April is over and done. The month that saw the WuHan Flu, coronavirus, COVID-19, SARS-COV II, or whatever you prefer calling it spread like wildfire throughout the United States and the world also produced the best performance in the S&P 500 since 1987.
As if the stock market's miraculous rebound off the March lows wasn't enough, the Fed's balance sheet, thanks to sopping up trillions in debt of all varieties - from corporate issuance to high yield (junk) to munis to the usual nasty mortgage=backed securities (MBS) and low-yielding treasuries - increased by some $2.23 trillion to a record amount of more than $6.6 trillion.
Also showing up on the national radar are people who are refusing to go back to work because they are making more on unemployment, states reopening businesses with some restrictions and precautions, Florida opening beaches while California closes them down, a GDP for the first quarter of -4.8%, and various misdirections, untruths, fabrications, and outright lies due to conflicts of interest by doctors (including the CDC's Dr. Anthony Fauci) promoting Gilead Science's remdesivir as a primary treatment of COVID-19 with little to no evidence that it does anything more than shorten the length of hospitalizations.
All the while, evidence continues to pile up showing hydroxychloroquine (HCQ) as a drug with a wide range of uses in not only diminishing the severity of coronavirus symptoms, but possibly acting as a preventive treatment, i.e., Lupus patients, who are prescribed Plaquenil (the brand name for HCQ), do not contract coronavirus.
Various studies from countries around the world have shown early use of HCQ is highly effective in combating the coronavirus, though the mainstream media refuses to report any positives about the drug, preferring to bombard the public with questionable research on remdesivir, a drug that can cost as much as $100 per dose, where HCQ can be produced in massive quantities for about a dime per dose.
Peak Prosperity's Chris Martenson, who has been doing incredible daily reporting on the crisis, has details in his latest video:
While the US continues to lurch toward some degree of normalcy at the end of a six-week near-nationwide lockdown, many questions linger, not the least of which being how badly the American public has been hoodwinked by the wealthy elite and their cohorts in government. From all appearances, it seems the public has been royally screwed this time around.
The economy is in tatters, more than 30 million lost their jobs, but what is likely going to be worse, are the millions of small businesses which have been severely hampered or outright destroyed by government overreach. Many of these businesses will not come back in the summer, or the fall. They are gone forever, and with them, their owners facing financial ruin. It will take years to undo the damage wrought by the government response to a virus that essentially affects people over 50 or those with pre-existing serious medical issues.
Friday, May 1, will offer some pushback agains the federal tyranny. There's a nationwide rent strike being waged in big cities and small, along with a May Day work stoppage promoted by employees of some of the multi-national companies that were not forced to shut down for the past six weeks, including Wal-Mart, Amazon, Target, and others. Protests will be very visible, as will the outrage expressed in Michigan, where governor Gretchen Whitmer is extending the lockdown until May 28.
Protesters there have already been storming the Capitol, and some were actually armed inside the Capitol building on Thursday, though that received scant notice on the evening TV news. This explosive situation merits closer attention, as what happens in Lansing, Michigan's capitol, may serve as a template for popular uprisings in places like Virginia, California, New York, Massachusetts, and any other state that believes they can keep the general population under lock and key indefinitely.
With warmer weather and a weekend ahead, some payback may be forthcoming from an angry, frustrated American public.
In other markets, gold and silver were beaten down as they usually are at the end of the month, though the dislocation between spot, futures, and actual prices for acquiring physical metal has completely blown up. Silver especially is out of whack, with premiums over the futures price of anywhere from 30 to 100% now commonplace. Gold premiums are still in the 10-15% range, though dealers have been and continue to impose minimums with lengthy shipping delays.
Oil markets continue to fluctuate wildly as the supply glut and demand collapse refuse to abate. Beyond giants Russia and Saudi Arabia, countries which produce oil as a primary revenue source are going to be devastated, while in the US, rig counts are plummeting as shale drilling operations are being shut down. They're unable to make money at the current prices and investors are being wiped out along with the lenders who financed operations. WTI crude, as of Friday morning is hovering just under $19 a barrel, though it's been as low as $10.64 earlier this week. The June futures contract is beginning to look like another disaster - as was the May contract - in the making.
Treasuries have been relatively unmoved during the week, though the 30-year bond has increased yield from 1.17% last Friday to 1.28% Thursday. The curve has steepened slightly, though not in any statistically meaningful way. 118 basis points covers the entire complex.
Equity futures are pointing to a very ugly open Friday, with Dow futures down more than 450 points.
Could this be the "sell in May and go away" signal? Possible, but the real fallout may not occur until late July or August when earnings and the first reading of second quarter GDP will shock the markets, not just in the United States, but globally. The Greater Depression is ramping up.
At the Close, Thursday, April 30, 2020:
Dow: 24,345.72, -288.14 (-1.17%)
NASDAQ: 8,889.55, -25.16 (-0.28%)
S&P 500: 2,912.43, -27.08 (-0.92%)
NYSE: 11,372.34, -245.89 (-2.12%)
Showing posts with label gold. Show all posts
Showing posts with label gold. Show all posts
Friday, May 1, 2020
Tuesday, April 28, 2020
Bailout Nation: Careening Toward the Zombie Apocalypse
Beneath the superficial aspects of the coronavirus - the hospitals, the deaths, media deflection, Presidential dithering, lockdowns, social distancing, and the state-by-state re-openings - there exists a subculture of cash, credit, debt, default, and the eventuality of a global depression.
The question is not whether there's going to be a recession - there will be, without a doubt - it's how long the depression will last and how deeply affected will be various segments of the economies of nations and those nations themselves.
This is an extremely complex scenario that will not be evenly distributed. Some people will prosper while others decline. Some will go broke. Others will simply give up and die. It's an absolute certainty that there will be more losers than winners, many many more. Knowing that, the federal government, in conjunction with the Federal Reserve, has set about the process of bailing out everybody, or, nearly everybody. The problem is, they've not gone about the process with much foresight, they have no comprehensive plan, and the result has been a sloppy patchwork of band-aids, unkept promises, imbalances, and knee-jerk, short-term remedies.
Wall Street got their money right away, small business got shafted, twice, wage-earners, especially those in low-wage jobs, got a bonanza to the extent that the $600 extra unemployment benefit doled out by the Fed has in some cases doubled the take home pay of a huge chunk of the workforce. Anybody making minimum wage or anything less than $15 per hour has experienced a tangible benefit. The unfortunate part of this is that the additional unemployment benefit vanishes in about four months, or, for most people, sometime during August. Whether the federal government will step in again at that point to provide more relief is, at this juncture, a speculation.
Meanwhile, most seniors receiving Social Security or Railroad Retirement benefits, haven't seen a dime, despite the late March pledge from Treasury Secretary Steven Mnuchin that they would have their money ($1200 per person plus $500 for each qualifying dependent) within two weeks. It's going on six weeks and the money still hasn't arrived. The latest promise is that direct deposits would be made this week. Don't count on it. Mnuchin has proven that his priorities lie mainly with big business and Wall Street banks, not with the people who matter, the citizens, the taxpayers, the consumers. He's effectively relayed the message to seniors that they don't matter at all.
All the time, but especially during times of crisis, people should be judged by their actions, not their words. If there's a judgement to be made on Steven Mnuchin, he would be deemed an awesome character by the one-percenters and upper crust, and a outright liar and scoundrel by just about everybody over the age of 62.
The problems with the quick-fixes that have come out of the Fed and the federal government are multiple. They're temporary. They solve nothing. They're largely unfair. They won't work long term. Not for the stock market, not for the banks, not for states and cities, not for pension plans, and especially for the backbone of society, small businesses and the people they employ, or, rather, employed, because most small businesses in the United States are dead men walking. If they haven't already closed their doors forever, never to return, they're on the verge of collapse, as is the rest of the country, despite nobody in government or the media actually leveling with the people.
Next up on the list of bailouts are cities, counties and states, which have experienced massive losses to their revenue base and will see those losses multiply over time. They are coming to the federal government with outstretched arms, awaiting their turn at the feeding trough of unlimited capital. A business owner who doesn't pay property taxes because his business has been shut down for a month or six weeks or longer is one thing. The loss of sales tax revenue is another, and one that will continue long into the future. Again, the feds can only do so much. It's up to the local and state managers of their various governmental units to take action, and sooner rather than later.
Cutting back on services and employment should have been happening in March and April, but it hasn't. Teachers get paid. Cops and firemen get paid. Sanitation workers get paid. Clerks and paper shufflers get paid. All the while the cities and counties are bleeding revenue. Their collapse is imminent and they have only themselves to blame for decades of living high on the hog that is the taxpayer, without regard to emergencies, without planning for even a slowdown from the stock buyback, free money largesse of the past decade. Their demise, along with the platinum health care plans and pension, are at extremely high risk of being insolvent and overdue for a significant haircut. They're counting on the federal government to bail them out, but at issue is which ones get bailed out first and for how much? Will red states get more than blue states? Will big cities get a better piece of the pie than rural communities?
It's likely, actually, it's not only probable, but a near-certainty that any government bailout of cities, counties, and states will be as uneven as the handling of the first few rounds of government aid to private business and citizens. It's going to be a disaster of magnificent proportion because not only will the federal government take too long to deliver, they'll almost certainly deliver less than is necessary, and the help will be only temporary. There is no good way out. Like the companies who are being propped up by the Fed via purchasing of their commercial paper, the Fed can't stop at buying up muni bonds; it has to come in with actual cash to keep the lights on in every city, town, and village across America.
In the end, everything goes dark. While trying desperately to not sound like a broken record, Wall Street firms will fail, banks will fail, governments will fail, companies will die, people will die, but not until there's a massive outbreak of civil unrest, the first springs of that having already been seen in the "reopen" protests that have flourished at state capitols and elsewhere around the country.
As the coronavirus has proven to be less of a threat to human existence than previously thought, the feds and state governments continue to respond as though it is a return of the Bubonic Plague or Spanish Flu. It's not, and the response has been a massive overreach that has destroyed the economy and people's already wavering confidence in leadership and government. It has only just begun and the levels of protest, unruliness, incivility, lawlessness, and violence will only increase over time. When the extra unemployment insurance runs out in August and there are still 12-15 million people out of work, the cat will have come out of the bag, and it will be not a tame household kitty, but a hungry, untamed lion, set out to ravage the nearest prey, and that prey will be neighborhoods, local governments, and the unprotected. The resultant destruction to the social fabric will be devastatingly real and not just close to home, at your home or your neighbor's home or in it.
Not to put too fine a point on it, but it isn't COVID-19 that is screwing the country and the world, but the government reaction to it. As has already been made evident, government is not only not the solution, it is the problem itself.
Presently, the Fed has managed to keep the stock markets from imploding and possibly from shutting down altogether. They've actually managed to boost prices for many companies that should be heading to the bankruptcy courts rather than to the Fed's liquidity spigot. Since April 8, all the major indices have traded in a well-defined range, an overt signal that the Fed is in charge, keeping the markets stable while the VIX remains elevated. It's a manipulation and a thorough destruction of capital markets. Stocks and bonds are effectively controlled by government now, and thus, are DOA.
While stocks were reaching for yet another giddy day in their make-believe land of rich and plenty, General Motors (GM), at one time a bastion of industry and a beacon of capitalism, a company the taxpayers bailed out a decade ago, announced on Monday that it was suspending its 38 cents quarterly dividend, halting the buyback of its own stock and bolstering its lines of credit. Gee, thanks, GM. Please turn the lights out before you close the door. GM should have been allowed to fail in 2008. Now they will just burn more cash, screw their investors and permanently dis-employ hundreds of thousands of workers in the auto business and its suppliers.
GM has about 164,000 full time employees including Chairwoman of the Board and CEO Mary Barra, whose pay last year was $7.36 million, not including stock options and other bonuses and benefits. Not only has she managed to completely decimate the company's balance sheet, but she's managed to raid the company coffers to her benefit. The company is likely to survive for a few more years, but, after bankruptcy proceedings, within four or five years, the number of full time employees will be zero, and Ms. Barra and all her hourly and salaried workers can compliment her on the bang-up job she'd done throughout the coronavirus crisis, culminating in the wholesale looting and destruction of the company.
With that news as a backdrop, GM tacked on half a point Monday, closing at 22.45 a share. The company publicly disclosed assets of 228 billion and liabilities of 182 billion. With the expectation that the assets are overvalued and liabilities on the rise, it won't be long until GM is permanently upside down. Give it six months before all hell breaks loose.
GM is not alone. Most companies are going to slash dividends, workers, expenses and tap into their lines of credit as the quarterly reports flow this month and next, but Wall Street seems to like the idea, rallying on Monday with futures ramping higher into Tuesday's opening.
This is what a dysfunctional market looks like.
On the day, treasuries acted as though the recovery had already begun, with the 30-year upping its yield from 1.17 to 1.25%, the 10-year note up seven basis points to 0.67% and the curve steepening to 114 basis points. When the curve falls to below 100 basis points (one percent), that will be the signal that the crisis is deepening.
Oil got whacked again on Monday, WTI crude dropping from its Friday close of $16.94 per barrel to $10.76. Gold and silver were up early down late on futures trading, but that doesn't matter since physical is still elusive and premiums are through the roof, up to $135 on an ounce of gold, as much as $7.00 or more on silver.
Dominoes are falling. Get out of the way. Within six months, there will be more zombie companies, zombie banks, zombie governments and zombie people, all kept alive by the Federal Reserve. Unlike vampires, which can be killed with silver bullets or stakes to the heart, the only way to kill zombies is to blow off their heads.
Ready, aim...
At the Close, Monday, April 27, 2020:
Dow: 24,133.78, +358.51 (+1.51%)
NASDAQ: 8,730.16, +95.64 (+1.11%)
S&P 500: 2,878.48, +41.74 (+1.47%)
NYSE: 11,264.84, +246.94 (+2.24%)
The question is not whether there's going to be a recession - there will be, without a doubt - it's how long the depression will last and how deeply affected will be various segments of the economies of nations and those nations themselves.
This is an extremely complex scenario that will not be evenly distributed. Some people will prosper while others decline. Some will go broke. Others will simply give up and die. It's an absolute certainty that there will be more losers than winners, many many more. Knowing that, the federal government, in conjunction with the Federal Reserve, has set about the process of bailing out everybody, or, nearly everybody. The problem is, they've not gone about the process with much foresight, they have no comprehensive plan, and the result has been a sloppy patchwork of band-aids, unkept promises, imbalances, and knee-jerk, short-term remedies.
Wall Street got their money right away, small business got shafted, twice, wage-earners, especially those in low-wage jobs, got a bonanza to the extent that the $600 extra unemployment benefit doled out by the Fed has in some cases doubled the take home pay of a huge chunk of the workforce. Anybody making minimum wage or anything less than $15 per hour has experienced a tangible benefit. The unfortunate part of this is that the additional unemployment benefit vanishes in about four months, or, for most people, sometime during August. Whether the federal government will step in again at that point to provide more relief is, at this juncture, a speculation.
Meanwhile, most seniors receiving Social Security or Railroad Retirement benefits, haven't seen a dime, despite the late March pledge from Treasury Secretary Steven Mnuchin that they would have their money ($1200 per person plus $500 for each qualifying dependent) within two weeks. It's going on six weeks and the money still hasn't arrived. The latest promise is that direct deposits would be made this week. Don't count on it. Mnuchin has proven that his priorities lie mainly with big business and Wall Street banks, not with the people who matter, the citizens, the taxpayers, the consumers. He's effectively relayed the message to seniors that they don't matter at all.
All the time, but especially during times of crisis, people should be judged by their actions, not their words. If there's a judgement to be made on Steven Mnuchin, he would be deemed an awesome character by the one-percenters and upper crust, and a outright liar and scoundrel by just about everybody over the age of 62.
The problems with the quick-fixes that have come out of the Fed and the federal government are multiple. They're temporary. They solve nothing. They're largely unfair. They won't work long term. Not for the stock market, not for the banks, not for states and cities, not for pension plans, and especially for the backbone of society, small businesses and the people they employ, or, rather, employed, because most small businesses in the United States are dead men walking. If they haven't already closed their doors forever, never to return, they're on the verge of collapse, as is the rest of the country, despite nobody in government or the media actually leveling with the people.
Next up on the list of bailouts are cities, counties and states, which have experienced massive losses to their revenue base and will see those losses multiply over time. They are coming to the federal government with outstretched arms, awaiting their turn at the feeding trough of unlimited capital. A business owner who doesn't pay property taxes because his business has been shut down for a month or six weeks or longer is one thing. The loss of sales tax revenue is another, and one that will continue long into the future. Again, the feds can only do so much. It's up to the local and state managers of their various governmental units to take action, and sooner rather than later.
Cutting back on services and employment should have been happening in March and April, but it hasn't. Teachers get paid. Cops and firemen get paid. Sanitation workers get paid. Clerks and paper shufflers get paid. All the while the cities and counties are bleeding revenue. Their collapse is imminent and they have only themselves to blame for decades of living high on the hog that is the taxpayer, without regard to emergencies, without planning for even a slowdown from the stock buyback, free money largesse of the past decade. Their demise, along with the platinum health care plans and pension, are at extremely high risk of being insolvent and overdue for a significant haircut. They're counting on the federal government to bail them out, but at issue is which ones get bailed out first and for how much? Will red states get more than blue states? Will big cities get a better piece of the pie than rural communities?
It's likely, actually, it's not only probable, but a near-certainty that any government bailout of cities, counties, and states will be as uneven as the handling of the first few rounds of government aid to private business and citizens. It's going to be a disaster of magnificent proportion because not only will the federal government take too long to deliver, they'll almost certainly deliver less than is necessary, and the help will be only temporary. There is no good way out. Like the companies who are being propped up by the Fed via purchasing of their commercial paper, the Fed can't stop at buying up muni bonds; it has to come in with actual cash to keep the lights on in every city, town, and village across America.
In the end, everything goes dark. While trying desperately to not sound like a broken record, Wall Street firms will fail, banks will fail, governments will fail, companies will die, people will die, but not until there's a massive outbreak of civil unrest, the first springs of that having already been seen in the "reopen" protests that have flourished at state capitols and elsewhere around the country.
As the coronavirus has proven to be less of a threat to human existence than previously thought, the feds and state governments continue to respond as though it is a return of the Bubonic Plague or Spanish Flu. It's not, and the response has been a massive overreach that has destroyed the economy and people's already wavering confidence in leadership and government. It has only just begun and the levels of protest, unruliness, incivility, lawlessness, and violence will only increase over time. When the extra unemployment insurance runs out in August and there are still 12-15 million people out of work, the cat will have come out of the bag, and it will be not a tame household kitty, but a hungry, untamed lion, set out to ravage the nearest prey, and that prey will be neighborhoods, local governments, and the unprotected. The resultant destruction to the social fabric will be devastatingly real and not just close to home, at your home or your neighbor's home or in it.
Not to put too fine a point on it, but it isn't COVID-19 that is screwing the country and the world, but the government reaction to it. As has already been made evident, government is not only not the solution, it is the problem itself.
Presently, the Fed has managed to keep the stock markets from imploding and possibly from shutting down altogether. They've actually managed to boost prices for many companies that should be heading to the bankruptcy courts rather than to the Fed's liquidity spigot. Since April 8, all the major indices have traded in a well-defined range, an overt signal that the Fed is in charge, keeping the markets stable while the VIX remains elevated. It's a manipulation and a thorough destruction of capital markets. Stocks and bonds are effectively controlled by government now, and thus, are DOA.
While stocks were reaching for yet another giddy day in their make-believe land of rich and plenty, General Motors (GM), at one time a bastion of industry and a beacon of capitalism, a company the taxpayers bailed out a decade ago, announced on Monday that it was suspending its 38 cents quarterly dividend, halting the buyback of its own stock and bolstering its lines of credit. Gee, thanks, GM. Please turn the lights out before you close the door. GM should have been allowed to fail in 2008. Now they will just burn more cash, screw their investors and permanently dis-employ hundreds of thousands of workers in the auto business and its suppliers.
GM has about 164,000 full time employees including Chairwoman of the Board and CEO Mary Barra, whose pay last year was $7.36 million, not including stock options and other bonuses and benefits. Not only has she managed to completely decimate the company's balance sheet, but she's managed to raid the company coffers to her benefit. The company is likely to survive for a few more years, but, after bankruptcy proceedings, within four or five years, the number of full time employees will be zero, and Ms. Barra and all her hourly and salaried workers can compliment her on the bang-up job she'd done throughout the coronavirus crisis, culminating in the wholesale looting and destruction of the company.
With that news as a backdrop, GM tacked on half a point Monday, closing at 22.45 a share. The company publicly disclosed assets of 228 billion and liabilities of 182 billion. With the expectation that the assets are overvalued and liabilities on the rise, it won't be long until GM is permanently upside down. Give it six months before all hell breaks loose.
GM is not alone. Most companies are going to slash dividends, workers, expenses and tap into their lines of credit as the quarterly reports flow this month and next, but Wall Street seems to like the idea, rallying on Monday with futures ramping higher into Tuesday's opening.
This is what a dysfunctional market looks like.
On the day, treasuries acted as though the recovery had already begun, with the 30-year upping its yield from 1.17 to 1.25%, the 10-year note up seven basis points to 0.67% and the curve steepening to 114 basis points. When the curve falls to below 100 basis points (one percent), that will be the signal that the crisis is deepening.
Oil got whacked again on Monday, WTI crude dropping from its Friday close of $16.94 per barrel to $10.76. Gold and silver were up early down late on futures trading, but that doesn't matter since physical is still elusive and premiums are through the roof, up to $135 on an ounce of gold, as much as $7.00 or more on silver.
Dominoes are falling. Get out of the way. Within six months, there will be more zombie companies, zombie banks, zombie governments and zombie people, all kept alive by the Federal Reserve. Unlike vampires, which can be killed with silver bullets or stakes to the heart, the only way to kill zombies is to blow off their heads.
Ready, aim...
At the Close, Monday, April 27, 2020:
Dow: 24,133.78, +358.51 (+1.51%)
NASDAQ: 8,730.16, +95.64 (+1.11%)
S&P 500: 2,878.48, +41.74 (+1.47%)
NYSE: 11,264.84, +246.94 (+2.24%)
Sunday, April 19, 2020
WEEKEND WRAP: Americans Angered Over Lockdowns, Unfairness; Government Proposes Re-Opening
Was it a coincidence that the president released his guidelines for states to reopen their economies just as civil unrest was percolating across America?
Probably not. Very little happens by chance in the hyper-charged world of politics. The timing was no accident. From the looks of the well-prepared document sent out by the White House, these guidelines had been thought out and processed well in advance. Whether the co-mingled events of Thursday constitute conspiracy or just good planning is a debatable topic.
Whatever the case, most Americans won't be going back to work any time soon. The presidential guidelines call for 14 days of declining trajectory of COVID-19 cases or other criteria. Presently, the numbers are still rising in most states, so expect the level of unrest amongst the working class - what's left of it - to only increase in coming days.
At the same time, the fetid morass that came out of the recently-enacted relief bill is cause for even more dissent. While public corporations received government largesse instantaneously, small businesses suffering from shutdowns cited distressing experiences dealing with banks charged with administering their loans, and that was before the funding dried up and was gone. The so-called Paycheck Protection Program (PPP) was availed to a very small percentage of businesses needing assistance, falling well short of anything approaching appeasement. Some lucky individuals began receiving $1200 direct deposits from the feds, and a good number of the 22 million unemployed started getting the extra $600 in weekly unemployment payouts.
Frustration with the rollout of the PPP small business loans was possibly ameliorated by the extra cash afforded unemployed people. There are more than a few people presently reporting a weekly windfall far in excess of what they were making while actually working, so where is the incentive for businesses to keep employees on the books - with the mandate of employers providing up to three months of paid family leave during the crisis - when the government is offering a better deal?
Again, the clashing narratives of extra unemployment compensation and forgivable loans to small business was not happenstance. It is no accident that the federal government gave generously with few strings attached to bail out Wall Street's darlings while confounding and confusing small business and wage earners.
It would take a monumental leap of faith to overlook either the government's gross incompetence or purposeful negligence. From the start, the entire coronavirus affair looks like, smells like, and feels like a deceitful scam, perpetrated to gloss over a multi-trillion dollar scheme to rescue the money center banks and their big corporation, stock-buyback, campaign contributing cohorts.
It worked, and so well that Americans are now clamoring and demanding to get back to their wage-and-tax slavery, otherwise known as a steady job. On Thursday, when the Labor Department reported another 5.5 million new unemployment claims, boosting the number since lockdowns and stay-at=home orders went into effect to over 22 million, stocks managed small gains on the day, but closed out the week on Friday with massive gains.
Over the course of the four weeks in which large numbers of unemployed were reported, stocks gained in three of them, accosting middle and lower class wage earners with an unhealthy kick in the teeth each time for their "sacrifice." The unfair collusion between big business and big government apparently is being tolerated for the time being, though the restlessness of the citizenry has become palpable, the bad taste becoming less palatable with each passing day of isolation and perceived abuse.
A less civil society would have already manned the ramparts and forced the issue. In Michigan, at least, the state house was under assault by thousands of protesters in what may be a sign of things to come. Americans shouldn't stand for such out-and-out double dealing by their government, but it looks like they will, at least until the unemployment money runs out. Or the food runs out. As it stands, they have already taken away Americans' right of assembly (banning large gatherings) to free movement, freedom of choice, and as the crisis commences, governors and bankers will be picking winners and losers, denying re-openings and/or loans to businesses that are deemed "non-essential."
When the Roman Republic transitioned to becoming the Roman Empire the will of the people waned and government fiat became law, with little to no public input or appreciation. Juvenal, a poet of the late first and early second century, decried the dreadful state of affairs in his satires, his most famous phrase coining the term for pacifying the masses, panem et circenses.
Since the government of the United States - and elsewhere around the world - has already mandated an end to the circus aspect of American life by outlawing public gatherings such as sporting events - no baseball, no basketball, hockey, or soccer, and no fans - how soon they take away the bread (food), or price it at unaffordable levels, remains to be seen. The audacity and mendacious aspects of the government response - federal, state, and local - to the coronavirus pandemic puts into play a popular uprising in opposition to government that is increasingly being viewed as unfair, uncaring, and unaccountable.
This viewpoint is not held in isolation. It is shared by many. For perspective, the most recent Keiser Report gives an outstanding testament for the general outrage. It may be Max and Stacy's best effort ever produced (and this is episode 1529). The message is clear, concise, and to the point. Having the brilliant economist, Dr. Michael Hudson, in the second segment is a significant bonus. America, and likely, the rest of the world, is about to enter a new age of unbridled financial repression unless the citizenry rises up to smite the government and rentier class. Max and Stacy hit the nail hard and directly on the head.
Now, to recap the week in what used to be markets, everything is either broken, controlled, or manipulated. Precious metals can no longer be realistically priced by the futures. For decades, they have been manipulated by central banks and the bank for International Settlements (BIS). If there is any doubt, read the extensive body of work done by the Gold Anti-Trust Action Committee (GATA). Be forewarned. It is voluminous. Likely the most accurate, true market for gold and silver is on - of all places - eBay, where private parties and dealers buy and sell precious metals in an open, largely unregulated market.
Here are recent (April 18, 19) prices for 1 ounce silver and gold coins on eBay* (quote order is LOW, HIGH, AVERAGE and MEDIAN):
One troy ounce silver coin: 25.50, 61.00, 36.19, 31.89
One troy ounce silver bar: 23.75, 33.00, 27.74, 27.38
One troy ounce gold coin: 1,860.00, 2,004.19, 1,919.82, 1,917.97
One troy ounce gold bar: 1,826.00, 1,905.37, 1,860.95,1,858.34
*Prices were generated using eBay's sold (recently ended) function for the 12 most recent sales of standard (non-numismatic) bars, rounds and coins. Prices included shipping (often free).
Compare the public market price (eBay) to the futures prices and judge for yourself which standard should be used when pricing precious metals. In addition to many dealers being sold out of many popular items, for the past month to six weeks dealers have been imposing minimum order amounts and shipment delays of 15-45 days.
Futures (fake) prices (April 17):
Silver: $15.20/troy ounce
Gold: $1686.50/troy ounce
How about some US Treasury bonds for your portfolio? The benchmark 10-year note yielded between a record low, 0.61%, and 0.76% for the week, closing out on Friday at 0.65% The entire yield curve is 115 basis points end to end, from the 30-day (0.12%) and the 30-year (1.27%). The best that can be said for the treasury yield is that it's better than all other developed national debt, most of which offer negative yields through to 10 year bonds.
Those with faith in government might still want to drop $10,000 on a 10-year note for a whopping return of $76 a year and a grand total of $760 if held to maturity. Others might be hedging that the yield will drop even lower or into negative territory and then sell the bond at a profit. For such a paltry return, neither scenario offers much upside potential.
The one bright spot for the global population is the price of oil and gas. Some states are selling gas at the pump for under $1.00 per gallon as the price of WTI crude closed out last week at $18.12, the lowest in decades. That's overtly deflationary.
At the Close, Friday, April 17, 2020:
Dow: 24,242.49, +704.79 (+2.99%)
NASDAQ: 8,650.14, +117.78 (+1.38%)
S&P 500: 2,874.56, +75.01 (+2.68%)
NYSE: 11,208.29, +390.29 (+3.61%)
For the Week:
Dow: +523.12 (+2.21%)
NASDAQ: +496.57 (+6.09%)
S&P 500: +84.74 (+3.04%)
NYSE: +71.69 (+0.64%)
Probably not. Very little happens by chance in the hyper-charged world of politics. The timing was no accident. From the looks of the well-prepared document sent out by the White House, these guidelines had been thought out and processed well in advance. Whether the co-mingled events of Thursday constitute conspiracy or just good planning is a debatable topic.
Whatever the case, most Americans won't be going back to work any time soon. The presidential guidelines call for 14 days of declining trajectory of COVID-19 cases or other criteria. Presently, the numbers are still rising in most states, so expect the level of unrest amongst the working class - what's left of it - to only increase in coming days.
At the same time, the fetid morass that came out of the recently-enacted relief bill is cause for even more dissent. While public corporations received government largesse instantaneously, small businesses suffering from shutdowns cited distressing experiences dealing with banks charged with administering their loans, and that was before the funding dried up and was gone. The so-called Paycheck Protection Program (PPP) was availed to a very small percentage of businesses needing assistance, falling well short of anything approaching appeasement. Some lucky individuals began receiving $1200 direct deposits from the feds, and a good number of the 22 million unemployed started getting the extra $600 in weekly unemployment payouts.
Frustration with the rollout of the PPP small business loans was possibly ameliorated by the extra cash afforded unemployed people. There are more than a few people presently reporting a weekly windfall far in excess of what they were making while actually working, so where is the incentive for businesses to keep employees on the books - with the mandate of employers providing up to three months of paid family leave during the crisis - when the government is offering a better deal?
Again, the clashing narratives of extra unemployment compensation and forgivable loans to small business was not happenstance. It is no accident that the federal government gave generously with few strings attached to bail out Wall Street's darlings while confounding and confusing small business and wage earners.
It would take a monumental leap of faith to overlook either the government's gross incompetence or purposeful negligence. From the start, the entire coronavirus affair looks like, smells like, and feels like a deceitful scam, perpetrated to gloss over a multi-trillion dollar scheme to rescue the money center banks and their big corporation, stock-buyback, campaign contributing cohorts.
It worked, and so well that Americans are now clamoring and demanding to get back to their wage-and-tax slavery, otherwise known as a steady job. On Thursday, when the Labor Department reported another 5.5 million new unemployment claims, boosting the number since lockdowns and stay-at=home orders went into effect to over 22 million, stocks managed small gains on the day, but closed out the week on Friday with massive gains.
Over the course of the four weeks in which large numbers of unemployed were reported, stocks gained in three of them, accosting middle and lower class wage earners with an unhealthy kick in the teeth each time for their "sacrifice." The unfair collusion between big business and big government apparently is being tolerated for the time being, though the restlessness of the citizenry has become palpable, the bad taste becoming less palatable with each passing day of isolation and perceived abuse.
A less civil society would have already manned the ramparts and forced the issue. In Michigan, at least, the state house was under assault by thousands of protesters in what may be a sign of things to come. Americans shouldn't stand for such out-and-out double dealing by their government, but it looks like they will, at least until the unemployment money runs out. Or the food runs out. As it stands, they have already taken away Americans' right of assembly (banning large gatherings) to free movement, freedom of choice, and as the crisis commences, governors and bankers will be picking winners and losers, denying re-openings and/or loans to businesses that are deemed "non-essential."
When the Roman Republic transitioned to becoming the Roman Empire the will of the people waned and government fiat became law, with little to no public input or appreciation. Juvenal, a poet of the late first and early second century, decried the dreadful state of affairs in his satires, his most famous phrase coining the term for pacifying the masses, panem et circenses.
... Already long ago, from when we sold our vote to no man, the People have abdicated our duties; for the People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses.
-- Juvenal
Since the government of the United States - and elsewhere around the world - has already mandated an end to the circus aspect of American life by outlawing public gatherings such as sporting events - no baseball, no basketball, hockey, or soccer, and no fans - how soon they take away the bread (food), or price it at unaffordable levels, remains to be seen. The audacity and mendacious aspects of the government response - federal, state, and local - to the coronavirus pandemic puts into play a popular uprising in opposition to government that is increasingly being viewed as unfair, uncaring, and unaccountable.
This viewpoint is not held in isolation. It is shared by many. For perspective, the most recent Keiser Report gives an outstanding testament for the general outrage. It may be Max and Stacy's best effort ever produced (and this is episode 1529). The message is clear, concise, and to the point. Having the brilliant economist, Dr. Michael Hudson, in the second segment is a significant bonus. America, and likely, the rest of the world, is about to enter a new age of unbridled financial repression unless the citizenry rises up to smite the government and rentier class. Max and Stacy hit the nail hard and directly on the head.
Now, to recap the week in what used to be markets, everything is either broken, controlled, or manipulated. Precious metals can no longer be realistically priced by the futures. For decades, they have been manipulated by central banks and the bank for International Settlements (BIS). If there is any doubt, read the extensive body of work done by the Gold Anti-Trust Action Committee (GATA). Be forewarned. It is voluminous. Likely the most accurate, true market for gold and silver is on - of all places - eBay, where private parties and dealers buy and sell precious metals in an open, largely unregulated market.
Here are recent (April 18, 19) prices for 1 ounce silver and gold coins on eBay* (quote order is LOW, HIGH, AVERAGE and MEDIAN):
One troy ounce silver coin: 25.50, 61.00, 36.19, 31.89
One troy ounce silver bar: 23.75, 33.00, 27.74, 27.38
One troy ounce gold coin: 1,860.00, 2,004.19, 1,919.82, 1,917.97
One troy ounce gold bar: 1,826.00, 1,905.37, 1,860.95,1,858.34
*Prices were generated using eBay's sold (recently ended) function for the 12 most recent sales of standard (non-numismatic) bars, rounds and coins. Prices included shipping (often free).
Compare the public market price (eBay) to the futures prices and judge for yourself which standard should be used when pricing precious metals. In addition to many dealers being sold out of many popular items, for the past month to six weeks dealers have been imposing minimum order amounts and shipment delays of 15-45 days.
Futures (fake) prices (April 17):
Silver: $15.20/troy ounce
Gold: $1686.50/troy ounce
How about some US Treasury bonds for your portfolio? The benchmark 10-year note yielded between a record low, 0.61%, and 0.76% for the week, closing out on Friday at 0.65% The entire yield curve is 115 basis points end to end, from the 30-day (0.12%) and the 30-year (1.27%). The best that can be said for the treasury yield is that it's better than all other developed national debt, most of which offer negative yields through to 10 year bonds.
Those with faith in government might still want to drop $10,000 on a 10-year note for a whopping return of $76 a year and a grand total of $760 if held to maturity. Others might be hedging that the yield will drop even lower or into negative territory and then sell the bond at a profit. For such a paltry return, neither scenario offers much upside potential.
The one bright spot for the global population is the price of oil and gas. Some states are selling gas at the pump for under $1.00 per gallon as the price of WTI crude closed out last week at $18.12, the lowest in decades. That's overtly deflationary.
At the Close, Friday, April 17, 2020:
Dow: 24,242.49, +704.79 (+2.99%)
NASDAQ: 8,650.14, +117.78 (+1.38%)
S&P 500: 2,874.56, +75.01 (+2.68%)
NYSE: 11,208.29, +390.29 (+3.61%)
For the Week:
Dow: +523.12 (+2.21%)
NASDAQ: +496.57 (+6.09%)
S&P 500: +84.74 (+3.04%)
NYSE: +71.69 (+0.64%)
Friday, April 17, 2020
As States Prepare to Reopen Economies, Is The Coronavirus and COVID-19 Crisis a Complete Fake?
Editor's Note: Don't get me wrong. I supported Donald Trump in his run for president in 2016 and predicted that he'd win the presidency a month before the election. I voted for him and supported most of his agenda. For more background, see here, here and here.
Many diverse aspects of the coronavirus crisis are troubling to anybody who's awake, alive, and has has a skeptical view of government and media. From how COVID-19 was initially downplayed by the government and the media, to the heightened alarm of recent weeks, to the national shutdown, to the fawning TV media over "heroic" doctors and nurses, to the multi-trillion dollar bailout of Wall Street, and now, the sudden emergence of a plan to reopen the economy, the timeline seems all-too-well coordinated.
It was last Friday that President Trump announced the formation of a task force to focus on reopening the economy, calling it a bipartisan "council" of great doctors and business experts. The president had hinted at the formation of such a task force the day prior.
"I call it the "opening our country task force" or "opening our country council," said the president. Mr. Trump said the group would be more informal, communicating via teleconferences, and would include "names that you have a lot of respect for," which will be announced Tuesday.
"We’re going to have the great business leaders, great doctors. We’re going to have a great group of people," he said.
Just who are these great business leaders and doctors that put together a comprehensive plan for states to reopen their economies in six short days? Nobody's really sure, but it looks to be a rather large group that was consulted and cajoled while the White House already had plans in place. It's difficult to believe that the administration could have come up with such a tidy set of recommendations in a week when the president was making phone calls, engaging in conference calls (supposedly), holding lengthy, daily press conferences and two of those days fell on a weekend, when, let's be realistic here, very few people in Washington, D.C. are working.
How does one reconcile Wednesday's Business Insider story: Trump's vaunted task force to reopen the US economy became a marathon series of phone calls with 200 corporate leaders instead with the slick, well-produced, detailed, three-phase White House plan that was presented at Thursday's press conference?
By all outward appearances, the White House plan to reopen the economy had been in the works for some time and the release was coordinated to fall on Thursday, after protests began popping up all over the country and, similar to last Thursday, stocks struggled and options expire on Friday. Some people are making bank off all of the chaos, especially the usual suspects, big banks and their wholly-owned brokerages.
The timing is just too good to be coincidence. There's been a master plan all along. So, is it Trump playing six-level chess, a hustling, competent staff behind the scenes at the White House, or a crafty, giant hoax designed to deflect from bailing out banks and many what are now zombie corporations trading on the stocks exchanges?
I'll go with the latter. Scare the daylights out of people. Kill off bunches of people with pre-existing conditions or in nursing homes that are an overall drag on the economy, wipe out thousands of small businesses, release scary predictions that millions might die, revise those numbers downward, fall well short of them and then pat yourselves on the back for doing such a bang-up job. The general public has fallen for the ruse and don't see the big picture, that suggests - with so few deaths and focused primarily in just New York City - that the coronavirus was never as deadly to the general population as people like Dr. Fauchi, and Dr. Birks and the TV doctors would have everyone believe.
While the president was first out with a plan for reopening the economy, he's not the only one with a task force. There's one in the House of Representatives, another among East Coast states, another comprised of Oregon, Washington, and California, and even one in the midwest, composed of Kentucky, Indiana, Ohio, Michigan, Wisconsin, Minnesota, and Illinois. It's a task force mania.
So, color me skeptical about President Trump's overall honesty and somewhat disappointed by his devotion to Wall Street and the stock market.
Thursday's market action was mixed, with the Dow down and the NASDAQ up most of the session. A late-day rally moved the NASDAQ higher and prompted the Dow into positive territory just in time for the closing bell.
Oil had a banner day, or, rather, night. After WTI crude closed Wednesday at $19.87, and was unchanged Thursday at the lowest price since 2002, it suddenly ramped higher just before 11:00 pm ET, from $19.67 to $26.47 in a matter of just 10 minutes according to dailyfx.com, though their price says one thing and their chart another, with WTI crude trading in around $18.80. How this happened, and why, is a mystery, presently. No news outlet has published anything by way of explanation. Somehow, WTI crude has been quietly repriced to within two to three dollars of Brent ($28.34/bbl.) according to Business Insider's chart, while Yahoo Finance has WTI trading at $18.63. Something's not right. Probably just a glitch, but who knows?
Here's another oddity. Gold closed Wednesday in New York at $1716.00 per ounce and at $1716.80 on Thursday. Overnight it's been smashed down to $1684.00 as of 6:30 am ET, a $32 decline. A similar pattern is in place for silver, with closes of 15.43 Wednesday, $15.50 Thursday, but is down to $14.97 presently.
Treasuries are more or less stable, but in a frightful state. The yield on the 10-year note fell to 0.61% and the entire curve is now covered by a mere 107 basis points, or, just more than 1% from a 30-day bill to the 30-year bond.
As usual, stock index futures are flying high, with the Dow and S&P set to open trading more than three percent higher, the NASDAQ around 2.25% up.
It's probably an understatement to suggest that these are indeed strange days, but, overnight, it seems as though a switch was thrown, reshaping the narrative from fear, panic, and anger to "let's get back to work" optimism.
From all appearances, this wild ride still has many twists and turns ahead, and is far from over. With government corruption and inside dealing the order of things and running rampant throughout the world, it's probably safe to say that what looks like conspiracy theory today will become conspiracy fact sometime soon.
At the Close, Thursday, April 16, 2020:
Dow Jones Industrial Average: 23,537.68, +33.38 (+0.14%)
NASDAQ: 8,532.36, +139.18 (+1.66%)
S&P 500: 2,799.55, +16.19 (+0.58%)
NYSE: 10,818.03, -25.88 (-0.24%)
Many diverse aspects of the coronavirus crisis are troubling to anybody who's awake, alive, and has has a skeptical view of government and media. From how COVID-19 was initially downplayed by the government and the media, to the heightened alarm of recent weeks, to the national shutdown, to the fawning TV media over "heroic" doctors and nurses, to the multi-trillion dollar bailout of Wall Street, and now, the sudden emergence of a plan to reopen the economy, the timeline seems all-too-well coordinated.
It was last Friday that President Trump announced the formation of a task force to focus on reopening the economy, calling it a bipartisan "council" of great doctors and business experts. The president had hinted at the formation of such a task force the day prior.
"I call it the "opening our country task force" or "opening our country council," said the president. Mr. Trump said the group would be more informal, communicating via teleconferences, and would include "names that you have a lot of respect for," which will be announced Tuesday.
"We’re going to have the great business leaders, great doctors. We’re going to have a great group of people," he said.
Just who are these great business leaders and doctors that put together a comprehensive plan for states to reopen their economies in six short days? Nobody's really sure, but it looks to be a rather large group that was consulted and cajoled while the White House already had plans in place. It's difficult to believe that the administration could have come up with such a tidy set of recommendations in a week when the president was making phone calls, engaging in conference calls (supposedly), holding lengthy, daily press conferences and two of those days fell on a weekend, when, let's be realistic here, very few people in Washington, D.C. are working.
How does one reconcile Wednesday's Business Insider story: Trump's vaunted task force to reopen the US economy became a marathon series of phone calls with 200 corporate leaders instead with the slick, well-produced, detailed, three-phase White House plan that was presented at Thursday's press conference?
By all outward appearances, the White House plan to reopen the economy had been in the works for some time and the release was coordinated to fall on Thursday, after protests began popping up all over the country and, similar to last Thursday, stocks struggled and options expire on Friday. Some people are making bank off all of the chaos, especially the usual suspects, big banks and their wholly-owned brokerages.
The timing is just too good to be coincidence. There's been a master plan all along. So, is it Trump playing six-level chess, a hustling, competent staff behind the scenes at the White House, or a crafty, giant hoax designed to deflect from bailing out banks and many what are now zombie corporations trading on the stocks exchanges?
I'll go with the latter. Scare the daylights out of people. Kill off bunches of people with pre-existing conditions or in nursing homes that are an overall drag on the economy, wipe out thousands of small businesses, release scary predictions that millions might die, revise those numbers downward, fall well short of them and then pat yourselves on the back for doing such a bang-up job. The general public has fallen for the ruse and don't see the big picture, that suggests - with so few deaths and focused primarily in just New York City - that the coronavirus was never as deadly to the general population as people like Dr. Fauchi, and Dr. Birks and the TV doctors would have everyone believe.
While the president was first out with a plan for reopening the economy, he's not the only one with a task force. There's one in the House of Representatives, another among East Coast states, another comprised of Oregon, Washington, and California, and even one in the midwest, composed of Kentucky, Indiana, Ohio, Michigan, Wisconsin, Minnesota, and Illinois. It's a task force mania.
So, color me skeptical about President Trump's overall honesty and somewhat disappointed by his devotion to Wall Street and the stock market.
Thursday's market action was mixed, with the Dow down and the NASDAQ up most of the session. A late-day rally moved the NASDAQ higher and prompted the Dow into positive territory just in time for the closing bell.
Oil had a banner day, or, rather, night. After WTI crude closed Wednesday at $19.87, and was unchanged Thursday at the lowest price since 2002, it suddenly ramped higher just before 11:00 pm ET, from $19.67 to $26.47 in a matter of just 10 minutes according to dailyfx.com, though their price says one thing and their chart another, with WTI crude trading in around $18.80. How this happened, and why, is a mystery, presently. No news outlet has published anything by way of explanation. Somehow, WTI crude has been quietly repriced to within two to three dollars of Brent ($28.34/bbl.) according to Business Insider's chart, while Yahoo Finance has WTI trading at $18.63. Something's not right. Probably just a glitch, but who knows?
Here's another oddity. Gold closed Wednesday in New York at $1716.00 per ounce and at $1716.80 on Thursday. Overnight it's been smashed down to $1684.00 as of 6:30 am ET, a $32 decline. A similar pattern is in place for silver, with closes of 15.43 Wednesday, $15.50 Thursday, but is down to $14.97 presently.
Treasuries are more or less stable, but in a frightful state. The yield on the 10-year note fell to 0.61% and the entire curve is now covered by a mere 107 basis points, or, just more than 1% from a 30-day bill to the 30-year bond.
As usual, stock index futures are flying high, with the Dow and S&P set to open trading more than three percent higher, the NASDAQ around 2.25% up.
It's probably an understatement to suggest that these are indeed strange days, but, overnight, it seems as though a switch was thrown, reshaping the narrative from fear, panic, and anger to "let's get back to work" optimism.
From all appearances, this wild ride still has many twists and turns ahead, and is far from over. With government corruption and inside dealing the order of things and running rampant throughout the world, it's probably safe to say that what looks like conspiracy theory today will become conspiracy fact sometime soon.
At the Close, Thursday, April 16, 2020:
Dow Jones Industrial Average: 23,537.68, +33.38 (+0.14%)
NASDAQ: 8,532.36, +139.18 (+1.66%)
S&P 500: 2,799.55, +16.19 (+0.58%)
NYSE: 10,818.03, -25.88 (-0.24%)
Tuesday, April 14, 2020
Stocks Fail to Extend Rally; Oil Flat; JP Morgan, Wells Fargo Declare 1Q Earnings
Last week's furious rally failed to extend over into Monday's trading as news flow trended negatively.
Given the number of new cases and deaths worldwide from COVID-19, the pain and suffering of millions around the world out of work and isolated in their homes, it's surprising that Wall Street can even muster enough capital for any kind of rally.
Conditions have not changed from the onset of COVID-19's spread, only the Federal Reserve's commitment to suspend reality and boost stocks through various band-aids and stop gap measures has. The only reason stocks managed to gain any ground last week was due to trillions of dollars pumped into the hands of primary dealers via repos, debt purchases, foreign debt purchases, and promises from various Fed presidents to keep the currency spigots wide open.
The lunacy of these efforts is astounding. Desperate to save face and completely devoid of any tools to bring the economy back to their stated mandates of full employment and no inflation, the Fed has expanded its own balance sheet to the point at which it needed funding from the US treasury, a backhanded bailout of the central bank, using some $400-500 billion from Treasury's Exchange Stabilization Fund.
Oil prices barely budged after the hurried agreement by OPEC+ and other countries will slash production by as much as 10 million barrels a day, roughly 10 percent of global supply. WTI crude closed Monday at $22.41. Efforts to raise the price of oil worldwide were seen as mostly a publicity stunt, as the problem is more a lack of demand than of oversupply. Producers would be best served to stop pumping as storage facilities are near capacity already and the lockdowns in major countries remain weeks away.
Treasury yields rose on the long end, with the 30-year bond at 1.39% and the 10-year note rising three basis points to 0.76%. The curve steepened slightly to 122 basis points.
JP Morgan Chase (JPM) announced first quarter earnings prior to the opening bell Tuesday that were the lowest since 2013, warned of a fairly severe recession ahead and set aside $8.29 billion for bad loans, the biggest provision in at least a decade and more than double what some analysts expected.
The bank reported EPS of 78 cents on revenue of $29.07 billion. Net interest income was flat at $14.5 billion.
Wells Fargo (WFC) reported EPS of 1 cent per share on revenue of $17.7 billion as a $3.1 billion reserve build accounted for 56 cents per share and a $950 million impairment of securities accounted for 17 cents a share. Net interest income fell 8% to $11.3 billion. This bank is essentially insolvent, as is the Federal Reserve, the ECB, BOJ, PBOC and hundreds of other money center banks.
Other money center banks also report this week. Wednesday Bank of America, Goldman Sachs, and Citigroup release their reports. Morgan Stanley’s announcement is scheduled for Thursday.
(Reuters) - Johnson & Johnson on Tuesday beat analysts' estimates for first-quarter profit on higher sales of its cancer drugs and consumer products including Tylenol, while slashing its full-year forecast due to the coronavirus shutdowns.
Shares of the company, which raised its dividend by 6.3% to $1.01 per share, rose 3% to $144 in trading before the bell.
The company now expects 2020 adjusted earnings per share of $7.50 to $7.90, compared with its prior estimate of $8.95 to $9.10.
Gold and silver posted modest gains on the day. In case anyone was skeptical over Money Daily's call for $100 silver and a 16:1 gold:silver ratio in Sunday's Weekend Wrap (below), perhaps a gander at Mike Maloney's call for $700 silver a few years ago at goldsilver.com, may be in order:
At the Close, Monday, April 13, 2020:
Dow Jones Industrial Average: 23,390.77, -328.60 (-1.39%)
NASDAQ: 8,192.42, +38.85 (+0.48%)
S&P 500: 2,761.63, -28.19 (-1.01%)
NYSE: 10,949.53, -187.08 (-1.68%)
Given the number of new cases and deaths worldwide from COVID-19, the pain and suffering of millions around the world out of work and isolated in their homes, it's surprising that Wall Street can even muster enough capital for any kind of rally.
Conditions have not changed from the onset of COVID-19's spread, only the Federal Reserve's commitment to suspend reality and boost stocks through various band-aids and stop gap measures has. The only reason stocks managed to gain any ground last week was due to trillions of dollars pumped into the hands of primary dealers via repos, debt purchases, foreign debt purchases, and promises from various Fed presidents to keep the currency spigots wide open.
The lunacy of these efforts is astounding. Desperate to save face and completely devoid of any tools to bring the economy back to their stated mandates of full employment and no inflation, the Fed has expanded its own balance sheet to the point at which it needed funding from the US treasury, a backhanded bailout of the central bank, using some $400-500 billion from Treasury's Exchange Stabilization Fund.
Oil prices barely budged after the hurried agreement by OPEC+ and other countries will slash production by as much as 10 million barrels a day, roughly 10 percent of global supply. WTI crude closed Monday at $22.41. Efforts to raise the price of oil worldwide were seen as mostly a publicity stunt, as the problem is more a lack of demand than of oversupply. Producers would be best served to stop pumping as storage facilities are near capacity already and the lockdowns in major countries remain weeks away.
Treasury yields rose on the long end, with the 30-year bond at 1.39% and the 10-year note rising three basis points to 0.76%. The curve steepened slightly to 122 basis points.
JP Morgan Chase (JPM) announced first quarter earnings prior to the opening bell Tuesday that were the lowest since 2013, warned of a fairly severe recession ahead and set aside $8.29 billion for bad loans, the biggest provision in at least a decade and more than double what some analysts expected.
The bank reported EPS of 78 cents on revenue of $29.07 billion. Net interest income was flat at $14.5 billion.
Wells Fargo (WFC) reported EPS of 1 cent per share on revenue of $17.7 billion as a $3.1 billion reserve build accounted for 56 cents per share and a $950 million impairment of securities accounted for 17 cents a share. Net interest income fell 8% to $11.3 billion. This bank is essentially insolvent, as is the Federal Reserve, the ECB, BOJ, PBOC and hundreds of other money center banks.
Other money center banks also report this week. Wednesday Bank of America, Goldman Sachs, and Citigroup release their reports. Morgan Stanley’s announcement is scheduled for Thursday.
(Reuters) - Johnson & Johnson
Shares of the company, which raised its dividend by 6.3% to $1.01 per share, rose 3% to $144 in trading before the bell.
The company now expects 2020 adjusted earnings per share of $7.50 to $7.90, compared with its prior estimate of $8.95 to $9.10.
Gold and silver posted modest gains on the day. In case anyone was skeptical over Money Daily's call for $100 silver and a 16:1 gold:silver ratio in Sunday's Weekend Wrap (below), perhaps a gander at Mike Maloney's call for $700 silver a few years ago at goldsilver.com, may be in order:
At the Close, Monday, April 13, 2020:
Dow Jones Industrial Average: 23,390.77, -328.60 (-1.39%)
NASDAQ: 8,192.42, +38.85 (+0.48%)
S&P 500: 2,761.63, -28.19 (-1.01%)
NYSE: 10,949.53, -187.08 (-1.68%)
Thursday, April 9, 2020
US Federal Government Disrespects Its People; $2 Trillion To Wall Street While Citizens Wait for Checks
At 8:30 am ET Thursday morning, April 9, 2020, the Labor Department announced that 6.6 million people applied for unemployment benefits last week. That's in addition to the nearly 10 million who applied for benefits the prior two weeks.
Have you received your $1200 check from the government yet?
Didn't think so. You are aware that Wall Street had access to $2 trillion weeks ago, right?
That's the number TWO (2) with twelve zeroes behind it. Like this: $2,000,000,000,000.
Bear in mind, the corporate money is coming to corporations via the Federal Reserve, which is not part of the federal government. It is and always has been a private bank, so there's really nothing "federal" about it. As far as the "reserve" portion of their name, they have no money in reserve. They have a balance sheet of nearly $6 trillion, all in various bonds or notes or obligations, otherwise known as debt. Much of it is not worth the paper its printed on or the electrons holding it in cyberspace.
There's no "reserves" at the Federal Reserve. They whip up currency out of thin air. A few keystrokes on their computer and viola! currency at their pleasure. The currency is represented by Federal Reserve Notes, or those pieces of paper some people carry around with pictures of dead presidents on them. Those are the ones, fives, 10s, 20s, 50s and 100-dollar bills floating around in the economy. There is only $1.75 trillion in actual printed currency according to the Federal Reserve. That's a little less than $6000 for every man, woman, and child in America.
The rest of the currency is in electronic form. The currency in your bank account is not really there. Try going to a bank branch and asking for $40,000 in cash, even if you have $100,000 in your account. First, you'd have to fill out IRS form 8300, because any transaction of $10,000 or more, the federal government wants to know about it. They think you might be a drug dealer, human trafficker, money launderer, or maybe a terrorist. It's all part of the Bank Secrecy Act, officially known as the Currency and Foreign Transactions Reporting Act. Then, after you've filled out the form, the bank's branch manager will likely tell you that they don't have that much money on hand. After that, you might have to come back on a later date to get some of it, make multiple trips, and go through a lot of hassle to get your hands on your currency.
This seems an appropriate place to explain the difference between money and currency. Here's Mike Maloney (an expert on the subject) to explain in less than three minutes:
The great financier, J.P. Morgan, put it in even simpler terms: Gold is money. Everything else is credit.
With that out of the way, have you received your $1200 yet?
No. Of course not. But Wall Street has already gotten theirs, and probably already spent it too. The stock market has been mostly up lately, the Dow Jones Industrial Average having risen from a close of 18,591.93 on March 23 to close at 23,433.57 Wednesday.
On March 17, Treasury Secretary Steven Mnuchin said President Trump would like to get money into the hands of people within two weeks. That was more than three weeks ago. Now, Mnuchin says the first direct deposits will be going out some time next week.
In other words, continue to wait. The government will be here to help in moments, er, days, er, weeks, maybe.
While Wall Street is open for business as usual, millions of Americans - roughly three quarters of the country - is under some form of stay-at-home or lockdown restriction. Ordinary people can't go to work, send their kids to school (they're closed), or venture beyond the boundaries of their own homes without some express, immediate need, like getting groceries, or picking up a prescription drug.
It's a shame. It's also likely unconstitutional. Americans are supposed to have the right to freely assemble. It's in the Bill of Rights, the First Amendment:
So, not only does the federal government not want you to have any money, they also don't want you going anywhere or associating with other citizens. Because of COVID-19, the government has "suggested" people congregate at distances of six feet apart. Many states have outlawed meetings or congregations of 10 or more people, some, five or more. They don't want you to get together with your fellow citizens, either.
As you wait for your money from the government, ask yourself if $1200 is worth having your first amendment rights taken away. As with anything else that sounds too good to be true, like free money from the government, there are strings attached.
And, while you're pondering that, how about those small business loans that are supposed to help businesses that have been forced to close so that the coronavirus doesn't spread. Those non-essential businesses are getting the run-around from the very same banks (JP Morgan Chase, Citi, Bank of America, Wells Fargo) that were bailed out in 2009, continued to get favors from the Federal Reserve and the federal government since then, and have been getting oodles of cash over the past six months, even before the COVID-19 crisis.
Those loans are full of boondoggles and conditions that limit how much a business qualifies for and what they have to do in order to receive a loan and more conditions for loan forgiveness. It's likely that most small businesses would be better off not taking the loans, toughing it out, filing for reorganization under bankruptcy laws and moving forward without inept government assistance.
The American public is being conned and abused by the very people they voted into office along with the media, the banks, and the Federal Reserve. State and local governments are only marginally less disrespectful. It all stinks to high heaven.
They don't respect you. They don't care about you. They want to control you. That should be obvious to everybody by now.
At the Close, Wednesday, April 8, 2020:
Dow Jones Industrial Average: 23,433.57, +779.71 (+3.44%)
NASDAQ: 8,090.90, +203.64 (+2.58%)
S&P 500: 2,749.98, +90.57 (+3.41%)
NYSE: 10,902.59, +365.54 (+3.47%)
Have you received your $1200 check from the government yet?
Didn't think so. You are aware that Wall Street had access to $2 trillion weeks ago, right?
That's the number TWO (2) with twelve zeroes behind it. Like this: $2,000,000,000,000.
Bear in mind, the corporate money is coming to corporations via the Federal Reserve, which is not part of the federal government. It is and always has been a private bank, so there's really nothing "federal" about it. As far as the "reserve" portion of their name, they have no money in reserve. They have a balance sheet of nearly $6 trillion, all in various bonds or notes or obligations, otherwise known as debt. Much of it is not worth the paper its printed on or the electrons holding it in cyberspace.
There's no "reserves" at the Federal Reserve. They whip up currency out of thin air. A few keystrokes on their computer and viola! currency at their pleasure. The currency is represented by Federal Reserve Notes, or those pieces of paper some people carry around with pictures of dead presidents on them. Those are the ones, fives, 10s, 20s, 50s and 100-dollar bills floating around in the economy. There is only $1.75 trillion in actual printed currency according to the Federal Reserve. That's a little less than $6000 for every man, woman, and child in America.
The rest of the currency is in electronic form. The currency in your bank account is not really there. Try going to a bank branch and asking for $40,000 in cash, even if you have $100,000 in your account. First, you'd have to fill out IRS form 8300, because any transaction of $10,000 or more, the federal government wants to know about it. They think you might be a drug dealer, human trafficker, money launderer, or maybe a terrorist. It's all part of the Bank Secrecy Act, officially known as the Currency and Foreign Transactions Reporting Act. Then, after you've filled out the form, the bank's branch manager will likely tell you that they don't have that much money on hand. After that, you might have to come back on a later date to get some of it, make multiple trips, and go through a lot of hassle to get your hands on your currency.
This seems an appropriate place to explain the difference between money and currency. Here's Mike Maloney (an expert on the subject) to explain in less than three minutes:
The great financier, J.P. Morgan, put it in even simpler terms: Gold is money. Everything else is credit.
With that out of the way, have you received your $1200 yet?
No. Of course not. But Wall Street has already gotten theirs, and probably already spent it too. The stock market has been mostly up lately, the Dow Jones Industrial Average having risen from a close of 18,591.93 on March 23 to close at 23,433.57 Wednesday.
On March 17, Treasury Secretary Steven Mnuchin said President Trump would like to get money into the hands of people within two weeks. That was more than three weeks ago. Now, Mnuchin says the first direct deposits will be going out some time next week.
In other words, continue to wait. The government will be here to help in moments, er, days, er, weeks, maybe.
While Wall Street is open for business as usual, millions of Americans - roughly three quarters of the country - is under some form of stay-at-home or lockdown restriction. Ordinary people can't go to work, send their kids to school (they're closed), or venture beyond the boundaries of their own homes without some express, immediate need, like getting groceries, or picking up a prescription drug.
It's a shame. It's also likely unconstitutional. Americans are supposed to have the right to freely assemble. It's in the Bill of Rights, the First Amendment:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
So, not only does the federal government not want you to have any money, they also don't want you going anywhere or associating with other citizens. Because of COVID-19, the government has "suggested" people congregate at distances of six feet apart. Many states have outlawed meetings or congregations of 10 or more people, some, five or more. They don't want you to get together with your fellow citizens, either.
As you wait for your money from the government, ask yourself if $1200 is worth having your first amendment rights taken away. As with anything else that sounds too good to be true, like free money from the government, there are strings attached.
And, while you're pondering that, how about those small business loans that are supposed to help businesses that have been forced to close so that the coronavirus doesn't spread. Those non-essential businesses are getting the run-around from the very same banks (JP Morgan Chase, Citi, Bank of America, Wells Fargo) that were bailed out in 2009, continued to get favors from the Federal Reserve and the federal government since then, and have been getting oodles of cash over the past six months, even before the COVID-19 crisis.
Those loans are full of boondoggles and conditions that limit how much a business qualifies for and what they have to do in order to receive a loan and more conditions for loan forgiveness. It's likely that most small businesses would be better off not taking the loans, toughing it out, filing for reorganization under bankruptcy laws and moving forward without inept government assistance.
The American public is being conned and abused by the very people they voted into office along with the media, the banks, and the Federal Reserve. State and local governments are only marginally less disrespectful. It all stinks to high heaven.
They don't respect you. They don't care about you. They want to control you. That should be obvious to everybody by now.
At the Close, Wednesday, April 8, 2020:
Dow Jones Industrial Average: 23,433.57, +779.71 (+3.44%)
NASDAQ: 8,090.90, +203.64 (+2.58%)
S&P 500: 2,749.98, +90.57 (+3.41%)
NYSE: 10,902.59, +365.54 (+3.47%)
Tuesday, April 7, 2020
Stocks Rocket Higher on Hopes COVID-19 Threat Has Peaked; Gold Silver Remain in Short Supply with Hefty Premiums
According to Wall Street, the COVID-19 coronavirus crisis is all but over.
Stocks were being bought as if there weren't going to be any more available on Monday, as news spread that the coronavirus outbreak may have peaked in New York, which has been the epicenter of the crisis. Of the 367,758 confirmed cases in the United States, 130,689 are in New York state, mainly in the most populous part, New York City.
The state of New York accounts for 35% of the total cases in the US.
4,758 of those have resulted in death, a full 44% of the entire US death toll of 10,831.
What triggered the giddiness in the markets was the number of confirmed cases in New York falling for three straight days, though the 8,000+ increase from April 5 to April 6 was still a very large number.
There's no need for analysis of how the stock algorithms took the headlines. The 7.73% gain on the Dow Jones Industrial Average is proof enough that investors (or, at least the algos that guide the trades) believe the worst of the crisis is past.
This could be a case of some whistling past the graveyard, however, as the aftereffects from a near-nationwide lockdown and closure of many businesses have yet to be felt. The promised $1200 checks for most Americans haven't even begun to be distributed, which is causing more than a little consternation in many households which have been forced to work from home.
Along with kids out of school and assorted other odd conditions of voluntary confinement, millions of ordinary Americans have put up with the condition for over three weeks and are finding that states which did not impose "stay-at-home" recommendations have some of the lowest reported case numbers in the country.
Arkansas, Iowa, Nebraska, Oklahoma, North Dakota, South Dakota, Utah and Wyoming are the eight remaining states without statewide orders after South Carolina's governor, Henry McMaster, ordered all residents of the state to remain at home except for visits with family members or essential outings to get groceries, medicine or exercise, to help slow the spread of the coronavirus on Monday.
South Carolina has 2,232 recorded cases of the virus, comparable to neighboring states North Carolina (2,870), Georgia (7,558), and Tennessee (3,802), all of which have had stay-at-home or similar orders in place for weeks.
Wyoming, with 210 cases documented, is the least-affected in the lower 48 states (Alaska, 191), and has issued only local ordinances. North Dakota (225) and South Dakota (288) are the next-lowest states. Neither of the Dakotas have any restrictive orders in place. The data suggests that the virus, while easily transmitted, is not gaining much traction in places that are sparsely populated and mostly rural. It remains to be seen whether these states will eventually see a huge outbreak from the virus. Only time will tell on that account.
For the majority of people outside of city centers, the virus has proven to be an annoyance, exacerbated by public officials wishing to appear concerned and active in fighting the spread.
With a death toll not even having approached the usual count from ordinary flu (about 40,000 in a typical season), there's growing pressure on the White House and governors to lift some restrictions and get people back to work. According to recent timelines, the country as a whole is within two weeks of the peak, if not already having reached that point.
With more than 10 million having already applied for unemployment insurance over the past two weeks, it's a near certainty that the number will ratchet higher when new claims numbers are released this Thursday.
The White House - which originally was considering a death toll of two million - has lowered its estimate on the number of deaths to 100,000 to 200,000 as the pandemic takes its toll. If the final tally comes in under the low of 100,000, there will likely be widespread criticism of the government effort, which may have saved some lives but crippled the economy, almost certain to enter a recession.
On the day, oil, after blistering gains last week, settled down, pricing around $26.40 per barrel for WTI crude. The price peaked Friday at $28.86.
The big move in stocks helped stall the rally in treasuries, though not significantly. The benchmark 10-year note moved five basis points, as yield increased from 0.62% to 0.67%.
Gold rallied throughout the day, ending at $1660.70 in New York, while silver also caught a bid, rising from $14.40 to $15.01 on the spot market. Prices for physical metal at the biggest dealers remains well above those quoted prices and delivery - due to a shortage - can take as many as 30 to 45 days. Many dealers report sold out inventories of the most popular coins and bars.
The US Mint is offering 2020 one ounce proof Silver Eagles for $64.50 and 2020 one ounce gold proof Eagles at $2,275. Ebay remains the most reliable source for coins and bars with fast delivery times (one to three days, typically).
At the Close, Monday, April 6, 2020:
Dow Jones Industrial Average: 22,679.99, +1,627.46 (+7.73%)
NASDAQ: 7,913.24, +540.15 (+7.33%)
S&P 500: 2,663.68, +175.03 (+7.03%)
NYSE: 10,515.24, +634.61 (+6.42%)
Stocks were being bought as if there weren't going to be any more available on Monday, as news spread that the coronavirus outbreak may have peaked in New York, which has been the epicenter of the crisis. Of the 367,758 confirmed cases in the United States, 130,689 are in New York state, mainly in the most populous part, New York City.
The state of New York accounts for 35% of the total cases in the US.
4,758 of those have resulted in death, a full 44% of the entire US death toll of 10,831.
What triggered the giddiness in the markets was the number of confirmed cases in New York falling for three straight days, though the 8,000+ increase from April 5 to April 6 was still a very large number.
There's no need for analysis of how the stock algorithms took the headlines. The 7.73% gain on the Dow Jones Industrial Average is proof enough that investors (or, at least the algos that guide the trades) believe the worst of the crisis is past.
This could be a case of some whistling past the graveyard, however, as the aftereffects from a near-nationwide lockdown and closure of many businesses have yet to be felt. The promised $1200 checks for most Americans haven't even begun to be distributed, which is causing more than a little consternation in many households which have been forced to work from home.
Along with kids out of school and assorted other odd conditions of voluntary confinement, millions of ordinary Americans have put up with the condition for over three weeks and are finding that states which did not impose "stay-at-home" recommendations have some of the lowest reported case numbers in the country.
Arkansas, Iowa, Nebraska, Oklahoma, North Dakota, South Dakota, Utah and Wyoming are the eight remaining states without statewide orders after South Carolina's governor, Henry McMaster, ordered all residents of the state to remain at home except for visits with family members or essential outings to get groceries, medicine or exercise, to help slow the spread of the coronavirus on Monday.
South Carolina has 2,232 recorded cases of the virus, comparable to neighboring states North Carolina (2,870), Georgia (7,558), and Tennessee (3,802), all of which have had stay-at-home or similar orders in place for weeks.
Wyoming, with 210 cases documented, is the least-affected in the lower 48 states (Alaska, 191), and has issued only local ordinances. North Dakota (225) and South Dakota (288) are the next-lowest states. Neither of the Dakotas have any restrictive orders in place. The data suggests that the virus, while easily transmitted, is not gaining much traction in places that are sparsely populated and mostly rural. It remains to be seen whether these states will eventually see a huge outbreak from the virus. Only time will tell on that account.
For the majority of people outside of city centers, the virus has proven to be an annoyance, exacerbated by public officials wishing to appear concerned and active in fighting the spread.
With a death toll not even having approached the usual count from ordinary flu (about 40,000 in a typical season), there's growing pressure on the White House and governors to lift some restrictions and get people back to work. According to recent timelines, the country as a whole is within two weeks of the peak, if not already having reached that point.
With more than 10 million having already applied for unemployment insurance over the past two weeks, it's a near certainty that the number will ratchet higher when new claims numbers are released this Thursday.
The White House - which originally was considering a death toll of two million - has lowered its estimate on the number of deaths to 100,000 to 200,000 as the pandemic takes its toll. If the final tally comes in under the low of 100,000, there will likely be widespread criticism of the government effort, which may have saved some lives but crippled the economy, almost certain to enter a recession.
On the day, oil, after blistering gains last week, settled down, pricing around $26.40 per barrel for WTI crude. The price peaked Friday at $28.86.
The big move in stocks helped stall the rally in treasuries, though not significantly. The benchmark 10-year note moved five basis points, as yield increased from 0.62% to 0.67%.
Gold rallied throughout the day, ending at $1660.70 in New York, while silver also caught a bid, rising from $14.40 to $15.01 on the spot market. Prices for physical metal at the biggest dealers remains well above those quoted prices and delivery - due to a shortage - can take as many as 30 to 45 days. Many dealers report sold out inventories of the most popular coins and bars.
The US Mint is offering 2020 one ounce proof Silver Eagles for $64.50 and 2020 one ounce gold proof Eagles at $2,275. Ebay remains the most reliable source for coins and bars with fast delivery times (one to three days, typically).
At the Close, Monday, April 6, 2020:
Dow Jones Industrial Average: 22,679.99, +1,627.46 (+7.73%)
NASDAQ: 7,913.24, +540.15 (+7.33%)
S&P 500: 2,663.68, +175.03 (+7.03%)
NYSE: 10,515.24, +634.61 (+6.42%)
Sunday, April 5, 2020
WEEKEND WRAP: COVID-19 Crisis Will Peak Within Three Weeks, but the Economic Crisis Will Continue for Years
(Simultaneously published at Downtown Magazine)
OK, this was a long week, and stocks got clobbered again, but it could have been, and should have been, worse. The main indices were down between two percent (S&P 500) and three percent (NYSE Composite). For most citizens of the world who are under forced quarantine, the week was a painful experience. The vast majority of people would just like to be back at work, earning a living to support their families. The partially-manufactured COVID-19 crisis is keeping most of the developed nations' economies and people in lockdowns, on purpose, to impose government will over everyday people.
It's a shame how many will be cowed by government and led to believe the many lies that have been perpetrated during this period.
The beginning effects of the Fed backstopping companies has already been noticed. Some dime-store variety stocks were being bid up as the rest of the market was heading lower through the week. Companies (no names, for now, until more than a few weeks data is collected) evidenced buying at stop loss triggers. Not many were allowed to fall to anywhere near the recent lows.
Stocks should get another taste of selling in the coming week, as most of the news will be about overloaded hospitals, stressed out medial workers, press conferences by the president and his "team." It will be interesting to note how hard the Fed works to stave off a return to 18,212 on the Dow and similar drops on the other indices. They will likely keep losses to a minimum. It would not surprise at all would stocks stage another rally.
The treasury yield curve is about as flat as it can be, signaling nothing good. 115 basis points, or, just more than one percent, covers the entire complex from one-month bills (0.09% yield) to 30-year bonds (1.24%). The 10-year note is flatlining at 0.62%. The Fed, via its SPVs (Special Purpose Vehicles) is desperately buying commercial paper, in addition to treasury bonds, agency mortgage-backed securities, ETF paper, and municipal bonds. They're busy buying up the world's debt with the only currency that matters, the US dollar, conjured up daily out of thin air. The Federal Reserve's balance sheet has ballooned to nearly $6 trillion in their attempt to blow the global credit bubble a lot larger.
Oil caught a huge bid after President Trump supposedly brokered a deal between the Saudis and the Russians, making a record gain on Thursday and another huge leap forward in price on Friday. While there is rampant skepticism over whether there is any kind of deal afoot (the Saudis denied it), the recent price jump - WTI crude went from $21.76 per barrel on Wednesday to a high of $26.35 Thursday, and closed out Friday at $28.34; Brent went from $26.90 to $34.11 over the same span - is unlikely to be long-lasting. Until the Saudis and Russians have eliminated 50-60% of the shale drillers in the US, there aren't going to be any concessions. Additionally, the rampant supply glut and limited demand should keep the price around $20-24 per barrel.
Gold and silver continue to decouple from the fraudulent futures prices. Gold settled out just below $1600 the ounce, silver about $14.00. For real prices on physical silver and gold, one must go to eBay of all places, where there is a wide-open market for coins, bars and assorted bullion. An ounce of gold is ranging between $1800-$2000, while silver cannot be had for under $22 per ounce. These are the real prices, and are heading up quickly because demand is through the roof, many miners are idled, reducing supply, hoarding is rampant, and delivery times from established dealers (30-45 days in some cases) cannot match the one-to-three day deliveries by independent eBay sellers, and those prices have built into them a 10% commission to eBay and do not include shipping, which only adds to the real prices.
There's a definite possibility that the COMEX and LBMA will soon be disregarded completely and a free, open, un-manipulated market will emerge at the world's biggest online bazaar and elsewhere on the internet as fiat currencies are inflated away and real money begins to take root at the consumer level.
Random Notes and Recommendations
JP Morgan put out a study which concluded that the world will be on the downside of the case infection rate curve in two months. Rubbish. Check out this site for the US:
http://covid19.healthdata.org/projections
The United States will be peaking and on the downslope of the curve within 2-3 WEEKS, not 2 months, and European nations are already on the downslope.
All the noise over ventilators, on which two-thirds of the people die anyhow, is just wasted time and money. The small business "loans" are garbage, full of loopholes and boondoggles for small business.
As usual, Wall Street got their trillions in the blink of an eye. American citizens will have to wait until the government gets around to figuring out how to pay them their $1200. Average time, from right now, 3-6 weeks.
Gee, thanks for helping us all out.
Open up MLB. It would be nice to see the some home runs, swings and misses, stolen bases, sign-stealing, and all that good stuff by May 15 at the latest. Even a shortened season would be acceptable. Americans, average Americans are the ones who deserve all the credit. They took social distancing and stay-at-home seriously, which was very helpful in slowing the spread of COVID. We should all get $10K, and Wall Street nothing, because those companies contributed nothing, and most of the companies getting bailout money do nothing. The people should revolt once this is over.
The government, local, state, and federal are the destroyers of liberty. All of them are worthless parasites and when this is all over they'll all pat themselves on the backs for doing such a bang-up job, when, in reality, it was mostly a big hoax.
Here is an exceptional interactive chart which shows the curve (the one we're actively flattening by social distancing and other mediations) in the United States and in every state individually, with figures for numbers of beds, ICU beds, and ventilators needed and available.
It clearly shows the curve peaking between April 15 and 21. The response curve will peak first, followed quickly by the number of COVID-19 cases curve. After that, it's all downhill for the dangerous pathogen that has disrupted lives and economies worldwide.
Brent Johnson's Dollar Milkshake Theory
Brent Johnson is CEO of Santiago Capital. He has been creating and managing comprehensive wealth management strategies for the personal portfolios of high-net-worth individuals and families since the late 1990s.
If you watch no other video on money, gold, or finance, this is the one you definitely should see.
Also, Mike Maloney's GoldSilver.com is an excellent resource. Recently, Mike has been doing pretty much daily videos with consolidated information from a wide variety of sources, funneled through his intuitive, calculating mind. Here is a recent entry with some revealing charts by the incredible analyst John Hussman, another number-crunching maniac who's been studying and disseminating information on the economy in a series of market commentaries at his Hussman Funds website.
Here is Mike Maloney's April 3rd video:
Make sure to get Mike's free e-book, Guide to Investing in Gold & Silver, the #1 All-Time Bestseller On Precious Metals Investing, available at his site.
At the Close, Friday, April 2, 2020:
Dow Jones Industrial Average: 21,052.53, -360.87 (-1.69%)
NASDAQ: 7,373.08, -114.23 (-1.53%)
S&P 500: 2,488.65, -38.25 (-1.51%)
NYSE: 9,880.63, -181.77 (-1.81%)
For the Week:
Dow: -584.25 (-2.70%)
NASDAQ: -114.23 (-2.53%)
S&P 500: -52.82 (-2.08)
NYSE: -306.58 (-3.01%)
OK, this was a long week, and stocks got clobbered again, but it could have been, and should have been, worse. The main indices were down between two percent (S&P 500) and three percent (NYSE Composite). For most citizens of the world who are under forced quarantine, the week was a painful experience. The vast majority of people would just like to be back at work, earning a living to support their families. The partially-manufactured COVID-19 crisis is keeping most of the developed nations' economies and people in lockdowns, on purpose, to impose government will over everyday people.
It's a shame how many will be cowed by government and led to believe the many lies that have been perpetrated during this period.
The beginning effects of the Fed backstopping companies has already been noticed. Some dime-store variety stocks were being bid up as the rest of the market was heading lower through the week. Companies (no names, for now, until more than a few weeks data is collected) evidenced buying at stop loss triggers. Not many were allowed to fall to anywhere near the recent lows.
Stocks should get another taste of selling in the coming week, as most of the news will be about overloaded hospitals, stressed out medial workers, press conferences by the president and his "team." It will be interesting to note how hard the Fed works to stave off a return to 18,212 on the Dow and similar drops on the other indices. They will likely keep losses to a minimum. It would not surprise at all would stocks stage another rally.
The treasury yield curve is about as flat as it can be, signaling nothing good. 115 basis points, or, just more than one percent, covers the entire complex from one-month bills (0.09% yield) to 30-year bonds (1.24%). The 10-year note is flatlining at 0.62%. The Fed, via its SPVs (Special Purpose Vehicles) is desperately buying commercial paper, in addition to treasury bonds, agency mortgage-backed securities, ETF paper, and municipal bonds. They're busy buying up the world's debt with the only currency that matters, the US dollar, conjured up daily out of thin air. The Federal Reserve's balance sheet has ballooned to nearly $6 trillion in their attempt to blow the global credit bubble a lot larger.
Oil caught a huge bid after President Trump supposedly brokered a deal between the Saudis and the Russians, making a record gain on Thursday and another huge leap forward in price on Friday. While there is rampant skepticism over whether there is any kind of deal afoot (the Saudis denied it), the recent price jump - WTI crude went from $21.76 per barrel on Wednesday to a high of $26.35 Thursday, and closed out Friday at $28.34; Brent went from $26.90 to $34.11 over the same span - is unlikely to be long-lasting. Until the Saudis and Russians have eliminated 50-60% of the shale drillers in the US, there aren't going to be any concessions. Additionally, the rampant supply glut and limited demand should keep the price around $20-24 per barrel.
Gold and silver continue to decouple from the fraudulent futures prices. Gold settled out just below $1600 the ounce, silver about $14.00. For real prices on physical silver and gold, one must go to eBay of all places, where there is a wide-open market for coins, bars and assorted bullion. An ounce of gold is ranging between $1800-$2000, while silver cannot be had for under $22 per ounce. These are the real prices, and are heading up quickly because demand is through the roof, many miners are idled, reducing supply, hoarding is rampant, and delivery times from established dealers (30-45 days in some cases) cannot match the one-to-three day deliveries by independent eBay sellers, and those prices have built into them a 10% commission to eBay and do not include shipping, which only adds to the real prices.
There's a definite possibility that the COMEX and LBMA will soon be disregarded completely and a free, open, un-manipulated market will emerge at the world's biggest online bazaar and elsewhere on the internet as fiat currencies are inflated away and real money begins to take root at the consumer level.
Random Notes and Recommendations
JP Morgan put out a study which concluded that the world will be on the downside of the case infection rate curve in two months. Rubbish. Check out this site for the US:
http://covid19.healthdata.org/projections
The United States will be peaking and on the downslope of the curve within 2-3 WEEKS, not 2 months, and European nations are already on the downslope.
All the noise over ventilators, on which two-thirds of the people die anyhow, is just wasted time and money. The small business "loans" are garbage, full of loopholes and boondoggles for small business.
As usual, Wall Street got their trillions in the blink of an eye. American citizens will have to wait until the government gets around to figuring out how to pay them their $1200. Average time, from right now, 3-6 weeks.
Gee, thanks for helping us all out.
Open up MLB. It would be nice to see the some home runs, swings and misses, stolen bases, sign-stealing, and all that good stuff by May 15 at the latest. Even a shortened season would be acceptable. Americans, average Americans are the ones who deserve all the credit. They took social distancing and stay-at-home seriously, which was very helpful in slowing the spread of COVID. We should all get $10K, and Wall Street nothing, because those companies contributed nothing, and most of the companies getting bailout money do nothing. The people should revolt once this is over.
The government, local, state, and federal are the destroyers of liberty. All of them are worthless parasites and when this is all over they'll all pat themselves on the backs for doing such a bang-up job, when, in reality, it was mostly a big hoax.
Here is an exceptional interactive chart which shows the curve (the one we're actively flattening by social distancing and other mediations) in the United States and in every state individually, with figures for numbers of beds, ICU beds, and ventilators needed and available.
It clearly shows the curve peaking between April 15 and 21. The response curve will peak first, followed quickly by the number of COVID-19 cases curve. After that, it's all downhill for the dangerous pathogen that has disrupted lives and economies worldwide.
Brent Johnson's Dollar Milkshake Theory
Brent Johnson is CEO of Santiago Capital. He has been creating and managing comprehensive wealth management strategies for the personal portfolios of high-net-worth individuals and families since the late 1990s.
If you watch no other video on money, gold, or finance, this is the one you definitely should see.
Also, Mike Maloney's GoldSilver.com is an excellent resource. Recently, Mike has been doing pretty much daily videos with consolidated information from a wide variety of sources, funneled through his intuitive, calculating mind. Here is a recent entry with some revealing charts by the incredible analyst John Hussman, another number-crunching maniac who's been studying and disseminating information on the economy in a series of market commentaries at his Hussman Funds website.
Here is Mike Maloney's April 3rd video:
Make sure to get Mike's free e-book, Guide to Investing in Gold & Silver, the #1 All-Time Bestseller On Precious Metals Investing, available at his site.
At the Close, Friday, April 2, 2020:
Dow Jones Industrial Average: 21,052.53, -360.87 (-1.69%)
NASDAQ: 7,373.08, -114.23 (-1.53%)
S&P 500: 2,488.65, -38.25 (-1.51%)
NYSE: 9,880.63, -181.77 (-1.81%)
For the Week:
Dow: -584.25 (-2.70%)
NASDAQ: -114.23 (-2.53%)
S&P 500: -52.82 (-2.08)
NYSE: -306.58 (-3.01%)
Thursday, April 2, 2020
6.64 Million Unemployment Claims; Stocks Take a Hit; Gold, Silver Selling at Premium
(Simultaneously published at Downtown Magazine)
Wednesday was April Fool's Day, appropriate for the general public, which is being actively conned into giving up civil liberties at an alarming rate, and also for those who are stuck in passive investments like college or retirement funds, as stocks got hammered again on the day.
Meanwhile, mega banks and major corporations, which gorged themselves on stock buybacks and executive bonuses over the past decade, are being rewarded for their insouciant, self-serving behavior with loans and grants from the Treasury and Federal Reserve, which are rapidly coalescing into a single entity.
Since completing a near-perfect Fibonacci retrace of 38% to the 22,500 level on the Dow (22,552.17), the blue chip index has given up more than 1,500 points over the past two sessions and are threatening to retest the lows of March 23 (18,213.65). ADP private payroll data released Wednesday showed job losses of 27,000, which did not include the end of March when most of the recent layoffs and furloughs occurred. Despite exception of the brunt of a widespread voluntary quarantine imposed by most states the number was the first time ADP reported monthly job losses since 2017. Their next data release is expected to be much more sobering.
With the Federal Reserve firmly in control of the stock and bond markets, equity prices still have a long distance to travel on a downward slope to reach any reasonable level of valuation. While most heavily-traded stocks were wildly overvalued they are still trading at unsustainable levels, especially considering that business and commerce has very nearly ground to a halt globally.
There will be questions about the level of involvement in equity markets by the Fed, especially on days like Wednesday when losses cascaded down the wall of worry. While it's certainly the case that the Fed could buy up all the ETFs, stocks and mutual funds it pleases, their main approach is in the bond market, where they are actively purchasing commercial paper through its proxy, the Treasury. Guaranteeing that the corporations represented in the NASDAQ, Dow, S&P, and NYSE are still able to finance continuing operations is of primary concern. Price levels of individual stocks or even whole indices are of a secondary nature. Massive gains will be available to the Fed and their insider (congress) associates once stocks are reduced to a massive junk heap of debt, enriched management, and damaged operations.
Currently being touted by the financial insiders is the notion that the stock market and the nation will bounce back quickly once the coronavirus is conquered, though that concept is fatally flawed for a number of reasons. First, the goal is to have zero deaths from COVID-19, a near impossibility given that the infection number has not even cracked the one percent level, with the US currently at 217,000 confirmed cases with 5,137 deaths. Second, many small businesses will not reopen when the "all clear" is given, whether that be at the end of April, or some time in July. Third, with most working-age Americans at home or out of a job, the spending level upon the return to some semblance of normalcy will be vastly reduced. GDP growth is likely to be negative for the second and third quarters and the entire year of 2020 will go down as one in which the US economy was running in reverse.
At this point, anyone who has not taken steps to remove money from the stock and bond markets is facing a world of hurt which could have been avoided. The appropriate investment stance at this juncture would likely be 75% cash and 25% in hard assets (real estate, precious metals). Sadly, the gullible American passive investment class has been conditioned to believe stocks will always bounce back and that bonds represent safety. Neither claim can be proven within the present paradigm. Stocks may bounce back, but that bounce may not occur for many years. Bonds may be safe, but at interest rates that are comparable to stuffing matresses with Federal Reserve Notes. And, it's probably not beyond the realm of probability that the almighty dollar will not survive in its current form. At the very least, as severe devaluation is in the cards.
Treasury yields were smashed lower, the curve significantly flattened on the day, with the 30-year bond at 1.27%, the 10-year note at 0.62%, and the full breadth of the curve a mere 124 basis points, down from 130 a day ago and 145 a week prior. These are serious declines, significant moves in a market that is supposed to be stable. The portent is for more dislocation, desperation, and, eventually, negative rates which will obliterate the currency as is happening in Japan and Europe.
Gold and silver are still largely unavailable from regular dealers even though prices on the futures exchanges are dropping, defying the laws of supply and demand. The best place to purchase precious metals in any form is currently ebay, where the market is brisk and one ounce gold coins can be purchased and quickly delivered for prices between $1690 and $1861 while the futures price hovers around $1590.
Silver is in an even better position for sellers, tacking on premiums of up to 100% to the posted price of $14.25 on the futures exchanges. On eBay, the lowest price for a one ounce coin or bar is currently $21.50, with most ranging from $23.00 to $29.00 and uncirculated coins fetching more, up to absurd prices in the $40 and higher range. With mines shut down in many countries, the shortage of bullion is only just beginning. A metal mania is upon us.
Oil prices have caught bids early Thursday morning, with WTI crude priced at $22.37, Brent at $27.19 at the time of this writing. With a supply glut and the Saudis pumping at nearly-full capacity and offering discounts, it's likely that these prices do not reflect reality on the ground nor are they likely to maintain their gains for long.
As another trading day approaches, regular people may be wondering when they will receive their bailout $1200 check or direct deposit from the government and how they will pay their rent or mortgage without a job or some form of assistance. It has been two weeks since Treasury Secretary Steven Mnuchin and President Trump suggested that individuals would receive money within two weeks and nobody has seen a nickel. The bill to provide such assistance was passed last week by the Senate, House, and signed into law by President Trump.
On Wednesday, Mnuchin announced that Social Security recipients who do not regularly file tax returns will receive their checks or direct deposits without having to file "simple returns" as the IRS advised, according to TheHill.com. An actual date for dissemination of the monies was not disclosed, though it may be assumed that these recipients will receive their money along with their regular monthly payments. For the rest of the country, the waiting game continues, despite corporations already having trillions of dollars available to them via loans, loan guarantees or outright purchases of private debt issuance by the Federal Reserve, most of which is outside the Fed's normal chartered activities.
As for rent or mortgage payments, those are individual decisions. It is advisable to contact the landlord or mortgagee to work out payment options. Some landlords are deferring April rent payments while most lenders (represented in the main by servicers) have remained fairly tight-lipped on general guidelines relating to mortgage payments. Deferral is a likely solution, with the principal and interest being added to the end of the amortization schedule.
Just now, the Labor Department announced that unemployment insurance claims for the week ended March 28 doubled over the previous week to 6.64 million.
April and the second quarter is off to a very discouraging start.
At the Close, Wednesday, April 1, 2020:
Dow Jones Industrial Average: 20,943.51, -973.69 (-4.44%)
NASDAQ: 7,360.58, -339.52 (-4.41%)
S&P 500: 2,470.50, -114.09 (-4.41%)
NYSE: 9,844.85, -457.05 (-4.44%)
Wednesday was April Fool's Day, appropriate for the general public, which is being actively conned into giving up civil liberties at an alarming rate, and also for those who are stuck in passive investments like college or retirement funds, as stocks got hammered again on the day.
Meanwhile, mega banks and major corporations, which gorged themselves on stock buybacks and executive bonuses over the past decade, are being rewarded for their insouciant, self-serving behavior with loans and grants from the Treasury and Federal Reserve, which are rapidly coalescing into a single entity.
Since completing a near-perfect Fibonacci retrace of 38% to the 22,500 level on the Dow (22,552.17), the blue chip index has given up more than 1,500 points over the past two sessions and are threatening to retest the lows of March 23 (18,213.65). ADP private payroll data released Wednesday showed job losses of 27,000, which did not include the end of March when most of the recent layoffs and furloughs occurred. Despite exception of the brunt of a widespread voluntary quarantine imposed by most states the number was the first time ADP reported monthly job losses since 2017. Their next data release is expected to be much more sobering.
With the Federal Reserve firmly in control of the stock and bond markets, equity prices still have a long distance to travel on a downward slope to reach any reasonable level of valuation. While most heavily-traded stocks were wildly overvalued they are still trading at unsustainable levels, especially considering that business and commerce has very nearly ground to a halt globally.
There will be questions about the level of involvement in equity markets by the Fed, especially on days like Wednesday when losses cascaded down the wall of worry. While it's certainly the case that the Fed could buy up all the ETFs, stocks and mutual funds it pleases, their main approach is in the bond market, where they are actively purchasing commercial paper through its proxy, the Treasury. Guaranteeing that the corporations represented in the NASDAQ, Dow, S&P, and NYSE are still able to finance continuing operations is of primary concern. Price levels of individual stocks or even whole indices are of a secondary nature. Massive gains will be available to the Fed and their insider (congress) associates once stocks are reduced to a massive junk heap of debt, enriched management, and damaged operations.
Currently being touted by the financial insiders is the notion that the stock market and the nation will bounce back quickly once the coronavirus is conquered, though that concept is fatally flawed for a number of reasons. First, the goal is to have zero deaths from COVID-19, a near impossibility given that the infection number has not even cracked the one percent level, with the US currently at 217,000 confirmed cases with 5,137 deaths. Second, many small businesses will not reopen when the "all clear" is given, whether that be at the end of April, or some time in July. Third, with most working-age Americans at home or out of a job, the spending level upon the return to some semblance of normalcy will be vastly reduced. GDP growth is likely to be negative for the second and third quarters and the entire year of 2020 will go down as one in which the US economy was running in reverse.
At this point, anyone who has not taken steps to remove money from the stock and bond markets is facing a world of hurt which could have been avoided. The appropriate investment stance at this juncture would likely be 75% cash and 25% in hard assets (real estate, precious metals). Sadly, the gullible American passive investment class has been conditioned to believe stocks will always bounce back and that bonds represent safety. Neither claim can be proven within the present paradigm. Stocks may bounce back, but that bounce may not occur for many years. Bonds may be safe, but at interest rates that are comparable to stuffing matresses with Federal Reserve Notes. And, it's probably not beyond the realm of probability that the almighty dollar will not survive in its current form. At the very least, as severe devaluation is in the cards.
Treasury yields were smashed lower, the curve significantly flattened on the day, with the 30-year bond at 1.27%, the 10-year note at 0.62%, and the full breadth of the curve a mere 124 basis points, down from 130 a day ago and 145 a week prior. These are serious declines, significant moves in a market that is supposed to be stable. The portent is for more dislocation, desperation, and, eventually, negative rates which will obliterate the currency as is happening in Japan and Europe.
Gold and silver are still largely unavailable from regular dealers even though prices on the futures exchanges are dropping, defying the laws of supply and demand. The best place to purchase precious metals in any form is currently ebay, where the market is brisk and one ounce gold coins can be purchased and quickly delivered for prices between $1690 and $1861 while the futures price hovers around $1590.
Silver is in an even better position for sellers, tacking on premiums of up to 100% to the posted price of $14.25 on the futures exchanges. On eBay, the lowest price for a one ounce coin or bar is currently $21.50, with most ranging from $23.00 to $29.00 and uncirculated coins fetching more, up to absurd prices in the $40 and higher range. With mines shut down in many countries, the shortage of bullion is only just beginning. A metal mania is upon us.
Oil prices have caught bids early Thursday morning, with WTI crude priced at $22.37, Brent at $27.19 at the time of this writing. With a supply glut and the Saudis pumping at nearly-full capacity and offering discounts, it's likely that these prices do not reflect reality on the ground nor are they likely to maintain their gains for long.
As another trading day approaches, regular people may be wondering when they will receive their bailout $1200 check or direct deposit from the government and how they will pay their rent or mortgage without a job or some form of assistance. It has been two weeks since Treasury Secretary Steven Mnuchin and President Trump suggested that individuals would receive money within two weeks and nobody has seen a nickel. The bill to provide such assistance was passed last week by the Senate, House, and signed into law by President Trump.
On Wednesday, Mnuchin announced that Social Security recipients who do not regularly file tax returns will receive their checks or direct deposits without having to file "simple returns" as the IRS advised, according to TheHill.com. An actual date for dissemination of the monies was not disclosed, though it may be assumed that these recipients will receive their money along with their regular monthly payments. For the rest of the country, the waiting game continues, despite corporations already having trillions of dollars available to them via loans, loan guarantees or outright purchases of private debt issuance by the Federal Reserve, most of which is outside the Fed's normal chartered activities.
As for rent or mortgage payments, those are individual decisions. It is advisable to contact the landlord or mortgagee to work out payment options. Some landlords are deferring April rent payments while most lenders (represented in the main by servicers) have remained fairly tight-lipped on general guidelines relating to mortgage payments. Deferral is a likely solution, with the principal and interest being added to the end of the amortization schedule.
Just now, the Labor Department announced that unemployment insurance claims for the week ended March 28 doubled over the previous week to 6.64 million.
April and the second quarter is off to a very discouraging start.
At the Close, Wednesday, April 1, 2020:
Dow Jones Industrial Average: 20,943.51, -973.69 (-4.44%)
NASDAQ: 7,360.58, -339.52 (-4.41%)
S&P 500: 2,470.50, -114.09 (-4.41%)
NYSE: 9,844.85, -457.05 (-4.44%)
Wednesday, April 1, 2020
Dow, S&P Mark Worst 1st Quarters Ever; Stocks Poised for Lower Open; Gold, Silver Markets in Turmoil
Closing out the first quarter of 2020 with a whimper, stocks opened to the downside, briefly turned positive, but the minor rally quickly fell apart sending the main indices to a close near the lows of the day. On the session, the NASDAQ was the best performer of the majors, the Dow the worst, followed closely by the S&P 500.
Thanks to the Wuhan Flu, coronavirus, COVID-19 or whatever one wishes to call the pathogen making its way around the planet, stocks really took it on the chin to start off the year. The major averages were all lower, even after making all-time highs in mid-February.
It was the worst quarter for the S&P since 2008 and the poorest quarterly performance for the Dow Jones Industrials since 1987. Both the Dow and S&P suffered through their worst first quarter ever. The Dow lost more than 23% of its value in January through March, as the S&P 500 fell 20% in the quarter. The NASDAQ didn't set any records but lost more than 14% in the first quarter.
With supply chain issues affecting companies in February and the advance of the virus in March, there's a good chance that GDP has been so negatively affected through first quarter, growth figures may have a minus sign in front of them when the first estimate of GDP will be announced on the fourth Friday of April. Mark your calendars for April 24 to see if the US will be half way to a recession or barely hanging onto some remnant of growth, any of it likely having occurred in January and early February. Any positive number would uplift the markets, but that is still a long way off and first up are employment figures for March. Wednesday, ADP reports private payrolls for the month and Friday the BLS reports on non-farm payrolls for March. Friday's number ought to be a market mover considering the massive job losses over the past week which will be figured into the calculations.
Gold got clobbered again, losing $46.30 per ounce on the day, dipping from $1623.40 Monday to $1577.10 Tuesday. Silver lost eight cents, closing out at $13.92. These prices are for paper contracts on the COMEX and other futures markets and are not aligning with current physical market dynamics. Both gold and silver are in short supply and dealers worldwide are charging severe premiums and assigning minimum purchases in some cases. Silver generally can be had for $20 to $25 per ounce. Gold is selling at roughly the $1800 level, though delivery times are delayed with waiting times up to 45 days in some cases.
As the futures prices and physical market prices diverge and decouple, it's only a matter of time before the fraudulent practices of settling contracts in cash rather than metal at the COMEX will become common knowledge and an open scandal as buyers standing for physical delivery are denied their right. As the coronavirus panic and attendant market turmoil extends, expect precious metals to rise dramatically in price as true owners of the metal divorce themselves from the bogus futures market.
The same is already occurring in the oil market with Saudi Arabia offering steep discounts to the published prices. WTI price continues to trend around $20 per barrel with gas prices across the United States, Canada and throughout Europe (using the Brent crude standard) at multi-year lows.
Experiencing more flattening across the curve, the treasury complex saw yields rise at the short and long durations, with the belly (1-year through 7-year) flatlining. As was the case with equities, bonds were little moved on the day.
ADP announces March private payrolls at 8:15 am ET on Wednesday. Futures are nearing limit down heading toward the opening bell.
At the Close, Tuesday, March 31, 2020:
Dow Jones Industrial Average: 21,917.16, -410.32 (-1.84%)
NASDAQ: 7,700.10, -74.05 (-0.95%)
S&P 500: 2,584.59, -42.06 (-1.60%)
NYSE: 10,301.87, -132.88 (-1.27%)
Thanks to the Wuhan Flu, coronavirus, COVID-19 or whatever one wishes to call the pathogen making its way around the planet, stocks really took it on the chin to start off the year. The major averages were all lower, even after making all-time highs in mid-February.
It was the worst quarter for the S&P since 2008 and the poorest quarterly performance for the Dow Jones Industrials since 1987. Both the Dow and S&P suffered through their worst first quarter ever. The Dow lost more than 23% of its value in January through March, as the S&P 500 fell 20% in the quarter. The NASDAQ didn't set any records but lost more than 14% in the first quarter.
With supply chain issues affecting companies in February and the advance of the virus in March, there's a good chance that GDP has been so negatively affected through first quarter, growth figures may have a minus sign in front of them when the first estimate of GDP will be announced on the fourth Friday of April. Mark your calendars for April 24 to see if the US will be half way to a recession or barely hanging onto some remnant of growth, any of it likely having occurred in January and early February. Any positive number would uplift the markets, but that is still a long way off and first up are employment figures for March. Wednesday, ADP reports private payrolls for the month and Friday the BLS reports on non-farm payrolls for March. Friday's number ought to be a market mover considering the massive job losses over the past week which will be figured into the calculations.
Gold got clobbered again, losing $46.30 per ounce on the day, dipping from $1623.40 Monday to $1577.10 Tuesday. Silver lost eight cents, closing out at $13.92. These prices are for paper contracts on the COMEX and other futures markets and are not aligning with current physical market dynamics. Both gold and silver are in short supply and dealers worldwide are charging severe premiums and assigning minimum purchases in some cases. Silver generally can be had for $20 to $25 per ounce. Gold is selling at roughly the $1800 level, though delivery times are delayed with waiting times up to 45 days in some cases.
As the futures prices and physical market prices diverge and decouple, it's only a matter of time before the fraudulent practices of settling contracts in cash rather than metal at the COMEX will become common knowledge and an open scandal as buyers standing for physical delivery are denied their right. As the coronavirus panic and attendant market turmoil extends, expect precious metals to rise dramatically in price as true owners of the metal divorce themselves from the bogus futures market.
The same is already occurring in the oil market with Saudi Arabia offering steep discounts to the published prices. WTI price continues to trend around $20 per barrel with gas prices across the United States, Canada and throughout Europe (using the Brent crude standard) at multi-year lows.
Experiencing more flattening across the curve, the treasury complex saw yields rise at the short and long durations, with the belly (1-year through 7-year) flatlining. As was the case with equities, bonds were little moved on the day.
ADP announces March private payrolls at 8:15 am ET on Wednesday. Futures are nearing limit down heading toward the opening bell.
At the Close, Tuesday, March 31, 2020:
Dow Jones Industrial Average: 21,917.16, -410.32 (-1.84%)
NASDAQ: 7,700.10, -74.05 (-0.95%)
S&P 500: 2,584.59, -42.06 (-1.60%)
NYSE: 10,301.87, -132.88 (-1.27%)
Tuesday, March 31, 2020
As Usual, Government Solutions Are Wrong, Damaging the Economy as COVID-19 Ravages the Planet
The trading desk at the NY Fed apparently bought everything, all day long.
That's not a joke. It's probably much closer to the truth than many would believe.
Since the Fed took steps to backstop every bond, loan, or financial obligation on the planet over the past two weeks, and the Congress and President passed a $2.2 trillion rescue relief bill last week, stocks have done nothing but shoot the moon higher as four of the past five trading sessions have been positive for the Dow, S&P and NYSE Composite, and three of five for the NASDAQ.
Amid a crisis condition across the country and around the globe, this kind of action - with similar moves in international markets as well - is completely devoid of any fundamental pricing structure. Simply throwing more good money after bad seems to be the only way the Fed operates, as if it were in a void zone and it's the worst kind of malinvestment, chasing away the demon of real price discovery by throwing more fake, phony, fiat currency at it.
At current levels, the major indices have achieved bear market territory and are about as likely to escape it as President Trump is to refrain from tweeting. With giant swaths of the economy shut down for the past two weeks and looking forward to another month of idleness, stocks should be going down, not up. Even down as much as 60% from their recent peak, many stocks are still overvalued and the main indices are settled in at or near levels that are 40-60% (NASDAQ) higher than prevailing levels in 2007 prior to the Great Financial Crisis (GFC), indicating that stocks, rather then stabilizing at current levels, hav emuch further to fall.
The degree of decline should be back to levels below the lows of 2008-09, since the issues which caused the crash then were never addressed in any meaningful manner, instead just kicked down the road. Banks and corporations have re-leveraged well beyond any reasonable price, using nearly-free money from the Fed to perform stock buybacks, boosting prices to extremes.
Initially, the cascading waterfall of falling stock prices as COVID-19 panic became evident was justifiable, more extreme than the beginning of any bear market including 1929, 2000, and 2008, ending nowhere near a bottom.
The Fed's bazooka-style blitzkrieg has blown up the markets, exacerbated by the rescue relief package. It won't last. Eventually, the near-term lows will be tested, re-tested, and finally exceeded as the long, slow grind of a second phase bear market assumes command. All the money in the world - and that's how much the Fed has at its disposal - cannot prevent another wave of selling, and another, and another, nor can it limit the size and scope of the global tragedy that will unfold in coming months and years.
In its latest attempt to curry favor from the masses, the CDC proposed a best-case prognosis of 200,000 deaths from COVID-19, but that number pales by comparison to the economic and social damage the policies of demand isolation, shuttering of businesses, and crushing unemployment will produce over the next 12-18 months.
Government policy promoting social distancing, travel restrictions, and business closures are misguided and harmful, will not contain the virus to satisfactory levels and are likely to foment a Greater Depression worse than 1929 in terms of unemployment, poverty, and malnourishment. Sadly, almost all other developed and developing nations have taken a similar approach, a groupthink solution that isn't a solution at all, but rather a quest for more control, more power, and more curtailment of civil liberties by the authorities currently in charge.
Other approaches are better suited to achieve better results, especially ones suggested in a brilliant essay by Percy Carlton for the Saker Blog, titled Covid-19 Derangement Syndrome: A World Gone Mad.
Carlton relies upon logic and science to achieve his solutions, rather then the over-emotional reaction of today's government incompetents. It is a must read for everyone, especially those who value freedom of choice, liberty, and thoughtful self-expression over government controls, socialized solutions, pharmacological mandates, pseudo-science, and pathological lies.
Laid bare before the American public and the world is the staggering incompetence and outrageous insolence of world "leaders." Beyond that lies an unpromising land of replete with shortages, monetary imbalances, fiscal irresponsibility, societal dislocation, rioting, looting, starvation, and death which could have been avoided.
Lack of advance planning and reliance on extreme measures adopted from China's experience with coronavirus, combined with political grandstanding and media obsession and obfuscation of facts have the world lumbering toward desperation. The longer the general public is subjected to the dictates of the administration the worse the condition will become.
Defeating the disease is the easy part. Putting back together the pieces of a broken global economy figures to be a more difficult task, one which sovereign governments and a central banking cartel are not well-suited to handle.
Meanwhile, the treasury curve flattens out, with the 10-year note yield slipping to 0.70% on Monday. Gold and silver remain difficult to obtain at prices well above the futures levels. Crude oil has fallen to 18-year lows with the price of gasoline falling in line.
The recent rally has nowhere to go under current conditions and should not have happened in the first place even under the best of circumstances, which are certainly not prevalent.
At the Close, Monday, March 30, 2020:
Dow Jones Industrial Average: 22,327.48, +690.70 (+3.19%)
NASDAQ: 7,774.15, +271.77 (+3.62%)
S&P 500: 2,626.65, +85.18 (+3.35%)
NYSE: 10,434.75, +247.54 (+2.43%)
That's not a joke. It's probably much closer to the truth than many would believe.
Since the Fed took steps to backstop every bond, loan, or financial obligation on the planet over the past two weeks, and the Congress and President passed a $2.2 trillion rescue relief bill last week, stocks have done nothing but shoot the moon higher as four of the past five trading sessions have been positive for the Dow, S&P and NYSE Composite, and three of five for the NASDAQ.
Amid a crisis condition across the country and around the globe, this kind of action - with similar moves in international markets as well - is completely devoid of any fundamental pricing structure. Simply throwing more good money after bad seems to be the only way the Fed operates, as if it were in a void zone and it's the worst kind of malinvestment, chasing away the demon of real price discovery by throwing more fake, phony, fiat currency at it.
At current levels, the major indices have achieved bear market territory and are about as likely to escape it as President Trump is to refrain from tweeting. With giant swaths of the economy shut down for the past two weeks and looking forward to another month of idleness, stocks should be going down, not up. Even down as much as 60% from their recent peak, many stocks are still overvalued and the main indices are settled in at or near levels that are 40-60% (NASDAQ) higher than prevailing levels in 2007 prior to the Great Financial Crisis (GFC), indicating that stocks, rather then stabilizing at current levels, hav emuch further to fall.
The degree of decline should be back to levels below the lows of 2008-09, since the issues which caused the crash then were never addressed in any meaningful manner, instead just kicked down the road. Banks and corporations have re-leveraged well beyond any reasonable price, using nearly-free money from the Fed to perform stock buybacks, boosting prices to extremes.
Initially, the cascading waterfall of falling stock prices as COVID-19 panic became evident was justifiable, more extreme than the beginning of any bear market including 1929, 2000, and 2008, ending nowhere near a bottom.
The Fed's bazooka-style blitzkrieg has blown up the markets, exacerbated by the rescue relief package. It won't last. Eventually, the near-term lows will be tested, re-tested, and finally exceeded as the long, slow grind of a second phase bear market assumes command. All the money in the world - and that's how much the Fed has at its disposal - cannot prevent another wave of selling, and another, and another, nor can it limit the size and scope of the global tragedy that will unfold in coming months and years.
In its latest attempt to curry favor from the masses, the CDC proposed a best-case prognosis of 200,000 deaths from COVID-19, but that number pales by comparison to the economic and social damage the policies of demand isolation, shuttering of businesses, and crushing unemployment will produce over the next 12-18 months.
Government policy promoting social distancing, travel restrictions, and business closures are misguided and harmful, will not contain the virus to satisfactory levels and are likely to foment a Greater Depression worse than 1929 in terms of unemployment, poverty, and malnourishment. Sadly, almost all other developed and developing nations have taken a similar approach, a groupthink solution that isn't a solution at all, but rather a quest for more control, more power, and more curtailment of civil liberties by the authorities currently in charge.
Other approaches are better suited to achieve better results, especially ones suggested in a brilliant essay by Percy Carlton for the Saker Blog, titled Covid-19 Derangement Syndrome: A World Gone Mad.
Carlton relies upon logic and science to achieve his solutions, rather then the over-emotional reaction of today's government incompetents. It is a must read for everyone, especially those who value freedom of choice, liberty, and thoughtful self-expression over government controls, socialized solutions, pharmacological mandates, pseudo-science, and pathological lies.
Laid bare before the American public and the world is the staggering incompetence and outrageous insolence of world "leaders." Beyond that lies an unpromising land of replete with shortages, monetary imbalances, fiscal irresponsibility, societal dislocation, rioting, looting, starvation, and death which could have been avoided.
Lack of advance planning and reliance on extreme measures adopted from China's experience with coronavirus, combined with political grandstanding and media obsession and obfuscation of facts have the world lumbering toward desperation. The longer the general public is subjected to the dictates of the administration the worse the condition will become.
Defeating the disease is the easy part. Putting back together the pieces of a broken global economy figures to be a more difficult task, one which sovereign governments and a central banking cartel are not well-suited to handle.
Meanwhile, the treasury curve flattens out, with the 10-year note yield slipping to 0.70% on Monday. Gold and silver remain difficult to obtain at prices well above the futures levels. Crude oil has fallen to 18-year lows with the price of gasoline falling in line.
The recent rally has nowhere to go under current conditions and should not have happened in the first place even under the best of circumstances, which are certainly not prevalent.
At the Close, Monday, March 30, 2020:
Dow Jones Industrial Average: 22,327.48, +690.70 (+3.19%)
NASDAQ: 7,774.15, +271.77 (+3.62%)
S&P 500: 2,626.65, +85.18 (+3.35%)
NYSE: 10,434.75, +247.54 (+2.43%)
Monday, March 30, 2020
Coronavirus Will Kill Many, but Government Response Has Killed the Economy
Theories have been floated about the coronavirus, or COVID-19, pandemic, suggesting (or outright claiming) that the infectious virus is variously a Chinese communist plot, an American false flag, a scheme by central banks or other nefarious, elitist secret society types, a message from God, an outer space concoction that has something to do with planet X, or that it's just the flu and the media, in cahoots with the governments of the world, is hyping it to the maximum degree as a cover story for the second Great Depression that was about to unfold, anyway.
At least for a change, nobody is blaming Vladimir Putin, the Russians or the Ukraine. They seemed to have worn out their scapegoat status.
Whatever and wherever the truth may lay, it's becoming apparent that the cure may be worse than the disease.
If a business were to shut down for a month or six weeks or maybe two months, the chances of it coming back to life in a healthy manner would be slim. Employees may have found new positions at other companies, customers would have had the time to find alternative sources for the product or service the shut-down business provided, bills, such as rent, utilities, and loans may or may not have been paid in a timely manner, and most of all, there would have been zero income for said business.
Now, multiply that case by thousands in one area, then expand the condition to all areas of the country and you've got a real mess, or, the current state of the global economy. Hundreds of thousands of businesses are temporarily closed and have been shuttered for as long as six weeks in some countries. Many of these operations are small businesses with a handful of employees, but the afflicted include major corporations with thousands of employees as well.
Adding to the nightmarish scenario are government orders or advisories at national or local levels telling people to stay home, to not go to work, to shelter in place, and otherwise avoid all unnecessary travel and contact with other people.
This is madness.
There is precisely zero possibility that the global economy will return to any place similar to what it was six months ago. And while that may be a good thing in the long run, in the short term it will almost completely destroy most of the economy, and rip to shreds any of the tattered fabric that remained of societies at local or national levels.
We have all of this for the sake of people getting sick, some dying, others experiencing nothing more than a minor cold, even more not contracting the virus at all. The latest figures from reliable sources put the number of confirmed cases of COVID-19 worldwide at around 750,000. The number of deaths has surpassed 34,000. In the United States, there are now 143,000 confirmed cases and just over 2,500 deaths.
These numbers may sound frightening or staggering, but knowing how many people die every day may put them into a less-panicky perspective. Globally, about 153,000 people die every day. That's 1,071,000 every week and more than 380 million annually. In the United States, about 7500 people die daily, or about 2,750,000 each year.
Sure, the COVID-19 cases and death toll are mounting, but just taking the number of deaths already presented - 34,000 - and, for the sake of argument, assume they all died within the last month, that number is minuscule compared to the 4.6 million that normally die every month. It works out to 0.75%, or less than one percent worldwide.
So why are government officials making such a big deal out of COVID-19 when 80% of cases are resolved with little to no medical attention necessary and less than two percent eventually die from it?
Good question. People die in car accidents every day and we don't ban cars. There are murders and suicides every day and people have debated how to prevent them for decades. The normal flu variant - another virus - kills 290,000 to 650,000 people every year. Coronavirus has a lot of catching up to do, yet governments insist that we must destroy our economy in order to keep it in check. And guess what? It's not working. The caseloads and deaths pile up every day regardless of whether people stay home, avoid contact, wash their hands or (and, if the CDC were serious, they would require this of all Americans) wear face masks.
The goal is supposedly to slow the progress of this highly infectious pathogen. OK, fine, let's save some lives while killing our economy. Has anybody considered the number of lives that will be damaged or ruined, or the number of people that will die or have their lives shortened because of how this is being handled?
Face the facts. Many jobs are not going to be there if and when this virus panic is concluded. Over the weekend, President Trump extended the social distancing, avoid social contact, and stay at home guidelines though April 30. That's 4 1/2 more weeks. By that time, many people will have to stay at home - if they have one - because they'll have no job and no money, and ironically, even if they do have enough dough on hand to put gas in their cars at massively reduced prices, other than the grocery store, pharmacy, or bank, there's nowhere for them to go. Everything else is closed.
So, our so-called leaders (Chris Martenson of Peak Prosperity calls them "managers," because they aren't really leading anybody) have made the decision to save some number of lives (10,000? 4 million? Who knows?)by effectively shutting down the economy, crashing the stock market, then fixing it all with a $2.2 trillion rescue attempt which includes sending checks to most people who make less than $75,000 a year. Those checks or direct deposits, when and if they do arrive, will amount to $1200 for most adults and $500 for each dependent child. If they wanted to be fair about it, they could take that $2.2 trillion and just doe out $6,666 to every man, woman and child in the country. If they took the entire amount and send money to just people who earn less than $75,000 a year - roughly 200 million - everyone would get $11,000.
However, since those roughly 200 million are going to get $1200, that's only $240 billion. The rest of that money - roughly $2 trillion, is largely going to corporations, which are going to lay people off in droves, and states, to cover extra expenses incurred in dealing with the crisis and for additional unemployment insurance. It's a rather large boondoggle, which will explode the federal budget, but who cares, since we're destroying the economy anyhow? The US is already $23 trillion in debt, what's another $2 trillion? The rest of the developed nations are in equally bad conditions, so they're planning on doing some similar bailout.
When this is all over, maybe by September, your local restauranteur will be out of business, but the McDonalds, Applebees, Pizza Huts, and Taco Bells of the world will be there to please your palette. The government's solution to COVID-19 will manage to crush small businesses and reduce the middle class to rubble.
Stock market declines will wipe out pensions.
Banks and large corporations will get loans or grants, aka, bailouts, again.
In the face of all of this, stocks went on a tear last week, having the best week since 1932, supposedly, which is ironic, because 1932 was in the midst of the Great Depression. All of the top five or seven best daily or weekly gains for stocks have come during bear markets, just as last week's did.
While some people were claiming that the bear market was vanquished last week, there's absolutely no truth to that. All major indices are at least 20% lower from the all-time highs made in February. Stocks are in a bear market and they'll stay in one no matter how much money the government and Federal Reserve throws at them. Stocks may go up for a while, but they're destined to go right back down. There's no escaping the fact that the global economy is broken, banks are largely insolvent and at some point will likely be shut down, unemployment is headed north of 20% and bankruptcy attorneys are set to make fortunes.
Gas at the pump is the lowest it's been in decades. Gold and silver cannot be purchased and delivered at current quoted prices. Most dealers are sold out. Wait times for what may be available are as long as 45 days. While gold popped back over $1600 an ounce last week, nobody can touch an ounce for less than $1800. Pricing for physical has decoupled from the fake, manipulated futures con game price at the COMEX.
The same is true for silver. It's current price is floating somewhere around $14.50 per ounce. Sales on eBay, where delivery can be as quick as two day because private individuals are selling there, have the price for an ounce of silver anywhere from $20 to $25. That market is broken. More markets will break down in coming days, weeks, and months. It might be instructive to consider the equity markets broken since the Federal Reserve can prop up the banks and other companies at will, even though their mandate allows them to buy just about everything but stocks, though that will likely change. Imagine playing poker with a guy who has $20 trillion and you have $200. That's what trading stocks is going to be like soon.
Bond prices are the lowest in history. The short-dated maturities briefly went negative last week. Expect that to be the rule rather than the standard going forward.
It's an absolute mess, a complete shame. Already, the banks are in trouble, as CapitalOne (COF) received a back-handed bailout last week, getting a waiver from the CFTC when they were caught with their pants down playing derivatives in the oil market (yes, the oil market that crashed last month). There's more to come from your friendly banking community, which gets money for nothing and loans it to the public at 20%, 25%, 29% or more.
Everything is just peachy.
Here are some recent numbers for the major indices, noting the recent all-time highs (February, 2020) and interim lows (March, 2020):
Dow High: 29568.57, Low: 18213.65
NASDAQ High: 9838.37, Low: 6631.42
S&P High: 3393.52, Low: 2192.86
NYSE High: 14183.26, Low: 8664.94
Dow Transports: High: 11359.49, Low: 6481.20
At the Close, Friday, March 27, 2020:
Dow Jones Industrial Average: 21,636.78, -915.39 (-4.06%)
NASDAQ: 7,502.38, -295.16 (-3.79%)
S&P 500: 2,541.47, -88.60 (-3.37%)
NYSE: 10,187.21, -349.07 (-3.31%)
For the Week:
Dow: +2462.80 (+12.84%)
NASDAQ: +622.86 (+9.05%)
S&P 500: +236.55 (+10.26)
NYSE: +1054.05 (+11.54)
Dow Transports: +861.46 (+12.60%)
At least for a change, nobody is blaming Vladimir Putin, the Russians or the Ukraine. They seemed to have worn out their scapegoat status.
Whatever and wherever the truth may lay, it's becoming apparent that the cure may be worse than the disease.
If a business were to shut down for a month or six weeks or maybe two months, the chances of it coming back to life in a healthy manner would be slim. Employees may have found new positions at other companies, customers would have had the time to find alternative sources for the product or service the shut-down business provided, bills, such as rent, utilities, and loans may or may not have been paid in a timely manner, and most of all, there would have been zero income for said business.
Now, multiply that case by thousands in one area, then expand the condition to all areas of the country and you've got a real mess, or, the current state of the global economy. Hundreds of thousands of businesses are temporarily closed and have been shuttered for as long as six weeks in some countries. Many of these operations are small businesses with a handful of employees, but the afflicted include major corporations with thousands of employees as well.
Adding to the nightmarish scenario are government orders or advisories at national or local levels telling people to stay home, to not go to work, to shelter in place, and otherwise avoid all unnecessary travel and contact with other people.
This is madness.
There is precisely zero possibility that the global economy will return to any place similar to what it was six months ago. And while that may be a good thing in the long run, in the short term it will almost completely destroy most of the economy, and rip to shreds any of the tattered fabric that remained of societies at local or national levels.
We have all of this for the sake of people getting sick, some dying, others experiencing nothing more than a minor cold, even more not contracting the virus at all. The latest figures from reliable sources put the number of confirmed cases of COVID-19 worldwide at around 750,000. The number of deaths has surpassed 34,000. In the United States, there are now 143,000 confirmed cases and just over 2,500 deaths.
These numbers may sound frightening or staggering, but knowing how many people die every day may put them into a less-panicky perspective. Globally, about 153,000 people die every day. That's 1,071,000 every week and more than 380 million annually. In the United States, about 7500 people die daily, or about 2,750,000 each year.
Sure, the COVID-19 cases and death toll are mounting, but just taking the number of deaths already presented - 34,000 - and, for the sake of argument, assume they all died within the last month, that number is minuscule compared to the 4.6 million that normally die every month. It works out to 0.75%, or less than one percent worldwide.
So why are government officials making such a big deal out of COVID-19 when 80% of cases are resolved with little to no medical attention necessary and less than two percent eventually die from it?
Good question. People die in car accidents every day and we don't ban cars. There are murders and suicides every day and people have debated how to prevent them for decades. The normal flu variant - another virus - kills 290,000 to 650,000 people every year. Coronavirus has a lot of catching up to do, yet governments insist that we must destroy our economy in order to keep it in check. And guess what? It's not working. The caseloads and deaths pile up every day regardless of whether people stay home, avoid contact, wash their hands or (and, if the CDC were serious, they would require this of all Americans) wear face masks.
The goal is supposedly to slow the progress of this highly infectious pathogen. OK, fine, let's save some lives while killing our economy. Has anybody considered the number of lives that will be damaged or ruined, or the number of people that will die or have their lives shortened because of how this is being handled?
Face the facts. Many jobs are not going to be there if and when this virus panic is concluded. Over the weekend, President Trump extended the social distancing, avoid social contact, and stay at home guidelines though April 30. That's 4 1/2 more weeks. By that time, many people will have to stay at home - if they have one - because they'll have no job and no money, and ironically, even if they do have enough dough on hand to put gas in their cars at massively reduced prices, other than the grocery store, pharmacy, or bank, there's nowhere for them to go. Everything else is closed.
So, our so-called leaders (Chris Martenson of Peak Prosperity calls them "managers," because they aren't really leading anybody) have made the decision to save some number of lives (10,000? 4 million? Who knows?)by effectively shutting down the economy, crashing the stock market, then fixing it all with a $2.2 trillion rescue attempt which includes sending checks to most people who make less than $75,000 a year. Those checks or direct deposits, when and if they do arrive, will amount to $1200 for most adults and $500 for each dependent child. If they wanted to be fair about it, they could take that $2.2 trillion and just doe out $6,666 to every man, woman and child in the country. If they took the entire amount and send money to just people who earn less than $75,000 a year - roughly 200 million - everyone would get $11,000.
However, since those roughly 200 million are going to get $1200, that's only $240 billion. The rest of that money - roughly $2 trillion, is largely going to corporations, which are going to lay people off in droves, and states, to cover extra expenses incurred in dealing with the crisis and for additional unemployment insurance. It's a rather large boondoggle, which will explode the federal budget, but who cares, since we're destroying the economy anyhow? The US is already $23 trillion in debt, what's another $2 trillion? The rest of the developed nations are in equally bad conditions, so they're planning on doing some similar bailout.
When this is all over, maybe by September, your local restauranteur will be out of business, but the McDonalds, Applebees, Pizza Huts, and Taco Bells of the world will be there to please your palette. The government's solution to COVID-19 will manage to crush small businesses and reduce the middle class to rubble.
Stock market declines will wipe out pensions.
Banks and large corporations will get loans or grants, aka, bailouts, again.
In the face of all of this, stocks went on a tear last week, having the best week since 1932, supposedly, which is ironic, because 1932 was in the midst of the Great Depression. All of the top five or seven best daily or weekly gains for stocks have come during bear markets, just as last week's did.
While some people were claiming that the bear market was vanquished last week, there's absolutely no truth to that. All major indices are at least 20% lower from the all-time highs made in February. Stocks are in a bear market and they'll stay in one no matter how much money the government and Federal Reserve throws at them. Stocks may go up for a while, but they're destined to go right back down. There's no escaping the fact that the global economy is broken, banks are largely insolvent and at some point will likely be shut down, unemployment is headed north of 20% and bankruptcy attorneys are set to make fortunes.
Gas at the pump is the lowest it's been in decades. Gold and silver cannot be purchased and delivered at current quoted prices. Most dealers are sold out. Wait times for what may be available are as long as 45 days. While gold popped back over $1600 an ounce last week, nobody can touch an ounce for less than $1800. Pricing for physical has decoupled from the fake, manipulated futures con game price at the COMEX.
The same is true for silver. It's current price is floating somewhere around $14.50 per ounce. Sales on eBay, where delivery can be as quick as two day because private individuals are selling there, have the price for an ounce of silver anywhere from $20 to $25. That market is broken. More markets will break down in coming days, weeks, and months. It might be instructive to consider the equity markets broken since the Federal Reserve can prop up the banks and other companies at will, even though their mandate allows them to buy just about everything but stocks, though that will likely change. Imagine playing poker with a guy who has $20 trillion and you have $200. That's what trading stocks is going to be like soon.
Bond prices are the lowest in history. The short-dated maturities briefly went negative last week. Expect that to be the rule rather than the standard going forward.
It's an absolute mess, a complete shame. Already, the banks are in trouble, as CapitalOne (COF) received a back-handed bailout last week, getting a waiver from the CFTC when they were caught with their pants down playing derivatives in the oil market (yes, the oil market that crashed last month). There's more to come from your friendly banking community, which gets money for nothing and loans it to the public at 20%, 25%, 29% or more.
Everything is just peachy.
Here are some recent numbers for the major indices, noting the recent all-time highs (February, 2020) and interim lows (March, 2020):
Dow High: 29568.57, Low: 18213.65
NASDAQ High: 9838.37, Low: 6631.42
S&P High: 3393.52, Low: 2192.86
NYSE High: 14183.26, Low: 8664.94
Dow Transports: High: 11359.49, Low: 6481.20
At the Close, Friday, March 27, 2020:
Dow Jones Industrial Average: 21,636.78, -915.39 (-4.06%)
NASDAQ: 7,502.38, -295.16 (-3.79%)
S&P 500: 2,541.47, -88.60 (-3.37%)
NYSE: 10,187.21, -349.07 (-3.31%)
For the Week:
Dow: +2462.80 (+12.84%)
NASDAQ: +622.86 (+9.05%)
S&P 500: +236.55 (+10.26)
NYSE: +1054.05 (+11.54)
Dow Transports: +861.46 (+12.60%)
Friday, March 27, 2020
Dow, S&P Gain Third Straight Day; Fed Buying Evident
There are signs everywhere that the Federal Reserve has taken an active role in the stock market, especially in the US, but probably abroad as well, in cahoots with their central bank partners, as stocks have recovered sharply over the past three days after being battered by fears stemming from the coronavirus global pandemic, or COVID-19.
Probably the most glaring evidence - outside of the Dow's near-500-point gain in the final 12 minutes of trading Thursday - is the ballooning of the Fed's balance sheet, which has grown by $507,323,000,000 ($507.323 billion) in just seven days, from March 18 to the 25th.
Being almost completely transparent, the Fed, in recent days has announced that they would purchase everything from municipal debt, to corporate debt, to exchange traded funds (ETFs) in the open market in order to "stabilize" the situation. There's one good reason why the Dow was up 1,351 points on a day that started with the announcement that more than three million Americans has lost their jobs in the past week, and it's because the Federal Reserve, with literally unlimited amounts of buying power, was actively in the market.
While this will come as a surprise to pretty much 90% of all Americans, central bank direct activity in equity markets has been an open secret in financial circles for at least the past decade. The Swiss National Bank (SNB) and Bank of Japan are major shareholders in many corporations, including Apple (AAPL) and many others. The BOJ has been buying ETFs in earnest since as early as 2012, when their balance sheet exploded from 150 trillion yen ($138 billion US) to 550 ($506 billion US). Today, the Bank of Japan owns stocks and bonds equal to the country's entire economic output, or 100% of GDP. In essence, the Bank of Japan owns the Japanese economy. It is the Japanese economy and a similar scenario is beginning to emerge in the United States, and likely in the European Union as well.
Other independent central banks in Australia, Canada, England, Brazil, and elsewhere are probably considering doing the same in their stock markets if they haven't already.
It's not as though central banks are complete foreigners to intervention in markets. They've completely distorted the capital markets for years, buying up agency (government) debt and mortgage-backed securities en masse before and after the Great Financial Crisis in 2007-09 to the point at which trillions of dollars in government bonds carry negative yields.
So, instead of just buying debt, why not stocks? Ask your broker. I'm sure he or she will have a ready answer after convulsing on the floor in either laughter or tears.
Elsewhere, treasury yields fell across the spectrum, the 10-year note checking in at 0.83%. Gold and silver have returned to being an afterthought in the futures market and largely unavailable in physical quantities. Gold is still testing recent multi-year highs, closing up $11.60 on Thursday to $1624.50 per ounce. Silver closed down slightly to $14.41 in the futures market. Meanwhile, dealers report widespread shortages amid massive demand for "everyman's gold."
Being that silver is so much less expensive than gold, it is available to anybody with a couple of sawbucks. Thus, it is THE prime target of central banks, as their greatest fear is to have a competing currency accepted by the middle and lower classes. It would kind of ruin their monopoly on currency. It's been going on for hundreds of years and isn't likely to change soon.
Oil was beaten down again on Thursday, with WTI crude closing out at $22.60 a barrel, down nearly two dollars from Wednesday's finishing price. Unleaded gasoline is cheap around the globe, the irony being, with so many coronavirus lockdowns or "stay at home" orders in place, gas is a bargain, but nobody can go anywhere.
At the Close, Thursday, March 26, 2020:
Dow Jones Industrial Average: 22,552.17, +1,351.62 (+6.38%)
NASDAQ: 7,797.54, +413.24 (+5.60%)
S&P 500: 2,630.07, +154.51 (+6.24%)
NYSE: 10,536.28, +574.89 (+5.77%)
Probably the most glaring evidence - outside of the Dow's near-500-point gain in the final 12 minutes of trading Thursday - is the ballooning of the Fed's balance sheet, which has grown by $507,323,000,000 ($507.323 billion) in just seven days, from March 18 to the 25th.
Being almost completely transparent, the Fed, in recent days has announced that they would purchase everything from municipal debt, to corporate debt, to exchange traded funds (ETFs) in the open market in order to "stabilize" the situation. There's one good reason why the Dow was up 1,351 points on a day that started with the announcement that more than three million Americans has lost their jobs in the past week, and it's because the Federal Reserve, with literally unlimited amounts of buying power, was actively in the market.
While this will come as a surprise to pretty much 90% of all Americans, central bank direct activity in equity markets has been an open secret in financial circles for at least the past decade. The Swiss National Bank (SNB) and Bank of Japan are major shareholders in many corporations, including Apple (AAPL) and many others. The BOJ has been buying ETFs in earnest since as early as 2012, when their balance sheet exploded from 150 trillion yen ($138 billion US) to 550 ($506 billion US). Today, the Bank of Japan owns stocks and bonds equal to the country's entire economic output, or 100% of GDP. In essence, the Bank of Japan owns the Japanese economy. It is the Japanese economy and a similar scenario is beginning to emerge in the United States, and likely in the European Union as well.
Other independent central banks in Australia, Canada, England, Brazil, and elsewhere are probably considering doing the same in their stock markets if they haven't already.
It's not as though central banks are complete foreigners to intervention in markets. They've completely distorted the capital markets for years, buying up agency (government) debt and mortgage-backed securities en masse before and after the Great Financial Crisis in 2007-09 to the point at which trillions of dollars in government bonds carry negative yields.
So, instead of just buying debt, why not stocks? Ask your broker. I'm sure he or she will have a ready answer after convulsing on the floor in either laughter or tears.
Elsewhere, treasury yields fell across the spectrum, the 10-year note checking in at 0.83%. Gold and silver have returned to being an afterthought in the futures market and largely unavailable in physical quantities. Gold is still testing recent multi-year highs, closing up $11.60 on Thursday to $1624.50 per ounce. Silver closed down slightly to $14.41 in the futures market. Meanwhile, dealers report widespread shortages amid massive demand for "everyman's gold."
Being that silver is so much less expensive than gold, it is available to anybody with a couple of sawbucks. Thus, it is THE prime target of central banks, as their greatest fear is to have a competing currency accepted by the middle and lower classes. It would kind of ruin their monopoly on currency. It's been going on for hundreds of years and isn't likely to change soon.
Oil was beaten down again on Thursday, with WTI crude closing out at $22.60 a barrel, down nearly two dollars from Wednesday's finishing price. Unleaded gasoline is cheap around the globe, the irony being, with so many coronavirus lockdowns or "stay at home" orders in place, gas is a bargain, but nobody can go anywhere.
At the Close, Thursday, March 26, 2020:
Dow Jones Industrial Average: 22,552.17, +1,351.62 (+6.38%)
NASDAQ: 7,797.54, +413.24 (+5.60%)
S&P 500: 2,630.07, +154.51 (+6.24%)
NYSE: 10,536.28, +574.89 (+5.77%)
Thursday, March 26, 2020
Senate Approves $2.2 Trillion COVID-19 Relief Bill, Sends to House; Unemployment Claims Skyrocket to 3,283,000
Editor's Note: This edition of Money Daily was purposed delayed until after the weekly unemployment claims figures came out at 8:30 am ET Thursday. The regular report follows this headline news.
The Labor Department reported Thursday that initial unemployment claims for the week ending March 21 rose to a record 3,283,000, an increase of 3,001,000 from the previous week's revised level. An enormous jump in claims was widely expected.
Money Daily will have complete reporting on how this affected the markets in Friday morning's report.
Simply put, Wednesday was just a replay or extension of Tuesday's rally, without as much drama or conviction on the part of investors, witnessed by the rapid descent in the final hour of trading. The Dow lost more than half of the day's gains. The NASDAQ ended up in the red after being up more than 250 points in early afternoon trading.
In other words, this rally ran out of steam via the old, "buy the rumor, sell the news" meme. The "rumor" was the Senate's $2.2 trillion national bailout and rescue plan for COVID-19 (very convenient). The "news" is that it was not passed by the full Senate during market business hours. Instead, the aged Senators stayed up well past their bedtimes again, passing the bill around 11:00 pm ET.
The fact that the Senate's 96-0 passage of the bill will coincide perfectly with the next "buy the rumor, sell the news" item - the weekly unemployment claims number at 8:30 am ET Thursday morning, will no doubt leave open to speculation that the timing was anything but coincidence.
Leaving the barn door just slightly ajar, the House of Representatives still has to vote on the measure passed by the Senate before it goes to President Trump for his signature. If he does get a crack at putting pen to paper on this one, it will allow for a huge influx of capital to individuals, families, and businesses, both big and small. It will also destroy any chance of the federal budget coming in with anything less than a $2 trillion deficit this year (fiscal year ends September 30), and next.
Most Americans will receive either a check or direct deposit in the amount of $1,200. Married couples will get $2,400, plus another $500 for each dependent child. The media says that 90% of the people in this country will get such a check, which is a telling figure. It speaks loudly to the wealth distribution in America when only 10% are making enough to not receive a check of any amount. People making more than $75,000 in 2018 or 2019 will get less than the full amount. There's a cap at $99,000 for individuals and $198,000 for married couples. Those will get nothing. In general terms, there's proof that only 10% of Americans are making more than $99,000 a year. No wonder Bernie Sanders and other democrats receive such strong support for "wealth redistribution."
All that aside, Thursday is looking like a bloodbath for the Bulls, as the unemployment figures will almost certainly be record-setting. Estimates range from 860,000 new claims (UBS) to four million (4,000,000) (Citi). The prior high was 695,000 claims filed the week ended October 2, 1982. If this were a betting game, Money Daily would be at or above the high figure provided by analysts at Citi. There's a chance it could be six million. New York alone could be over a million, ditto California.
As for other markets, bonds, precious metals, and oil were relatively stable on the day. The 10-year note seems to have found a sweet spot with a yield around 0.85%.
Gold looks to be consolidating above $1600 per ounce, though there are widespread reports that nobody can find even a one ounce bar at that price. Dealers have been scrambling for the last two weeks to fill orders and many are completely sold out. The same is true for silver, though to a lesser extent. The miners can produce silver faster than gold, so supplies are being replenished, but they will be bought up as soon as they're available.
Order fulfillment times for physical gold and silver bullion, coins, and bars are running three weeks and longer. Silver, on the spot or futures market is stabilizing around $14.50, but prices on eBay (which means almost immediate shipment) and through dealers are much higher.
Single one-ounce silver bars on ebay have been flying high, with prices ranging anywhere from $22 to as high as $41.
WTI crude is settling into a range between $22 and $24 per barrel and that price should persist and possibly go lower as the COVID-19 plague spreads and slows movement commerce worldwide. Gas prices in the US are a multi-year lows.
Stocks are not going back to record levels despite the Dow gaining ground for the second straight day. Tuesday and Wednesday were the first time the Dow saw back-to-back gains since February 3-6, when it strung together four straight wins. Finishing on the upside two days straight hadn't happened over the past 31 sessions.
At the Close, Wednesday, March 25, 2020:
Dow Jones Industrial Average: 21,200.55, +495.64 (+2.39%)
NASDAQ: 7,384.29, -33.56 (-0.45%)
S&P 500: 2,475.56, +28.23 (+1.15%)
NYSE: 9,961.38, +303.06 (+3.14%)
The Labor Department reported Thursday that initial unemployment claims for the week ending March 21 rose to a record 3,283,000, an increase of 3,001,000 from the previous week's revised level. An enormous jump in claims was widely expected.
Money Daily will have complete reporting on how this affected the markets in Friday morning's report.
Simply put, Wednesday was just a replay or extension of Tuesday's rally, without as much drama or conviction on the part of investors, witnessed by the rapid descent in the final hour of trading. The Dow lost more than half of the day's gains. The NASDAQ ended up in the red after being up more than 250 points in early afternoon trading.
In other words, this rally ran out of steam via the old, "buy the rumor, sell the news" meme. The "rumor" was the Senate's $2.2 trillion national bailout and rescue plan for COVID-19 (very convenient). The "news" is that it was not passed by the full Senate during market business hours. Instead, the aged Senators stayed up well past their bedtimes again, passing the bill around 11:00 pm ET.
The fact that the Senate's 96-0 passage of the bill will coincide perfectly with the next "buy the rumor, sell the news" item - the weekly unemployment claims number at 8:30 am ET Thursday morning, will no doubt leave open to speculation that the timing was anything but coincidence.
Leaving the barn door just slightly ajar, the House of Representatives still has to vote on the measure passed by the Senate before it goes to President Trump for his signature. If he does get a crack at putting pen to paper on this one, it will allow for a huge influx of capital to individuals, families, and businesses, both big and small. It will also destroy any chance of the federal budget coming in with anything less than a $2 trillion deficit this year (fiscal year ends September 30), and next.
Most Americans will receive either a check or direct deposit in the amount of $1,200. Married couples will get $2,400, plus another $500 for each dependent child. The media says that 90% of the people in this country will get such a check, which is a telling figure. It speaks loudly to the wealth distribution in America when only 10% are making enough to not receive a check of any amount. People making more than $75,000 in 2018 or 2019 will get less than the full amount. There's a cap at $99,000 for individuals and $198,000 for married couples. Those will get nothing. In general terms, there's proof that only 10% of Americans are making more than $99,000 a year. No wonder Bernie Sanders and other democrats receive such strong support for "wealth redistribution."
All that aside, Thursday is looking like a bloodbath for the Bulls, as the unemployment figures will almost certainly be record-setting. Estimates range from 860,000 new claims (UBS) to four million (4,000,000) (Citi). The prior high was 695,000 claims filed the week ended October 2, 1982. If this were a betting game, Money Daily would be at or above the high figure provided by analysts at Citi. There's a chance it could be six million. New York alone could be over a million, ditto California.
As for other markets, bonds, precious metals, and oil were relatively stable on the day. The 10-year note seems to have found a sweet spot with a yield around 0.85%.
Gold looks to be consolidating above $1600 per ounce, though there are widespread reports that nobody can find even a one ounce bar at that price. Dealers have been scrambling for the last two weeks to fill orders and many are completely sold out. The same is true for silver, though to a lesser extent. The miners can produce silver faster than gold, so supplies are being replenished, but they will be bought up as soon as they're available.
Order fulfillment times for physical gold and silver bullion, coins, and bars are running three weeks and longer. Silver, on the spot or futures market is stabilizing around $14.50, but prices on eBay (which means almost immediate shipment) and through dealers are much higher.
Single one-ounce silver bars on ebay have been flying high, with prices ranging anywhere from $22 to as high as $41.
WTI crude is settling into a range between $22 and $24 per barrel and that price should persist and possibly go lower as the COVID-19 plague spreads and slows movement commerce worldwide. Gas prices in the US are a multi-year lows.
Stocks are not going back to record levels despite the Dow gaining ground for the second straight day. Tuesday and Wednesday were the first time the Dow saw back-to-back gains since February 3-6, when it strung together four straight wins. Finishing on the upside two days straight hadn't happened over the past 31 sessions.
At the Close, Wednesday, March 25, 2020:
Dow Jones Industrial Average: 21,200.55, +495.64 (+2.39%)
NASDAQ: 7,384.29, -33.56 (-0.45%)
S&P 500: 2,475.56, +28.23 (+1.15%)
NYSE: 9,961.38, +303.06 (+3.14%)
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