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%)

Dow Closes Below 18,000, S&P Under 2100, Trendiing Lower; Fed Null

Stocks took the usual FOMC do-nothing antics in stride but sold off late in the day, with the Dow Jones Industrials finishing below 18,000 and the S&P 500 under 2100.

For the S&P, it was the first close below 2100 since early July, leaving the broad index up just five percent on the year, floating just above its 200-day moving average.

Cause for such grief in stocks is likely tied to the presidential election, now less than a week away, and the continuing surge of Donald J. Trump in the polls as more and more dirt is coming up from under the Hillary Clinton rug.

Investors are worried that their fair-haired, lying, cheating, scandal-ridden candidate will not make it to the finish line ahead of Trump, whom the media and Clinton camp have tried in vain to paint as misogynist, racist, rapacious, in bed with Russia, and other flights of fantasy.

As sad as the media bias and misrepresentation has been, what is potentially more disturbing is how poorly the media and Democrats think of the American public as gullible, malleable and utterly useful only to the ends of the elite.

As was stated more than three weeks ago right here in Money Daily, it now appears that Trump is going to win the election in a backlash landslide.

And stocks don't like it. Too bad.

Hump Day or Trump Day?
17,960.60, -76.50 (-0.42%)

NASDAQ
5,105.57, -48.01 (-0.93%)

S&P 500
2,097.95, -13.77 (-0.65%)

NYSE COMPOSITE
10,349.57, -64.48 (-0.62%)

Trouble In Paradise As Trump Presidency Looms

Normally, stocks are flat - as they were Monday - in anticipation of an FOMC rate policy meeting.

This time is different.

Stocks took a turn for the worse on Tuesday, with the major averages dipping more than 1/2 percent all around. The cause: the truly frightening possibility of a Donald Trump presidency, signifying a change from the crony capitalism of the past 30 years to a more measured, honest, workable structure favoring small business instead of major corporations erecting barriers to business through their henchmen in the US congress and various state assemblies.

That Trump could win the White House - disappointing the supporters of Hillary Clinton and the status quo - is a very disturbing development for Wall Street insiders who have counted on special favors, underhanded practices, and a compliant government to rack up big profits and fleece taxpayers and the investing public, all at the same time.

People who say that a Trump win would cause a market crash may be right, and it's just the medicine this sick globalized economy would need to mend itself. Trump is for a level playing field, lower taxes for individuals and corporations, tariffs as opposed to "free" trade, tighter border control, and fewer regulations.

While those proposals generally sound positive for US business, the devil is in the details. Policy leads reality and Trump's policies would likely put fire to the feet of fat-cat corporate types, ending the corruption and control frauds that plague business and government alike.

Yesterday's drop on the markets was not a one-time event and it also had nothing at all to do with the Fed and their FOMC meeting, which wraps up 2:00 pm ET Wednesday. As has been the case for the past ten months, the Fed will huff and puff and then do nothing. It's obviously too close to the election for the Fed to do anything that might upset the apple cart.

With a Trump presidency now a real, emerging possibility (since Clinton has finally been exposed as corrupt, incompetent, and dishonest) there may be more of these daily dips, especially if the media is forced to tell the truth about the economy and investments.

Time will tell. It's a week to the election and Trump is surging. Like it or not, stocks may take a dive and the economy will probably fall into a recession, all of which will be net positive for America. A good draining of the swamps in Washington and Wall Street is long overdue.

Dow Jones Industrial Average
18,037.10, -105.32 (-0.58%)

NASDAQ
5,153.58, -35.56 (-0.69%)

S&P 500
2,111.72, -14.43 (-0.68%)

NYSE Composite
10,414.05, -67.84 (-0.65%)

Stocks Finish Week On Negative Note, Leans Toward Trump

As Fridays go, especially one in which the government reported 2.9% GDP growth, this one was particularly dull.

Perhaps the news that the FBI informed members of congress that they'd discovered new evidence (on former rep Anthony Weiner's phone, of all places) that gave rise to reopening the investigation of Hillary Clinton's use of a private email server while secretary of state, her ties with the Clinton Foundation, pay for play, etc.

Investors are already nervous heading into the election on November 8, but news like what was released on Friday - abundant in speculation and short on details - has to make one consider running for the hills, or at least the nearest bug-out location.

Maybe it's nothing, but people with money invested always prefer calm to confusion, and the past six months (some say eight years) have been hard to figure.

Consequently, on Friday, stocks were up, then down, then unchanged, finally finishing with a small decline.

For the week, the Dow was the only major index to offer a gain, though a mere .05%. That makes sense, as, compared to the other indices, the Dow is considered the safest, comprised of 30 strong, dividend-yielding companies. The others were down on the week and for the third time in the past four, the NASDAQ - unsurprisingly, the most volatile - took the largest percentage loss, at -1.28%.

Correcting a slight but relevant detail in a previous post, it was stated that Friday was the final trading day of October. The calendar says otherwise, with Monday being the 31st and the key date by which to measure the stock market's ability to predict the presidential election. Being correct 82% of the tie since 1944, the S&P 500 would have to rally more than two percent on Monday for the prediction to call the election for Hillary Clinton.

If the S&P closes below 2,173.60 on Monday, the market predicts the next president will be Donald J. Trump.

Friday's Foibles:
Dow Jones Industrial Average
18,161.19, -8.49 (-0.05%)

NASDAQ
5,190.10, -25.87 (-0.50%)

S&P 500
2,126.41, -6.63 (-0.31%)

NYSE Composite
10,479.78, -23.28 (-0.22%)

Week ended 10/28
Dow: +15.48 (0.09%)
S&P 500: -14.75 (-0.69%)
NASDAQ: -67.30 (-1.28%)
NYSE Composite: -95.26 (-0.90%)