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%)
Showing posts with label silver. Show all posts
Showing posts with label silver. Show all posts
Friday, June 19, 2020
Wednesday, June 17, 2020
Stocks Gain On Sensational Retail Report; NASDAQ Re-Approaching Record Highs
Stocks gained across the board on Tuesday, after May retail sales figures were up an eye-popping 17.7% as stores reopened across the country post-lockdowns from the coronavirus scare.
The number was more than double what many analysts had expected and prompted a wave of new buying in stocks of all varieties. The Dow gained more than 500 points. The S&P powered up by almost 60 points.
Despite the gaudy month-over-month numbers, gross receipts were 6.1% below a year earlier due mainly to uneven store re-openings, some states keeping stay-at-home restrictions in place longer than others.
With gains on both Monday and Tuesday, stocks have recovered most of the losses suffer last Thursday, June 11. The NASDAQ is about 175 points away from its all-time high, made on June 10. The intraday high was 10,086.89. At the close, the record was set at 10,020.35.
Of particular note is Friday's quad-witching day, which should introduce more volatility to the mix. It seems apparent, however, that bulls have regained the advantage and stocks appear set on a path upward, despite valuations in the stratosphere.
Bonds took a hit as yields on the long end of the treasury complex rose. The 30-year exploded nine basis points higher, from a yield of 1.45% on Monday to 1.54% Tuesday. The 10-year note was yielding 0.75%.
Precious metals were higher on the futures market but investors are becoming impatient with the constant niggling in the paper markets. Considering the level of disruption over the past four months, both gold and silver appear largely undervalued. Prices remain elevated on fair, open markets such as eBay. Dealers are still charging high premiums over spot and many are sold out of popular items.
It was recently reported that gold-backed exchange traded funds (ETFs) added 623 tonnes of the metal worth $34 billion to their stockpile from January to May, exceeding in five months every full-year increase on record. That's an impressive figure, as the amount of gold held in storage by ETFs reflects a growing demand for the precious metal.
While the ETFs are required to hold gold in storage at a percentage of their actual outstanding stock, shares of ETFs are not redeemable in gold and serve as a buffer against physical price increases. Touted as a safe way to invest in gold, they serve to track price increases on the paper (futures and spot) markets. The SPDR Gold Shares (GLD) ETF is up from 142 to 162 this year, roughly the same percentage in gold futures.
As pure derivatives, the gold and silver ETFs cause more confusion and actually dilute the pool of gold buyers. People investing in gold or silver ETFs are actually serving to keep a lid on prices by not engaging in active physical purchase and storage of their own gold.
The ETFs are yet another reason why gold and silver are orders of magnitude lower than where many believe they should be. Speculative in nature, they can be driven in any direction by well-timed buys, sells or shorts.
Oil prices have hit a rock at about $38 per barrel. That could change Wednesday when a monthly report from the Organization of the Petroleum Exporting Countries (OPEC) is released.
At the Close, Tuesday, June 16, 2020:
Dow: 26,289.98, +526.82 (+2.04%)
NASDAQ: 9,895.87, +169.84 (+1.75%)
S&P 500: 3,124.74, +58.15 (+1.90%)
NYSE: 12,161.47, +218.57 (+1.83%)
The number was more than double what many analysts had expected and prompted a wave of new buying in stocks of all varieties. The Dow gained more than 500 points. The S&P powered up by almost 60 points.
Despite the gaudy month-over-month numbers, gross receipts were 6.1% below a year earlier due mainly to uneven store re-openings, some states keeping stay-at-home restrictions in place longer than others.
With gains on both Monday and Tuesday, stocks have recovered most of the losses suffer last Thursday, June 11. The NASDAQ is about 175 points away from its all-time high, made on June 10. The intraday high was 10,086.89. At the close, the record was set at 10,020.35.
Of particular note is Friday's quad-witching day, which should introduce more volatility to the mix. It seems apparent, however, that bulls have regained the advantage and stocks appear set on a path upward, despite valuations in the stratosphere.
Bonds took a hit as yields on the long end of the treasury complex rose. The 30-year exploded nine basis points higher, from a yield of 1.45% on Monday to 1.54% Tuesday. The 10-year note was yielding 0.75%.
Precious metals were higher on the futures market but investors are becoming impatient with the constant niggling in the paper markets. Considering the level of disruption over the past four months, both gold and silver appear largely undervalued. Prices remain elevated on fair, open markets such as eBay. Dealers are still charging high premiums over spot and many are sold out of popular items.
It was recently reported that gold-backed exchange traded funds (ETFs) added 623 tonnes of the metal worth $34 billion to their stockpile from January to May, exceeding in five months every full-year increase on record. That's an impressive figure, as the amount of gold held in storage by ETFs reflects a growing demand for the precious metal.
While the ETFs are required to hold gold in storage at a percentage of their actual outstanding stock, shares of ETFs are not redeemable in gold and serve as a buffer against physical price increases. Touted as a safe way to invest in gold, they serve to track price increases on the paper (futures and spot) markets. The SPDR Gold Shares (GLD) ETF is up from 142 to 162 this year, roughly the same percentage in gold futures.
As pure derivatives, the gold and silver ETFs cause more confusion and actually dilute the pool of gold buyers. People investing in gold or silver ETFs are actually serving to keep a lid on prices by not engaging in active physical purchase and storage of their own gold.
The ETFs are yet another reason why gold and silver are orders of magnitude lower than where many believe they should be. Speculative in nature, they can be driven in any direction by well-timed buys, sells or shorts.
Oil prices have hit a rock at about $38 per barrel. That could change Wednesday when a monthly report from the Organization of the Petroleum Exporting Countries (OPEC) is released.
At the Close, Tuesday, June 16, 2020:
Dow: 26,289.98, +526.82 (+2.04%)
NASDAQ: 9,895.87, +169.84 (+1.75%)
S&P 500: 3,124.74, +58.15 (+1.90%)
NYSE: 12,161.47, +218.57 (+1.83%)
Sunday, 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%)
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%)
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%)
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%)
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.
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.
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%)
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%)
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:
....These THUGS are dishonoring the memory of George Floyd, and I won’t let that happen. Just spoke to Governor Tim Walz and told him that the Military is with him all the way. Any difficulty and we will assume control but, when the looting starts, the shooting starts. Thank you!
— Donald J. Trump (@realDonaldTrump) May 29, 2020
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...
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%)
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%)
Sunday, May 24, 2020
WEEKEND WRAP: Governments Throw $$$ Billions At Drug Companies; Mall Rents Go Unpaid; Unemployment Soaring; Stocks Higher
Spurred by an announcement by Moderna (MRNA) that early trials of a possible COVID-19 vaccine were positive, stocks rode a big Monday rally to better than three percent gains across the major indices. All but the NYSE Composite closed at 11-week highs, the Comp. falling just points short.
The irony of the rally was that Moderna, a company that has never made a single dime of profit (they've lost $1.5 billion since 2016), closed last Friday at 66.68, finished Monday at an even $80 per share, but closed out the week at 69.00. In between, there were some big paydays for insiders. If that wasn't proof enough that the market is a crony capitalist playground, then something's wrong with people's world views.
It was the ultimate slap in the face to the American public by the rich and connected, the one-percenters, who made a show of fake news over something ultimately immaterial. It was a very sad display of fascism in practice.
To make matters even worse, Moderna received up to $483 million in federal funding to accelerate development of its coronavirus vaccine. Governments around the world are throwing money at well-heeled companies working on a vaccine. In the United States, the Biomedical Advanced Research and Development Authority (BARDA), a federal agency that funds disease-fighting technology, has announced investments of nearly $1 billion to support coronavirus vaccine development and the scale-up of manufacturing for promising candidates. Johnson and Johnson, Sanofi, and GlaxoSmithKline are among about 100 companies being funded for research toward a coronavirus vaccine by countries from Canada, to Singapore, to France.
The US government committed up to $1.2 billion to fund Oxford University and drug maker, AstraZeneca, in a race to produce a vaccine by October, it was announced on Friday.
The quickest a vaccine has ever been developed is four years from phase one trials to working vaccine on the market. No vaccine for a coronavirus has ever been successfully developed. SARS and MERS are variants of coronaviruses. There are no vaccines to protect against them.
This is just the common folly of the age in which we live. Instead of spending time explaining to people how to strengthen their individual immune systems - the best defense against all diseases and viruses - world governments spend taxpayer dollars funding companies that don't need any extra money. It's an incredible waste of capital, but you can bet the executives of the Big Pharma companies (one of Washington's biggest lobbying groups) and high-ranking scientists are making bank on your dollar.
Meanwhile, back in the real world, the "official" unemployment figure is 14.7%, with more than 36 million Americans out of work. Wall Street continues to party while Main Street gets the shaft, as usual. Lockdowns and social distancing restrictions have blown a hole in small businesses, many of which will never recover and will be bankrupt within months, if not already.
Malls are going broke. The biggest mall in the country, Minnesota's Mall of America, is two months delinquent on it's $1.4 billion loan. Other mall landlords report collecting less than 25% of rent due from April and May. With June approaching quickly, many retailers will be three months behind on rent payments and subject to lockouts, forced liquidations, and other draconian measures written into their leases.
Bankruptcies are mounting and delinquency notices are flying around everywhere. With retail operations - from clothing stores to hair salons to baseball card shops and everything in between - suffering as a result of the nearly nationwide two-month lockdown, many employees who were furloughed will not have jobs to go back to when everything begins to get back to some semblance of normal. That means extended unemployment for millions, poverty and homelessness set to soar.
The federal government's additional $600 a week in unemployment benefits via the CARES act will run out at the end of July, just in time for back-to-school sales that may not happen because some schools won't be reopening and many colleges are planning to allow only limited on-campus activity, with many classes offered via the internet only.
The world has changed, and is changing, though it doesn't appear to be for the better, at least at first blush.
Gold and silver caught bids on the paper markets this week with gold trading as high as $1756.90 per ounce, closing out at $1732.70 bid. Silver was an even better performer, ripping through the $17 per ounce price on Monday, trading as high as $17.57 per ounce before settling in at $17.19 on Friday.
In the physical market, premiums have begun to ease after an incredible supply-demand tug-of-war. Dealers are still facing shortages of certain items, but on eBay, at least, prices were lower for the week, although still well above spot prices.
Here are the most recent prices (Sunday, May 24) for specific items on eBay:
Item / Low / High / Average / Median
1 oz silver coin / 22.74 / 38.98 / 30.72 / 29.60
1 oz silver bar / 25.45 / 39.50 / 29.84 / 26.98
1 oz gold coin / 1,855.00 / 1,985.00 / 1,894.48 / 1,894.27
1 oz gold bar / 1,839.93 / 1,987.95 / 1,869.38 / 1,855.52
Oil was up, treasuries were fairly flat for the week. It's a beautiful holiday weekend, so we're calling this a wrap, right here.
Get out and get some sun!
At the Close, Friday, May 22, 2020:
Dow: 24,465.16, -8.94 (-0.04%)
NASDAQ: 9,324.59, +39.71 (+0.43%)
S&P 500: 2,955.45, +6.94 (+0.24%)
NYSE: 11,331.97, -19.63 (-0.17%)
For the Week:
Dow: +779.74 (+3.29%)
NASDAQ: +310.03 (+3.44%)
S&P 500: +91.75 (+3.20%)
NYSE: +384.65 (+3.51%)
The irony of the rally was that Moderna, a company that has never made a single dime of profit (they've lost $1.5 billion since 2016), closed last Friday at 66.68, finished Monday at an even $80 per share, but closed out the week at 69.00. In between, there were some big paydays for insiders. If that wasn't proof enough that the market is a crony capitalist playground, then something's wrong with people's world views.
It was the ultimate slap in the face to the American public by the rich and connected, the one-percenters, who made a show of fake news over something ultimately immaterial. It was a very sad display of fascism in practice.
To make matters even worse, Moderna received up to $483 million in federal funding to accelerate development of its coronavirus vaccine. Governments around the world are throwing money at well-heeled companies working on a vaccine. In the United States, the Biomedical Advanced Research and Development Authority (BARDA), a federal agency that funds disease-fighting technology, has announced investments of nearly $1 billion to support coronavirus vaccine development and the scale-up of manufacturing for promising candidates. Johnson and Johnson, Sanofi, and GlaxoSmithKline are among about 100 companies being funded for research toward a coronavirus vaccine by countries from Canada, to Singapore, to France.
The US government committed up to $1.2 billion to fund Oxford University and drug maker, AstraZeneca, in a race to produce a vaccine by October, it was announced on Friday.
The quickest a vaccine has ever been developed is four years from phase one trials to working vaccine on the market. No vaccine for a coronavirus has ever been successfully developed. SARS and MERS are variants of coronaviruses. There are no vaccines to protect against them.
This is just the common folly of the age in which we live. Instead of spending time explaining to people how to strengthen their individual immune systems - the best defense against all diseases and viruses - world governments spend taxpayer dollars funding companies that don't need any extra money. It's an incredible waste of capital, but you can bet the executives of the Big Pharma companies (one of Washington's biggest lobbying groups) and high-ranking scientists are making bank on your dollar.
Meanwhile, back in the real world, the "official" unemployment figure is 14.7%, with more than 36 million Americans out of work. Wall Street continues to party while Main Street gets the shaft, as usual. Lockdowns and social distancing restrictions have blown a hole in small businesses, many of which will never recover and will be bankrupt within months, if not already.
Malls are going broke. The biggest mall in the country, Minnesota's Mall of America, is two months delinquent on it's $1.4 billion loan. Other mall landlords report collecting less than 25% of rent due from April and May. With June approaching quickly, many retailers will be three months behind on rent payments and subject to lockouts, forced liquidations, and other draconian measures written into their leases.
Bankruptcies are mounting and delinquency notices are flying around everywhere. With retail operations - from clothing stores to hair salons to baseball card shops and everything in between - suffering as a result of the nearly nationwide two-month lockdown, many employees who were furloughed will not have jobs to go back to when everything begins to get back to some semblance of normal. That means extended unemployment for millions, poverty and homelessness set to soar.
The federal government's additional $600 a week in unemployment benefits via the CARES act will run out at the end of July, just in time for back-to-school sales that may not happen because some schools won't be reopening and many colleges are planning to allow only limited on-campus activity, with many classes offered via the internet only.
The world has changed, and is changing, though it doesn't appear to be for the better, at least at first blush.
Gold and silver caught bids on the paper markets this week with gold trading as high as $1756.90 per ounce, closing out at $1732.70 bid. Silver was an even better performer, ripping through the $17 per ounce price on Monday, trading as high as $17.57 per ounce before settling in at $17.19 on Friday.
In the physical market, premiums have begun to ease after an incredible supply-demand tug-of-war. Dealers are still facing shortages of certain items, but on eBay, at least, prices were lower for the week, although still well above spot prices.
Here are the most recent prices (Sunday, May 24) for specific items on eBay:
Item / Low / High / Average / Median
1 oz silver coin / 22.74 / 38.98 / 30.72 / 29.60
1 oz silver bar / 25.45 / 39.50 / 29.84 / 26.98
1 oz gold coin / 1,855.00 / 1,985.00 / 1,894.48 / 1,894.27
1 oz gold bar / 1,839.93 / 1,987.95 / 1,869.38 / 1,855.52
Oil was up, treasuries were fairly flat for the week. It's a beautiful holiday weekend, so we're calling this a wrap, right here.
Get out and get some sun!
At the Close, Friday, May 22, 2020:
Dow: 24,465.16, -8.94 (-0.04%)
NASDAQ: 9,324.59, +39.71 (+0.43%)
S&P 500: 2,955.45, +6.94 (+0.24%)
NYSE: 11,331.97, -19.63 (-0.17%)
For the Week:
Dow: +779.74 (+3.29%)
NASDAQ: +310.03 (+3.44%)
S&P 500: +91.75 (+3.20%)
NYSE: +384.65 (+3.51%)
Sunday, May 17, 2020
WEEKEND WRAP: Stocks Split, Dow Suffers; Gold, Silver May Be Headed For Record Prices
The week just past was not a particularly enthralling one for stock investors, as the Dow and NYSE Composite took it on the chin while the S&P and NASDAQ put up fractional, unsubstantial gains.
As economic and COVID-19 developments were concerned, it was mostly politicking over substance, as President Trump backhanded Dr. Anthony Fauci, head of the CDC, over predictions related to states' reopening their economies and the potential for a second wave of the virus in the coming fall or winter.
For the most part, stocks refrained from further insane advances, though the gains toward the back end of the week reeked of malingering by the Federal Reserve, moving stocks off their lows into green territory in both Thursday and Friday's sessions. With the Dow Jones Industrial Average forming a pretty obvious short-term head-and-shoulders pattern, the equity markets are set up for a breakout either higher or lower, though the least resistant path may be down another six to eight percent over the next week to two weeks. With the traditional third Friday of the month options expiry in the rear view mirror (May 15), the markets will need some kind of catalyst to move forward. Otherwise, expect the Dow and NYSE Composite to both head back below the bear market defined level of -20 percent.
If that were to happen, the NASDAQ, already ridiculously valued, and S&P should fall in sympathy with the Blue Chips.
The week was a very solid one for oil, though the June contract is set to expire on Tuesday (May 18). Producers do not want to see a repeat of the May futures expiration when the price went negative and buyers were being paid to haul oil off to the tune of $41 a barrel.
June futures closed last Friday (May 8) at $24.61 a barrel and this week at $29.43. Monday will likely give a signal as to whether another collapse is imminent, though with US states and most of Europe reopening their economies, it would appear that the massive glut has at least partially abated and demand is rising. There is still no open air for the futures to fly in, however, as the spread between the current month all the way out to the December 2021 contract is pretty slim. 35.78 is the last quoted price for December 2021.
Yields on treasuries continued lower through the week and are presumptuously headed below zero, into the brave new world of negative rates. With the two-year yielding 0.16% and the five-year at 0.31, it would seem only a matter of when, not if rates go underwater. With deflationary forces at work, the low yields on short-dates bills and notes may be attractive as a hedge against asset price declines. Yields cannot fall much more from these levels before going negative in real terms. Those seeing inflation ahead could easily be urged into paying to hold capital.
Gold and silver absolutely exploded this week on eBay, a market where true price discovery can be ascertained.
For the first time since Money Daily began tracking prices a month ago for one troy ounce gold and silver coins and bars, one ounce gold coins sold for more than the all-time record closing spot price ($1895.00, September 5 and 6, 2011) on an average and median basis. The average price for a one ounce gold coin on eBay was $1,917.41, and for a one ounce bar, $1,898.62. Buyers are looking at a premium of over $150 for either coins or bars. Notably, smaller denominations of gold coins and bars (1/10 ounce to 1/2 ounce) are routinely selling at prices that relate to over $225 per ounce.
These actual sale prices are in stark contrast to the easily-corrupted gold COMEX prices where gold closed with a bid of $1742.20 on Friday afternoon.
Silver also showed enormous gains over last week as the average price of a one ounce coin gained from $30.50 on May 10 to $33.71 this Sunday. Price appreciation for silver bars was even more dramatic, gaining from last week's average price of $26.77 to $34.57 this week. That is more than double the COMEX paper silver price bid of $16.61 as of Friday's close.
We employ the same methodology, looking at the most recently-closed sales on eBay, eliminating any coins or bars that may have numismatic or collectible value as best as possible to come up with a standard, reliable price tracking model.
Here are the most recent prices:
Item: Low / High / Average / Median
1 oz silver coin: 20.51 / 47.00 / 33.71 / 32.42
1 oz silver bar: 26.25 / 44.50 / 34.57 / 34.50
1 oz gold coin: 1,833.08 / 2,030.50 / 1,917.41 / 1,907.02
1 oz gold bar: 1,845.37 / 2,035.00 / 1,898.62 / 1,874.09
Parts of Saturday and Sunday mornings were spent viewing some very interesting and important videos.
Mike Maloney's narrative over charts from wtfhappenedin1971.com offers an historic perspective of the American condition.
Refinitiv shares a wide-ranging interview with Real Vision’s CEO and co-founder, Raoul Pal, who provides distinct trading strategies and a serious view of what's ahead for the world's economies.
Gregory Mannarino supplies a look ahead for Stocks, Bitcoin, Gold and Silver.
Something to make note of as the world cascades through the covid crisis and beyond is that all of the important videos on youtube and various websites are being made by people who are generally shunned by mainstream media. goldsilver.com's Mike Maloney, Adam Taggert and Chris Martenson of Peak Prosperity, Real Vision's Raoul Pal, Max Keiser and Stacy Herbert of the Kaiser Report, and, to a lesser extent, various guests of Keith McCullough's Hedgeye can be seen only on the internet, while Fed officials, government bigwigs like Treasury Secretary Steven Mnuchin, and old line investors like Warren Buffett are the staple of mainstream TV media.
It's quite a contrast when you view it from that perspective and realize that the stories being told and the predictions being made about the future of the crisis and of the world are radically different. There's a choice to be made. Just which narrative are you going to believe? Who's advice will you follow, and where will you end up, socially, politically, and financially.
At the Close, Friday, May 15, 2020:
Dow Jones Industrial Average: 23,685.42, +60.12 (+0.25%)
NASDAQ: 9,014.56, +70.84 (+0.79%)
S&P 500: 2,863.70, +11.20 (+0.39%)
NYSE: 10,947.32, +19.92 (+0.18%)
For the Week:
Dow: -645.90 (-2.65%)
NASDAQ: +70.84 (+0.79%)
S&P 500: +11.20 (+0.39%)
NYSE: -407.02 (-3.58%)
As economic and COVID-19 developments were concerned, it was mostly politicking over substance, as President Trump backhanded Dr. Anthony Fauci, head of the CDC, over predictions related to states' reopening their economies and the potential for a second wave of the virus in the coming fall or winter.
For the most part, stocks refrained from further insane advances, though the gains toward the back end of the week reeked of malingering by the Federal Reserve, moving stocks off their lows into green territory in both Thursday and Friday's sessions. With the Dow Jones Industrial Average forming a pretty obvious short-term head-and-shoulders pattern, the equity markets are set up for a breakout either higher or lower, though the least resistant path may be down another six to eight percent over the next week to two weeks. With the traditional third Friday of the month options expiry in the rear view mirror (May 15), the markets will need some kind of catalyst to move forward. Otherwise, expect the Dow and NYSE Composite to both head back below the bear market defined level of -20 percent.
If that were to happen, the NASDAQ, already ridiculously valued, and S&P should fall in sympathy with the Blue Chips.
The week was a very solid one for oil, though the June contract is set to expire on Tuesday (May 18). Producers do not want to see a repeat of the May futures expiration when the price went negative and buyers were being paid to haul oil off to the tune of $41 a barrel.
June futures closed last Friday (May 8) at $24.61 a barrel and this week at $29.43. Monday will likely give a signal as to whether another collapse is imminent, though with US states and most of Europe reopening their economies, it would appear that the massive glut has at least partially abated and demand is rising. There is still no open air for the futures to fly in, however, as the spread between the current month all the way out to the December 2021 contract is pretty slim. 35.78 is the last quoted price for December 2021.
Yields on treasuries continued lower through the week and are presumptuously headed below zero, into the brave new world of negative rates. With the two-year yielding 0.16% and the five-year at 0.31, it would seem only a matter of when, not if rates go underwater. With deflationary forces at work, the low yields on short-dates bills and notes may be attractive as a hedge against asset price declines. Yields cannot fall much more from these levels before going negative in real terms. Those seeing inflation ahead could easily be urged into paying to hold capital.
Gold and silver absolutely exploded this week on eBay, a market where true price discovery can be ascertained.
For the first time since Money Daily began tracking prices a month ago for one troy ounce gold and silver coins and bars, one ounce gold coins sold for more than the all-time record closing spot price ($1895.00, September 5 and 6, 2011) on an average and median basis. The average price for a one ounce gold coin on eBay was $1,917.41, and for a one ounce bar, $1,898.62. Buyers are looking at a premium of over $150 for either coins or bars. Notably, smaller denominations of gold coins and bars (1/10 ounce to 1/2 ounce) are routinely selling at prices that relate to over $225 per ounce.
These actual sale prices are in stark contrast to the easily-corrupted gold COMEX prices where gold closed with a bid of $1742.20 on Friday afternoon.
Silver also showed enormous gains over last week as the average price of a one ounce coin gained from $30.50 on May 10 to $33.71 this Sunday. Price appreciation for silver bars was even more dramatic, gaining from last week's average price of $26.77 to $34.57 this week. That is more than double the COMEX paper silver price bid of $16.61 as of Friday's close.
We employ the same methodology, looking at the most recently-closed sales on eBay, eliminating any coins or bars that may have numismatic or collectible value as best as possible to come up with a standard, reliable price tracking model.
Here are the most recent prices:
Item: Low / High / Average / Median
1 oz silver coin: 20.51 / 47.00 / 33.71 / 32.42
1 oz silver bar: 26.25 / 44.50 / 34.57 / 34.50
1 oz gold coin: 1,833.08 / 2,030.50 / 1,917.41 / 1,907.02
1 oz gold bar: 1,845.37 / 2,035.00 / 1,898.62 / 1,874.09
Parts of Saturday and Sunday mornings were spent viewing some very interesting and important videos.
Mike Maloney's narrative over charts from wtfhappenedin1971.com offers an historic perspective of the American condition.
Refinitiv shares a wide-ranging interview with Real Vision’s CEO and co-founder, Raoul Pal, who provides distinct trading strategies and a serious view of what's ahead for the world's economies.
Gregory Mannarino supplies a look ahead for Stocks, Bitcoin, Gold and Silver.
Something to make note of as the world cascades through the covid crisis and beyond is that all of the important videos on youtube and various websites are being made by people who are generally shunned by mainstream media. goldsilver.com's Mike Maloney, Adam Taggert and Chris Martenson of Peak Prosperity, Real Vision's Raoul Pal, Max Keiser and Stacy Herbert of the Kaiser Report, and, to a lesser extent, various guests of Keith McCullough's Hedgeye can be seen only on the internet, while Fed officials, government bigwigs like Treasury Secretary Steven Mnuchin, and old line investors like Warren Buffett are the staple of mainstream TV media.
It's quite a contrast when you view it from that perspective and realize that the stories being told and the predictions being made about the future of the crisis and of the world are radically different. There's a choice to be made. Just which narrative are you going to believe? Who's advice will you follow, and where will you end up, socially, politically, and financially.
At the Close, Friday, May 15, 2020:
Dow Jones Industrial Average: 23,685.42, +60.12 (+0.25%)
NASDAQ: 9,014.56, +70.84 (+0.79%)
S&P 500: 2,863.70, +11.20 (+0.39%)
NYSE: 10,947.32, +19.92 (+0.18%)
For the Week:
Dow: -645.90 (-2.65%)
NASDAQ: +70.84 (+0.79%)
S&P 500: +11.20 (+0.39%)
NYSE: -407.02 (-3.58%)
Friday, May 15, 2020
Stocks Post Weak Gains Ahead of April Retail; Gold, Silver Bid, Approaching Breakout Levels
Following a weak open, which looked to see stocks extend their losing streak to a third straight session in the red, stocks pivoted, gradually rising off the lows (the Dow down more than 400 points early on) to eventually finish with fair, though hardly secure gains, the advance prompted right at the Dow Jones Industrials' 50-day moving average.
For the seventh time in the past eight weeks, the major averages put on gains in the face of staggering employment losses, as new unemployment claims came in hotter than anticipated, with 2.98 million fresh filings, bringing the two-month total over 36 million out of work.
Equity moves were likely not correlated well to the unemployment data, as the gains all appeared after the news had been known for hours. The more likely scenario was one which has been playing out since the Federal Reserve stepped up its bond-buying activity, but quantitatively and qualitatively. Flush with cash, primary dealers and cohorts ramped into stocks, erasing some of the losses from the prior two sessions.
The move, which is mostly market noise rather than anything substantial, is likely to have been in vain. With investors eyeing what are certain to be horrific April retail sales figures Friday morning, futures are pointing down two hours prior to the opening bell.
Sensing weakness in equities, precious metals caught a long-overdue bid, with gold bounding as high as $1732.70, and silver breaking out to a high in early Friday morning trading of $16.48 per troy ounce.
Premiums on both gold and silver remain high, with popular one-ounce silver bars and coins selling in a range of $23-30, while gold fetches well above $1840 routinely for one ounce coins, rounds, or bars. Despite whatever nonsense the mainstream financial media is throwing out as justification for stocks over real money, demand for precious metals is, and has been, at extremely high levels since early March with no abatement seen on the horizon. The outsized demand has created a supply shortage and has miners and smelting operations working at breakneck speed to maintain at least some modicum of reliability.
With input costs around $1250 for gold miners, exploration and excavation should continue at a strong pace as prices rise and demand continues strong. Undervalued for the past seven years at least, gold and silver mining companies may be looking at solid, if not spectacular, profits in coming quarters.
Bond traders were also able to capitalize on the recent weakness in stocks. The yield on the 10-year note has fallen from a May high yield of 0.73% on Monday to close at 0.63% on Thursday. The 30-year closed Monday at 1.43%, its highest level since March 25, but finished Thursday yielding 1.30% and under pressure.
Oil continues to be a favorite plaything of the speculative class, making a two-month high at $28.25 on hopes that some pickup in demand has occurred since states began getting back to business from May 1 forward. Despite an enormous glut on the supply side, specs and oil company execs are latching onto any rumor or fantasy to get the price off the recent decades-deep lows.
The world continues in a state of shock and despair over the coronavirus debacle and various government attempts to both stem its advance and keep their economies on life support. Indications are that some of it's working, but not very well, overall.
Stocks will need a three percent gain on Friday to avoid a negative print for the week. Only the rosiest prognosis would believe that even remotely possible, though the Fed's heft has overcome dire predictions more than once during the current crisis.
Stay liquid. Next posting will be Sunday's WEEKEND WRAP. Life on Wall Street may be not so sweet if all the currency thrown into markets doesn't produce anything more than a 50% spike off the lows, but that head-and-shoulders pattern on the Dow - now with a sloping right shoulder - is beginning to appear ominous.
At the Close, Thursday, May 14, 2020:
Dow: 23,625.34, +377.37 (+1.62%)
NASDAQ: 8,943.72, +80.56 (+0.91%)
S&P 500: 2,852.50, +32.50 (+1.15%)
NYSE: 10,927.41, +97.97 (+0.90%)
For the seventh time in the past eight weeks, the major averages put on gains in the face of staggering employment losses, as new unemployment claims came in hotter than anticipated, with 2.98 million fresh filings, bringing the two-month total over 36 million out of work.
Equity moves were likely not correlated well to the unemployment data, as the gains all appeared after the news had been known for hours. The more likely scenario was one which has been playing out since the Federal Reserve stepped up its bond-buying activity, but quantitatively and qualitatively. Flush with cash, primary dealers and cohorts ramped into stocks, erasing some of the losses from the prior two sessions.
The move, which is mostly market noise rather than anything substantial, is likely to have been in vain. With investors eyeing what are certain to be horrific April retail sales figures Friday morning, futures are pointing down two hours prior to the opening bell.
Sensing weakness in equities, precious metals caught a long-overdue bid, with gold bounding as high as $1732.70, and silver breaking out to a high in early Friday morning trading of $16.48 per troy ounce.
Premiums on both gold and silver remain high, with popular one-ounce silver bars and coins selling in a range of $23-30, while gold fetches well above $1840 routinely for one ounce coins, rounds, or bars. Despite whatever nonsense the mainstream financial media is throwing out as justification for stocks over real money, demand for precious metals is, and has been, at extremely high levels since early March with no abatement seen on the horizon. The outsized demand has created a supply shortage and has miners and smelting operations working at breakneck speed to maintain at least some modicum of reliability.
With input costs around $1250 for gold miners, exploration and excavation should continue at a strong pace as prices rise and demand continues strong. Undervalued for the past seven years at least, gold and silver mining companies may be looking at solid, if not spectacular, profits in coming quarters.
Bond traders were also able to capitalize on the recent weakness in stocks. The yield on the 10-year note has fallen from a May high yield of 0.73% on Monday to close at 0.63% on Thursday. The 30-year closed Monday at 1.43%, its highest level since March 25, but finished Thursday yielding 1.30% and under pressure.
Oil continues to be a favorite plaything of the speculative class, making a two-month high at $28.25 on hopes that some pickup in demand has occurred since states began getting back to business from May 1 forward. Despite an enormous glut on the supply side, specs and oil company execs are latching onto any rumor or fantasy to get the price off the recent decades-deep lows.
The world continues in a state of shock and despair over the coronavirus debacle and various government attempts to both stem its advance and keep their economies on life support. Indications are that some of it's working, but not very well, overall.
Stocks will need a three percent gain on Friday to avoid a negative print for the week. Only the rosiest prognosis would believe that even remotely possible, though the Fed's heft has overcome dire predictions more than once during the current crisis.
Stay liquid. Next posting will be Sunday's WEEKEND WRAP. Life on Wall Street may be not so sweet if all the currency thrown into markets doesn't produce anything more than a 50% spike off the lows, but that head-and-shoulders pattern on the Dow - now with a sloping right shoulder - is beginning to appear ominous.
At the Close, Thursday, May 14, 2020:
Dow: 23,625.34, +377.37 (+1.62%)
NASDAQ: 8,943.72, +80.56 (+0.91%)
S&P 500: 2,852.50, +32.50 (+1.15%)
NYSE: 10,927.41, +97.97 (+0.90%)
Sunday, May 10, 2020
WEEKEND WRAP: Fed Fiat Funny Money Has Managed to Short-Circuit the Crisis, for Now
Against a backdrop of Great Depression-like numbers - 33 million Americans out of work and an "official" unemployment rate of 14.7% - equity investors enjoyed a remarkably positive week, with all major indices rising by at least 2.50%, with the NASDAQ leading the way with a six percent gain.
The NASDAQ's advance was not only remarkable, but it is also ludicrous. The tech-heavy index has advanced beyond both its 50 and 200-day moving averages and is within 720 points of its all-time high. Investors in the speculative sector of the market have either divorced themselves from reality or are seeing something the rest of the world is missing. Money has to go somewhere, even money from the Federal Reserve, released to companies across the investing spectrum, but most of it appears to be heading toward Silicon Valley.
No doubt, chasing momentum has amplified the absurd move to the NASDAQ, which is likely a dangerous precedent. Many of the companies moving higher sport P/E ratios well above the norm, even the norm in a major bull market, a position that was shattered eight weeks ago.
Some of the standouts in the nebulous NASDAQ unicorn universe include Alphabet, parent of Google (GOOG), bottomed out at 1056.62 on March 23, and closed Friday at 1388.37.
Netflix (NFLX) fell out at 298.84 on March 16, but has since rebounded to Friday's close of 435.55.
Amazon (AMZN) reached an all-time high of 2474.00 on April 16, after dropping to 1676.61 on March 12, an amazing gain of 47.6% in just over a month. Amazon may be a superb, dynamic company, but it's arguably extremely overvalued, with a P/E of 113.
Facebook (FB) finished at 146.01 on March 16 and closed at 212.35 on Friday.
Some investors have been getting fat while the larger economy has, for the most part, imploded.
As almost all states (47 of 50 as of Saturday, May 9) have at least partially reopened their businesses and relaxed stay-at-home and other restrictions on the populace, anecdotal reports show that business is still a long distance from anything approaching normal, i.e., prior to the COVID-19 pandemic.
Wall Street is pushing a narrative that the country and the economy is all well and good, the recovery - in terms of stock prices - well underway, even as cases of coronavirus are still prevalent and rising in some cases and deaths continue at a run rate of over 1,000 a day. How well that works out for investors won't likely be known for some time. For now, investors, and the companies getting the most attention, are sitting pretty.
Crude oil continued to be under pressure from both a supply glut and slack demand, hovering in the mid-20s throughout the week. The June contract on WTI crude rose from $19.78 last Friday (May 1) to $24.74 a barrel this Friday (May 8). The contract expires within two weeks and there hasn't really been much improvement on the supply side of the equation, though demand has improved as the United States and most other countries around the world have begun getting back to business.
The treasury curve steepened over the course of the week. The entire complex is covered by 129 basis points as of Friday, up from 117 the prior week. All of the yield gains were at the long end. As money rushed out of bonds and back into stocks on Friday, the 10-year note added six basis points, to 0.69. The 30-year bond yield gained from 1.31 to 1.39.
Precious metals continued to be among the most-desired asset class since the onset of the pandemic. Both gold and silver are selling at massive premiums (up to $200 for gold, 40-80% for silver) and dealers are still experiencing supply issues with many popular items out of stock, though available to order. Delivery times have come back a bit, with gold and silver in quantity available within two weeks of placing orders.
Here are representative recent prices (5/9-5/10) on eBay for standard gold and silver coins and bars (prices include shipping):
Item: Low / High / Average / Median
1 oz silver coin: 24.45 / 38.00 / 30.58 / 30.48
1 oz silver bar: 23.00 / 30.95 / 26.77 / 26.20
1 oz gold coin: 1,750.00 / 1,946.65 / 1,854.84 / 1,841.99
1 oz gold bar: 1,799.99 / 1,871.52 / 1,843.90 / 1,851.47
In cryptocurrency-land, the Bitcoin Halving approaches. Fr those unfamiliar with the concept, the "halving" is the predetermined moment when Bitcoin’s block subsidy gets cut in half. The halving of Bitcoin’s block subsidy occurs every 210,000 blocks (approximately every four years) and is a key feature of Bitcoin. It is because of the Halving that there is a capped supply of 21 million bitcoin that will ever exist. The halving is scheduled to take place Monday at approximately 6:49 pm ET.
Bitcoin surpassed the $10,000 mark in US dollars, but fell back to the $8850 range in anticipation of the event.
And, just to throw another spanner into the works, the government of Argentina failed to reach agreement with creditors by its self-imposed Friday deadline, essentially defaulting on $65 billion worth of bonds, though talks between the two sides are continuing. Argentina will formally default on May 22, as it missed a $503 million payment last month and the grace period is expiring.
Talks were extended through Monday in hopes that Argentina could avoid its ninth sovereign default.
At this juncture, everything is at risk. According to recent economic data, the global economy is flat on its back. Most developed countries are either in a recession or about to enter one. The response to the coronavirus has ramped up unemployment and knocked down GDP estimates.
Thanks to massive infusions of capital from the Fed and other central banks to both business and individuals, the crisis has been managed to a degree, but the future remains a guessing game. Whether or not QE to infinity will save the day - and the underlying currencies - is a real gamble.
At the close, Friday, May 8, 2020:
Dow: 24,331.32, +455.43 (+1.91%)
NASDAQ: 9,121.32, +141.66 (+1.58%)
S&P 500: 2,929.80, +48.61 (+1.69%)
NYSE: 11,354.34, +232.68 (+2.09%)
For the Week:
Dow: +607.63 (+2.56%)
NASDAQ: +516.37 (+6.00%)
S&P 500: +99.09 (+3.50%)
NYSE: +295.77 (+2.67%)
The NASDAQ's advance was not only remarkable, but it is also ludicrous. The tech-heavy index has advanced beyond both its 50 and 200-day moving averages and is within 720 points of its all-time high. Investors in the speculative sector of the market have either divorced themselves from reality or are seeing something the rest of the world is missing. Money has to go somewhere, even money from the Federal Reserve, released to companies across the investing spectrum, but most of it appears to be heading toward Silicon Valley.
No doubt, chasing momentum has amplified the absurd move to the NASDAQ, which is likely a dangerous precedent. Many of the companies moving higher sport P/E ratios well above the norm, even the norm in a major bull market, a position that was shattered eight weeks ago.
Some of the standouts in the nebulous NASDAQ unicorn universe include Alphabet, parent of Google (GOOG), bottomed out at 1056.62 on March 23, and closed Friday at 1388.37.
Netflix (NFLX) fell out at 298.84 on March 16, but has since rebounded to Friday's close of 435.55.
Amazon (AMZN) reached an all-time high of 2474.00 on April 16, after dropping to 1676.61 on March 12, an amazing gain of 47.6% in just over a month. Amazon may be a superb, dynamic company, but it's arguably extremely overvalued, with a P/E of 113.
Facebook (FB) finished at 146.01 on March 16 and closed at 212.35 on Friday.
Some investors have been getting fat while the larger economy has, for the most part, imploded.
As almost all states (47 of 50 as of Saturday, May 9) have at least partially reopened their businesses and relaxed stay-at-home and other restrictions on the populace, anecdotal reports show that business is still a long distance from anything approaching normal, i.e., prior to the COVID-19 pandemic.
Wall Street is pushing a narrative that the country and the economy is all well and good, the recovery - in terms of stock prices - well underway, even as cases of coronavirus are still prevalent and rising in some cases and deaths continue at a run rate of over 1,000 a day. How well that works out for investors won't likely be known for some time. For now, investors, and the companies getting the most attention, are sitting pretty.
Crude oil continued to be under pressure from both a supply glut and slack demand, hovering in the mid-20s throughout the week. The June contract on WTI crude rose from $19.78 last Friday (May 1) to $24.74 a barrel this Friday (May 8). The contract expires within two weeks and there hasn't really been much improvement on the supply side of the equation, though demand has improved as the United States and most other countries around the world have begun getting back to business.
The treasury curve steepened over the course of the week. The entire complex is covered by 129 basis points as of Friday, up from 117 the prior week. All of the yield gains were at the long end. As money rushed out of bonds and back into stocks on Friday, the 10-year note added six basis points, to 0.69. The 30-year bond yield gained from 1.31 to 1.39.
Precious metals continued to be among the most-desired asset class since the onset of the pandemic. Both gold and silver are selling at massive premiums (up to $200 for gold, 40-80% for silver) and dealers are still experiencing supply issues with many popular items out of stock, though available to order. Delivery times have come back a bit, with gold and silver in quantity available within two weeks of placing orders.
Here are representative recent prices (5/9-5/10) on eBay for standard gold and silver coins and bars (prices include shipping):
Item: Low / High / Average / Median
1 oz silver coin: 24.45 / 38.00 / 30.58 / 30.48
1 oz silver bar: 23.00 / 30.95 / 26.77 / 26.20
1 oz gold coin: 1,750.00 / 1,946.65 / 1,854.84 / 1,841.99
1 oz gold bar: 1,799.99 / 1,871.52 / 1,843.90 / 1,851.47
In cryptocurrency-land, the Bitcoin Halving approaches. Fr those unfamiliar with the concept, the "halving" is the predetermined moment when Bitcoin’s block subsidy gets cut in half. The halving of Bitcoin’s block subsidy occurs every 210,000 blocks (approximately every four years) and is a key feature of Bitcoin. It is because of the Halving that there is a capped supply of 21 million bitcoin that will ever exist. The halving is scheduled to take place Monday at approximately 6:49 pm ET.
Bitcoin surpassed the $10,000 mark in US dollars, but fell back to the $8850 range in anticipation of the event.
And, just to throw another spanner into the works, the government of Argentina failed to reach agreement with creditors by its self-imposed Friday deadline, essentially defaulting on $65 billion worth of bonds, though talks between the two sides are continuing. Argentina will formally default on May 22, as it missed a $503 million payment last month and the grace period is expiring.
Talks were extended through Monday in hopes that Argentina could avoid its ninth sovereign default.
At this juncture, everything is at risk. According to recent economic data, the global economy is flat on its back. Most developed countries are either in a recession or about to enter one. The response to the coronavirus has ramped up unemployment and knocked down GDP estimates.
Thanks to massive infusions of capital from the Fed and other central banks to both business and individuals, the crisis has been managed to a degree, but the future remains a guessing game. Whether or not QE to infinity will save the day - and the underlying currencies - is a real gamble.
At the close, Friday, May 8, 2020:
Dow: 24,331.32, +455.43 (+1.91%)
NASDAQ: 9,121.32, +141.66 (+1.58%)
S&P 500: 2,929.80, +48.61 (+1.69%)
NYSE: 11,354.34, +232.68 (+2.09%)
For the Week:
Dow: +607.63 (+2.56%)
NASDAQ: +516.37 (+6.00%)
S&P 500: +99.09 (+3.50%)
NYSE: +295.77 (+2.67%)
Friday, May 8, 2020
Are Markets Awakening to Reality? Gold, Silver, Bonds Higher; Stocks, Oil Lose Momentum As Argentina Approaches Default, US April Job Losses 20.5 Million
Stocks, bonds, oil and precious metals all had their ups and downs on Thursday, as the focus early was on stocks, which put on impressive gains, only to give half of them back in afternoon trading.
Oil was higher in early trading, spiking to $26.27 a barrel for WTI crude before collapsing all the way down to $23.13.
With a turn right after noon, money began to flow away from riskier assets and into safe havens, with bonds, gold, and silver all being bid as the day wore onward.
Silver started the day at $14.81, languished early, and finished sharply higher, at $15.36. Gold was also cold in the morning, but found its legs later, moving from Wednesday's NY close of $1684.10 to finish at $1718.00.
Treasuries were bought with unusual gusto on the long end. The yield on the 5-year note moved from 0.37% to 0.29% on the day, the 10-year yield went from 0.72% to 0.63%, and the 30-year dropped 10 basis points, from 1.41% to 1.31%. The curve flatted out by 10 basis points, 121 bips covering the entire complex.
All of this activity was against a backdrop of 3.2 million initial unemployment claims, bringing the recent total to 33 million over the past seven weeks.
April non-farm payrolls were also on the mind, with the number - expected to be a record for one month - due out Friday morning.
Argentina (silvery) is about to default on $65 billion of its foreign debt today, Friday, May 8, as bondholders and the government are at loggerheads over a restructuring, though the government appeared to be willing to make some concessions late Thursday. A harder deadline comes May 22, when the country could enter certain default, as a grace period for $500 million of interest payments comes to an end. The clock is ticking for the nation that has defaulted on debt eight times previously.
Argentina could be the doomsday clock the financial world is watching. Other nations are sure to be on the brink of debt default and currency crises after weeks and months of lockdowns, supply chain breakdowns, social unrest, and deaths caused by COVID-19.
Is this the beginning of the end of the stock market rally and a rush to the safety of hard assets? The Dow popped above 24,000 intraday, but it's been unable to surpass the seven-week high of 24,633.66, which is roughly a half retrace of the March pullback. Another failure at this level would signal a short-term selling condition.
Just moments ago, the BLS reported April non-farm payrolls, registering a loss of 20.5 million jobs, pushing the unemployment rate to 14.7%.
With COVID-19 continuing to cause dislocations in everything from meat distribution to pro sports to education, the debate over whether this economic maelstrom will eventually result in a sharp rebound or a long, drawn out recession or even a depression.
Siding with the sharp rebound are those who gave up the ghost back in March with lockdowns, the government, media, and most of the financial community following the lead of the Federal Reserve.
Naysayers, viewing the global economy at a severe breaking point with no good solutions, include James Rickards, Mike Maloney of goldsilver.com, Peak Prosperity's Chris Martenson, Peter Schiff (a fiat money perma-bear and gold perma-bull) and others.
Greg Mannarino, the Robin Hood of Wall Street adds some perspective:
At the Close, Thursday, May 7, 2020:
Dow: 23,875.89, +211.25 (+0.89%)
NASDAQ: 8,979.66, +125.27 (+1.41%)
S&P 500: 2,881.19, +32.77 (+1.15%)
NYSE: 11,121.67, +121.68 (+1.11%)
Oil was higher in early trading, spiking to $26.27 a barrel for WTI crude before collapsing all the way down to $23.13.
With a turn right after noon, money began to flow away from riskier assets and into safe havens, with bonds, gold, and silver all being bid as the day wore onward.
Silver started the day at $14.81, languished early, and finished sharply higher, at $15.36. Gold was also cold in the morning, but found its legs later, moving from Wednesday's NY close of $1684.10 to finish at $1718.00.
Treasuries were bought with unusual gusto on the long end. The yield on the 5-year note moved from 0.37% to 0.29% on the day, the 10-year yield went from 0.72% to 0.63%, and the 30-year dropped 10 basis points, from 1.41% to 1.31%. The curve flatted out by 10 basis points, 121 bips covering the entire complex.
All of this activity was against a backdrop of 3.2 million initial unemployment claims, bringing the recent total to 33 million over the past seven weeks.
April non-farm payrolls were also on the mind, with the number - expected to be a record for one month - due out Friday morning.
Argentina (silvery) is about to default on $65 billion of its foreign debt today, Friday, May 8, as bondholders and the government are at loggerheads over a restructuring, though the government appeared to be willing to make some concessions late Thursday. A harder deadline comes May 22, when the country could enter certain default, as a grace period for $500 million of interest payments comes to an end. The clock is ticking for the nation that has defaulted on debt eight times previously.
Argentina could be the doomsday clock the financial world is watching. Other nations are sure to be on the brink of debt default and currency crises after weeks and months of lockdowns, supply chain breakdowns, social unrest, and deaths caused by COVID-19.
Is this the beginning of the end of the stock market rally and a rush to the safety of hard assets? The Dow popped above 24,000 intraday, but it's been unable to surpass the seven-week high of 24,633.66, which is roughly a half retrace of the March pullback. Another failure at this level would signal a short-term selling condition.
Just moments ago, the BLS reported April non-farm payrolls, registering a loss of 20.5 million jobs, pushing the unemployment rate to 14.7%.
With COVID-19 continuing to cause dislocations in everything from meat distribution to pro sports to education, the debate over whether this economic maelstrom will eventually result in a sharp rebound or a long, drawn out recession or even a depression.
Siding with the sharp rebound are those who gave up the ghost back in March with lockdowns, the government, media, and most of the financial community following the lead of the Federal Reserve.
Naysayers, viewing the global economy at a severe breaking point with no good solutions, include James Rickards, Mike Maloney of goldsilver.com, Peak Prosperity's Chris Martenson, Peter Schiff (a fiat money perma-bear and gold perma-bull) and others.
Greg Mannarino, the Robin Hood of Wall Street adds some perspective:
At the Close, Thursday, May 7, 2020:
Dow: 23,875.89, +211.25 (+0.89%)
NASDAQ: 8,979.66, +125.27 (+1.41%)
S&P 500: 2,881.19, +32.77 (+1.15%)
NYSE: 11,121.67, +121.68 (+1.11%)
Thursday, May 7, 2020
Deflation, Inflation, Hyperinflation, Signal to Noise Ratio, Gold, Silver, and the End of the Dollar
Everything that has happened so far was predictable.
The worldwide government response to the COVID-19 pandemic was as easy to see for cynics and skeptics as the eventual lying that would take place. First, back in January and early February, the federal government told the public that the threat to Americans from the coronavirus that was ravishing China was minimal. Gradually, that advice was replaced by travel restrictions to and from mainland China, then to and from Europe, until finally, infections and deaths from the virus began to multiply in America.
By mid-March and into the first days of Spring, the veil had been lifted and the virus was spreading rapidly across the United States, thanks to millions of international travelers on ships and airplanes that had been allowed to come and go as they pleased through the winter. Individual cases turned into clusters and clusters to severe outbreaks, especially in New York City, not surprisingly a hub for international travel.
By the time congress got around to passing emergency legislation, lockdowns and shelter-in-place recommendations were put into play by governors of the individual states. The legislation contained the usual: massive injections of currency into Wall Street (because we can't have a stock market crash), a pittance for the public, and payments to hospitals for treating patients infected with COVID-19: $13,000 for each patient admitted; $39,000 for each patient put on a ventilator.
Anybody who has been following government and Federal Reserve policy knew that the response would be to throw massive amounts of currency at the problem because that's all they know about how to handle crises.
And here we are. The government is now readying a fourth "stimulus" bill, chock full of more handouts, bailouts, and currency drops. This time, the public gets nothing. States and municipalities are going to get tons of currency to bail out their broken, drained public coffers and keep millions of teachers, cops, firemen, and paper-pushers on the job and their pensions partially funded because having the Fed backstop municipal bonds simply wasn't enough. Hospitals will get more currency. Small businesses will get another tranche of loans, pressing cynics to respond that cities get grants, while businesses have to pay it back.
All of this currency printing and government deficits won't amount to a hill of beans because the transmission mechanism for the velocity of money is broken. Cops, teachers, and firemen will get paid, but they'll be scared to take on new debt and will spend much of their money paying down credit card bills and overpriced mortgages. After another crash to lower levels, the stock market will stabilize.
The US will have deflation, widely, in big-ticket assets like stocks (market crash), bonds (rolling defaults), real estate (forbearance today leads to foreclosure tomorrow), trickling down to things like furniture (no interest for 5, 6, 7 years), cars (rebates, cash back, 0% financing), and appliances (oversupply). Food, especially meat, which is getting a bit pricey right now due to chinks in the supply chain, will not be affected much. Food was the one thing that didn't go up or down much during the Great Depression of the 1930s. It was cheap enough so that people didn't starve, though meats were generally considered close to being luxuries, so no worries there, until hyperinflation. Besides, even if you have a tiny back yard, you can grow some vegetables of your own to offset any price rises in meats. Why do you think your mother was always telling you to eat your vegetables? Sometimes there just isn't enough meat.
After six to 18 months of deflation, all the while the Fed printing dollars like maniacs and the government running massive deficits (probably over $8 trillion this fiscal year alone (through September 30), prices will seem to stabilize. By this time next year (2021), many will think the crisis has passed, mostly because that's what they'll be telling you on TV. But, it's just a lull. Inflation will return as all that currency begins to be spent into the economy. As the velocity of money ramps up, the Fed will respond by raising interest rates, but it won't matter. The game is on, with hyperinflation underway, the currency will continue losing value and eventually, there will be a massive default on dollar debt.
Forget, for for a few weeks or a few months what's happening on a day-to-day basis. It's mostly noise. The signal to noise ratio (SNR or S/N), a measure used in science and engineering that compares the level of a desired signal to the level of background noise, in today's economy, politics, and society, is very low, meaning the signal is barely transmitting the message as it is being drowned out by the noise.
In terms of decibels, to hear what's really happening in the world, the signal has to be about 60, the level of sound as conversational speech. If the noise is that of a rocket launch (180), the SNR is 0.33 and the noise drowns out the signal. When the SNR gets to above one (1), the signal can be heard. Putting that in perspective, a signal sound of a balloon popping is 125, a toilet flushing is 75, producing a SNR of 1.67. Those are appropriate today, as the balloon popping can metaphorically represent the debt bubble bursting and the toilet flushing the sound of US dollars losing value, going down the drain. That hasn't happened yet, but, as time progresses, the SNR will rise, pass 1.00 and the signal will eventually be loud and clear, one that everybody can hear. That's when inflation proceeds to hyperinflation, with prices rising faster than the Fed can print new currency.
It is at that point that you'll want to have gold, but especially, silver, because it will outperform the currency, just by standing still. Truth of the matter is that gold and silver don't really rise in price. An ounce of silver or a gram of gold is still an ounce or a gram. But the purchasing power of the currency is falling because there's more money circulating. Thus, in a very natural correspondence, gold and silver rise in value as the currency falls, which is why three 1964 dimes (90% silver) can buy more gas at the pump today, in 2020, than in 1964.
In the year 1964, the average retail price of gas in the U.S. was $0.30. So, back then, you could put a gallon of gas in your car with three 1964 (or earlier) dimes. Today, three dimes from 1964 or earlier are worth a silver melt value of about $1.10 each, so, with gas prices currently deflating to around $1.50 a gallon, you could buy more than two gallons of gas, even with silver (and gold) prices being suppressed. That's deflation. One could buy just one gallon and use the other roughly dime-and-a-half to help pay for the increased price of pork or beef. That's inflation. Inflation and deflation can and will occur - in different products or services - simultaneously.
Silver, even under the severe constraints imposed by the futures, central banks, the BIS, and other manipulators, has increased in value 1100% since 1964, an annual, non-compounded return of 16.67%. Try getting that from stocks or bonds. And silver is going higher. Much higher. The price of an ounce of silver in dollars is likely to double in the next few years, then double again, and again, as the dollar is gradually debased, losing all that's left of its purchasing power. Your 1964 dime will buy at least a gallon of gas or the equivalent in bread or beef or whatever items you wish to purchase. It will have value, as precious metals have for more than 5000 years. The dollar, and with it, the pound, yen, euro, yuan, and any other currency not backed by or tethered to a tangible asset (it doesn't have to be gold; it can be anything) will revert to its intrinsic value of ZERO, or close to it because every other country will be going through similar scenarios as the United States.
That's where this is all headed. Price deflation with currency inflation through Spring or Summer 2021, relative calm from 2021 to maybe the beginning of 2023, but likely before then, with inflation ramping up; then hyperinflation for two years before a complete monetary system reset is the only solution. It's not the length of time for these varying processes to occur that's importance, it's the sequence (deflation, calm (some inflation), inflation, hyperinflation) and the ability to spot the subtle changes that matters most.
Completely wrecking a global economy takes time. The Fed's been at it since 1913, and in 107 years have reduced the purchasing power of the dollar by about 97%. The last three percent - and the sopping up of all the malinvestment and toxic assets will take time... about three to four years.
At the Close, Wednesday, May 6, 2020:
Dow: 23,664.64, -218.45 (-0.91%)
NASDAQ: 8,854.39, +45.27 (+0.51%)
S&P 500: 2,848.42, -20.02 (-0.70%)
NYSE: 10,999.99, -135.41 (-1.22%)
The worldwide government response to the COVID-19 pandemic was as easy to see for cynics and skeptics as the eventual lying that would take place. First, back in January and early February, the federal government told the public that the threat to Americans from the coronavirus that was ravishing China was minimal. Gradually, that advice was replaced by travel restrictions to and from mainland China, then to and from Europe, until finally, infections and deaths from the virus began to multiply in America.
By mid-March and into the first days of Spring, the veil had been lifted and the virus was spreading rapidly across the United States, thanks to millions of international travelers on ships and airplanes that had been allowed to come and go as they pleased through the winter. Individual cases turned into clusters and clusters to severe outbreaks, especially in New York City, not surprisingly a hub for international travel.
By the time congress got around to passing emergency legislation, lockdowns and shelter-in-place recommendations were put into play by governors of the individual states. The legislation contained the usual: massive injections of currency into Wall Street (because we can't have a stock market crash), a pittance for the public, and payments to hospitals for treating patients infected with COVID-19: $13,000 for each patient admitted; $39,000 for each patient put on a ventilator.
Anybody who has been following government and Federal Reserve policy knew that the response would be to throw massive amounts of currency at the problem because that's all they know about how to handle crises.
And here we are. The government is now readying a fourth "stimulus" bill, chock full of more handouts, bailouts, and currency drops. This time, the public gets nothing. States and municipalities are going to get tons of currency to bail out their broken, drained public coffers and keep millions of teachers, cops, firemen, and paper-pushers on the job and their pensions partially funded because having the Fed backstop municipal bonds simply wasn't enough. Hospitals will get more currency. Small businesses will get another tranche of loans, pressing cynics to respond that cities get grants, while businesses have to pay it back.
All of this currency printing and government deficits won't amount to a hill of beans because the transmission mechanism for the velocity of money is broken. Cops, teachers, and firemen will get paid, but they'll be scared to take on new debt and will spend much of their money paying down credit card bills and overpriced mortgages. After another crash to lower levels, the stock market will stabilize.
The US will have deflation, widely, in big-ticket assets like stocks (market crash), bonds (rolling defaults), real estate (forbearance today leads to foreclosure tomorrow), trickling down to things like furniture (no interest for 5, 6, 7 years), cars (rebates, cash back, 0% financing), and appliances (oversupply). Food, especially meat, which is getting a bit pricey right now due to chinks in the supply chain, will not be affected much. Food was the one thing that didn't go up or down much during the Great Depression of the 1930s. It was cheap enough so that people didn't starve, though meats were generally considered close to being luxuries, so no worries there, until hyperinflation. Besides, even if you have a tiny back yard, you can grow some vegetables of your own to offset any price rises in meats. Why do you think your mother was always telling you to eat your vegetables? Sometimes there just isn't enough meat.
After six to 18 months of deflation, all the while the Fed printing dollars like maniacs and the government running massive deficits (probably over $8 trillion this fiscal year alone (through September 30), prices will seem to stabilize. By this time next year (2021), many will think the crisis has passed, mostly because that's what they'll be telling you on TV. But, it's just a lull. Inflation will return as all that currency begins to be spent into the economy. As the velocity of money ramps up, the Fed will respond by raising interest rates, but it won't matter. The game is on, with hyperinflation underway, the currency will continue losing value and eventually, there will be a massive default on dollar debt.
Forget, for for a few weeks or a few months what's happening on a day-to-day basis. It's mostly noise. The signal to noise ratio (SNR or S/N), a measure used in science and engineering that compares the level of a desired signal to the level of background noise, in today's economy, politics, and society, is very low, meaning the signal is barely transmitting the message as it is being drowned out by the noise.
In terms of decibels, to hear what's really happening in the world, the signal has to be about 60, the level of sound as conversational speech. If the noise is that of a rocket launch (180), the SNR is 0.33 and the noise drowns out the signal. When the SNR gets to above one (1), the signal can be heard. Putting that in perspective, a signal sound of a balloon popping is 125, a toilet flushing is 75, producing a SNR of 1.67. Those are appropriate today, as the balloon popping can metaphorically represent the debt bubble bursting and the toilet flushing the sound of US dollars losing value, going down the drain. That hasn't happened yet, but, as time progresses, the SNR will rise, pass 1.00 and the signal will eventually be loud and clear, one that everybody can hear. That's when inflation proceeds to hyperinflation, with prices rising faster than the Fed can print new currency.
It is at that point that you'll want to have gold, but especially, silver, because it will outperform the currency, just by standing still. Truth of the matter is that gold and silver don't really rise in price. An ounce of silver or a gram of gold is still an ounce or a gram. But the purchasing power of the currency is falling because there's more money circulating. Thus, in a very natural correspondence, gold and silver rise in value as the currency falls, which is why three 1964 dimes (90% silver) can buy more gas at the pump today, in 2020, than in 1964.
In the year 1964, the average retail price of gas in the U.S. was $0.30. So, back then, you could put a gallon of gas in your car with three 1964 (or earlier) dimes. Today, three dimes from 1964 or earlier are worth a silver melt value of about $1.10 each, so, with gas prices currently deflating to around $1.50 a gallon, you could buy more than two gallons of gas, even with silver (and gold) prices being suppressed. That's deflation. One could buy just one gallon and use the other roughly dime-and-a-half to help pay for the increased price of pork or beef. That's inflation. Inflation and deflation can and will occur - in different products or services - simultaneously.
Silver, even under the severe constraints imposed by the futures, central banks, the BIS, and other manipulators, has increased in value 1100% since 1964, an annual, non-compounded return of 16.67%. Try getting that from stocks or bonds. And silver is going higher. Much higher. The price of an ounce of silver in dollars is likely to double in the next few years, then double again, and again, as the dollar is gradually debased, losing all that's left of its purchasing power. Your 1964 dime will buy at least a gallon of gas or the equivalent in bread or beef or whatever items you wish to purchase. It will have value, as precious metals have for more than 5000 years. The dollar, and with it, the pound, yen, euro, yuan, and any other currency not backed by or tethered to a tangible asset (it doesn't have to be gold; it can be anything) will revert to its intrinsic value of ZERO, or close to it because every other country will be going through similar scenarios as the United States.
That's where this is all headed. Price deflation with currency inflation through Spring or Summer 2021, relative calm from 2021 to maybe the beginning of 2023, but likely before then, with inflation ramping up; then hyperinflation for two years before a complete monetary system reset is the only solution. It's not the length of time for these varying processes to occur that's importance, it's the sequence (deflation, calm (some inflation), inflation, hyperinflation) and the ability to spot the subtle changes that matters most.
Completely wrecking a global economy takes time. The Fed's been at it since 1913, and in 107 years have reduced the purchasing power of the dollar by about 97%. The last three percent - and the sopping up of all the malinvestment and toxic assets will take time... about three to four years.
Anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile.
We have been fragilizing the economy, our health, political life, education, almost everything… by suppressing randomness and volatility. Much of our modern, structured, world has been harming us with top-down policies and contraptions… which do precisely this: an insult to the antifragility of systems. This is the tragedy of modernity: As with neurotically overprotective parents, those trying to help are often hurting us the most.
-- Nasim Taleb
It would be nice if we started listening to the people who have been right rather than the people who have theories.
-- Mike Maloney, The Hidden Secrets of Money, Episode 7, Velocity & the Money Illusion
At the Close, Wednesday, May 6, 2020:
Dow: 23,664.64, -218.45 (-0.91%)
NASDAQ: 8,854.39, +45.27 (+0.51%)
S&P 500: 2,848.42, -20.02 (-0.70%)
NYSE: 10,999.99, -135.41 (-1.22%)
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