Sell in May and go away?
Balderdash.
Summer slump?
Nonsense.
Stocks have had an amazing run through July and August, thanks to ultra-low bond yields driving money into stocks, momentum, and oodles of dollars going straight to Wall Street from the Federal Reserve.
As noted by countless economists, columnists, and stock enthusiasts, the backstops provided by the Fed have servd the interests of Wall Street in glorious ways, sending stocks soaring, the S&P and NASDAQ having made multiple record highs over the past eight weeks.
While the NYSE Composite Index and Dow Jones Industrial Average have not made it yet to new records, they're getting close and the Dow, specifically, will get a significant boost on Monday (the final trading day of August) when Exxon Mobil (XOM), Raytheon (RTX), and Pfizer (PFE) are replaced with Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
Already within 900 points of its all-time closing high (29,551.42, 2/12/20), it's within similar range of the intraday high of 29,568.57, which was also made on February 12. The added boost from the booting of three laggards with three high-fliers should send the industrials over the top, possibly this coming week.
Just how good the summer has been to investors is illustrated by the weekly closes for the past eight weeks, beginning July 6 and ending this past Friday, August 28. The slowpokes among the indices was the Dow and NYSE. The latter rose from a July 2 close of 11,991.52 to 13,170.96. It closed on the plus side seven of the eight past weeks for a 9.84% gain.
The Dow Industrials gained in five of the eight weeks, rising more than 2800 points from its July 2 close of 25,827.36, a gain of 10.94 percent.
The S&P closed at 3,130.01 on July 2, and added 378 points during the past eight weeks for a solid 12% upside, while the NASDAQ took home the top prize, vaulting from 10,207.63 eight weeks ago to its most recent record close of 11,695.63, a 14.6% gain. The S&P was up in seven of the past eight weeks while the NASDAQ finished in positive territory in six, including the last five straight.
So, whoever said the era of passive investing was over obviously hasn't taken account of the performance of index funds, which have sparkled recently, despite the narrative supplied to the market by the FAANMGs, the six tech stocks that have largely been responsible for the bulk of the gains in the NAZ and S&P. Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Microsoft (MSFT) and Alphabet, parent of Google (GOOG) account for roughly 25% of the market capitalization of the entire S&P 500. Throw in Elon Musk's Tesla (TSLA) and one could make a very strong point about picking the right stocks over passive investing.
Apple, which recently announced a 4-for-1 stock split, was up 39% over the past eight weeks. Tesla gained a whopping 54%, while Amazon gained only 19%, though it and the other FAANMG components have been steady outperformers for years.
Warren Buffett, who turns 90 today, made news this week when it was revealed he was selling off some banking stocks while picking up shares of Barrick Gold. The information came from the latest 13F filing from Bershire Hathaway, the holding company for Buffett's global portfolio.
The punditry of the investment world made plenty of noise over the move, especially since Buffett had previously claimed to not think much of gold as an investment. One of the most-cited quotes attributed to Buffett's disdain for gold is "[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility."
While Buffett's purchase of some Barrick Gold shares (roughly $600 million) may look like a departure from the Oracle of Omaha's norm, the truth of the matter is that the shares account for a smidge more than 0.2 percent of Bershire's 250 billion stock portfolio. What's interesting about the move was that Berkshire closed its position in Goldman Sachs (GS), eliminating the Vampire Squid entirely from its holdings. It also trimmed positions in JPMorgan Chase (JPM) and Wells Fargo (WFC), but upped its position in Bank of America (BAC), which is now the second-largest holding, well behind #1, Apple.
It will be another three months before we'll know whether Berkshire intends to keep buying Barrick or even other gold-related stocks. For all anyone knows, Buffett could have a secret stash of gold and silver coins buried in his back yard, just in case.
Speaking of reasons to own gold and silver, the second estimate of second quarter GDP was released on Friday, and it was a slight improvement from the initial reading, but not enough of one to matter. The decline, which was estimated to be a record 32.9%, was revised to a 31.7% loss, still the largest on record by far. Making matters more concerning, it's been a fact for some time that the government spending portion of the GDP calculation has been inordinately high, and it now accounts for more than 50% of GDP. The other roughly one-half of GDP is largely consumer spending, people buying things they don't need with credit cards they can't afford to pay.
In the oil patch, the slow, relentless rise in the barrel price of oil continued apace with WTI crude peaking at $43.34 on the 26th - the highest price since March 3rd - before settling at $42.97 on Friday afternoon. Theprice of WTI crude has been below $40 just twice since July 2nd, with the recent prices nearing the top of the recent tight range. With the Labor Day holiday a week off, prices for crude and gas at the pump may begin to decline as the traditional end of summer normally results in lower prices, though these days have been anything but normal.
Treasury yields peaked on Friday, with the 10-year note ending at 0.74% and the 30-year at 1.52%, both the highest since June 16. Shorter-dated maturities were little affected by market noise nor Fed Chairman Jerome Powell's virtual keynote for the Jackson Hole symposium in which he promoted increasing inflationary policy incentives at the Federal Reserve. Powell's insistence that inflation of two percent or more somehow equates to the Fed's mandate of "stable prices" serves to point out what an abject liar he is and what a complete failure the Federal Reserve as a whole has been since its inception more than 100 years ago. The Fed has failed spectacularly in achieving both of its mandates as the dollar has lost 97% of purchasing power since 1913 and full employment - the other mandate - is about as far from the minds of the regional Fed presidents and governors of the FOMC as the Earth is from planet Jupiter.
Gold regained some respect on Friday, up $35 to close out the week at $1,964.83. Since peaking at $2,063.54 on August 6, the trend has been lower, but $1900 an ounce appears to be very strong support. With supply strained and demand still very high, recent dips look more like consolidation than manipulation, even though the spot price is subservient to the eminently exploitable futures market where daily claims on precious metals often exceed a year's production. Eventually, the futures market will face an untenable situation when the punters stand for delivery of real metal rather than a paper equivalent of dollars, yen, or euros. Once the COMEX fails to deliver physical in a timely manner - a possibility that's growing increasingly worrying - it's game over for the paper markets, where the rigging has kept the true price of gold to be discovered for decades.
In order to prevent such an occurrence, the CME has been and will continue to raise margin requirements for futures trading in precious metals until none but the biggest players - central banks, bullion banks, private banks, investment and commercial banks, insurance companies, and sovereign trusts - will be able to afford the buying and selling of futures contracts. Thus, the compression of prices could continue indefinitely while physical premiums soar beyond the rooftops.
Silver also appears to be in a consolidation phase, ranging between $26.45 and $27.67 the past two weeks. It finished up Friday near the top end, at $27.50. Considering the recent smackdown sent silver from a high of $29.13 to $24.79 in the course of one day, the recent close puts the loss at less than six percent, a complete nothing-burger in the highly volatile silver market. The inability of the futures' players to keep a lid on silver indicates that the riggers are losing control. Silver's market is much smaller than gold's, and the demand for physical has bordered on a mania recently due to its affordability and monetary and commercial value.
Here are the most recent prices on eBay (shipping - often free - included) for selected items (numismatics excluded):
Item: Low / High / Average / Median
1 oz silver coin: 31.90 / 48.95 / 39.05 / 37.98
1 oz silver bar: 32.95 / 42.00 / 36.75 / 35.98
1 oz gold coin: 1,985.00 / 2,178.90 / 2,090.41 / 2,107.55
1 oz gold bar: 2,006.16 / 2,114.59 / 2,078.62 / 2,081.75
An historical survey of prices from April, 2020 to the present is available here.
Concluding this edition of the WEEKEND WRAP, a reminder: There are just 65 days until Election Day and 117 days until Christmas. With any luck, we'll all know who the president is by the time we're unwrapping presents.
At the Close, Friday, August 28, 2020:
Dow: 28,653.87, +161.60 (+0.57%)
NASDAQ: 11,695.63, +70.30 (+0.60%)
S&P 500: 3,508.01, +23.46 (+0.67%)
NYSE: 13,170.96, +102.15 (+0.78%)
For the Week:
Dow: +723.54 (+2.59%)
NASDAQ: +383.83 (+3.39%)
S&P 500: +110.85 (+3.26%)
NYSE: +261.89 (+2.83%)
Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts
Sunday, August 30, 2020
Sunday, July 26, 2020
WEEKEND WRAP: US Dollar Scorched As Gold, Silver Shine; Bonds Bid, Stocks Flat, Oil Up
Shifting forces were at work the second last week of July, and while the winds of change didn't quite blow stocks away, the dollar's value, precious metals and bond yields saw wild swings.
Bloomberg's dollar index finished the week at 94.435, edging below the level seen at the trough of the March stock market lows (94.895), and lower for the year (96.389, 12/31/19). It was also the lowest recorded reading since September 2018 (94.220).
While the dollar may have been reeling against competing fiat currencies, it was dealt a knockdown blow by precious metals, especially silver, which had it's best week in more than 40 years. Spot Silver closed at 19.33 per ounce on July 17, traded as high as 23.00 on July 22 before settling into a close at 22.77 on the 24th, a gain of 17.80% in just five trading days.
Gold was also making headlines, with spot gold closing out the week at 1,902.02, a record closing price, surpassing the previous high in US$ of 1895.60 from 2011. While the dollar's weakness was a contributing factor in the rise of precious metals, it wasn't the only one. Continued strong demand, which many dealers are calling "unprecedented", massive purchases by the gold and silver ETF funds, and shortages due to mining shutdowns over the past four months have all been weighing on gold and silver prices.
With faith in fiat currencies and the governments that rule by them weakening, gold, silver, and other hard assets are beginning to be looked upon more favorably as the global economy melts away, multi-national protests persist, and unemployment rages. The first rise in initial weekly US unemployment claims in nearly four months sent shock waves across markets and had a dampening effect on stocks in particular.
WTI crude oil, which had remained moored around the $40/barrel mark for most of the month, was bid slightly higher during the week, closing above $41 for the first time since March. Producers, desperate for higher prices see the falling dollar as an aid to their plight. Global prices are in flux, especially with China buying directly from many producers, including Russia and Iran, bypassing the long-standing dollar hegemony completely. If the dollar continues to decline, the price of oil will certainly rise, affecting just about every finished product in some manner. The condition appears ripe for $50 oil and $2.00 gas at the pump though seasonal demand could keep a lid on prices through the fall.
Treasury yields fell on the long end, with the 30-year taking the brunt of the action, closing out the week at 1.23%, a decline of a full 10 basis points from the previous Friday reading. The benchmark 10-year note slipped from 0.64% to 0.59%, and persisted through Thursday and Friday at that level. Even the one-month maturity bill fell from 0.11 to 0.10%, cramming the entire complex into a 113 basis point box.
The shift in sentiment from bullish on stocks to mildly bearish was, in the main, attributable to the decimation in second quarter earnings as companies lost ground across the equity spectrum. Tech, energy, finance, consumer, and industrial sectors were all affected by the shutdowns and stay-at-home orders prevalent during the second quarter and that was reflected in some very dismal reports, especially from banks and finance stocks, which were forced to add significantly to credit loss reserves over the quarter.
With the reopening of most state economies in the US, there was hope for some relief and a return to pre-COVID conditions, but the recent rise of infections in many states has caused a reversal of the reopening protocols and has tempered enthusiasm for a quick recovery. The COVID crisis seems to have a long-lasting effect, not just on people's health but on the economy in general. The outlook for the fall is not particularly promising either.
Wrapping up this Weekend Wrap, here are the most current prices - including shipping - for select precious metal items on eBay:
Item: Low / High / Average / Median
1 oz silver coin: 27.11 / 46.85 / 35.34 / 34.97
1 oz silver bar: 28.00 / 51.95 / 34.33 / 33.75
1 oz gold coin: 1,850.00 / 2,045.42 / 1,982.27 / 1,995.10
1 oz gold bar: 1,985.22 / 2,019.69 / 2,006.68 / 2,010.15
At the Close, Friday, July 24, 2020:
Dow: 26,469.89, -182.44 (-0.68%)
NASDAQ: 10,363.18, -98.24 (-0.94%)
S&P 500: 3,215.63, -20.03 (-0.62%)
NYSE: 12,461.78, -49.09 (-0.39%)
For the Week:
Dow: -202.06 (-0.76%)
NASDAQ: -140.01 (1.33%)
S&P 500: -9.10 (-0.28%)
NYSE: +59.04 (+0.48%)
Bloomberg's dollar index finished the week at 94.435, edging below the level seen at the trough of the March stock market lows (94.895), and lower for the year (96.389, 12/31/19). It was also the lowest recorded reading since September 2018 (94.220).
While the dollar may have been reeling against competing fiat currencies, it was dealt a knockdown blow by precious metals, especially silver, which had it's best week in more than 40 years. Spot Silver closed at 19.33 per ounce on July 17, traded as high as 23.00 on July 22 before settling into a close at 22.77 on the 24th, a gain of 17.80% in just five trading days.
Gold was also making headlines, with spot gold closing out the week at 1,902.02, a record closing price, surpassing the previous high in US$ of 1895.60 from 2011. While the dollar's weakness was a contributing factor in the rise of precious metals, it wasn't the only one. Continued strong demand, which many dealers are calling "unprecedented", massive purchases by the gold and silver ETF funds, and shortages due to mining shutdowns over the past four months have all been weighing on gold and silver prices.
With faith in fiat currencies and the governments that rule by them weakening, gold, silver, and other hard assets are beginning to be looked upon more favorably as the global economy melts away, multi-national protests persist, and unemployment rages. The first rise in initial weekly US unemployment claims in nearly four months sent shock waves across markets and had a dampening effect on stocks in particular.
WTI crude oil, which had remained moored around the $40/barrel mark for most of the month, was bid slightly higher during the week, closing above $41 for the first time since March. Producers, desperate for higher prices see the falling dollar as an aid to their plight. Global prices are in flux, especially with China buying directly from many producers, including Russia and Iran, bypassing the long-standing dollar hegemony completely. If the dollar continues to decline, the price of oil will certainly rise, affecting just about every finished product in some manner. The condition appears ripe for $50 oil and $2.00 gas at the pump though seasonal demand could keep a lid on prices through the fall.
Treasury yields fell on the long end, with the 30-year taking the brunt of the action, closing out the week at 1.23%, a decline of a full 10 basis points from the previous Friday reading. The benchmark 10-year note slipped from 0.64% to 0.59%, and persisted through Thursday and Friday at that level. Even the one-month maturity bill fell from 0.11 to 0.10%, cramming the entire complex into a 113 basis point box.
The shift in sentiment from bullish on stocks to mildly bearish was, in the main, attributable to the decimation in second quarter earnings as companies lost ground across the equity spectrum. Tech, energy, finance, consumer, and industrial sectors were all affected by the shutdowns and stay-at-home orders prevalent during the second quarter and that was reflected in some very dismal reports, especially from banks and finance stocks, which were forced to add significantly to credit loss reserves over the quarter.
With the reopening of most state economies in the US, there was hope for some relief and a return to pre-COVID conditions, but the recent rise of infections in many states has caused a reversal of the reopening protocols and has tempered enthusiasm for a quick recovery. The COVID crisis seems to have a long-lasting effect, not just on people's health but on the economy in general. The outlook for the fall is not particularly promising either.
Wrapping up this Weekend Wrap, here are the most current prices - including shipping - for select precious metal items on eBay:
Item: Low / High / Average / Median
1 oz silver coin: 27.11 / 46.85 / 35.34 / 34.97
1 oz silver bar: 28.00 / 51.95 / 34.33 / 33.75
1 oz gold coin: 1,850.00 / 2,045.42 / 1,982.27 / 1,995.10
1 oz gold bar: 1,985.22 / 2,019.69 / 2,006.68 / 2,010.15
At the Close, Friday, July 24, 2020:
Dow: 26,469.89, -182.44 (-0.68%)
NASDAQ: 10,363.18, -98.24 (-0.94%)
S&P 500: 3,215.63, -20.03 (-0.62%)
NYSE: 12,461.78, -49.09 (-0.39%)
For the Week:
Dow: -202.06 (-0.76%)
NASDAQ: -140.01 (1.33%)
S&P 500: -9.10 (-0.28%)
NYSE: +59.04 (+0.48%)
Wednesday, June 17, 2020
Stocks Gain On Sensational Retail Report; NASDAQ Re-Approaching Record Highs
Stocks gained across the board on Tuesday, after May retail sales figures were up an eye-popping 17.7% as stores reopened across the country post-lockdowns from the coronavirus scare.
The number was more than double what many analysts had expected and prompted a wave of new buying in stocks of all varieties. The Dow gained more than 500 points. The S&P powered up by almost 60 points.
Despite the gaudy month-over-month numbers, gross receipts were 6.1% below a year earlier due mainly to uneven store re-openings, some states keeping stay-at-home restrictions in place longer than others.
With gains on both Monday and Tuesday, stocks have recovered most of the losses suffer last Thursday, June 11. The NASDAQ is about 175 points away from its all-time high, made on June 10. The intraday high was 10,086.89. At the close, the record was set at 10,020.35.
Of particular note is Friday's quad-witching day, which should introduce more volatility to the mix. It seems apparent, however, that bulls have regained the advantage and stocks appear set on a path upward, despite valuations in the stratosphere.
Bonds took a hit as yields on the long end of the treasury complex rose. The 30-year exploded nine basis points higher, from a yield of 1.45% on Monday to 1.54% Tuesday. The 10-year note was yielding 0.75%.
Precious metals were higher on the futures market but investors are becoming impatient with the constant niggling in the paper markets. Considering the level of disruption over the past four months, both gold and silver appear largely undervalued. Prices remain elevated on fair, open markets such as eBay. Dealers are still charging high premiums over spot and many are sold out of popular items.
It was recently reported that gold-backed exchange traded funds (ETFs) added 623 tonnes of the metal worth $34 billion to their stockpile from January to May, exceeding in five months every full-year increase on record. That's an impressive figure, as the amount of gold held in storage by ETFs reflects a growing demand for the precious metal.
While the ETFs are required to hold gold in storage at a percentage of their actual outstanding stock, shares of ETFs are not redeemable in gold and serve as a buffer against physical price increases. Touted as a safe way to invest in gold, they serve to track price increases on the paper (futures and spot) markets. The SPDR Gold Shares (GLD) ETF is up from 142 to 162 this year, roughly the same percentage in gold futures.
As pure derivatives, the gold and silver ETFs cause more confusion and actually dilute the pool of gold buyers. People investing in gold or silver ETFs are actually serving to keep a lid on prices by not engaging in active physical purchase and storage of their own gold.
The ETFs are yet another reason why gold and silver are orders of magnitude lower than where many believe they should be. Speculative in nature, they can be driven in any direction by well-timed buys, sells or shorts.
Oil prices have hit a rock at about $38 per barrel. That could change Wednesday when a monthly report from the Organization of the Petroleum Exporting Countries (OPEC) is released.
At the Close, Tuesday, June 16, 2020:
Dow: 26,289.98, +526.82 (+2.04%)
NASDAQ: 9,895.87, +169.84 (+1.75%)
S&P 500: 3,124.74, +58.15 (+1.90%)
NYSE: 12,161.47, +218.57 (+1.83%)
The number was more than double what many analysts had expected and prompted a wave of new buying in stocks of all varieties. The Dow gained more than 500 points. The S&P powered up by almost 60 points.
Despite the gaudy month-over-month numbers, gross receipts were 6.1% below a year earlier due mainly to uneven store re-openings, some states keeping stay-at-home restrictions in place longer than others.
With gains on both Monday and Tuesday, stocks have recovered most of the losses suffer last Thursday, June 11. The NASDAQ is about 175 points away from its all-time high, made on June 10. The intraday high was 10,086.89. At the close, the record was set at 10,020.35.
Of particular note is Friday's quad-witching day, which should introduce more volatility to the mix. It seems apparent, however, that bulls have regained the advantage and stocks appear set on a path upward, despite valuations in the stratosphere.
Bonds took a hit as yields on the long end of the treasury complex rose. The 30-year exploded nine basis points higher, from a yield of 1.45% on Monday to 1.54% Tuesday. The 10-year note was yielding 0.75%.
Precious metals were higher on the futures market but investors are becoming impatient with the constant niggling in the paper markets. Considering the level of disruption over the past four months, both gold and silver appear largely undervalued. Prices remain elevated on fair, open markets such as eBay. Dealers are still charging high premiums over spot and many are sold out of popular items.
It was recently reported that gold-backed exchange traded funds (ETFs) added 623 tonnes of the metal worth $34 billion to their stockpile from January to May, exceeding in five months every full-year increase on record. That's an impressive figure, as the amount of gold held in storage by ETFs reflects a growing demand for the precious metal.
While the ETFs are required to hold gold in storage at a percentage of their actual outstanding stock, shares of ETFs are not redeemable in gold and serve as a buffer against physical price increases. Touted as a safe way to invest in gold, they serve to track price increases on the paper (futures and spot) markets. The SPDR Gold Shares (GLD) ETF is up from 142 to 162 this year, roughly the same percentage in gold futures.
As pure derivatives, the gold and silver ETFs cause more confusion and actually dilute the pool of gold buyers. People investing in gold or silver ETFs are actually serving to keep a lid on prices by not engaging in active physical purchase and storage of their own gold.
The ETFs are yet another reason why gold and silver are orders of magnitude lower than where many believe they should be. Speculative in nature, they can be driven in any direction by well-timed buys, sells or shorts.
Oil prices have hit a rock at about $38 per barrel. That could change Wednesday when a monthly report from the Organization of the Petroleum Exporting Countries (OPEC) is released.
At the Close, Tuesday, June 16, 2020:
Dow: 26,289.98, +526.82 (+2.04%)
NASDAQ: 9,895.87, +169.84 (+1.75%)
S&P 500: 3,124.74, +58.15 (+1.90%)
NYSE: 12,161.47, +218.57 (+1.83%)
Sunday, May 17, 2020
WEEKEND WRAP: Stocks Split, Dow Suffers; Gold, Silver May Be Headed For Record Prices
The week just past was not a particularly enthralling one for stock investors, as the Dow and NYSE Composite took it on the chin while the S&P and NASDAQ put up fractional, unsubstantial gains.
As economic and COVID-19 developments were concerned, it was mostly politicking over substance, as President Trump backhanded Dr. Anthony Fauci, head of the CDC, over predictions related to states' reopening their economies and the potential for a second wave of the virus in the coming fall or winter.
For the most part, stocks refrained from further insane advances, though the gains toward the back end of the week reeked of malingering by the Federal Reserve, moving stocks off their lows into green territory in both Thursday and Friday's sessions. With the Dow Jones Industrial Average forming a pretty obvious short-term head-and-shoulders pattern, the equity markets are set up for a breakout either higher or lower, though the least resistant path may be down another six to eight percent over the next week to two weeks. With the traditional third Friday of the month options expiry in the rear view mirror (May 15), the markets will need some kind of catalyst to move forward. Otherwise, expect the Dow and NYSE Composite to both head back below the bear market defined level of -20 percent.
If that were to happen, the NASDAQ, already ridiculously valued, and S&P should fall in sympathy with the Blue Chips.
The week was a very solid one for oil, though the June contract is set to expire on Tuesday (May 18). Producers do not want to see a repeat of the May futures expiration when the price went negative and buyers were being paid to haul oil off to the tune of $41 a barrel.
June futures closed last Friday (May 8) at $24.61 a barrel and this week at $29.43. Monday will likely give a signal as to whether another collapse is imminent, though with US states and most of Europe reopening their economies, it would appear that the massive glut has at least partially abated and demand is rising. There is still no open air for the futures to fly in, however, as the spread between the current month all the way out to the December 2021 contract is pretty slim. 35.78 is the last quoted price for December 2021.
Yields on treasuries continued lower through the week and are presumptuously headed below zero, into the brave new world of negative rates. With the two-year yielding 0.16% and the five-year at 0.31, it would seem only a matter of when, not if rates go underwater. With deflationary forces at work, the low yields on short-dates bills and notes may be attractive as a hedge against asset price declines. Yields cannot fall much more from these levels before going negative in real terms. Those seeing inflation ahead could easily be urged into paying to hold capital.
Gold and silver absolutely exploded this week on eBay, a market where true price discovery can be ascertained.
For the first time since Money Daily began tracking prices a month ago for one troy ounce gold and silver coins and bars, one ounce gold coins sold for more than the all-time record closing spot price ($1895.00, September 5 and 6, 2011) on an average and median basis. The average price for a one ounce gold coin on eBay was $1,917.41, and for a one ounce bar, $1,898.62. Buyers are looking at a premium of over $150 for either coins or bars. Notably, smaller denominations of gold coins and bars (1/10 ounce to 1/2 ounce) are routinely selling at prices that relate to over $225 per ounce.
These actual sale prices are in stark contrast to the easily-corrupted gold COMEX prices where gold closed with a bid of $1742.20 on Friday afternoon.
Silver also showed enormous gains over last week as the average price of a one ounce coin gained from $30.50 on May 10 to $33.71 this Sunday. Price appreciation for silver bars was even more dramatic, gaining from last week's average price of $26.77 to $34.57 this week. That is more than double the COMEX paper silver price bid of $16.61 as of Friday's close.
We employ the same methodology, looking at the most recently-closed sales on eBay, eliminating any coins or bars that may have numismatic or collectible value as best as possible to come up with a standard, reliable price tracking model.
Here are the most recent prices:
Item: Low / High / Average / Median
1 oz silver coin: 20.51 / 47.00 / 33.71 / 32.42
1 oz silver bar: 26.25 / 44.50 / 34.57 / 34.50
1 oz gold coin: 1,833.08 / 2,030.50 / 1,917.41 / 1,907.02
1 oz gold bar: 1,845.37 / 2,035.00 / 1,898.62 / 1,874.09
Parts of Saturday and Sunday mornings were spent viewing some very interesting and important videos.
Mike Maloney's narrative over charts from wtfhappenedin1971.com offers an historic perspective of the American condition.
Refinitiv shares a wide-ranging interview with Real Vision’s CEO and co-founder, Raoul Pal, who provides distinct trading strategies and a serious view of what's ahead for the world's economies.
Gregory Mannarino supplies a look ahead for Stocks, Bitcoin, Gold and Silver.
Something to make note of as the world cascades through the covid crisis and beyond is that all of the important videos on youtube and various websites are being made by people who are generally shunned by mainstream media. goldsilver.com's Mike Maloney, Adam Taggert and Chris Martenson of Peak Prosperity, Real Vision's Raoul Pal, Max Keiser and Stacy Herbert of the Kaiser Report, and, to a lesser extent, various guests of Keith McCullough's Hedgeye can be seen only on the internet, while Fed officials, government bigwigs like Treasury Secretary Steven Mnuchin, and old line investors like Warren Buffett are the staple of mainstream TV media.
It's quite a contrast when you view it from that perspective and realize that the stories being told and the predictions being made about the future of the crisis and of the world are radically different. There's a choice to be made. Just which narrative are you going to believe? Who's advice will you follow, and where will you end up, socially, politically, and financially.
At the Close, Friday, May 15, 2020:
Dow Jones Industrial Average: 23,685.42, +60.12 (+0.25%)
NASDAQ: 9,014.56, +70.84 (+0.79%)
S&P 500: 2,863.70, +11.20 (+0.39%)
NYSE: 10,947.32, +19.92 (+0.18%)
For the Week:
Dow: -645.90 (-2.65%)
NASDAQ: +70.84 (+0.79%)
S&P 500: +11.20 (+0.39%)
NYSE: -407.02 (-3.58%)
As economic and COVID-19 developments were concerned, it was mostly politicking over substance, as President Trump backhanded Dr. Anthony Fauci, head of the CDC, over predictions related to states' reopening their economies and the potential for a second wave of the virus in the coming fall or winter.
For the most part, stocks refrained from further insane advances, though the gains toward the back end of the week reeked of malingering by the Federal Reserve, moving stocks off their lows into green territory in both Thursday and Friday's sessions. With the Dow Jones Industrial Average forming a pretty obvious short-term head-and-shoulders pattern, the equity markets are set up for a breakout either higher or lower, though the least resistant path may be down another six to eight percent over the next week to two weeks. With the traditional third Friday of the month options expiry in the rear view mirror (May 15), the markets will need some kind of catalyst to move forward. Otherwise, expect the Dow and NYSE Composite to both head back below the bear market defined level of -20 percent.
If that were to happen, the NASDAQ, already ridiculously valued, and S&P should fall in sympathy with the Blue Chips.
The week was a very solid one for oil, though the June contract is set to expire on Tuesday (May 18). Producers do not want to see a repeat of the May futures expiration when the price went negative and buyers were being paid to haul oil off to the tune of $41 a barrel.
June futures closed last Friday (May 8) at $24.61 a barrel and this week at $29.43. Monday will likely give a signal as to whether another collapse is imminent, though with US states and most of Europe reopening their economies, it would appear that the massive glut has at least partially abated and demand is rising. There is still no open air for the futures to fly in, however, as the spread between the current month all the way out to the December 2021 contract is pretty slim. 35.78 is the last quoted price for December 2021.
Yields on treasuries continued lower through the week and are presumptuously headed below zero, into the brave new world of negative rates. With the two-year yielding 0.16% and the five-year at 0.31, it would seem only a matter of when, not if rates go underwater. With deflationary forces at work, the low yields on short-dates bills and notes may be attractive as a hedge against asset price declines. Yields cannot fall much more from these levels before going negative in real terms. Those seeing inflation ahead could easily be urged into paying to hold capital.
Gold and silver absolutely exploded this week on eBay, a market where true price discovery can be ascertained.
For the first time since Money Daily began tracking prices a month ago for one troy ounce gold and silver coins and bars, one ounce gold coins sold for more than the all-time record closing spot price ($1895.00, September 5 and 6, 2011) on an average and median basis. The average price for a one ounce gold coin on eBay was $1,917.41, and for a one ounce bar, $1,898.62. Buyers are looking at a premium of over $150 for either coins or bars. Notably, smaller denominations of gold coins and bars (1/10 ounce to 1/2 ounce) are routinely selling at prices that relate to over $225 per ounce.
These actual sale prices are in stark contrast to the easily-corrupted gold COMEX prices where gold closed with a bid of $1742.20 on Friday afternoon.
Silver also showed enormous gains over last week as the average price of a one ounce coin gained from $30.50 on May 10 to $33.71 this Sunday. Price appreciation for silver bars was even more dramatic, gaining from last week's average price of $26.77 to $34.57 this week. That is more than double the COMEX paper silver price bid of $16.61 as of Friday's close.
We employ the same methodology, looking at the most recently-closed sales on eBay, eliminating any coins or bars that may have numismatic or collectible value as best as possible to come up with a standard, reliable price tracking model.
Here are the most recent prices:
Item: Low / High / Average / Median
1 oz silver coin: 20.51 / 47.00 / 33.71 / 32.42
1 oz silver bar: 26.25 / 44.50 / 34.57 / 34.50
1 oz gold coin: 1,833.08 / 2,030.50 / 1,917.41 / 1,907.02
1 oz gold bar: 1,845.37 / 2,035.00 / 1,898.62 / 1,874.09
Parts of Saturday and Sunday mornings were spent viewing some very interesting and important videos.
Mike Maloney's narrative over charts from wtfhappenedin1971.com offers an historic perspective of the American condition.
Refinitiv shares a wide-ranging interview with Real Vision’s CEO and co-founder, Raoul Pal, who provides distinct trading strategies and a serious view of what's ahead for the world's economies.
Gregory Mannarino supplies a look ahead for Stocks, Bitcoin, Gold and Silver.
Something to make note of as the world cascades through the covid crisis and beyond is that all of the important videos on youtube and various websites are being made by people who are generally shunned by mainstream media. goldsilver.com's Mike Maloney, Adam Taggert and Chris Martenson of Peak Prosperity, Real Vision's Raoul Pal, Max Keiser and Stacy Herbert of the Kaiser Report, and, to a lesser extent, various guests of Keith McCullough's Hedgeye can be seen only on the internet, while Fed officials, government bigwigs like Treasury Secretary Steven Mnuchin, and old line investors like Warren Buffett are the staple of mainstream TV media.
It's quite a contrast when you view it from that perspective and realize that the stories being told and the predictions being made about the future of the crisis and of the world are radically different. There's a choice to be made. Just which narrative are you going to believe? Who's advice will you follow, and where will you end up, socially, politically, and financially.
At the Close, Friday, May 15, 2020:
Dow Jones Industrial Average: 23,685.42, +60.12 (+0.25%)
NASDAQ: 9,014.56, +70.84 (+0.79%)
S&P 500: 2,863.70, +11.20 (+0.39%)
NYSE: 10,947.32, +19.92 (+0.18%)
For the Week:
Dow: -645.90 (-2.65%)
NASDAQ: +70.84 (+0.79%)
S&P 500: +11.20 (+0.39%)
NYSE: -407.02 (-3.58%)
Friday, May 8, 2020
Are Markets Awakening to Reality? Gold, Silver, Bonds Higher; Stocks, Oil Lose Momentum As Argentina Approaches Default, US April Job Losses 20.5 Million
Stocks, bonds, oil and precious metals all had their ups and downs on Thursday, as the focus early was on stocks, which put on impressive gains, only to give half of them back in afternoon trading.
Oil was higher in early trading, spiking to $26.27 a barrel for WTI crude before collapsing all the way down to $23.13.
With a turn right after noon, money began to flow away from riskier assets and into safe havens, with bonds, gold, and silver all being bid as the day wore onward.
Silver started the day at $14.81, languished early, and finished sharply higher, at $15.36. Gold was also cold in the morning, but found its legs later, moving from Wednesday's NY close of $1684.10 to finish at $1718.00.
Treasuries were bought with unusual gusto on the long end. The yield on the 5-year note moved from 0.37% to 0.29% on the day, the 10-year yield went from 0.72% to 0.63%, and the 30-year dropped 10 basis points, from 1.41% to 1.31%. The curve flatted out by 10 basis points, 121 bips covering the entire complex.
All of this activity was against a backdrop of 3.2 million initial unemployment claims, bringing the recent total to 33 million over the past seven weeks.
April non-farm payrolls were also on the mind, with the number - expected to be a record for one month - due out Friday morning.
Argentina (silvery) is about to default on $65 billion of its foreign debt today, Friday, May 8, as bondholders and the government are at loggerheads over a restructuring, though the government appeared to be willing to make some concessions late Thursday. A harder deadline comes May 22, when the country could enter certain default, as a grace period for $500 million of interest payments comes to an end. The clock is ticking for the nation that has defaulted on debt eight times previously.
Argentina could be the doomsday clock the financial world is watching. Other nations are sure to be on the brink of debt default and currency crises after weeks and months of lockdowns, supply chain breakdowns, social unrest, and deaths caused by COVID-19.
Is this the beginning of the end of the stock market rally and a rush to the safety of hard assets? The Dow popped above 24,000 intraday, but it's been unable to surpass the seven-week high of 24,633.66, which is roughly a half retrace of the March pullback. Another failure at this level would signal a short-term selling condition.
Just moments ago, the BLS reported April non-farm payrolls, registering a loss of 20.5 million jobs, pushing the unemployment rate to 14.7%.
With COVID-19 continuing to cause dislocations in everything from meat distribution to pro sports to education, the debate over whether this economic maelstrom will eventually result in a sharp rebound or a long, drawn out recession or even a depression.
Siding with the sharp rebound are those who gave up the ghost back in March with lockdowns, the government, media, and most of the financial community following the lead of the Federal Reserve.
Naysayers, viewing the global economy at a severe breaking point with no good solutions, include James Rickards, Mike Maloney of goldsilver.com, Peak Prosperity's Chris Martenson, Peter Schiff (a fiat money perma-bear and gold perma-bull) and others.
Greg Mannarino, the Robin Hood of Wall Street adds some perspective:
At the Close, Thursday, May 7, 2020:
Dow: 23,875.89, +211.25 (+0.89%)
NASDAQ: 8,979.66, +125.27 (+1.41%)
S&P 500: 2,881.19, +32.77 (+1.15%)
NYSE: 11,121.67, +121.68 (+1.11%)
Oil was higher in early trading, spiking to $26.27 a barrel for WTI crude before collapsing all the way down to $23.13.
With a turn right after noon, money began to flow away from riskier assets and into safe havens, with bonds, gold, and silver all being bid as the day wore onward.
Silver started the day at $14.81, languished early, and finished sharply higher, at $15.36. Gold was also cold in the morning, but found its legs later, moving from Wednesday's NY close of $1684.10 to finish at $1718.00.
Treasuries were bought with unusual gusto on the long end. The yield on the 5-year note moved from 0.37% to 0.29% on the day, the 10-year yield went from 0.72% to 0.63%, and the 30-year dropped 10 basis points, from 1.41% to 1.31%. The curve flatted out by 10 basis points, 121 bips covering the entire complex.
All of this activity was against a backdrop of 3.2 million initial unemployment claims, bringing the recent total to 33 million over the past seven weeks.
April non-farm payrolls were also on the mind, with the number - expected to be a record for one month - due out Friday morning.
Argentina (silvery) is about to default on $65 billion of its foreign debt today, Friday, May 8, as bondholders and the government are at loggerheads over a restructuring, though the government appeared to be willing to make some concessions late Thursday. A harder deadline comes May 22, when the country could enter certain default, as a grace period for $500 million of interest payments comes to an end. The clock is ticking for the nation that has defaulted on debt eight times previously.
Argentina could be the doomsday clock the financial world is watching. Other nations are sure to be on the brink of debt default and currency crises after weeks and months of lockdowns, supply chain breakdowns, social unrest, and deaths caused by COVID-19.
Is this the beginning of the end of the stock market rally and a rush to the safety of hard assets? The Dow popped above 24,000 intraday, but it's been unable to surpass the seven-week high of 24,633.66, which is roughly a half retrace of the March pullback. Another failure at this level would signal a short-term selling condition.
Just moments ago, the BLS reported April non-farm payrolls, registering a loss of 20.5 million jobs, pushing the unemployment rate to 14.7%.
With COVID-19 continuing to cause dislocations in everything from meat distribution to pro sports to education, the debate over whether this economic maelstrom will eventually result in a sharp rebound or a long, drawn out recession or even a depression.
Siding with the sharp rebound are those who gave up the ghost back in March with lockdowns, the government, media, and most of the financial community following the lead of the Federal Reserve.
Naysayers, viewing the global economy at a severe breaking point with no good solutions, include James Rickards, Mike Maloney of goldsilver.com, Peak Prosperity's Chris Martenson, Peter Schiff (a fiat money perma-bear and gold perma-bull) and others.
Greg Mannarino, the Robin Hood of Wall Street adds some perspective:
At the Close, Thursday, May 7, 2020:
Dow: 23,875.89, +211.25 (+0.89%)
NASDAQ: 8,979.66, +125.27 (+1.41%)
S&P 500: 2,881.19, +32.77 (+1.15%)
NYSE: 11,121.67, +121.68 (+1.11%)
Sunday, May 3, 2020
Stocks Flat As States Begin to Reopen; COVID-19 Still Wreaking Havoc on Lives, Markets
This installment of the WEEKEND WRAP is going to be one of the shortest since the onset of the coronavirus crisis because noting much of consequence occurred, other than the "breakthrough" with Gilead Science's remdesivir clinical trial.
Turns out, remdesivir, as was already known, has little effect on the virus and doesn't reduce mortality at all. The study was purposely shortened to include only the data that shows the drug reduces the time to recovery by about 30%. Big deal. You take it - at $1000 a dose - and you recover in ten days rather than 14, at a cost of some $6-8000. Yeah, great. Four fewer days with a bad cold and a big pharmacy bill.
Hydroxychloroquine with zinc supplements and healthy doses of Vitamins C, D3, and Quercetin (or red wine, onions, green tea, apples, berries) before infection will likely prevent one from contracting the virus, and, the same combination after infection (if started early) will shorten the duration and severity.
Proven.
Mainstream media and government won't allow this information to even be considered.
The release of the remdesivir story was timed to coincide with the release of first quarter GDP, which was a very disappointing -4.8 percent. It's worth noting that many mainstream economists, like those from Bank of America and Goldman Sachs, downplayed the first quarter and thought it was going to come in as a positive number, proving, once again, that expert opinions should be treated in a similar manner to online stock touts. Both are better avoided and trusting in your own gut.
Most states have at least partially re-opened their economies, lead by Georgia, Florida, Tennessee and other Southern and some Midwestern states, notably Iowa, the Dakotas, Kansas, Nebraska, Oklahoma, Missouri, Texas). Some eight states never actually issued lockdown orders in the first place.
Meanwhile New York, New Jersey, Connecticut, Massachusetts, Virginia, Michigan, California, and others are still operating under lockdown restrictions.
This Wired.com article from April 30 offer some accurate state-by-state reporting.
Stocks finished the week about where they started (see below).
Treasuries closed out the week with the 2-year note yielding 0.20%, the 10-year, 0.64%, and the 30-year, 1.27%. There was limited movement. The 2-year down two basis points, the 10-year up four, and the 30-year up 10. The curve steepened 10 basis points to 117, essentially all driven by the 30-year.
Oil seems to be stabilizing, but at a price that will slaughter some smaller producers. WTI crude finished the week at its high of $19.69 a barrel on the June contract. Predictions are for a sloppy termination of the current contract, though nothing quite like the end of the May contract when oil prices turned negative.
Precious metals continue to be massaged and depressed. Gold futures closed out on Friday at $1700.40 per troy ounce. Silver futures finished at $14.97. The gold/silver ratio stands at 113.6, near a 5000-year high. The sensible move, for investors would be to be buying silver for the foreseeable future, as premiums on both metals are high, though, on a percentage basis, the silver premiums are drastic. It's nearly impossible to purchase silver for under $20 an ounce in quantity. Smaller amounts, such as one ounce coins and bars carry premiums of 70 to 100% or higher, whereas gold premiums are about $130-160, less than 10%.
It's actually far easier to purchase silver than gold, especially on ebay, where delivery delays such as those being experienced by dealers, are cut down to a few days rather than weeks. Delivery delays are slowly abating, but minimum order sizes remain in place at many online dealers.
It appears as though stocks are going to tumble on Monday, as word leaked out that Berkshire Hathaway, the holding company of Warren Buffett, is going to be selling hard into the recent rally. A retest of the March lows could be underway as stocks finished dramatically lower Friday - which happened to be May 1 - wiping out the week's gains.
The Dow Jones Industrial Average has failed repeatedly to break through the 50% retrace line off the lows, and that could portend a significant shift in risk assessment.
At the Close, Friday, May 1, 2020:
Dow: 23,723.69, -622.03 (-2.55%)
NASDAQ: 8,604.95, -284.60 (-3.20%)
S&P 500: 2,830.71, -81.72 (-2.81%)
NYSE: 11,058.57, -313.77 (-2.76%)
For the Week:
Dow: -51.58 (-0.22%)
NASDAQ: -29.57 (-0.34%)
S&P 500: -6.03 (-0.21%)
NYSE: +40.68 (-0.37%)
Turns out, remdesivir, as was already known, has little effect on the virus and doesn't reduce mortality at all. The study was purposely shortened to include only the data that shows the drug reduces the time to recovery by about 30%. Big deal. You take it - at $1000 a dose - and you recover in ten days rather than 14, at a cost of some $6-8000. Yeah, great. Four fewer days with a bad cold and a big pharmacy bill.
Hydroxychloroquine with zinc supplements and healthy doses of Vitamins C, D3, and Quercetin (or red wine, onions, green tea, apples, berries) before infection will likely prevent one from contracting the virus, and, the same combination after infection (if started early) will shorten the duration and severity.
Proven.
Mainstream media and government won't allow this information to even be considered.
The release of the remdesivir story was timed to coincide with the release of first quarter GDP, which was a very disappointing -4.8 percent. It's worth noting that many mainstream economists, like those from Bank of America and Goldman Sachs, downplayed the first quarter and thought it was going to come in as a positive number, proving, once again, that expert opinions should be treated in a similar manner to online stock touts. Both are better avoided and trusting in your own gut.
Most states have at least partially re-opened their economies, lead by Georgia, Florida, Tennessee and other Southern and some Midwestern states, notably Iowa, the Dakotas, Kansas, Nebraska, Oklahoma, Missouri, Texas). Some eight states never actually issued lockdown orders in the first place.
Meanwhile New York, New Jersey, Connecticut, Massachusetts, Virginia, Michigan, California, and others are still operating under lockdown restrictions.
This Wired.com article from April 30 offer some accurate state-by-state reporting.
Stocks finished the week about where they started (see below).
Treasuries closed out the week with the 2-year note yielding 0.20%, the 10-year, 0.64%, and the 30-year, 1.27%. There was limited movement. The 2-year down two basis points, the 10-year up four, and the 30-year up 10. The curve steepened 10 basis points to 117, essentially all driven by the 30-year.
Oil seems to be stabilizing, but at a price that will slaughter some smaller producers. WTI crude finished the week at its high of $19.69 a barrel on the June contract. Predictions are for a sloppy termination of the current contract, though nothing quite like the end of the May contract when oil prices turned negative.
Precious metals continue to be massaged and depressed. Gold futures closed out on Friday at $1700.40 per troy ounce. Silver futures finished at $14.97. The gold/silver ratio stands at 113.6, near a 5000-year high. The sensible move, for investors would be to be buying silver for the foreseeable future, as premiums on both metals are high, though, on a percentage basis, the silver premiums are drastic. It's nearly impossible to purchase silver for under $20 an ounce in quantity. Smaller amounts, such as one ounce coins and bars carry premiums of 70 to 100% or higher, whereas gold premiums are about $130-160, less than 10%.
It's actually far easier to purchase silver than gold, especially on ebay, where delivery delays such as those being experienced by dealers, are cut down to a few days rather than weeks. Delivery delays are slowly abating, but minimum order sizes remain in place at many online dealers.
It appears as though stocks are going to tumble on Monday, as word leaked out that Berkshire Hathaway, the holding company of Warren Buffett, is going to be selling hard into the recent rally. A retest of the March lows could be underway as stocks finished dramatically lower Friday - which happened to be May 1 - wiping out the week's gains.
The Dow Jones Industrial Average has failed repeatedly to break through the 50% retrace line off the lows, and that could portend a significant shift in risk assessment.
At the Close, Friday, May 1, 2020:
Dow: 23,723.69, -622.03 (-2.55%)
NASDAQ: 8,604.95, -284.60 (-3.20%)
S&P 500: 2,830.71, -81.72 (-2.81%)
NYSE: 11,058.57, -313.77 (-2.76%)
For the Week:
Dow: -51.58 (-0.22%)
NASDAQ: -29.57 (-0.34%)
S&P 500: -6.03 (-0.21%)
NYSE: +40.68 (-0.37%)
Tuesday, April 21, 2020
The Bubble Has Been Popped; All Fiat Currencies Will Become Worthless; The New Normal Will Be Absurd
Leave it to the most corrupt governments in the history of mankind to put the world into a global depression. This isn't about China, or the United States, it's about all of them. France, Egypt, Indonesia, it doesn't matter. Every government in the world is corrupt to the core, led on by central bankers, market manipulators, and the lure of riches.
It's likely always been that way, but it just seems to be much worse now than ever before. There's no honesty, no integrity, no compassion in any of the soulless monsters that some refer to as "our leaders." Well, our dear leaders have led everybody down a path of ruin and injustice, pain and despair.
And it certainly doesn't help matters when the mainstream media has become completely useless. Neither do they investigate nor present truth. They are not journalists. They are note takers, headline mongers, zombified readers of tele-prompters. They spew propaganda directly from government sources.
Enough.
The world is currently so bizarre that the price of crude oil traded at a negative price. On Monday, the May contract for US West Texas Intermediate (WTI) oil, the benchmark for US crude prices, fell to its lowest-ever, a negative price of -$40.32 per barrel. Because of demand destruction by a near-global lockdown and a supply glut that has filled storage capacity to the brim, producers were forced to pay buyers to take delivery as contracts expired.
Here is an explanation of how this happened.
The upside-down futures market will provide more insanity in days to come. It's not as though everybody's going back to work tomorrow or next week, or that airline travel will suddenly become all the rage again. The June contracts are likely to witness similar madness.
Stocks responded to a degree, though hardly with the expedience one would have expected. For a time, the NASDAQ was actually trading in positive territory. Eventually, even the most stubborn of the bulls had to relent.
As the coronavirus crisis and lockdowns continue, stocks should be expected to decline. They haven't because the Fed is backstopping everything on wall Street by buying up all the bad paper that being tossed to the wind. Through Special Purpose Vehicles (SPVs) which circumvent the law, the Federal Reserve is buying up municipal bonds, investment grade (IG) bonds, High Yield (HY) bonds, Junk bonds, and much more in addition to their usual purchasing of treasury and mortgage-backed securities, in a desperate effort to provide liquidity in what has become an illiquid market. Eventually, they will resort to buying equities outright, just as the Bank of Japan and Swiss National Bank has done.
When the Fed becomes the global lender and buyer of last resort, all of the companies listed on the exchanges will be worthless because they will not have enough free cash flow to cover the interest on their debt. The money center and investment banks are already insolvent, and have been since 2008, kept alive by massive injections of fiat currency via the Fed's discount window, interest on reserves, various accounting frauds, and other chicanery only people as deranged and greedy as these money maniacs have become.
National currencies are imploding at an increasingly rapid pace, all fiat, backed by nothing, eventually headed to worthlessness. Perhaps some day in the not too distant future, the Fed will pay people to take currency off their hands, such as happened with oil on Monday. The ECB, most European nations and the Bank of Japan already do, most of their national bonds carrying negative yields. Having the entire planet's economy shut down certainly hasn't helped matters.
Eventually, the creators of this mess will improvise a new global currency to "save the world," which would be more insanity unless it is backed by gold and/or silver. Desperate people will line up to exchange their worthless dollars, yen, euros, and pounds for what will likely be of digital design, capable of being tracked by the purveyors of debt, the same ones who imploded the prior system.
There will be riots, protests, starvation, rampant crime, lawlessness of a degree nobody can even imagine before the central banks arrive with their ultimate solution. It's all part of the plan. Nobody will be able to do anything without using the agreed-upon new currency. The only hope for preventing the world turning into a ghastly neo-feudal nightmare is the wholesale repudiation of central banks, debt-backed currencies, and fractional reserve banking. It's going to be a very wicked time.
That's all for today. It's too disgusting and depressing to even bother trying to explain the present circumstances and the blighted future that awaits.
At the Close, Monday, April 20, 2020:
Dow Jones Industrial Average: 23,650.44, -592.05 (-2.44%)
NASDAQ: 8,560.73, -89.41 (-1.03%)
S&P 500: 2,823.16, -51.40 (-1.79%)
NYSE: 11,003.88, -204.41 (-1.82%)
It's likely always been that way, but it just seems to be much worse now than ever before. There's no honesty, no integrity, no compassion in any of the soulless monsters that some refer to as "our leaders." Well, our dear leaders have led everybody down a path of ruin and injustice, pain and despair.
And it certainly doesn't help matters when the mainstream media has become completely useless. Neither do they investigate nor present truth. They are not journalists. They are note takers, headline mongers, zombified readers of tele-prompters. They spew propaganda directly from government sources.
Enough.
The world is currently so bizarre that the price of crude oil traded at a negative price. On Monday, the May contract for US West Texas Intermediate (WTI) oil, the benchmark for US crude prices, fell to its lowest-ever, a negative price of -$40.32 per barrel. Because of demand destruction by a near-global lockdown and a supply glut that has filled storage capacity to the brim, producers were forced to pay buyers to take delivery as contracts expired.
Here is an explanation of how this happened.
The upside-down futures market will provide more insanity in days to come. It's not as though everybody's going back to work tomorrow or next week, or that airline travel will suddenly become all the rage again. The June contracts are likely to witness similar madness.
Stocks responded to a degree, though hardly with the expedience one would have expected. For a time, the NASDAQ was actually trading in positive territory. Eventually, even the most stubborn of the bulls had to relent.
As the coronavirus crisis and lockdowns continue, stocks should be expected to decline. They haven't because the Fed is backstopping everything on wall Street by buying up all the bad paper that being tossed to the wind. Through Special Purpose Vehicles (SPVs) which circumvent the law, the Federal Reserve is buying up municipal bonds, investment grade (IG) bonds, High Yield (HY) bonds, Junk bonds, and much more in addition to their usual purchasing of treasury and mortgage-backed securities, in a desperate effort to provide liquidity in what has become an illiquid market. Eventually, they will resort to buying equities outright, just as the Bank of Japan and Swiss National Bank has done.
When the Fed becomes the global lender and buyer of last resort, all of the companies listed on the exchanges will be worthless because they will not have enough free cash flow to cover the interest on their debt. The money center and investment banks are already insolvent, and have been since 2008, kept alive by massive injections of fiat currency via the Fed's discount window, interest on reserves, various accounting frauds, and other chicanery only people as deranged and greedy as these money maniacs have become.
National currencies are imploding at an increasingly rapid pace, all fiat, backed by nothing, eventually headed to worthlessness. Perhaps some day in the not too distant future, the Fed will pay people to take currency off their hands, such as happened with oil on Monday. The ECB, most European nations and the Bank of Japan already do, most of their national bonds carrying negative yields. Having the entire planet's economy shut down certainly hasn't helped matters.
Eventually, the creators of this mess will improvise a new global currency to "save the world," which would be more insanity unless it is backed by gold and/or silver. Desperate people will line up to exchange their worthless dollars, yen, euros, and pounds for what will likely be of digital design, capable of being tracked by the purveyors of debt, the same ones who imploded the prior system.
There will be riots, protests, starvation, rampant crime, lawlessness of a degree nobody can even imagine before the central banks arrive with their ultimate solution. It's all part of the plan. Nobody will be able to do anything without using the agreed-upon new currency. The only hope for preventing the world turning into a ghastly neo-feudal nightmare is the wholesale repudiation of central banks, debt-backed currencies, and fractional reserve banking. It's going to be a very wicked time.
That's all for today. It's too disgusting and depressing to even bother trying to explain the present circumstances and the blighted future that awaits.
At the Close, Monday, April 20, 2020:
Dow Jones Industrial Average: 23,650.44, -592.05 (-2.44%)
NASDAQ: 8,560.73, -89.41 (-1.03%)
S&P 500: 2,823.16, -51.40 (-1.79%)
NYSE: 11,003.88, -204.41 (-1.82%)
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%)
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%)
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%)
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%)
Monday, March 9, 2020
Weekend Wrap: This Is Bad; Oil Crashes; Stock Futures Limit Down; Global Market Panic in Progress
Thanks to a late-day ramp on Friday afternoon, the week turned out to be mostly positive for the investor class, though it certainly didn't seem to be that way most as the days wore onward.
With a 600-point buying spree on the Dow Jones Industrial Average - which pulled all the other indices higher as well - stocks finished with gains instead of substantial losses. After a week of wild swings, the mood had turned ugly, accentuated by cascading drops on Thursday and Friday at the opening bells both days and concerted selling in airline stocks, banks, and hospitality.
As pronounced as the near-panic over the prior five trading sessions was, what's ahead on Monday will be worse by orders of magnitude.
Beginning with the coronavirus (COVID-19) decimating economies and social structure from China to Italy to South Korea, Iran, and beyond, slumping demand and forecasting of a bleak near-term future prompted extreme action from Saudi Arabia over the weekend. On Friday, when Russia refused to go along with a planned 1.5 million barrels a day reduction in crude production by OPEC+ nations, the Saudis decided to put the screws to everyone in the oil business by slashing their rates and ramping up production.
The impact of this momentous decision on Saturday was immediately felt across not just the oil futures markets but equity and credit markets around the world. With all major indices closed as usual on Sunday, focus was attuned to futures, which were being hammered lower by as much as seven percent in some cases. In the US, futures trading was halted when the Dow, S&P, and NASDAQ futures fell by five percent, otherwise known as limit down.
Crude futures were down by extreme amounts. WTI crude was last seen at $32.07 per barrel, a 22% loss from Friday, when it was selling in the low 40s per barrel.
Bonds were being battered as well, with reports that the benchmark 10-year note was trading with a yield below 0.48% (at one point yielding an all-time low of 0.31%) and other bond yields were being destroyed in markets that began to open, first in Japan, China and the Far East, then to Europe. If fear of COVID-19 contagion was palpable, the contagion from the economic fallout had become all to real.
With US markets set to open in an hour, the condition is dire.
A quick rundown of the carnage on major indices around the world:
Suppression of the precious metals, the only remaining asset class that may hold some value, continues unabated as global economies come under severe pressure. Gold gained marginally, to $1678.00 per ounce, following a banner performance last week. Silver is under even more pressure, trading at $16.83 on futures markets, making a mockery of the gold/silver ratio, which is nearly 100:1. In more measured times - as in all centuries prior to this one - the gold silver ratio was pretty steady at 12:1 to 16:1. The current measure is a bad joke on a bad day, told by bad people with nothing but evil intentions (central banks).
Silver would have to rise to $100 per ounce for the gold/silver ratio to be anywhere near historical norms. With gold on the verge of a major breakout above $2000 per ounce, silver should - some day, maybe - be worth over $150 per ounce or similar equivalent in some other currency.
Monday's open should be epic. The aftermath, and the expected coordinated response by central banks figures to be a complete clown show, highlighted by massive injections of cash, POMO, TOMO, market-neutral rates, negative rates, and eventually, some collapsing banks. Couldn't happen to a more deserving crowd.
Money Daily will provide updates as time allows. Panic is a mild term for what's about to occur.
At the Close, Friday, March 6, 2020:
Dow Jones Industrial Average: 25,864.78, -256.52 (-0.98%)
NASDAQ: 8,575.62, -162.97 (-1.86%)
S&P 500: 2,972.37, -51.57 (-1.71%)
NYSE: 12,352.03, -240.97 (-1.91%)
For the Week:
Dow: +455.42 (+1.79%)
NASDAQ: +8.25 (+0.10%)
S&P 500: +18.15 (+0.61%)
NYSE: -28.94 (-0.23%)
With a 600-point buying spree on the Dow Jones Industrial Average - which pulled all the other indices higher as well - stocks finished with gains instead of substantial losses. After a week of wild swings, the mood had turned ugly, accentuated by cascading drops on Thursday and Friday at the opening bells both days and concerted selling in airline stocks, banks, and hospitality.
As pronounced as the near-panic over the prior five trading sessions was, what's ahead on Monday will be worse by orders of magnitude.
Beginning with the coronavirus (COVID-19) decimating economies and social structure from China to Italy to South Korea, Iran, and beyond, slumping demand and forecasting of a bleak near-term future prompted extreme action from Saudi Arabia over the weekend. On Friday, when Russia refused to go along with a planned 1.5 million barrels a day reduction in crude production by OPEC+ nations, the Saudis decided to put the screws to everyone in the oil business by slashing their rates and ramping up production.
The impact of this momentous decision on Saturday was immediately felt across not just the oil futures markets but equity and credit markets around the world. With all major indices closed as usual on Sunday, focus was attuned to futures, which were being hammered lower by as much as seven percent in some cases. In the US, futures trading was halted when the Dow, S&P, and NASDAQ futures fell by five percent, otherwise known as limit down.
Crude futures were down by extreme amounts. WTI crude was last seen at $32.07 per barrel, a 22% loss from Friday, when it was selling in the low 40s per barrel.
Bonds were being battered as well, with reports that the benchmark 10-year note was trading with a yield below 0.48% (at one point yielding an all-time low of 0.31%) and other bond yields were being destroyed in markets that began to open, first in Japan, China and the Far East, then to Europe. If fear of COVID-19 contagion was palpable, the contagion from the economic fallout had become all to real.
With US markets set to open in an hour, the condition is dire.
A quick rundown of the carnage on major indices around the world:
- NIKKEI (Japan) -5.07%
- Straits Times Index (Taiwan, Pacific Rim) -6.03%
- SSE Composite (China) -3.01%
- Hang Seng (Hong Kong) -4.23%
- BSE Sensex (India) -5.17%
- All Ordinaries (Australia) -7.40%
- KOSPI (South Korea) -4.19%
- MOEX (Russia) -3.45
- Jakarta Composite (Indonesia) -6.58%
- FTSE Bursa (Malaysia) -3.97%
- DAX (Germany) -7.00%
- CAC-40 (France) -7.14%
- FTSE 100 (England) -6.93%
- EuroNext 100 (Europe composite) -7.50%
Suppression of the precious metals, the only remaining asset class that may hold some value, continues unabated as global economies come under severe pressure. Gold gained marginally, to $1678.00 per ounce, following a banner performance last week. Silver is under even more pressure, trading at $16.83 on futures markets, making a mockery of the gold/silver ratio, which is nearly 100:1. In more measured times - as in all centuries prior to this one - the gold silver ratio was pretty steady at 12:1 to 16:1. The current measure is a bad joke on a bad day, told by bad people with nothing but evil intentions (central banks).
Silver would have to rise to $100 per ounce for the gold/silver ratio to be anywhere near historical norms. With gold on the verge of a major breakout above $2000 per ounce, silver should - some day, maybe - be worth over $150 per ounce or similar equivalent in some other currency.
Monday's open should be epic. The aftermath, and the expected coordinated response by central banks figures to be a complete clown show, highlighted by massive injections of cash, POMO, TOMO, market-neutral rates, negative rates, and eventually, some collapsing banks. Couldn't happen to a more deserving crowd.
Money Daily will provide updates as time allows. Panic is a mild term for what's about to occur.
At the Close, Friday, March 6, 2020:
Dow Jones Industrial Average: 25,864.78, -256.52 (-0.98%)
NASDAQ: 8,575.62, -162.97 (-1.86%)
S&P 500: 2,972.37, -51.57 (-1.71%)
NYSE: 12,352.03, -240.97 (-1.91%)
For the Week:
Dow: +455.42 (+1.79%)
NASDAQ: +8.25 (+0.10%)
S&P 500: +18.15 (+0.61%)
NYSE: -28.94 (-0.23%)
Sunday, March 1, 2020
Coronavirus (COVID-19) Crushes Stocks, Commodities, Oil, Gold, Silver; Crisis Appears To Be Accelerating
(Simultaneously published at Downtown Magazine)
As ugly goes, this past week ranks right up there with bearded lady or three-eyed ogre status.
Over the course of just five trading sessions, stocks lost more than ten percent on all the main indices. The Dow topped the list with a drop of 12.36%. The week and the preceding Thursday and Friday (all but the NASDAQ are sporting seven-day losing streaks marked the fastest that stocks fell into correction territory, officially designated as a 10% slide.
What's worse - if there's anything worse than shaving a couple trillion off the American market cap balance sheet - is that the rush to sell hardly seems to be over. The last week of February looks more like the beginning of something more severe, and with the spread of the coronavirus (COVID-19) just beginning to make an impact in the United States, there isn't much talk about "buying the dip" at this particular juncture.
Just because everybody loves numbers, here are the current losses from the respective tops and the levels needed to reach down to a 20% loss, the designated level at which would kick in a bear market. Bear in mind that stocks recently hit all-time highs.
Dow: Top: 29,551.42 (2/12/20); Current: 25,409.36 (-14.02%); Bear Market (-20%): 23,641.14
NASDAQ: Top: 9,817.18 (2/19/20); Current: 8,567.37 (-12.74%); Bear Market(-20%): 7,853.74
S&P 500: Top: 3,386.15 (2/19/20); Current: 2,954.22 (-13.76%); Bear Market (-20%): 2,708.92
NYSE: Top: 14,183.20 (1/17/20); Current: 12,380.97 (-12.71%); Bear Market (-20%): 11,346.56
The potential for a bear market are palpable for more reasons than just the threat of COVID-19 spreading across the great expanse of the United States. A widespread outbreak, like the one in China, would be devastating, but already there are strong indications that community transmission has already taken place in the state of Washington, in Chicago, and in California.
Widespread infections that close schools and businesses would only be the tip of the issue. Large public gatherings - and that is a concern with baseball's regular season less than a month away - would carry warnings to the public. Many would likely stay away just out of personal caution, but hope is that the department of Heath and Human Services (HHS), CDC and Vice President Pence's executive branch team will keep community outbreaks well contained. However, France and Switzerland have banned large gatherings over 5,000, and cancelled all sporting events. Imagine the same for the United States in just a few weeks. It could happen. It may not.
Possibly also working against the virus is time. Many similar viruses, like the flu, die off naturally or lose their effectiveness and ability to transmit and spread.
On he other hand, the aftereffects from China's production slowdown have not been fully felt and won't be evident until companies report first quarter results. That's early April and beyond, giving the markets more than a month to navigate whatever trend emerges.
Stocks were significantly overvalued when the slide began; today they are less so, though still hanging in the high end in the valuation regimen. There is more room on the downside. All through 2019, companies were not reporting robust results. The S&P was generally flat on earnings yet stocks rose. Capacity Utilization and Productivity have also shown signs of a slowdown, even prior to the coronavirus event.
While unemployment remains a bright spot, business expansion has been slow to nearly nothing. A slew of variables - in effect the market's wall of worry - are mixed and unresolved. With sentiment now having shifted violently from greed to fear, any bad or marginal data is going to get the bum's rush, encouraging more selling.
Elsewhere, crude oil took a massive hit during the week. WTI crude closed at $54.88 on February 20, but by Friday of this week had dropped to $44.76 per barrel, a slide of 18.45%.
Precious metals abruptly went negative midweek after rallying for the better part of the last month. The silver continuous contract closed Friday at $16.46, the lowest price since last July. Gold topped out at $1691.70 per ounce on Monday, but by Friday could be purchased for $1566.70, more than a hundred dollar discount. Four straight down days snapped a rally in gold that started in late November, 2019. The gold price remains elevated, having only caught down to a price that was last seen the first week of February.
Particularly telling was action in the treasury market and bonds overall. The entire yield curve was decimated with the benchmark 10-year note checking in at an all-time low of 1.13%. The 30-year bond also posted a record low yield at 1.65% on Friday. With inversion on the short end - the 6-month bill is yielding 1.11 - the 2-year, 3-year, and 5-year are yielding 0.86%, 0.85%, and 0.89%, respectively.
With everybody from President Trump on down calling on the Federal Reserve to get into the act, rumors began circulating late Thursday that the Fed would coordinate with other central banks for some kind of symmetric cuts in overnight rates as early as Sunday, though as of this writing, nothing has come of it. The Fed is virtually guaranteed to cut by at least 25 basis points at its next FOMC meeting, on March 17-18, though for many in the markets, that seems a long time off and may in fact be too late to have much influence.
It wasn't just treasuries feeling the heat. According to Doug Noland's Credit Bubble Bulletin, "There were no investment-grade deals for the first time in 18 months, as $25bn of sales were postponed awaiting more favorable market conditions."
If credit markets begin to seize up, which appears to be the evolving case, the Fed will have no choice but to lower the federal funds rate prior to the meeting. 50 basis points would appear appropriate if the virus continues to spread not just in the US, but around the world. More than 60 countries have at least one case of the virus and the United States, Australia, and Thailand have reported their first deaths just in the past 24 hours.
Preparedness is the key to surviving whatever form the crisis takes, be it medical or economic. Households should have on hand at least a three-week supply of food and other essentials at the minimum. Investors should have moved money into safe havens, as many did. Money market funds and bonds provide some relief from the roller coaster of stocks. Precious metals usually provide some protection, but, as was the case in 2008, gold and silver fell off dramatically as stores of the metals were sold in order to shore up cash liquidity. Back then, they were the first commodities to recover, besting the markets by a number of months, though right now, they don't appear to be stunning buying opportunities.
If the worst case scenario occurs and there are wide ranging quarantines, travel restrictions and cancelation of public gatherings, expect nothing short of a complete meltdown of the financial system and conditions which have never been seen before. A stock market decline of 60-70 percent would be a real possibility. The entire rip to the downside could take as long as 18 months or as little as six.
That's not to say that a total collapse will occur. There may be mitigating factors in the interim, plus the advent of warmer weather with higher humidity might slow down the virus, but market direction has turned violently to the negative. Now is not the time to jump in a buy equities as most rallies will likely be met with strong resistance and more selling.
Presently, everything is up in the air, including the virus and the world's finances.
At the Close, Friday, February 28, 2020:
Dow Jones Industrial Average: 25,409.36, -357.28 (-1.39%)
NASDAQ: 8,567.37, +0.89 (+0.01%)
S&P 500: 2,954.22, -24.54 (-0.82%)
NYSE: 12,380.97, -166.29 (-1.33%)
For the Week:
Dow: -3583.05 (-12.36%)
NASDAQ: -1009.22 (-10.54%)
S&P 500: -383.53 (-11.49%)
NYSE: -1594.81 (-11.41%)
As ugly goes, this past week ranks right up there with bearded lady or three-eyed ogre status.
Over the course of just five trading sessions, stocks lost more than ten percent on all the main indices. The Dow topped the list with a drop of 12.36%. The week and the preceding Thursday and Friday (all but the NASDAQ are sporting seven-day losing streaks marked the fastest that stocks fell into correction territory, officially designated as a 10% slide.
What's worse - if there's anything worse than shaving a couple trillion off the American market cap balance sheet - is that the rush to sell hardly seems to be over. The last week of February looks more like the beginning of something more severe, and with the spread of the coronavirus (COVID-19) just beginning to make an impact in the United States, there isn't much talk about "buying the dip" at this particular juncture.
Just because everybody loves numbers, here are the current losses from the respective tops and the levels needed to reach down to a 20% loss, the designated level at which would kick in a bear market. Bear in mind that stocks recently hit all-time highs.
Dow: Top: 29,551.42 (2/12/20); Current: 25,409.36 (-14.02%); Bear Market (-20%): 23,641.14
NASDAQ: Top: 9,817.18 (2/19/20); Current: 8,567.37 (-12.74%); Bear Market(-20%): 7,853.74
S&P 500: Top: 3,386.15 (2/19/20); Current: 2,954.22 (-13.76%); Bear Market (-20%): 2,708.92
NYSE: Top: 14,183.20 (1/17/20); Current: 12,380.97 (-12.71%); Bear Market (-20%): 11,346.56
The potential for a bear market are palpable for more reasons than just the threat of COVID-19 spreading across the great expanse of the United States. A widespread outbreak, like the one in China, would be devastating, but already there are strong indications that community transmission has already taken place in the state of Washington, in Chicago, and in California.
Widespread infections that close schools and businesses would only be the tip of the issue. Large public gatherings - and that is a concern with baseball's regular season less than a month away - would carry warnings to the public. Many would likely stay away just out of personal caution, but hope is that the department of Heath and Human Services (HHS), CDC and Vice President Pence's executive branch team will keep community outbreaks well contained. However, France and Switzerland have banned large gatherings over 5,000, and cancelled all sporting events. Imagine the same for the United States in just a few weeks. It could happen. It may not.
Possibly also working against the virus is time. Many similar viruses, like the flu, die off naturally or lose their effectiveness and ability to transmit and spread.
On he other hand, the aftereffects from China's production slowdown have not been fully felt and won't be evident until companies report first quarter results. That's early April and beyond, giving the markets more than a month to navigate whatever trend emerges.
Stocks were significantly overvalued when the slide began; today they are less so, though still hanging in the high end in the valuation regimen. There is more room on the downside. All through 2019, companies were not reporting robust results. The S&P was generally flat on earnings yet stocks rose. Capacity Utilization and Productivity have also shown signs of a slowdown, even prior to the coronavirus event.
While unemployment remains a bright spot, business expansion has been slow to nearly nothing. A slew of variables - in effect the market's wall of worry - are mixed and unresolved. With sentiment now having shifted violently from greed to fear, any bad or marginal data is going to get the bum's rush, encouraging more selling.
Elsewhere, crude oil took a massive hit during the week. WTI crude closed at $54.88 on February 20, but by Friday of this week had dropped to $44.76 per barrel, a slide of 18.45%.
Precious metals abruptly went negative midweek after rallying for the better part of the last month. The silver continuous contract closed Friday at $16.46, the lowest price since last July. Gold topped out at $1691.70 per ounce on Monday, but by Friday could be purchased for $1566.70, more than a hundred dollar discount. Four straight down days snapped a rally in gold that started in late November, 2019. The gold price remains elevated, having only caught down to a price that was last seen the first week of February.
Particularly telling was action in the treasury market and bonds overall. The entire yield curve was decimated with the benchmark 10-year note checking in at an all-time low of 1.13%. The 30-year bond also posted a record low yield at 1.65% on Friday. With inversion on the short end - the 6-month bill is yielding 1.11 - the 2-year, 3-year, and 5-year are yielding 0.86%, 0.85%, and 0.89%, respectively.
With everybody from President Trump on down calling on the Federal Reserve to get into the act, rumors began circulating late Thursday that the Fed would coordinate with other central banks for some kind of symmetric cuts in overnight rates as early as Sunday, though as of this writing, nothing has come of it. The Fed is virtually guaranteed to cut by at least 25 basis points at its next FOMC meeting, on March 17-18, though for many in the markets, that seems a long time off and may in fact be too late to have much influence.
It wasn't just treasuries feeling the heat. According to Doug Noland's Credit Bubble Bulletin, "There were no investment-grade deals for the first time in 18 months, as $25bn of sales were postponed awaiting more favorable market conditions."
If credit markets begin to seize up, which appears to be the evolving case, the Fed will have no choice but to lower the federal funds rate prior to the meeting. 50 basis points would appear appropriate if the virus continues to spread not just in the US, but around the world. More than 60 countries have at least one case of the virus and the United States, Australia, and Thailand have reported their first deaths just in the past 24 hours.
Preparedness is the key to surviving whatever form the crisis takes, be it medical or economic. Households should have on hand at least a three-week supply of food and other essentials at the minimum. Investors should have moved money into safe havens, as many did. Money market funds and bonds provide some relief from the roller coaster of stocks. Precious metals usually provide some protection, but, as was the case in 2008, gold and silver fell off dramatically as stores of the metals were sold in order to shore up cash liquidity. Back then, they were the first commodities to recover, besting the markets by a number of months, though right now, they don't appear to be stunning buying opportunities.
If the worst case scenario occurs and there are wide ranging quarantines, travel restrictions and cancelation of public gatherings, expect nothing short of a complete meltdown of the financial system and conditions which have never been seen before. A stock market decline of 60-70 percent would be a real possibility. The entire rip to the downside could take as long as 18 months or as little as six.
That's not to say that a total collapse will occur. There may be mitigating factors in the interim, plus the advent of warmer weather with higher humidity might slow down the virus, but market direction has turned violently to the negative. Now is not the time to jump in a buy equities as most rallies will likely be met with strong resistance and more selling.
Presently, everything is up in the air, including the virus and the world's finances.
At the Close, Friday, February 28, 2020:
Dow Jones Industrial Average: 25,409.36, -357.28 (-1.39%)
NASDAQ: 8,567.37, +0.89 (+0.01%)
S&P 500: 2,954.22, -24.54 (-0.82%)
NYSE: 12,380.97, -166.29 (-1.33%)
For the Week:
Dow: -3583.05 (-12.36%)
NASDAQ: -1009.22 (-10.54%)
S&P 500: -383.53 (-11.49%)
NYSE: -1594.81 (-11.41%)
Wednesday, February 12, 2020
Wall Street Plays Wait-and-See On Coronavirus (WuHan Flu)
Without a source more trustworthy than the Communist Party of China (CPC) for accurate data on the coronavirus (Wuhan Flu), it's difficult to make an assessment of the threat from the disease which has spread to 25 countries and two cruise ships, but has so far resulted in only 517 confirmed cases and two deaths, one in Hong Kong and another in the Philippines.
Inside mainland China, it's apparently a different story, what with 44,685 confirmed cases and 1114 deaths, the government is trying to maintain the people's spirit, but, with something on the order of 400 million people under quarantine orders, theres little doubt that patience is wearing thin.
Wall Street has, for the most part, faded the fallout from the virus's effect on China's economy and its part in the global supply chain until yesterday, when stocks slumped after an initial upside burst, leaving the Dow on the downside and the other indices hanging onto marginal gains. Notable was the NYSE, which led all the averages percentage-wise, an outlier occurrence, and possibly the beginning of a shift into small cap stocks.
Commodities were flat, with gold and silver barely budging from unchanged and oil settling around the $50 mark for WTI crude.
US treasuries escaped from inversion, with the 10-year note finishing at 1.59% yield and bills with maturities of less than a year all lower than that, albeit by only a few basis points. The 30-year bond is sitting precariously on a yield of just 2.05%.
China, notorious for supplying information that is either corrupted, massaged, or goal-sought to the pleasure of the Party, is difficult to gauge in terms of what it's telling the rest of the world. Are there 1100 dead from the virus or 11,000? Have over 4000 recovered, or more, or less? And what were the treatments involved?
None of this information is readily available as China is keeping a tight lid on the details. One thing is for sure: plants that were closed first because of the Lunar New Year holiday and had their closures extended by the threat of the virus are still closed, even though many were supposed to reopen on Monday, February 10. That's a worry Wall Street cannot overlook for long. With companies supplying component parts from everything from automobiles to washing machines, the effect of their closure will be felt up the chain. Car-makers outside of China, Nissan, Tesla, Kia, and others have already announced plant closures due to supply disruption. The longer the Chinese factories remain shuttered, the worse it is not only for the Chinese economy, but the global condition as well.
The overarching theme from the public start of the virus in early January to today has been one of questions about the virulence of the virus, the length of its incubation, the mortality rates. These questions have been answered in roundabout manners, but the big one, where does this all end? remains a mystery. China says the spread of the virus is slowing; the WHO says a global heightening of risk is on the horizon.
For the time being, everybody is playing a wait-and-see game.
At the Close, Tuesday, February 11, 2020:
Dow Jones Industrial Average: 29,276.34, -0.48 (-0.00%)
NASDAQ: 9,638.94, +10.55 (+0.11%)
S&P 500: 3,357.75, +5.66 (+0.17%)
NYSE: 14,054.08, +69.60 (+0.50%)
Inside mainland China, it's apparently a different story, what with 44,685 confirmed cases and 1114 deaths, the government is trying to maintain the people's spirit, but, with something on the order of 400 million people under quarantine orders, theres little doubt that patience is wearing thin.
Wall Street has, for the most part, faded the fallout from the virus's effect on China's economy and its part in the global supply chain until yesterday, when stocks slumped after an initial upside burst, leaving the Dow on the downside and the other indices hanging onto marginal gains. Notable was the NYSE, which led all the averages percentage-wise, an outlier occurrence, and possibly the beginning of a shift into small cap stocks.
Commodities were flat, with gold and silver barely budging from unchanged and oil settling around the $50 mark for WTI crude.
US treasuries escaped from inversion, with the 10-year note finishing at 1.59% yield and bills with maturities of less than a year all lower than that, albeit by only a few basis points. The 30-year bond is sitting precariously on a yield of just 2.05%.
China, notorious for supplying information that is either corrupted, massaged, or goal-sought to the pleasure of the Party, is difficult to gauge in terms of what it's telling the rest of the world. Are there 1100 dead from the virus or 11,000? Have over 4000 recovered, or more, or less? And what were the treatments involved?
None of this information is readily available as China is keeping a tight lid on the details. One thing is for sure: plants that were closed first because of the Lunar New Year holiday and had their closures extended by the threat of the virus are still closed, even though many were supposed to reopen on Monday, February 10. That's a worry Wall Street cannot overlook for long. With companies supplying component parts from everything from automobiles to washing machines, the effect of their closure will be felt up the chain. Car-makers outside of China, Nissan, Tesla, Kia, and others have already announced plant closures due to supply disruption. The longer the Chinese factories remain shuttered, the worse it is not only for the Chinese economy, but the global condition as well.
The overarching theme from the public start of the virus in early January to today has been one of questions about the virulence of the virus, the length of its incubation, the mortality rates. These questions have been answered in roundabout manners, but the big one, where does this all end? remains a mystery. China says the spread of the virus is slowing; the WHO says a global heightening of risk is on the horizon.
For the time being, everybody is playing a wait-and-see game.
At the Close, Tuesday, February 11, 2020:
Dow Jones Industrial Average: 29,276.34, -0.48 (-0.00%)
NASDAQ: 9,638.94, +10.55 (+0.11%)
S&P 500: 3,357.75, +5.66 (+0.17%)
NYSE: 14,054.08, +69.60 (+0.50%)
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