Showing posts with label central banks. Show all posts
Showing posts with label central banks. Show all posts

Thursday, June 11, 2020

Fed To Keep Rates At ZERO Through 2022; Are Gold and Silver Investors Batty?; Implications of Global Madness

If Forex is in your wheelhouse, you've no doubt noticed the recent decline in the US dollar against other major currencies. The Dollar Index has been pretty shaky as of late, but the current trend in the aftermath of the worst of the coronavirus pandemic is lower, with no bottom in sight.

After sinking to 94.89 on the 3rd of March, the dollar leapt back to an interim high of 102.82 on March 20th. Wednesday's quote was 95.96, a decline of nearly seven precent, most of that happening within the last three weeks.

That's not surprising, given that American cities have been beset upon by hordes of protesters, complete with rioters, looters, cop killings, tear gassings, rubber bullet maimings, autonomous zones (Seattle's Capitol Hill is one, recently claimed and occupied by protesters as police vacated the 3rd Precinct) and general lawlessness, making dollar holdings somewhat of a risky bet in the near term and, as dollar dominance recedes, maybe for much longer.

At the conclusion of the Fed's Tuesday and Wednesday's FOMC policy meeting, Chairman Jerome Powell made a definitive statement on interest rates, saying that the overnight federal funds rate would remain at the zero-bound at least until 2022. That kind of central bank sentiment doesn't exactly inspire confidence in the world's reserve currency. It indicates nothing less than a failure of financial system underpinning, a condition that first appeared in 2007, was not adequately addressed and has now become a systemic crisis without hope of positive resolution.

While the Fed still has the monetary muscle to backstop financial assets it does so with counterfeit, a fictional fiat currency without backing that eventually will be worthless. History has shown this to always be the case. Fiat currencies die and a new financial system is erected. Normally, the new system is backed by gold or silver, or a combination of the two. This time is no different than any other. The Federal Reserve and other central banks can continue their charade for only so long. Eventually, income disparity results in runaway inflation and widespread poverty, prompting clamor from the masses, which we are witnessing on a global scale today as an epochal societal revolution.

Such incalculable convulsions encourage escape from the clutches of unfair finances promulgated by central banks. People seek refuge from currencies that are losing value rapidly. Housing, health care, and eventually, food become unaffordable to the vast swath of middle and lower classes. Alternatives are sought. Gold and silver are the most readily available to the public. Silver becomes particularly of interest due to its lower price points. The availability of metallic money becomes a point of contention as people with limited means crowd into the space, which is exactly what's happened since the onset of the coronavirus.

A 10 troy ounce gold bar at is offered for $18,255.90. At Scottsdale Mint, the popular one ounce silver bar dubbed "The One" starts at $25.05 and goes down in price to $23.42 depending on quantity and method of payment. Of course, given that one would be willing to pay a price that carries a premium of seven dollars over spot, one would be out of luck, as "The One" is currently out of stock.

These are just a few examples of what happens when a confluence of events (pandemic, endless fiat currency creation, summer-long protests, high unemployment, rampant inflation) strikes the minds of people with money and assets. They either go with the flow and stay in stocks or look to gold and/or silver for some safety. With bonds yielding little to nothing - sometimes less than that via negative rates - and default risk rising (hello, Argentina!), precious metals offer a reasonable alternative.

Futures and spot prices for the precious metals might as well be cast upon stones for what they fail to deliver in terms of price discovery. Being holdovers from the failing fiat regime, they are being left behind as physical holdings dominate the marketplace. Prices are exploding on eBay and at dealers, as shown in the examples above. Money Daily tracks prices on eBay for one ounce gold and silver coins and bars weekly in it's Weekend Wrap every Sunday.

Other ways to deploy currency are in art, collectibles (comic book prices are through the roof), vintage automobiles, commodity futures, real estate, ad other asset classes, but none of those share the characteristics of precious metals as real money, except possibly cryptocurrencies like Bitcoin.

Wall Street, the Federal Reserve, and the federal government are hanging onto their prized positions of monetary and political authority by their teeth. It's only a matter of time before all of it fails. The nationwide protests are proof that the federal government is losing control of the country in manifest ways. Unrelenting gains in precious metal prices - and the attendant, repeated attempts to contain those gains in the futures markets - is evidence of the Fed's desperation, just as Wall Street's recent snapback rally is a mirage based on easily available fiat currency and nothing else.

It's all tumbling down and there's nothing that can stop it. The demise of the dollar has been an ongoing orgy of dislocation for decades. Trillions of dollars added to the Fed's balance sheet, euros at the ECB, yen at the Bank of Japan, yuan at at PBOC are mere stop-gap measures which do not address the underlying solvency issues. If the stock market crash in March wasn't enough to scare people out of stocks and fiat, the coming wave will surely devastate those who failed to heed the warning. Via the Fed's emergency measures, Wall Street has given investors a golden opportunity to diversify out of stocks. Those who fail to take the opportunity will suffer a heavy economic blow.

At the Close, Wednesday, June 10, 2020:
Dow: 26,989.99, -282.31 (-1.04%)
NASDAQ: 10,020.35, +66.59 (+0.67%)
S&P 500: 3,190.14, -17.04 (-0.53%)
NYSE: 12,449.22, -170.30 (-1.35%)

Tuesday, April 21, 2020

The Bubble Has Been Popped; All Fiat Currencies Will Become Worthless; The New Normal Will Be Absurd

Leave it to the most corrupt governments in the history of mankind to put the world into a global depression. This isn't about China, or the United States, it's about all of them. France, Egypt, Indonesia, it doesn't matter. Every government in the world is corrupt to the core, led on by central bankers, market manipulators, and the lure of riches.

It's likely always been that way, but it just seems to be much worse now than ever before. There's no honesty, no integrity, no compassion in any of the soulless monsters that some refer to as "our leaders." Well, our dear leaders have led everybody down a path of ruin and injustice, pain and despair.

And it certainly doesn't help matters when the mainstream media has become completely useless. Neither do they investigate nor present truth. They are not journalists. They are note takers, headline mongers, zombified readers of tele-prompters. They spew propaganda directly from government sources.


The world is currently so bizarre that the price of crude oil traded at a negative price. On Monday, the May contract for US West Texas Intermediate (WTI) oil, the benchmark for US crude prices, fell to its lowest-ever, a negative price of -$40.32 per barrel. Because of demand destruction by a near-global lockdown and a supply glut that has filled storage capacity to the brim, producers were forced to pay buyers to take delivery as contracts expired.

Here is an explanation of how this happened.

The upside-down futures market will provide more insanity in days to come. It's not as though everybody's going back to work tomorrow or next week, or that airline travel will suddenly become all the rage again. The June contracts are likely to witness similar madness.

Stocks responded to a degree, though hardly with the expedience one would have expected. For a time, the NASDAQ was actually trading in positive territory. Eventually, even the most stubborn of the bulls had to relent.

As the coronavirus crisis and lockdowns continue, stocks should be expected to decline. They haven't because the Fed is backstopping everything on wall Street by buying up all the bad paper that being tossed to the wind. Through Special Purpose Vehicles (SPVs) which circumvent the law, the Federal Reserve is buying up municipal bonds, investment grade (IG) bonds, High Yield (HY) bonds, Junk bonds, and much more in addition to their usual purchasing of treasury and mortgage-backed securities, in a desperate effort to provide liquidity in what has become an illiquid market. Eventually, they will resort to buying equities outright, just as the Bank of Japan and Swiss National Bank has done.

When the Fed becomes the global lender and buyer of last resort, all of the companies listed on the exchanges will be worthless because they will not have enough free cash flow to cover the interest on their debt. The money center and investment banks are already insolvent, and have been since 2008, kept alive by massive injections of fiat currency via the Fed's discount window, interest on reserves, various accounting frauds, and other chicanery only people as deranged and greedy as these money maniacs have become.

National currencies are imploding at an increasingly rapid pace, all fiat, backed by nothing, eventually headed to worthlessness. Perhaps some day in the not too distant future, the Fed will pay people to take currency off their hands, such as happened with oil on Monday. The ECB, most European nations and the Bank of Japan already do, most of their national bonds carrying negative yields. Having the entire planet's economy shut down certainly hasn't helped matters.

Eventually, the creators of this mess will improvise a new global currency to "save the world," which would be more insanity unless it is backed by gold and/or silver. Desperate people will line up to exchange their worthless dollars, yen, euros, and pounds for what will likely be of digital design, capable of being tracked by the purveyors of debt, the same ones who imploded the prior system.

There will be riots, protests, starvation, rampant crime, lawlessness of a degree nobody can even imagine before the central banks arrive with their ultimate solution. It's all part of the plan. Nobody will be able to do anything without using the agreed-upon new currency. The only hope for preventing the world turning into a ghastly neo-feudal nightmare is the wholesale repudiation of central banks, debt-backed currencies, and fractional reserve banking. It's going to be a very wicked time.

That's all for today. It's too disgusting and depressing to even bother trying to explain the present circumstances and the blighted future that awaits.

At the Close, Monday, April 20, 2020:
Dow Jones Industrial Average: 23,650.44, -592.05 (-2.44%)
NASDAQ: 8,560.73, -89.41 (-1.03%)
S&P 500: 2,823.16, -51.40 (-1.79%)
NYSE: 11,003.88, -204.41 (-1.82%)

Sunday, March 22, 2020

WEEKEND WRAP: Wall Street Suffers Worst Week Since 2008; Economy in Shambles and Worsening; COVID-19 Wrecking Central Banks, Sovereign Governments

My, oh, my, what a week this was!

The numbers are sufficiently horrifying to speak for themselves, and they're speaking loudly.

Stocks suffered their worst week since 2008. Yes. The week just past was worse than anything since the Great Financial Crisis, and beyond that, the dramatic drop that kicked off the Great Depression in 1929, is comparable.

The three top indices had their worst weekly performances since October of 2008. The Dow dropped 17% for the week, the S&P 500 tumbled 15% and the NASDAQ lost more than 12%. Friday's losses were widespread, the biggest losers were utilities (-8.2%) and consumer staples (-6.5%).

Since the beginning of the COVID-19 crisis, the main indices are down anywhere between 30% (NASDAQ) and 35% (Dow).

Here are the stark, raving-mad numbers from the peaks to Friday's close, with dates:

Dow Industrials: peak: 29,551.42 (2/12), close 3/20: 19,173.98, net: -35.12%
NASDAQ: peak: 9,817.18 (2/19), close 3/20: 6,879.52, net: -29.92%
S&P 500: peak: 3,386.15 (2/19), close 3/20: 2,304.92, net: -31.03%
NYSE Composite: peak: 14,136.98 (2/12), close 3/20: 9,133.16, net: -35.40%

Bear in mind, these numbers are all higher than they were prior to the collapse of 2008. For reference, here are figures from August 2008, followed by the bottoms, all recorded March 9, 2009.

Dow Industrials: 8/11/09: 11,782.35; 3/9/09: 6,926.49
NASDAQ: 8/14/09: 2,453.67; 3/9/09: 1,268.64
S&P 500: 8/11/08: 1,305.32; 3/9/09: 676.53
NYSE Composite 8/6/09: 8,501.44; 3/9/09: 4,226.31

What are the implications from these figures? Pretty simple, really. Since nothing was really fixed from 2008-09 (i.e., none of the major commercial banks - Lehman and Bear Stearns notwithstanding, as they were investment banks - failed), nobody went to jail, the GFC was mostly the deflation of a housing bubble, and all of the gains in stocks were the product of buybacks and/or massive infusions of cash by the Federal Reserve, it stands to reason that stocks will fall below their lowest levels of the GFC, or sub-prime crisis.

As almost all bear markets prove, there are steep losses in the initial phase, followed by a longer, slower, gradual decline, ending in complete capitulation wherein nobody wants to be holding equity shares at any price. Stocks go bidless. There are no buyers, and that is the condition to come.

The years 2009 through early 2020 can readily be construed as what's often referred to as the "everything bubble," in which all financial assets were inflated. In the simplest terms imaginable, gains in stocks during the past 11 years were a chimera, a figment of Wall Street's great imagination and greed.

An arguable point is that all of the major corporations who feasted on stock buybacks and easy money from the Fed are bankrupt. A corollary to that is the the commercial banks - Citi, Bank of America, JP Morgan Chase, Wells Fargo, Goldman Sachs, and Morgan Stanley - being either major shareholders of the Federal Reserve and/or many major corporations are also bankrupt, insolvent, as is the Fed, which, for all intents and purposes, just creates whatever money is needed out of thin air, with no backing other than the faith of the people and institutions using their fiat currency, and that faith is fading fast.

WTI crude oil concluded its worst week since the 1991 Gulf War, settling -11%, at $22.43/bbl as part of its 29% meltdown this week.

Precious metals continued to be under pressure, even though buyers of physical gold and silver are paying high premiums and silver buyers are waiting as long as a month for deliveries from major coin and bullion dealers. Many online outlets are out of stock on almost all silver items. Scottsdale Mint is advising buyers that silver purchases are 15-20 days behind. Spot silver was as low as $11.94 per ounce, ending the week at $12.59. Prices for coins and bars are ranging between $17.50 and $25.00.

Gold traded as low as $1471.40 on the paper markets. It finished up Friday at $14.98.80

Bonds were all over the map and ended with lower yields overall. Yield on the 30-year was as low as 1.34% and as high as 1.78%. It ended the week yielding 1.55%, crashing 23 basis points on Friday. The 10-year note yield ranged from 0.73% to 1.18%, closing at 0.92%. The curve steepened through the week to 151 basis points from the 1-month bill (0.04%) to the 30-year bond, though yields are lower than ever in history. Money has lost nearly all of its time-value, especially at the shorter end. The two-year is yielding a mere 0.37%.

The point is that the Federal Reserve, with ample assistance from other central banks around the world, particularly, the ECB, BOE, BOJ, and SNB (Swiss National Bank), blew an enormous stock bubble around the world, and, since it is deflating rapidly, are trying to blow an even bigger bubble. It will not work. Never has, never will. It might for a time, but in the end there will be massive defaults from individuals all the way to sovereign states and central banks themselves. There is a limit to how much fiat currency (not money, which would be currency backed by gold or silver or some other tangible, not-easily replenished asset) and how much complexity the world can handle. We are at those limits and hastily exceeding them.

What's worse is that the governments and central banks of planet Earth are doing this to themselves, or, rather, to their sovereign citizens, who will bear the brunt of rash decisions based on faulty economics and radical monetary and fiscal policies. The Fed will print trillions of dollars. The government will run debts to the tune of 20-25% of the gross national product, if there is any left after the shutdowns, slowdowns, quarantines, and eventual rationing.

Profligate spending and corruption at the highest levels of business, finance, and government has led to an inevitable dead end, ruining lives, destroying businesses, and deflating, then inflating bogus currencies.

This is the end of the fiat currency era, but it doesn't have to be the end of the world. Money Daily has been warning its readers for more than a decade that this kind of economic carnage would eventually come, urging people to invest in hard assets, real estate, precious metals, machinery, food supplies, arable land and produce, and more.

There will be winners and losers in all of this, and it is the intention of Money Daily to provide information and instruction on how to win.

Some random links:

Gregory Mannarino says, in a very emotional and exasperating video, that it's OVER, just as Money Daily has been suggesting for weeks.

Here's a beach-loving Seeking Alpha commentator who thinks we've seen the worst.

Marketwatch notes that the Dow is on track for its worst month since the Great Depression.

Sending checks to every eligible American is being debated in congress. Treasury Secretary quipped early in the week that President Trump and he would like to get money into the hands of Americans within two weeks. The current proposals being argued in congress are looking at early April as a timeline to get money to needy citizens. That's a lot longer than two weeks, but, when the banks and hedge funds need billions and trillions of dollars from the Fed, they get it the next day, if not sooner. It's about as unfair as banks getting money at near zero interest and charging 17-29% interest on credit cards.

The house of cards (no pun intended) is tumbling down.

At the Close, Friday, March 20, 2020:
Dow Jones Industrial Average: 19,173.98, -913.21 (-4.55%)
NASDAQ: 6,879.52, -271.06 (-3.79%)
S&P 500: 2,304.92, -104.47 (-4.34%)
NYSE: 9,133.16, -328.15 (-3.47%)

For the Week:
Dow: -4011.64 (-17.30%)
NASDAQ: -995.36 (-12.64%)
S&P 500: -406.10 (-14.98%)
NYSE: -1718.82 (-15.84%)

Sunday, October 20, 2019

WEEKEND WRAP: QE Is Back and Here To Stay

As can be easily shown by the numbers below, Friday's little blood-letting brought markets close to break-even for the week, that being the most likely outcome for stocks in the near-term and over the past 21 months.

Bullish and bearish arguments can generally be tossed to the trash heap at this juncture. Many funds will be soon closing their books on 2019, with a pretty fair profit baked in and the ugly returns from 2018 fading fast into the distance.

On the funding issues at the Fed and primary dealers, some are already calling it a crisis. In a nutshell, on October 1, the entire overnight lending facility nearly froze up and the Fed has been lending to the primary dealers, buying back their collateral for cash, at a frantic pace.

What many are calling, tongue-in-cheek "not QE" is exactly QE, on steroids. The Fed has to buy up more securities than the Treasury department can issue, thus, they'll be buying up foreign debt (read: at negative interest rates), in what can only be seen by any cogent observer as backdoor currency destruction.

What the Fed doesn't want to reveal is that they will have to continue doing Temporary Open Market Operations (TOMO) and Permanent OPO (POMO) well past the second quarter of next year, which they have already admitted to being their current forecast timetable. By June of next year, at the end of the second quarter, the Fed will probably be sopping up $100 billion per month, and that's a conservative estimate.

The overarching objective is to keep the current expansion (Ponzi scheme) going, so that the stock market continues toward and beyond new all-time highs and bonds continue to lower in yield. The problem, ultimately, is that it cannot go on forever, but negative interest rates will likely take care of that, reducing the monetary base to a point at which the Fed and central bankers around the world will have run out of options.

Then, it will be the average citizen who pays the price for experimental Keynesian economics, or, as a former president used to term it, "voodoo economics."

Stock up on canned goods. Great for the holidays and essential during catastrophes.

At the Close, Friday, October 17, 2019:
Dow Jones Industrial Average: 26,770.20, -255.68 (-0.95%)
NASDAQ: 8,089.54, -67.31 (-0.83%)
S&P 500: 2,986.20, -11.75 (-0.39%)
NYSE Composite: 13,006.64, -32.59 (-0.25%)

For the Week:
Dow: -46.39 (-0.17%)
NASDAQ: +32.50 (+0.40%)
S&P 500: +15.93 (+0.54%)
NYSE Composite: +73.73 (+0.62%)

Thursday, October 17, 2019

IMF Warns Pension Funds, Insurers, Shadow Banking On Overvalued Stocks

At last, some honesty.

The International Monetary Fund (IMF) and World Bank, holding its week-long annual meeting in (where else?) Washington, DC from October 15-20, has issued a report about stock valuations and the dangers faced by pension funds, insurers, and institutional investors.

Because low interest rates in many parts of the world are cause investors to reach for yield, the IMF sees inherent risk of overvaluation and imprudent borrowing as potential pitfalls should an economic downturn occur.

Their solution would be for more stringent regulation and closer monitoring of large institutional investors and so-called "shadow banking" outlets like insurers and non-bank financial companies. Obviously, the chiefs at the IMF have not read their history well enough, as there's ample proof that during ties of loose monetary policy, central bankers have a tendency to look the other way, fall suddenly into deep sleep, or simply miss obvious signs of trouble developing.

Famously, leading up to the Great Financial Crisis, then-chairman, Ben Bernanke, dubiously opined on May 17, 2007, "The subprime mess is grave but largely contained." A year later, the global economy was in tatters, fending off complete collapse.

While there are certainly signs that stocks are overvalued, and those signs have been apparent for a long time, years, in fact, the conceptual framework currently in use by investors is that the Fed and other central banks, fully in control of markets, will not allow any serious decline in equities, particularly in developed nations, and especially int eh United States.

That's the kind of certitude and unabashed frothiness that leads not-so-directly to insolvency, like trying to catch a falling knife.

It's laudable for the IMF to issue such a report and offer potential solutions to problems which may arise, but who's listening?

At the Close, Wednesday, October 15, 2019:
Dow Jones Industrial Average: 27,001.98, -22.82 (-0.08%)
NASDAQ: 8,124.18, -24.52 (-0.30%)
S&P 500: 2,989.69, -5.99 (-0.20%)
NYSE Composite: 12,994.89, -11.15 (-0.09%)

Tuesday, October 15, 2019

Stocks Flatlining In Advance of Bank Earnings

In the most recent Weekend Wrap, the flatlining of stocks over the last 21 months was discovered and discussed, but Monday's trading amplified the condition, with stocks stuck in a narrow range throughout the session.

The Dow Industrials traded in a range of 125 points for the full day, but, after the first half hour, the range was no more than 100 points in either direction. The same range-bound condition was true for all the major indices. Trailing into the close, the three majors (Dow, NAZ, S&P) were all down by less than 0.15 percent.

This was likely due to the observance of Columbus Day, which saw the bond market closed, though the lingeing effects of so much central bank tinkering must be playing on the minds of more than a few seasoned traders.

While markets are unlikely to completely seize up, there is the potential for individual stocks to go bid-less for extended periods. Market volume and breadth has been on the skinny side of thin, to say the least. Volatility has been wrung out, except for the occasional algo bounce directly tied to the up and down, on and off trade disputes between the United States and China. This false narrative moves markets, but not in any consistent pattern except for that of a knee-jerk.

The week ahead will feature third quarter results from the banking sector, sure to add some dynamism to an otherwise flaccid affair.

At the Close, Monday, October 14, 2019:
Dow Jones Industrial Average: 26,787.36, -29.23 (-0.11%)
NASDAQ: 8,048.65, -8.39 (-0.10%)
S&P 500: 2,966.15, -4.12 (-0.14%)
NYSE Composite: 12,896.22, -30.70 (-0.24%)

Thursday, October 3, 2019

How Deep Will Stocks Dive In October?

On the second day of the fourth quarter, US stocks took a fairly big hit, with the most widely-watches indices each dropping nearly two percent on the day. The current downdraft comes on the heels of two consecutive down weeks in the US markets, but the damage has been relatively mild.

Prior to Tuesday and Wednesday's heavy declines, the Dow Jones Industrial Average was down just over 300 points, a little more than a one percent drop. Combined, the Dow fell over 800 points on Monday and Tuesday, making the entire dip about 1100 points, or just over four percent.

This is nothing to be concerned with, for now, though a repeat of 2018, when stocks ripped lower in October and December, should not be ruled out. By many measures, a slew of US equites are significantly overvalued, thanks in large part to the long-running bull market fueled by excess money printing by central banks and corporate buybacks. These are the two major components of the heady bull market and it is readily apparent that neither of these policies are going to end anytime soon.

The Fed is planning another 25 basis point cut in the federal funds rate at their next FOMC meeting, October 29-30 and corporate stock buybacks are still close to all-time high levels. With the pair policies funding all manner of excess, it would not be surprising to see any sharp decline - such as a 10% correction - countered with more easy money policy.

If there is going to be a recession, Europe will undoubtably encounter one before the United States. The EU is being battered by Brexit fears and poor economic data at the same time and its own measures of QE are barely making a dent in the declining economic conditions on the Continent. Thus, investors in the US will likely have advance warning of any GDP suffering.

Bear in mind that an official recession is defined as two consecutive quarters of negative growth. Therefore, a recession doesn't even become apparent until it is well underway. If third quarter GDP returns a positive number, that would indicate that a recession is still at least three months ahead. The world would find out if the US is headed into recession if fourth quarter GDP came in as a negative number, and that would only be reported by late January 2020.

Finally, a recession is not the end of the world for commerce nor stock investing. There will be a general malaise, as the low tide would affect all stocks in some manner, but there will still be winners, most likely in consumer staples, utilities, and dividend plays. If and when dividend-yielding stocks start taking on heavy water, that would be a time for more focused concern.

For now, caution, not panic, is advisable.

At the Close, Wednesday, October 2, 2019:
Dow Jones Industrial Average: 26,078.62, -494.42 (-1.86%)
NASDAQ: 7,785.25, -123.44 (-1.56%)
S&P 500: 2,887.61, -52.64 (-1.79%)
NYSE Composite: 12,608.43, -226.92 (-1.77%)

Tuesday, September 17, 2019

Oil and Gas Price Hikes Are a Central Banker Scam

Reiterating what was posted here Sunday in the Weekend Wrap, a recent article by Lance Roberts at Real Investment Advice, brings home the bacon in detail, of how the bottom 80% of all US workers, i.e., earners, is carrying a high debt burden that today cannot even cover basic necessities.

The consumer squeeze is in focus after the attacks on a Saudi oilfield and the Abqaiq refinery, which, according to most sources, will affect five percent of global oil supply. Somehow, cutting off five percent of global supply magically raises oil prices 15 percent.

Without anybody knowing exactly who is behind the attacks, many fingers are being pointed toward Iran, naturally, since the Iranians are fighting a proxy war with Saudi Arabia in Yemen. has a solid account with photos of how the attack might have been staged, who was behind it and future implications.

From a central banker's perspective, the attack and subsequent rise in the global price of oil could not be more opportune on a number of fronts. First, in desperate need of inflation, the bankers get the gift of core inflation in both PPI and CPI. Second, the rise in the price of oil, translated to gas at the pump and some home heating fuel, will show up in the convoluted GDP calculations, just in time for the third quarter and also adding a boost to the fourth if high prices persist.

Further down the road, high input prices and consumer prices for oil and gas should put the brakes on the economy eventually, putting a dent in discretionary spending which could spark a recession in 2020, just in time for the November US elections. Sure, higher prices and profits are good for some, for a while, but eventually, high gas prices act effectively as a tax on all consumers.

If you happen to be a central banker, this sounds great, doesn't it?

There are also political and financial aspects to the story. The attacks come right on the heels of President Trump's firing of John Bolton, the infamous neocon whose penchant for war with Iran was no secret. Conspiracy theorists believe this was long-ago planned, but Bolton's removal as National Security Advisor to the president was the trigger.

There's also the upcoming IPO of Saudi Aramco to consider. Initially, following the attack, the Saudis hinted that they would delay their long-awaited IPO, but now, a day beyond, they say they will forge ahead as planned. At issue is valuation. The Saudis believe the company should be worth $2 trillion at IPO, while the consensus among bankers handling the deal have the figure closer to $1.5 trillion. A lasting boost in the price of oil would naturally add to the valuation, bringing it closer to the level desired by the Saudis, who, after all, have control of the flow of oil, but not the price.

With no culprit positively identified, the entire affair looks to be highly organized - from the accuracy of the missiles and/or drones employed in the attack to the coordinated record trading in the oil futures pits - and the work of people or nations with an agenda. While this may appear far fetched to some, the power of the globalist banking cartel is well-known and could be pulling all the strings behind the scenes. It is not outside the realm of possibility that deep state globalists staged the attacks and price surge. It's also possible the the attacks were completely faked, just to get the price of oil higher.

There has been a glut of global oil supply since the US embarked on its fracking and shale output, becoming the world leader a few years ago. Russia is also pumping like mad, as are most of the OPEC nations. The amount of oil on world markets is so large that even small disruptions should not affect price - which has been falling for over a year - very much, but, in this case, it did.

While there isn't much the general population as a whole can do about higher gas prices outside of mass protests (a likelihood in Europe), there are a few actions the average motorist can take.
  • Plan driving trips - organize your schedule to include multiple stops, thus reducing the amount of gas used rather than making individual trips for each task
  • Seek lower prices - use online resources like to find the lowest prices in your area.
  • Ride-sharing - organize with neighbors, friends and co-workers to share rides heading in similar directions.
  • Drive smarter - slower speeds, properly inflated tires, and good driving habits can significantly reduce your fuel usage.
  • Avoid wasted trips - deciding whether or not a trip is an absolute necessity can cut your overall fuel consumption considerably.
You don't have to buy into the price panic the global banking cartel seeks to impose upon you. As an end-user, you have to power of decision and information at your fingertips to help make wise choices. Share information with your friends, relatives and co-workers. A loose band of informed citizens can thwart the intentions the central bankers. Reduced demand should result in lower prices, eventually.

Most of all, don't buy into the media hype over gas prices, recession or any other narrative (like climate change) that the media water-carriers throw at you.

At the Close, Monday, September 16, 2019:
Dow Jones Industrial Average: 27,076.82, -142.70 (-0.52%)
NASDAQ: 8,156.40, +2.86 (+0.04%)
S&P 500: 2,994.17, -3.79 (-0.13%)
NYSE Composite: 13,107.98, -16.36 (-0.12%)

Monday, September 9, 2019

Weekend Wrap: Stocks Gain, All Clear Signal Given Investors; Gold, Silver Dashed

Sorry. On the road again, drive-by post:

Two straight weeks of positive returns have pushed the major Us indices back above their 50-day moving averages, an okey-dokey signal to investors that the 0.25% federal funds interest rate cut from the FOMC is in the bag later this month (September 17-18), and the trade/tariff food fight between the US and China will continue unabated, alternating between "talks are ongoing," to "talks are off again," to "all options are on the table," or other such nonsense.

Trade and tariff talk seems to have a mysterious effect on traders, sending them into emotional buying and selling fits on headlines. Actually, the headline readers are algorithms, keyed to respond to major developments, or, in the case of the trade war, rumors of minor developments.

On the week, stocks vacillated, but moved higher in tandem, precious metals were dashed, as anyone who has an interest in the prices of such knew they would be. Both gold and silver are still trading near multi-year highs, so it's obvious that more flogging will be necessary until the morale of holders and buyers is sufficiently dashed.

As the global charade of overinflated sovereign budgets and overstretched consumers continues, the debt cycle looks to be extended at any cost by the overlords of banking, the central banks. Their position is as precarious as it has ever been. Rumors of an ouster of the Fed by congress in the United States are vastly overstated and wishful thinking by freedom-loving folks, yet they persist.

At this point in the day-to-day noise chamber that is Wall Street, caution is best served cold and reliance on a financial planner could be a major mistake going forward. It's all hands on deck, every man and woman for him/herself, babies being thrown overboard.

Happy sailing!

At the Close, Friday, September 6, 2019:
Dow Jones Industrial Average: 26,797.46, +69.26 (+0.26%)
NASDAQ: 8,103.07, -13.76 (-0.17%)
S&P 500: 2,978.71, +2.71 (+0.09%)
NYSE Composite: 12,933.38, +15.58 (+0.12%)

For the Week:
Dow: +394.18 (+1.49%)
NASDAQ: +140.19 (+1.76%)
S&P 500: +52.25 (+1.79%)
NYSE Composite: +196.50 (+1.54%)

Sunday, August 25, 2019

Weekend Wrap: Trade, Recession, Currency Fears Stoke Week-Ending Sell-Off

These days, it doesn't take much to spook markets.

That stands to reason, with all of the US major indices near all-time highs conjoined with a divisive political environment, global trade tensions, and a corrupted financial system run by central bankers bent on the globalization of currencies and nations.

Thus, on Friday, after Fed Chairman, Jay Powell, spoke to the assembled cognoscenti at Jackson Hole, Wyoming, and President Trump doubled down on his tariff mandate towards China, the runners, scalpers, and money-changers on Wall Street were so spooked that one might have assumed they'd seen the ghost of legendary China short-seller, Jim Chanos, stalking the trading floor, even though - as far as is known - Mr. Chanos is still alive and kicking the shorts out of the Chinese market.

Stocks had opened only marginally in the red on Friday and were improving into the eleven o'clock hour before suddenly reversing course, heading into the abyss, the Dow shedding more than 400 points in a matter of minutes.

With Wall Street struggling to regain some semblance of balance and propriety, stocks drifted lower, cratering in the final hour with the Dow Industrials down nearly 750 points before gaining back another hundred into the closing bell.

It was ugly. It was impressive. At the end of the day, it seemed completely appropriate.

The fuel for growth was fading fast and has been since well before Friday's melt-down. All of the fancy tricks the Fed and their central banking buddies had employed to goose equities skyward over the past decade were being exposed as fraudulent, artificial, unnecessary, and eventually harmful to the operation of what previously had been free markets.

Wall Street has lost confidence in the Fed's forward guidance, which, according to Mr. Powell, is decidedly negative. The Trump tariffs are a sideshow to the already-failing economies of the developed nations, slowing precipitously and taking down the emerging giants of China and India with them.

Over the weekend, while the leaders of the G7 powerhouse nations debate and will likely confirm that globalization is a crumbling edifice of one-percenter greed and that the world needs to be adjusted toward something that serves people other than just the mega-corporate interests and the skimming habits of the ultra-wealthy.

As has been of considerable mention here the past few days, negative interest-bearing sovereign debt instruments - those wildly popular $19 trillion worth of bonds - are ringing the death-knell of fiat currencies and central bank interference with the normal operation of capitalist design.

For now, the shock waves of fading confidence in the global Ponzi and counterfeit schemes of stock buybacks, quantitative easing, and negative interest rates is contained largely to the Wall Street crowd, but, it is spreading and the uproar will increase as stocks fall, ordinary people worry about their jobs and their futures, and the central bankers moan and cajole and mumble and stumble and fall.

Remnants of the global economic structure previously known as Bretton Woods are being shredded on a daily basis. A new world order is on the way, but any transition - like the one which dashed national currencies into one euro a few decades past - is going to be painful and consequential.

Sadly, when all the smoke is blown away and the dust settled, the planet will still largely be governed by the same morons and their predecessors who brought all of this upon us and their economic agents of destruction. The new currency regiment will be talked about as more fair, more balanced, more equitable, but those in the know will have already understood that it will be more of the same, damaging to the middle classes while barely scraping off a scintilla of the assets held by the rich and powerful.

Americans, Europeans, Japanese and all citizens are being shafted, and it's going to hurt.

The long-delayed reckoning from the global crisis of 2008 is about to be unleashed. Unless one holds hard assets such as precious metals, real estate, and/or income-producing assets like a productive business or needed service, one is likely to feel more pain than would otherwise be prescribed by the lords of finance.

At the Close, Friday, August 23, 2019:
Dow Jones Industrial Average: 25,628.90, -623.34 (-2.37%)
NASDAQ: 7,751.77, -239.62 (-3.00%)
S&P 500: 2,847.11, -75.84 (-2.59%)
NYSE Composite: 12,416.45, -272.01 (-2.14%)

For the Week:
Dow: -257.11 (-0.99%)
NASDAQ: -144.23 (-1.83%)
S&P 500: -41.57 (-1.44%)
NYSE Composite: -163.96 (-1.30%)
Dow Transports: -227.58 (-2.28%)

Monday, August 19, 2019

WEEKEND WRAP: Stocks Lower Third Straight Week; Treasury Curve Inverts

Stocks took another turn for the worse, the third straight week in which the major averages shed points. That would constitute a trend, especially considering what happened on the Treasury yield curve, where the two-year note inverted against the 10-year-note, yielding - for a short time - one basis point more than its longer-term counterpart.

Additionally, bonds with negative yields globally moved beyond the $16 trillion mark, with Germany, among other EU countries, having its entire bond complex falling below zero yield.

Those two events in bond-land are going to prove to be crippling to global growth and the effects are already becoming apparent.

Negative interest rates destroy the time value of money. Debt is discarded. Without debt, there is no money, except for that which has no interest or counterparty. That would be gold, silver, hard assets. Gold and silver have been rallying while national central-bank fiat currencies fluctuate against each other in the desperate race to the bottom.

The idea that the country which can devalue its currency fastest and lowest will be the winner in the trade arena is offset by the fact that weak currencies - while great for exporters - are not necessarily good for that nation's consumers, because imports would necessarily become more dear.

The desire to send interest rates into negative territory - a concept launched by the Japanese and quickly taken up by Europe after the GFC - is a marker for the death of currencies, i.e., fiat money.

Negative rates are inherently deflationary, which is exactly what central banks wish to avoid, because it voids their franchise. Fiat money - which is in use globally - will die, not by hyperinflation, but by hyper-deflation.

That has been the working thesis at Money Daily since 2008, and it appears to finally be setting off into a new phase.

Facts must be faced. After the crash in 2008, banks became insolvent and were bailed out by trillions of dollars, yen and euros from central banks, which, by their very nature of money creation out of thin air, are also insolvent. Most governments are either deeply in debt or insolvent, with massive debts to their central banks offset by national resources (see Greece). Most people's finances are in a state of insolvent, with debt far outweighing assets. That leaves corporations, large and small, as the only solvent entities in the world, though many of those corporations are also insolvent, with more debt than equity, and much of their equity accounted for by stock buybacks. When the market takes a meaningful dive, many of these corporations will be prime bankruptcy targets, though the government would almost surely step in - as it did with the banks and General Motors during the crisis - with freshly-minted money to stave off creditors.

All roads lead back to the fiat money system and fractional reserve banking.

We have broken countries undertaking broken trade in broken markets. Mal-investments and wealth inequality are proliferating. Big government, running enormous deficits, carries on the fraud of counterfeiting by central banks. The currencies commonly used in exchange are worth nothing more than the ink and paper upon which are printed the pretty pictures and numbers. They are all debt instruments and negative interest rates extinguish debt. The world is headed for a radical reconfiguration of the monetary system.

At the Close, Friday, August 16, 2019:
Dow Jones Industrial Average: 25,886.01, +306.61 (+1.20%)
NASDAQ: 7,895.99, +129.37 (+1.67%)
S&P 500: 2,888.68, +41.08 (+1.44%)
NYSE Composite: 12,580.41, +170.91 (+1.38%)

For the Week:
Dow: -401.43 (-1.53%)
NASDAQ: -63.15 (-0.79%)
S&P 500: -29.97 (-1.03%)
NYSE Composite: -168.01 (-1.32%)
Dow Transports: -239.89 (-2.35%)

Monday, August 12, 2019

Far From Ordinary Times For National Economies

Empires rise and fall. Nations traverse through periods of feast and famine, disputes with other nations, sometimes wars, and economic booms and busts. History is rife with stories detailing the life and times of nations and their leaders.

The vast majority of nations today face conditions that are far from normal.

There are at least three major migrations taking place, Africans to Europe, Chinese to Africa, and South Americans to North America. These are disruptive events, not only for the individuals involved but for the entire populations of the nations affected. Changes are gradual, mostly, but the mundane can be cracked by atrocities, absurdities and maladjustments committed by migrants in the clash of cultures.

Such conditions are prevalent in Europe and the United States, with migration reaching epidemic proportions. Indeed, President Trump himself calls the illegal immigration at the southern US border an "invasion." He is not wrong. The United States was built on the back of immigrants - legal ones - whose individual efforts and respect for their fellows built the greatest nation on Earth.

Illegal immigration is challenging the normative behavior of well-established citizens. According to certain left-leaning politicians and a corrupted media, illegal immigrants should receive free health care, free schooling, and largely, freedom from gainful employment. Ordinary, established US citizens do not receive such largesse, nor should they. Nor should the illegal entrants, who have violated our borders, broken our laws and flaunted the lifestyles and even the national flags of whence they came.

Such activity is largely disruptive to the fine working condition of a nation and the United States has been building to this state of affairs for more than 40 years. Estimates of people living in the US illegally range from 11 million to as many as 60 million people. The higher end of that range is probably closest to the truth, which is why immigrants - mostly the illegal ones - disrespect US laws, commit crimes, and take advantage of an overly generous social framework and increasingly undisciplined judicial process.

The condition in many European countries is far worse, where theft, rape, and other human crimes are committed with impunity. Often, if an immigrant is accused of crime, there exists no punishment. The system feeds upon itself and eventually fails to protect the national culture.

That is not all. Every nation on earth is controlled economically by an unelected elite, otherwise know as a central bank. In Europe, where the financial condition is dire, all nations on the continent are controlled by one central bank, the ECB. Nations have usurped their right to issue currency, having been overwhelmed by the collectivist desires of the European Union. The ECB issues fiat currency, in the form of a counterfeit euro, bolstered most recently by negative interest rates because the system is a fraud and it imploded over 10 years ago, during the Great Financial Crisis. The global central banks added untold amounts of liquidity, but it will never be enough because the crisis is one not of liquidity, but of solvency. All central banks create currency out of thin air, charge interest for its use, and, via the magic of fractional reserve lending, multiply the amount of currency in circulation by ghastly amounts.

The system is broken and will remain broken until it is completely rejected by the various populaces which employ it. That moment in time is unknowable, but it is inevitable.

There is more.

Great Britain, wise enough to keep their currency - the pound - national in nature, is attempting to exit the EU, but has been met with resistance three years since a national referendum preferred exiting, or, in common parlance, Brexit.

This is a further disruption to the status quo, and the elites will have none of it.

President Donald J. Trump, of the United States, foments more radical departures, not the least of which being his penchant for fair trade via tariffs. For three decades, the globalists have promulgated their "free trade" jingoism, which is commonly broken, cheated upon, corrupted, deceitful, unequal, and decrepit. Global trade should well collapse, and if President Trump's tariffs are the agent of change, all the better.

Thus, these days are far from normal. Superficially, people go about their business as if nothing is brewing beneath the casual calm. There will be a shock, probably multiple shocks, similar to, and many of them larger than the events of 2007-2009.

How long the politicians, bankers, and the media can keep a lid on the calamity that is bubbling up below, is anyone's guess, but their time is running short. Currencies will collapse, nations will fall, there will be wars.

It would pay to keep a sharp eye on one's assets, hard and soft. Anything that is not well-protected can be stolen away in a flash. Consider the number of security breaches at financial institutions as warnings. The money is unsafe. Hard assets are safer, but must be protected, defended.

All of this is frighteningly real and happening at breakneck speed. The usual media sources will not tell you the truth. You must find it on your own.

Ten years is a long time for the central banks and their friends to keep the spinning plates of a corrupt, defunct global financial construct from experiencing inertia and crashing to the floor, shattering into millions of tiny, unrecoverable pieces.

The spinning will end. Everything will change.

At the Close, Monday, August 12, 2019:
Dow Jones Industrial Average: 25,897.71, -389.73 (-1.48%)
NASDAQ: 7,863.41, -95.73 (-1.20%)
S&P 500: 2,883.09, -35.56 (-1.22%)
NYSE Composite: 12,586.24, -162.18 (-1.27%)

WEEKEND WRAP: Another Shaky Week for Stocks; Bond, Gold, Silver Rallies Extend

As the global ponzi turns, the week now left behind shares a trails of tears and cheers, sadness for equity holders, joyous celebrations in the bond pits as US rates re-approach the zero-bound (despite the Fed's reluctance).

While stocks bounced like a rubber ball on a string, the losses were limited by some mysterious dip-buying mid-week as news flow changed not just by the day, but seemingly by the hour.

At the same time, the bond market in the US was mimicking Japan and Europe, grinding yields lower, with the 10-year note closing out the week at 1.74%, which is lower than the 1,2,3,6-month and one-year yields, making the case for an already inverted yield curve. The 2-year continues to be resilient, though one has to wonder how much longer it can hold the narrow margin below the 10-year, which is currently a scant 11 basis points (1.63%).

Precious metals have also benefitted from global uncertainty, with gold hovering around $1500 and silver teasing the $17.00 mark. Both are significantly higher from lows spotted in late May. The ascent of the metals has been swift and without any major pullback. If the metals are in an overbought condition, they certainly aren't showing any signs of it. As usual, however, the persistence of central banks to keep "real money" on its heels is probably keeping PMs from going vertical. That story seems to have no end, except that a hyperbolic rise in gold and silver would signal the death of not just the US dollar, but probably all fiat currencies in use by every nation, developed or not. After fiat finds its proper value (ZERO), barter will follow. It's a natural progression. The central question, as has been for centuries, is, "what do you give for a live chicken?"

Though it may appear that the global economy is about to implode, it's useful to be reminded that the Great Financial Crisis (GFC) is well beyond its 10th anniversary, thanks to massive infusions of counterfeit fiat ladled out to the unwashed by the BOJ, FRS, BOE, SNB, PBOC, ECB. Spelling out the acronyms somehow yields negative interest rates and the death of money. Nobody knows when this will occur, but it will, and the effects will devastate many. Think billions of people, not just millions.

In the interim, as the world is roiled by international, geopolitical events, the wall of worry is being built upon the current crises (not in any particular order):

  • The Epstein "suicide"
  • Honk Hong protests
  • Brexit
  • Trade War and tariffs
  • Middle East tensions
  • Mass Shootings, Gun Control Legislation, Red Flaw Laws (won't happen)
  • 2020 presidential election hijinks
  • Ongoing migrations (Africa to Europe, South America to North America, China to Africa)

That's more than enough to keep traders up at night and on their collective toes during the days ahead.

Incidentally, all of this anguish has shielded the markets somewhat from a less-than-rousing second quarter earnings season, even as the corporates float through the third quarter. The Dow Transports re-entered correction territory two weeks past week and extended it last week with the worst showing of all the US indices, by far.

Recession is almost a certainly, though it needn't be particularly horrible for the US, since employment is still strong, despite weakening earnings in the large cap corporate sector. Since the US is a very big country, different areas will be affected in different ways. Areas of the country that have been growing (most of the South, Midwest and Pacific Northwest) will continue to do so, albeit at a slower pace. Those areas in decline (Northeast cities, California, rural enclaves) will see conditions worsen. Those areas in decline will continue to do so through good times and bad and some may be exacerbated by outflows of high income individuals due to SALT taxes. It's a big country, a panacea for speculators with long time horizons.

At the Close, Friday, August 9:
Dow Jones Industrial Average: 26,287.44, -90.76 (-0.34%)
NASDAQ: 7,959.14, -80.02 (-1.00%)
S&P 500: 2,918.65, -19.44 (-0.66%)
NYSE Composite: 12,748.42, -80.38 (-0.63%)

For the Week:
Dow Industrials: -197.57 (-0.75%)
Dow Jones Transports: -167.22 (-1.61%)
NASDAQ: -44.93 (-0.56%)
S&P 500: -13.40 (-0.46%)
NYSE Composite: -91.08 (-0.71%)

Thursday, April 11, 2019

Silver Is Testing $14/ounce Again; How Low Can It Go?

Silver Technical chart [Kitco Inc.]
Blue line=30 day MA; Green Line=200-day MA
Since my late January burnout, I've been sick, quit a part-time job, plotted a move from New York to Tennessee (more on that later, scheduled for October), and decided to resume writing "Money Daily," employing first person singular style with less of a focus on stocks.

It's something of a relief to be able to write as I speak, discarding the strictures, stultification and distance of the third person.

That means I can mean what I say, say what I mean, directly, closing the space between me, and you, the reader (2nd person).

Enough semantics and style, for now. Let's get right to the subject matter.

Silver has long been a favorite investment of mine, though over the past number of years - since the heady days of 2010-11, when the price rose close to $50/ounce - it has been rather disappointing. My holdings did, however, manage to provide some relief against rising interest rates on credit cards in 2017 and 2018, as I was able to liquidate to cash and pay off the loan sharks otherwise known as banks and credit issuers.

Since my basis was right around $17/ounce and buyers paid a hefty (15-30%) premium on my offerings, I was actually able to cash out at a profit and still maintain something of a stash for future purposes.

As an aside, that's what investments are about.  Generally, people don't hold assets for the sake of holding them, except, of course for precious metals, gems, art, and some real estate. Eventually, they want to convert to cash to spend on something else. In my case, cutting up a couple of credit cards which were obliging me with ungodly - and rising - interest rates was the purpose of some of my silver. The rest, I continue to hold as a store of value, even though that's still a questionable proposition.

As anyone who plays in the gold and silver markets already knows all too well, the metals have been squashed in recent years by central banks because the metals pose competition to fiat currencies. That's all right if one manages to ignore the Sprotts and Caseys of the world who insist with regularity that gold and silver are on the verge of a breakout. Nothing could be further from the truth.

Gold and silver have been in a slow, long, excruciating bear market since mid-2011. They have been and continue to be relentlessly beaten down in the speculative futures markets and they will continue to be for the foreseeable future.

The question, for gold bugs and silver surfers, is "where is the bottom?" The chart at the top suggests that we may be getting close, especially if silver takes another dive into the $14s.
Silver Technical chart [Kitco Inc.]
Blue line=30 day MA; Green Line=200-day MA

The most recent bottom came in 2015, when silver struck out at $13.71 on December 14. In 2018, it approached that figure, but never quite made it, bottoming at $13.97 on the 14th of November. This year, the low was $15.025, on April 2.

With no bounce in the charts other than the usual 1-3% noise, silver is headed back in the
14s soon, likely within the next week. Stocks and first quarter earnings will be all the rage for the next three weeks, so there's no interest in shiny metals, presenting a tempting opportunity.

It might be prudent to avoid that temptation, because the commodity will have every opportunity to set a three-year low. Like any asset, the time to buy is when everybody else has given up. Silver may never again get to $48/ounce, but it's also likely that it will never again sell for $6 or $7, which was the norm in the 1990s, prior to the great awakening.

I do believe $12 or even $11 per ounce or lower is possible, and, if you're doing your investing right - buying small amounts on a set schedule - you may be able to dollar-cost average your way to a very low basis for your holdings. Of course, anybody who got in at $16 or $17 last year may still be buying right now, and nobody can blame them for lowering their basis.

What it will take to get silver to some more reasonable valuation - say $20-22 - is anybody's guess and a fool's game. Silver is a hedge and it's certainly better than paying 18% interest on credit cards or blowing your money on dinners out, vacations or other life-changing "experiences."

Having a vault full of 1, 10, and 100-ounce bars is likely to be a more life-changing, exceptional, and satisfying experience.

Per Aspera Ad Astra,

Fearless Rick

Coincidentally, this article on silver - by a (ahem) respected investment writer - popped up right as I was publishing mine. Of course, his conclusive approach is completely incorrect.

Tuesday, January 8, 2019

PPT And/Or The Fed Working Overtime To Keep Stocks Elevated

Not exactly proof, but here's a mainstream article calling out the central banks for market intervention, otherwise known as manipulation, or, preventing a crash.

Call it anything you want, including PPT, but there are surely unseen forces at work. Consider, if you will, that since central banks have the power to goose markets upwards, they also possess the power to depress them. Sobering thought, isn't it?

Valuation will become a concern this year as soon as earnings reports commence. First quarter reports may not be all that impactful, but second quarter corporate earnings and revenue reports may validate the theory that a combination of easy fed policies, low interest rates, buybacks, and a willingness to believe that the Fed would backstop any sizable decline were responsible for the last ten years of gains.

If some of the more astute forecasters are correct, an earnings and profit recession is due sometime in 2019, and the likelihood of such an occurrence will accelerate throughout the year. If corporations are going to slow down in 2019, stocks should follow, but, in the parallel universe that has become Wall Street and end of the business cycle as we once knew it, anything could happen.

The rally since Christmas appears to be based on just about nothing. Noting that, how long it will last has only one correct solution. Out will last until holders of stocks find a comfortable exit price because the major indices are still in correction.

Dow Jones Industrial Average January Scorecard:

Date Close Gain/Loss Cum. G/L
1/2/19 23,346.24 +18.78 +18.78
1/3/19 22,686.22 -660.02 -641.24
1/4/19 23,433.16 +746.94 +105.70
1/7/19 23,531.35 +98.19 +203.89
1/8/19 23,787.45 +256.10 +459.99

At the Close, Tuesday, January 8, 2019:
Dow Jones Industrial Average: 23,787.45, +256.10 (+1.09%)
NASDAQ: 6,897.00, +73.53 (+1.08%)
S&P 500: 2,574.41, +24.72 (+0.97%)
NYSE Composite: 11,716.23, +110.27 (+0.95%)

Thursday, December 20, 2018

Stock Carnage Continues; NASDAQ Down 20%; Why It Is Happening

Stocks continued to sell off on Thursday, extending the December decline to dangerous levels.

The Dow has registered what is easily the worst month of 2018, while the NASDAQ joined the Dow Jones Transportation Index in bear market territory, down 20% from its August 29 high.

Pundits in the financial media are trying to assign blame wherever they can, on the Fed's recent rate hike, fear of a coming recession, the possible federal government partial shutdown, China's slump, a looming trade war. While those are contributing factors, the real culprits are the Federal Reserve and their cohorts in central banking in Japan, China, the ECB, the Bank of England and the Swiss National Bank.

These are the architects of the past decade's debacle of debt, beginning in the depths of 2008-09 and continuing through until today. Their schemes of zero interest rate policy (ZIRP), negative interest rate policy (NIRP) and quantitative easing (QE), which made money all-too-easily available to their willing friends in the C-suites of major corporations.

The corporations took the easy money, at rates of one to two percent or less, and repurchased their own corporate stock at inflated prices. Now that the executives have cashed out, milked dry their own businesses, they are upside-down, owning shares of stock purchased at 20, 30, 40 percent or more than they will sell for today.

2018 was the culmination of this global corporate theft, inspired by the gracious money printers at the Federal Reserve and other central banks. Over the past ten years, trillions of dollars, yen, yuan, euros, pounds and other currencies were brought into existence, lent to various large corporate interests in a variety of complex and/or simple transactions and now the gig is up, though one will never hear talk of this in the mainstream media.

What happens to a corporation that is holding shares it bought at $90, when the stock is selling for $60 and may be worth less than that? Nothing good, including cutbacks, rollbacks, layoffs, and the general demise of once-strong companies.

When these companies offer shares for sale - and they eventually will - they will realize losses and they will still have the loans from the central banking system to repay. Some will file for bankruptcy. Others will cut payrolls and expenses to the bone. The past ten years have been nothing short of complete and total corruption of the financial system, from top to bottom. This is why the selling has been intense and relentless and likely will not cease until stocks are 40 to 60 percent off the artificial highs created by reducing the number of shares available through stock buybacks.

It was a swell scheme that paid off handsomely for some of the top executives at many of the largest corporations, and the general public, the people with 401k or retirement or college funds tied to the stock market, are going to end up bag-holders, broke and dismayed, as well they should be.

If there is any justice in this world, the bankers will be fingered, the corporate executives tried and jailed, and money clawed back from their ill-gotten gains. But we all know from the 2008-09 experience that that will not happen. Nobody will be tried. Nobody will serve a single day in jail, and the Federal Reserve will continue on its merry way, inflating and deflating to their heart's content, stealing from the public as they have been since 1913.

That's all there is to it. Hopefully, you are not a victim, though in many ways, we all are.

Dow Jones Industrial Average December Scorecard:

Date Close Gain/Loss Cum. G/L
12/3/18 25,826.43 +287.97 +287.97
12/4/18 25,027.07 -799.36 -511.39
12/6/18 24,947.67 -79.40 -590.79
12/7/18 24,388.95 -558.72 -1149.51
12/10/18 24,423.26 +34.31 -1115.20
12/11/18 24,370.24 -53.02 -1168.22
12/12/18 24,527.27 +157.03 -1011.19
12/13/18 24,597.38 +70.11 -941.08
12/14/18 24,100.51 -496.87 -1437.95
12/17/18 23,592.98 -507.53 -1945.58
12/18/18 23,675.64 +82.66 -1862.92
12/19/18 23,323.66 -351.98 -2214.90
12/20/18 22,859.60 -464.06 -2678.96

At the Close, Thursday, the solstice, December 20, 2018:
Dow Jones Industrial Average: 22,859.60, -464.06 (-1.99%)
NASDAQ: 6,528.41, -108.42 (-1.63%)
S&P 500: 2,467.42, -39.54 (-1.58%)
NYSE Composite: 11,222.79, -149.05 (-1.31%)

Wednesday, December 19, 2018

Stocks Tank On Fed Rate Hike (Thank You, Captain Obvious); Transportation Index In Bear Market

What a racket!

As if there was ever any doubt that the Fed would hike the federal funds rate another 25 basis points, stocks shot up at the open and maintained a very positive stance right up until 2:00 pm ET, when the Fed did what everybody knew they would do all along.

Seriously, who in their right mind was buying prior to the rate hike? People with money to burn?

To get an idea of the kind of lunatics trading stocks on Wall Street, the Dow was up just about 300 points at 1:57 pm. By 2:08 pm - following the policy announcement - it was essentially flat... and it went down from there, eventually losing 351 points, closing at a new low for 2018.

Over the same time span, the NASDAQ was up 65 points, but 11 minutes later was down 38. The same fate that befell the Dow was true for NASDAQ, S&P, and NYSE Composite: fresh 2018 lows.

The Transportation Index was absolutely devastated, closing at 9,147.66, down 297.81 points (-3.15%), pushing the transports into bear market territory, down 21% from its September high.

OK, so it was one of those "heads, Fed wins, tails, you lose," kind of deal. There was no way the Fed was going to surprise anybody. It's simply not their style. They telegraph everything they do, because they're so, so important to the proper functioning of the economy, and they never balk at even the most obvious data or implication. Balderdash.

The Fed should be run out of town just like all other central banks have been, but the US sheeple population has put up with this particular band of thieves for the past 105 years. The Fed is why we have booms and busts, never-ending inflation, recessions, absurdly high interest rates on credit cards, and incomes that just don't quite match up with expenses for much of the former middle class.

The good news about the Fed's rate increase is that it may be the last one for a while. They may hike a few times in 2019, or, depending on how the stock market and/or ec responds, they may not hike at all. Meanwhile, they'll keep losing money by unwinding their massive, overvalued bond portfolio of US treasuries and toxic mortgage-backed securities dating from the sub-prime glory days.

Elsewhere, crude oil rallied a little bit, gaining to $47 and change per barrel. Gold and silver were punished, though each was down less than one percent. The real lashing will come tomorrow or at the latest, by the end of the year.

Thus, the Fed, in its infinite wisdom (greed), decided that it would be in its own best interests to destroy the global economy by hiking the overnight and prime rate for the ninth time since 2015.

Happy days for some. tears and more pain to come for many more.

Dow Jones Industrial Average December Scorecard:

Date Close Gain/Loss Cum. G/L
12/3/18 25,826.43 +287.97 +287.97
12/4/18 25,027.07 -799.36 -511.39
12/6/18 24,947.67 -79.40 -590.79
12/7/18 24,388.95 -558.72 -1149.51
12/10/18 24,423.26 +34.31 -1115.20
12/11/18 24,370.24 -53.02 -1168.22
12/12/18 24,527.27 +157.03 -1011.19
12/13/18 24,597.38 +70.11 -941.08
12/14/18 24,100.51 -496.87 -1437.95
12/17/18 23,592.98 -507.53 -1945.58
12/18/18 23,675.64 +82.66 -1862.92
12/19/18 23,323.66 -351.98 -2214.90

At the Close, Wednesday, December 19, 2018:
Dow Jones Industrial Average: 23,323.66, -351.98 (-1.49%)
NASDAQ: 6,636.83, -147.08 (-2.17%)
S&P 500: 2,506.96, -39.20 (-1.54%)
NYSE Composite: 11,371.84, -130.32 (-1.13%)

Tuesday, October 23, 2018

Stocks Creamed At Opening, Rally For Minor Losses

As mentioned in the most recent post, stocks tested a variety of support levels on Tuesday and actually crashed right through them early in the session.

But, about 10:30 am ET, a rally began, first in fits and starts, but by noon, it was well underway, lifting stocks well off their lows and continuing until... until... well, no, the major indices didn't turn positive, not even for a fleeting instant. By 3:00 pm all of the "greater fools" had been had, the dip buyers had bought all the dips they could and stocks drifted slightly lower into the close.

What started with the Dow down nearly 550 points, the NASDAQ off by more than 200, the S&P losing more than 60 points and the NYSE Composite down 264, ended with merely pedestrian losses and investors wiping the sweat from their furrowed brows. Once again, as has happened so many times during the Fed-led bull market of the 2010s, stocks averted catastrophe and sailed through the day thanks to so-called bargain hunters, that rare breed of speculators who believe buying a stock that's three to five percent off its highs is some kind of grand deal.

This is more than likely the coordinated work of central banks, who are not ever audited, who can created limitless amounts of funny money with the push of a button, and who have done so regularly in order to keep alive the dreams of prosperity and financial security for millions, by inventing - and then investing - trillions.

Behind the scene presented to the unsuspecting, unprofessional investing class - those people with retirements and life savings locked into 401k and other accounts - there was real damage. One index that did not recover very well at all was the Dow Jones Transportation Index, which slipped 199 points, to 10,237.02, a loss of 1.90%, sending it well below the key level of 10,397.23, its most recent low, from October 11, while also descending into correction territory for a second time this month, below 10,413.

With the transports falling like a bowling ball off a cliff, the importance of transportation to the rest of the economy has to be put into question. If nothing's moving, or, at least moving with less alacrity and determination, how strong is the whole economy? With their relevance to the Industrials via Dow Theory and in real life practice, the transports are the answer in search of a question, the question being how long can the slip-slide-recover charade continue before the bottom falls completely out?

The other fly in the financial ointment is, and has been, oil. WTI crude lost ground again today, sliding more than four percent into the low-$66 range, well off the $76/barrel high recently achieved. Not to offer a punnish perception, but oil greases the skids of industry and transportation. Lower pricing for the world's most vital commodity can mean one of three things: 1) lack of demand, 2) oversupply, 3) global recession. Of course, a combination of all three might be the correct analysis, though the implications of such a paroxysm might trigger a more virile reaction amongst the monied class.

Considering the ramifications of the major indices falling straight through support levels and then rebounding to more respectable levels, plus the demise of oil and the transports, one can easily conclude that the October volatility that has been apparent since the start of the month is nowhere near abatement. Even the mediocre losses today add to somebody's misery, though the pain felt is being doled out in small units, much like Chinese water torture, rather than having investors suffer the quick blade of the guillotine in a sudden crash (that may be saved for closer to the mid-term elections).

Stating the very, very obvious, this is far from over.

Dow Jones Industrial Average October Scorecard:

Date Close Gain/Loss Cum. G/L
10/1/18 26,651.21 +192.90 +192.90
10/2/18 26,773.94 +122.73 +315.63
10/3/18 26,828.39 +54.45 +370.08
10/4/18 26,627.48 -200.91 +169.17
10/5/18 26,447.05 -180.43 -11.26
10/8/18 26,486.78 +39.73 +28.47
10/9/18 26,430.57 -56.21 -27.74
10/10/18 25,598.74 -831.83 -859.57
10/11/18 25,052.83 -545.91 -1,405.48
10/12/18 25,339.99 +287.16 -1,118.32
10/15/18 25,250.55 -89.44 -1,207.76
10/16/18 25,798.42 +547.87 -659.89
10/17/18 25,706.68 -91.74 -751.63
10/18/18 25,379.45 -327.23 -1,078.86
10/19/18 25,444.34 +64.89 -1,013.97
10/22/18 25,317.41 -126.93 -1,140.90
10/23/18 25,191.43 -125.98 -1,265.88

At the Close, Tuesday, October 23, 2018:
Dow Jones Industrial Average: 25,191.43, -125.98 (-0.50%)
NASDAQ: 7,437.54, -31.09 (-0.42%)
S&P 500: 2,740.69, -15.19 (-0.55%)
NYSE Composite: 12,287.44, -87.33 (-0.71%)

Tuesday, September 25, 2018

Dow Lower Again As Investors Ponder Fed Wisdom

Well, if you're content with having a bunch of highly-paid academics controlling your finances, you're in luck. The Federal Reserve has been hard at work for over 100 years to guarantee that they get a cut of everybody's money, mostly because they create it themselves, out of thin air, with no backing with tangible assets, like gold, or silver, or anything like that.

As it says on their debt instruments, full faith and credit.

Therein lies the problem. Most people, if they understood how the Federal Reserve operates - mostly in secret, and outside the boundaries of government (it is a private banking system, after all. Shhh!) - would pine for foregone days when gold and silver were the coin of the realm, so to speak, when people and businesses weren't amortized and taxed to the bare bones of their existence.

Full faith is something the Fed takes for granted, assuming that 99% of the public has no idea how money works. Credit is their life blood. Every dollar created by the Fed is a debt, which is why the so called "national debt" can never be repaid. If it was, there would be no money. Everybody would be broke.

Is that what is occupying the minds of the great investors and traders of Wall Street and their bankers, brokers, cronies and insiders? Probably not. They're more interested in getting and keeping as much of the Federal Reserve money they can, investing it in more stocks, bonds, debentures, options, futures and maybe along the way, some real assets like real estate, gold, silver, art, vehicles, machinery.

Almost nobody really cares about how the Fed or other central banks operate. It's a fact. Most people are caught up in the matrix of jobs, bills, rents, taxes, and debt. They don't have time to study the intricate workings of central banks, which, of course, is how the central bankers wish. The less scrutiny on them, the more they and their member banks (all the big ones) make, unaudited and without interference.

What the traders on the exchanges today were contemplating was whether or not the Fed will actually raise the federal funds rate (the rate banks charge each other for overnight loans) to 2.00-2.25% tomorrow at 2:00 pm EDT when the FOMC policy rate decision is announced.

The simple answer is that they almost certainly will. The market has priced this in. At the least, the 10-year treasury note has gotten the memo. It's holding pretty steady at 3.10% yield, anticipating the Fed's very well-telegraphed interest rate ploy.

To many of the top traders and investors, the Fed's bold actions, in the face of a somewhat gradual economic improvement, are already too much and too soon. Some analysts are suggesting that with the 10-year note over three percent, big money will forego the risks inherent in the stock market and shift more money into bonds. The 10-year is a benchmark. Better returns can be made in corporate debt offerings, junk bonds, shorter term offerings, or munis, all of which carry more risk, but not significantly so.

Thus, the market will tell everybody, including the wizened old men and women at the Fed, what the federal funds rate should be by voting with their feet. If stocks continue to rise, it gives the Fed a free pass to increase rates another 25 basis points in December. If the market declines, the Fed will be on its own.

The Fed has raised rates at a very steady pace since December 2016, adding 0.25% every quarter, in March, June, September, and December. They may be nearing a point at which they need to take a break.

The questions are whether or not they will see it, understand it, and how they will act upon it.

Dow Jones Industrial Average September Scorecard:

Date Close Gain/Loss Cum. G/L
9/4/18 25,952.48 -12.34 -12.34
9/5/18 25,974.99 +22.51 +10.17
9/6/18 25,995.87 +20.88 +31.05
9/7/18 25,916.54 -79.33 -48.28
9/10/18 25,857.07 -59.47 -107.75
9/11/18 25,971.06 +113.99 +6.24
9/12/18 25,998.92 +27.86 +34.10
9/13/18 26,145.99 +147.07 +181.17
9/14/18 26,154.67 +8.68 +189.85
9/17/18 26,062.12 -92.55 +97.30
9/18/18 26,246.96 +184.84 +282.14
9/19/18 26,405.76 +158.80 +440.94
9/20/18 26,656.98 +251.22 +692.16
9/21/18 26,743.50 +86.52 +778.68
9/24/18 26,562.05 -181.45 +597.23
9/25/18 26,492.21 -69.84 +527.39

At the Close, Tuesday, September 25, 2018:
Dow Jones Industrial Average: 26,492.21, -69.84 (-0.26%)
NASDAQ: 8,007.47, +14.22 (+0.18%)
S&P 500: 2,915.56, -3.81 (-0.13%)
NYSE Composite: 13,161.64, -0.42 (0.00%)

Sunday, August 19, 2018

Change of Sentiment; Something Bad In Tech-land

As of a week ago, the leading index was the NASDAQ, up more than 11 percent on the year, as opposed to the Dow Industrials, which had been lagging. Prior to this week, the Dow was up less than four percent and it was down for the year much of the time between February and early July.

Something snapped in the minds of investors this week. Maybe it was the high valuations on some of the more speculative stocks sporting the NASDAQ. Perhaps, in the search for yield, investors sought the safety of dividend producers on the Dow. Whatever the case, the Dow, this past week, was up 1.41%, while the NASDAQ shed 0.29%. It was a radical shift that appeared, magically, Wednesday morning, when the Dow was trading below 24,000.

In a matter of less than three trading session, the Dow tacked on a whopping 687 points, much of it at the open on Thursday, when the Dow popped higher and stayed well into the green the rest of the day.

Skeptics of the market will point to the radical rise on Wednesday and Thursday as proof of manipulation, or even - everybody's favorite word this season - collusion, by central banks and their ancillary brokers, to boost the share prices of the staid and steady heavy industrials. Such speculation cannot be bought off easily in this environment. It's apparent to just about everybody that the Federal Reserve and their counterparts in Japan, China, and the European Union will not stomach a severe downturn, at least not at this time. The bull market is just a few trading days from becoming the longest in American history, something the head honchos at the Fed wish to pin on their beanies before they ride triumphantly into some economic sunset.

The shifting sentiment was stunning, however. As the Dow soared, the NASDAQ soured. Many of the grand tech bonanza stocks like Netflix (NFLX) and Telsa (TSLA) were down hard for the week. Netflix dropped nearly 10%, from 345 per share to 316 at the close of business Friday. From its peak just a month ago (July 11), Netflix is down more than 100 points.

Tesla is another story altogether. The darling little electric engine that could is rapidly approaching bear territory, down to 305 at the close Friday from 379 on August 7, a span of just nine trading sessions.

Facebook, everybody's favorite ranting and raving lunatic asylum, is already in bear territory, dropping from a high of 217.50 on July 25, to a close of 173.80 Friday afternoon. That's precisely a 20.1% decline. Be sure to post to your friends, family, and anybody who gives a hoot, rat's behind, or beaver dam.

None dare call is collusion, so maybe collision is the correct word for what happened on Wall Street this week. It was nothing short of a collision of rational thinking and emotional yield-chasing.

Next week may be more or less intriguing, but after Labor Day, this market is going to become very interesting indeed.

Dow Jones Industrial Average August Scorecard:

Date Close Gain/Loss Cum. G/L
8/1/18 25,333.82 -81.37 -81.37
8/2/18 25,326.16 -7.66 -89.03
8/3/18 25,462.58 +136.42 +55.05
8/6/18 25,502.18 +39.60 +94.65
8/7/18 25,628.91 +126.73 +221.38
8/8/18 25,583.75 -45.16 +176.22
8/9/18 25,509.23 -74.52 +101.70
8/10/18 25,313.14 -196.09 -94.39
8/13/18 25,187.70 -125.44 -219.83
8/14/18 25,299.92 +112.22 -107.61
8/15/18 25,162.41 -137.51 -245.12
8/16/18 25,558.73 +396.32 +151.20
8/17/18 25,669.32 +110.59 +261.79

At the Close, Friday, August 17, 2018:
Dow Jones Industrial Average: 25,669.32, +110.59 (+0.43%)
NASDAQ: 7,816.33, +9.81 (+0.13%)
S&P 500: 2,850.13, +9.44 (+0.33%)
NYSE Composite: 12,908.26, +66.98 (+0.52%)

For the Week:
Dow: +356.18 (+1.41%)
NASDAQ: -22.78 (-0.29%)
S&P 500: +16.85 (+0.59%)
NYSE Composite: +64.77 (+0.50%)