US Federal Government Disrespects Its People; $2 Trillion To Wall Street While Citizens Wait for Checks

At 8:30 am ET Thursday morning, April 9, 2020, the Labor Department announced that 6.6 million people applied for unemployment benefits last week. That's in addition to the nearly 10 million who applied for benefits the prior two weeks.

Have you received your $1200 check from the government yet?

Didn't think so. You are aware that Wall Street had access to $2 trillion weeks ago, right?

That's the number TWO (2) with twelve zeroes behind it. Like this: $2,000,000,000,000.

Bear in mind, the corporate money is coming to corporations via the Federal Reserve, which is not part of the federal government. It is and always has been a private bank, so there's really nothing "federal" about it. As far as the "reserve" portion of their name, they have no money in reserve. They have a balance sheet of nearly $6 trillion, all in various bonds or notes or obligations, otherwise known as debt. Much of it is not worth the paper its printed on or the electrons holding it in cyberspace.

There's no "reserves" at the Federal Reserve. They whip up currency out of thin air. A few keystrokes on their computer and viola! currency at their pleasure. The currency is represented by Federal Reserve Notes, or those pieces of paper some people carry around with pictures of dead presidents on them. Those are the ones, fives, 10s, 20s, 50s and 100-dollar bills floating around in the economy. There is only $1.75 trillion in actual printed currency according to the Federal Reserve. That's a little less than $6000 for every man, woman, and child in America.

The rest of the currency is in electronic form. The currency in your bank account is not really there. Try going to a bank branch and asking for $40,000 in cash, even if you have $100,000 in your account. First, you'd have to fill out IRS form 8300, because any transaction of $10,000 or more, the federal government wants to know about it. They think you might be a drug dealer, human trafficker, money launderer, or maybe a terrorist. It's all part of the Bank Secrecy Act, officially known as the Currency and Foreign Transactions Reporting Act. Then, after you've filled out the form, the bank's branch manager will likely tell you that they don't have that much money on hand. After that, you might have to come back on a later date to get some of it, make multiple trips, and go through a lot of hassle to get your hands on your currency.

This seems an appropriate place to explain the difference between money and currency. Here's Mike Maloney (an expert on the subject) to explain in less than three minutes:



The great financier, J.P. Morgan, put it in even simpler terms: Gold is money. Everything else is credit.

With that out of the way, have you received your $1200 yet?

No. Of course not. But Wall Street has already gotten theirs, and probably already spent it too. The stock market has been mostly up lately, the Dow Jones Industrial Average having risen from a close of 18,591.93 on March 23 to close at 23,433.57 Wednesday.

On March 17, Treasury Secretary Steven Mnuchin said President Trump would like to get money into the hands of people within two weeks. That was more than three weeks ago. Now, Mnuchin says the first direct deposits will be going out some time next week.

In other words, continue to wait. The government will be here to help in moments, er, days, er, weeks, maybe.

While Wall Street is open for business as usual, millions of Americans - roughly three quarters of the country - is under some form of stay-at-home or lockdown restriction. Ordinary people can't go to work, send their kids to school (they're closed), or venture beyond the boundaries of their own homes without some express, immediate need, like getting groceries, or picking up a prescription drug.

It's a shame. It's also likely unconstitutional. Americans are supposed to have the right to freely assemble. It's in the Bill of Rights, the First Amendment:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

So, not only does the federal government not want you to have any money, they also don't want you going anywhere or associating with other citizens. Because of COVID-19, the government has "suggested" people congregate at distances of six feet apart. Many states have outlawed meetings or congregations of 10 or more people, some, five or more. They don't want you to get together with your fellow citizens, either.

As you wait for your money from the government, ask yourself if $1200 is worth having your first amendment rights taken away. As with anything else that sounds too good to be true, like free money from the government, there are strings attached.

And, while you're pondering that, how about those small business loans that are supposed to help businesses that have been forced to close so that the coronavirus doesn't spread. Those non-essential businesses are getting the run-around from the very same banks (JP Morgan Chase, Citi, Bank of America, Wells Fargo) that were bailed out in 2009, continued to get favors from the Federal Reserve and the federal government since then, and have been getting oodles of cash over the past six months, even before the COVID-19 crisis.

Those loans are full of boondoggles and conditions that limit how much a business qualifies for and what they have to do in order to receive a loan and more conditions for loan forgiveness. It's likely that most small businesses would be better off not taking the loans, toughing it out, filing for reorganization under bankruptcy laws and moving forward without inept government assistance.

The American public is being conned and abused by the very people they voted into office along with the media, the banks, and the Federal Reserve. State and local governments are only marginally less disrespectful. It all stinks to high heaven.

They don't respect you. They don't care about you. They want to control you. That should be obvious to everybody by now.

At the Close, Wednesday, April 8, 2020:
Dow Jones Industrial Average: 23,433.57, +779.71 (+3.44%)
NASDAQ: 8,090.90, +203.64 (+2.58%)
S&P 500: 2,749.98, +90.57 (+3.41%)
NYSE: 10,902.59, +365.54 (+3.47%)

Senate Approves $2.2 Trillion COVID-19 Relief Bill, Sends to House; Unemployment Claims Skyrocket to 3,283,000

Editor's Note: This edition of Money Daily was purposed delayed until after the weekly unemployment claims figures came out at 8:30 am ET Thursday. The regular report follows this headline news.

The Labor Department reported Thursday that initial unemployment claims for the week ending March 21 rose to a record 3,283,000, an increase of 3,001,000 from the previous week's revised level. An enormous jump in claims was widely expected.

Money Daily will have complete reporting on how this affected the markets in Friday morning's report.

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Simply put, Wednesday was just a replay or extension of Tuesday's rally, without as much drama or conviction on the part of investors, witnessed by the rapid descent in the final hour of trading. The Dow lost more than half of the day's gains. The NASDAQ ended up in the red after being up more than 250 points in early afternoon trading.

In other words, this rally ran out of steam via the old, "buy the rumor, sell the news" meme. The "rumor" was the Senate's $2.2 trillion national bailout and rescue plan for COVID-19 (very convenient). The "news" is that it was not passed by the full Senate during market business hours. Instead, the aged Senators stayed up well past their bedtimes again, passing the bill around 11:00 pm ET.

The fact that the Senate's 96-0 passage of the bill will coincide perfectly with the next "buy the rumor, sell the news" item - the weekly unemployment claims number at 8:30 am ET Thursday morning, will no doubt leave open to speculation that the timing was anything but coincidence.

Leaving the barn door just slightly ajar, the House of Representatives still has to vote on the measure passed by the Senate before it goes to President Trump for his signature. If he does get a crack at putting pen to paper on this one, it will allow for a huge influx of capital to individuals, families, and businesses, both big and small. It will also destroy any chance of the federal budget coming in with anything less than a $2 trillion deficit this year (fiscal year ends September 30), and next.

Most Americans will receive either a check or direct deposit in the amount of $1,200. Married couples will get $2,400, plus another $500 for each dependent child. The media says that 90% of the people in this country will get such a check, which is a telling figure. It speaks loudly to the wealth distribution in America when only 10% are making enough to not receive a check of any amount. People making more than $75,000 in 2018 or 2019 will get less than the full amount. There's a cap at $99,000 for individuals and $198,000 for married couples. Those will get nothing. In general terms, there's proof that only 10% of Americans are making more than $99,000 a year. No wonder Bernie Sanders and other democrats receive such strong support for "wealth redistribution."

All that aside, Thursday is looking like a bloodbath for the Bulls, as the unemployment figures will almost certainly be record-setting. Estimates range from 860,000 new claims (UBS) to four million (4,000,000) (Citi). The prior high was 695,000 claims filed the week ended October 2, 1982. If this were a betting game, Money Daily would be at or above the high figure provided by analysts at Citi. There's a chance it could be six million. New York alone could be over a million, ditto California.

As for other markets, bonds, precious metals, and oil were relatively stable on the day. The 10-year note seems to have found a sweet spot with a yield around 0.85%.

Gold looks to be consolidating above $1600 per ounce, though there are widespread reports that nobody can find even a one ounce bar at that price. Dealers have been scrambling for the last two weeks to fill orders and many are completely sold out. The same is true for silver, though to a lesser extent. The miners can produce silver faster than gold, so supplies are being replenished, but they will be bought up as soon as they're available.

Order fulfillment times for physical gold and silver bullion, coins, and bars are running three weeks and longer. Silver, on the spot or futures market is stabilizing around $14.50, but prices on eBay (which means almost immediate shipment) and through dealers are much higher.

Single one-ounce silver bars on ebay have been flying high, with prices ranging anywhere from $22 to as high as $41.

WTI crude is settling into a range between $22 and $24 per barrel and that price should persist and possibly go lower as the COVID-19 plague spreads and slows movement commerce worldwide. Gas prices in the US are a multi-year lows.

Stocks are not going back to record levels despite the Dow gaining ground for the second straight day. Tuesday and Wednesday were the first time the Dow saw back-to-back gains since February 3-6, when it strung together four straight wins. Finishing on the upside two days straight hadn't happened over the past 31 sessions.

At the Close, Wednesday, March 25, 2020:
Dow Jones Industrial Average: 21,200.55, +495.64 (+2.39%)
NASDAQ: 7,384.29, -33.56 (-0.45%)
S&P 500: 2,475.56, +28.23 (+1.15%)
NYSE: 9,961.38, +303.06 (+3.14%)

Weekend Wrap: Stocks Suffer Worst Week Since February As Earnings Arrive

What should be front of mind for investors this weekend and heading into the third trading week of the fourth quarter is whether the massive slip-sliding of the past week was, a) rehearsal for a full blown bear market; b) beginnings of a normal correction; or, c) a buying opportunity.

Pessimists amongst us will surely side with answer (a), noting that the bull market, now the longest ever, has to come to an end at some point, and that the various factors leading to its demise are obvious (rising interest rates, global contagion, trade and tariff paroxysm, currency confusion and convulsion).

Realists might prefer answer (b), because inflation is still tame, jobs are plentiful, unemployment is low, and interest rates are still below historical averages.

Optimists obviously will go with answer (c) because, well, you know, the market always goes up and there's money to be made.

There's a very good chance that the optimists are over-optimistic after US markets nose-dived through the worst week since February, wiping out almost all third quarter gains, leaving investors with the kind of feeling one gets about an hour after eating at McDonald's (if you've never done it, don't start now), a blase, indecisive feeling in the pit of one's stomach, as though eating was not what one should have done. In this case, that feeling may have come on Wednesday or Thursday, with Friday providing something of an Alka-Seltzer relief rally.

Even with the sizable gains to close out the week, all of the major averages suffered badly, and the condition may only be at a beginning. It would be difficult to pinpoint an exact culprit for the crime of this week's market turbulence, though the Federal Reserve is always a convenient scapegoat. Just ask President Trump, who said that the esteemed central bankers had gone crazy.

While adding 25 basis points to the federal funds rate every quarter - especially after they'd been affixed to near-zero for seven years - may not exactly define madness, there are those (such as Money Daily) who believe the Fed has overstepped its escape from years of the other madness now known as saving the global financial system from the ruinous aspects of the 2008-09 collapse.

Certainly, credit is excessive, especially the funding of corporate stock buybacks, which have reached a crescendo this annum, with more than a trillion dollars worth of corporate malinvestment on tap. The federal government has binged on debt to ungodly proportions and is getting even worse, while your average, everyday consumer has also ratcheted up the mortgage, student loan, car payment, and credit card bills to historic heights.

One could posit the expression, "nothing says white trash like a blue tarp" has an ancillary phrase in, "nothing says bubble like a new car in front of a new house with kids in college wearing new shoes."

Have we cumulatively reached the end of the road? Probably not. But, if last week's savviest stock sellers were on their marks, the road is likely to be a bumpy one through to the end of the year.

What was witnessed not just in US markets but around the world last week raised a fair share of eyebrows and lowered even more expectations. With earnings cranking up this coming week if will be most instructive to see which companies are punished, which ones prevail, and which ones offer excuses and/or outlooks suggesting more trouble ahead.

There's a lot of money sloshing around, and none of it is without a debt burden attached to it. There will be winners and losers in the fourth quarter, and, from the looks of it, tech, financials, and consumer stocks may tend to pull all the other sectors down with them.

Or, it just could be a buying opportunity, just five percent off of all-time highs, a dubious prospect.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63
10/3/18	26,828.39	+54.45	+370.08
10/4/18	26,627.48	-200.91	+169.17
10/5/18	26,447.05	-180.43	-11.26
10/8/18	26,486.78	+39.73	+28.47
10/9/18	26,430.57	-56.21	-27.74
10/10/18	25,598.74	-831.83	-859.57
10/11/18	25,052.83	-545.91	-1405.48
10/12/18	25,339.99	+287.16	-1118.32

At the Close, Friday, October 12, 2018:
Dow Jones Industrial Average: 25,339.99, +287.16 (+1.15%)
NASDAQ: 7,496.89, +167.83 (+2.29%)
S&P 500: 2,767.13, +38.76 (+1.42%)
NYSE Composite: 12,439.42, +89.89 (+0.73%)

For the Week:
Dow: -1107.06 (-4.19%)
NASDAQ: -291.55 (-3.74%)
S&P 500: -118.44 (-4.10%)
NYSE Composite: -552.53 (-4.25%)

Stocks Under Pressure; Bulls All Die At Some Point

Anybody who believes that this current bull market - fueled by easy money policies from central banks, fake statistics, and enormous government deficits - will continue much longer needs to take a reality check.

Just for those who cannot or will not see the forest for the trees, the following:

• The 10-year-note is stuck in a perpetual yield range of 2.3-something.
• Stocks have been going sideways for week.
• There's almost no chance that the congress will pass any kind of tax reform bill this year as they are doing nothing more than posturing for the midterm elections.
• The national debt continues to soar to new heights, despite happy talk from the administration (remember, congress holds the purse-strings).
• The percentage of people in the workforce is still at near-record lows.
• The Us trade deficit with China is not shrinking.
• State pension plans and many private pension plans are underfunded by trillions of dollars.
• Voting doesn't matter (see the fiasco over Roy Moore)
• Corporate profits are beginning to show serious signs of a slowdown (GE, Chipolte, others)
• Foreclosures, bankruptcies, student loan defaults are rising.

That is just a sampling, and today's market, in form with the past few sessions, took a nosedive at the open only to recover thanks to spirited heavy lifting by the PPT or central bank cronies on the heaviest volume in five months.

The Dow was down 168 points shortly after 10:00 am ET, only to close with a marginal loss. Even at its lowest point, the index was 900 points above its 50-day moving average.

Stocks are as overpriced as they've ever been, setting up for a crash of enormous proportions.

It's coming, but nobody knows when or why it will occur. The Fed is still insistent upon raising interest rates again in December, at a time at which the economy is neither growing fast enough to warrant such behavior nor robust enough to withstand repeated rate hikes.

Over the years, the Federal Reserve has caused more crashes and recessions than it will admit. Uncontrollable spending by government and cascading business and individual debt is reaching unprecedented heights, worse than preceding the Great Financial Crisis of 2007-09.

Extreme caution is advised.


At the Close, Tuesday, November 14, 2017:
Dow: 23,409.47, -30.23 (-0.13%)
NASDAQ: 6,737.87, -19.72 (-0.29%)
S&P 500: 2,578.87, -5.97 (-0.23%)
NYSE Composite: 12,280.11, -36.71 (-0.30%)

Weekend Wrap: Stocks Pop and Stop After FOMC Meeting

With the Fed's $4.4 trillion balance sheet overhanging the global economy, US stocks spent Thursday and Friday treading water as investors try to figure out just how the added weight from tranches of MBS and various maturities of treasury bonds will affect liquidity and markets in the coming months and years.

While the Fed's stated goal is to reduce the size of its balance sheet alongside an attempt to normalize interest rates, the structure of their policies leaves open many questions and uncertainties, chief among them being just wo is supposed to sop up all of the excess the Fed will be releasing into markets.

More than likely it will be the usual suspects, money center banks, hedge funds, and possibly sovereign wealth funds, which may consider buying up bonds on the cheap a strategy for preserving wealth rather than increasing it.

Equity markets being particularly overvalued by nearly any metric, large players should be more cautious than they have been during eight years of unprecedented gains in US markets.

How it all plays out may turn out to be an exercise in futility from the sidelines because the Fed and their inner workings are not generally what one would call transparent.

Effects from the whirlwind of bond offerings in private settings will probably only be felt after the fact and in widely-varied segments of the economy. One thing is certain: the Fed is intent on unloading some highly toxic assets in the case of the mortgage-backed securities, something that could lead to unforeseen circumstances with homeowners and real estate speculators possibly exposed to long-standing, but previously hidden, claims.

With uncertainty as a backdrop following Wednesday's FOMC announcement, the record highs from Monday and Tuesday were not built upon, US equity indices generally taking a wait-and-see attitude into the weekend.

At the Close, Friday, September 22, 2017:
Dow: 22,349.59, -9.64 (-0.04%)
NASDAQ: 6,426.92, +4.23 (+0.07%)
S&P 500: 2,502.22, +1.62 (+0.06%)
NYSE Composite: 12,151.79, +18.17 (+0.15%)

For the week:
DOW: +81.25 (+0.36%)
NASDAQ: -21.55 (-0.33%)
S&P 500: +1.99 (+0.08%)
NYSE Composite: +71.66 (+0.59%)

Counterfeiting and Money Laundering At Its Finest: Fed To Begin Balance Sheet Unwind

If there's one thing everybody can be sure of after today's FOMC rate announcement (spoiler alert: fed funds remain unchanged), it's that the officials at the Federal Reserve will continue to tell everybody that everything is under control, until it's obvious that nothing is under control.

What the Fed will embark upon beginning in October is selling off the assets it purchased during and after the Great Financial Collapse (GFC), thos being primarily mortgage backed securities (MBS, AKA, toxic bond waste) and Treasury bills, notes, and bonds.

Of the two, the treasury issuance will be much less of a problem unloading than the MBS, since treasuries come with an implied guarantee that they're as good as the federal government's full faith and credit promise to repay... with interest and return of principal.

Those toxic mortgage backed securities, which the Fed likely purchased at or near par (100% of value), will be more of a challenge, but, being the central banker to the world, the Fed has nothing about which to worry.
Many of these MBS contain tranches of mortgages minted during the sub-prime crisis. Many of them are worthless. Many more are worth less than half of par value.

But, that does not worry the Federal Reserve, because, since they want to shrink their balance sheet, they can just sell them at whatever price they can get, because they - unlike just about any other entity in the known universe - can just print more money if they need it.

So, $4.4 trillion is going to be wound down to probably under $1 trillion over the course of six to ten years. Some of the mortgage backed securities are performing, many are not. They're in default. Somebody will buy them, ostensibly, because if not, they remain on the Fed's balance sheet - at par value.

It's ludicrous. The Fed will, let's say, sell what they consider to be $500 billion of MBS which is in fact worth maybe, $100 billion. They'll write the $400 billion off their books, in effect, taking a loss. It won't matter. It's gone. It's all just accounting, and, since the Fed doesn't report to the IRS, IMF, BIS, or anybody for that matter, they'll just whistle past the grave of homes lost or stolen by vicious, unscrupulous bankers, who, by the way, will probably be the ones repurchasing - at pennies on the dollar - the very same MBS they unloaded onto the Fed.

And, just for good measure, those very same banks will try to enforce their rights on those bonds, triggering another round of financial shenanigans, this time going after people who thought they bought properties with good title, only to learn that there are claims on them, claims that were hidden in the bowels of the Fed's books for five, six, seven or eight years.

It's the best counterfeiting and money laundering operation that's ever been hatched, and it will all be done out in the open because 99% of the people in the world don't actually understand how it all works.

In the long run, it's all flimflammery of the flimsiest variety, but our glorious central counterfeiters and money launderers just do business that way.

As they say in investing, gambling, and, supposedly, now, banking, "easy come, easy go."

At the close, Wednesday, September 20, 2017:
Dow: 22,412.59, +41.79 (+0.19%)
NASDAQ: 6,456.04, -5.28 (-0.08%)
S&P 500: 2,508.24, +1.59 (+0.06%)
NYSE Composite: 12,147.50, +15.77 (+0.13%)

Trump Effect: Stocks Roar To New All-Time Highs Following Presidential Address

How important President Donald Trump's speech before a joint assembly on congress Tuesday night was is not easy to gauge, but, from a Wall Street perspective, he must have hit the high notes perfectly because all major averages were straight up at the opening bell and continued to add to gains throughout Wednesday's session.

The Dow, which blew away the 20,000 Rubicon less than a month ago, added nearly 1.5%, or 303 points, its largest one-day gain since early December. With Industrials leading the way, the other three major averages broke out as well, with the S&P pretty much reaching highs that analysts had been predicting as end-of-year results, yet we're barely two months into the new year.

How this kind of euphoria will eventually manifest itself is still a mystery, especially with stocks tacking higher despite consistent warnings of a valuation trap being set. While stocks continue to ramp on a daily basis, corporate reports are not following the same tune. Additionally, analysts from various houses also revised first quarter GDP estimates lower, with Goldman Sachs and the Atlanta Fed looking for 1.8% growth. JP Morgan and Bank of America are even more pessimistic, at 1.5% and 1.3%, respectively.

In the main, what companies behind the stocks are counting on is a relaxed regulatory environment under President Trump's administration. The President has already issued a variety of pro-business executive orders and his commitment to repealing and replacing the Affordable Care Act (Obamacare) is also being viewed as a positive on two fronts. First, it will free up consumer funds from an expensive mandated coverage nightmare; second, companies will probably get breaks as well in group coverage.

Adding to the speculative high spirits are items currently under the radar such as the President's budget, which includes massive cost-cutting across agencies, a one trillion dollar infrastruture plan that Mr. Trump touched on it in his speech, and trade negotiations with countries outside the framework of international treaties such as NAFTA, TPP and the World Bank.

All told, President Trump's first six weeks in office have been nothing short of miraculous for stocks, though it will take some time to see how it all plays out. Either stock pickers have been set up for a major catastrophe or the enthusiasm and honesty of the new president will indeed guide America and American business interests to new heights.

Lurking in the shadows behind the presidential bluster is the Federal Reserve, which meets in two weeks to decide whether to raise federal funds rates or keep them at current levels. Money is on them keeping the rates at the current 0.50-0.75, though even an increase of 25 basis points would seem to be inadequate to quiet Wall Street's enthusiasm.

At the Close, 3.1.17:
Dow: 21,115.55 +303.31 (1.46%)
NASDAQ: 5,904.03 +78.59 (1.35%)
S&P 500: 2,395.96, +32.32 (1.37%)
NYSE Composite: 11,661.22, +148.83 (1.29%)