Drones sighted in New Jersey and an earthquake in the bond market highlighted a week that will largely go unnoticed by most analysts, but may turn out to be one of the more consequential indicators in recent memory.
While drone sightings serve mostly to confuse and disorient the general public, the upheaval in the treasury market - with the long and short ends completely flipping positions - is an actual economic big deal which mainstream financial journalists completely missed, likely because they have little to no clue about how the debt market functions.
Kudos to Paul Franke at Seeking Alpha making note of the change and for forward thinking, ferreting out some constructive investing ideas based on the "dis-inversion."
With November CPI and PPI in the rear-view mirror, the upcoming week will feature the Fed's final monetary policy rate decision of the year on Wednesday, followed by the Bank of Japan and the Bank of England on Thursday.
Somewhere in this jumbled miasma, there's a happy holiday package wrapped up with a frilly bow on top. Starting Monday, there are nine days until Christmas and just 11 trading sessions remaining in 2024. Following the Fed policy decision, most minds will be turning to college bowl games, last-minute shopping, and travel plans.
Oh, and drone swarms. Don't forget drone swarms.
Stocks
It was not a good week to be holding equities, especially blue chips. The Dow fell every day this week, with the losing streak hitting seven and nine of the last ten sessions.
The only index to show gain was the NASDAQ, the usual suspect in the over-heated stock environment, powered by AI. Artificial intelligence is making impacts in certain places beyond sex animations, better language usage, and deep fakes. There are ground-breaking developments in search quality, predictive analysis, and general business planning. What AI can do, used properly, results in positive outcomes for the most part. The problem is, like during the dotcom boom, it's vastly over-hyped and thus, certain high-flying stocks are being overvalued.
There is likely to be a correction, at least, in tech stocks, possibly a drop of more than the usual 10-15%, in months ahead. Other sectors are likely to be affected more severely, particularly consumer discretionary and general retail, should a recession appear in early 2025, which appears to be more and more likely.
Treasury Yield Curve Rates
| Date |
1 Mo |
2 Mo |
3 Mo |
4 Mo |
6 Mo |
1 Yr |
| 11/08/2024 |
4.70 |
4.69 |
4.63 |
4.53 |
4.42 |
4.32 |
| 11/15/2024 |
4.70 |
4.67 |
4.60 |
4.52 |
4.44 |
4.34 |
| 11/22/2024 |
4.72 |
4.67 |
4.63 |
4.53 |
4.46 |
4.42 |
| 11/29/2024 |
4.76 |
4.69 |
4.58 |
4.52 |
4.42 |
4.30 |
| 12/06/2024 |
4.57 |
4.50 |
4.42 |
4.42 |
4.34 |
4.19 |
| 12/13/2024 |
4.43 |
4.43 |
4.34 |
4.36 |
4.32 |
4.24 |
| Date |
2 Yr |
3 Yr |
5 Yr |
7 Yr |
10 Yr |
20 Yr |
30 Yr |
| 11/08/2024 |
4.26 |
4.18 |
4.20 |
4.25 |
4.30 |
4.58 |
4.47 |
| 11/15/2024 |
4.31 |
4.27 |
4.30 |
4.36 |
4.43 |
4.70 |
4.60 |
| 11/22/2024 |
4.37 |
4.32 |
4.30 |
4.35 |
4.41 |
4.67 |
4.60 |
| 11/29/2024 |
4.13 |
4.10 |
4.05 |
4.10 |
4.18 |
4.45 |
4.36 |
| 12/06/2024 |
4.10 |
4.05 |
4.03 |
4.09 |
4.15 |
4.42 |
4.34 |
| 12/13/2024 |
4.25 |
4.21 |
4.25 |
4.33 |
4.40 |
4.69 |
4.61 |
Yields rising during the week on maturities from two years out to 30 indicate a massive dumping of U.S. treasuries, owing to inflationary indication in November CPI and PPI and the Fed's steadfast commitment to cut the federal funds target rate at next week's FOMC meeting (Tuesday-Wednesday).
Fed policy has become fully disjointed from perceived reality. Never has the Fed cut rates with stocks near all-time highs, unemployment low, the general economy supposedly in good shape with GDP growing. It's almost as if they know something about which the rest of us are being purposely kept in the dark, which, like it or not, is probably the case.
This week's movements in bonds unclenched the long-term inversion, with full spectrum yields (30-days out to 30-years) flipping from -23 to +18, an event that should not go unnoticed by anybody considering investments in stocks or fixed income. The rapid change to a nearly-normalized yield curve has produced a flattening of immense consequence.
The entire curve is ensconced in a 0.40% range, from the low of 4.21% on the three-year note to the high of 4.61% on the 30-year bond and it is all concentrated at the long end with antecedent preference given to 30- and 60-day yields in anticipation of a drop next week from 4.50-4.75% to 4.25-4.50%. It's about as flat as it can be. 30-day bills will likely continue to drop when the Fed actually announces the cut, which is a near-certainty, as is another 25 basis point drop in January.
(As an aside, 20-year bonds should be simply ignored as they are largely illiquid, not favored by the bond-trading community and thus irrelevant in terms of yield structure.)
By Friday, 30-day bills could be yielding as low as 4.30%. By February, 30-day bills could yield 4.15% or lower, completing the Fed's task of normalization of the yield curve. Short-term issuance dropping along with long-dated maturities rising will result in a healthy upward-sloping yield curve, usually considered "normal", though little about the methodology nor the timing offer even a small degree of confidence. The Fed seems to be forcing the issue, driving down the short end to accommodate the incoming Trump administration's austerity protocol, which is likely to be predicated on cuts to government agency budgets and slashing of employment numbers which will lead inexorably to higher unemployment across government sectors, wedging into private payrolls as well.
The overall effects of Trump's process are going to be massively deflationary. The Fed is going to have to keep "pumping the brakes" with rate cuts and may have to slam them down to avoid what should, in all likelihood, become a deep, long recession, one that is long overdue owing to phony government statistics and readings that clouded over the true condition of the U.S. economy, thrashed and plundered by four years of Biden bone-headedness, pilferage, and dishonesty. What the current administration - with ample assistance from congress - has done to the economics of the United States is nothing short of criminal and there will, no doubt, be repercussions, recriminations, and penalties.
35 days until the Biden years get swept unceremoniously into the dustbin of history and counting. God help us.
Spreads:
2s-10s
9/15/2023: -69
9/22/2023: -66
9/29/2023: -44
10/06/2023: -30
10/13/2023: -41
10/20/2023: -14
10/27/2023: -15
11/03/2023: -26
11/10/2023: -43
11/17/2023: -44
11/24/2023: -45
12/01/2023: -34
12/08/2023: -48
12/15/2023: -53
12/22/2023: -41
12/29/2023: -35
1/5/2024: -35
1/12/2024: -18
1/19/2024: -24
1/26/2024: -19
2/2/2024: -33
2/9: -31
2/16: -34
2/23: -41
3/1: -35
3/8: -39
3/15: -41
3/22: -37
3/28: -39
4/5: -34
4/12: -38
4/19: -35
4/26: -29
5/3: -31
5/10: -37
5/17: -39
5/24: -47
5/31: -38
6/7: -44
6/14: -47
6/21: -45
6/28: -35
7/5: -32
7/12: -27
7/19: -24
7/26: -16
8/2: -08
8/9: -11
8/16: -17
8/23: -09
8/30: 00
9/6: +06
9/13: +09
9/20: +18
9/27: +20
10/4: +5
10/11: +13
10/18: +13
10/25: +14
11/1: +16
11/8: +5
11/15: +12
11/22: +4
11/29: +5
12/6: +5
12/13: +15
Full Spectrum (30-days - 30-years)
9/15/2023: -109
9/22/2023: -99
9/29/2023: -82
10/06/2023: -64
10/13/2023: -82
10/20/2023: -47
10/27/2023: -54
11/03/2023: -76
11/10/2023: -80
11/17/2023: -93
11/24/2023: -95
12/01/2023: -105
12/08/2023: -123
12/15/2023: -154
12/22/2023: -149
12/29/2023: -157
1/5/2024: -133
1/12/2024: -135
1/19/2024: -118
1/26/2024: -116
2/2/2024: -127
2/9: -117
2/16: -103
2/23: -112
3/1: -121
3/8: -125
3/15: -109
3/22: -112
3/28: -115
4/5: -93
4/12: -87
4/19: -77
4/26: -70
5/3: -85
5/10: -87
5/17: -94
5/24: -99
5/31: -83
6/7: -92
6/14: -113
6/21: -103
6/28: -96
7/5: -101
7/12: -108
7/19: -103
7/26: -104
8/2: -143
8/9: -131
8/16: -138
8/23: -141
8/30: -121
9/6: -125
9/13: -117
9/20: -80
9/27: -80
10/4: -75
10/11: -58
10/18: -54
10/25: -38
11/1: -18
11/8: -23
11/15: -10
11/22: -12
11/29: -40
12/6: -23
12/13: +18
Oil/Gas
The demise of Assad and Syria gave oil a needed boost, to $70.65 as of Friday's New York close, though it was likely for many wrong reasons.
WTI crude oil leapt from the prior Friday close of $67.17, a massive move of $3.48, though it might be more of a one-off than the beginning of any kind of trend.
Oil prices have been under pressure for the past eight months, falling from a peak of $86.91 on April 5 to current levels. Peak to trough, the drop is a bear market signal. This week's run-up is just noise and an opportunity for hedgers to make money on both sides of the trade. There is nothing existent in the financial realm to suggest in the least that oil prices should rise unless the final days of Biden bunker mentality lands the world into thermo-nuclear winter just as climatological winter appear (December 20).
Consequently, gas prices stabilized at three-year low levels during the week with Gasbuddy.com reporting the national average for a gallon of unleaded regular gas at the pump of $3.01 a gallon, just two cents higher than the prior week. With Trump taking over the White House in a little more than a month, it's worth noting that the national average for gas never rose above $3.00 from 2016 through 2020.
California continues as price leader, at $4.28 a gallon, down four cents from the prior week and well below prices prevailing during the summer.
Pennsylvania prices are down another four cents this week, at $3.23, with the Keystone State holding the high price in the Northeast. New York was unmoved, down a penny, at $3.11. Connecticut ($3.02) and Massachusetts ($3.01) were slightly lower, continuing to nip at sub-$3 levels, while Maryland remained below $3.00, at $2.94 per gallon.
There were some upsetting price movements in the Midwest, led by Illinois rising from $3.13 to $3.20 and Ohio and Indiana both popping back over $3.00, both showing $3.04 on Sunday morning.
Fuel prices in Oklahoma ($2.44) continue to be by far the lowest in the nation, holding at current levels for a second straight week. Following are Texas ($2.50), Mississippi and Arkansas ($2.55), and Tennessee at $2.60. Louisiana and Kansas, at $2.63 and $2.64, respectively are just slightly lower than Southeastern neighbors South Carolina, Georgia, and Alabama. Florida ($3.11) remains the outlier, with all other Southeastern states well below $3.00, along with Virginia ($2.89) and North Carolina ($2.85).
Sub-$3.00 gas can now be found in at least 32 U.S. states. The Northeast and West coast are the over-$3.00 holdouts.
Arizona ($3.12) was down another four cents on the week, continuing a long trend. Oregon checked in at $3.44, Nevada at $3.57, and Washington at $3.91, leaving only California above $4.00. Utah ($2.92) and Idaho ($2.95) have both come down steadily and significantly over the last eight months.
Bitcoin
This week: $103,002.00
Last week: $99,645.69
2 weeks ago: $97,184.05
6 months ago: $66,111.79
One year ago: $42,651.91
Five years ago: $7,335.59
Bitcoin remains atop the asset leaderboard, up 133% year-to-date and more than 50% since the November 5 U.S. elections, retracing $103,000.00 this morning.
Fool's gold?
Precious Metals
Gold:Silver Ratio: 86.00; last week: 84.31
Per COMEX continuous contracts:
Gold price 11/15: $2,567.40
Gold price 11/22: $2,743.20
Gold price 11/29: $2,673.90
Gold price 12/6: $2,654.90
Gold price 12/13: $2,665.90
Silver price 11/15: $30.33
Silver price 11/22: $31.85
Silver price 11/29: $31.10
Silver price 12/6: $31.49
Silver price 12/13: $31.00
Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping):
| Item/Price |
Low |
High |
Average |
Median |
| 1 oz silver coin: |
35.15 |
50.05 |
40.15 |
39.52 |
| 1 oz silver bar: |
35.50 |
43.95 |
40.13 |
40.26 |
| 1 oz gold coin: |
2,773.63 |
2,875.00 |
2,829.69 |
2,832.26 |
| 1 oz gold bar: |
2,749.24 |
2,868.41 |
2,776.37 |
2,769.15 |
The Single Ounce Silver Market Price Benchmark (SOSMPB) priced higher this week, to $40.02, a gain of $1.31 above the December 8 price of $38.71 per troy ounce.
Prices for gold and silver remained steady, even as system riggers managed a complete turnaround, with both metals reaching six-week highs (gold: $2,758.70; silver: $33.28) late Wednesday into early Thursday on the COMEX continuous contract.
Individual purchasers haven't been paying homage to futures prices on the COMEX nor daily fixes at the LBMA. Prices at retail are trending well above both. For instance, Kitco reports spot gold Sunday morning at $2,647.50, while the lowest price for a 1-ounce gold piece on eBay is $2,749.24, a $100 premium to quoted spot.
The same holds true for silver, quoting spot at $30.52 on Kitco, while the median price for a finished silver 1-ounce coin on eBay is $39.52, and $40.26 for a 1-ounce bar with low prices for the same at $35.15 and $35.50.
While eBay maintains a robust market for bullion of all varieties, prices can sometimes exceed expectations, owing to the onerous fees charged by the auction and quick-buy monopolist. However, even at online retailers, a single 1-ounce common round can run anywhere from $32.26 t0 $35.81, depending on payment type (check, crypto, credit card, PayPal) plus shipping and tax (depending on jurisdiction), whereas on eBay, via Money Daily's weekly survey, free shipping is required, putting dealer and eBay prices more or less in agreement.
Naturally, buying single silver coins or bars is the most inefficient way to build a stack. Most serious buyers opt for 10-ounce lots or 10-ounce bars. Any way one looks at the trend, it's obvious that silver and gold are being purchased at an incredibly strong run-rate at retail.
Price-rigging at the COMEX and pric fixes by LBMA for both gold and silver are largely being ignored by individual purchasers who just want the metal at what they consider a reasonable price, even if premia are running 10-15-20% above spot.
Using silver as the base, a 10% premium over spot is $3.05, 20% is $6.10, translating into $33.54 and $36.62, respectively. Nothing unusual about that at all. Dealers, whether online, brick and mortar, or eBay-based, need to make money. Buying at spot -10% and selling at spot +10% has been normative behavior for decades and still, to some extent, is.
Nothing says "collapsing currency" better than advancing prices on gold and silver and a robust and growing market for precious metals. Trading crisp or crinkled U.S. greenbacks for actual physical metal one can hold in one's hand is about the most obvious trade one can imagine and everyday people are awakening to the crumbling condition of currency and markets.
COMEX and the LBMA will likely survive the onslaught of a gold and silver mania, but their relevance will continue to decline. Already, the Shanghai exchange challenging their legitimacy, and soon Moscow, Dubai, and possibly Mumbai will follow with exchanges of their own, making the LBMA price fixes and COMEX futures a fool’s errand as the world moves on from their outdated systems.
Anybody with even a limited interest in gold or silver should consider today's prices more or less a baseline, because, as recent history proves, prices for precious metals are going nowhere but up, reflecting the decreasing purchasing power of currencies issued by central bankers like the dollar, euro, pound, and even the Chinese yuan.
It's likely that China will be a first-mover in backing currency with gold, possibly Russia, since those two countries produce and hold the largest reserves in the world. The U.S. position is a grey area, as there hasn't been an audit of U.S. gold holdings in more than 70 years, the last one, in 1953, barely meeting any standard of credibility.
Those who are waiting on the sidelines for a pullback or believing that prices are already too high best not tarry further. Prices will continue higher, with or without the COMEX, LBMA, and other notorious manipulators.
Price, being relative to currency, is not as important as quality and quantity. Buy well and buy often.
WEEKEND WRAP
Changes are happening at a fairly rapid beat. It's a shame the mainstream press can't recognize the importance of events beyond the latest Taylor Swift concert or Disney production.
The numbers this week are 35 (days until inauguration), 11 (trading days left in 2024), and 9 (days until Christmas).
Don't drone me, bro!
At the Close, Friday, December 13, 2024:
Dow: 43,828.06, -86.06 (-0.20%)
NASDAQ: 19,926.72, +23.88 (+0.12%)
S&P 500: 6,051.09, -0.16 (-0.00%)
NYSE Composite: 19,729.37, -39.72 (-0.20%)
For the Week:
Dow: -814.46 (-1.82%)
NASDAQ: +66.96 (+0.34%)
S&P 500: -39.18 (-0.64%)
NYSE Composite: -378.42 (-1.88%)
Dow Transports: -167.97 (-1.00%)
Editor's Note: For those who might sense a little (or a lot) bit of joy on the pages of Money Daily whenever stocks decline, you're right. Anybody with a realistic outlook should have seen that stocks were stretched to extremes weeks or even months ago and caution has always been advised here, whether stocks are up, down, or treading water, and so, when markets correct, it's a kind of validation.
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