Showing posts with label silver. Show all posts
Showing posts with label silver. Show all posts

Wednesday, July 1, 2020

Credit World May Become A Battlefield If FICO and Square Butt Heads; Silver on the Move; ADP Fairy Tales

A couple of stories from the world of personal credit are noteworthy as the world enters the third quarter of 2020 hoping for improvement but fearing a repeat of the second quarter from the same enemy which ran roughshod over the world economy.

It's not the virus that people fear, but government response to it in terms of restricted mobility, business operations, and general closures of everything from schools and churches to bars and hair salons.

While the planet and government managers struggle with the virus and their chances in the upcoming US elections in November, credit issues are popping up like daffodils in Springtime. Huge numbers of Americans are foregoing rent and mortgage payments, citing unemployment as the main cause for a diminished cash flow, and delinquencies are piling up not only on mortgages (which are vitally important), but on car loans and leases, student debt, credit cards, and personal loans.

It's because of these issues, or perhaps in spite of them, that FICO (Fair Isaac Corporation) wants to rate your resilience and ability to pay back borrowed money in a recession or economic downturn. The company and its affiliate credit scorekeepers - Experian, TransUnion and Equifax - are looking back at credit histories from the GFC in 2007-09 for hints of riskiness in borrowers.

Their findings, which won't be relevant for at least a few more months, could affect how consumers are judged when applying for any kind of credit, from mortgages to car loans. If economic conditions remain below par, many people with poor resilience scores could find themselves out of luck getting credit.

Countering FICO's foray into past performance of borrowers, Chime continues to innovate in the banking and credit space with the launch of the Chime Credit Builder Visa Credit Card.

Actually a debit card that works like a credit card, users can transfer funds from a secure Chime account to a Visa card, and use that money to charge anything, including everyday items like food, gas, clothing or general expenses. The charges are paid by the card automatically, and the results reported to the credit bureaus. The goal is to improve credit scores for mainly younger folks, who favor debit cards over credit, but who need to establish or improve their credit history.

If it sounds like cheating, it very well may be. This is reporting of purchases made with essentially a debit card being reported as a credit card. The credit bureaus are likely to balk at this methodology. A clash between the old standard bureaus and the upstart Chime might make for some interesting developments in how credit and individual risk are measured down the road.

Tuesday's hands-down big winner was silver, which rocketed up by more than two percent in the futures space, vaulting over the psychologically-challenging $18 mark and holding around $18.20. Gold's little sister has a lot of catching up to do and if this price maintains, should signal that a run up to resistance in the $20-21 range is imminent. Correlated closely to the S&P index (for God only knows what reason), if stocks falter and silver holds or goes even higher, that would qualify as a major development. Keep eyes peeled on that space.

Stocks continued their rally from Monday into Tuesday, which was the final day of the month and of the second quarter, an important milestone, since GDP for the quarter - heavily affected by the coronavirus and state-by-state lockdowns and business closures - is expected to check in with a very negative number on a scale likely never seen before. Estimates for second quarter GDP range between -25% to -52%.

Current stock valuations seem to be suggesting that investors are leaning toward the upper end of that range. A decline of 30-35% might actually be seen as a positive for markets because it will be viewed as a one-off event followed by a rapid recovery, though the jury is still out on whether economic recovery will look like a "V", "W", or an "L".

Any view of the stock market indices over the past five months clearly show a "V" shape, with stocks declining and rising at the same frenetic pace. The recovery pattern for stocks can hardly be taken as definitive by any measure of economic activity. Stocks were skyrocketing off their lows as millions of people were losing their jobs, the government and Federal Reserve exercising emergency measures, and the general economy entering a recession.

A "W" pattern goes along with the "second wave" theory of the virus, already being engineered by increased testing and renewed calls for shutdowns, lockdowns, face masks, social distancing and all the assorted recommendations which were successful only in wrecking the Main Street small business economy.

The "L" pattern is the one most despised by money managers, banking executives, and financial central planners because it offers no realistic hope for the immediate future. The "L" concept implies that the economy falls and stays down for an extended period. Like just about everything else the experts at the biggest banks and financial institutions predict, contrarian view has the slow recovery "L" pattern front of mind and it is actually the most likely pattern - not for stocks or any other asset classes - for the general economy in terms of GDP, personal income, and employment.

Finally, queueing the start of the third quarter in the typical doublespeak manner, ADP's June Employment Report showed a gain of 2,369,000 jobs in the non-farm private sector. This follows a decline of 2,760,000 in May, with June just about covering all those job losses. ADP saw 19.5 million people lose their jobs in April, another 2.8 million lost jobs in May (which has now been revised to +3.065mm!). It's almost as if many of those 20 million people filing continuing unemployment claims don't exist, which is fine, since we're all living in bizarro-world now.

At the Close, Tuesday, June 30, 2020:
Dow: 25,812.88, +217.08 (+0.85%)
NASDAQ: 10,058.77, +184.61 (+1.87%)
S&P 500: 3,100.29, +47.05 (+1.54%)
NYSE: 11,893.78, +116.69 (+0.99%)

Sunday, June 28, 2020

WEEKEND WRAP: Stocks Slide; Island Reversal Seen; Gold, Silver Soar; Treasuries Flatline; Argentina On The Ropes

For a second time in the past three weeks, stocks suffered another round of losses which accelerated as the week progressed. Of the major indices, taking the biggest hit were the Dow Industrials, followed by the NYSE Composite, S&P 500, and NASDAQ, in percentage terms.

The Dow's 3.31% fall was made possible by a Friday selloff which saw the blue chips decline by 730 points, the largest selloff since June 11, when stocks suffered a major blow preceded by an ominous island reversal of June 5, 8, 9, and 10. (see video below for more)

Friday's action may be presaging an oncoming decline of a magnitude rivaling the initial slide in March. The second quarter comes to a close on Tuesday and everybody on wall Street knows that it's difficult to "price in" a GDP decline which may be on the order of 35-50% when the first figure is announced on July 30.

Prior to that momentous milestone, corporate earnings reports will begin to flow to the street following next week's July 4 Independence Day holiday. The coming week will be shortened by a day, as Friday is a national holiday, giving most Americans a three-day weekend. Stock markets, banks, the postal service and most city and county offices will be closed. Hopefully, most of them will reopen on July 6.

For the week just concluded, treasury yields were clobbered, the 10-year note falling from 0.71 to 0.64%, the lowest since May 14 and approaching the record low of 0.58% from April 21st. As the 30-year bond yield fell from 1.47 to 1.37 over the course of the week, the curve flattened significantly, 125 basis points covering the entire complex. If this is what the Fed considers success in "curve control," they can have it, with the short end - one-month to two-years - covered by just five basis points (0.12 to 0.17%).

These low rates at the front end aren't by accident. They are policy and they are indicative of a recession if not outright depression. Adamant that they will not go to negative rates as has been the case in the Eurozone and Japan for years, the Fed's real rates have been in the red pretty much since the previous crisis in '08-'09, i.e., they were lower than the inflation rate. The one year note only crested above one percent in 2017. A year ago, it was yielding 1.92%, a stark comparison to Friday's close at 0.17%.

The Fed promised cheap credit and they are delivering.

Oil prices were slapped down after WTI crude tested $40/barrel, peaking at $40.73 on Monday, only to close out at $38.49 on Friday. Expect oil to continue trading sideways to lower if stock prices begin to falter, or, vice versa. Oil declines could help trigger or exacerbate a rundown on equities.

Precious metals were by far the big winners for the week. Both gold and silver advanced smartly despite a desperate attempt to crater their prices Friday on the NYMEX failed miserably. The morning rout sent gold reeling $20 to the downside, bottoming just below $1745 per ounce. So enamored with "V"-shaped recoveries, Wall Street got an unexpected one when gold prices recovered all of the losses within an hour and proceeded to close near the high for the day at $1771.50. Laughably, Friday's recorded London PM fix was set at $1747.60, setting up a $24 weekend arbitrage gap. Maybe, considering the problems the paper COMEX markets have had in recent months, it's not so funny for gold shorts, which are burning.

Silver savers should be delighted with the price action this week. Not only was a raid similar to the gold price suppression thwarted on both Thursday and Friday, but spot edged three cents higher than the closeout future price, at $17.83 the ounce, the highest Friday price since February 21, just prior to the epic COVID collapse.

Current physical prices continue to demand high premiums. This week saw prices for silver art bars absolutely explode higher, some one ounce bars selling above $40. Average and median prices for one ounce gold coins and bars were captured at prices $33 to $45 higher than a week ago.

Here's a glimpse at current selected prices on eBay (shipping included):

Item: Low / High / Average / Median
1 oz silver coin: 25.95 / 40.95 / 30.92 / 29.47
1 oz silver bar: 27.00 / 45.44 / 34.62 / 32.93
1 oz gold coin: 1,827.85 / 2,109.95 / 1,919.39 / 1,901.60
1 oz gold bar: 1,861.66 / 1,920.65 / 1,879.77 / 1,873.92


Argentina's Debt Crisis Far From Resolution

Argentina's government continues to play cat and mouse with international creditors, extending the deadline for negotiations concerning $65 billion worth of bonds to July 24.

Having already defaulted on a $500 million interest payment on May 22, the government is doubling down, indicating that it will miss another similar payment in June, which has a 30-day grace period. The chances of a settlement agreeable to the government and its creditors continue to deteriorate as interest payments are missed and the value of the bonds plummets, some selling off to as low as 37 cents on the dollar.

Talks stalled over the past two weeks as investors including BlackRock, Fidelity, AllianceBernstein, and Ashmore Group PLC, rejected a government proposal tied to agricultural exports while seeking recovery of between 49 and 57 cents on the dollar.

At the same time, the province of Buenos Aires, Argentina’s largest province, is negotiating with bondholders on the restructuring of $7.148 billion in debt and extended its deadline for a negotiated settlement to July 31.

Per previous proposals, payments would not begin being made on the currently-defaulted bonds until 2025. This article, published by the Council on Foreign Relations, offers the most comprehensive details, including charts that break down Argentina's $323 billion of debt, all of which is at dangerous risk levels.

At a time when the country's GDP is predicted to decline by 10 percent, the severity of the financial crisis cannot be understated, though mainstream television media in America has nearly completely neglected to report on the issue. Argentina has suffered through decades of boom and bust over the past 45 years, 20 of which showed GDP in decline.

It's not a question of when Argentina defaults on its debts, it's a question of how severe the defaults will be, how they will affect government pensions, and the ability of the government to maintain its status as a going concern. With a population estimated at 45 million, Argentina's problems are quickly becoming everybody's, as tens and perhaps hundreds of billions are in the process of being eviscerated.

With the government of President Alberto Fernandez content to play kick the can by extending the negotiation deadline for a fifth time, the dithering is taking its toll on investors. While a formal default has only been declared on portions of Argentina's debt, triggering the awarding of a credit default swap (CDS) recently, these things have a nasty way of snowballing into global crises, as was the case with Mexico in 1982, the Asian Crisis in 1997, and when Russia devalued the ruble in 1998.

Having to deal with some of the most severe lockdowns in the world due to the COVID-19 panic, Argentina is ill-prepared to deal with a financial hardship of this magnitude. The situation could spiral out of control at any time, when one side or the other finally throws in the towel and walks away. Consider Argentina's plight a fluid situation with more headlines and fireworks likely over coming months.

At the Close, Friday, June 26, 2020:
Dow: 25,015.55, -730.05 (-2.84%)
NASDAQ: 9,757.22, -259.78 (-2.59%)
S&P 500: 3,009.05, -74.71 (-2.42%)
NYSE: 11,604.43, -260.68 (-2.20%)

For the Week:
Dow: -855.91 (-3.31%)
NASDAQ: -188.90 (-1.90%)
S&P 500: -88.69 (-2.86%)
NYSE: -375.19 (-3.14%)

Peak Prosperity's Adam Taggert and friends discuss threats to the stock market, highlighted by their charting of the recent Island Reversal:

Tuesday, June 23, 2020

Why An Hourly Wage Is Such a Bad Idea

Let's talk about money, your work experience, and taxes, just what you want to think about this morning, right?

It is an important topic, however, just because so many people avoid thinking about their work and its relation to taxation and general well-being.

Right from jump street, if you're working for an hourly wage, everybody's getting cheated. You, your employer, even the government which takes part of your pay before you even see it is getting a raw deal, though it could be argued that the government, which has little to no "skin in the game" when it comes to your income, your employment, and your work habits, has nothing to lose and so much to gain.

By taking a job or a position in exchange for so form of compensation based on time, you've rendered yourself about as useful or resourceful as a drone. You show up, you punch the clock, you perform your duties, you go home. Nothing more, nothing less. It's a dreadful condition, draining the life force out of you on a regularly scheduled basis. Making matters even worse, your boss probably thinks you aren't working hard enough and the government takes a percentage of everything - before you even see it - and wants more.

The concept of hourly wages is a relatively recent development in the great pantheon of civilization and labor. Prior to 1900, workers were paid by the day, week, or month, or by the task, which, being that much of the labor of the era was performed on farms, often included lodging and/or meals. This made sense because the world was a hard-scrabble place, weather took its toll on the amount and quality of work performed over days and even weeks, and it was generally well-known that workers wore down after six to eight hours on a particular job and the quality might suffer as the day wore away at their muscles and bones.

It wasn't until the industrial revolution and the great immigration from Europe to America that hourly wages became established. Employers and unions established scales of wages and requirements for work-weeks (a typical week of work was from 50 to 60 hours). In the early days of industrialization, unions became necessary because naturally, employers wanted to pay as little as possible, but workers needed to earn a decent living, provide for their families, and maybe have a little left over for savings.

It wasn't until 1938 - in the throes of the Great Depression - that minimum wage laws were established, at the time, a necessary evil, because not just workers, but employers as well, were suffering from the maladies of slack demand and massive deflation. During that developmental period and since then, the hourly wage became the standard compensation for menial tasks and the government didn't miss the opportunity to get its unfair share, beginning in the early 1940s, when they imposed payroll deductions as a means to fund the war effort incurred during world War II.

When the war was over, the feds didn't stop there, they just kept taking part of everybody's pay, increasing their percentage over the years. States jumped on that bandwagon as well, many imposing their own income taxes. Many still believe that income tax or any tax on wages is unconstitutional. They're actually right, and why the IRS calls income tax "voluntary," but try not paying your share and see what happens. There's nothing voluntary about wage taxes and deductions from your paycheck. It's theft on a grand scale.

It's a crying shame that somebody making $15 per hour only gets to take home about $12 of that hourly rate after the feds take their withholding amount, Social Security (FICA) and Medicaid "contribution" and the state piles in for another piece of your pie. People making more are penalized even further. That's the government side of the equation. Making it all the more unbearable, the various governments waste what they take from you and have to borrow even more and still can't manage to balance their budget. It's like throwing money down a black hole, this one lined with $26 trillion in federal debt which will never be repaid.

Getting back to the hourly wage and why it makes everybody a crook, you're probably not happy about the government taking 12-20% or more right out of your paycheck. You may decide to work 12-20% less or slow your productivity because of that unfair practice. That, in effect, steals from your employer, who isn't at fault for the government's intrusion into an agreement made between you and your boss' company, but it is he who pays for lost productivity, slack standards, theft, and the other unintended consequences of hourly wages.

Because, like you, the employer feels threatened by both sides - workers and the government - he cuts hours, or lays off unproductive employees, putting more strain on those that remain. He or she might also makes use of accountants and any other tricks available to limit his contributions to the government. It's the employer who writes the checks after all, and it is the employer who must remit to the government. Many have tried to cheat the government. Many have failed. Many are out of business, but the point is that the hourly wage and payroll deductions have spawned all sorts of bad behavior by employees and employers alike. More often than not, it's payments made to the "silent partners" - governments - that bankrupt businesses and put people out of work through no faults of their own.

The other major problem with a hourly wage it that it stifles productivity and efficiency. Maybe you can produce six widgets an hour, but everybody else on your shift can only produce four. If you're all making the same wage, there's absolutely no upside for you to work more efficiently than your peers unless you believe you'll get a raise, which, in a union setting, would be impossible. Even then, if you were to get a raise for your more efficient use of time, when your fellow workers find out, they'll castigate you and tell you you're making their lives more difficult. It's a no win condition.

If you get paid $15 an hour to do a job in five hours, but you could do it in four, why would you? The hourly wage not only does not encourage efficiency, it retards it. Or, would you rather make $60 instead of $75 for the same job?

The hourly wage is one of the worst inventions ever created in terms of labor effectiveness and efficiency. It stifles creativity, encourages bad behavior and spawns more government rules, regulations, and taxes. It reduces an erstwhile valuable human being to little more than a punch-press machine. It's degrading and demoralizing and nearly universal. Anything that becomes that widespread without competition - like a monopoly - should be done away with, the sooner the better.

As much as we'd all like to believe that everybody is created equal, it just isn't the case. In the eyes of the law, maybe. Hours and days are not created equally either. It's a proven fact that less work gets done after two o'clock than before noon; Fridays are radically different from Mondays.

Maybe some good will come from the lockdowns and stay-at-home impositions caused by the coronavirus. If anything, it's given people the opportunity to work from home, unsupervised, and maybe given everybody a chance to ponder the value of work versus an hourly wage. Hopefully, this time will encourage people to do their own thing, to start a home-based business, or at least look into alternatives to the time-worn nine-to-five practice.

The main beneficiaries of standardized hourly wages seem to be governments and their tax regimes. Might a return to the sanity of daily or weekly wages, piece work, or by-the-job work become reasonable alternatives?

We can only hope.

The Markets:

Gold futures soared on Monday, peaking at $1765 before being knocked down to just under $1755 an ounce at the New York close. Silver reached out above $18 an ounce prior to a late-morning smackdown, closing at the regrettable - an utterly unrealistic - price of $17.68.

While goldbugs continue to cry about manipulation, it seems obvious that any continuing control over precious metals markets is about keeping the gold to silver ratio near the historical absurdity of 100 and the forces in opposition to real money at the futures windows. After all, silver is more plentiful, more affordable to everybody and much more divisible than gold. Remember, prior to the Crime of 1873, silver was money, but the banking elite of the day wanted to establish a gold standard, and did, impoverishing many independent businesspeople and farmers in the process.

Now that the entire planet is on a fiat standard, which is no standard at all, it's time for silver to take its rightful place as the money of gentlemen and of the world. It can start with a readjustment to a reasonable gold:silver ratio of 20, eventually to 16 or 12. If gold is to persist at $1750 or higher, silver should be at least $85 an ounce. Market forces are at work. Prices for single ounce coins and bars on eBay are routinely over $30, and dealers are charging $23 and upwards for the same, if they can get their hands on it.

With eBay charging a ten percent fee on all bullion sales, the actual price of physical silver in one ounce increments is realistically approaching $32 to $35 per ounce. That's Troy ounces, and Troy approves (joke).

Silver may be kept down in the spot and futures markets, to the detriment of dealers and paper-pushers worldwide. In the meantime, the actual, true, honest, real physical market is exploding and will continue to until such a time that silver holders will be satisfactorily compensated.

Fight the Fed. Buy silver.

Bonds: eh, who needs them? The Fed wants to control the curve to keep short term rates near zero forever. Let them. It can only serve to hasten the return to real money.

Oil prices continue to be inflated, serving only the needs of drillers, shippers, and distillers. When the price of WTI crude falls back to realistic levels around $24-30 a barrel and states begin reducing their onerous gasoline taxes, the economy can begin recovering. Until then, we're stuck in an artificial stagflationary environment.

Stocks gained. They always do. Shares of public companies have never been as expensive.

At the Close, Monday, June 22, 2020:
Dow: 26,024.96, +153.50 (+0.59%)
NASDAQ: 10,056.47, +110.35 (+1.11%)
S&P 500: 3,117.86, +20.12 (+0.65%)
NYSE: 12,028.91, +48.79 (+0.41%)

Sunday, June 21, 2020

WEEKEND WRAP: Fake COVID Data, Faulty HCQ Studies, Bailouts for Zombies, Secret Handshakes, Excessive Lying and Bunk

The level of fraud in the scientific community is absolutely out of control. It's even beyond that of the government and media, though the media probably holds the title of most disingenuous as it lies or distorts on practically everything.

On Friday, yet another clinical trial of hydroxychloroquine was halted, this time by the National Institutes of Health.

Citing that the drug has no ill effects on hospitalized patients - in opposition to previously unfounded claims that HCQ was dangerous - a data and safety monitoring board (DSMB) said the drug offered no benefit to hospitalized patients.

It's too bad that the mainstream medical authorities have to be so obviously stupid. HCQ is used as a preventative medicine. It helps the immune system fight off coronavirus, especially when used in a regular regimen with zinc and Azithromycin when asymptomatic or in early stages of infection as this study and many others have clearly shown.

Instead, the NIH, CDC, WHO and other "official" medical bodies refuse to release the proof of the effectiveness of hydroxychloroquine as what doctors call a prophylactic remedy, insisting that COVID-19 is a deadly disease and that billions must be spent in search of a vaccine, when they know a vaccine will likely never be developed.

These people, who first told the world that wearing a mask was a waste of time, then promoted the use of masks when it suited their purposes, should all be met with swift justice because it is they, not the virus, who are causing countless deaths that could have been saved if proper preventive measures had been taken. They, and the media which continues to promote COVID-19, lockdowns, quarantines, social distancing, absurdities like not allowing fans into sporting events, keeping restaurant customers six feet apart and other ridiculous notions should be tried for operating a criminal conspiracy.

Even this post, because it violates the dictatorial policy of Google, Twitter, or Facebook may be deemed conspiracy theory or in violation of their standards may be labeled with a warning or removed from public view.

The virus is a total scam. The rising cries of a coming "second wave" are nothing more than another attempt to scare people into rash behaviors using slanted statistics while playing on emotions. Places like Georgia, Texas, and Arizona have been cited as possible new hotspots for the virus, but the truth of the matter is that more testing has produced more cases, therefore increasing the daily bogus coronavirus counts. Additionally, all of the various tests have proven to show an abundance of false positives. Hospitalization and death statistics have been overstated since the beginning of the pandemic.

In other words, almost all of the data and scare-mongering from the media is bunk. Complete rubbish. Take off your masks and start living like a human being again. The chances of catching the virus are slim. It has mutated numerous times and most strains circulating are severe or deadly only to people over the age of 60 who have pre-existing health conditions or are obese, suffer from diabetes or heart disease. The general population is in no more danger from COVID-19 than from the common flu.

Get over it. Move on. Tell anybody who disagrees to take their opinions elsewhere. As it stands, there's no baseball this summer and there may not be football this fall. All this pandemic nonsense is about as important and vital as the BLM/Antifa protests. All of it needs to stop and the media is largely to blame for promoting false narratives.

The absurdities were on display at yesterday's Belmont Stakes, where no spectators were allowed into the sprawling Belmont Park facility and everybody on the grounds - except the horses - were required to wear masks. Even jockeys had to wear masks during the races. Please, somebody explain how a rider traveling at 25 to 40 miles per hour is going to catch the virus. It's as bad as the idiots who wear their masks while driving in their cars with the windows rolled up. Stupid. Banal. Idiotic. Is the world really populated by that many morons? If so, maybe the virus should relieve us of 30-40% of the population. More room for everybody. Happy days!

It's just all so annoying and stupid. This post was originally going to be about gold and silver, but the news of yet another HCQ trial being shut down changed those plans.

Go and check your local pharmacy or drug store or vitamin center. They're out of ZINC. Yeah, ZINC. Apparently, some people aren't buying the "we're all gonna die" narrative being shoved down the throats of the unsuspecting public. As the thrust of Money Daily posts over the past few days and weeks have been stressing, the media and government are doing you no good. You need to extricate yourself and your family from the clutches of creeping socialism and outright tyranny.

Let's get away from those who wish only to control everything and move forward to better lives. There is so much the word has to offer, having it ruined by a small minority of psychopathic monsters is a sin and an outrage.

Moving on to the markets and financial world from the week just past, stocks seem to have hit a stall space. The major indices, while all advancing for the week, have not recovered fully from the downdraft of Thursday, June 11. This week's gains were made mainly on Monday and Tuesday. Things slowed down in midweek and by Friday the bloom was off the rose once again.

Not to worry. There's a huge chance that the news will be cocked forward to produce a running start for the major averages and bourses around the world Monday morning. It's just how the Fed and the algorithm-pumping mechanisms operate these days. There's no market. There's no need to study charts or engage in fundamental analysis. Everything is fake, crooked, corrupted.

There is somewhat of a silver lining approaching for people who don't appreciate ever-rising stock prices when companies are showing dwindling profits or actually losing money, however. In a few weeks, publicly-traded companies will be releasing their second quarter financial reports and many of them figure to be absolute dumpster-diving material.

There's been a chart circulating recently showing the number of "zombie" corporations steadily increasing to a point at which nearly one in five US companies are insolvent. A zombie company is loosely defined as a business that has to borrow to survive and doesn’t make enough profit to cover the cost of its debt service. Simply put, these are companies being kept afloat by banks, or the Fed, or both. If it were possible to actually make sense of the books of large commercial banks like Wells Fargo (WFC), Bank of America (BAC) and Citibank (C) it's probable that the banks themselves would be zombies, underwater and headed to bankruptcy if not for the largesse afford them by the Federal Reserve.

The outcome from keeping zombie companies afloat is lower, slower growth in the overall economy. The Fed is actually exacerbating the effects of ultra-low interest rates and keeping insolvent companies alive with the most recent emergency measures that have the Federal Reserve buying debt from ETFs and corporate paper of individual (healthy and failing) companies. The Fed is also buying up municipal debt and may be positioning itself to fund states and cities that have deep budget deficits and buying individual stocks. Yes, the Fed may soon be buying stocks. And who said the markets weren't manipulated?

The bottom line is that we have a central bank producing counterfeit currency to buy assets offered by insolvent companies. Making matters worse, is that Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow believe the companies that have received bailouts or funding from the Cares Act should not be disclosed to the public. So, on top of it all, the underhanded workings of the government, the Fed and big business should be kept secret. Nice. Not.

Treasuries basically spent the week flopping around like a landed fish. The yield spread for the entire curve, from 1-month to 30 years ended at 1.31% on Friday, June 12. As of this past Friday (June 19) the spread was 1.34%. Some steepening, but not notable. The 10-year note ended the week one basis point lower than the previous Friday, at 0.70%.

The July futures contract for WTI crude oil closed at a three-month high Friday, at $39.75 a barrel. Like the stock market, oil prices have engaged in a V-shaped rebound, the bottom coming in mid-April when oil hit $11.57 a barrel. While there has been some demand recovery, there's still a worldwide overhang of supply. The price of oil, with almost a direct pathway to gas prices, is another manufactured number. Most US shale producers can't survive below $50 a barrel, much less $40. Thanks to renewables like solar, wind, and hydro-electric, the oil business is dying a slow death. There's abundant resources available, but inroads have been made by so-called "green energy", and efficiencies in newer vehicles are crimping the use of oil and distillates. In an economy on a slowing glide path, there's no good reason for oil prices to rise other than to support the ailing old companies that rely on pumping and consumer use of the greasy stuff.

In the precious metals space, both gold and silver were dumped in the futures market on Monday and then rallied over the course of the week. Silver, despite a generally positive end to the week, closed at the lowest week-ending price ($17.52) since May 11. Since the March 19 bottoming at $12 an ounce, the trend has been higher, though it's been a slow grind despite high demand, shortages, huge premiums, and shipping delays.

Gold was flattened to $1710.45 on Monday, but rebounded to the high of the week at the close of business in New York Friday, at $1734.75. Like silver, gold has been rangebound since mid-April, suggesting a breakout on the horizon, though it could go either way.

Here are the latest free market prices for select items on eBay (prices include shipping, which is often free):

Item: Low / High / Average / Median
1 oz silver coin: 26.50 / 39.90 / 31.52 / 31.12
1 oz silver bar: 24.75 / 46.00 / 31.35 / 28.70
1 oz gold coin: 1,803.85 / 1,963.52 / 1,875.30 / 1,865.36
1 oz gold bar: 1,780.00 / 1,852.38 / 1,833.92 / 1,840.45

Finally, Fearless Rick nailed the trifecta in the Belmont Stakes, making a public pick prior to the race for everyone. Such generosity! What a guy!

At the close, Friday, June 19, 2020:
Dow: 25,871.46, -208.64 (-0.80%)
NASDAQ: 9,946.12, +3.07 (+0.03%)
S&P 500: 3,097.74, -17.60 (-0.56%)
NYSE: 11,980.12, -92.48 (-0.77%)

For the Week:
Dow: +265.92 (+1.04%)
NASDAQ: +357.31 (+3.73%)
S&P 500: +56.43 (+1.86%)
NYSE: +112.95 (+0.95%)

Friday, June 19, 2020

The Fifth Rail of Your Own Protest Movement and Freedom Is Solar Power

Thursday's post, How to Become Your Own Protest Movement, received very favorable responses and readership, as four ways to escape the tyranny of government were presented as Planting a Garden, Starting Your Own Business, Homeschooling, and Investing in Gold, Silver and Cash.

The cursory overview supplied plenty to expand upon, but with those four key components, overlooked was a key component to freedom, Becoming Your Own Energy Producer.

A brief overview of yesterday's fake, controlled, contrived, Fed-and-algo-induced markets will come at the end of this post, but let's take a look at the obvious energy source for independent thinkers, solar.

Solar power has been with us a long time. In 1979, President Jimmy Carter had 32 solar panels installed on the roof of the White House. They were used to supply hot water for the first family and White House cafeteria.

In 1986, President Reagan, not a fan of solar power, had them removed. But, in 2002, the Bush administration installed solar water heaters on the Cabana’s roof to heat the White House pool and more solar photovoltaic panels were also installed on the White House roof in 2014 and they remain in use today.

Over forty years have passed and solar technology has exceeded all expectations, to a point at which it is now on a par - or in some cases cheaper - than energy produced by traditional coal or natural gas power plants.

Single-family use of solar panels has been on the rise for years, and prices for photovoltaic panels are now approaching $1 per watt, which is pretty cheap, or for a 100-watt panel, about $100. A single 100-watt panel can produce nearly a kilowatt (1000 watts) of clean power per day, and many panels now work well even on cloudy days.

Solar panels will even produce a small amount of electricity on clear nights with a full or nearly full moon. There are even solar panels designed to be efficient at generating electricity from moonlight.

There are countless studies on solar and it's efficiency, all of them showing vast improvement from the early pioneering days of the 1970s.

Connecting to the power grid is also optional, though many advanced users are now powering their homes almost completely with solar and the amazing power of lithium-ion or lithium-polymer battery banks which can store the power produced by the panels and convert it from DC to AC.

Of course, as more people convert to at least partial solar power, governments and power companies have fought the trend with various tax bills, permitting, and penalties for people who generate their own power and, in 2016, congress extended the tax credit for solar installations, but the credit is reduced to 26% (from 30%) in 2020, and to 22% in 2021. After that, the credit will be 10%.

In addition to providing cheap, renewable power, solar panels and an operating inverter/battery system can increase the value of your home.

This topic cannot be sufficiently explained in one article. There are many varied uses and types of solar power available to consumers. Those will be covered in subsequent posts, but adding energy independence to your cache of freedom materials is a sure-fire way to thwart the unequal system of governance and economy the US and other countries have promoted.

Instead of everybody relying on one big power producer, solar offers a distributed system whereby individuals, families and businesses can produce their own power at very reasonable costs. The fluctuations of a voltage regulator attached to your own solar panels serves as a near-constant reminder that you are freeing yourself from the corrupt, slavish system.

As far as stocks are concerned, they were nearly flat on Thursday, but Friday being a quad-witching day, there's likely to be a pretty good lift via the algorithms and some Fed pumping.

Oil, which continues to stubbornly increase in price despite constant nibbling away of demand is currently testing $40 for WTI crude, a ridiculous number that should have everybody thinking electric cars powered by home solar panels. The price of oil will continue to rise as countries and industries dependent on pumping it from the ground refuse to face reality and cut production, limiting supply. The oil market is probably more crooked than stock markets and has little to do with actual supply (there's a huge glut) and demand (it continues to decline).

Oil should be $20 a barrel or less in the US, and gas at the pump should be approaching $1.25 a gallon. Instead, both prices continue to rise as oil companies and state and federal tax revenues are choking to death with lower prices. Expect major disturbances and disruptions in supply and price over the coming months and years as the world transitions away from oil.

Gold and silver continue rangebound as the manipulators suppress the price of precious metals over fears that they will replace their unbacked currencies.

Change must happen. Those who oppose change will be effected with severe consequences.

At the Close, Thursday, June 18, 2020:
Dow: 26,080.10, -39.50 (-0.15%)
NASDAQ: 9,943.05, +32.52 (+0.33%)
S&P 500: 3,115.34, +1.85 (+0.06%)
NYSE: 12,072.59, -13.91 (-0.12%)

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%)

Sunday, June 14, 2020

Markets Skid, Ending Three-Week Win Streak As Rally Falters; Gold, Silver Continue Abusing Futures Pricing; Treasuries Rally

Stocks broke off a streak of three straight winning weeks courtesy of a trend-reversing, cascading selloff Thursday that erased all or most of June's gains.

The downdraft followed two straight days of minor losses and may have put a punctuation mark on the market's 11-week rally. The NASDAQ, which made a fresh all-time closing high on Monday (9,924.75) and crested over 10,000 on Wednesday, took a 517-point collapse on Wednesday. Like the Dow, which lost over 1800 points, the loss was the fourth-highest one-day point decline in market history. For both indices, the three higher point losses all occurred this past March.

Friday was snapback day, though the gains were paltry compared to the prior day's losses. Stocks gained back less than a third of what was surrendered on Thursday.

The late-week action prompted market observers to question the solidity of the recent rally, which, in V-shaped manner, took the markets straight off their March lows and out of bear market territory. Stocks had gained even as entire states were in lockdowns and the COVID-19 virus raged across America. Stocks continued to rise in the face of nationwide protests against police violence in the aftermath of the death of George Floyd at the hands of Minneapolis police. Many of the protests turned violent, as disruptive elements rioted and looted stores.

Fueled by emergency lending by the Fed, stocks seemed to be out of touch with mainstream economics, a condition not unusual for Wall Street types. Thursday's turnabout was broadly-based and unsparing of any sector though banking and tech stocks were leaders to the downside.

Coincidentally, protesting fell off as well, probably due to uprising fatigue. After two weeks of marching around in hot weather, the movement became somewhat pointless and many lost interest in reform toward better policing, though success was claimed in some areas, such as Minneapolis, where the city council decided to defund and disband the police, and New York, where measures were take by legislators to ratchet down the heavy-handed tactics of its force.

In Louisville, Kentucky, the city council voted to ban no-knock warrants. The resolution was passed in reaction to the death of Breonna Taylor, who was killed in a March no-knock raid at the wrong address.

One city in which protests have not tailed off is Atlanta, the scene of widespread rioting and looting early on, where chief of police, Erika Shields, has resigned on Sunday after officers fired upon and killed 27-year-old Rayshard Brooks Friday night.

And, in Seattle, the madness reached a climax on Monday as officials decided not to defend a police precinct, resulting in protesters, led by Black Lives Matter (BLM) taking over a six-block urban area and renaming it the Capitol Hill Autonomous Zone (CHAZ).

All of this is a backdrop to pent-up emotions and outrage that were magnified during the coronavirus lockdowns. Some people, took issue with Wall Street's rapid rally, citing it as an affront to societal mores and economic inequality. By the looks of where markets were heading on Thursday, the impact of the lockdowns and protests finally have reached lower Manhattan.

Treasuries staged a solid rally at the long end of the curve through Thursday, with the 10-year note yield falling from 0.91% to 0.66% and from 1.69% to 1.41% on the 30-year. On Friday, bond prices fell, with the 10-year closing out at 0.71%; the 30-year bond finished at 1.45%.

Precious metals rose early in the week, but were tamped down as the week drew to a close. Gold reached $1742.15 before ending the week still elevated at $1733.50. Spot silver was as high as $17.87 an ounce, closing at $17.62 on Friday. Spot and futures prices continue to trend toward irrelevance as premium prices for physical metal and shortages continue into a third month. Many dealers show popular items out of stock or with significant delivery delays, a condition that has persisted for retailers since the onset of the coronavirus.

eBay continues to light the way for purveyors and buyers alike, with calculable prices (at premiums over spot) and rapid, reliable deliveries. Here are the most recent prices on select items from ebay sellers (prices include shipping):

Item: Low / High / Average / Median
1 oz silver coin: 25.50 / 36.20 / 31.00 / 29.90
1 oz silver bar: 19.95 / 35.20 / 29.32 / 29.88
1 oz gold coin: 1,837.00 / 1,900.52 / 1,857.86 / 1,855.40
1 oz gold bar: 1,806.00 / 1,880.00 / 1,840.52 / 1,832.63

As far as stocks are concerned, after the FOMC meeting concluded Wednesday and the Fed committed to keep the federal funds rate at or near the zero-bound at least until the end of 2022, investors got a little jittery over their engineered V-shaped rally, the overall stability of the global economy, and valuations heading into the end of the second quarter and some supposedly horrifying earnings figures coming the second week of July.

The coming week may be epochal or apocalyptic as Friday offers a quad witching day as stock index futures, stock index options, stock options, and single stock futures expire simultaneously. There should be some volatility showing up at the convergence of day-trading, options players and real-time economics all roll together.

While Thursday's massive decline in stocks sent shock waves through the markets, Friday's returns were uninspired and had the look of a an exhausted rally on its final legs. Trading was sluggish at best and flatlined around 2:00 pm ET only to be saved by late-day short covering and the usual hijinks by backroom operators (NY Fed).

If stocks fail to close higher next week - as this week marked the end of a three-week uptrend - damage could become more or less permanent. While many placed hope in the Fed's power to purchase as many types and varieties of bonds that confidence was shattered on Thursday and should lead the way back to some fundamental rethinking of market dynamics.

Nothing goes up or down in a straight line, but this week should provide some clues as to the ultimate short-and-long term market direction.

At the Close, Friday, June 12, 2020:
Dow: 25,605.54, +477.37 (+1.90%)
NASDAQ: 9,588.81, +96.08 (+1.01%)
S&P 500: 3,041.31, +39.21 (+1.31%)
NYSE: 11,867.17, +208.00 (+1.78%)


For the Week:
Dow: -1505.44 (-5.55%)
NASDAQ: -225.27 (-2.30%)
S&P 500: -152.62 (-4.78%)
NYSE: -774.27 (-6.12%)

Thursday, June 11, 2020

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sunday, June 7, 2020

WEEKEND WRAP: Did The BLS Cook The Books On May's Jobs Report?; Despite Stock Euphoria, The Crisis Will Continue

The week was one of consistency on the major indices, with stocks closing higher every day except Thursday, though, of the big four, the Dow was higher every day of the week, culminating in Friday's blow-off rally following the release of May non-farm payroll data from the BLS.

There was a considerable amount of speculation regarding the veracity of the BLS figures, which showed a net gain in May of 2.5 million jobs, the unemployment rate falling to 13.3%, according to the official release.

Most of the nation at least partially shut down during the month, the data provided by the BLS, while good enough for Wall Street's stock enthusiasts, has to be considered at least partially flawed, given that continuing claims for unemployment insurance rose sharply in the most recent week, hitting nearly 21.5 million.

Given that the April non-farm payroll report was a blockbuster all-time record at -20,537,000, revised higher, to -20,687,000, adding in the +2,509,000 would yield 18,178,000 still unemployed at the end of May, a number that does not jibe with the 21,487,000 continuing unemployment claims reported by the US Labor Department.

Also taken into consideration for the discrepancies between the two reports are the differences in reporting schedules and the Labor Department's estimate of more than 42 million initial claims filed over the past 10 weeks. Simply put, a lot of people went back to work in May, but there are still somewhere between 18 and 25 million unemployed. By claiming a record job creation number in its May data, the BLS has likely overstated the case for people returning to work after a brief hiatus due to the lockdowns caused by extreme measures taken to combat COVID-19.

A jump of 2.5 million jobs for the month has to be taken somewhat tongue-in-cheek since these are not new jobs whatsoever. The economy didn't produce 2.5 million new jobs. A better explanation would be that during the month, more people went back to work than were laid off or fired, by about 2.5 million.

Therefore, while the BLS can be accused of massaging their data to produce a positive headline, their methodology and timing remain - as has been the case for a very long time - somewhat suspect. There's still a massive unemployment problem which was manifest by the enormous numbers of protesters that appeared in cities nationwide over the course of the week. Many of these mostly young people were out on the streets during daylight and into the evenings. It would be logical to conclude that the vast majority of them were not holding down full-time jobs.

The protests underscore two things, neither of which have anything remotely to do with the death of George Floyd or police brutality. First, the protests are more about income inequality than anything else. These young people from Generation Z and the last remnants of the Millennials are becoming more and more impatient with the structure of the economy, even though most of them don't recognize that as the overriding factor of their movement.

While the chants of "Black Lives Matter" and "No Justice, No Peace" make for sensationally simple-minded soundbites on the mainstream media's morning and nightly news broadcasts, the root of the frustration is an economy which provides fewer jobs than are needed for fewer hours per week, at low rates of pay while the purchasing power of the dollar continues to decline, especially in some very important areas, those being primarily, housing, education, and health care.

When economists decry that large government deficits will be bourn on the backs of future generations, what we are seeing today is the truth of that dictum as the youthful protesters on the street are the generation now paying for the deficits rung up from the 1970s and '80s. It's a continuing, systemic problem that isn't about to go away. People trying to enter the workforce and engage in meaningful careers are finding it harder and harder to make ends meet. Income has net kept pace with inflation over the past 40-50 years, dating back to when then-President Nixon took the country off permanently off the gold standard in August of 1971.

There are certainly many young people doing fine in their careers. Those with masters degrees or doctorates or well-honed skills make very good money, but at a considerable price. Their cost of eduction can be measured in their student loan debt. Since housing costs have risen to extreme levels with only a slight blip in 2008-09, the affordability of just plain living quarters tests their resolve. Those wishing to start families (a declining number) see health care costs spiraling out of control. And those are the lucky ones with good jobs and dual incomes.

The rest of their generation struggles with all of that at lower pay and onerous debt. Many Millennials and Generation Z youths live four and five to a single home or apartment. Most cannot save anything, much less even dream of owning their own homes. Pity those who have medical conditions. Most cannot afford $300-$600 a month premiums with $5-8,000 deductibles, so they go without. To a lesser degree, the same conditions affect the backend of the Baby Boomers and early Millennials who have lived their lives on the fringes of society.

It's a condition of perpetual decline when roughly half of adult Americans do not have any savings whatsoever, the result of massive, uncontrolled government deficits, fait currency backed by nothing, printed to the hilt causing the purchasing power of the almighty dollar to slide into obscurity. It's not going away. In fact, with the Federal Reserve now in the process of either buying up or backing every stock or bond issued, hoisting their balance sheet by more than three trillion dollars in just the past three months, the US economy has become one of very few haves and very many have-nots, manifesting itself as runaway inflation. Not confined to just the United States, the rest of the world is revolted and revolting. Under current fiscal and monetary policy, the entire planet is rapidly turning into an oversized Venezuela.

Dissatisfaction with the political process is the second tenet of the protesters root causes, dovetailing income inequality and unaffordable living conditions. Federal, state, and local governments are ill-equipped to handle even ordinary stresses. Now that unemployment is on the rise and inflation is taking hold, government resources are stretched beyond their means. When people needed food during the recent lockdowns, government made little effort to step in. Food banks, charities and private citizens stepped up to fill the void. Government is increasingly being viewed with a jaded eye, neither responsive to people's needs nor able to fulfill basic obligations. People are simply tired of paying taxes and getting little to nothing in return. Individual income tax revenues are falling off a cliff while government debt continues to rise at an accelerating pace. Nothing about the current social and political condition is sustainable over anything but the short term, which is why we are seeing one crisis after another, bailout after bailout, emergencies arising on a regular schedule.

The United States and the rest of the world cannot buy or borrow their way out of this situation with policies that only increase debt and the burden to society. President Trump and Wall Street can go giddy over the most recent jobs data, but the underlying problems continue to mount and they're not going away. For all the media hype and government high-fiving in the short term, there's a larger price to be paid down the road. After years of can-kicking of core fiscal and monetary issues, the road is coming to an end. Most people, politicians, and financial planners don't have sufficient knowledge or vision to see where this all leads, preference being given to the present.

The NASDAQ is less than one half of one percent away from breaking to a new all-time high (9838.37).

The S&P 500 is about six percent away from a record close (3393.52).

Stocks are likely to continue climbing to record highs, but a period of stagnation lies just ahead. The bear market which was cut short by the Fed's money-pumping mechanisms and the government's emergency spending bills was the shortest on record, lasting a mere five weeks. Another bear market will be coming, as this one was papered over with currency that has only declining value. Oil prices are back up and by Friday, interest rates on treasuries had exploded. The 10-year note yielded 0.66% on Monday. By Friday, they were at 0.91%. The 30-year yield went from 1.46% to 1.68% over the course of the week. Shorter-dated maturities remained low, steepening the curve.

The final question for economists is this: How can high unemployment and tighter currency (higher rates) co-exist. The answer is very simple. They can't. With business unwilling or unable to expand, few will be hiring. Unemployment will remain elevated until there's a clearing or restructure of debt and businesses see a rosier future.

The Federal Reserve and the federal government has a very big problem on their hands. The pandemic and street uprisings were just the opening chapters of a very long story.

Gold and silver saw gains early in the week, only to be hammered lower on the paper markets.

The latest prices on ebay for one troy once items (shipping - often free - included):
Item: Low / High / Average / Median
1 oz silver coin: 24.95 / 42.50 / 28.47 / 27.75
1 oz silver bar: 24.99 / 45.00 / 29.09 / 27.90
1 oz gold coin: 1,780.00 / 1,882.00 / 1,823.11 / 1,823.69
1 oz gold bar: 1,755.95 / 1,826.92 / 1,792.96 / 1,794.40

Premiums for silver are, on average, ten dollars or more over spot. Gold premiums are $80-100 over spot.

Greg Mannarino expounds upon the jobs number being cooked, market response and his positioning:



At the Close, Friday, June 5, 2020:
Dow: 27,110.98, +829.16 (+3.15%)
NASDAQ: 9,814.08, +198.27 (+2.06%)
S&P 500: 3,193.93, +81.58 (+2.62%)
NYSE: 12,641.44, +354.46 (+2.88%)

For the Week:
Dow: +1727.87 (+6.81%)
NASDAQ: +324.21 (+3.42%)
S&P 500: +149.62 (+4.91%)
NYSE: +838.49 (+7.10%)

Wednesday, June 3, 2020

Nothing Can Stop The Mighty Fed Printing Press And Back Room Bookkeepers

The protesting, rioting, and looting was noticeably on the downswing Tuesday night. It could be seen as a sign that cities and states have things under control or just a lull in the overall action. Depending on location, it's likely a little bit of each.

Before the curfews took effect, the Masters of the Universe on Wall Street managed to enrich themselves and shareholders just a little bit more, sending stocks through the proverbial roof, with most of the gains happening in the final half-hour of trading. The Dow, for instance, was up about 100 points at 3:30 pm ET. By the closing bell, it had gained 267 points.

Apparently, there's little to no downside for corporations no matter what happens in the real world. Pandemic? No problem. Print more. Widespread civil unrest? Meh. Print more. Supposedly, a nuclear holocaust would send the major indices to record highs.

What's amazing about the rally since late March is not that it has come with a background of lockdowns, over 100,000 deaths, street protests, rioting, looting, and assorted public dislocation, but that stocks were overvalued even at the low point. First quarter earnings reports were dismal, yet stocks continued their ascent to nosebleed levels that are now more overvalued than almost any time before.

The current CAPE ratio (Robert Shiller's 10-year P/E ratio) stands at 28.96. For purposes of comparison, the same ratio just prior to the 1929 crash was about 30. The figure before the panic of 2008 was around 27.50. Only the dotcom era produced a record high higher than Black Tuesday and the most recent levels, when it peaked at 44.19. For reference, the median CAPE is 15.78.

What we have is a market of zombie corporations controlled by financial manipulators, expert at buying back shares with borrowed money at near-zero interest, limiting the number of shares outstanding to goose the price of the stock higher. Many companies don't really make money anymore. They just play games with the books to make it look like they do.

In the background, other elements of the price-fixing regime that has become Wall Street back rooms, the NY Fed and controllers at Treasury and monolithic banking operations (primary dealers, but mostly JP Morgan Chase) keep gold and silver under wraps on the COMEX, as they did on Tuesday, slapping down the recent runaway rally in precious metals. That's a necessary evil under the control economy because the Fed doesn't like competition for their Federal Reserve (debt) Notes and gold and silver are real money, rather than just currency, like every other sovereign fiat.

Also well under the control mechanism is the price of oil, which is forbidden to fall to prices that comport to affordability for drivers of gas-powered vehicles. There was a brief opportunity to save a little at the pump, but that's now over, with oil pushing toward $40 a barrel. Truth be told, oil is old news. Renewables have taken a serious bite into the overall market share, especially solar, as advancement in solar panels have made self-generated electricity as cheap as what's supplied by fossil fuel plants and in some instances, cheaper.

The price of oil can go to $200, but people with solar installations and hybrid or EVs (electronic vehicles) will barely notice. What they will notice is the slowdown of the outlying economy, which would be crushed under regular unleaded at $6 or $7 a gallon.

There's no stopping this juggernaut monstrosity of a stock market nor the destructive money printing of the Federal Reserve. If and when stocks nosedive again, the Fed will just increase its balance sheet another for or five trillion, loan out money at negative rates and call it a day. By then, there will be no economy, just some cheap, fake import from China masquerading as a market.

Later this morning, ADP will release May private payroll numbers, which will be a disaster and a presage of Friday's non-farm payroll report for May. None of it will matter. Even with unemployment at 20%, stocks will still stroke higher. Welcome to the new world of finance, where nothing matters other than questionable or fraudulent bookkeeping and willful ignorance.

At the close, Tuesday, June 2, 2020:
Dow: 25,742.65, +267.63 (+1.05%)
NASDAQ: 9,608.38, +56.33 (+0.59%)
S&P 500: 3,080.82, +25.09 (+0.82%)
NYSE: 12,046.41, +146.17 (+1.23%)

Sunday, May 31, 2020

WEEKEND WRAP: Violent Protests... What Did You Expect? Civil Unrest Sweeps Across America

Twenty percent unemployment. 20%.

That's the number likely to be presented when the monthly data series, non-farm payroll is released Friday one hour before the opening bell.

More than 40 million Americans are out of work. Another 12-24 million are underemployed, meaning they are working at jobs in which they are overqualified or their work doesn't provide a full week's employment (under 35 hours). Add to that the millions on welfare or disability and what you have is roughly half the working age population - with the bulk of them under 40 years of age - with no work, either no income or income of a size insufficient to service their expenses, lots of time on their hands, and anger building.

While these unemployed Americans were forced to stay home over a period stretching anywhere from three weeks to two months (and counting) because of ordered lockdowns due to the coronavirus, they watched the US stock markets crash and recover, aided by trillions of dollars thrown to market makers, banks, brokerages, corporations, and financial intermediaries from the Federal Reserve. The unemployed were assisted in their plight by an additional $600 a week in benefits and a one-time $1200 special payment, which for many took weeks to arrive. All along, the people at home watched the stock market recover at a record pace, wondering how long it will take for their jobs, their lives to recover back to somewhere near prior levels.

On Memorial Day, when four policemen in Minneapolis murdered George Floyd in broad daylight right in front of protesting bystanders, the fuse was lit for an explosion of pent-up frustration and anger. By Tuesday, people in Minneapolis took to the street to vent and the result was widespread violence, looting, burning of buildings, and utter disregard for authority as the police actually retreated from the swelling, uncontrolled mobs.

Wednesday through Saturday saw the protests turn violent in other cities. Denver, Atlanta, Louisville, Kentucky, New York, Boston, Los Angeles, Washington, DC, Portland, Oregon were among dozens which witnessed growing mayhem. By Saturday night, protests were witnessed in more than 75 cities and curfews imposed - with varying degrees of effectiveness - in 30 cities.

At a very early point the protests became no longer about George Floyd and police mistreatment and more about the disproportionate distribution of wealth, substandard living conditions, and a host of related issues.

For the most part, Americans don't like being told what to do or when to do it. By nature, Americans are bred for independence and freedom. The lockdowns and shelter-in-place orders clamped down on freedoms and shredded free speech, the right to assemble, freedom of choice, and freedom of movement. Prior to the violence of the week just past there were already anti-lockdown protests all over the country.

Now that we are amidst the overwhelming civil unrest that many had predicted, it's important to step back and view the carnage with an eye toward analysis and understanding. Authorities, such as the Democrat governor of Minnesota, Tim Walls, have asserted that as many as 80% of the people demonstrating in the streets are not locals, but imports from other areas of the country, their intent to spread unrest and wreak havoc on cities.

While this may or may not be true - it actually sounds ludicrous considering the sheer numbers - it's unlikely that the same numbers would apply in other cities. After all, with protests in more than 30 cities, the outsiders would have to have come from somewhere. Besides it being logistically inefficient, there would have been massive traffic spikes on the interstates. It just doesn't add up.

No doubt there are outside agitators, but there would also be agents provocateur from the authoritarian side of the equation.

The killing of George Floyd set this episode of violence into motion, but there's evidence that the main protagonist, officer Derek Chauvin, who pressed his knee into Floyd's throat for more than eight minutes, should have been aware of the death of Eric Garner, who was killed under similar circumstances in New York city in 2014. At least one or more of the other three officers holding down the handcuffed Floyd had to be aware of the similarities. These police knew exactly what they were doing. To believe otherwise is naive. Floyd's death, in a city notorious for mistreatment of minorities by the police, was very likely a set-up, to engender a violent reaction, just as the lockdown orders were conditioning of the public by authorities.

By the way, Floyd's supposed "crime" was passing a counterfeit $20 bill at a convenience store. Is it simply a coincidence that the image on the $20 bill is that of Andrew Jackson, "Old Hickory," who shut down the Second National Bank of the United States on September 10, 1833, and survived an assassination attempt on January 30, 1835? Coincidence? Maybe. Irony? Absolutely.

Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the Eternal God, I will rout you out.

– Andrew Jackson (1767-1845)

When the violence began in Minneapolis, the police either backed off in fear of their lives or stood down purposely, allowing looting and burning of buildings, cars, and trash receptacles to take place without limit. Law and order proponents have made reference to left-wing groups such as ANTIFA for inciting the riots, but for whom does ANTIFA actually work? The case can be made that their agitation serves the interests of authorities in government. As the violence and mayhem spirals out of control, the mayors and governors build up their forces with more manpower and firepower, and now, military support, as nearly a dozen states have activated the National Guard.

California, Georgia, Minnesota, Missouri, Nevada, Ohio, Tennessee, Texas, Utah, and Washington state, in addition to the District of Columbia have called in Guardsmen to help quell the uprisings. Martial Law is the next logical step as the protests continue though there is likely to be a pause followed by random acts of civil disobedience on a massive, if unorganized scale. People have had more than enough of a financial systems that favors the rich over the poor and middle class, a two-tiered judicial system - one for the rich and connected, one for those who are not, extreme inflation in housing and educational costs, rising taxes without sufficient representation, injustices by the elite and the governing class going unpunished, and their emotions are boiling over into untenable conditions across the nation.

Those who make peaceful revolution impossible will make violent revolution inevitable.

-- President John F. Kennedy

Television media continues to push a narrative that the protests and violence are an outgrowth of racial tensions, rather than address the truth that the protests are more about generational and institutional inequality as evidenced by the massive numbers of black, white and Hispanics engaged, the vast majority of them under 30 years of age.

As cities burn, the obnoxious culture that is Wall Street is certain to respond, most likely in the wrong manner. All that matters in the realm of the economics of big business and central banking is higher share prices for the most-favored public corporations. While 40 million people were being laid off, fired, disengaged from jobs and income, the stock market indices gained back more than half of the losses initially incurred in late February and March. In the pretzel logic that is the inexorable ties between the Federal Reserve, the Treasury, and Wall Street, major cities erupting in riots and fires might be reason enough for fresh all-time highs in equities.

For the week, stocks continued their ten-week-long rally, tacking on 1.75 to over four percent on the major averages. The NASDAQ is within four percent of reaching all-time highs.

Over the shortened four-day week, treasuries were volatile with yields on the long end rising over the first three days but recoiling back on Friday as protests spread nationwide. The 30-year bond yield rose from 1.37% last Friday to 1.47% on Thursday, only to drop down to 1.41% Friday. The 10-year note closed out the week at with a two-week low yield of 0.65%.

Overall, the curve steepened to a spread of 125 basis points between the 2-year and 30-year with inversion between the six-month (0.18%) and 2-year (0.16%), indicative of recessionary conditions.

Oil prices seem to be consolidating. The July futures contract on WTI crude oil closed at $35.34 on Friday, in a range that appears to be suitable for all parties, considering the unlevel conditions on the ground.

The most volatility was evidenced in the precious metals space, especially silver, which advanced from a low of $16.80 per troy ounce to $18.05, closing out on Friday at $17.84. Gold finished up at $1728.70, off recent highs ($1748.30, May 20), though much improved from the week's low of $1694.60 per troy ounce.

On eBay, premiums remain elevated as shown by the most recent sales of one-ounce coins and bars:

Item: Low / High / Average / Median
1 oz silver coin: 25.50 / 39.71 / 28.47 / 27.47
1 oz silver bar: 18.49 / 43.90 / 30.36 / 29.70
1 oz gold coin: 1,853.63 / 1,975.49 / 1,882.36 / 1,876.89
1 oz gold bar: 1,658.20 / 1,883.81 / 1,828.94 / 1,849.35

Looking ahead, it's incredible how quickly the media focus changed from the fading coronavirus to the escalating street unrest. These are macro-issues, covering large swaths of people who are neither coalescing nor collectively unifying. If leaders emerge from the city protests, which is natural in large public movements, then it can be safely assumed that these protests and the background issues are real. If no leaders emerge, it's all more fakery and planned demolition of society, just like the pandemic, aka plandemic.

In the 1960s protests, leaders and organized groups were plentiful. Jerry Ruben, Abbie Hoffman, Dr. Martin Luther King Jr., Jane Fonda, Tom Hayden, Malcolm X, Eldridge Cleaver, Huey Newton, Angela Davis, and others are among the more memorable individuals from the era. Students for a Democratic Society (SDS), the Weathermen, the Southern Christian Leadership Conference, Black Panthers and many more splinter groups comprised peaceful and violent elements.

Songs expressed the prevailing movements of anti-war (peace) and civil rights. Joan Baez, Bob Dylan, Phil Ochs, Arlo Guthrie, Judy Collins, Pete Seeger, Peter Paul and Mary, the Byrds, Country Joe and the Fish, and many of the groups that played at Woodstock in 1969 were among the more prominent voices among the peace and civil rights movements.

One would expect leaders and groups to emerge and musicians to show the way forward. While it might be considered cynical to believe that current events are orchestrated by a devious deep state or other bad actors, it is not outside the realm of possibility. As the world has learned so often in recent times, conspiracy theory often emerges as conspiracy fact.

At the Close, Friday, May 29, 2002:
Dow: 25,383.11, -17.53 (-0.07%)
NASDAQ: 9,489.87, +120.88 (+1.29%)
S&P 500: 3,044.31, +14.58 (+0.48%)
NYSE: 11,802.95, -1.97 (-0.02%)

For the Week:
Dow: +917.95 (+3.75%)
NASDAQ: +165.29 (+1.77%)
S&P 500: 88.06 (+3.01%)
NYSE: +470.98 (+4.16%)

Friday, May 29, 2020

Trump Ramps Up Social Media Battle; Argentina Continues Defaulting; Gold, Silver Premiums Persist

Not that anybody should be concerned, but Argentina defaulted on a $500 million interest payment a week ago, on May 22nd. Money Daily had been covering the story but slipped up and missed the breaking news over the Memorial Day Weekend. No excuse. We blew it. 20 lashes.

Anyhow, it's not over down Buenos Aires way, as representatives from both sides - the Argentine government and a gaggle of international creditors - continue to seek a solution, setting a June 2nd date for a plan to restructure $66 billion of the country's debt. Realistically, this being the ninth time Argentina has defaulted on its obligations and the third time this century, hopes of reaching any kind of deal that satisfies both the creditor and debtor seems well removed from the realm of the possible.

President Trump issued another executive order Thursday afternoon, this one coming after Twitter tagged a couple of his tweets with fact-checks.

The order calls for new regulations under Section 230 of the Communications Decency Act "to make it so that social media companies that engage in censoring or any political conduct will not be able to keep their liability shield," Trump said.

The tweets in question concerned Trump's opposition to mail-in ballots in the upcoming November election, which he believes would result in a cascade of fraud. Twitter added some fact-checking language stating that fraud isn't an issue with absentee ballots.

That, and his announcement of a press conference Friday to address growing concerns over China's dispute with Hong Kong (and now India), sent markets tumbling into the red after making small gains in Thursday's session.

Escalating the situation, early Friday morning, Trump tweeted about the ongoing violence in Minneapolis and elsewhere:



Accessing the President's tweet on the Twitter platform brings up the following message: This Tweet violated the Twitter Rules about glorifying violence. However, Twitter has determined that it may be in the public’s interest for the Tweet to remain accessible. Beside it is a button that gives the user the option to display the tweet or keep it hidden. That seems to be an exercise in futility on Twitter's part, possibly drawing even more attention to the tweet in question than had they just left it alone and allowed the public to decide and debate its appropriateness.

Twitter continues to dig its own grave because the President certainly isn't going to back down when he has the complete arsenal of the Department of Justice at his disposal. It's become rather obvious to just about everybody that Twitter, along with their social media counterparts, Google, Facebook, and others, that these companies have abused their free reign over what gets published and where on the internet for a long time without any oversight. Having set up their own rules and guidelines they've often trampled on first amendment rights of users, citing their status as private companies as cover for their subjective agenda.

It would appear that President Trump is serious about limiting their ability to shape opinion. It's certain that the issue will end up in the courts and may take years to resolve. Meanwhile, the mainstream TV networks, ABC, NBC, CBS, CNN, and Fox, and newspapers such as the New York Times and Washington Post continue to spread half-truths, fake news, and outright lies on a regular basis. Whether the president's wrath extends to limitations or punishments for biased reporting in other areas of the media remains to be seen, but there is sure to be intense focus on the media leading up to the November elections.

Elsewhere, confusion reigns supreme in the precious metals space. Since mid-March there has been a schism between the futures price of gold and the spot price, with the gap sometimes great enough to encourage arbitrage in a relatively risk-free trade. Usually, the spot price is a few dollars below the futures bid, but the spread has widened and exhibited volatile behavior recently. Silver has also joined the party, with spot and futures prices deviating sporadically.

Of course, the spot and futures prices are little more than bookmarks these days compared to the premium prices being paid for actual physical metal on eBay. Gold and silver are both sporting heavy premiums, with gold selling at the one ounce level at $120-180 over spot and one ounce silver going for $23-30 when the spot price has been hovering in the $16-17 range. Silver, probably the most undervalued commodity in the world, has approached 100% premiums in recent days.

As more people become aware of the fraudulent nature of futures trading where major players such as JP Morgan Chase are allowed to flaunt size limits and engage in spoofing, naked shorting, and are never forced to stand for delivery, physical markets are becoming the go-to for investors with serious intentions of protecting their wealth with precious metals.

Yields in the treasury space rose across the curve on Thursday, with the 30-year bond hitting 1.47%, a two-month high. The spread between the 2-year note (0.17%) and the 30 is now 130 basis points, 10 points higher than a week ago. Tighter lending conditions may not be in the Fed's best interests at this time, but the present issue is likely one of supply. The Fed has been begging fiscal authorities (congress and the president) to unleash more stimulus spending so as to facilitate the Fed's monetizing of the debt, spreading its largesse to equity market participants.

If the government isn't going to ramp up deficit spending, the Fed will be looking over its shoulder at rising rates with too little supply coming to market. This is just one of the unintended consequences of massive money printing on a global scale. At some point, with all hands outstretched, there's not enough to go around and a struggle is engaged for the scraps thrown to the market. The Fed is committed to buying everything, but if there's not enough everything around, they risk severe impairment of credit markets.

Congress needs to get on the bandwagon with all due alacrity lest the Fed run out of debt to monetize, jeopardizing the massive stock rally they have recently engendered.

Finally, in spite of the price of oil (once again, on the futures market) having roughly doubled over the past month, and with it, rising gas prices at the pump, there's still a massive glut on the supply side and slack demand against it. WTI crude in the $32-36 range is a resistance level the market will find difficult to overcome. Economies aren't roaring back to life following the global lockdowns, rather, they're reengaging in fits and starts, and not nearly at capacity. The major oil producers have done their level best to halt the price decline, but there's only so much production that can be cut from counties whose very existence relies upon regular selling of crude oil.

The summer, if authorities allow free movement, should be affordable, at least as concerns automotive touring.

Friday's trading session opens in a little more than an hour from this posting. With the Dow ahead by nearly 1000 points this week, unless there's a major pullback on Friday, Wall Street will shove another fat week of gains into America's face.

At the Close, Thursday, May 28, 2020:
Dow: 25,400.64, -147.63 (-0.58%)
NASDAQ: 9,368.99, -43.37 (-0.46%)
S&P 500: 3,029.73, -6.40 (-0.21%)
NYSE: 11,804.91, -32.62 (-0.28%)

Wednesday, May 27, 2020

Fed Reduces Bank Reserve Requirements to ZERO Nationwide; Hydroxychloroquine Proves Effective; Stocks Gain; Gold, Silver Mashed

A few developments in the financial sphere over the holiday weekend were worth noting.

Reserve Requirements

As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

Did anybody see or hear that announcement from the Fed?

It must have been announced via double-secret handshake pinky-swear written in invisible ink on flash paper. Thankfully, Mike Maloney has been keeping tabs on the out-of-control Fed and released the information in a video over the Memorial Day weekend.



Actions by the Federal Reserve concerning currency in circulation evokes memories of this famous South Park clip:



Also developing over the weekend (when nobody was paying attention), the World Health Organization announced a "temporary pause" to clinical trials on hydroxychloroquine (HCQ) as a treatment for COVID-19, based on a report from the medical journal, The Lancet, on May 22 which had published an observational study on HCQ and chloroquine and its effects on COVID-19 patients that have been hospitalized.

The study included some very sketchy data and besides being "observational", rather then relying on the gold standard: randomized double blind clinical trial, the study looked at patients already hospitalized from COVID-19, when the benefits of HCQ, especially when taken in conjunction with zinc, is effective as a preventative drug and also has shown in various anecdotal cases to be effective as a treatment for asymptomatic people who tested positive for COVID-19 and also those showing early symptoms of the virus.

A Texas nursing home treated patients and staff with HCQ, Azithromycin (Zithromax, Z-Pak) and zinc with amazing results, only one death from 56 residents and 33 staff who tested positive. Great video coverage in this report.

Costa Rica has been using HCQ effectively to combat COVID-19 with exceptional results. Costa Rica’s reported fatality rate of 1.2 per 1,000,000 population is one of the lowest in the world.

Coronavirus Treatment: India Expands Use Of Trump's Hydroxychloroquine As WHO Halts Trials

Dr. Chris Martenson, who has no bias or agenda, and has been producing some of the most informative and extensively-researched video reports on the virus since January, offers much more:



Oh, yeah, we can't test HCQ because it's so dangerous... to Big Pharma's bottom line. The generic drug costs roughly 10 cents per dose to produce.

And, in case you missed it, President Trump signed an executive order on May 19, which instructed all federal agencies to...
"address this economic emergency by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law and with protection of the public health and safety, with national and homeland security, and with budgetary priorities and operational feasibility."

This was presented earlier on Money Daily, but advisors believe the president's executive order was created to keep federal and state agencies on short leases as regards enforcement of stay-at-home, lockdown, social distancing, and other orders and restrictions on the American public and especially on small business.

The markets on Tuesday were the usual mix of stocks and oil up, gold and silver smashed, bonds flat.

At the Close, Tuesday, May 26, 2020:
Dow: 24,995.11, +529.95 (+2.17%)
NASDAQ: 9,340.22, +15.63 (+0.17%)
S&P 500 2,991.77, +36.32 (+1.23%)
NYSE: 11,603.00, +271.03 (+2.39%)