Last week's furious rally failed to extend over into Monday's trading as news flow trended negatively.
Given the number of new cases and deaths worldwide from COVID-19, the pain and suffering of millions around the world out of work and isolated in their homes, it's surprising that Wall Street can even muster enough capital for any kind of rally.
Conditions have not changed from the onset of COVID-19's spread, only the Federal Reserve's commitment to suspend reality and boost stocks through various band-aids and stop gap measures has. The only reason stocks managed to gain any ground last week was due to trillions of dollars pumped into the hands of primary dealers via repos, debt purchases, foreign debt purchases, and promises from various Fed presidents to keep the currency spigots wide open.
The lunacy of these efforts is astounding. Desperate to save face and completely devoid of any tools to bring the economy back to their stated mandates of full employment and no inflation, the Fed has expanded its own balance sheet to the point at which it needed funding from the US treasury, a backhanded bailout of the central bank, using some $400-500 billion from Treasury's Exchange Stabilization Fund.
Oil prices barely budged after the hurried agreement by OPEC+ and other countries will slash production by as much as 10 million barrels a day, roughly 10 percent of global supply. WTI crude closed Monday at $22.41. Efforts to raise the price of oil worldwide were seen as mostly a publicity stunt, as the problem is more a lack of demand than of oversupply. Producers would be best served to stop pumping as storage facilities are near capacity already and the lockdowns in major countries remain weeks away.
Treasury yields rose on the long end, with the 30-year bond at 1.39% and the 10-year note rising three basis points to 0.76%. The curve steepened slightly to 122 basis points.
JP Morgan Chase (JPM) announced first quarter earnings prior to the opening bell Tuesday that were the lowest since 2013, warned of a fairly severe recession ahead and set aside $8.29 billion for bad loans, the biggest provision in at least a decade and more than double what some analysts expected.
The bank reported EPS of 78 cents on revenue of $29.07 billion. Net interest income was flat at $14.5 billion.
Wells Fargo (WFC) reported EPS of 1 cent per share on revenue of $17.7 billion as a $3.1 billion reserve build accounted for 56 cents per share and a $950 million impairment of securities accounted for 17 cents a share. Net interest income fell 8% to $11.3 billion. This bank is essentially insolvent, as is the Federal Reserve, the ECB, BOJ, PBOC and hundreds of other money center banks.
Other money center banks also report this week. Wednesday Bank of America, Goldman Sachs, and Citigroup release their reports. Morgan Stanley’s announcement is scheduled for Thursday.
(Reuters) - Johnson & Johnson on Tuesday beat analysts' estimates for first-quarter profit on higher sales of its cancer drugs and consumer products including Tylenol, while slashing its full-year forecast due to the coronavirus shutdowns.
Shares of the company, which raised its dividend by 6.3% to $1.01 per share, rose 3% to $144 in trading before the bell.
The company now expects 2020 adjusted earnings per share of $7.50 to $7.90, compared with its prior estimate of $8.95 to $9.10.
Gold and silver posted modest gains on the day. In case anyone was skeptical over Money Daily's call for $100 silver and a 16:1 gold:silver ratio in Sunday's Weekend Wrap (below), perhaps a gander at Mike Maloney's call for $700 silver a few years ago at goldsilver.com, may be in order:
At the Close, Monday, April 13, 2020:
Dow Jones Industrial Average: 23,390.77, -328.60 (-1.39%)
NASDAQ: 8,192.42, +38.85 (+0.48%)
S&P 500: 2,761.63, -28.19 (-1.01%)
NYSE: 10,949.53, -187.08 (-1.68%)
Stocks staged a dramatic rally, posting the best weekly gains since 1938, as the Federal Reserve launched another volley into the market, this time a $2.3 trillion directive aimed at buying municipal bonds as well as expanding a credit backstop for new debt issued by highly rated firms to include so-called “fallen angels” - companies that were investment grade in mid-March but have subsequently been downgraded from BBB to -BB.
In other words, the Fed is helping out companies which made bad credit decisions. Average Americans should be so lucky. No word was forthcoming from banks and credit card companies on a repayment moratorium for unemployed workers or stressed-out businesses. Some are offering some forms of forbearance, but debtors have to contact the issuer and ask for help. Like the so-called PPP (Payment Protection Program) that is offering loans to small businesses, the major banks - the same ones who were bailed out in 2008-09 - are not going out of their way to help people.
All 50 states are now under declared emergencies for the first time in US history and the national guard has been called out to at least 19 states to aid in coronavirus mitigation and control efforts.
OPEC+ countries agreed on Sunday for cumulative production cuts of 9.7 million barrel a day after Mexico agreed to a compromise. Though it's a record slowdown, crimping supply is unlikely to have any lasting effect on the demand crunch caused by so many countries now on varying degrees of lockdown.
Brent crude was around $32 a barrel as of Friday while the U.S. benchmark West Texas crude closed under $23.
Treasury yields improved over the course of the week with all maturities gaining. The 30-year finished at 1.35% after closing out the prior week at 1.24%. The biggest gains were in the shortest maturities, with 2-month bills topping all, gaining 16 basis points, from 0.11 to 0.27%. The 10-year note improved from 0.62 to 0.73%. Overall curve structure remained flat, a mere 115 basis points end-to-end.
Gold tested seven-year highs, closing at $1685.60 in New York Thursday. Silver also gained, ending at 15.40 per ounce, but that hardly tells the story for the physical market for both precious metals. Premiums are extreme and delivery times are out 30-45 days with many dealers imposing minimums. See the special section below on the case for $100 silver.
Happy Easter!
At the Close, Thursday, April 9, 2020:
Dow Jones Industrial Average: 23,719.37, +285.77 (+1.22%)
NASDAQ: 8,153.58, +62.68 (+0.77%)
S&P 500: 2,789.82, +39.84 (+1.45%)
NYSE: 11,136.61, +234.01 (+2.15%)
For the Week:
Dow: +2666.84 (+12.67%)
NASDAQ: +780.49 (+10.59)
S&P 500: +301.17 (+12.10%)
NYSE: +1255.98 (+12.71%)
The Case for $100 Silver
Silver, which has been mercilessly suppressed by central banks since 1873 (see: "The Crime of '73" here, here, here, and the chart at right) when they essentially bankrupted most of rural America, a new valuation system must be considered because the current one only benefits bankers who hate competition.
This proposal is to tie silver to gold at the long-established 16:1 ratio. It's only fair, after decades of manipulation to where the ratio is an absurd 100:1 or higher presently. It's often been said that gold is the money of kings, silver the money of gentlemen. As an enlightened - albeit suppressed group - gentlemen investors in silver should take the initiative and buy up every available ounce from dealers at today's prevailing prices, while agreeing on the new standard, throwing the silver investment world into absolute chaos.
The only place that has reliable prices for silver currently is eBay, where the majority of sellers (and buyers) are regular people, small businesses, or separate entities of the dealers themselves (this was explained to me by people at Scottsdale Mint). The most recent sale prices on eBay are presented below:
Type
Low
High
Avg.
Median
Per Oz
1 oz coin
21.50
33.95
26.77
26.95
26.77
1 oz bar
24.99
35.83
29.01
29.38
29.01
10 oz coin
217.50
325.00
252.21
247.49
25.22
10 oz bar
198.00
342.00
232.13
216.50
23.21
100 oz bar
1929.00
2150.00
2005.22
1981.47
20.05
Average per ounce all types: 24.85
Obviously, these are much higher than what the dealers are offering, but the tradeoff is guaranteed fast delivery (1-3 days standard), versus dealers taking advance orders, imposing minimums, and openly stating that silver deliveries are 30-45 days from date of cleared purchase.
Those quote prices are from actual sales, and available to the general public, which is as it should be. If players in the market want to continue to quote the theft prices in the futures market, let them play with their paper. Nobody stands for delivery at the COMEX except JP Morgan (per Ted Butler), which has control of the market with their huge short book and horde of physical.
There is a bit of a problem making JP Morgan filthy rich via the pegging scheme, but those are the breaks.
When the dealers eventually come on board silver will once again stand aside gold as the preferred money of the common man. Everybody will want to own some and it will still be reasonably priced at... here it comes...
based on today's gold price of $1685.60 (and when that breaks loose, expect $4000 gold)...
$105.35 the ounce.
Reprice all your silver at a 16:1 ratio with gold. Do it now.
Why allow central banks and market scammers (cough...JP Morgan... cough) the privilege of setting prices when it's obvious they aren't very good at it, long-term or that they set prices to benefit themselves and allies in the price-rigging scheme?
If all holders of silver reprice at a 16:1 ratio to gold and refuse to sell unless at that price or very close to it, who would complain and how loudly?
The COMEX, naturally, and all the participants in the futures and spot frauds. Let them complain. We counter that they are only trading paper. Nobody stands for delivery.
Individual holders of sliver are just that, INDIVIDUALS. Many of them have plenty of gold as well. If silver is repriced at 16:1 gold, that will set off a firestorm.
As for the dealers and their 30-45 day delivery times, well, I threatened a well-known online dealer, with whom I have a long-standing relationship, with legal action concerning my purchase of 10-ounce bars on March 16. Funny thing, the day after I got a response to my email, which made no mention of my proposed legal action, my order shipped. The dealers are arbitrageurs in the grand scheme. Not much better than the banks or the paper exchanges.
If a few of them latch onto the idea that they can price their silver at (currently) $105.35 an ounce, that will shake up the PM universe. $105.35 is a lot better than $15 and change.
The current gold:silver ratio is a farce. The people who think gold is manipulated fail to see the bigger picture. Silver is affordable to massive amounts of people and could serve as an alternate currency and real money.
Let's go for it. Don't sell any silver unless somebody will pay you its real worth. In the meantime, keep buying at bargain basement prices all the way up. It will eventually happen if enough people stick with it.
You're welcome.
Rick Gagliano
dtmagazine.com
Video highlights:
Here is GATA Chairman Bill Murphy, interviewed by Robert Kientz for GoldSilverPros.com. Murphy asserts that the banks suppressing gold and silver prices have run out of metal and the futures market has broken as its increasing attempts at deception fail. 16 minutes of excellent back-and-forth:
In the same vein, here's James Rickards giving a speech in Vancouver, 2018, titled Is the Future of Money Gold, Crypto or Fiat? Fascinating stuff from one of the world's leading experts.
Finally, this must see video from the Epoch Times, the first documentary movie on the origin of CCP virus, Tracking Down the Origin of the Wuhan Coronavirus. Please take note that Downtown Magazine nor Money Daily has never endorsed any video or any article as "must see" or "must read." This is the exception.
At 8:30 am ET Thursday morning, April 9, 2020, the Labor Department announced that 6.6 million people applied for unemployment benefits last week. That's in addition to the nearly 10 million who applied for benefits the prior two weeks.
Have you received your $1200 check from the government yet?
Didn't think so. You are aware that Wall Street had access to $2 trillion weeks ago, right?
That's the number TWO (2) with twelve zeroes behind it. Like this: $2,000,000,000,000.
Bear in mind, the corporate money is coming to corporations via the Federal Reserve, which is not part of the federal government. It is and always has been a private bank, so there's really nothing "federal" about it. As far as the "reserve" portion of their name, they have no money in reserve. They have a balance sheet of nearly $6 trillion, all in various bonds or notes or obligations, otherwise known as debt. Much of it is not worth the paper its printed on or the electrons holding it in cyberspace.
There's no "reserves" at the Federal Reserve. They whip up currency out of thin air. A few keystrokes on their computer and viola! currency at their pleasure. The currency is represented by Federal Reserve Notes, or those pieces of paper some people carry around with pictures of dead presidents on them. Those are the ones, fives, 10s, 20s, 50s and 100-dollar bills floating around in the economy. There is only $1.75 trillion in actual printed currency according to the Federal Reserve. That's a little less than $6000 for every man, woman, and child in America.
The rest of the currency is in electronic form. The currency in your bank account is not really there. Try going to a bank branch and asking for $40,000 in cash, even if you have $100,000 in your account. First, you'd have to fill out IRS form 8300, because any transaction of $10,000 or more, the federal government wants to know about it. They think you might be a drug dealer, human trafficker, money launderer, or maybe a terrorist. It's all part of the Bank Secrecy Act, officially known as the Currency and Foreign Transactions Reporting Act. Then, after you've filled out the form, the bank's branch manager will likely tell you that they don't have that much money on hand. After that, you might have to come back on a later date to get some of it, make multiple trips, and go through a lot of hassle to get your hands on your currency.
This seems an appropriate place to explain the difference between money and currency. Here's Mike Maloney (an expert on the subject) to explain in less than three minutes:
The great financier, J.P. Morgan, put it in even simpler terms: Gold is money. Everything else is credit.
With that out of the way, have you received your $1200 yet?
No. Of course not. But Wall Street has already gotten theirs, and probably already spent it too. The stock market has been mostly up lately, the Dow Jones Industrial Average having risen from a close of 18,591.93 on March 23 to close at 23,433.57 Wednesday.
In other words, continue to wait. The government will be here to help in moments, er, days, er, weeks, maybe.
While Wall Street is open for business as usual, millions of Americans - roughly three quarters of the country - is under some form of stay-at-home or lockdown restriction. Ordinary people can't go to work, send their kids to school (they're closed), or venture beyond the boundaries of their own homes without some express, immediate need, like getting groceries, or picking up a prescription drug.
It's a shame. It's also likely unconstitutional. Americans are supposed to have the right to freely assemble. It's in the Bill of Rights, the First Amendment:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
So, not only does the federal government not want you to have any money, they also don't want you going anywhere or associating with other citizens. Because of COVID-19, the government has "suggested" people congregate at distances of six feet apart. Many states have outlawed meetings or congregations of 10 or more people, some, five or more. They don't want you to get together with your fellow citizens, either.
As you wait for your money from the government, ask yourself if $1200 is worth having your first amendment rights taken away. As with anything else that sounds too good to be true, like free money from the government, there are strings attached.
And, while you're pondering that, how about those small business loans that are supposed to help businesses that have been forced to close so that the coronavirus doesn't spread. Those non-essential businesses are getting the run-around from the very same banks (JP Morgan Chase, Citi, Bank of America, Wells Fargo) that were bailed out in 2009, continued to get favors from the Federal Reserve and the federal government since then, and have been getting oodles of cash over the past six months, even before the COVID-19 crisis.
Those loans are full of boondoggles and conditions that limit how much a business qualifies for and what they have to do in order to receive a loan and more conditions for loan forgiveness. It's likely that most small businesses would be better off not taking the loans, toughing it out, filing for reorganization under bankruptcy laws and moving forward without inept government assistance.
The American public is being conned and abused by the very people they voted into office along with the media, the banks, and the Federal Reserve. State and local governments are only marginally less disrespectful. It all stinks to high heaven.
They don't respect you. They don't care about you. They want to control you. That should be obvious to everybody by now.
At the Close, Wednesday, April 8, 2020:
Dow Jones Industrial Average: 23,433.57, +779.71 (+3.44%)
NASDAQ: 8,090.90, +203.64 (+2.58%)
S&P 500: 2,749.98, +90.57 (+3.41%)
NYSE: 10,902.59, +365.54 (+3.47%)
Turnaround Tuesday certainly lived up to its advance billing as stocks performed a midday about-face, giving up expansive gains - the Dow gave up over 900 points from its intraday peak - to end near the flatline, only the NYSE Composite finishing in the black.
With a massive gap up at the open, equities were riding the crest of Monday's monstrous wave of buying, on the false hope that the worst of the coronavirus pandemic was behind them. At 11:25 am ET, when New York City announced its death toll for the prior day as the highest one-day total to date with 731 fresh corpses, bringing the state total number of coronavirus fatalities to 5,489, surpassing those lost on 9/11, a wave of gloom descended on Wall Street and in trading offices worldwide. Once the news circulated, stocks embarked upon an afternoon of desperate selling.
Whatever it is that fuels the animal spirits of the investor class, it is misplaced and widely mis-pricing stocks presently, and has been for much of the past 11 years. Now that stock buybacks are no longer going to spike the punch in lower Manhattan, the Fed has stepped in with a variety show of programs and debt options, none of which will eventually be proven sufficient to stem the coming tide of lowered expectations, defaults, earnings misses and downright deplorable economic data.
All the Fed is doing is throwing more bad money atop a raging fire. They cannot print enough money globally to stop the coming self-inflicted Greater Depression, though they will surely blame everything on COVID-19, the convenient scapegoat.
Now that stocks have briefly recovered from the March selloff, all of the programs brought to light by the Federal Reserve will be viewed skeptically, as real values make their return to the former fantasy world of finance. Instead of the Dow resting comfortably above 22,000, the true value, when all is said and done will be much closer to 12,000 and likely far lower.
At current levels, the major indices are still higher than they were in 2007, before the Great Financial Crisis nearly wiped out the global economy. The ongoing crisis will assure that everybody loses, particularly the Baby Boomer generation, which was forced into stocks by the Fed's insistence on interest rates near zero for almost all of the current century.
Portfolios which were valued as retirement savings are going up in smoke and they will continue to do so as the crisis and antecedent solutions tear to shreds the dreams and aspirations of the enormous, aging generation. Unless one has already departed the stock market, anticipated losses will be catastrophic.
Elsewhere, bond yields ticked slightly higher on Tuesday. Gold and silver remain in a nascent bull market, as a global scramble for precious metals has left major dealers with dwindling or already depleted stock. Spot and futures prices are diverging in gold, but that's not even the real story, as premiums are going through the roof for gold and silver bars and coins. If one is fortunate enough to find a dealer with goods for sale, wait times for delivery are now averaging a month for silver in quantity, and five to 10 days for gold.
In times of panic, precious metals are desirous as a hedge against catastrophic circumstance, but, already, many have arrived at the decision to acquire such stock too late as prices have become unaffordable and physical delivery unobtainable.
On the oil front, the spasm of price hikes from last week has faded badly, with WTI crude down again, backing into a $24 handle per barrel. As they say in the trade, it's a fluid situation.
Finally, and this is not to be taken lightly, an astute commentator on a popular financial website posted the following cryptic message:
I don't think any bankers will go to jail, but I assure you they will meet with other, more horrible circumstances as this all plays out.
Citi, BofA, JPM Chase, Wells, Goldman Sachs, and others are all underwater, have already been bailed out (for the past 11 years), and will soon be insolvent when millions of Americans (and a host of foreigners) default on credit cards, car loans and leases, commercial leases, student loans, personal loans, business loans, and more.
There are a lot of biblical posters around here who quote Revelations and such, but they are off the mark. Judgement Day for the major commercial banks was delayed in 2008-09, but, when the full temper of anger from the American public is released - and that is not far off - their branches will be firebombed, their insurance cancelled, their stocks worth less than zero.
They've had it coming and whether they've calculated the enormity of unintended consequences or not, they're going to get skewered for good.
It will be a feast like no other, and a jubilee.
At the Close, Tuesday, April 7, 2020:
Dow Jones Industrial Average: 22,653.86, -26.13 (-0.12%)
NASDAQ: 7,887.26, -25.98 (-0.33%)
S&P 500: 2,659.41, -4.27 (-0.16%)
NYSE: 10,537.04, +21.80 (+0.21%)
According to Wall Street, the COVID-19 coronavirus crisis is all but over.
Stocks were being bought as if there weren't going to be any more available on Monday, as news spread that the coronavirus outbreak may have peaked in New York, which has been the epicenter of the crisis. Of the 367,758 confirmed cases in the United States, 130,689 are in New York state, mainly in the most populous part, New York City.
The state of New York accounts for 35% of the total cases in the US.
4,758 of those have resulted in death, a full 44% of the entire US death toll of 10,831.
What triggered the giddiness in the markets was the number of confirmed cases in New York falling for three straight days, though the 8,000+ increase from April 5 to April 6 was still a very large number.
There's no need for analysis of how the stock algorithms took the headlines. The 7.73% gain on the Dow Jones Industrial Average is proof enough that investors (or, at least the algos that guide the trades) believe the worst of the crisis is past.
This could be a case of some whistling past the graveyard, however, as the aftereffects from a near-nationwide lockdown and closure of many businesses have yet to be felt. The promised $1200 checks for most Americans haven't even begun to be distributed, which is causing more than a little consternation in many households which have been forced to work from home.
Along with kids out of school and assorted other odd conditions of voluntary confinement, millions of ordinary Americans have put up with the condition for over three weeks and are finding that states which did not impose "stay-at-home" recommendations have some of the lowest reported case numbers in the country.
Arkansas, Iowa, Nebraska, Oklahoma, North Dakota, South Dakota, Utah and Wyoming are the eight remaining states without statewide orders after South Carolina's governor, Henry McMaster, ordered all residents of the state to remain at home except for visits with family members or essential outings to get groceries, medicine or exercise, to help slow the spread of the coronavirus on Monday.
South Carolina has 2,232 recorded cases of the virus, comparable to neighboring states North Carolina (2,870), Georgia (7,558), and Tennessee (3,802), all of which have had stay-at-home or similar orders in place for weeks.
Wyoming, with 210 cases documented, is the least-affected in the lower 48 states (Alaska, 191), and has issued only local ordinances. North Dakota (225) and South Dakota (288) are the next-lowest states. Neither of the Dakotas have any restrictive orders in place. The data suggests that the virus, while easily transmitted, is not gaining much traction in places that are sparsely populated and mostly rural. It remains to be seen whether these states will eventually see a huge outbreak from the virus. Only time will tell on that account.
For the majority of people outside of city centers, the virus has proven to be an annoyance, exacerbated by public officials wishing to appear concerned and active in fighting the spread.
With a death toll not even having approached the usual count from ordinary flu (about 40,000 in a typical season), there's growing pressure on the White House and governors to lift some restrictions and get people back to work. According to recent timelines, the country as a whole is within two weeks of the peak, if not already having reached that point.
With more than 10 million having already applied for unemployment insurance over the past two weeks, it's a near certainty that the number will ratchet higher when new claims numbers are released this Thursday.
The White House - which originally was considering a death toll of two million - has lowered its estimate on the number of deaths to 100,000 to 200,000 as the pandemic takes its toll. If the final tally comes in under the low of 100,000, there will likely be widespread criticism of the government effort, which may have saved some lives but crippled the economy, almost certain to enter a recession.
On the day, oil, after blistering gains last week, settled down, pricing around $26.40 per barrel for WTI crude. The price peaked Friday at $28.86.
The big move in stocks helped stall the rally in treasuries, though not significantly. The benchmark 10-year note moved five basis points, as yield increased from 0.62% to 0.67%.
Gold rallied throughout the day, ending at $1660.70 in New York, while silver also caught a bid, rising from $14.40 to $15.01 on the spot market. Prices for physical metal at the biggest dealers remains well above those quoted prices and delivery - due to a shortage - can take as many as 30 to 45 days. Many dealers report sold out inventories of the most popular coins and bars.
The US Mint is offering 2020 one ounce proof Silver Eagles for $64.50 and 2020 one ounce gold proof Eagles at $2,275. Ebay remains the most reliable source for coins and bars with fast delivery times (one to three days, typically).
At the Close, Monday, April 6, 2020:
Dow Jones Industrial Average: 22,679.99, +1,627.46 (+7.73%)
NASDAQ: 7,913.24, +540.15 (+7.33%)
S&P 500: 2,663.68, +175.03 (+7.03%)
NYSE: 10,515.24, +634.61 (+6.42%)
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