Stocks
Investors got spanked, and hard, on Friday, after the BLS announced January job gains of 256,000, shattering estimates that largely ranged between 110,000 and 160,000. The good news was enough to trigger Wall Street's inverse response, that a strong economy is not conducive to lower interest rates, which is what the stock pushers and pumpers have been squealing for since the Fed began raising rates nearly three years ago (March 2022).
Not only did the selling result in a the biggest decline of the new year on the S&P and the Dow, but it sent the NASDAQ lower, even after a 376-point loss on Tuesday, January 7. The weekly gauge was down as well and stuck stocks on the wrong side of the ledger year-to-date.
Year-to-date:
Dow: -605.77 (-1.4%)
NASDAQ: -149.17 (-0.8%)
S&P 500: -54.59 (-0.9%)
NYSE Composite: -134.09 (-0.7)
Russell 2000: -40.93 (-1.8%)
How bad it is depends on who you ask. The Dow, for instance, has dropped 17 of the last 24 trading sessions after hitting an all-time high on December 4. Since then, it's down 6.83%, just shy of 3,100 points. By comparison, the S&P and NASDAQ have suffered less, losing around five percent over similar time spans, though it appears the NASDAQ-Tech-AI selling spree might be just getting started.
With the January jobs jamboree in the books, investors will begin gauging earnings in the coming week, sweating it out until Trump's inauguration on Monday, January 20. As has become regular practice, the first week of earnings season will be dominated by the biggest banks.
Monday (Jan. 13): KB Homes (KBH)
Tuesday: Applied Digital (APLD)
Wednesday: JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), BlackRock (BLK) Citigroup (C), Bank of New York Mellon (BK)
Thursday: Taiwan Semiconductor (TSM), Morgan Stanley (MS), Bank of America (BAC), U.S. Bancorp (USB), UnitedHealth Group (UNH), PNC Financial Services (PNC)
Friday: Citizens Financial Group (CFG), State Street (STT), Regions Financial (RF), Truist (TFC), Schlumberger (SLB), Fastenal (FAST)
In addition, December PPI is released on Tuesday and CPI on Wednesday, both prior to the opening bell. There's also data drops from the Philly and New York Feds, December Retail Sales (Thursday).
Fed Presidents John Williams, Neel Kashkari, and Austan Goolsbee will be out jaw-boning their mumbo-jumbo at various conferences during the week.
Should be just swell.
Treasury Yield Curve Rates
| Date | 1 Mo | 2 Mo | 3 Mo | 4 Mo | 6 Mo | 1 Yr |
| 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 |
| 12/20/2024 | 4.43 | 4.42 | 4.34 | 4.35 | 4.29 | 4.27 |
| 12/27/2024 | 4.44 | 4.43 | 4.31 | 4.35 | 4.29 | 4.20 |
| 01/03/2025 | 4.44 | 4.35 | 4.34 | 4.31 | 4.25 | 4.18 |
| 01/10/2025 | 4.42 | 4.35 | 4.36 | 4.33 | 4.27 | 4.25 |
| Date | 2 Yr | 3 Yr | 5 Yr | 7 Yr | 10 Yr | 20 Yr | 30 Yr |
| 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 |
| 12/20/2024 | 4.30 | 4.32 | 4.37 | 4.45 | 4.52 | 4.79 | 4.72 |
| 12/27/2024 | 4.31 | 4.36 | 4.45 | 4.53 | 4.62 | 4.89 | 4.82 |
| 01/03/2025 | 4.28 | 4.32 | 4.41 | 4.51 | 4.60 | 4.88 | 4.82 |
| 01/10/2025 | 4.40 | 4.46 | 4.59 | 4.70 | 4.77 | 5.04 | 4.96 |
Despite the Fd cutting the federal funds rate by one percent since August with a 50 basis point cut in September (political), and a pair of 25 basis point cuts in November and December, long-dated maturities have not cooperated as intended, instead rising by more than the one-percent blessed by the Fed governors and regional presidents.
Since the day before the first cut in September, the 17th, yield on the 10-year note stood at 3.65%, the 20-year bond yielded 4.02%, and the 30-year returned 3.96%. On the release of the policy announcement on the 18th, they all moved in the opposite direction, to 3.70%, 4.08%, and 4.03%, respectively.
Look where they are now. At a minimum the longest-dated maturities are not one percent lower, but one percent HIGHER! One conclusion to draw from this conundrum is that the bond vigilantes are back with a vengeance, revolting against what they consider to be a grave policy error on the part of the Fed by shunning treasuries by demanding a payoff commensurate with what they percieve as high risk.
They are not alone. America's strongest foreign debt buyers, Japan and China, have been shedding U.S. debt since 2022 and they aren't stopping. According to Bloomberg:
Japanese investors sold a record $61.9 billion of the securities in the three months ended Sept. 30, data from the US Department of the Treasury showed on Monday. Funds in China offloaded $51.3 billion during the same period, the second biggest sum on record.
Part of that strategy has to do with incoming tariffs from the Trump administration, but it is part of an overall tendency to shun U.S. debt markets that began when the the U.S. and Europe sequestered (that's being kind) roughly $300 billion in Russian assets at the start of the Ukraine project (Feb. 2022). While Trump may find a way to end the Ukraine and other conflicts, repairing the financial damage will require even more effort. He could start with ending the tariff regime, which only serves to harm U.S. interests and maybe find a way to return to Russia the funds that are rightfully theirs.
Whether he takes action in those directions, we may begin to find out within eight days. Something's got to give and there's growing talk that a global debt crisis is approaching.
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
12/20: +22
12/27: +31
1/3: +32
1/10: +37
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
12/20: +29
12/27: +38
1/3: +38
1/10: +54
Oil/Gas
WTI crude oil continued its wild ride higher, finishing out the week at $75.70, up from $74.07 the prior Friday. Right after the jobs report, WTI hit a high at $76.75, the highest level in three months. What appears to be moving the price of oil recently is the spate of frigid weather across the lower 48 states, prompting just a little price gouging from those benevolent producers.
This week's bump sent oil prices closer to summer's levels above $82/barrel. This appears to be a little more than a response rally. There's still plenty of winter left and prices tend to rise in the spring, though the supply-demand dynamic remains in favor of consumers.
Gasbuddy.com is reporting the national average for a gallon of unleaded regular gas at the pump unchanged at $3.05 a gallon.
California continues on top, at $4.36 a gallon, remaining well below prices prevailing during the summer.
Pennsylvania prices stabilized, at $3.26, with the Keystone State the price leader in the Northeast. New York saw little change, at $3.11. Connecticut ($3.03) was up slightly while Massachusetts ($2.98) was lower by a penny. Maryland settled lower, at $3.10.
Illinois was four cents higher, to $3.22. Ohio ($2.96) and Indiana ($2.99) dipped back under $3 after a week above.
Fuel prices in Oklahoma ($2.53) continue to be the lowest in the nation, despite rising three cents this week. Following are Mississippi ($2.57), Louisiana and Kansas ($2.66) Texas and Arkansas ($2.67), Tennessee ($2.69), Alabama ($2.74), and Missouri, $2.75. Florida's is steady, at $3.11, Georgia remains sub-$3 at $2.91.
Sub-$3.00 gas can now be found in more than 30 U.S. states. The Northeast and West coast remain over-$3.00 holdouts.
Arizona ($3.03) continues to tease at $3 gas. Oregon checked in at $3.45, Nevada at $3.58, and Washington at $3.89, leaving only California above $4.00. Utah ($3.02) and Idaho ($3.02) remain just above the $3.00 threshold.
Bitcoin
This week: $94,640.44
Last week: $97,453.01
2 weeks ago: $94,597.53
6 months ago: $57,935.24
One year ago: $42,848.36
Five years ago: $8,910.66
The crypto market continues its struggle for identity. The price of bitcoin fluctuates as much as five percent or more weekly, often by that much or more in a single day, which is probably because it's nothing more than a Wall Street slush fund. Watch how quickly it evaporates in the next liquidity crisis or spate of margin calls.
Bitcoin ia a swell place to park money if you can handle the volatility and potential for theft or loss.
Precious Metals
Gold:Silver Ratio: 86.82; last week: 88.13
Per COMEX continuous contracts:
Gold price 12/13: $2,665.90
Gold price 12/20: $2,640.50
Gold price 12/27: $2,636.50
Gold price 1/5: $2,652.70
Gold price 1/12: $2,717.40
Silver price 12/13: $31.00
Silver price 12/20: $30.08
Silver price 12/27: $29.98
Silver price 1/5: $30.10
Silver price 1/12: $31.30
Gold began a serious breakout on the back of Friday's jobs report, vaulting over $2,700 to reach a high of $2,728.90 early in the day before settling down in the afternoon to its highest close in a month. Silver also got the memo, breaking through $31, hitting a high of $31.83.
The outsized gains on Friday indicate that precious metals are on their own flight path. With the blowout jobs report and higher interest rates, PMs would often take a hit in such a scenario. Instead, both got jacked higher because people see inflation rising again and the chance that the Fed will not only fail to lower interest rates again, but possible raise them. That's a sword that cuts both ways. On one hand, gold and silver provide the best protection from currency debasement manifested as inflation. Otherwise, rising interest rates provide an alternative and hedge.
Perhaps there's a growing concern that U.S. treasuries aren't exactly risk-free and subject holders to losing money against inflation. That's a huge plus for gold and silver which continue to gain new supporters in retail channels.
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: | 35.00 | 52.00 | 42.27 | 42.00 |
| 1 oz silver bar: | 38.05 | 44.95 | 40.66 | 40.13 |
| 1 oz gold coin: | 2,794.70 | 2,904.70 | 2,860.71 | 2,879.68 |
| 1 oz gold bar: | 2,650.00 | 2,855.75 | 2,793.99 | 2,805.92 |
The Single Ounce Silver Market Price Benchmark (SOSMPB) galloped ahead, to $41.27, a gain of $1.73 from the January 5th price of $39.54 per troy ounce.
WEEKEND WRAP
The upcoming week will be the first full week of trading for the year. The trend has been lower for stocks and higher for long-dated treasuries.
Is the trend your friend?
At the Close, Friday, January 10, 2025:
Dow: 41,938.45, -696.75 (-1.63%)
NASDAQ: 19,161.63, -317.25 (-1.63%)
S&P 500: 5,827.04, -91.21 (-1.54%)
NYSE Composite: 18,963.01, -277.73 (-1.44%)
For the week:
Dow: -793.68 (-1.86%)
NASDAQ: -460.05 (-2.34%)
S&P 500: -115.43 (-1.94%)
NYSE Composite: -291.28 (-1.51%)
Dow Transports: -83.60 (-0.52%)
Russell 2000: -79.24 (-3.53%)
Year-to-date:
Dow: -605.77 (-1.4%)
NASDAQ: -149.17 (-0.8%)
S&P 500: -54.59 (-0.9%)
NYSE Composite: -134.09 (-0.7)
Russell 2000: -40.93 (-1.8%)
Posts
No comments:
Post a Comment