfortunately, the country is moving away from at an alarming pace. From Wall Street to the neighbors next door, everybody seems to have their hands out, seeking solutions from people who not only don't have any, but are the proximate cause for the fix we're in to begin with. COVID-19 has accounted for illness and some additional deaths, but government's response will result in fracturing an already fragile society and severe damage to the national psyche, and we're still not even close to the horrors that await us come the elections in November.
We might as well sacrifice lambs to a mythical sun god for all the good the politicians are doing.
Maybe if everybody just stayed home and refrained from voting at all, some of these posers and self-appointed magistrates of rule-making might get the message that they're neither needed nor wanted.
Fat chance of that. And please, whatever you do, do not watch or support any sporting event on TV that does not allow fans into the arena or stadium. Games without fans is like having a steak without seasoning nor a baked potato or vegetable, or a hot dog without mustard or even a bun. It's just not very appealing.
With that, here's a look at recent prices for popular precious metal items on ebay (shipping - often free - included):
Item: Low / High / Average / Median
1 oz silver coin: 32.52 / 37.99 / 35.01 / 35.00
1 oz silver bar: 32.99 / 36.90 / 35.49 / 35.99
1 oz gold coin: 2,010.00 / 2,152.82 / 2,072.02 / 2,061.61
1 oz gold bar: 2,000.00 / 2,153.95 / 2,077.05 / 2,073.58
The result of our review here is interesting in that silver, which suffered a nearly 15% decline in the futures market, barely skipped a beat. This is primarily due to two overriding factors: first, the price of spot silver locked in on Friday August 7 was $28.33, which wasn't far from the closing - post-smackdown - price on Friday, August 14, $26.70. The $1.63 change is hardly notable, being a decline of just over five percent. Second, silver is still - relative to gold - very inexpensive, thus, the very active physical market is still willing to pay hefty premiums to acquire the metal. Normally quite volatile, silver futures and spot prices do not change from Fridays at 5:00 pm ET to Sundays at 6:00 pm ET.
Prices paid for gold coins and bars were more consequential, down, on average, $74-$80. The median gold coin was down by more than $100 compared to the prior week.
Downtown Magazine has also launched a new page showing historical prices for these same items since Money Daily began tracking them on April 18. Prices are recorded every Sunday morning at approximately 8:00 - 10:00 am. Numismatics and specialty items are excluded, resulting in a regular, rational reading on what people are actually paying, an advancing necessitating diversion from the atypical gyrations in the futures markets.
While futures and spot prices have been the norm for some time, they may have outlived their usefulness for millions of savers, stackers and small speculators who seek a semblance of regularity and steadiness in their investments and currencies. We hope to expand upon tracking historical prices to include prices from the more popular dealers on the internet in the near future. We trust their cooperation may prove to unshackle the precious metals from the tyranny of arbitrary paper price discovery and the machinations of central bankers and their cohorts.
At the Close, Friday, August 14, 2020:
Dow: 27,931.02, +34.30 (+0.12%)
NASDAQ: 11,019.30, -23.20 (-0.21%)
S&P 500: 3,372.85, -0.58 (-0.02%)
NYSE: 12,902.50, -16.64 (-0.13%)
For the Week:
Dow: +497.54 (+1.81%)
NASDAQ: +8.32 (+0.08%)
S&P 500: +21.57 (+0.64%)
NYSE: +136.66 (+1.07%)
Friday, August 14, 2020
Markets Shaky As Congress Abrogates Responsibility On Coronavirus Stimulus Legislation
Markets got a little bit shaky on Thursday, the main driver seemingly congress' inability to come together on a stimulus package to help out struggling Americans.
The Dems want $3.5 billion which would include a lot of extras, such as up to $150 billion in direct aid to states, localities, and school districts. The Republican plan is more streamlined and less expensive at around $1 trillion. Both plans include another $1200 check for individuals and some form of extended unemployment benefits, the Democrats calling for an extension of the $600 weekly though the end of the year, the Republicans wanting to lower the amount to $200 or $400 for a few months, and then base the extra federal payout plus regular state unemployment to become 70% of employees' regular pay.
The reality of the situation is that both parties' members are out of town, away on their usual month-long August hiatus and won't return until after Labor Day, September 7. Unless the president's executive orders issued over the past weekend pan out, all hell will have broken loose by then. There are an estimated 30 million Americans out of work presently and the so-called recovery has begun to stall out.
That's taking its toll on investors who are afraid that the rally, which has been engaged since mid-March, is about to roll over. Most of the upside in stocks over the past six months has been due to nothing other than Fed largesse, with the central bank basically sopping up assets from every corner of the country, and to a lesser extent, executing swaps on the international stage. Everything from high yield junk to AAA corporate offerings are on the Fed's menu and they've been busy chowing down like a gang of frat boys at an all-you-can-eat buffet.
An economy and stock market built almost entirely on central bank counterfeiting is not a long-lasting solution and everybody on Wall Street knows that, but they're getting while the getting is good. The S&P touched its all-time closing high on Thursday but backed off as selling intensified in the afternoon. Bonds were being sold off as well. The 30-year closed Thursday with a yield of 1.42%; the 10-year note ended at 0.71%. The yield on the 30-year is at a one-month high, but more troubling is the 10-year. One has to go all the way back to March 26 (0.72%) to find a yield higher than yesterday's close.
The Federal Reserve cannot allow rates on treasuries to rise much more as they would soon become more attractive than stocks. The very last thing the Fed wants is a stock market crash and high yields on treasuries as that would indicate just how serious the economic condition is in the United States. The overriding narrative has been that the Fed has a handle on everything and all is well. At least if things do get sideways, they can lay the blame on politicians for not acting prudently or quickly enough.
Following up on our reportage on Tuesday's massive selloff in gold and silver, Andrew Maguire explains that the price "takedown" was executed as part of a strategy by the CME to achieve equilibrium in the market, because silver (and gold) for delivery as far as three months out - largely unavailable - was too cheap.
There's a lot of background knowledge into Maguire's analysis and it's difficult for anyone without an understanding of how futures markets work (almost everybody) to follow, but the bottom line, according to the expert, is that gold and silver were not negatively affected long term and are still on their ways to higher prices in the near and long term.
For anybody in already invested in or thinking about investing in gold or silver, this is a good video to view as it points up the gamesmanship in the futures market and the need for more transparency in an effort toward true price discovery.
With price discovery in mind, Downtown Magazine's Money Daily is planning to launch a new page devoted to real prices for smaller gold and silver purchases, mainly one ounce coins and bars, quoting major bullion dealers and actual sale prices on eBay for these common, high demand items. An alpha test page will be launched this Sunday along with the usual WEEKEND WRAP.
Friday looks like it could be more signal than the usual noise, with European markets stressed and US futures pointing toward an open to the downside.
Play nice. See you on Sunday.
At the Close, Thursday, August 13, 2020:
Dow: 27,896.72, -80.12 (-0.29%)
NASDAQ: 11,042.50, +30.26 (+0.27%)
S&P 500: 3,373.43, -6.92 (-0.20%)
NYSE: 12,919.15, -55.68 (-0.43%)
The Dems want $3.5 billion which would include a lot of extras, such as up to $150 billion in direct aid to states, localities, and school districts. The Republican plan is more streamlined and less expensive at around $1 trillion. Both plans include another $1200 check for individuals and some form of extended unemployment benefits, the Democrats calling for an extension of the $600 weekly though the end of the year, the Republicans wanting to lower the amount to $200 or $400 for a few months, and then base the extra federal payout plus regular state unemployment to become 70% of employees' regular pay.
The reality of the situation is that both parties' members are out of town, away on their usual month-long August hiatus and won't return until after Labor Day, September 7. Unless the president's executive orders issued over the past weekend pan out, all hell will have broken loose by then. There are an estimated 30 million Americans out of work presently and the so-called recovery has begun to stall out.
That's taking its toll on investors who are afraid that the rally, which has been engaged since mid-March, is about to roll over. Most of the upside in stocks over the past six months has been due to nothing other than Fed largesse, with the central bank basically sopping up assets from every corner of the country, and to a lesser extent, executing swaps on the international stage. Everything from high yield junk to AAA corporate offerings are on the Fed's menu and they've been busy chowing down like a gang of frat boys at an all-you-can-eat buffet.
An economy and stock market built almost entirely on central bank counterfeiting is not a long-lasting solution and everybody on Wall Street knows that, but they're getting while the getting is good. The S&P touched its all-time closing high on Thursday but backed off as selling intensified in the afternoon. Bonds were being sold off as well. The 30-year closed Thursday with a yield of 1.42%; the 10-year note ended at 0.71%. The yield on the 30-year is at a one-month high, but more troubling is the 10-year. One has to go all the way back to March 26 (0.72%) to find a yield higher than yesterday's close.
The Federal Reserve cannot allow rates on treasuries to rise much more as they would soon become more attractive than stocks. The very last thing the Fed wants is a stock market crash and high yields on treasuries as that would indicate just how serious the economic condition is in the United States. The overriding narrative has been that the Fed has a handle on everything and all is well. At least if things do get sideways, they can lay the blame on politicians for not acting prudently or quickly enough.
Following up on our reportage on Tuesday's massive selloff in gold and silver, Andrew Maguire explains that the price "takedown" was executed as part of a strategy by the CME to achieve equilibrium in the market, because silver (and gold) for delivery as far as three months out - largely unavailable - was too cheap.
There's a lot of background knowledge into Maguire's analysis and it's difficult for anyone without an understanding of how futures markets work (almost everybody) to follow, but the bottom line, according to the expert, is that gold and silver were not negatively affected long term and are still on their ways to higher prices in the near and long term.
For anybody in already invested in or thinking about investing in gold or silver, this is a good video to view as it points up the gamesmanship in the futures market and the need for more transparency in an effort toward true price discovery.
With price discovery in mind, Downtown Magazine's Money Daily is planning to launch a new page devoted to real prices for smaller gold and silver purchases, mainly one ounce coins and bars, quoting major bullion dealers and actual sale prices on eBay for these common, high demand items. An alpha test page will be launched this Sunday along with the usual WEEKEND WRAP.
Friday looks like it could be more signal than the usual noise, with European markets stressed and US futures pointing toward an open to the downside.
Play nice. See you on Sunday.
At the Close, Thursday, August 13, 2020:
Dow: 27,896.72, -80.12 (-0.29%)
NASDAQ: 11,042.50, +30.26 (+0.27%)
S&P 500: 3,373.43, -6.92 (-0.20%)
NYSE: 12,919.15, -55.68 (-0.43%)
Thursday, August 13, 2020
Bankruptcies About To Go Ballistic As America's Nightmare Turns To Election Distraction
Question: What do Neiman Marcus, JC Penny's, Lord & Taylor, Men's Warehouse, Pier 1 Imports, Brooks Brothers, J. Crew, and Ann Taylor have in common?
If you answered that they are all retailers, you're on the right track, but only partially correct. They are all former retailers, because the correct answer is that - according to this Yahoo! Finance article - they've all filed for bankruptcy protection within the past six months.
They are not alone, of course. Many other big companies have gone the bankruptcy route, along with scores of smaller firms. About 3,600 companies filed for Chapter 11 in the first half of 2020 nationwide, more than any year since 2012, according to the American Bankruptcy Institute. That number may not sound very large, but it should be couched in the understanding that these are corporations, and many smaller companies, sole proprietorships, LLCs, partnerships and such haven't bothered to go through the legal system
Updating those figures, there were another 642 filings in July, pushing chapter 11 U.S. Commercial Bankruptcy Filings up 52% in the month. Through July, Chapter 11 commercial filings are up 30% over the same period last year, with a total of 4,246 filings.
The same article notes that Chapter 13 (personal) non-commercial filings are actually down 38% so far in 2020, with 99,136 filings, from 159,602 filings in the same period of 2019. Chapter 7 - which is liquidation - non-commercial filings are down 21% in July 2020 with 30,177 new filings, which is down from 38,033 the same period of 2019.
However, total non-commercial filings have increased each of the last four months and are up 11% since April, with 40,072 in July 2020, which is up from 36,151 in April 2020.
What all these numbers are suggesting is that some big retailers took an early exit with more business failures on the way, and that governments, banks and other credit institutions have done a good job of incentivizing bad behavior by allowing people to skip rent and mortgage payments, car payments, credit card payments and student loan payments. Such programs began in March or April, with the onset of the coronavirus and resulting government responses and continue today, in some cases being extended far beyond what was originally considered prudent.
Between the actions by the Federal Reserve, federal and state governments, banks, mortgage, and credit companies, the whoop-butt can of financial ruin that's descended upon American and the world has been kicked down the proverbial road for six months and counting.
But, time is running out and the consequences of playing along with stupid quick-fixes like temporary furloughs, deferrals, forbearance, and other cutesy-sounding programs like "stay safe at home" and "wear a mask" are leading to a major disaster later this year, just in time for - you guessed it - the elections in November.
Not trying to sound too cynical, it's a safe bet that much of what's happened so far in 2020 was thought out well in advance, as a means to inflict the maximum amount of fear, pain, and suffering upon the U.S. electorate. The fright dials will be turned up significantly as summer turns to fall and the elections of 2020 approach. Of course, the big one is the presidency, which has the Trump-Pence team lined up to defend its incumbency against the Biden-Harris squad.
To the assembled mainstream media, this looks like a fair fight. To anybody who hasn't been persuaded that president Trump is a secret Russian agent, a racist, or an otherwise evil person, the 2020 presidential race appears to be close to a slam dunk for the Republicans because they have more money, better candidates (Joe Biden is likely suffering from Alzheimer's or some other form of dementia), a better platform (Dems are running a "We Hate Donald" campaign), and Donald Trump will make mincemeat out of Joe Biden if and when there is a debate.
The elections are a but a sideshow to the national nightmare that is unfolding. Whoever wins locally, statewide, nationally, will have to dal with the same problems. Candidates on either side are barely equipped with enough skills to get them through a day without saying something utterly stupid, so who wins and who loses won't make much of a difference. Election hoopla and assorted finger-pointing, name-calling and mud-slinging will prove to be a short-lived distraction from the real issues.
That said, the global catastrophe that has been slowly proceeding is going to accelerate in the fall and winter. There will be more COVID cases, more deaths, more panic, all of it made up by an out-of-control media and government propagandists. Almost nothing presented so far has been trustworthy or useful and the coming spate of glaring, scary headlines and fake news stories are pretty much assured to be complete fabrications.
As the seasons change, people are going to find out that their unemployment insurance payments do actually run out at some time, deferrals of rent, mortgage, credit card, auto loan, and other debt didn't stop the interest from running and still need to be paid back, and that much of the world - particularly big cities - is a very messy place, ill-suited for human habitation. Personal bankruptcies will go through the roof and trigger another round of corporate and business bankruptcies. When law firms start going bankrupt, run for the hills, because if the people that sue people can't make a go of it, that says things have gone from sideways to downhill in a very bad way.
(It should be pointed out that the various forms of bankruptcy are usually followed by the word "protection." What bankruptcy protects companies and/or individuals from are creditors, i.e., banks, mortgage companies, credit card companies, auto loan financiers, which, if you've ever been through the process before, might give one pause to consider why any sane person would want to conduct business with any entity from which one might eventually need protection. It's like lambs and lions. Everybody's fine until the lions get hungry.)
Life is going to get more complicated, less fun, more frightening and probably, for a lot of people, significantly shorter and/or more unhealthy. Nothing on the horizon - like 30% of all renters in America not paying their rent in August - seems to indicate that the economy is picking up or will improve soon. Rather, there are signs that despite Wall Street's irrational exuberance, Main Street is dying a slow, painful death and with it the whole of society. Depending largely upon where one lives and maybe works, life in America is either going to get worse, a lot worse, or stay about the same.
In wide, general terms, big cities like Chicago, Los Angeles, New York, Baltimore, Denver, San Francisco, Seattle, Portland, Minneapolis, Atlanta will get a lot worse, smaller cities will only get a little worse, and rural areas may slip through the cracks only marginally affected by the coming debt tsunami and greater depression. Your mileage may vary, depending upon your levels of frustration, resiliency, savings, overall health, age, and future prospects along with other intangible variables.
As Chris Martenson recently offered on dealing with economic catastrophe now or later: "I'd rather fall off the fifth rung of the ladder than the twelfth rung." We're now somewhere between the fourth and seventh rung of Chris' hypothetical ladder. Some have already fallen off. Others are just barely hanging on. Only a brave few will make it to the top rung and manage to hang on through the chaos.
Thank you for slogging through the gloom and doom.
Please enjoy our nomination for COVID-19 song of the year: The Kinks, "Apeman" circa, 1970.
I think I'm sophisticated 'cause I'm living my life
like a good homo sapien
But all around me everybody's multiplying and
they're walking round like flies man
So I'm no better than the animals sitting
in the cages in the zoo
Cause compared to the flowers and the birds and the trees
I am an apeman.
I think I'm so educated and I'm so civilized
'Cause I'm a strict vegetarian
But with the over-population and inflation and starvation
and the crazy politicians
I don't feel safe in this world no more,
I don't want to die in a nuclear war.
I want to sail away to a distant shore and make like an apeman.
I'm an apeman, I'm an ape, apeman, oh I'm an apeman
I'm a King Kong man, I'm a voodoo man, oh I'm an apeman
Cause compared to the sun that sits in the sky,
Compared to the clouds as they roll by,
Compared to the bugs and the spiders and flies I am an apeman.
In man's evolution he's created the city
and the motor traffic rumble.
But give me half a chance and I'd be taking off my clothes
and living in the jungle.
Cause the only time that I feel at ease
Is swinging up and down in the coconut trees.
Oh what a life of luxury to be like an apeman.
I'm an apeman, I'm an ape, apeman, oh I'm an apeman
I'm a King Kong man, I'm a voodoo man, oh I'm an apeman
I look out the window but I can't see the sky,
The air pollution is a-f**king up my eyes,
I want to get out of this city alive and live like an apeman.
Oh come on and love me, be my apeman girl
And we'll be so happy in my apeman world.
I'm an apeman, I'm an ape, apeman, oh I'm an apeman
I'm a King Kong man, I'm a voodoo man, oh I'm an apeman
I'll be your Tarzan, you'll be my Jane,
I'll keep you warm and you'll keep me sane,
We'll sit in the trees and eat bananas all day,
Just like an apeman.
I'm an apeman, I'm an ape, apeman, oh I'm an apeman
I'm a King Kong man, I'm a voodoo man, oh I'm an apeman
I don't feel safe in this world no more,
I don't want to die in a nuclear war.
I want to sail away to a distant shore and make like an apeman.
Songwriter: RAY DAVIES
At the Close, Wednesday, August 12, 2020:
Dow: 27,976.84 +289.93 (+1.05%)
NASDAQ: 11,012.24, +229.42 (+2.13%)
S&P 500: 3,380.35, +46.66 (+1.40%)
NYSE: 12,974.82, +125.45 (+0.98%)
If you answered that they are all retailers, you're on the right track, but only partially correct. They are all former retailers, because the correct answer is that - according to this Yahoo! Finance article - they've all filed for bankruptcy protection within the past six months.
They are not alone, of course. Many other big companies have gone the bankruptcy route, along with scores of smaller firms. About 3,600 companies filed for Chapter 11 in the first half of 2020 nationwide, more than any year since 2012, according to the American Bankruptcy Institute. That number may not sound very large, but it should be couched in the understanding that these are corporations, and many smaller companies, sole proprietorships, LLCs, partnerships and such haven't bothered to go through the legal system
Updating those figures, there were another 642 filings in July, pushing chapter 11 U.S. Commercial Bankruptcy Filings up 52% in the month. Through July, Chapter 11 commercial filings are up 30% over the same period last year, with a total of 4,246 filings.
The same article notes that Chapter 13 (personal) non-commercial filings are actually down 38% so far in 2020, with 99,136 filings, from 159,602 filings in the same period of 2019. Chapter 7 - which is liquidation - non-commercial filings are down 21% in July 2020 with 30,177 new filings, which is down from 38,033 the same period of 2019.
However, total non-commercial filings have increased each of the last four months and are up 11% since April, with 40,072 in July 2020, which is up from 36,151 in April 2020.
What all these numbers are suggesting is that some big retailers took an early exit with more business failures on the way, and that governments, banks and other credit institutions have done a good job of incentivizing bad behavior by allowing people to skip rent and mortgage payments, car payments, credit card payments and student loan payments. Such programs began in March or April, with the onset of the coronavirus and resulting government responses and continue today, in some cases being extended far beyond what was originally considered prudent.
Between the actions by the Federal Reserve, federal and state governments, banks, mortgage, and credit companies, the whoop-butt can of financial ruin that's descended upon American and the world has been kicked down the proverbial road for six months and counting.
But, time is running out and the consequences of playing along with stupid quick-fixes like temporary furloughs, deferrals, forbearance, and other cutesy-sounding programs like "stay safe at home" and "wear a mask" are leading to a major disaster later this year, just in time for - you guessed it - the elections in November.
Not trying to sound too cynical, it's a safe bet that much of what's happened so far in 2020 was thought out well in advance, as a means to inflict the maximum amount of fear, pain, and suffering upon the U.S. electorate. The fright dials will be turned up significantly as summer turns to fall and the elections of 2020 approach. Of course, the big one is the presidency, which has the Trump-Pence team lined up to defend its incumbency against the Biden-Harris squad.
To the assembled mainstream media, this looks like a fair fight. To anybody who hasn't been persuaded that president Trump is a secret Russian agent, a racist, or an otherwise evil person, the 2020 presidential race appears to be close to a slam dunk for the Republicans because they have more money, better candidates (Joe Biden is likely suffering from Alzheimer's or some other form of dementia), a better platform (Dems are running a "We Hate Donald" campaign), and Donald Trump will make mincemeat out of Joe Biden if and when there is a debate.
The elections are a but a sideshow to the national nightmare that is unfolding. Whoever wins locally, statewide, nationally, will have to dal with the same problems. Candidates on either side are barely equipped with enough skills to get them through a day without saying something utterly stupid, so who wins and who loses won't make much of a difference. Election hoopla and assorted finger-pointing, name-calling and mud-slinging will prove to be a short-lived distraction from the real issues.
That said, the global catastrophe that has been slowly proceeding is going to accelerate in the fall and winter. There will be more COVID cases, more deaths, more panic, all of it made up by an out-of-control media and government propagandists. Almost nothing presented so far has been trustworthy or useful and the coming spate of glaring, scary headlines and fake news stories are pretty much assured to be complete fabrications.
As the seasons change, people are going to find out that their unemployment insurance payments do actually run out at some time, deferrals of rent, mortgage, credit card, auto loan, and other debt didn't stop the interest from running and still need to be paid back, and that much of the world - particularly big cities - is a very messy place, ill-suited for human habitation. Personal bankruptcies will go through the roof and trigger another round of corporate and business bankruptcies. When law firms start going bankrupt, run for the hills, because if the people that sue people can't make a go of it, that says things have gone from sideways to downhill in a very bad way.
(It should be pointed out that the various forms of bankruptcy are usually followed by the word "protection." What bankruptcy protects companies and/or individuals from are creditors, i.e., banks, mortgage companies, credit card companies, auto loan financiers, which, if you've ever been through the process before, might give one pause to consider why any sane person would want to conduct business with any entity from which one might eventually need protection. It's like lambs and lions. Everybody's fine until the lions get hungry.)
Life is going to get more complicated, less fun, more frightening and probably, for a lot of people, significantly shorter and/or more unhealthy. Nothing on the horizon - like 30% of all renters in America not paying their rent in August - seems to indicate that the economy is picking up or will improve soon. Rather, there are signs that despite Wall Street's irrational exuberance, Main Street is dying a slow, painful death and with it the whole of society. Depending largely upon where one lives and maybe works, life in America is either going to get worse, a lot worse, or stay about the same.
In wide, general terms, big cities like Chicago, Los Angeles, New York, Baltimore, Denver, San Francisco, Seattle, Portland, Minneapolis, Atlanta will get a lot worse, smaller cities will only get a little worse, and rural areas may slip through the cracks only marginally affected by the coming debt tsunami and greater depression. Your mileage may vary, depending upon your levels of frustration, resiliency, savings, overall health, age, and future prospects along with other intangible variables.
As Chris Martenson recently offered on dealing with economic catastrophe now or later: "I'd rather fall off the fifth rung of the ladder than the twelfth rung." We're now somewhere between the fourth and seventh rung of Chris' hypothetical ladder. Some have already fallen off. Others are just barely hanging on. Only a brave few will make it to the top rung and manage to hang on through the chaos.
Thank you for slogging through the gloom and doom.
Please enjoy our nomination for COVID-19 song of the year: The Kinks, "Apeman" circa, 1970.
I think I'm sophisticated 'cause I'm living my life
like a good homo sapien
But all around me everybody's multiplying and
they're walking round like flies man
So I'm no better than the animals sitting
in the cages in the zoo
Cause compared to the flowers and the birds and the trees
I am an apeman.
I think I'm so educated and I'm so civilized
'Cause I'm a strict vegetarian
But with the over-population and inflation and starvation
and the crazy politicians
I don't feel safe in this world no more,
I don't want to die in a nuclear war.
I want to sail away to a distant shore and make like an apeman.
I'm an apeman, I'm an ape, apeman, oh I'm an apeman
I'm a King Kong man, I'm a voodoo man, oh I'm an apeman
Cause compared to the sun that sits in the sky,
Compared to the clouds as they roll by,
Compared to the bugs and the spiders and flies I am an apeman.
In man's evolution he's created the city
and the motor traffic rumble.
But give me half a chance and I'd be taking off my clothes
and living in the jungle.
Cause the only time that I feel at ease
Is swinging up and down in the coconut trees.
Oh what a life of luxury to be like an apeman.
I'm an apeman, I'm an ape, apeman, oh I'm an apeman
I'm a King Kong man, I'm a voodoo man, oh I'm an apeman
I look out the window but I can't see the sky,
The air pollution is a-f**king up my eyes,
I want to get out of this city alive and live like an apeman.
Oh come on and love me, be my apeman girl
And we'll be so happy in my apeman world.
I'm an apeman, I'm an ape, apeman, oh I'm an apeman
I'm a King Kong man, I'm a voodoo man, oh I'm an apeman
I'll be your Tarzan, you'll be my Jane,
I'll keep you warm and you'll keep me sane,
We'll sit in the trees and eat bananas all day,
Just like an apeman.
I'm an apeman, I'm an ape, apeman, oh I'm an apeman
I'm a King Kong man, I'm a voodoo man, oh I'm an apeman
I don't feel safe in this world no more,
I don't want to die in a nuclear war.
I want to sail away to a distant shore and make like an apeman.
Songwriter: RAY DAVIES
At the Close, Wednesday, August 12, 2020:
Dow: 27,976.84 +289.93 (+1.05%)
NASDAQ: 11,012.24, +229.42 (+2.13%)
S&P 500: 3,380.35, +46.66 (+1.40%)
NYSE: 12,974.82, +125.45 (+0.98%)
Wednesday, August 12, 2020
Gold, Silver Smashed Lower, Stocks, Bonds Follow Down But Nobody Is Selling Gold Or Silver
What happened in the futures and spot markets for gold and silver on Tuesday was nothing short of criminal. It was a sort of gang rape by the collected purveyors of fiat, who cannot stomach excessive gains in other currencies, the precious metals being the most frighteningly destructive to their counterfeiting of paper currencies, paper assets, and paper promises.
With gold wafting past the $2000 mark earlier and silver briefly touching $30 an ounce and up more than 55% over just the past month, the forces controlling the futures market embarked on one of their more ambitious raids, designed to discourage further investment in precious metals.
How successful they were only time will tell, but if past is prelude, their efforts will be short-lived. In an environment in which physical silver and gold are scarce to say the least, how in the world can a 14% one-day decline in silver and a $110 loss on gold be justified? It simply cannot, which is why the paper markets such as the COMEX must be dissolved, to allow true price discovery for actual purchasers and real sellers instead of he fakery of paper short and long contracts that are 99% of the time settled in cash, not physical metal.
To say that the futures market is rigged would be a massive understatement, but Tuesday's raid showed that the central banks are not only afraid of gold, they are absolutely terrified of silver as currency.
The reason is simple. Silver is plentiful and cheap (for now). If silver were ever allowed to be employed widely as currency, the end of fractional reserve banking would commence in a dizzying rush that would leave the lobal economy staring into an abyss of their own making. The math that says this outcome is inevitable notwithstanding, the terrorizing of futures markets - indeed, all markets - by imbecilic people with god-like power to conjure up currency out of thin air will continue for a while longer, but not much longer. It is coming quickly to a horrible conclusion as the Tuesday slaughter on the futures markets reeks of desperation and last-ditch attempts to keep a lid on the price of real money, gold and silver.
There's a certain amount of ironic futility in the effort to suppress precious metals at this juncture. All the central bank proxy shorting did was erase a week's worth of gains and likely encourage even more buying of the dip by savvy gold bugs and silver stackers who have seen this kind of activity all too many times.
By all indications, this was a one-off event, though there may be a follow-up raid, just to reinforce the mad machinations of the people who cannot bear to see the reign of fiat currency come to an end. Silver, while it was smacked down as low as $23.54 overnight, was already back above $26 an ounce earlier and currently hovers in the $25.60-25.90 range. Gold was knocked down to $1866.70, but is already up sharply, at $1931.
Truth be told, nary a single "true believer" in the power of real money so much as thought about unloading any physical gold or silver during this engineered crash in the futures.
Meanwhile, the carnage in precious metals futures spilled over somewhat as a liquidity drain into the financial markets. The Dow, which was sporting a gain of more than 300 points most of the day, ended lower by 104. The NASDAQ was was modestly higher in the early going, but ended lower for the third straight session, the 185-point loss the biggest since July 23.
Bonds were also sent reeling, with yields on longer-dated maturities up sharply. The 10-year note finished the day with a 0.64% yield, a move of six basis points, while the 30-year gained seven basis points to 1.32%.
With markets being bought and sold in tandem, the danger is that falling stocks will not translate into lower yields, with investors heading to gold. A resultant rise in interest rates and loss of control by the Fed would signal disaster. A simultaneous selloff in equities and fixed income would be a crushing blow, the gates of hell flung open wide.
Here's a nominee for quote of the year, by Eugene Fama, Professor of Finance at the University of Chicago, who, in 2013, shared the Nobel Memorial Prize in Economic Sciences jointly with Robert J. Shiller and Lars Peter Hansen. The renowned economist and creator of the Efficient Market Theory, known as the "Father of Modern Finance," recently did an interview with Market/NZZ:
Market/NZZ: Professor Fama, the efficient market hypothesis has revolutionized the way people invest. What goes through your mind when you look at the wild swings the stock market made this year?
Fama: The market seems pretty good. It held up even though the economy is deep in the bucket. This is a good example of how forward looking the market really is: It’s looking past what we are going through now, and it’s saying that the future doesn’t look that bad.
Market/NZZ: Do you think that’s the correct assumption?
Fama: If I could forecast, I wouldn’t be a professor.
Bada Bing! A rare expression of shameless self-deprecating humor. Kudos to Professor Fama.
At the Close, Tuesday, August 11, 2020:
Dow: 27,686.91, -104.53 (-0.38%)
NASDAQ: 10,782.82, -185.53 (-1.69%)
S&P 500: 3,333.69, -26.78 (-0.80%)
NYSE: 12,849.37, +5.35 (+0.04%)
With gold wafting past the $2000 mark earlier and silver briefly touching $30 an ounce and up more than 55% over just the past month, the forces controlling the futures market embarked on one of their more ambitious raids, designed to discourage further investment in precious metals.
How successful they were only time will tell, but if past is prelude, their efforts will be short-lived. In an environment in which physical silver and gold are scarce to say the least, how in the world can a 14% one-day decline in silver and a $110 loss on gold be justified? It simply cannot, which is why the paper markets such as the COMEX must be dissolved, to allow true price discovery for actual purchasers and real sellers instead of he fakery of paper short and long contracts that are 99% of the time settled in cash, not physical metal.
To say that the futures market is rigged would be a massive understatement, but Tuesday's raid showed that the central banks are not only afraid of gold, they are absolutely terrified of silver as currency.
The reason is simple. Silver is plentiful and cheap (for now). If silver were ever allowed to be employed widely as currency, the end of fractional reserve banking would commence in a dizzying rush that would leave the lobal economy staring into an abyss of their own making. The math that says this outcome is inevitable notwithstanding, the terrorizing of futures markets - indeed, all markets - by imbecilic people with god-like power to conjure up currency out of thin air will continue for a while longer, but not much longer. It is coming quickly to a horrible conclusion as the Tuesday slaughter on the futures markets reeks of desperation and last-ditch attempts to keep a lid on the price of real money, gold and silver.
There's a certain amount of ironic futility in the effort to suppress precious metals at this juncture. All the central bank proxy shorting did was erase a week's worth of gains and likely encourage even more buying of the dip by savvy gold bugs and silver stackers who have seen this kind of activity all too many times.
By all indications, this was a one-off event, though there may be a follow-up raid, just to reinforce the mad machinations of the people who cannot bear to see the reign of fiat currency come to an end. Silver, while it was smacked down as low as $23.54 overnight, was already back above $26 an ounce earlier and currently hovers in the $25.60-25.90 range. Gold was knocked down to $1866.70, but is already up sharply, at $1931.
Truth be told, nary a single "true believer" in the power of real money so much as thought about unloading any physical gold or silver during this engineered crash in the futures.
Meanwhile, the carnage in precious metals futures spilled over somewhat as a liquidity drain into the financial markets. The Dow, which was sporting a gain of more than 300 points most of the day, ended lower by 104. The NASDAQ was was modestly higher in the early going, but ended lower for the third straight session, the 185-point loss the biggest since July 23.
Bonds were also sent reeling, with yields on longer-dated maturities up sharply. The 10-year note finished the day with a 0.64% yield, a move of six basis points, while the 30-year gained seven basis points to 1.32%.
With markets being bought and sold in tandem, the danger is that falling stocks will not translate into lower yields, with investors heading to gold. A resultant rise in interest rates and loss of control by the Fed would signal disaster. A simultaneous selloff in equities and fixed income would be a crushing blow, the gates of hell flung open wide.
Here's a nominee for quote of the year, by Eugene Fama, Professor of Finance at the University of Chicago, who, in 2013, shared the Nobel Memorial Prize in Economic Sciences jointly with Robert J. Shiller and Lars Peter Hansen. The renowned economist and creator of the Efficient Market Theory, known as the "Father of Modern Finance," recently did an interview with Market/NZZ:
Market/NZZ: Professor Fama, the efficient market hypothesis has revolutionized the way people invest. What goes through your mind when you look at the wild swings the stock market made this year?
Fama: The market seems pretty good. It held up even though the economy is deep in the bucket. This is a good example of how forward looking the market really is: It’s looking past what we are going through now, and it’s saying that the future doesn’t look that bad.
Market/NZZ: Do you think that’s the correct assumption?
Fama: If I could forecast, I wouldn’t be a professor.
Bada Bing! A rare expression of shameless self-deprecating humor. Kudos to Professor Fama.
At the Close, Tuesday, August 11, 2020:
Dow: 27,686.91, -104.53 (-0.38%)
NASDAQ: 10,782.82, -185.53 (-1.69%)
S&P 500: 3,333.69, -26.78 (-0.80%)
NYSE: 12,849.37, +5.35 (+0.04%)
Tuesday, August 11, 2020
Fake Pandemic Ushers In Real Depression
Slow news day, Monday.
Looting in Chicago, armed man shot outside White House. Dow up, NASDAQ down, silver up, gold down.
About the only item of significance actually occurred after midnight, ergo, Tuesday, when the "Protectors of Fiat" (POF) managed to beat the price of gold back down below $2000, currently stumbling down $40, at $1988.90.
Why? The world's central banks cannot allow gold and silver to be priced at anything that might inspire people to want to hold them, so they allow some gains before shorting them back down to more "reasonable" levels.
It's a game, and the central banks are still winning, though that is all dependent on a majority of the population playing. Pricing everything in Federal Reserve Notes preserves the fantasy of control. They have none over people who have chosen to opt out. People who have had enough, who are home-schooling their kids instead of packing them off for daily trips to the government indoctrination centers, who have backyard gardens, own guns for personal protection, and invest in shiny metals rather than worthless electronic bits of paper contracts commonly known as stocks, are not playing.
These are people who do things for themselves, without assistance from government bureaucrats who only help to make everything more difficult and time-consuming. These people are not interested in creating a wealth nest egg based on fake money. They're interested in raising their families as they see fit, eating food they raise themselves, living life on their terms, not those of some government or central bank.
The people we see looting, protesting, rioting, tearing down monuments, and engaging in otherwise destructive activities are the opposite of those described above. They are useful idiots who measure themselves in fiat currency and rail against the same government from which they expect to receive all benefits: money, food, clothing, shelter, communications, everything.
They hurl insults over injustice, then ask for social justice. The loot stores in their neighborhoods, then complain when there is no bread on the shelves. They are the dregs of society, and they've always been there, just now they are emboldened by the biased mainstream media, communist infiltrators, and a left-leaning Democratic party which has sailed off on an election campaign without a rudder.
In the end, when the reality of a failed economy, fake pandemic, and burning cities collide, the useful idiots will cease to be useful and a culling will commence. Unless they change their ways - a doubtful expectation - they will no longer be useful to anybody and will be discarded one way or another.
At the same time, those who have opted out, the preppers, home-schoolers, backyard gardeners, gun-toters, silver and gold hoarders, will find their footing on the other side of the social equation.
In between these two mega-groups, millions of civil servants (a misnomer since 1980) will continue to exist, albeit at levels that will have to be readjusted to a new reality. Their privilege will be lost. Their pay, health care coverage, and pensions reduced. They will find that a life spent making other people more miserable doesn't end well. They will either learn new skills and survive or resist and die.
That's just the way it goes during a depression. And make no doubt about it, the United States - and most of the rest of the world - is in the early stages of what is likely to be known as the greatest depression.
The Federal Reserve and fellow central banks can't just continue conjuring up trillions of dollars out of thin air and handing it off to banks and oligarchs and the federal government can't continue to borrow far in excess of their tax revenues. States have been broken by this fake pandemic; the worst of them are bankrupt.
A great reset is upon us, and it will be painful for many.
Slow news day, but the gloom continues to descend, slowly, inexorably, deliberately.
At the Close, Monday, August 10, 2020:
Dow: 27,791.44, +357.94 (+1.30%)
NASDAQ: 10,968.36, -42.64 (-0.39%)
S&P 500: 3,360.47, +9.19 (+0.27%)
NYSE: 12,844.02, +78.22 (+0.61%)
Looting in Chicago, armed man shot outside White House. Dow up, NASDAQ down, silver up, gold down.
About the only item of significance actually occurred after midnight, ergo, Tuesday, when the "Protectors of Fiat" (POF) managed to beat the price of gold back down below $2000, currently stumbling down $40, at $1988.90.
Why? The world's central banks cannot allow gold and silver to be priced at anything that might inspire people to want to hold them, so they allow some gains before shorting them back down to more "reasonable" levels.
It's a game, and the central banks are still winning, though that is all dependent on a majority of the population playing. Pricing everything in Federal Reserve Notes preserves the fantasy of control. They have none over people who have chosen to opt out. People who have had enough, who are home-schooling their kids instead of packing them off for daily trips to the government indoctrination centers, who have backyard gardens, own guns for personal protection, and invest in shiny metals rather than worthless electronic bits of paper contracts commonly known as stocks, are not playing.
These are people who do things for themselves, without assistance from government bureaucrats who only help to make everything more difficult and time-consuming. These people are not interested in creating a wealth nest egg based on fake money. They're interested in raising their families as they see fit, eating food they raise themselves, living life on their terms, not those of some government or central bank.
The people we see looting, protesting, rioting, tearing down monuments, and engaging in otherwise destructive activities are the opposite of those described above. They are useful idiots who measure themselves in fiat currency and rail against the same government from which they expect to receive all benefits: money, food, clothing, shelter, communications, everything.
They hurl insults over injustice, then ask for social justice. The loot stores in their neighborhoods, then complain when there is no bread on the shelves. They are the dregs of society, and they've always been there, just now they are emboldened by the biased mainstream media, communist infiltrators, and a left-leaning Democratic party which has sailed off on an election campaign without a rudder.
In the end, when the reality of a failed economy, fake pandemic, and burning cities collide, the useful idiots will cease to be useful and a culling will commence. Unless they change their ways - a doubtful expectation - they will no longer be useful to anybody and will be discarded one way or another.
At the same time, those who have opted out, the preppers, home-schoolers, backyard gardeners, gun-toters, silver and gold hoarders, will find their footing on the other side of the social equation.
In between these two mega-groups, millions of civil servants (a misnomer since 1980) will continue to exist, albeit at levels that will have to be readjusted to a new reality. Their privilege will be lost. Their pay, health care coverage, and pensions reduced. They will find that a life spent making other people more miserable doesn't end well. They will either learn new skills and survive or resist and die.
That's just the way it goes during a depression. And make no doubt about it, the United States - and most of the rest of the world - is in the early stages of what is likely to be known as the greatest depression.
The Federal Reserve and fellow central banks can't just continue conjuring up trillions of dollars out of thin air and handing it off to banks and oligarchs and the federal government can't continue to borrow far in excess of their tax revenues. States have been broken by this fake pandemic; the worst of them are bankrupt.
A great reset is upon us, and it will be painful for many.
Slow news day, but the gloom continues to descend, slowly, inexorably, deliberately.
At the Close, Monday, August 10, 2020:
Dow: 27,791.44, +357.94 (+1.30%)
NASDAQ: 10,968.36, -42.64 (-0.39%)
S&P 500: 3,360.47, +9.19 (+0.27%)
NYSE: 12,844.02, +78.22 (+0.61%)
Sunday, August 9, 2020
WEEKEND WRAP: Big Week for Silver; President Trump Delivers For America, Bypassing Inept Congress
We'll get to the good stuff in a few paragraphs, but first, for the record, the salient numbers.
Stocks had another mostly impressive week, slowed down slightly on Friday by the reality of the July non-farm payrolls data. While the July jobs number exceeded expectations with the creation of 1,763,000 employment positions. The unemployment rate fell from 10.6% to 10.2%, and it was that nagging reminder that millions of Americans are still out of work that took some steam away from Wall Street.
Led by an impressive 1000+ point gain on the Dow Industrials (+3.80%), stocks out-performed expectations in the face of continuing COVID-19 issues, the NASDAQ making another in a long stretch of record closes Thursday (11,108.07) before Friday's giveback.
Fixed income rallied alongside stocks, with the 10-year note recording a record low yield of 0.52% on Tuesday. The Treasury complex did, however, finish the week roughly where it started, with the 30-year at 1.23% and the 1-month bill off a mere one basis point to 0.08%.
Crude oil continued to trade rangebound, as WTI crude closed out the week at 41.22 Since mid-June, a barrel of WTI crude oil has been priced between $38 and $42 due to slack demand and a glut on the world market.
The real story was in the precious metals space, where silver stole the spotlight from gold. A little more than a week earlier, the price of gold in US dollars set an all-time high, but by Thursday's close of 2,069.40, was beginning to gain the attention of many more than the usual gold bugs. Finishing the week at 2,028.00, gold's rise seems to be an unstoppable force.
Silver was a runaway success on the week, reaching as high as $29.88 on the COMEX. even though it closed Friday at $27.54, it still managed a gain of $3.32, or 13.7%. Silver is up an incredible 51.24% in just the past 30 days.
GoldMoney.com's Allasdair Macleod believes bullion banks and fiat currencies have no way out as gold vaults past $2000 and silver powers forward as a secondary current.
Ted Butler reminds us that silver is also an industrial metal and an even more significant price move could develop if makers of solar panels and electrical devices get the idea that it's getting too expensive and move to buy up existing or future supplies.
In the physical world, premiums and shortages are widespread on both metals. Here are the most recent prices for selected items on eBay (including shipping, which is often free):
Item: Low / High / Average / Median
1 oz silver coin: 33.00 / 43.11 / 35.99 / 35.45
1 oz silver bar: 32.95 / 43.90 / 36.83 / 36.08
1 oz gold coin: 2,000.00 / 2,204.28 / 2,152.10 / 2,168.32
1 oz gold bar: 2,053.90 / 2,237.00 / 2,151.87 / 2,136.22
At the Close, Friday, August 8, 2020:
Dow: 27,433.48, +46.50 (+0.17%)
NASDAQ: 11,010.98, -97.09 (-0.87%)
S&P 500: 3,351.28, +2.12 (+0.06%)
NYSE: 12,765.84, +36.68 (+0.29%)
For the Week:
Dow: +1005.16 (+3.80%)
NASDAQ: +265.71 (+2.47%)
S&P 500: +80.16 (+2.45%)
NYSE: +300.79 (+2.41%)
The biggest news of the week, however, came Saturday afternoon, when President Trump took to the podium at his private golf course in Bedminster, New Jersey, to announce the signing of four executive orders after congress wasted weeks trying to negotiate a stimulus package.
Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows spent countless hours over the past three weeks trying to sway intractable, unbudging Democrats led by Nancy Pelosi and Chuck Schumer, senator from New York toward a workable compromise.
When discussions broke down entirely on Friday, the President was ready to act on his own and did so on Saturday.
The four executive orders are 1) to continue paying a supplemental federal unemployment benefit for millions of Americans out of work, lowering the amount from $600 a week to $400 through the end of 2020; 2) extending a moratorium on federal student loan payments; 3) recommendations for a continuation of a freeze on some evictions and foreclosures during the COVID-19 crisis, and; 4) deferral of the employee portion of the payroll tax from August 1 through the end of the year for people who earn less than $100,000.
Missing was the $1200 checks to eligible Americans that were promised by both sides, though many of the recipients of the government stipend were already receiving enhanced unemployment. Congress may step forward with a smaller, slimmed-down relief bill to address the needs of seniors and the self-employed and destitute.
Thus, President Trump stepped around congress and acted forcibly on his own, prompting cries of derision and unfairness from the liberal side and threats of lawsuits challenging his authority to distribute funds. However, the President seemed to be within his rights since the money, especially for enhanced unemployment payments, was already in the hands of the states. No further money was needed to be appropriated.
Finally, here's the late, great Robert Goulet, singing "The Impossible Dream," a song from the Broadway smash hit, "Man of La Mancha." Based on the novel, "Don Quixote" by Miguel de Cervantes, the 1965 musical by Dale Wasserman, lyrics by Joe Darion, and music by Mitch Leigh is a loose interpretation of Cervantes' greatest novel, itself a masterpiece of Western literature, published in two parts in 1605 and 1609.
The original 1965 Broadway production of "Man of La Mancha" ran for 2,328 performances and won five Tony Awards, including Best Musical. It has been revived four times on Broadway, becoming one of the most enduring works of musical theatre.
"The Impossible Dream" was the principal song from the show and it became an American classic. We present it here in tribute to President Trump. The lyrics aptly capture the essence of Trump's crusade against the deep state and successive campaigns for the presidency of the United States.
Enjoy.
The Impossible Dream
To dream the impossible dream
To fight the unbeatable foe
To bear with unbearable sorrow
To run where the brave dare not go
To right the unrightable wrong
To love pure and chaste from afar
To try when your arms are too weary
To reach the unreachable star
This is my quest, to follow that star
No matter how hopeless, no matter how far
To fight for the right
Without question or pause
To be willing to march
Into hell for a heavenly cause
And I know if I'll only be true
To this glorious quest
That my heart will lay peaceful and calm
When I'm laid to my rest
And the world will be better for this
That one man scorned and covered with scars
Still strove with his last ounce of courage
To reach the unreachable star.
Stocks had another mostly impressive week, slowed down slightly on Friday by the reality of the July non-farm payrolls data. While the July jobs number exceeded expectations with the creation of 1,763,000 employment positions. The unemployment rate fell from 10.6% to 10.2%, and it was that nagging reminder that millions of Americans are still out of work that took some steam away from Wall Street.
Led by an impressive 1000+ point gain on the Dow Industrials (+3.80%), stocks out-performed expectations in the face of continuing COVID-19 issues, the NASDAQ making another in a long stretch of record closes Thursday (11,108.07) before Friday's giveback.
Fixed income rallied alongside stocks, with the 10-year note recording a record low yield of 0.52% on Tuesday. The Treasury complex did, however, finish the week roughly where it started, with the 30-year at 1.23% and the 1-month bill off a mere one basis point to 0.08%.
Crude oil continued to trade rangebound, as WTI crude closed out the week at 41.22 Since mid-June, a barrel of WTI crude oil has been priced between $38 and $42 due to slack demand and a glut on the world market.
The real story was in the precious metals space, where silver stole the spotlight from gold. A little more than a week earlier, the price of gold in US dollars set an all-time high, but by Thursday's close of 2,069.40, was beginning to gain the attention of many more than the usual gold bugs. Finishing the week at 2,028.00, gold's rise seems to be an unstoppable force.
Silver was a runaway success on the week, reaching as high as $29.88 on the COMEX. even though it closed Friday at $27.54, it still managed a gain of $3.32, or 13.7%. Silver is up an incredible 51.24% in just the past 30 days.
GoldMoney.com's Allasdair Macleod believes bullion banks and fiat currencies have no way out as gold vaults past $2000 and silver powers forward as a secondary current.
Ted Butler reminds us that silver is also an industrial metal and an even more significant price move could develop if makers of solar panels and electrical devices get the idea that it's getting too expensive and move to buy up existing or future supplies.
In the physical world, premiums and shortages are widespread on both metals. Here are the most recent prices for selected items on eBay (including shipping, which is often free):
Item: Low / High / Average / Median
1 oz silver coin: 33.00 / 43.11 / 35.99 / 35.45
1 oz silver bar: 32.95 / 43.90 / 36.83 / 36.08
1 oz gold coin: 2,000.00 / 2,204.28 / 2,152.10 / 2,168.32
1 oz gold bar: 2,053.90 / 2,237.00 / 2,151.87 / 2,136.22
At the Close, Friday, August 8, 2020:
Dow: 27,433.48, +46.50 (+0.17%)
NASDAQ: 11,010.98, -97.09 (-0.87%)
S&P 500: 3,351.28, +2.12 (+0.06%)
NYSE: 12,765.84, +36.68 (+0.29%)
For the Week:
Dow: +1005.16 (+3.80%)
NASDAQ: +265.71 (+2.47%)
S&P 500: +80.16 (+2.45%)
NYSE: +300.79 (+2.41%)
The biggest news of the week, however, came Saturday afternoon, when President Trump took to the podium at his private golf course in Bedminster, New Jersey, to announce the signing of four executive orders after congress wasted weeks trying to negotiate a stimulus package.
Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows spent countless hours over the past three weeks trying to sway intractable, unbudging Democrats led by Nancy Pelosi and Chuck Schumer, senator from New York toward a workable compromise.
When discussions broke down entirely on Friday, the President was ready to act on his own and did so on Saturday.
The four executive orders are 1) to continue paying a supplemental federal unemployment benefit for millions of Americans out of work, lowering the amount from $600 a week to $400 through the end of 2020; 2) extending a moratorium on federal student loan payments; 3) recommendations for a continuation of a freeze on some evictions and foreclosures during the COVID-19 crisis, and; 4) deferral of the employee portion of the payroll tax from August 1 through the end of the year for people who earn less than $100,000.
Missing was the $1200 checks to eligible Americans that were promised by both sides, though many of the recipients of the government stipend were already receiving enhanced unemployment. Congress may step forward with a smaller, slimmed-down relief bill to address the needs of seniors and the self-employed and destitute.
Thus, President Trump stepped around congress and acted forcibly on his own, prompting cries of derision and unfairness from the liberal side and threats of lawsuits challenging his authority to distribute funds. However, the President seemed to be within his rights since the money, especially for enhanced unemployment payments, was already in the hands of the states. No further money was needed to be appropriated.
Finally, here's the late, great Robert Goulet, singing "The Impossible Dream," a song from the Broadway smash hit, "Man of La Mancha." Based on the novel, "Don Quixote" by Miguel de Cervantes, the 1965 musical by Dale Wasserman, lyrics by Joe Darion, and music by Mitch Leigh is a loose interpretation of Cervantes' greatest novel, itself a masterpiece of Western literature, published in two parts in 1605 and 1609.
The original 1965 Broadway production of "Man of La Mancha" ran for 2,328 performances and won five Tony Awards, including Best Musical. It has been revived four times on Broadway, becoming one of the most enduring works of musical theatre.
"The Impossible Dream" was the principal song from the show and it became an American classic. We present it here in tribute to President Trump. The lyrics aptly capture the essence of Trump's crusade against the deep state and successive campaigns for the presidency of the United States.
Enjoy.
The Impossible Dream
To dream the impossible dream
To fight the unbeatable foe
To bear with unbearable sorrow
To run where the brave dare not go
To right the unrightable wrong
To love pure and chaste from afar
To try when your arms are too weary
To reach the unreachable star
This is my quest, to follow that star
No matter how hopeless, no matter how far
To fight for the right
Without question or pause
To be willing to march
Into hell for a heavenly cause
And I know if I'll only be true
To this glorious quest
That my heart will lay peaceful and calm
When I'm laid to my rest
And the world will be better for this
That one man scorned and covered with scars
Still strove with his last ounce of courage
To reach the unreachable star.
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