75 years ago today, the first nuclear bomb was used in warfare, as the United States dropped "Little Boy" on Hiroshima, Japan. Three days later, the US did the same to the Japanese city of Nagasaki with a nuclear device known by the nickname "Fat Man." Together, the two bombs ushered in a quick end to World War II in the Pacific, with Japan surrendering on August 15, and formally signing the instrument of surrender on September 2, aboard the USS Missouri, harbored in Tokyo Bay.
The 13-kiloton blast on Hiroshima destroyed nearly 5 square miles of the Japanese city. Upwards of 70,000 died instantly, and tens of thousands later perished from injury and radiation sickness. Though no official count was ever undertaken, estimates near 150,000 total killed are common.
No other nuclear device has ever been used in military combat since the two that ended World War II. Today's nuclear weapons are orders of magnitude more powerful than the two dropped on Japan. According to a 2104 article by the Brookings Institute, the largest ballistic missile warhead in the US arsenal is 455 kilotons on the W88, carried by the Trident II SLBM. The B83 nuclear weapon, which is the largest nuclear weapon currently in the U.S. stockpile is estimated at 1.2 megatons, 1000 times more powerful than the Hiroshima bomb, "Little Boy."
While these explosions occurred 75 years ago, there's another explosion evident today, that being the one in the price of silver, which is up more than 50 percent in just the last 30 days.
Overnight, the price of an ounce of silver not only passed $27 an ounce, it surpassed $28 per ounce. As of this writing, the bid price on August silver futures is $28.22. As is the case with gold, getting physical metal at anywhere near the futures or spot prices is basically an impossibility.
For instance, there's little availability of gold in bars or coins of over one ounce at dealers worldwide. Typical prices for one ounce gold coins or bars carries a premium of roughly $100 beyond spot. Silver is even more dear, with 30-40% premiums common. Typical prices for one ounce coins or bars is $34 and higher.
Money Daily has outlined the reasons for silver and gold's spectacular gains this year in previous posts, mostly attributing the rise to destruction of fiat currencies by incessant central bank counterfeiting and negative real interest rates. Outstripping every other asset this year, precious metals are just beginning what is likely to become known as the greatest rally ever.
The Federal Reserve, trapped into a corner of their own making, cannot do anything except prop up their favored equity and fixed-income markets via special buying programs that are essentially illegal and serve only as a temporary reprieve for companies that are insolvent and should be headed to bankruptcy. Beyond the roughly 30-40% of listed companies that are technically "zombies" - meaning current profits are not enough to pay the interest on their debt - US and other significant international banks have been frantically ramping up their loan loss reserves while also having taken advantage of handouts from the Federal Reserve.
Gold and silver's ascent is a signal the the entire monetary system of the planet - all based on faith and credit - is about to collapse. As it is, stocks are only being kept afloat by the Federal Reserve's ZIRP and special bond-buying programs. Their next step is to buy stocks directly, another violation of their charter. The same is being done in Europe and Asia. Japan and Switzerland have been buyers of equities for years.
It's not just big money institutional investors who see the damage being done to the global currency regime. Ordinary people are losing faith in the dollar, euro, pound, Swiss franc, yen, and China's yuan, though the US dollar has been the hardest hit recently when measured against other currencies.
Gold has been making record highs against all other currencies for months and years. Just last week gold topped the all-time high against the dollar, signaling that the real rout of all currencies is just beginning. Silver hasn't even come close to its record high of $49 an ounce, though it certainly will, probably early in 2021, if not sooner. The rocket-like nature of silver's price explosion gives credence to current thinking that it is the gentleman's way of saying good-bye to other currencies.
There's an old adage that goes something like this:
Gold is the money of kings.
Silver is the money of gentlemen.
Copper is the money of commoners.
Debt is the money of slaves.
Smart money is on gold and silver replacing the fiat currencies within one to three years.
You can have your stocks, your bonds, your Federal Reserve Notes, but gold and silver are blowing them all away. If you don't own physical gold or silver or other tradable hard assets within the next few years, you're going to be out of luck and likely out of money.
Right now, the economic wheels are wobbling on their axles. When they finally fall off - and they will - chaos will ensue. We've seen nothing yet.
At the close, Wednesday, August 5, 2020:
Dow: 27,201.52, +373.05 (+1.39%)
NASDAQ: 10,998.40, +57.23 (+0.52%)
S&P 500: 3,327.77, +21.26 (+0.64%)
NYSE: 12,731.55, +119.46 (+0.95%)
Showing posts with label Pound Sterling. Show all posts
Showing posts with label Pound Sterling. Show all posts
Thursday, August 6, 2020
Friday, May 13, 2016
Friday The 13th Sell-Off Nearly Breaks Through Downside Range On Dow Industrials
Yesterday, Money Daily extolled the virtues of ignoring intra-day movement on the major indices and pointed out that the last time the Dow Jones Industrial Average (DJIA) closed below the magic mark at 17,500, was nearly two months ago, on March 18 (17,481.89).
The waterfall decline on Dow stocks Friday put an exclamation mark on that post, as stocks fell to within a whisper of the bottom end of the tight range with 18,000 as the top and 17,500 as the bottom.
Friday's trading also assured that US indices would end the week in the red for the third straight week and fourth time in the past seven, suggesting the five closes above 18,000 in mid-April were aberrations rather than normative market behavior.
Thus, despite a completely phony report from the US Census that saw sales by U.S. retailers leap 1.3% in April, marking the biggest month-over-month gain in a year, the exodus from stocks continued unabated. While the indices have regained all of their losses from January and early February, institutional money has been selling all along, leaving the market largely in the hands of small investors and... please be seated, because this is a shocker... central banks.
It's widely understood that the Bank of Japan, that country's central bank, is heavily invested in its own stock market, propping up prices on the Nikkei, apparently to no avail, since the benchmark index is down sharply this year, and, unlike its counterpart in the US, has not rallied back to glory.
The Nikkei made a triple top last summer with peak closes in the 20,860 range. On Friday, the Nikkei closed at 16,412.21 and is down sharply on the year (it closed out 2015 at 19,033). Make no mistake, off its highs from June through August of last year, the Nikkei has fallen into bear market territory, even though the Bank of Japan has been furiously buying shares in the largest companies, as explained in this article by none other than the Wall Street Journal.
It was reported just the other day that the Swiss National Bank was wisely using some of its money to buy shares of Apple (AAPL) as Carl Icahn was liquidating his holdings in the company and the stock was slumping to two-year lows.
Is there any wonder that people have little faith in their governments and are rapidly losing faith in other institutions, especially those which conjure money out of thin air. When central banks are actively bidding in markets of all sorts - from precious metals to oil to stocks and bonds - how can there be any rational approach to investing or any kind of reasonable price discovery. Everything is subject to the inane whims of people in ivory towers who think they know more than anybody else about how the world should operate. In truth, they are destroying the system that spewed out their jobs and paychecks.
When people finally awaken to the massive misallocation of capital and enormous malinvestments by the issuers of paper money it's going to be too late. Central banks cannot - at least not in a rational world - buy up shares of everything in order to keep the global economy humming along while at the same time issuing critical mountains of debt in the form of digital deposits and bonds (which they are, in effect, also buying from themselves).
There will be a crash, a day of reckoning, probably multiple ones, when the cnetral bank global ponzi scheme is finally exposed, and that could happen at any time.
If the stock markets begin breaking down, it should be seen as a sign that the final chapter of extraordinary central bank policy which began with the financial crisis in 2008, is underway. The endgame is likely to resemble 50-70% declines in major stock indices, 10-year interest rates at zero of less (already there in some countries) and massive disruptions of businesses, bank closures, or worse, outright confiscation of deposits by the banks holding trillions of dollars, yen, yuan, euros and pounds.
This is not fiction, but the reality of the past eight years of nightmare economics spawned by the Federal Reserve and their brethren central bankers.
But, as it has been since the collapse of the global economy in 2008, when central banks have endless supplies of fictional fiat to spend, crashes like Friday's can be aborted, as was this one, right at 3:00 pm, with just an hour left in the trading day. Agents of the Fed stepped in at the most dangerous moment to hold the line at 17,500.
André Maginot would be impressed.
The only problem is that this kind of madness cannot go on forever without incredibly dangerous distortions and serious, lasting repercussions.
For the week:
DOW: -205.31 (-1.16%)
S&P 500: -10.53 (-0.51%)
NASDAQ: -18.48 (-0.39)
Friday's Fall:
S&P 500: 2,046.61, -17.50 (0.85%)
Dow: 17,535.32, -185.18 (1.05%)
NASDAQ: 4,717.68, -19.66 (0.41%)
Crude Oil 46.32 -0.81% Gold 1,274.80 +0.28% EUR/USD 1.1308 -0.58% 10-Yr Bond 1.70 -2.96% Corn 390.50 +0.39% Copper 2.08 +0.14% Silver 17.16 +0.30% Natural Gas 2.10 -2.55% Russell 2000 1,102.44 -0.56% VIX 15.04 +4.37% BATS 1000 20,677.17 0.00% GBP/USD 1.4359 -0.61% USD/JPY 108.6400 -0.40%
The waterfall decline on Dow stocks Friday put an exclamation mark on that post, as stocks fell to within a whisper of the bottom end of the tight range with 18,000 as the top and 17,500 as the bottom.
Friday's trading also assured that US indices would end the week in the red for the third straight week and fourth time in the past seven, suggesting the five closes above 18,000 in mid-April were aberrations rather than normative market behavior.
Thus, despite a completely phony report from the US Census that saw sales by U.S. retailers leap 1.3% in April, marking the biggest month-over-month gain in a year, the exodus from stocks continued unabated. While the indices have regained all of their losses from January and early February, institutional money has been selling all along, leaving the market largely in the hands of small investors and... please be seated, because this is a shocker... central banks.
It's widely understood that the Bank of Japan, that country's central bank, is heavily invested in its own stock market, propping up prices on the Nikkei, apparently to no avail, since the benchmark index is down sharply this year, and, unlike its counterpart in the US, has not rallied back to glory.
The Nikkei made a triple top last summer with peak closes in the 20,860 range. On Friday, the Nikkei closed at 16,412.21 and is down sharply on the year (it closed out 2015 at 19,033). Make no mistake, off its highs from June through August of last year, the Nikkei has fallen into bear market territory, even though the Bank of Japan has been furiously buying shares in the largest companies, as explained in this article by none other than the Wall Street Journal.
It was reported just the other day that the Swiss National Bank was wisely using some of its money to buy shares of Apple (AAPL) as Carl Icahn was liquidating his holdings in the company and the stock was slumping to two-year lows.
Is there any wonder that people have little faith in their governments and are rapidly losing faith in other institutions, especially those which conjure money out of thin air. When central banks are actively bidding in markets of all sorts - from precious metals to oil to stocks and bonds - how can there be any rational approach to investing or any kind of reasonable price discovery. Everything is subject to the inane whims of people in ivory towers who think they know more than anybody else about how the world should operate. In truth, they are destroying the system that spewed out their jobs and paychecks.
When people finally awaken to the massive misallocation of capital and enormous malinvestments by the issuers of paper money it's going to be too late. Central banks cannot - at least not in a rational world - buy up shares of everything in order to keep the global economy humming along while at the same time issuing critical mountains of debt in the form of digital deposits and bonds (which they are, in effect, also buying from themselves).
There will be a crash, a day of reckoning, probably multiple ones, when the cnetral bank global ponzi scheme is finally exposed, and that could happen at any time.
If the stock markets begin breaking down, it should be seen as a sign that the final chapter of extraordinary central bank policy which began with the financial crisis in 2008, is underway. The endgame is likely to resemble 50-70% declines in major stock indices, 10-year interest rates at zero of less (already there in some countries) and massive disruptions of businesses, bank closures, or worse, outright confiscation of deposits by the banks holding trillions of dollars, yen, yuan, euros and pounds.
This is not fiction, but the reality of the past eight years of nightmare economics spawned by the Federal Reserve and their brethren central bankers.
But, as it has been since the collapse of the global economy in 2008, when central banks have endless supplies of fictional fiat to spend, crashes like Friday's can be aborted, as was this one, right at 3:00 pm, with just an hour left in the trading day. Agents of the Fed stepped in at the most dangerous moment to hold the line at 17,500.
André Maginot would be impressed.
The only problem is that this kind of madness cannot go on forever without incredibly dangerous distortions and serious, lasting repercussions.
For the week:
DOW: -205.31 (-1.16%)
S&P 500: -10.53 (-0.51%)
NASDAQ: -18.48 (-0.39)
Friday's Fall:
S&P 500: 2,046.61, -17.50 (0.85%)
Dow: 17,535.32, -185.18 (1.05%)
NASDAQ: 4,717.68, -19.66 (0.41%)
Crude Oil 46.32 -0.81% Gold 1,274.80 +0.28% EUR/USD 1.1308 -0.58% 10-Yr Bond 1.70 -2.96% Corn 390.50 +0.39% Copper 2.08 +0.14% Silver 17.16 +0.30% Natural Gas 2.10 -2.55% Russell 2000 1,102.44 -0.56% VIX 15.04 +4.37% BATS 1000 20,677.17 0.00% GBP/USD 1.4359 -0.61% USD/JPY 108.6400 -0.40%
Thursday, December 17, 2009
Get Away Day on Strong Dollar, Options Expiration
As is usually the case, foreign markets reacted to Wednesday's Fed statement with more conviction and honesty than US media and economic pundits. Here in the USA, the widely-accepted response to the Fed was that the statement contained nothing new, and that money would continue flowing freely, courtesy of extraordinarily low interest rates fostered by Fed accommodation.
In the Far East, Asia and Europe, the response was vastly different and it had far-ranging effects on US equities. Most foreign currencies - especially the Euro, Pound Sterling and Yen - fell sharply against the US Dollar as leaders and market participants overseas saw the Fed announcement for what it really was: an early warning that accommodative policies would soon end. With the rise of the dollar, those enganged in the risk trade (shot the dollar, long stocks) on Wall Street were stung and forced into selling off a wide swath of positions, sending the markets to their worst one-day slide in over a month.
Contributing to the decline was options expiration on Friday, which raised volatility and exacerbated a descent which really needed little help. In the horse-racing business, they call day's like these "get-away days," as owners sell off unwanted or damaged horse flesh in claiming races or to private parties, raising cash for their next foray. So it was on Wall Street today, with investors exiting unwanted positions and trimming back on strong ones. Some, however, were selling everything to cover their short positions against the US Dollar.
Dow 10,308.26, -132.86 (1.27%)
Nasdaq 2,180.05, -26.86 (1.22%)
S&P 500 1,096.07, -13.11 (1.18%)
NYSE Composite 7,063.75, -117.02 (1.63%)
The decline was broad-based, with declining issues far outpacing advancers, 4851-1780. The relationship of new highs to new lows was flattened, with the highs at 227, to 73 lows. Volume, which was extraordinarily high on the NYSE, is indicating that the selling may only have begun, though there are still enough unhedged bulls about to keep declines in order.
NYSE Volume 6,782,270,000
Nasdaq Volume 1,928,465,625
Commodities were hard hit, as is the usual case with dollar strength. Oil dropped only a penny by the close, though it traded down as much as $1.40 during the day. Gold fell $29.00, to $1,107.20, while silver dipped 49 cents to $17.20.
In general, the day's trade was tied almost exclusively to dollar strength, a counter-trend trade that may have legs. The number of short positions in the dollar is immense, and if there are continuing signs that the US economy is improving rapidly - and there are some - the unwinding of these positions and the corresponding sell-off in stocks could be profound in a classic short-squeeze, likely engineered by a concerted effort by central banks with more at stake than equity positions.
The message may become all-too-clear if central banks work together to promote dollar stability and global strength: Stocks be dammed; whole economies are of far more importance. It's a dicey situation, though a correction may not exceed a 15% in equity values, not a bad haircut, but more of a trim after the robustness during the liquidity-driven rally of the past 9 months.
Overall, the markets are functioning well, and an unwinding of the short dollar - long stocks trade may be just the tonic needed to promote overall prosperity. Wall Street needs to give some heed to Main Street, which is still suffering.
There were a number of positive signs beyond the Fed announcement from Wednesday. After new unemployment claims disappointed with a 7,000 net rise from a week ago, to 480,000, the Philadelphia Fed Index reported a healthy rise, from 16.7 in November to 20.4 in December, and the Conference Board's Index of Leading Economic Indicators posted an increase of 0.9% for November, ahead of expectations (0.7%).
There is no economic data due out tomorrow and options traders must close positions by noon. There was a positive quarterly report by Research in Motion (RIMM) after the bell, which may provide some impetus to the upside in the tech space, though it appears that much of the trading for 2009 has concluded and new highs for the markets are unlikely until January.
In the Far East, Asia and Europe, the response was vastly different and it had far-ranging effects on US equities. Most foreign currencies - especially the Euro, Pound Sterling and Yen - fell sharply against the US Dollar as leaders and market participants overseas saw the Fed announcement for what it really was: an early warning that accommodative policies would soon end. With the rise of the dollar, those enganged in the risk trade (shot the dollar, long stocks) on Wall Street were stung and forced into selling off a wide swath of positions, sending the markets to their worst one-day slide in over a month.
Contributing to the decline was options expiration on Friday, which raised volatility and exacerbated a descent which really needed little help. In the horse-racing business, they call day's like these "get-away days," as owners sell off unwanted or damaged horse flesh in claiming races or to private parties, raising cash for their next foray. So it was on Wall Street today, with investors exiting unwanted positions and trimming back on strong ones. Some, however, were selling everything to cover their short positions against the US Dollar.
Dow 10,308.26, -132.86 (1.27%)
Nasdaq 2,180.05, -26.86 (1.22%)
S&P 500 1,096.07, -13.11 (1.18%)
NYSE Composite 7,063.75, -117.02 (1.63%)
The decline was broad-based, with declining issues far outpacing advancers, 4851-1780. The relationship of new highs to new lows was flattened, with the highs at 227, to 73 lows. Volume, which was extraordinarily high on the NYSE, is indicating that the selling may only have begun, though there are still enough unhedged bulls about to keep declines in order.
NYSE Volume 6,782,270,000
Nasdaq Volume 1,928,465,625
Commodities were hard hit, as is the usual case with dollar strength. Oil dropped only a penny by the close, though it traded down as much as $1.40 during the day. Gold fell $29.00, to $1,107.20, while silver dipped 49 cents to $17.20.
In general, the day's trade was tied almost exclusively to dollar strength, a counter-trend trade that may have legs. The number of short positions in the dollar is immense, and if there are continuing signs that the US economy is improving rapidly - and there are some - the unwinding of these positions and the corresponding sell-off in stocks could be profound in a classic short-squeeze, likely engineered by a concerted effort by central banks with more at stake than equity positions.
The message may become all-too-clear if central banks work together to promote dollar stability and global strength: Stocks be dammed; whole economies are of far more importance. It's a dicey situation, though a correction may not exceed a 15% in equity values, not a bad haircut, but more of a trim after the robustness during the liquidity-driven rally of the past 9 months.
Overall, the markets are functioning well, and an unwinding of the short dollar - long stocks trade may be just the tonic needed to promote overall prosperity. Wall Street needs to give some heed to Main Street, which is still suffering.
There were a number of positive signs beyond the Fed announcement from Wednesday. After new unemployment claims disappointed with a 7,000 net rise from a week ago, to 480,000, the Philadelphia Fed Index reported a healthy rise, from 16.7 in November to 20.4 in December, and the Conference Board's Index of Leading Economic Indicators posted an increase of 0.9% for November, ahead of expectations (0.7%).
There is no economic data due out tomorrow and options traders must close positions by noon. There was a positive quarterly report by Research in Motion (RIMM) after the bell, which may provide some impetus to the upside in the tech space, though it appears that much of the trading for 2009 has concluded and new highs for the markets are unlikely until January.
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