Stocks took a pretty major blow in the final hour of trading Tuesday, when Stat News, which is focused on health-related material, reported that Moderna's phase one trial of a COVID-19 vaccine was thin on critical data according to experts, in contrast to the glow that permeated Wall Street Monday over the same trial.
When that story crossed the wires, it wiped out - in a matter of minutes just before 3:00 pm ET - all of the sparse gains on the day for the NASDAQ and S&P, and sent the Dow Industrials tumbling in a textbook case of how stock-trading algorithms distort and disrupt what used to be markets run by human beings.
Moderna (MRNA) dropped nearly 10.5% on the day, after gaining 20% on Monday, wiping out most of that one-day wonderfulness. Moderna closed Friday at 66.68, rose to close at 80.00 on Monday and finished up Tuesday at 71.67.
Easy come, easy go.
The Dow, which was in the red almost all day, dropped more than 200 points in 10 minutes. Gains on other exchanges were wiped out in one fell swoop. Such is the fickle nature of equity markets in the days of fake news and extreme momentum chasing and yield seeking.
Elsewhere, Home Depot (HD) took a $640 million after-tax hit due to its response to the pandemic, which included expanded paid time off for hourly employees, weekly bonuses, and extended dependent-care benefits. Earnings per share for the first quarter came in at $2.08, down from $2.27 in the prior-year period and $0.18 below analyst expectations. Home Depot was down 7.25, a loss of nearly three percent on the day.
Walmart blew everything away in its quarterly, reporting adjusted earnings per share of $1.18, up from $1.13 in the prior-year period. Total sales for the big box giant jumped 8.6% to $134.6 billion, handily beating analyst estimates by $3.7 billion. Comparable-store sales in the U.S. soared 10%, driven by strong demand for food, consumables, and health and wellness products.
Even those blockbuster numbers couldn't stop investors from unloading Walmart stock, which finished the day down 2.71 (-2.12%). The stock made a 52-week high less than a month ago.
Housing starts were down 30.2% in April. Building Permits down 20.8% for the most recent month.
Other than all that, there wasn't much excitement on Wall Street, which thrives on gains, no matter where they're sourced.
The major issue facing stocks and the overall economy is how well the Federal Reserve can keep up with the rolling knock-on effects from the coronavirus and government response to it. With the national lockdown winding into a roving re-opening phase, some areas are seeing business and communities getting back to some semblance of normalcy, which is now a moving target. Schools remain closed almost nationwide, while rural communities have fared much better in terms of case incidence and economic slowdown than urban areas.
Having just passed the midway point of the second quarter, there's little doubt anywhere that the blow to GDP will be tremendous. The latest estimates for second quarter GDP range from -42% to -20% and those guesses may be overly optimistic. Being that just about everything was shut down for the entire month of April and most cities - where economic activity is paramount - just beginning to open up to vehicle and foot traffic, there's a very real possibility that the current quarter could collapse by more than 50 percent. Much is dependent on the consumer mindset, which is currently a mixed one.
Having already received bailout currency from the federal government and generous additions to unemployment insurance, lawmakers in Washington are slow-footing the follow-up. House Democrats launched a $3 trillion second stimulus measure on Friday, but Republicans in the Senate are calling the bill dead on arrival, preferring to take time to assess the result from round one before committing to more fun money for small business and individuals.
One unmistakable aspect of the government's bailout efforts is the unexpected consequences from giving people who were laid off or furloughed in the early days of the lockdown movement an additional $600 a week in unemployment compensation. As it turns out, a very large percentage (up to 70% according to some estimates) of workers are making more now sitting at home collecting benefits than they were when they were gainfully employed and many of them are refusing to go back to their old jobs. Would anybody have suspected that hard-working Americans would rather stay home and cash checks from the government rather than grind out a 9-to-5 existence?
It shows, yet again, that government is always the problem and never the solution. Welcome to socialism 101 and a test run of Universal Basic Income (UBI). Alongside Modern Monetary Theory (MMT), now in live alpha testing by the Federal Reserve, the federal government and its central bank have slingshot the American public into a brave new world of radical economics, the long-term effects known by exactly nobody, though skeptics believe it will eventually result in either a worldwide depression, neo-feudalism (Max Keiser and others easily figured that one out), hyper-inflation, and a growing divide between haves and have-nots, already a chasm-sized gap.
Best bet is to be ready for all of the above by investing in hard assets, growing a garden, learning as much as possible about animal husbandry (at least chickens), and obtaining skills necessary to eek out a meager existence without the benefit of a central authority. Younger people will increasingly find such advice tiresome and boring, but the jobs and careers they were engaged in before the crisis occurred will almost certainly be greatly affected, with an emphasis on the negative.
Along those lines, unless local governments begin the process of trimming their robust budgets, cities and towns face imminent crises, the bigger ones looking at enormous needs that neither the federal government nor the Federal Reserve can fulfill.
Life will gradually return to a dystopian almost-normal in coming months. Thankfully, Summer is on the horizon, along with warmer weather and outdoor activities which should provide relief from the mask-wearing, social distancing, and fear mongering so prevalent in the current environment. On the other hand, things are heating up pretty quickly on all fronts. Expecting more disruption, displeasure, discontent, disparate government actions, fraud, fakery, and general dysfunction would be a solid frame of reference for anyone wishing to come out on the other side of this - circa 2022 - somewhat sane and intact.
At the Close, Tuesday, May 19, 2020:
Dow: 24,206.86, -390.51 (-1.59%)
NASDAQ: 9,185.10, -49.72 (-0.54%)
S&P 500: 2,922.94, -30.97 (-1.05%)
NYSE: 11,248.97, -153.26 (-1.34%)
Thursday, May 21, 2020
Tuesday, May 19, 2020
Profiteering Politicians, Slick Money Managers Make Hay on Possible COVID-19 Vaccine Headlines
Two headlines:
JCPenney says it will close about 240 stores after filing for bankruptcy
Moderna says test results for possible COVID19 vaccine 'positive'
Only one mattered. Moderna's positive spin over fairly insignificant early stage trials for a vaccine against COVID-19 sent stocks into orbit. Actually, sending stocks skyward was more the work of the Federal Reserve's relentless currency printing press, running full speed since late March. The Fed has created so much liquidity - for nothing, out of thin air - that there's a global glut, just like oil, and it has to find somewhere to go, and that place is usually in risk assets, like stocks, because, well, it's just extra money.
It's kind of like this: Suppose you went to the race track with some friends and hit a superfecta for $15,000. You'd probably splurge over a night on the town, treating your friends to dinner at a great restaurant and endless drinks at some club. In other words, you'd basically just blow some of it because it was an unexpectedly large sum of dough.
Getting back to the cover story from Moderna, never mind that the company has been working with the National Institute of Allergy and Infectious Diseases (NIAD), headed by Dr. Anthony Fauci, since January, or that Moncef Slaoui resigned from Moderna's board of directors just last week when he was tapped by the Trump administration to head up Operation Warp Speed, the president's fast-track search for a COVID-19 vaccine.
Slaoui is reportedly going to divest all of his stock options for 156,000 shares of Moderna, which shot up nearly 20% (MRNA, 80.00, +13.31 (+19.96%) At close: May 18 4:00PM EDT) on the news.
Coincidence? Perhaps. Insider trading? Definitely, though nobody wants to talk about that.
Between the Fed's meddling and the White House's understanding of the situation (surely, anybody who is anybody in Washington, DC was aware that this news would break Monday morning), the whole COVID-19 racket is beginning to look like another major scandal to be piled atop all the other government scandals over the past 40 years. Nobody will be charged with anything. Nobody will go to jail. There probably won't even be an investigation, and, even if there is, it will reveal nothing. Business as usual for the rich and infamous in DC and on Wall Street.
Apparently, it wasn't enough to enrich politicians and send stocks to the moon. The Federal Meddlers made sure that the massive gains in gold and silver were squelched, quickly, and with undue force.
Gold was cruising along around $1762, up $20 just prior to the opening of the NYMEX (8:15 EDT). Over the course of the day, it reversed and fell, finally closing in New York at $1732, down $10 on the day.
Since it is so wickedly undervalued, it stood to reason that silver fared a little better, up nearly a dollar just before the NYMEX open, at $17.50. It was hammered back down to $16.97 at the close. Still a gain, but hardly of the magnitude that was building before the maligners became involved.
Money Daily has said this before, multiple times, in many ways: the elitist politicians and Wall Street insiders are among the most corrupt connivers in history. The levels of dishonesty, self-dealing, and bad faith practices are at extremes and they commit their financial and societal crimes in full view, without remorse. We're all just along for the show.
This show should have been cancelled long ago.
Let's not forget, unemployment, with more than 36 million out of work, is well over 20% and second quarter GDP is expected to post a 42 percent decline, numbers not seen since the Great Depression.
At the Close, Monday, May 18, 2020:
Dow: 24,597.37, +911.95 (+3.85%)
NASDAQ: 9,234.83, +220.27 (+2.44%)
S&P 500: 2,953.91, +90.21 (+3.15%)
NYSE: 11,402.23, +454.91 (+4.16%)
JCPenney says it will close about 240 stores after filing for bankruptcy
Moderna says test results for possible COVID19 vaccine 'positive'
Only one mattered. Moderna's positive spin over fairly insignificant early stage trials for a vaccine against COVID-19 sent stocks into orbit. Actually, sending stocks skyward was more the work of the Federal Reserve's relentless currency printing press, running full speed since late March. The Fed has created so much liquidity - for nothing, out of thin air - that there's a global glut, just like oil, and it has to find somewhere to go, and that place is usually in risk assets, like stocks, because, well, it's just extra money.
It's kind of like this: Suppose you went to the race track with some friends and hit a superfecta for $15,000. You'd probably splurge over a night on the town, treating your friends to dinner at a great restaurant and endless drinks at some club. In other words, you'd basically just blow some of it because it was an unexpectedly large sum of dough.
Getting back to the cover story from Moderna, never mind that the company has been working with the National Institute of Allergy and Infectious Diseases (NIAD), headed by Dr. Anthony Fauci, since January, or that Moncef Slaoui resigned from Moderna's board of directors just last week when he was tapped by the Trump administration to head up Operation Warp Speed, the president's fast-track search for a COVID-19 vaccine.
Slaoui is reportedly going to divest all of his stock options for 156,000 shares of Moderna, which shot up nearly 20% (MRNA, 80.00, +13.31 (+19.96%) At close: May 18 4:00PM EDT) on the news.
Coincidence? Perhaps. Insider trading? Definitely, though nobody wants to talk about that.
Between the Fed's meddling and the White House's understanding of the situation (surely, anybody who is anybody in Washington, DC was aware that this news would break Monday morning), the whole COVID-19 racket is beginning to look like another major scandal to be piled atop all the other government scandals over the past 40 years. Nobody will be charged with anything. Nobody will go to jail. There probably won't even be an investigation, and, even if there is, it will reveal nothing. Business as usual for the rich and infamous in DC and on Wall Street.
Apparently, it wasn't enough to enrich politicians and send stocks to the moon. The Federal Meddlers made sure that the massive gains in gold and silver were squelched, quickly, and with undue force.
Gold was cruising along around $1762, up $20 just prior to the opening of the NYMEX (8:15 EDT). Over the course of the day, it reversed and fell, finally closing in New York at $1732, down $10 on the day.
Since it is so wickedly undervalued, it stood to reason that silver fared a little better, up nearly a dollar just before the NYMEX open, at $17.50. It was hammered back down to $16.97 at the close. Still a gain, but hardly of the magnitude that was building before the maligners became involved.
Money Daily has said this before, multiple times, in many ways: the elitist politicians and Wall Street insiders are among the most corrupt connivers in history. The levels of dishonesty, self-dealing, and bad faith practices are at extremes and they commit their financial and societal crimes in full view, without remorse. We're all just along for the show.
This show should have been cancelled long ago.
Let's not forget, unemployment, with more than 36 million out of work, is well over 20% and second quarter GDP is expected to post a 42 percent decline, numbers not seen since the Great Depression.
At the Close, Monday, May 18, 2020:
Dow: 24,597.37, +911.95 (+3.85%)
NASDAQ: 9,234.83, +220.27 (+2.44%)
S&P 500: 2,953.91, +90.21 (+3.15%)
NYSE: 11,402.23, +454.91 (+4.16%)
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%)
Thursday, May 14, 2020
Intent on Self-destruction, the Fed and Washington Politicians Should Be Encouraged to Get On With It
Two straight days of losses should have some investors a little concerned that all the money the Federal Reserve is using to prop up markets may not be enough.
Especially frightful is the short term head and shoulders pattern the Dow has printed, raising the possibility for another serious downturn that could leave the Fed outflanked, flummoxed, and low on ammunition.
Considering that the recent move forward off the March lows was anything other than an aberration predicated on the vacuuming up of voluminous amounts of debt by the central bank is just wishful thinking. After all, the entire planet is being ravaged - societally and economically - by a pandemic, the likes of which have not been seen in over 100 years. Stocks should have been sold right into the trash pile. Instead, the past six weeks have primarily demonstrated the Fed's ability to meddle in the natural functions of what used to be a free market. While profits were deteriorating at a manic pace the Fed saw fit to massage market integrity with bubble-gum, candy, and ice cream, looking past the most obvious and painful resolution to overpriced, overvalued equities: a quick crash and revaluation at lower levels, bankruptcies for the least protected or most egregiously offensive, and a sober look at systemic solvency.
Acting more like an overprotective soccer mom than a steward of principled financial policy, the Fed managed the nearly impossible feat of taking an already-overvalued market to even greater levels of investment insanity, throwing ridiculous amounts of capital and liquidity into a hyperventilated landscape on the verge of collapse.
It's high time for the Fed and the president to back away from the punch bowl of fiat fantasy and allow the market to determine for itself where it wishes to go, though the likelihood of that happening are about the same as Dr. Fauci speaking out of only one side of his mouth.
The president wants negative rates and while the Fed protests against the lunacy of capital destruction, they will eventually comply because that's all they know how to do. When all you have is a hammer, everything looks like a screw, so it's a safe bet that when push comes to shove - sending the major indices back into bear market territory where they belong - the Fed will no doubt begin to engage in financial hari kari.
By introducing negative rates, they will have effectively given up all hope for salvation of the capitalist system, punishing investors and savers even more than a zero-interest rate policy has for the past two decades, now insisting that bond holders lose money and currency is flattened under the steamroller of failed radical policy.
It's one thing to want to rescue a company or an industry from default or liquidation, but the folly and sheer egotistical panache of trying to save an entire economic system is on the table and being gorged upon by the inmates at the Federal Reserve. The panicky regional presidents and FOMC governors are about to put on a show for the ages, demonstrating, for anyone interested, how a group of supposedly intelligent men and woman can openly conspire to their own demise. With every shovelful of capital they feed to the market, the deeper they dig their own grave, with ample assistance from Washington politicians intent on not being outdone. Congress will compete with the Fed for lunatics of the century by doing on the fiscal side about what the Fed is doing on the monetary side, abandoning any remnant of financial discipline by exploding the federal budget with deficits wider than the Grand Canyon.
The American public should allow it. In fact, we should cheer on their efforts emphatically from our stay-at-home prisons. Since the public isn't allowed to go to sporting events or concerts, garden shows or lectures, the least they can do is encourage the people who masterminded this economic mishmash to demolish the antiquated, decrepit, malfunctioning miasma of governance, economy, and policy as quickly as possible, because then, a new functioning system can begin to evolve, one that hopefully does not include elected morons and economic theorists of central planning.
As predictable as day turns to night, the old gives way to the new. If those atop the pyramids of power wish to willfully fling themselves from the their perches, they should be allowed and even encouraged to do so.
It will hasten the pain and speed the healing.
At the Close, Wednesday, May 13, 2020:
Dow: 23,247.97, -516.81 (-2.17%)
NASDAQ: 8,863.17, -139.38 (-1.55%)
S&P 500: 2,820.00, -50.12 (-1.75%)
NYSE: 10,829.44, -226.14 (-2.05%)
Especially frightful is the short term head and shoulders pattern the Dow has printed, raising the possibility for another serious downturn that could leave the Fed outflanked, flummoxed, and low on ammunition.
Considering that the recent move forward off the March lows was anything other than an aberration predicated on the vacuuming up of voluminous amounts of debt by the central bank is just wishful thinking. After all, the entire planet is being ravaged - societally and economically - by a pandemic, the likes of which have not been seen in over 100 years. Stocks should have been sold right into the trash pile. Instead, the past six weeks have primarily demonstrated the Fed's ability to meddle in the natural functions of what used to be a free market. While profits were deteriorating at a manic pace the Fed saw fit to massage market integrity with bubble-gum, candy, and ice cream, looking past the most obvious and painful resolution to overpriced, overvalued equities: a quick crash and revaluation at lower levels, bankruptcies for the least protected or most egregiously offensive, and a sober look at systemic solvency.
Acting more like an overprotective soccer mom than a steward of principled financial policy, the Fed managed the nearly impossible feat of taking an already-overvalued market to even greater levels of investment insanity, throwing ridiculous amounts of capital and liquidity into a hyperventilated landscape on the verge of collapse.
It's high time for the Fed and the president to back away from the punch bowl of fiat fantasy and allow the market to determine for itself where it wishes to go, though the likelihood of that happening are about the same as Dr. Fauci speaking out of only one side of his mouth.
The president wants negative rates and while the Fed protests against the lunacy of capital destruction, they will eventually comply because that's all they know how to do. When all you have is a hammer, everything looks like a screw, so it's a safe bet that when push comes to shove - sending the major indices back into bear market territory where they belong - the Fed will no doubt begin to engage in financial hari kari.
By introducing negative rates, they will have effectively given up all hope for salvation of the capitalist system, punishing investors and savers even more than a zero-interest rate policy has for the past two decades, now insisting that bond holders lose money and currency is flattened under the steamroller of failed radical policy.
It's one thing to want to rescue a company or an industry from default or liquidation, but the folly and sheer egotistical panache of trying to save an entire economic system is on the table and being gorged upon by the inmates at the Federal Reserve. The panicky regional presidents and FOMC governors are about to put on a show for the ages, demonstrating, for anyone interested, how a group of supposedly intelligent men and woman can openly conspire to their own demise. With every shovelful of capital they feed to the market, the deeper they dig their own grave, with ample assistance from Washington politicians intent on not being outdone. Congress will compete with the Fed for lunatics of the century by doing on the fiscal side about what the Fed is doing on the monetary side, abandoning any remnant of financial discipline by exploding the federal budget with deficits wider than the Grand Canyon.
The American public should allow it. In fact, we should cheer on their efforts emphatically from our stay-at-home prisons. Since the public isn't allowed to go to sporting events or concerts, garden shows or lectures, the least they can do is encourage the people who masterminded this economic mishmash to demolish the antiquated, decrepit, malfunctioning miasma of governance, economy, and policy as quickly as possible, because then, a new functioning system can begin to evolve, one that hopefully does not include elected morons and economic theorists of central planning.
As predictable as day turns to night, the old gives way to the new. If those atop the pyramids of power wish to willfully fling themselves from the their perches, they should be allowed and even encouraged to do so.
It will hasten the pain and speed the healing.
At the Close, Wednesday, May 13, 2020:
Dow: 23,247.97, -516.81 (-2.17%)
NASDAQ: 8,863.17, -139.38 (-1.55%)
S&P 500: 2,820.00, -50.12 (-1.75%)
NYSE: 10,829.44, -226.14 (-2.05%)
Wednesday, May 13, 2020
Stocks Triggered By Federal Reserve EFT Buys, Negative Interest Rate Fears; PTJ Buys Bitcoin
Once more, the Dow Jones Industrial Average failed to break above a key level, giving up morning gains after President Trump reiterated his desire for the Fed to entertain negative interest rates. Bank stocks were especially hard hit as the belief is that rates below zero would further hamper their ability to control the spread and turn profits despite the ability to skim directly from deposit accounts via the minus sign on yields.
Alongside the president's tweeting, the Federal Reserve began purchasing corporate debt ETFs, beginning with investment grade bonds but eventually swinging down the ladder to high yield, among the most dodgy and riskiest of fixed income products. The intent was announced on March 23, as a response to the coronavirus epidemic, and put into practice during Tuesday's session, with investment firm, BlackRock, as the intermediary, using funds from the Fed and US Treasury.
Seen as the ultimate backstop for stocks and the debt market, the scheme is one of nine separate facilities the Fed is employing to help stabilize - or in most cases, pump higher - markets.
The various backstops being deployed by the Fed, in conjunction with the currency-killing qualities of negative interest rates should eventually result in a gigantic bubble in the Fed's balance sheet, holding investment vehicles that are headed straight to the fiat scrapyard, another sign that the world is heading toward a currency crisis and a new monetary regime.
The attempt to vault beyond the 50% retrace of the March collapse was the third in the past month. The Dow peaked on April 17 when it closed at 24,633.86. After Tuesday's selloff, the head-and-shoulders chart pattern is clearly defined, a strong signal that a major decline is likely.
In recent days, and just prior to its halving, Paul Tudor Jones has bought into Bitcoin, expressing his view that the cryptocurrency will act as a hedge against the inflation he sees coming from central bank money-printing, telling clients it reminds him of the role gold played in the 1970s.
In a quote that is certain to become his trademark, Jones, founder and CEO of Tudor Investment Corp., said:
Unabashedly, Jones believes Bitcoin will win the investment race over the coming years, along with gold, silver and other hard assets.
Jones' entry into the crypto-market stands in stark contrast to famed investor Warren Buffet and his holding company Berkshire Hathaway. Buffet has openly stated that he would never invest in gold or Bitcoin. After selling off his positions in the airlines at a sizable loss, Buffet's Berkshire Hathaway is sitting on some $150 billion in cash, loathing the concept that he finds nothing of compelling value to purchase presently.
Obviously, one of these investing titans is going to be proven wrong. It appears that at the present time, Jones may be holding the winning hand, or, in racing parlance, the live long shot.
At the Close, Tuesday, May 12, 2020:
Dow: 23,764.78, -457.21 (-1.89%)
NASDAQ: 9,002.55, -189.79 (-2.06%)
S&P 500: 2,870.12, -60.20 (-2.05%)
NYSE: 11,055.58, -225.78 (-2.00%)
Alongside the president's tweeting, the Federal Reserve began purchasing corporate debt ETFs, beginning with investment grade bonds but eventually swinging down the ladder to high yield, among the most dodgy and riskiest of fixed income products. The intent was announced on March 23, as a response to the coronavirus epidemic, and put into practice during Tuesday's session, with investment firm, BlackRock, as the intermediary, using funds from the Fed and US Treasury.
Seen as the ultimate backstop for stocks and the debt market, the scheme is one of nine separate facilities the Fed is employing to help stabilize - or in most cases, pump higher - markets.
The various backstops being deployed by the Fed, in conjunction with the currency-killing qualities of negative interest rates should eventually result in a gigantic bubble in the Fed's balance sheet, holding investment vehicles that are headed straight to the fiat scrapyard, another sign that the world is heading toward a currency crisis and a new monetary regime.
The attempt to vault beyond the 50% retrace of the March collapse was the third in the past month. The Dow peaked on April 17 when it closed at 24,633.86. After Tuesday's selloff, the head-and-shoulders chart pattern is clearly defined, a strong signal that a major decline is likely.
In recent days, and just prior to its halving, Paul Tudor Jones has bought into Bitcoin, expressing his view that the cryptocurrency will act as a hedge against the inflation he sees coming from central bank money-printing, telling clients it reminds him of the role gold played in the 1970s.
In a quote that is certain to become his trademark, Jones, founder and CEO of Tudor Investment Corp., said:
“The best profit-maximizing strategy is to own the fastest horse.”
Unabashedly, Jones believes Bitcoin will win the investment race over the coming years, along with gold, silver and other hard assets.
Jones' entry into the crypto-market stands in stark contrast to famed investor Warren Buffet and his holding company Berkshire Hathaway. Buffet has openly stated that he would never invest in gold or Bitcoin. After selling off his positions in the airlines at a sizable loss, Buffet's Berkshire Hathaway is sitting on some $150 billion in cash, loathing the concept that he finds nothing of compelling value to purchase presently.
Obviously, one of these investing titans is going to be proven wrong. It appears that at the present time, Jones may be holding the winning hand, or, in racing parlance, the live long shot.
At the Close, Tuesday, May 12, 2020:
Dow: 23,764.78, -457.21 (-1.89%)
NASDAQ: 9,002.55, -189.79 (-2.06%)
S&P 500: 2,870.12, -60.20 (-2.05%)
NYSE: 11,055.58, -225.78 (-2.00%)
Tuesday, May 12, 2020
Universal Basic Income (UBI) On the Table in Washington, DC; Gold, Silver Looking More Enticing
Hop-scotching the financial and political universe:
While the news wants to focus on President Trump and the close proximity of coronavirus to President Trump and Vice President Pence, the figures coming back from states that have re-engaged their economies are intriguing, indicative of increased testing with precautions having been tossed to the roadside in many cases.
Possibly, some states jumped the gun in getting the people at least partially back to work and some stores may have opened prematurely, though it's too early to make a definitive judgement. In some cases, the general public wasn't ready to get back to and kind of routine, be it shopping and strolling, punching a clock or dinner at a restaurant. Elsewhere, people were eager to re-connect.
It's only natural and mathematically predictable that with increased virus testing, the numbers of infected will be rising and the media is poised to pounce all over states that were quick off the line. Thus far, there's no true trend detected. That will take a month or longer, as most states began partial re-openings May 1 and deaths from the virus take a month or longer from infection to expiration.
Look for the media to cherry-pick the state-by-state data and come up with the scariest "second wave" headlines possible within a few weeks, if not sooner. The mainstream is always over-eager when it comes to promoting the pornography of demise, aka, doom porn.
Bernie Sanders, Ed Markey, Kamala Harris put forward a bill Friday (May 8) that would provide $2000 a month to roughly 175 million American adults - and another $2000 for each family member under the age of 18 - for as long as the crisis exists.
In one form or another, the bill has support among Democrats while Republicans are holding their cards close to their chests, for now. With money out on the table, it's only a matter of time before congress approves a monthly stipend for Americans, especially if partial re-openings in states result in increased incidence of infection from COVID-19.
$2000 a month may seem a bit over the top, but there will be pressure on Republicans to not look like a modern-day Scrooge in the face of the pandemic. Millions are out of work, and the long lines at food banks will be a useful prop for Democrats to push their agenda. While the politicians work out their differences, expect to see some form of monthly universal basic income (UBI) agreed upon by the spendthrifts-at-large, likely in the range of $1200-1500 per adult per month, and $500 for dependent children.
The monthly tab for such a scheme would fall somewhere between $325 and $400 billion a month, and could last as long as six months (November elections), perhaps longer. A total of $2 trillion would be touted as "reasonable" considering the heft already thrown to Wall Street and small businesses. Besides, anything spent past September would be rolled into next year's budget. With the 2020 budget already $4 trillion in the red, anything under $5 trillion over budget in 2021 will be appealing to the vote-buyers in Washington.
It's coming. The political calculus favors the Democrat free-spending plan without much pushback from the opposition. Expect direct deposits or checks in the mail to begin arriving sometime in June at the earliest, July at the latest. The nation's political leaders just can't help themselves when it comes to over-spending and trying to appear meritorious and compassionate.
Many thanks to GATA for supplying a link to Nick Laird's fabulous charts and commentary detailing the recent volatility storm in gold and silver.
Scottsdale Mint continues to advise clients of shipment delays of 20+ days. Other dealers have similar warnings, some demanding minimum order sizes due to an ongoing supply shortage and massive uptick in demand.
Fearless Rick's Commentary
Everybody has some kind of normalcy bias that leads to hoping this corona-demic will subside sooner rather than later. We're all tired of it.
In February, I thought this would all be over in a month. Two weeks hence, I recalculated out to six weeks, which became two months, then three and now, careening into June, having tracked events since late January when the virus began ravaging China and then the world, the crisis appears to be an endless one.
Realistically, whether this event is staged or real doesn't matter. The media, governments, and medical community will lead the vast sheeple population into believing what they want and doing their bidding, right down to idiotic suggestions like baseball games with no fans in the stands (not profitable from an ownership perspective), wearing cloth masks (might as well just wear a Howdy Doody Halloween mask as it will have the same effect), keeping six feet apart from people you live with day-to-day, and other abstract restrictions and recommendations.
I'd like this all to be over and done with, but I know it won't be. I am trying hard to abandon my own normalcy bias and beginning to realize that this "new world dis-order" is going to be with us for a long time. The elites can't resolve anything themselves except to keep the stock market inflated, people distracted or starving or angry, and the planet teetering on self-destruction.
I'm resolved that it's all going to get worse. I'm focused on my garden, my personal well-being, stacking and prepping now for winter, which is inevitable.
A year from now, we'll all still be reading and fretting about the virus, lockdowns, death, etc. without an end date. Best to just carry on with life in as usual a manner as one can command. The government is only going to help for a while and in a limited capacity. Once the elections (which is all anybody in Washington DC cares about) are over and done, a cruel, harsh winter is the most likely outcome. Cold weather seems to bring out the worst in people, and if the federal and state governments don't have a handle on both the economy and the virus by then, they'll be facing an even angrier, colder, more determined populace seeking retribution for what they believe was avoidable.
Try to think at least six months ahead of the herd. That way, you'll be more likely to outrun the stampede.
At the Close, Monday, May 11, 2020:
Dow: 24,221.99, -109.33 (-0.45%)
NASDAQ: 9,192.34, +71.02 (+0.78%)
S&P 500: 2,930.32, +0.52 (+0.02%)
NYSE: 11,281.37, -72.98 (-0.64%)
While the news wants to focus on President Trump and the close proximity of coronavirus to President Trump and Vice President Pence, the figures coming back from states that have re-engaged their economies are intriguing, indicative of increased testing with precautions having been tossed to the roadside in many cases.
Possibly, some states jumped the gun in getting the people at least partially back to work and some stores may have opened prematurely, though it's too early to make a definitive judgement. In some cases, the general public wasn't ready to get back to and kind of routine, be it shopping and strolling, punching a clock or dinner at a restaurant. Elsewhere, people were eager to re-connect.
It's only natural and mathematically predictable that with increased virus testing, the numbers of infected will be rising and the media is poised to pounce all over states that were quick off the line. Thus far, there's no true trend detected. That will take a month or longer, as most states began partial re-openings May 1 and deaths from the virus take a month or longer from infection to expiration.
Look for the media to cherry-pick the state-by-state data and come up with the scariest "second wave" headlines possible within a few weeks, if not sooner. The mainstream is always over-eager when it comes to promoting the pornography of demise, aka, doom porn.
Bernie Sanders, Ed Markey, Kamala Harris put forward a bill Friday (May 8) that would provide $2000 a month to roughly 175 million American adults - and another $2000 for each family member under the age of 18 - for as long as the crisis exists.
In one form or another, the bill has support among Democrats while Republicans are holding their cards close to their chests, for now. With money out on the table, it's only a matter of time before congress approves a monthly stipend for Americans, especially if partial re-openings in states result in increased incidence of infection from COVID-19.
$2000 a month may seem a bit over the top, but there will be pressure on Republicans to not look like a modern-day Scrooge in the face of the pandemic. Millions are out of work, and the long lines at food banks will be a useful prop for Democrats to push their agenda. While the politicians work out their differences, expect to see some form of monthly universal basic income (UBI) agreed upon by the spendthrifts-at-large, likely in the range of $1200-1500 per adult per month, and $500 for dependent children.
The monthly tab for such a scheme would fall somewhere between $325 and $400 billion a month, and could last as long as six months (November elections), perhaps longer. A total of $2 trillion would be touted as "reasonable" considering the heft already thrown to Wall Street and small businesses. Besides, anything spent past September would be rolled into next year's budget. With the 2020 budget already $4 trillion in the red, anything under $5 trillion over budget in 2021 will be appealing to the vote-buyers in Washington.
It's coming. The political calculus favors the Democrat free-spending plan without much pushback from the opposition. Expect direct deposits or checks in the mail to begin arriving sometime in June at the earliest, July at the latest. The nation's political leaders just can't help themselves when it comes to over-spending and trying to appear meritorious and compassionate.
Many thanks to GATA for supplying a link to Nick Laird's fabulous charts and commentary detailing the recent volatility storm in gold and silver.
Scottsdale Mint continues to advise clients of shipment delays of 20+ days. Other dealers have similar warnings, some demanding minimum order sizes due to an ongoing supply shortage and massive uptick in demand.
Fearless Rick's Commentary
Everybody has some kind of normalcy bias that leads to hoping this corona-demic will subside sooner rather than later. We're all tired of it.
In February, I thought this would all be over in a month. Two weeks hence, I recalculated out to six weeks, which became two months, then three and now, careening into June, having tracked events since late January when the virus began ravaging China and then the world, the crisis appears to be an endless one.
Realistically, whether this event is staged or real doesn't matter. The media, governments, and medical community will lead the vast sheeple population into believing what they want and doing their bidding, right down to idiotic suggestions like baseball games with no fans in the stands (not profitable from an ownership perspective), wearing cloth masks (might as well just wear a Howdy Doody Halloween mask as it will have the same effect), keeping six feet apart from people you live with day-to-day, and other abstract restrictions and recommendations.
I'd like this all to be over and done with, but I know it won't be. I am trying hard to abandon my own normalcy bias and beginning to realize that this "new world dis-order" is going to be with us for a long time. The elites can't resolve anything themselves except to keep the stock market inflated, people distracted or starving or angry, and the planet teetering on self-destruction.
I'm resolved that it's all going to get worse. I'm focused on my garden, my personal well-being, stacking and prepping now for winter, which is inevitable.
A year from now, we'll all still be reading and fretting about the virus, lockdowns, death, etc. without an end date. Best to just carry on with life in as usual a manner as one can command. The government is only going to help for a while and in a limited capacity. Once the elections (which is all anybody in Washington DC cares about) are over and done, a cruel, harsh winter is the most likely outcome. Cold weather seems to bring out the worst in people, and if the federal and state governments don't have a handle on both the economy and the virus by then, they'll be facing an even angrier, colder, more determined populace seeking retribution for what they believe was avoidable.
Try to think at least six months ahead of the herd. That way, you'll be more likely to outrun the stampede.
At the Close, Monday, May 11, 2020:
Dow: 24,221.99, -109.33 (-0.45%)
NASDAQ: 9,192.34, +71.02 (+0.78%)
S&P 500: 2,930.32, +0.52 (+0.02%)
NYSE: 11,281.37, -72.98 (-0.64%)
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%)
Wednesday, May 6, 2020
Crashing Companies Slash Dividends; ADP Finds 20 Million Jobs Lost in April; Mortgage Rates at All-Time Lows
Wednesday morning, ADP reported a loss of 20,236,000 US private sector jobs in April, a record likely never to be broken again (unless an asteroid hits somewhere along the East or West coast).
Job losses covered the entire spectrum, with 11,274,000 jobs lost by businesses with fewer than 500 employees, and 8,963,000 losses by businesses with over 500 employees. The numbers comfirm what everybody already knows, that the United States and the world at large are at the beginning of a Greater Depression, many metrics having already surpassed the Great Depression of the 1930s.
For the week ending May 1, US residential mortgage applications edged up 0.1% while the interest rate on a 30-year fixed loan fell to its lowest level ever, checking in at 3.4%, according to the Mortgage Bankers Association. Purchase activity remains almost 19 percent below year-ago levels.
Stocks gained on Tuesday, though the rally was shunted late in the day, shaving off roughly two-thirds of the gains in the final hour of trading.
While stocks seem to be always going up in recent days, all rallies have been capped by violent resurges of selling, as was the case on Friday, when the major indices gave back all the gains of the week in one session. Stocks have traded in a relatively stable, narrow range since April 6, after the markets had rebounded smartly off the March lows. The S&P 500, during that span, has fluctuated between a low of 2663 and a high of 2939, the all time high of 3386.15 (February 19, 2020) a fading memory.
COVID-19 and the government response to the outbreak has caused wild swings, anguish, and some recovery, after the Federal Reserve, in conjunction with the US Treasury Department has sought to stabilize equity markets, buying up every losing asset they could find, from junk bonds to munis.
Despite the gargantuan lifting by the Fed, stocks are still being stung by first quarter earnings releases showing how disruptive just two to three weeks of partial shutdown (late March) had on the bottom line of various companies.
One of the latest casualties is Disney (DIS), which posted first quarter earnings (fiscal second quarter) of 60 cents against expectations for 91 cents after the closing bell Tuesday. The company, which owns a variety of media and entertainment assets, including movies, ABC, ESPN, Disneyland, DisneyWorld, and other theme parks around the world, also found it necessary to eliminate its semiannual dividend of 88 cents per share for the first half of their fiscal year (October-March). Instead of paying out the $1.6 billion to shareholders, the company will keep the cash for itself, ostensibly to cover ongoing expenses.
Profits at the "magic kingdom" fell 90% year-over-year.
Putting it bluntly, the Mouse in the House just screwed over a large swath of investors expecting a payout on the dividend. Imagine the frustration and angst of not only seeing the stock fall from an all-time high of 161 (November, 2019) to as low as 85 in March, but now to have what was thought to be a guaranteed dividend denied. The stock is trading right around 100 per share as of Tuesday's close.
Also cutting its dividend, Wendy's Co. (WEN) reported Wednesday that its first-quarter net income declined 54.9 percent to $14.4 million from last year's $31.9 million.
Earnings per share were $0.06, down 57.1 percent from $0.14 a year ago. Adjusted earnings per share were $0.09, compared to prior year's $0.14. The company - which reported flat to declining same-store sales across all markets and a number of outlets running out of beef patties on Tuesday - lowered its dividend for the second quarter from 12 cents per share to 5 cents per share, payable on June 15, to shareholders of record as of June 1.
On Tuesday, shares of rental car company Hertz (HTZ) fell more than 14% after it disclosed that it received approval from its lenders to continue negotiations through May 22 to “develop a financing strategy and structure that better reflects the economic impact" of COVID-19. The company, which operates rental car business, many located at airports around the country, is on the ropes and close to filing Chapter 11 reorganization bankruptcy.
Shares of the company, which had reached a 52-week high of 20.29 on February 20, have slid to three dollars in May, closing at 3.01 on Tuesday.
Also on the ropes are retailers Nordstrom (JWN), closing 16 stores permanently, and J. Crew (private), which filed for chapter 11 on Tuesday. Neiman Marcus is reportedly close to chapter 11, and rumors that JC Penny's is in talks with lenders are circulating. An avalanche of store closings, restructurings, and bankruptcies are expected in the sector over the next few weeks and months.
Amid all the chaos, most analysts still insist that major banking firms, such as Bank of America (BAC), wells Fargo (WFC), Citi (C), and JP Morgan (JPM), are all well enough capitalized to survive cascading defaults in commercial real estate, residential real estate, consumer brands, lines of credit, credit cards, student loans and other funding vehicles.
Others are not so certain, expecting rather that the entire edifice of global debt is about to become torn down amid a worldwide pandemic and depression resulting in the collapse of fiat currencies, governments, and central banks.
Whatever your individual outlook, it may be wise to amplify that to the downside by orders of magnitude.
At the Close, Tuesday, May 5, 2020:
Dow: 23,883.09, +133.33 (+0.56%)
NASDAQ: 8,809.12, +98.41 (+1.13%)
S&P 500: 2,868.44, +25.70 (+0.90%)
NYSE: 11,135.40, +79.12 (+0.72%)
Job losses covered the entire spectrum, with 11,274,000 jobs lost by businesses with fewer than 500 employees, and 8,963,000 losses by businesses with over 500 employees. The numbers comfirm what everybody already knows, that the United States and the world at large are at the beginning of a Greater Depression, many metrics having already surpassed the Great Depression of the 1930s.
For the week ending May 1, US residential mortgage applications edged up 0.1% while the interest rate on a 30-year fixed loan fell to its lowest level ever, checking in at 3.4%, according to the Mortgage Bankers Association. Purchase activity remains almost 19 percent below year-ago levels.
Stocks gained on Tuesday, though the rally was shunted late in the day, shaving off roughly two-thirds of the gains in the final hour of trading.
While stocks seem to be always going up in recent days, all rallies have been capped by violent resurges of selling, as was the case on Friday, when the major indices gave back all the gains of the week in one session. Stocks have traded in a relatively stable, narrow range since April 6, after the markets had rebounded smartly off the March lows. The S&P 500, during that span, has fluctuated between a low of 2663 and a high of 2939, the all time high of 3386.15 (February 19, 2020) a fading memory.
COVID-19 and the government response to the outbreak has caused wild swings, anguish, and some recovery, after the Federal Reserve, in conjunction with the US Treasury Department has sought to stabilize equity markets, buying up every losing asset they could find, from junk bonds to munis.
Despite the gargantuan lifting by the Fed, stocks are still being stung by first quarter earnings releases showing how disruptive just two to three weeks of partial shutdown (late March) had on the bottom line of various companies.
One of the latest casualties is Disney (DIS), which posted first quarter earnings (fiscal second quarter) of 60 cents against expectations for 91 cents after the closing bell Tuesday. The company, which owns a variety of media and entertainment assets, including movies, ABC, ESPN, Disneyland, DisneyWorld, and other theme parks around the world, also found it necessary to eliminate its semiannual dividend of 88 cents per share for the first half of their fiscal year (October-March). Instead of paying out the $1.6 billion to shareholders, the company will keep the cash for itself, ostensibly to cover ongoing expenses.
Profits at the "magic kingdom" fell 90% year-over-year.
Putting it bluntly, the Mouse in the House just screwed over a large swath of investors expecting a payout on the dividend. Imagine the frustration and angst of not only seeing the stock fall from an all-time high of 161 (November, 2019) to as low as 85 in March, but now to have what was thought to be a guaranteed dividend denied. The stock is trading right around 100 per share as of Tuesday's close.
Also cutting its dividend, Wendy's Co. (WEN) reported Wednesday that its first-quarter net income declined 54.9 percent to $14.4 million from last year's $31.9 million.
Earnings per share were $0.06, down 57.1 percent from $0.14 a year ago. Adjusted earnings per share were $0.09, compared to prior year's $0.14. The company - which reported flat to declining same-store sales across all markets and a number of outlets running out of beef patties on Tuesday - lowered its dividend for the second quarter from 12 cents per share to 5 cents per share, payable on June 15, to shareholders of record as of June 1.
On Tuesday, shares of rental car company Hertz (HTZ) fell more than 14% after it disclosed that it received approval from its lenders to continue negotiations through May 22 to “develop a financing strategy and structure that better reflects the economic impact" of COVID-19. The company, which operates rental car business, many located at airports around the country, is on the ropes and close to filing Chapter 11 reorganization bankruptcy.
Shares of the company, which had reached a 52-week high of 20.29 on February 20, have slid to three dollars in May, closing at 3.01 on Tuesday.
Also on the ropes are retailers Nordstrom (JWN), closing 16 stores permanently, and J. Crew (private), which filed for chapter 11 on Tuesday. Neiman Marcus is reportedly close to chapter 11, and rumors that JC Penny's is in talks with lenders are circulating. An avalanche of store closings, restructurings, and bankruptcies are expected in the sector over the next few weeks and months.
Amid all the chaos, most analysts still insist that major banking firms, such as Bank of America (BAC), wells Fargo (WFC), Citi (C), and JP Morgan (JPM), are all well enough capitalized to survive cascading defaults in commercial real estate, residential real estate, consumer brands, lines of credit, credit cards, student loans and other funding vehicles.
Others are not so certain, expecting rather that the entire edifice of global debt is about to become torn down amid a worldwide pandemic and depression resulting in the collapse of fiat currencies, governments, and central banks.
Whatever your individual outlook, it may be wise to amplify that to the downside by orders of magnitude.
At the Close, Tuesday, May 5, 2020:
Dow: 23,883.09, +133.33 (+0.56%)
NASDAQ: 8,809.12, +98.41 (+1.13%)
S&P 500: 2,868.44, +25.70 (+0.90%)
NYSE: 11,135.40, +79.12 (+0.72%)
Tuesday, May 5, 2020
The Fraud Continues: States Defy Feds' Phony Recommendations; Treasury Self-Dealing With Federal Reserve; Remdesivir Fake Medicine
The levels of fraud and corruption at the highest echelons of government, business, finance, and media are astonishing.
A few examples:
FEDERAL GUIDELINES FOR RE-OPENING STATES
States are quickly moving forward on reopening their cities, countries, stores, and service businesses after as much as seven weeks of virtual lockdown and social distancing recommendations from the federal government have rendered their economies little more than zombified, debt-ridden vestiges of the recent past.
The governors of the individual states were provided guidelines by the feds to follow as protocol for safe re-openings, including a declining number of new COVID-19 cases reported over a 14-day period. No state has achieved that metric, though more than 40 are already at some stage of operational functionality.
It's not the states which are - in open defiance of the non-binding federal guidelines - committing fraud or demonstrating any kind of corrupt practice, it is the federal government, in their feeble attempt to keep businesses closed down, effectively destroying the American economy by way of suggesting guidelines to which states could not possibly have adhered.
As the federal emergency declaration ended on April 30, at the same time and prior to that date, the federal government was urging more vigorous testing and rushing tests to states, in full knowledge that the tests for coronavirus would result in higher numbers of positive cases. Not only are a majority of states now testing for the presence of the virus, but they are also testing for antibodies, an indicator that the subject - whether showing symptoms or not (mostly the latter) - had the virus and has either recovered or is recovering. By default, those test results will be added to the number of positive cases for COVID-19, on the assumption that the presence of antibodies confirms coronavirus at some past date.
Thus, the federal government will be able to show increasing numbers of infections and possibly assert that states re-opened too soon and should go back to shutdown mode. That's a fraud because the reason for more positive cases appearing in states is due to increased testing and piling on antibody test results, not that the disease is spreading at a more rapid rate.
What will be telling are the number of deaths from the virus. If there are more positive cases appearing, but the number of deaths slows or remains relatively the same, it would be clear that the virus is neither as deadly as previously assumed nor as prevalent in the most at risk segments of the population.
REMDESIVIR AND HYDROXYCHLOROQUINE
It was widely reported last week that a drug developed by Gilead Sciences (GILD), remdesivir, produced positive results in clinical trials and was fast-tracked by the FDA for front-line use by hospitals in treatment of COVID-19, despite there being no evidence whatsoever that the drug produced anything more than a lessening of time to recovery of roughly 30%. There was no reduction in mortality rates or severity of illness. Remdesivir costs about $1000 a dose, which will be paid out by health insurance companies or more likely, the federal government.
Meanwhile, all news and scientific enquiry into the widely-used, generic Malaria treatment, hydroxychloroquine, has been barred from public consumption, despite many studies showing its efficacy in shortening the time of illness, and lessening the severity of illness. It is also being widely used around the world as a prophylactic, along with zinc and vitamins C and D, as a preventative measure. The drug is available widely for about one daller per dose.
The government, medical community, and media have concocted a story wherein the less-effective $1000 a pop drug that doesn't work very well in combating the disease is preferred over the proven-to-be-effective one dollar drug.
SOCIAL DISTANCING
This one is simple. Anyone urging people to social distance by six feet is either a fraud or a moron. It's widely known that this coronavirus is transmitted by aerosol, through tiny droplets which can suspend n the air over a distance of up to 29 feet, and it also remains active in ventilation systems, like those on cruise ships, apartment buildings, hospitals, stores, malls, everywhere.
FEDERAL RESERVE AND THE TREASURY
When congress passed the CARES Act and the president signed the $2.3 trillion into law, one provision was $450 billion from the exchange stabilization fund to the Federal Reserve. The Exchange Stabilization Fund (ESF) is a U.S. Department of Treasury emergency reserve fund which includes holdings of U.S. dollars (USD), other foreign currencies, and special drawing rights (SDR) funds.
This allowed the Fed to leverage that money 10 times or more in loans or outright bailouts to banks, failing companies, strapped municipalities and other connected entities. It effectively made the US treasury a shareholder in the Federal Reserve, a private bank, putting taxpayer money into the mix.
It was announced on Monday that the Treasury would be issuing $3 trillion of bonds to cover the costs related to the CARES Act and COVID-19. These bonds will eventually end up in the hands of the Federal Reserve, of which the Treasury Department is a shareholder.
In the private sector, this would be known as self-dealing, a crime punishable by a good length of time in prison for the perpetrators and/or a hefty fine and barring from financial markets.
In the case of the Fed and Treasury, it's business as usual. Nobody is questioned on the legality of it and nobody goes to jail. Bear in mind, all of this money is a further debt burden to American taxpayers.
When this news came out Monday morning, stocks erased their sizable losses and ended narrowly positive.
Those are just the tip of a proverbial iceberg of fraud and deception.
Generally speaking, Americans are gullible, kind, and fairly easy-going. There are elements of the population, however, that understand enough about politics, mathematics, medicine, and the law to be hopping mad. The American public is being defrauded by its own government, business, medical, and business leaders.
When will enough people say, "enough is enough," and demand change or seek retribution?
At the Close, Monday, May 4, 2020:
Dow: 23,749.76, +26.07 (+0.11%)
NASDAQ: 8,710.71, +105.77 (+1.23%)
S&P 500: 2,842.74, +12.03 (+0.42%)
NYSE: 11,056.28, -2.29 (-0.02%)
A few examples:
FEDERAL GUIDELINES FOR RE-OPENING STATES
States are quickly moving forward on reopening their cities, countries, stores, and service businesses after as much as seven weeks of virtual lockdown and social distancing recommendations from the federal government have rendered their economies little more than zombified, debt-ridden vestiges of the recent past.
The governors of the individual states were provided guidelines by the feds to follow as protocol for safe re-openings, including a declining number of new COVID-19 cases reported over a 14-day period. No state has achieved that metric, though more than 40 are already at some stage of operational functionality.
It's not the states which are - in open defiance of the non-binding federal guidelines - committing fraud or demonstrating any kind of corrupt practice, it is the federal government, in their feeble attempt to keep businesses closed down, effectively destroying the American economy by way of suggesting guidelines to which states could not possibly have adhered.
As the federal emergency declaration ended on April 30, at the same time and prior to that date, the federal government was urging more vigorous testing and rushing tests to states, in full knowledge that the tests for coronavirus would result in higher numbers of positive cases. Not only are a majority of states now testing for the presence of the virus, but they are also testing for antibodies, an indicator that the subject - whether showing symptoms or not (mostly the latter) - had the virus and has either recovered or is recovering. By default, those test results will be added to the number of positive cases for COVID-19, on the assumption that the presence of antibodies confirms coronavirus at some past date.
Thus, the federal government will be able to show increasing numbers of infections and possibly assert that states re-opened too soon and should go back to shutdown mode. That's a fraud because the reason for more positive cases appearing in states is due to increased testing and piling on antibody test results, not that the disease is spreading at a more rapid rate.
What will be telling are the number of deaths from the virus. If there are more positive cases appearing, but the number of deaths slows or remains relatively the same, it would be clear that the virus is neither as deadly as previously assumed nor as prevalent in the most at risk segments of the population.
REMDESIVIR AND HYDROXYCHLOROQUINE
It was widely reported last week that a drug developed by Gilead Sciences (GILD), remdesivir, produced positive results in clinical trials and was fast-tracked by the FDA for front-line use by hospitals in treatment of COVID-19, despite there being no evidence whatsoever that the drug produced anything more than a lessening of time to recovery of roughly 30%. There was no reduction in mortality rates or severity of illness. Remdesivir costs about $1000 a dose, which will be paid out by health insurance companies or more likely, the federal government.
Meanwhile, all news and scientific enquiry into the widely-used, generic Malaria treatment, hydroxychloroquine, has been barred from public consumption, despite many studies showing its efficacy in shortening the time of illness, and lessening the severity of illness. It is also being widely used around the world as a prophylactic, along with zinc and vitamins C and D, as a preventative measure. The drug is available widely for about one daller per dose.
The government, medical community, and media have concocted a story wherein the less-effective $1000 a pop drug that doesn't work very well in combating the disease is preferred over the proven-to-be-effective one dollar drug.
SOCIAL DISTANCING
This one is simple. Anyone urging people to social distance by six feet is either a fraud or a moron. It's widely known that this coronavirus is transmitted by aerosol, through tiny droplets which can suspend n the air over a distance of up to 29 feet, and it also remains active in ventilation systems, like those on cruise ships, apartment buildings, hospitals, stores, malls, everywhere.
FEDERAL RESERVE AND THE TREASURY
When congress passed the CARES Act and the president signed the $2.3 trillion into law, one provision was $450 billion from the exchange stabilization fund to the Federal Reserve. The Exchange Stabilization Fund (ESF) is a U.S. Department of Treasury emergency reserve fund which includes holdings of U.S. dollars (USD), other foreign currencies, and special drawing rights (SDR) funds.
This allowed the Fed to leverage that money 10 times or more in loans or outright bailouts to banks, failing companies, strapped municipalities and other connected entities. It effectively made the US treasury a shareholder in the Federal Reserve, a private bank, putting taxpayer money into the mix.
It was announced on Monday that the Treasury would be issuing $3 trillion of bonds to cover the costs related to the CARES Act and COVID-19. These bonds will eventually end up in the hands of the Federal Reserve, of which the Treasury Department is a shareholder.
In the private sector, this would be known as self-dealing, a crime punishable by a good length of time in prison for the perpetrators and/or a hefty fine and barring from financial markets.
In the case of the Fed and Treasury, it's business as usual. Nobody is questioned on the legality of it and nobody goes to jail. Bear in mind, all of this money is a further debt burden to American taxpayers.
When this news came out Monday morning, stocks erased their sizable losses and ended narrowly positive.
Those are just the tip of a proverbial iceberg of fraud and deception.
Generally speaking, Americans are gullible, kind, and fairly easy-going. There are elements of the population, however, that understand enough about politics, mathematics, medicine, and the law to be hopping mad. The American public is being defrauded by its own government, business, medical, and business leaders.
When will enough people say, "enough is enough," and demand change or seek retribution?
At the Close, Monday, May 4, 2020:
Dow: 23,749.76, +26.07 (+0.11%)
NASDAQ: 8,710.71, +105.77 (+1.23%)
S&P 500: 2,842.74, +12.03 (+0.42%)
NYSE: 11,056.28, -2.29 (-0.02%)
Sunday, May 3, 2020
Stocks Flat As States Begin to Reopen; COVID-19 Still Wreaking Havoc on Lives, Markets
This installment of the WEEKEND WRAP is going to be one of the shortest since the onset of the coronavirus crisis because noting much of consequence occurred, other than the "breakthrough" with Gilead Science's remdesivir clinical trial.
Turns out, remdesivir, as was already known, has little effect on the virus and doesn't reduce mortality at all. The study was purposely shortened to include only the data that shows the drug reduces the time to recovery by about 30%. Big deal. You take it - at $1000 a dose - and you recover in ten days rather than 14, at a cost of some $6-8000. Yeah, great. Four fewer days with a bad cold and a big pharmacy bill.
Hydroxychloroquine with zinc supplements and healthy doses of Vitamins C, D3, and Quercetin (or red wine, onions, green tea, apples, berries) before infection will likely prevent one from contracting the virus, and, the same combination after infection (if started early) will shorten the duration and severity.
Proven.
Mainstream media and government won't allow this information to even be considered.
The release of the remdesivir story was timed to coincide with the release of first quarter GDP, which was a very disappointing -4.8 percent. It's worth noting that many mainstream economists, like those from Bank of America and Goldman Sachs, downplayed the first quarter and thought it was going to come in as a positive number, proving, once again, that expert opinions should be treated in a similar manner to online stock touts. Both are better avoided and trusting in your own gut.
Most states have at least partially re-opened their economies, lead by Georgia, Florida, Tennessee and other Southern and some Midwestern states, notably Iowa, the Dakotas, Kansas, Nebraska, Oklahoma, Missouri, Texas). Some eight states never actually issued lockdown orders in the first place.
Meanwhile New York, New Jersey, Connecticut, Massachusetts, Virginia, Michigan, California, and others are still operating under lockdown restrictions.
This Wired.com article from April 30 offer some accurate state-by-state reporting.
Stocks finished the week about where they started (see below).
Treasuries closed out the week with the 2-year note yielding 0.20%, the 10-year, 0.64%, and the 30-year, 1.27%. There was limited movement. The 2-year down two basis points, the 10-year up four, and the 30-year up 10. The curve steepened 10 basis points to 117, essentially all driven by the 30-year.
Oil seems to be stabilizing, but at a price that will slaughter some smaller producers. WTI crude finished the week at its high of $19.69 a barrel on the June contract. Predictions are for a sloppy termination of the current contract, though nothing quite like the end of the May contract when oil prices turned negative.
Precious metals continue to be massaged and depressed. Gold futures closed out on Friday at $1700.40 per troy ounce. Silver futures finished at $14.97. The gold/silver ratio stands at 113.6, near a 5000-year high. The sensible move, for investors would be to be buying silver for the foreseeable future, as premiums on both metals are high, though, on a percentage basis, the silver premiums are drastic. It's nearly impossible to purchase silver for under $20 an ounce in quantity. Smaller amounts, such as one ounce coins and bars carry premiums of 70 to 100% or higher, whereas gold premiums are about $130-160, less than 10%.
It's actually far easier to purchase silver than gold, especially on ebay, where delivery delays such as those being experienced by dealers, are cut down to a few days rather than weeks. Delivery delays are slowly abating, but minimum order sizes remain in place at many online dealers.
It appears as though stocks are going to tumble on Monday, as word leaked out that Berkshire Hathaway, the holding company of Warren Buffett, is going to be selling hard into the recent rally. A retest of the March lows could be underway as stocks finished dramatically lower Friday - which happened to be May 1 - wiping out the week's gains.
The Dow Jones Industrial Average has failed repeatedly to break through the 50% retrace line off the lows, and that could portend a significant shift in risk assessment.
At the Close, Friday, May 1, 2020:
Dow: 23,723.69, -622.03 (-2.55%)
NASDAQ: 8,604.95, -284.60 (-3.20%)
S&P 500: 2,830.71, -81.72 (-2.81%)
NYSE: 11,058.57, -313.77 (-2.76%)
For the Week:
Dow: -51.58 (-0.22%)
NASDAQ: -29.57 (-0.34%)
S&P 500: -6.03 (-0.21%)
NYSE: +40.68 (-0.37%)
Turns out, remdesivir, as was already known, has little effect on the virus and doesn't reduce mortality at all. The study was purposely shortened to include only the data that shows the drug reduces the time to recovery by about 30%. Big deal. You take it - at $1000 a dose - and you recover in ten days rather than 14, at a cost of some $6-8000. Yeah, great. Four fewer days with a bad cold and a big pharmacy bill.
Hydroxychloroquine with zinc supplements and healthy doses of Vitamins C, D3, and Quercetin (or red wine, onions, green tea, apples, berries) before infection will likely prevent one from contracting the virus, and, the same combination after infection (if started early) will shorten the duration and severity.
Proven.
Mainstream media and government won't allow this information to even be considered.
The release of the remdesivir story was timed to coincide with the release of first quarter GDP, which was a very disappointing -4.8 percent. It's worth noting that many mainstream economists, like those from Bank of America and Goldman Sachs, downplayed the first quarter and thought it was going to come in as a positive number, proving, once again, that expert opinions should be treated in a similar manner to online stock touts. Both are better avoided and trusting in your own gut.
Most states have at least partially re-opened their economies, lead by Georgia, Florida, Tennessee and other Southern and some Midwestern states, notably Iowa, the Dakotas, Kansas, Nebraska, Oklahoma, Missouri, Texas). Some eight states never actually issued lockdown orders in the first place.
Meanwhile New York, New Jersey, Connecticut, Massachusetts, Virginia, Michigan, California, and others are still operating under lockdown restrictions.
This Wired.com article from April 30 offer some accurate state-by-state reporting.
Stocks finished the week about where they started (see below).
Treasuries closed out the week with the 2-year note yielding 0.20%, the 10-year, 0.64%, and the 30-year, 1.27%. There was limited movement. The 2-year down two basis points, the 10-year up four, and the 30-year up 10. The curve steepened 10 basis points to 117, essentially all driven by the 30-year.
Oil seems to be stabilizing, but at a price that will slaughter some smaller producers. WTI crude finished the week at its high of $19.69 a barrel on the June contract. Predictions are for a sloppy termination of the current contract, though nothing quite like the end of the May contract when oil prices turned negative.
Precious metals continue to be massaged and depressed. Gold futures closed out on Friday at $1700.40 per troy ounce. Silver futures finished at $14.97. The gold/silver ratio stands at 113.6, near a 5000-year high. The sensible move, for investors would be to be buying silver for the foreseeable future, as premiums on both metals are high, though, on a percentage basis, the silver premiums are drastic. It's nearly impossible to purchase silver for under $20 an ounce in quantity. Smaller amounts, such as one ounce coins and bars carry premiums of 70 to 100% or higher, whereas gold premiums are about $130-160, less than 10%.
It's actually far easier to purchase silver than gold, especially on ebay, where delivery delays such as those being experienced by dealers, are cut down to a few days rather than weeks. Delivery delays are slowly abating, but minimum order sizes remain in place at many online dealers.
It appears as though stocks are going to tumble on Monday, as word leaked out that Berkshire Hathaway, the holding company of Warren Buffett, is going to be selling hard into the recent rally. A retest of the March lows could be underway as stocks finished dramatically lower Friday - which happened to be May 1 - wiping out the week's gains.
The Dow Jones Industrial Average has failed repeatedly to break through the 50% retrace line off the lows, and that could portend a significant shift in risk assessment.
At the Close, Friday, May 1, 2020:
Dow: 23,723.69, -622.03 (-2.55%)
NASDAQ: 8,604.95, -284.60 (-3.20%)
S&P 500: 2,830.71, -81.72 (-2.81%)
NYSE: 11,058.57, -313.77 (-2.76%)
For the Week:
Dow: -51.58 (-0.22%)
NASDAQ: -29.57 (-0.34%)
S&P 500: -6.03 (-0.21%)
NYSE: +40.68 (-0.37%)
Friday, May 1, 2020
The World Has Been Hoaxed; Hydroxychloroquine Works; Rent Strike, Mass Protests On Tap for May 1
April is over and done. The month that saw the WuHan Flu, coronavirus, COVID-19, SARS-COV II, or whatever you prefer calling it spread like wildfire throughout the United States and the world also produced the best performance in the S&P 500 since 1987.
As if the stock market's miraculous rebound off the March lows wasn't enough, the Fed's balance sheet, thanks to sopping up trillions in debt of all varieties - from corporate issuance to high yield (junk) to munis to the usual nasty mortgage=backed securities (MBS) and low-yielding treasuries - increased by some $2.23 trillion to a record amount of more than $6.6 trillion.
Also showing up on the national radar are people who are refusing to go back to work because they are making more on unemployment, states reopening businesses with some restrictions and precautions, Florida opening beaches while California closes them down, a GDP for the first quarter of -4.8%, and various misdirections, untruths, fabrications, and outright lies due to conflicts of interest by doctors (including the CDC's Dr. Anthony Fauci) promoting Gilead Science's remdesivir as a primary treatment of COVID-19 with little to no evidence that it does anything more than shorten the length of hospitalizations.
All the while, evidence continues to pile up showing hydroxychloroquine (HCQ) as a drug with a wide range of uses in not only diminishing the severity of coronavirus symptoms, but possibly acting as a preventive treatment, i.e., Lupus patients, who are prescribed Plaquenil (the brand name for HCQ), do not contract coronavirus.
Various studies from countries around the world have shown early use of HCQ is highly effective in combating the coronavirus, though the mainstream media refuses to report any positives about the drug, preferring to bombard the public with questionable research on remdesivir, a drug that can cost as much as $100 per dose, where HCQ can be produced in massive quantities for about a dime per dose.
Peak Prosperity's Chris Martenson, who has been doing incredible daily reporting on the crisis, has details in his latest video:
While the US continues to lurch toward some degree of normalcy at the end of a six-week near-nationwide lockdown, many questions linger, not the least of which being how badly the American public has been hoodwinked by the wealthy elite and their cohorts in government. From all appearances, it seems the public has been royally screwed this time around.
The economy is in tatters, more than 30 million lost their jobs, but what is likely going to be worse, are the millions of small businesses which have been severely hampered or outright destroyed by government overreach. Many of these businesses will not come back in the summer, or the fall. They are gone forever, and with them, their owners facing financial ruin. It will take years to undo the damage wrought by the government response to a virus that essentially affects people over 50 or those with pre-existing serious medical issues.
Friday, May 1, will offer some pushback agains the federal tyranny. There's a nationwide rent strike being waged in big cities and small, along with a May Day work stoppage promoted by employees of some of the multi-national companies that were not forced to shut down for the past six weeks, including Wal-Mart, Amazon, Target, and others. Protests will be very visible, as will the outrage expressed in Michigan, where governor Gretchen Whitmer is extending the lockdown until May 28.
Protesters there have already been storming the Capitol, and some were actually armed inside the Capitol building on Thursday, though that received scant notice on the evening TV news. This explosive situation merits closer attention, as what happens in Lansing, Michigan's capitol, may serve as a template for popular uprisings in places like Virginia, California, New York, Massachusetts, and any other state that believes they can keep the general population under lock and key indefinitely.
With warmer weather and a weekend ahead, some payback may be forthcoming from an angry, frustrated American public.
In other markets, gold and silver were beaten down as they usually are at the end of the month, though the dislocation between spot, futures, and actual prices for acquiring physical metal has completely blown up. Silver especially is out of whack, with premiums over the futures price of anywhere from 30 to 100% now commonplace. Gold premiums are still in the 10-15% range, though dealers have been and continue to impose minimums with lengthy shipping delays.
Oil markets continue to fluctuate wildly as the supply glut and demand collapse refuse to abate. Beyond giants Russia and Saudi Arabia, countries which produce oil as a primary revenue source are going to be devastated, while in the US, rig counts are plummeting as shale drilling operations are being shut down. They're unable to make money at the current prices and investors are being wiped out along with the lenders who financed operations. WTI crude, as of Friday morning is hovering just under $19 a barrel, though it's been as low as $10.64 earlier this week. The June futures contract is beginning to look like another disaster - as was the May contract - in the making.
Treasuries have been relatively unmoved during the week, though the 30-year bond has increased yield from 1.17% last Friday to 1.28% Thursday. The curve has steepened slightly, though not in any statistically meaningful way. 118 basis points covers the entire complex.
Equity futures are pointing to a very ugly open Friday, with Dow futures down more than 450 points.
Could this be the "sell in May and go away" signal? Possible, but the real fallout may not occur until late July or August when earnings and the first reading of second quarter GDP will shock the markets, not just in the United States, but globally. The Greater Depression is ramping up.
At the Close, Thursday, April 30, 2020:
Dow: 24,345.72, -288.14 (-1.17%)
NASDAQ: 8,889.55, -25.16 (-0.28%)
S&P 500: 2,912.43, -27.08 (-0.92%)
NYSE: 11,372.34, -245.89 (-2.12%)
As if the stock market's miraculous rebound off the March lows wasn't enough, the Fed's balance sheet, thanks to sopping up trillions in debt of all varieties - from corporate issuance to high yield (junk) to munis to the usual nasty mortgage=backed securities (MBS) and low-yielding treasuries - increased by some $2.23 trillion to a record amount of more than $6.6 trillion.
Also showing up on the national radar are people who are refusing to go back to work because they are making more on unemployment, states reopening businesses with some restrictions and precautions, Florida opening beaches while California closes them down, a GDP for the first quarter of -4.8%, and various misdirections, untruths, fabrications, and outright lies due to conflicts of interest by doctors (including the CDC's Dr. Anthony Fauci) promoting Gilead Science's remdesivir as a primary treatment of COVID-19 with little to no evidence that it does anything more than shorten the length of hospitalizations.
All the while, evidence continues to pile up showing hydroxychloroquine (HCQ) as a drug with a wide range of uses in not only diminishing the severity of coronavirus symptoms, but possibly acting as a preventive treatment, i.e., Lupus patients, who are prescribed Plaquenil (the brand name for HCQ), do not contract coronavirus.
Various studies from countries around the world have shown early use of HCQ is highly effective in combating the coronavirus, though the mainstream media refuses to report any positives about the drug, preferring to bombard the public with questionable research on remdesivir, a drug that can cost as much as $100 per dose, where HCQ can be produced in massive quantities for about a dime per dose.
Peak Prosperity's Chris Martenson, who has been doing incredible daily reporting on the crisis, has details in his latest video:
While the US continues to lurch toward some degree of normalcy at the end of a six-week near-nationwide lockdown, many questions linger, not the least of which being how badly the American public has been hoodwinked by the wealthy elite and their cohorts in government. From all appearances, it seems the public has been royally screwed this time around.
The economy is in tatters, more than 30 million lost their jobs, but what is likely going to be worse, are the millions of small businesses which have been severely hampered or outright destroyed by government overreach. Many of these businesses will not come back in the summer, or the fall. They are gone forever, and with them, their owners facing financial ruin. It will take years to undo the damage wrought by the government response to a virus that essentially affects people over 50 or those with pre-existing serious medical issues.
Friday, May 1, will offer some pushback agains the federal tyranny. There's a nationwide rent strike being waged in big cities and small, along with a May Day work stoppage promoted by employees of some of the multi-national companies that were not forced to shut down for the past six weeks, including Wal-Mart, Amazon, Target, and others. Protests will be very visible, as will the outrage expressed in Michigan, where governor Gretchen Whitmer is extending the lockdown until May 28.
Protesters there have already been storming the Capitol, and some were actually armed inside the Capitol building on Thursday, though that received scant notice on the evening TV news. This explosive situation merits closer attention, as what happens in Lansing, Michigan's capitol, may serve as a template for popular uprisings in places like Virginia, California, New York, Massachusetts, and any other state that believes they can keep the general population under lock and key indefinitely.
With warmer weather and a weekend ahead, some payback may be forthcoming from an angry, frustrated American public.
In other markets, gold and silver were beaten down as they usually are at the end of the month, though the dislocation between spot, futures, and actual prices for acquiring physical metal has completely blown up. Silver especially is out of whack, with premiums over the futures price of anywhere from 30 to 100% now commonplace. Gold premiums are still in the 10-15% range, though dealers have been and continue to impose minimums with lengthy shipping delays.
Oil markets continue to fluctuate wildly as the supply glut and demand collapse refuse to abate. Beyond giants Russia and Saudi Arabia, countries which produce oil as a primary revenue source are going to be devastated, while in the US, rig counts are plummeting as shale drilling operations are being shut down. They're unable to make money at the current prices and investors are being wiped out along with the lenders who financed operations. WTI crude, as of Friday morning is hovering just under $19 a barrel, though it's been as low as $10.64 earlier this week. The June futures contract is beginning to look like another disaster - as was the May contract - in the making.
Treasuries have been relatively unmoved during the week, though the 30-year bond has increased yield from 1.17% last Friday to 1.28% Thursday. The curve has steepened slightly, though not in any statistically meaningful way. 118 basis points covers the entire complex.
Equity futures are pointing to a very ugly open Friday, with Dow futures down more than 450 points.
Could this be the "sell in May and go away" signal? Possible, but the real fallout may not occur until late July or August when earnings and the first reading of second quarter GDP will shock the markets, not just in the United States, but globally. The Greater Depression is ramping up.
At the Close, Thursday, April 30, 2020:
Dow: 24,345.72, -288.14 (-1.17%)
NASDAQ: 8,889.55, -25.16 (-0.28%)
S&P 500: 2,912.43, -27.08 (-0.92%)
NYSE: 11,372.34, -245.89 (-2.12%)
Thursday, April 30, 2020
More Stock Fakery As Indices Jump On Remdesivir Hope, Fading -4.8% GDP; Dividend Cuts Continue
Stock market fakery took on a whole new dimension Wednesday, as news of a potential treatment breakthrough for coronavirus (Gilead' Science's remdesivir) was released just before an incorrect reading on first quarter GDP - of 4.8% growth rather than the actual -4.8% contraction - was released.
Together, the two news breaks fueled a jump in stock futures an hour prior to the opening bell. The
The remdesivir announcement came from the familiar face of Dr. Anthony Fauci, who now says he let the news out somewhat early because he was concerned about the possibility of the news leaking out from elsewhere.
Rubbish. Fauci is deeply entrenched within the government COVID-19 team. His very own "leak" was timed to front-run the damaging news of contraction in first quarter GDP. He, along with tag-team partner, Dr. Deborah Birks, and Treasury Secretary Steven Mnuchin, are all in on the big con, keeping the pandemic narrative alive and well, avoiding any kind of actual progress that could be made, obfuscating useful information, offering bad advice, and generally keeping the public as much in the dark as possible with a huge assist from mainstream media, which now reports almost exclusively on coronavirus-related stories all the time, every-day, ad nauseum.
There's little doubt that the orchestrated, concerted effort to extend lockdowns, provide conflicting and misleading information, scare people into irrationality, and keep the United States in a crippled condition is a White House operation. President Trump and Vice President Pence have to know what's what, and they are either complicit or playing a long game that should result - if they're just playing along for now - in revelations (and hopefully, charges) this summer of corruption at the CDC and elsewhere in the government.
While there's little clear-cut evidence to suggest that the president isn't in on the entire scam, he remains somewhat solid amongst his base of supporters, but there are troubling signs that he's not been completely honest throughout the crisis. In case the crisis persists through the summer, Trump is going to have a difficult time winning re-election, even though his opponent, Joe Biden, is a very weak choice for the Democrats.
Getting back to the timing of the Wednesday morning announcements, the GDP release was almost immediately corrected, from a positive 4.8% to negative 4.8%, though there's no mention of the fake +4.8% announcement which was banged out first in order to trick the algorithms, and it worked, but overall, the remdesivir story overshadowed the dire GDP numbers and the FOMC policy announcement and press conference later in the day. The effective result was good for more than a two-percent gain in the Dow, S&P and NYSE Composite and a 3.57% rise on the NAASDAQ.
As far as remdesivir being a panacea for controlling, containing, and/or defeating coronavirus, the indefatigable (and reliably honest) Chris Martenson explains:
Thus, in a nutshell, fake news triumphs over reality, and stocks soar as the US economy is now firmly into a recession, along with many other countries, including Spain, France, South Korea, Indonesia. One might be persuaded into admitting that the Global Depression has begun in earnest and that somehow encourages investors to buy more stocks.
As the stock market gains are a matter of record, the sad reality is that share prices didn't go up on buys by the likes of Goldman Sachs or JP Morgan or any of the big banks' trading units. The purchases on Wednesday will most assuredly be credited into the accounts of weakened pension funds, which will take more severe losses in the next round of selling.
The game is rigged completely against the public.
On the dividend front, from where this blog hastily retreated Wednesday morning, the overnight news that Royal Dutch Shell slashed its dividend for the first time since World War II, supplies more evidence of the depth of this downturn.
Alongside the British companies, stand the 81 (as of Monday morning... there are more now) US companies which either reduced their dividend or eliminating it altogether.
Taking a quick look at the Dow components, we see that Boeing (BA) has already suspended its dividend earlier this year, which was a whopping $8.22 a share. The stock has fluctuated wildly since, but has collapsed from a 52-week high of 391.00, to close yesterday at 139.00. When a stock loses 64% of its share price, eliminates its dividend, lays off workers, and faces numerous lawsuits, that stock should be trading in single digits. It's almost worthless or could actually be tallied in the liability column. The outlook for Boeing is grim, though Wall Street investors have seen fit to boost it recently from 89 to its current price, which is likely to be hammered in the next downturn. Boeing is not a buy or even a hold. The time to sell this dog was months ago.
A few other candidates for dividend cuts or suspension include the obvious, ExxonMobil (XOM), which has missed three of its last four earnings estimates and reports for the first quarter on May 1 (Friday). The current dividend is $3.48, offering a yield of 7.33%. With the price of oil having cratered over the past two months, this company is likely to miss its earning targets again and the likelihood of cutting the dividend is very high.
On Wednesday, Chevron (CVX) announced a dividend of $1.29 a share to investors of record through May 19, payable June 20. whether this will be the last of the 5.45% yielding dividend remains to be seen. While it may be enticing to hold CVX through its first quarter earnings report (May 1) until the ex-dividend date, a drop in the price of the stock of less than 1.5% (about 1 1/2 points) would render that gamble a moot point. And, if the company announces a dividend cut and the stock goes down more, it turns into a major loss.
Among the companies on the Dow that have already reported first quarter earnings is Johnson & Johnson (JNJ). The company raised its quarterly dividend to $1.01 per share from 95 cents per share, as it announced earnings on Monday. Comparatively, this company looks rock-solid.
Merck (MRK) and Pfizer (PFE) each reported earnings on Tuesday of this week. Merck beat big, posting 1.50 per share against estimates of 1.34, keeping its annual dividend of 2.44 intact (3.02% yield), but cutting guidance.
Pfizer (PFE) also beat, retaining its annual dividend of 1.52 (3.99% yield). The company may be one to produce or share in the creation of some COVID-19 treatments or vaccines, though those potentialities go with an undue level of risk.
Intel (INTC) recently reported first quarter earnings at 1.45 per share over estimates for 1.28. The tech firm sports a dividend of 1.32 (2.25% yield) and is probably a safe bet to keep paying that out. However, here's where the math becomes important. If Intel tanks again - it fell to 42.86 in March from a high of 69.29, the paltry sum garnered from the dividend will be little consolation with the stock down 30 percent or more.
One of the worst plays of dividend-bearing Dow stocks going forward could be Apple (AAPL). The darling of Wall Street and the Swiss National Bank (a major shareholder), Apple's 3.08 annual dividend yields just 1.07%. with the stock trading with a multiple of 20-24 recently, even a minor downturn wipes out any gain from the dividend. Apple is unlikely to cut the dividend, as it is flush with cash. This one could go either way.
That's a snapshot look at a number of Dow stocks. We'll be examining more of them on Friday morning and over the weekend in the WEEKEND WRAP.
Just in, the U.S. Labor Department released its weekly jobless claims figures Thursday morning, and another 3.839 million Americans filed for unemployment benefits during the week ending April 25. That boosts the number of jobless in America to 30 million, unofficially putting the unemployment rate at 20%, the highest since the Great Depression.
This time, it appears that Wall Street won't be celebrating. Futures have been eroding all morning, with Dow futures off nearly one percent with the opening bell less than an hour away.
At the Close, Wednesday, April 29, 2020:
Dow: 24,633.86, +532.31 (+2.21%)
NASDAQ: 8,914.71, +306.98 (+3.57%)
S&P 500: 2,939.51, +76.12 (+2.66%)
NYSE: 11,618.23, +298.54 (+2.64%)
Together, the two news breaks fueled a jump in stock futures an hour prior to the opening bell. The
The remdesivir announcement came from the familiar face of Dr. Anthony Fauci, who now says he let the news out somewhat early because he was concerned about the possibility of the news leaking out from elsewhere.
Rubbish. Fauci is deeply entrenched within the government COVID-19 team. His very own "leak" was timed to front-run the damaging news of contraction in first quarter GDP. He, along with tag-team partner, Dr. Deborah Birks, and Treasury Secretary Steven Mnuchin, are all in on the big con, keeping the pandemic narrative alive and well, avoiding any kind of actual progress that could be made, obfuscating useful information, offering bad advice, and generally keeping the public as much in the dark as possible with a huge assist from mainstream media, which now reports almost exclusively on coronavirus-related stories all the time, every-day, ad nauseum.
There's little doubt that the orchestrated, concerted effort to extend lockdowns, provide conflicting and misleading information, scare people into irrationality, and keep the United States in a crippled condition is a White House operation. President Trump and Vice President Pence have to know what's what, and they are either complicit or playing a long game that should result - if they're just playing along for now - in revelations (and hopefully, charges) this summer of corruption at the CDC and elsewhere in the government.
While there's little clear-cut evidence to suggest that the president isn't in on the entire scam, he remains somewhat solid amongst his base of supporters, but there are troubling signs that he's not been completely honest throughout the crisis. In case the crisis persists through the summer, Trump is going to have a difficult time winning re-election, even though his opponent, Joe Biden, is a very weak choice for the Democrats.
Getting back to the timing of the Wednesday morning announcements, the GDP release was almost immediately corrected, from a positive 4.8% to negative 4.8%, though there's no mention of the fake +4.8% announcement which was banged out first in order to trick the algorithms, and it worked, but overall, the remdesivir story overshadowed the dire GDP numbers and the FOMC policy announcement and press conference later in the day. The effective result was good for more than a two-percent gain in the Dow, S&P and NYSE Composite and a 3.57% rise on the NAASDAQ.
As far as remdesivir being a panacea for controlling, containing, and/or defeating coronavirus, the indefatigable (and reliably honest) Chris Martenson explains:
Thus, in a nutshell, fake news triumphs over reality, and stocks soar as the US economy is now firmly into a recession, along with many other countries, including Spain, France, South Korea, Indonesia. One might be persuaded into admitting that the Global Depression has begun in earnest and that somehow encourages investors to buy more stocks.
As the stock market gains are a matter of record, the sad reality is that share prices didn't go up on buys by the likes of Goldman Sachs or JP Morgan or any of the big banks' trading units. The purchases on Wednesday will most assuredly be credited into the accounts of weakened pension funds, which will take more severe losses in the next round of selling.
The game is rigged completely against the public.
On the dividend front, from where this blog hastily retreated Wednesday morning, the overnight news that Royal Dutch Shell slashed its dividend for the first time since World War II, supplies more evidence of the depth of this downturn.
"Investors risk putting money into the markets in order to stand a chance of achieving a better return than cash in the bank. While rates on cash savings accounts have been drifting down for a while, investment dividends were widely considered to be much more reliable.
"Sadly that is no longer the case, given how more than 300 companies on the UK stock market have this year said they won't be paying dividends for the time being or paying a much lower level than before. This figure includes 41 companies in the FTSE 100."
-- Ross Mould, investment director at AJ Bell
Alongside the British companies, stand the 81 (as of Monday morning... there are more now) US companies which either reduced their dividend or eliminating it altogether.
Taking a quick look at the Dow components, we see that Boeing (BA) has already suspended its dividend earlier this year, which was a whopping $8.22 a share. The stock has fluctuated wildly since, but has collapsed from a 52-week high of 391.00, to close yesterday at 139.00. When a stock loses 64% of its share price, eliminates its dividend, lays off workers, and faces numerous lawsuits, that stock should be trading in single digits. It's almost worthless or could actually be tallied in the liability column. The outlook for Boeing is grim, though Wall Street investors have seen fit to boost it recently from 89 to its current price, which is likely to be hammered in the next downturn. Boeing is not a buy or even a hold. The time to sell this dog was months ago.
A few other candidates for dividend cuts or suspension include the obvious, ExxonMobil (XOM), which has missed three of its last four earnings estimates and reports for the first quarter on May 1 (Friday). The current dividend is $3.48, offering a yield of 7.33%. With the price of oil having cratered over the past two months, this company is likely to miss its earning targets again and the likelihood of cutting the dividend is very high.
On Wednesday, Chevron (CVX) announced a dividend of $1.29 a share to investors of record through May 19, payable June 20. whether this will be the last of the 5.45% yielding dividend remains to be seen. While it may be enticing to hold CVX through its first quarter earnings report (May 1) until the ex-dividend date, a drop in the price of the stock of less than 1.5% (about 1 1/2 points) would render that gamble a moot point. And, if the company announces a dividend cut and the stock goes down more, it turns into a major loss.
Among the companies on the Dow that have already reported first quarter earnings is Johnson & Johnson (JNJ). The company raised its quarterly dividend to $1.01 per share from 95 cents per share, as it announced earnings on Monday. Comparatively, this company looks rock-solid.
Merck (MRK) and Pfizer (PFE) each reported earnings on Tuesday of this week. Merck beat big, posting 1.50 per share against estimates of 1.34, keeping its annual dividend of 2.44 intact (3.02% yield), but cutting guidance.
Pfizer (PFE) also beat, retaining its annual dividend of 1.52 (3.99% yield). The company may be one to produce or share in the creation of some COVID-19 treatments or vaccines, though those potentialities go with an undue level of risk.
Intel (INTC) recently reported first quarter earnings at 1.45 per share over estimates for 1.28. The tech firm sports a dividend of 1.32 (2.25% yield) and is probably a safe bet to keep paying that out. However, here's where the math becomes important. If Intel tanks again - it fell to 42.86 in March from a high of 69.29, the paltry sum garnered from the dividend will be little consolation with the stock down 30 percent or more.
One of the worst plays of dividend-bearing Dow stocks going forward could be Apple (AAPL). The darling of Wall Street and the Swiss National Bank (a major shareholder), Apple's 3.08 annual dividend yields just 1.07%. with the stock trading with a multiple of 20-24 recently, even a minor downturn wipes out any gain from the dividend. Apple is unlikely to cut the dividend, as it is flush with cash. This one could go either way.
That's a snapshot look at a number of Dow stocks. We'll be examining more of them on Friday morning and over the weekend in the WEEKEND WRAP.
Just in, the U.S. Labor Department released its weekly jobless claims figures Thursday morning, and another 3.839 million Americans filed for unemployment benefits during the week ending April 25. That boosts the number of jobless in America to 30 million, unofficially putting the unemployment rate at 20%, the highest since the Great Depression.
This time, it appears that Wall Street won't be celebrating. Futures have been eroding all morning, with Dow futures off nearly one percent with the opening bell less than an hour away.
At the Close, Wednesday, April 29, 2020:
Dow: 24,633.86, +532.31 (+2.21%)
NASDAQ: 8,914.71, +306.98 (+3.57%)
S&P 500: 2,939.51, +76.12 (+2.66%)
NYSE: 11,618.23, +298.54 (+2.64%)
Wednesday, April 29, 2020
Recession Arrives as First Quarter GDP Contracts By 4.8%; Companies Cutting Dividends at Record Pace
Dispensing with the usual diatribe over coronavirus and the botched government response, today's edition of Money Daily will focus on stocks that pay out quarterly dividends, the mother's milk of investing, as Larry Kudlow might phrase it.
But first, US first quarter 2020 GDP was just announced at 8:30 am ET, and the result was as Money Daily predicted, a decline of 4.8%. A few weeks back, various analysts from the likes of Bank of America Merrill Lynch and Goldman Sachs were making projections for second quarter GDP losses, somewhat overlooking what we considered obvious: a negative number for 1Q GDP. While the corporate analysts were busy downplaying the effect of a nationwide lockdown on business activity, they were missing an existential point.
Assuming that the second quarter was going to be in the red, a decline in first quarter GDP would satisfy the textbook requirement for a recession, which is two consecutive quarters of declining GDP growth. The definition is something of a non sequiter because nothing in nature actually grows at a negative rate. A truer definition might be worded as "two consecutive quarters of contraction," and that's now in play meaning one might as well assume that there's already a recession, and it started roughly the second week of February, when the world started to become focused on coronavirus and how to halt its spread.
Thus, we have the first quarter contraction of 4.8%, which will be revised twice, in late May and again in late June, though the number is so far into the red that there's no practical probability of it being revised into the positive. Second quarter GDP will be an outright train wreck. Figure on something on the order of -40% just for openers. That kind of number will have even the most ardent equity investor seeking safe harbor and scurrying away from stocks. Even today's figure should give everyone pause, and, in normal times, stocks would be falling into the ocean, but, thanks to the generosity of the Federal Reserve, the major indices will likely post more gains.
Underscoring the absurdity of the Fed's fool's errand - one in which they will bankrupt themselves - stock futures all soared higher on this morning's GDP announcement. How's that for in-your-face obstinance and stupidity?
Along with higher stock prices (unbelievable), the political ramifications are stupendous. This places the economy and a recession as front-and-center issues for the election season. Second quarter results will be in place come late July, and they will be undeniably ugly, since April was a complete washout and May isn't going to look much better. There are still vast swaths of the economy that are not operating at even 50% of optimal productivity and others that are not operating at all. Small businesses were shut down across the country for roughly six weeks to the tune of hundreds of billions of dollars in lost revenue and GDP, to say nothing of the lack of velocity in the economy. From late March through all of April and into May, velocity was basically stalled out.
What this means in terms of elections is the very real possibility of a President Biden and a takeover by the Democrats of the Senate, which would give the socialist movement firm footing in the three important branches of the federal government, the presidency, the House, and the Senate, which spells doomsday for America because socialist ideology will only exacerbate the already horrid condition of money-printing and profligate spending. It's doubtful that any of this has been factored into the Wall Street calculations. Current prices on the major indices and in "recovering" individual stocks reflect that, glowingly.
With the opening bell just minutes away, Money Daily will wrap here for Wednesday morning, cutting a little short the look at dividend stocks.
Wolf Richter of WolfStreet.com penned a noteworthy post on Tuesday, titled, Dividend Massacre in This Crisis is Already Breaking Records, But it Just Started, within which he details the number of companies which have already slashed or canceled their dividend payouts and how 2020 compares to other recent years in which dividends were targeted, 2001, 2008, and 2009.
What investors often lose sight of in times of financial turmoil is how mathematics deceives and often leads to false conclusions when considering buying a particular stock.
Picking up this theme on Thursday, along with the latest unemployment figures, the 30 stocks that comprise the Dow Jones Industrial Average - all of which pay dividends - will be examined, with considered opinion on whether or not these companies will maintain, increase, reduce or cancel their normal dividend payouts.
For today, the recession has arrived, though many in the know already think we're at the beginning of what is being hailed as "The Greater Depression."
At the Close, Tuesday, April 28, 2020:
Dow: 24,101.55, -32.23 (-0.13%)
NASDAQ: 8,607.73, -122.43 (-1.40%)
S&P 500: 2,863.39, -15.09 (-0.52%)
NYSE: 11,319.70, +54.86 (+0.49%)
But first, US first quarter 2020 GDP was just announced at 8:30 am ET, and the result was as Money Daily predicted, a decline of 4.8%. A few weeks back, various analysts from the likes of Bank of America Merrill Lynch and Goldman Sachs were making projections for second quarter GDP losses, somewhat overlooking what we considered obvious: a negative number for 1Q GDP. While the corporate analysts were busy downplaying the effect of a nationwide lockdown on business activity, they were missing an existential point.
Assuming that the second quarter was going to be in the red, a decline in first quarter GDP would satisfy the textbook requirement for a recession, which is two consecutive quarters of declining GDP growth. The definition is something of a non sequiter because nothing in nature actually grows at a negative rate. A truer definition might be worded as "two consecutive quarters of contraction," and that's now in play meaning one might as well assume that there's already a recession, and it started roughly the second week of February, when the world started to become focused on coronavirus and how to halt its spread.
Thus, we have the first quarter contraction of 4.8%, which will be revised twice, in late May and again in late June, though the number is so far into the red that there's no practical probability of it being revised into the positive. Second quarter GDP will be an outright train wreck. Figure on something on the order of -40% just for openers. That kind of number will have even the most ardent equity investor seeking safe harbor and scurrying away from stocks. Even today's figure should give everyone pause, and, in normal times, stocks would be falling into the ocean, but, thanks to the generosity of the Federal Reserve, the major indices will likely post more gains.
Underscoring the absurdity of the Fed's fool's errand - one in which they will bankrupt themselves - stock futures all soared higher on this morning's GDP announcement. How's that for in-your-face obstinance and stupidity?
Along with higher stock prices (unbelievable), the political ramifications are stupendous. This places the economy and a recession as front-and-center issues for the election season. Second quarter results will be in place come late July, and they will be undeniably ugly, since April was a complete washout and May isn't going to look much better. There are still vast swaths of the economy that are not operating at even 50% of optimal productivity and others that are not operating at all. Small businesses were shut down across the country for roughly six weeks to the tune of hundreds of billions of dollars in lost revenue and GDP, to say nothing of the lack of velocity in the economy. From late March through all of April and into May, velocity was basically stalled out.
What this means in terms of elections is the very real possibility of a President Biden and a takeover by the Democrats of the Senate, which would give the socialist movement firm footing in the three important branches of the federal government, the presidency, the House, and the Senate, which spells doomsday for America because socialist ideology will only exacerbate the already horrid condition of money-printing and profligate spending. It's doubtful that any of this has been factored into the Wall Street calculations. Current prices on the major indices and in "recovering" individual stocks reflect that, glowingly.
With the opening bell just minutes away, Money Daily will wrap here for Wednesday morning, cutting a little short the look at dividend stocks.
Wolf Richter of WolfStreet.com penned a noteworthy post on Tuesday, titled, Dividend Massacre in This Crisis is Already Breaking Records, But it Just Started, within which he details the number of companies which have already slashed or canceled their dividend payouts and how 2020 compares to other recent years in which dividends were targeted, 2001, 2008, and 2009.
What investors often lose sight of in times of financial turmoil is how mathematics deceives and often leads to false conclusions when considering buying a particular stock.
Picking up this theme on Thursday, along with the latest unemployment figures, the 30 stocks that comprise the Dow Jones Industrial Average - all of which pay dividends - will be examined, with considered opinion on whether or not these companies will maintain, increase, reduce or cancel their normal dividend payouts.
For today, the recession has arrived, though many in the know already think we're at the beginning of what is being hailed as "The Greater Depression."
At the Close, Tuesday, April 28, 2020:
Dow: 24,101.55, -32.23 (-0.13%)
NASDAQ: 8,607.73, -122.43 (-1.40%)
S&P 500: 2,863.39, -15.09 (-0.52%)
NYSE: 11,319.70, +54.86 (+0.49%)
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