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%)
Tuesday, May 19, 2020
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%)
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