Two straight days of losses should have some investors a little concerned that all the money the Federal Reserve is using to prop up markets may not be enough.
Especially frightful is the short term head and shoulders pattern the Dow has printed, raising the possibility for another serious downturn that could leave the Fed outflanked, flummoxed, and low on ammunition.
Considering that the recent move forward off the March lows was anything other than an aberration predicated on the vacuuming up of voluminous amounts of debt by the central bank is just wishful thinking. After all, the entire planet is being ravaged - societally and economically - by a pandemic, the likes of which have not been seen in over 100 years. Stocks should have been sold right into the trash pile. Instead, the past six weeks have primarily demonstrated the Fed's ability to meddle in the natural functions of what used to be a free market. While profits were deteriorating at a manic pace the Fed saw fit to massage market integrity with bubble-gum, candy, and ice cream, looking past the most obvious and painful resolution to overpriced, overvalued equities: a quick crash and revaluation at lower levels, bankruptcies for the least protected or most egregiously offensive, and a sober look at systemic solvency.
Acting more like an overprotective soccer mom than a steward of principled financial policy, the Fed managed the nearly impossible feat of taking an already-overvalued market to even greater levels of investment insanity, throwing ridiculous amounts of capital and liquidity into a hyperventilated landscape on the verge of collapse.
It's high time for the Fed and the president to back away from the punch bowl of fiat fantasy and allow the market to determine for itself where it wishes to go, though the likelihood of that happening are about the same as Dr. Fauci speaking out of only one side of his mouth.
The president wants negative rates and while the Fed protests against the lunacy of capital destruction, they will eventually comply because that's all they know how to do. When all you have is a hammer, everything looks like a screw, so it's a safe bet that when push comes to shove - sending the major indices back into bear market territory where they belong - the Fed will no doubt begin to engage in financial hari kari.
By introducing negative rates, they will have effectively given up all hope for salvation of the capitalist system, punishing investors and savers even more than a zero-interest rate policy has for the past two decades, now insisting that bond holders lose money and currency is flattened under the steamroller of failed radical policy.
It's one thing to want to rescue a company or an industry from default or liquidation, but the folly and sheer egotistical panache of trying to save an entire economic system is on the table and being gorged upon by the inmates at the Federal Reserve. The panicky regional presidents and FOMC governors are about to put on a show for the ages, demonstrating, for anyone interested, how a group of supposedly intelligent men and woman can openly conspire to their own demise. With every shovelful of capital they feed to the market, the deeper they dig their own grave, with ample assistance from Washington politicians intent on not being outdone. Congress will compete with the Fed for lunatics of the century by doing on the fiscal side about what the Fed is doing on the monetary side, abandoning any remnant of financial discipline by exploding the federal budget with deficits wider than the Grand Canyon.
The American public should allow it. In fact, we should cheer on their efforts emphatically from our stay-at-home prisons. Since the public isn't allowed to go to sporting events or concerts, garden shows or lectures, the least they can do is encourage the people who masterminded this economic mishmash to demolish the antiquated, decrepit, malfunctioning miasma of governance, economy, and policy as quickly as possible, because then, a new functioning system can begin to evolve, one that hopefully does not include elected morons and economic theorists of central planning.
As predictable as day turns to night, the old gives way to the new. If those atop the pyramids of power wish to willfully fling themselves from the their perches, they should be allowed and even encouraged to do so.
It will hasten the pain and speed the healing.
At the Close, Wednesday, May 13, 2020:
Dow: 23,247.97, -516.81 (-2.17%)
NASDAQ: 8,863.17, -139.38 (-1.55%)
S&P 500: 2,820.00, -50.12 (-1.75%)
NYSE: 10,829.44, -226.14 (-2.05%)
Showing posts with label monetary policy. Show all posts
Showing posts with label monetary policy. Show all posts
Thursday, May 14, 2020
Thursday, June 30, 2016
Stocks Regain Nearly All Brexit Losses, But Silver Tells Another Tale
While the maintainers of the status quo managed to nearly erase all of the losses from Friday and Monday due to Brexit, there is an outlier which Money Daily has referenced in the past, and its name is silver.
Gold being the choice of elitists and very rich people worldwide, it gets most of the attention in the financial press, after stocks, of course. Silver is regarded largely as an afterthought by the all-powerful, but it has been, throughout human history, an essential element in commerce, trade and capital accumulation, and today, it outpaced every other asset class by a wide margin, closing in New York at a very favorable price of $18.695, the best closing price since September of 2014.
While other assets have been languishing or found range-bound, silver has forged ahead by a nifty 35% year-to-date.
As a monetary metal, silver has no equal in terms of affordability and value for the common man or woman. The recent rise will no doubt spur further demand and subsequent gains.
Silver's rise signals a threat to phony fiat money and the monopoly of gold as a store of value. It may also be presaging a new monetary order, one in which the general populace will not be thought of as chattel.
Whoopie!
Brexit Didn't Matter After All:
S&P 500: 2,098.86, +28.09 (1.36%)
Dow: 17,929.99, +235.31 (1.33%)
NASDAQ: 4,842.67, +63.43 (1.33%)
Crude Oil 48.39 -2.99% Gold 1,325.10 -0.14% EUR/USD 1.1101 -0.22% 10-Yr Bond 1.4880 +0.74% Corn 372.75 -2.68% Copper 2.20 +0.87% Silver 18.84 +2.38% Natural Gas 2.92 +2.10% Russell 2000 1,151.92 +1.79% VIX 15.78 -5.17% BATS 1000 20,677.17 0.00% GBP/USD 1.3312 -0.92% USD/JPY 103.2700 +0.34%
Gold being the choice of elitists and very rich people worldwide, it gets most of the attention in the financial press, after stocks, of course. Silver is regarded largely as an afterthought by the all-powerful, but it has been, throughout human history, an essential element in commerce, trade and capital accumulation, and today, it outpaced every other asset class by a wide margin, closing in New York at a very favorable price of $18.695, the best closing price since September of 2014.
While other assets have been languishing or found range-bound, silver has forged ahead by a nifty 35% year-to-date.
As a monetary metal, silver has no equal in terms of affordability and value for the common man or woman. The recent rise will no doubt spur further demand and subsequent gains.
Silver's rise signals a threat to phony fiat money and the monopoly of gold as a store of value. It may also be presaging a new monetary order, one in which the general populace will not be thought of as chattel.
Whoopie!
Brexit Didn't Matter After All:
S&P 500: 2,098.86, +28.09 (1.36%)
Dow: 17,929.99, +235.31 (1.33%)
NASDAQ: 4,842.67, +63.43 (1.33%)
Crude Oil 48.39 -2.99% Gold 1,325.10 -0.14% EUR/USD 1.1101 -0.22% 10-Yr Bond 1.4880 +0.74% Corn 372.75 -2.68% Copper 2.20 +0.87% Silver 18.84 +2.38% Natural Gas 2.92 +2.10% Russell 2000 1,151.92 +1.79% VIX 15.78 -5.17% BATS 1000 20,677.17 0.00% GBP/USD 1.3312 -0.92% USD/JPY 103.2700 +0.34%
Tuesday, June 14, 2016
Slump Continues For Stocks; Oil Lower As Discontent Grows
While the world awaits an edict from the high halls of the Federal Reserve on Wednesday, when the FOMC concludes their two day meeting and announces no change in the federal funds rate, investors appear increasingly nervous, not over the expected nothingness dictum from the Fed, but from the overall malaise that has captured markets, otherwise known as stagnation.
What capitalists fear more than anything else is an economy going backwards. What we have today is an economy at stall speed, needing only the slightest of nudges to fall into recession. The US is not alone in these fears; most of Europe is teetering on the brink of a receding growth curve, and this time, there is not enough left of policy maneuvers by central bankers in the EU, Japan, China, or anywhere else in the developed or underdeveloped world, should a recession occur, to keep it from becoming a global depression.
Lessons learned from the near-collapse of the global economy in 2008-09 are that stimuli only is a short-term fix, QE is a waste of money, and lower interest rates do not stir a dormant economy. In essence, the world's central bankers are out of ideas and have been for some time. They are, and have been, pushing on a string, kicking a can down a road, keeping their fingers crossed, and hoping for an economic miracle all at the same time.
Nothing has worked. Nothing will work... until the economies of both the developed world and underdeveloped world purge themselves of debt, stop trying to implement policies that clearly do not work, go back to money backed by something other than empty promises, and stop allowing governments to run up enormous deficits serviced by ever-lower interest payments (debasing the currency all the way along).
Those are just for starters. The world finds itself on the cusp of economic, societal and philosophical revolution. Ordinary people are fed up with government, the media, and various other institutions supposedly in place to provide for the public weal. They are tired of lies, cheating at the highest levels, institutional regulatory strangulation, higher and higher taxes, and an endless stream of regulations that have stripped away their liberties and much of what some may have previously called the "good life."
The few people currently in power are only interested in keeping and maintaining their control over the populations and their power and positions. They are being seriously questioned by populations who feel betrayed, unappreciated and desperate for relief from the very governments and institutions which are supposed to improve their lives, not impoverish them.
Therefore, stocks continue to wallow. And though today's declines are not noteworthy in and of themselves, there's a growing chorus of discontent that continues to rise.
The policies and practices of the past 20 or 30 years cannot continue indefinitely.
The time is coming for major change.
Today's Dippity-Do:
S&P 500: 2,075.32, -3.74 (0.18%)
Dow: 17,674.82, -57.66 (0.33%)
NASDAQ: 4,843.55, -4.89 (0.10%)
Crude Oil 48.56 -0.65% Gold 1,287.90 +0.08% EUR/USD 1.1208 -0.71% 10-Yr Bond 1.61 -0.31% Corn 435.25 +1.22% Copper 2.04 -0.46% Silver 17.40 -0.25% Natural Gas 2.89 -0.86% Russell 2000 1,147.09 -0.31% VIX 20.54 -2.05% BATS 1000 20,677.17 0.00% GBP/USD 1.4109 -0.74% USD/JPY 106.1300 -0.03%
What capitalists fear more than anything else is an economy going backwards. What we have today is an economy at stall speed, needing only the slightest of nudges to fall into recession. The US is not alone in these fears; most of Europe is teetering on the brink of a receding growth curve, and this time, there is not enough left of policy maneuvers by central bankers in the EU, Japan, China, or anywhere else in the developed or underdeveloped world, should a recession occur, to keep it from becoming a global depression.
Lessons learned from the near-collapse of the global economy in 2008-09 are that stimuli only is a short-term fix, QE is a waste of money, and lower interest rates do not stir a dormant economy. In essence, the world's central bankers are out of ideas and have been for some time. They are, and have been, pushing on a string, kicking a can down a road, keeping their fingers crossed, and hoping for an economic miracle all at the same time.
Nothing has worked. Nothing will work... until the economies of both the developed world and underdeveloped world purge themselves of debt, stop trying to implement policies that clearly do not work, go back to money backed by something other than empty promises, and stop allowing governments to run up enormous deficits serviced by ever-lower interest payments (debasing the currency all the way along).
Those are just for starters. The world finds itself on the cusp of economic, societal and philosophical revolution. Ordinary people are fed up with government, the media, and various other institutions supposedly in place to provide for the public weal. They are tired of lies, cheating at the highest levels, institutional regulatory strangulation, higher and higher taxes, and an endless stream of regulations that have stripped away their liberties and much of what some may have previously called the "good life."
The few people currently in power are only interested in keeping and maintaining their control over the populations and their power and positions. They are being seriously questioned by populations who feel betrayed, unappreciated and desperate for relief from the very governments and institutions which are supposed to improve their lives, not impoverish them.
Therefore, stocks continue to wallow. And though today's declines are not noteworthy in and of themselves, there's a growing chorus of discontent that continues to rise.
The policies and practices of the past 20 or 30 years cannot continue indefinitely.
The time is coming for major change.
Today's Dippity-Do:
S&P 500: 2,075.32, -3.74 (0.18%)
Dow: 17,674.82, -57.66 (0.33%)
NASDAQ: 4,843.55, -4.89 (0.10%)
Crude Oil 48.56 -0.65% Gold 1,287.90 +0.08% EUR/USD 1.1208 -0.71% 10-Yr Bond 1.61 -0.31% Corn 435.25 +1.22% Copper 2.04 -0.46% Silver 17.40 -0.25% Natural Gas 2.89 -0.86% Russell 2000 1,147.09 -0.31% VIX 20.54 -2.05% BATS 1000 20,677.17 0.00% GBP/USD 1.4109 -0.74% USD/JPY 106.1300 -0.03%
Thursday, April 21, 2016
With Central Banks Losing Control, Markets Begin Wild Gyrations
In the aftermath of the Deustche Bank revelations that they and other banking concerns engaged in explicit manipulation of gold and silver prices and markets (assuredly, among others), and in anticipation of various central bank announcements, proclamations and policy nonsense, as of today, markets seem to have become somewhat disjointed and erratic.
Witness the madness in precious metals that began in earnest with the opening of the Shanghai Gold Exchange (SGE) daily gold fix priced in yuan, the price of gold shot up $20 when ECB President Mario Draghi left European markets with no new monetary ammunition, and then retreated without reason, ostensibly the controllers in the West reacting to the challenge having been thrown down by the Chinese.
It was a somewhat similar condition in the silver price, which whipped up to $17.65 in early morning trading, only to be slammed down moments later on the NYMEX, below $17. The prices of both gold and silver recovered, but the message is clear: the London gold fixers and those in China are at odds over what should be the true price of precious metals.
There is a solution to this, and that would be to allow markets to work, by outlawing naked shorting, bid stuffing on the CME, high frequency trading and other tools of manipulation. Letting the market decide on the price would be a satisfactory conclusion to what is rapidly turning into an economic war zone, but it is also quite possible the opposing parties could begin using actual guns, bullets, warships and bombs to settle their differences. It is evident that the long-established edge of US monetary hegemony, via the dollar as reserve currency, is coming to an end, and with that, the era of unbacked, unsound money (fiat).
The easiest and most prudent advice to investors at this juncture would be to buy gold - and more importantly silver, since it has been so viciously violated by the bankers over the years - as quickly as possible, and in as much quantity as one can reasonably afford.
US stocks also experienced something of a double dip, once in the early trading and again just before and after noon, which ended up being the move of the day, as the Dow suffered its worst day in three weeks, with the major indices backing off from recent highs, promoted via vapid and obfuscated corporate earnings reports. While the media has been largely hushed over first quarter earnings, the truth of the matter is that most companies are not keeping up with projections, though they are beating lowered expectations. Many companies are reporting positive earnings, no doubt, but they are also lower than what they reported in the year-ago period. Once again, gains in stock prices can generally be attributed to easy monetary policy, cartel-like trading (the same big banks that brought us the last financial crash in 2008-09), and an astounding amount of group-think, wherein nobody bothers with fundamental analysis, but relies more on the whims of the moment, otherwise known as momentum trading.
Get ready for more volatility, as more and more students of the markets realize just how distorted the policies of the various powerful central banks have been.
Today's Closing Numbers:
S&P 500: 2,091.48, -10.92 (0.52%)
Dow: 17,982.52, -113.75 (0.63%)
NASDAQ: 4,945.89, -2.24 (0.05%)
Crude Oil 43.43 -1.70% Gold 1,250.10 -0.02% EUR/USD 1.1289 0.00% 10-Yr Bond 1.87 +0.86% Corn 394.00 +1.09% Copper 2.25 +0.07% Silver 17.03 -0.35% Natural Gas 2.06 -0.43% Russell 2000 1,135.77 -0.57% VIX 13.95 +5.05% BATS 1000 20,682.61 0.00% GBP/USD 1.4317 -0.04% USD/JPY 109.4370 +0.02%
Witness the madness in precious metals that began in earnest with the opening of the Shanghai Gold Exchange (SGE) daily gold fix priced in yuan, the price of gold shot up $20 when ECB President Mario Draghi left European markets with no new monetary ammunition, and then retreated without reason, ostensibly the controllers in the West reacting to the challenge having been thrown down by the Chinese.
It was a somewhat similar condition in the silver price, which whipped up to $17.65 in early morning trading, only to be slammed down moments later on the NYMEX, below $17. The prices of both gold and silver recovered, but the message is clear: the London gold fixers and those in China are at odds over what should be the true price of precious metals.
There is a solution to this, and that would be to allow markets to work, by outlawing naked shorting, bid stuffing on the CME, high frequency trading and other tools of manipulation. Letting the market decide on the price would be a satisfactory conclusion to what is rapidly turning into an economic war zone, but it is also quite possible the opposing parties could begin using actual guns, bullets, warships and bombs to settle their differences. It is evident that the long-established edge of US monetary hegemony, via the dollar as reserve currency, is coming to an end, and with that, the era of unbacked, unsound money (fiat).
The easiest and most prudent advice to investors at this juncture would be to buy gold - and more importantly silver, since it has been so viciously violated by the bankers over the years - as quickly as possible, and in as much quantity as one can reasonably afford.
US stocks also experienced something of a double dip, once in the early trading and again just before and after noon, which ended up being the move of the day, as the Dow suffered its worst day in three weeks, with the major indices backing off from recent highs, promoted via vapid and obfuscated corporate earnings reports. While the media has been largely hushed over first quarter earnings, the truth of the matter is that most companies are not keeping up with projections, though they are beating lowered expectations. Many companies are reporting positive earnings, no doubt, but they are also lower than what they reported in the year-ago period. Once again, gains in stock prices can generally be attributed to easy monetary policy, cartel-like trading (the same big banks that brought us the last financial crash in 2008-09), and an astounding amount of group-think, wherein nobody bothers with fundamental analysis, but relies more on the whims of the moment, otherwise known as momentum trading.
Get ready for more volatility, as more and more students of the markets realize just how distorted the policies of the various powerful central banks have been.
Today's Closing Numbers:
S&P 500: 2,091.48, -10.92 (0.52%)
Dow: 17,982.52, -113.75 (0.63%)
NASDAQ: 4,945.89, -2.24 (0.05%)
Crude Oil 43.43 -1.70% Gold 1,250.10 -0.02% EUR/USD 1.1289 0.00% 10-Yr Bond 1.87 +0.86% Corn 394.00 +1.09% Copper 2.25 +0.07% Silver 17.03 -0.35% Natural Gas 2.06 -0.43% Russell 2000 1,135.77 -0.57% VIX 13.95 +5.05% BATS 1000 20,682.61 0.00% GBP/USD 1.4317 -0.04% USD/JPY 109.4370 +0.02%
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