Albert Einstein once described insanity as "...doing the same thing over and over and expecting different results."
That would be applicable to describe voting in America. Every two years Americans have the opportunity to replace every inefficient member of congress in the House of Representatives. Instead, the voters in 435 congressional districts largely re-elect the same people who have done nothing for them - in some cases - for decades.
For the Senate, the term is six years. Incumbents often win re-election and since there are no term limits, many make careers out of their government "service," becoming inordinately wealthy (as do many House members) in the process.
Americans elect a president every four years, choosing between the choices made largely by Democrat and Republican party insiders. They come and go. Most of them are not effective leaders. The current one, Donald J. Trump, may have been different, but it seems that he too has been co-opted by the deep state that controls all of the federal government, and thus, most of the day-to-day lives of Americans.
The same applies to the governors of the fifty states, legislatures of same, county executives, mayors of cities, all the way down to your local code enforcement officers, police, and school teachers.
What congress and the president and every other elected official in the states and counties does matters. What matters more is what they don't do, and that is representing their constituents. Instead, members of the House and Senate are bought and paid for by lobbyists, industry insiders, political donors, corporate interests, and special interests. They haven't done much good for the American people in decades. Polls routinely show approval of congress in the teens. The teens! Less than one in five people of voting age approve of what congress does, so, the question one must ask is, why do we go along with their legislation? Why do we agree to their schemes, plans, rules and regulations like the hated Affordable Care Act, or the president's trade policies, wage rules, income taxes, pat-downs at airports, and all the rest?
Why? Because most Americans are either too brainwashed, too busy, or too self-absorbed to do any critical thinking of their own. The national public school system has been breeding ignorance, incompetence, and lack of responsibility for decades. Standards have been lowered so that students pass to the next level without any learning and certainly without learning how to engage in critical thinking. Everybody just goes along to get along.
Thus, America has become a nation of zombies, or sheep, led along by the nose to do what the elite in government expect. It has to change, because, as Einstein posited years ago, it's insanity. And, it's destroying the country and the society.
A movement is needed to change the structure and thrust of never-ending government. It does not have to be an organized effort like Black Lives Matter, or some pink initiative, or even have a Twitter hashtag. There are specific things anybody can do, on their own, to thwart the unrelenting intrusion of government into our lives and become your own protest movement.
Here, in no particular order, are just a few:
1. Plant a garden. Growing your own food not only saves you money and is healthier for you, it is liberating in a very real, earthy sense. Getting closer to nature, seeing seeds or small sprouts grow into thriving plants producing rich, delicious, nutritious tomatoes, peppers, cucumbers, squash, corn, and anything else you might desire is a rewarding, inspiring experience. Nothing tastes better than food you raised yourself. Besides being almost free, most of it is better than what you can purchase (at ever higher prices) from your local grocery.
Use heirloom seeds or seedlings whenever possible. Hybrids should be avoided because they are mostly GMO, provide little in the way of nutrition and don't taste as good as fruits and vegetables from heirloom sources. Other things you can do are raise chickens (farm fresh eggs are much better for you) or rabbits, or, for the truly adventurous, cattle or hogs. At the very least, buy produce direct from local farmers or farm markets.
2. Start your own business. Just because the government wants you to be a wage slave and work according to a set schedule for hourly wages that are inordinately insufficient and overtaxed doesn't mean you have to. Working for oneself is a challenging endeavor, but it doesn't have to be large scale. Start small. If you have to, keep your regular job and do your own thing on your own time. Do something you like. Make things or create services that people can use. In the beginning, you can sell at a small profit just to get the ball rolling.
There's nothing as thrilling or personally uplifting as getting paid for something you made on your own. Opportunities for small businesses are everywhere. Go to any department or dollar store and see the cheap junk made in China that people are buying. You'll find many items you can make and sell yourself. If you have a specific skill, all the better. Even mowing your neighbor's lawns or doing house-cleaning puts you in the status of a business owner. And, when you get paid, the money is all yours. You can choose whether or to to pay taxes and remit your "contributions" to the broken social security and medical systems the government routinely extracts from your paycheck.
Besides the obvious benefit of making your own way on your own terms, working your own hours, there are tax benefits galore for home businesses. You can write off expenses and reduce your overall tax burden. If you operate at a loss, it reduces the amount of tax you pay. If a local official tells you you need a license, file a lawsuit against them for restraint of trade. The lessons you'll learn about the court system will be invaluable.
3. Homeschool. Get your kids out of the public idiot factories. Public schools used to be pretty good, back in the 50s and 60s, maybe, in some districts, even into the 70s. Those days are long gone. The public schools of today are nothing more than indoctrination centers, gulags for adolescents. Children are forced to play by the rules, trained not to question authority, and expected to accept doctrinaire faux science as truth, without questioning. Kids are ridiculed for being smart, for being different, and the best students are routinely slowed down to match the median or common denominator. The goal of public education is to create generations of mindless drones who are easily coerced to do anything demanded by those in positions of power. Reject it. Take your kids out of the public schools and educate them yourselves or with your neighbors. Not only will your kids learn more, faster, but your own education will be enhanced. The internet is overflowing with ideas, lesson plans, and source materials for homeschoolers.
There's no reason to keep your children in public schools, especially now that they're mostly closed and operating remotely. Nobody needs a degree or certificate to get along in this country or this world. What's needed is education and skills. You can teach them as well as any self-serving, overpaid public school teacher. And your kids can learn better, learn to ask probing questions, learn how to think critically.
4. Escape the Currency Cabal. The currency (Most people call our Federal Reserve Notes - those paper things with pictures of presidents on them - money, but it's not. It's currency.) we use in America is not even constitutionally-sanctioned. According to the US constitution, only gold and silver are money in America. Being that it's currently impractical to abandon the accepted Federal Reserve Notes currency completely, at least educate yourself on the workings of money and currency. A good place to start is at the website of Mike Maloney, goldsilver.com. There's a wealth of information there.
If you don't own any gold or silver, get some. You don't have to spend a fortune. For less than $50 you can hold in your hands real money in the form of silver coins or bars, or what's referred to as "junk silver", coins that were in circulation prior to 1965 that contain 90% silver. You can buy gold and/or silver (gold is much more expensive, and silver offers better investment potential) from dealers across the country or right in your town or city. The best marketplace online is at eBay. There, you will find everything from one ounce silver coins and bars to massive bars of gold. It's almost a guarantee that once you hold real gold or silver in your hands, you'll want more of it and less of the fake, fiat currency that is widely in use today and is bound to buy less tomorrow than it is today.
It also wouldn't be a bad idea to horde some cash for emergencies or "out of the system" purchases. Governments hate actual, physical cash. They can't track it or you. Cash, gold, silver and the secret weapon, barter, renders their desire for control over you useless.
These are probably the top four ways to escape the clutches of over-reaching government control. There are many more. Since the financial system is hopelessly broken and controlled by computer algorithms, big banks and the Federal Reserve, it's almost pointless to focus on those markets. Instead, Money Daily hopes to delve into more ways in which regular, honest Americans can become their own protest movement and really make changes for a better America and a better world.
At the Close, Wednesday, June 17, 2020:
Dow: 26,119.61, -170.37 (-0.65%)
NASDAQ: 9,910.53, +14.66 (+0.15%)
S&P 500: 3,113.49, -11.25 (-0.36%)
NYSE: 12,086.49, -74.99 (-0.62%)
Thursday, June 18, 2020
Wednesday, June 17, 2020
Stocks Gain On Sensational Retail Report; NASDAQ Re-Approaching Record Highs
Stocks gained across the board on Tuesday, after May retail sales figures were up an eye-popping 17.7% as stores reopened across the country post-lockdowns from the coronavirus scare.
The number was more than double what many analysts had expected and prompted a wave of new buying in stocks of all varieties. The Dow gained more than 500 points. The S&P powered up by almost 60 points.
Despite the gaudy month-over-month numbers, gross receipts were 6.1% below a year earlier due mainly to uneven store re-openings, some states keeping stay-at-home restrictions in place longer than others.
With gains on both Monday and Tuesday, stocks have recovered most of the losses suffer last Thursday, June 11. The NASDAQ is about 175 points away from its all-time high, made on June 10. The intraday high was 10,086.89. At the close, the record was set at 10,020.35.
Of particular note is Friday's quad-witching day, which should introduce more volatility to the mix. It seems apparent, however, that bulls have regained the advantage and stocks appear set on a path upward, despite valuations in the stratosphere.
Bonds took a hit as yields on the long end of the treasury complex rose. The 30-year exploded nine basis points higher, from a yield of 1.45% on Monday to 1.54% Tuesday. The 10-year note was yielding 0.75%.
Precious metals were higher on the futures market but investors are becoming impatient with the constant niggling in the paper markets. Considering the level of disruption over the past four months, both gold and silver appear largely undervalued. Prices remain elevated on fair, open markets such as eBay. Dealers are still charging high premiums over spot and many are sold out of popular items.
It was recently reported that gold-backed exchange traded funds (ETFs) added 623 tonnes of the metal worth $34 billion to their stockpile from January to May, exceeding in five months every full-year increase on record. That's an impressive figure, as the amount of gold held in storage by ETFs reflects a growing demand for the precious metal.
While the ETFs are required to hold gold in storage at a percentage of their actual outstanding stock, shares of ETFs are not redeemable in gold and serve as a buffer against physical price increases. Touted as a safe way to invest in gold, they serve to track price increases on the paper (futures and spot) markets. The SPDR Gold Shares (GLD) ETF is up from 142 to 162 this year, roughly the same percentage in gold futures.
As pure derivatives, the gold and silver ETFs cause more confusion and actually dilute the pool of gold buyers. People investing in gold or silver ETFs are actually serving to keep a lid on prices by not engaging in active physical purchase and storage of their own gold.
The ETFs are yet another reason why gold and silver are orders of magnitude lower than where many believe they should be. Speculative in nature, they can be driven in any direction by well-timed buys, sells or shorts.
Oil prices have hit a rock at about $38 per barrel. That could change Wednesday when a monthly report from the Organization of the Petroleum Exporting Countries (OPEC) is released.
At the Close, Tuesday, June 16, 2020:
Dow: 26,289.98, +526.82 (+2.04%)
NASDAQ: 9,895.87, +169.84 (+1.75%)
S&P 500: 3,124.74, +58.15 (+1.90%)
NYSE: 12,161.47, +218.57 (+1.83%)
The number was more than double what many analysts had expected and prompted a wave of new buying in stocks of all varieties. The Dow gained more than 500 points. The S&P powered up by almost 60 points.
Despite the gaudy month-over-month numbers, gross receipts were 6.1% below a year earlier due mainly to uneven store re-openings, some states keeping stay-at-home restrictions in place longer than others.
With gains on both Monday and Tuesday, stocks have recovered most of the losses suffer last Thursday, June 11. The NASDAQ is about 175 points away from its all-time high, made on June 10. The intraday high was 10,086.89. At the close, the record was set at 10,020.35.
Of particular note is Friday's quad-witching day, which should introduce more volatility to the mix. It seems apparent, however, that bulls have regained the advantage and stocks appear set on a path upward, despite valuations in the stratosphere.
Bonds took a hit as yields on the long end of the treasury complex rose. The 30-year exploded nine basis points higher, from a yield of 1.45% on Monday to 1.54% Tuesday. The 10-year note was yielding 0.75%.
Precious metals were higher on the futures market but investors are becoming impatient with the constant niggling in the paper markets. Considering the level of disruption over the past four months, both gold and silver appear largely undervalued. Prices remain elevated on fair, open markets such as eBay. Dealers are still charging high premiums over spot and many are sold out of popular items.
It was recently reported that gold-backed exchange traded funds (ETFs) added 623 tonnes of the metal worth $34 billion to their stockpile from January to May, exceeding in five months every full-year increase on record. That's an impressive figure, as the amount of gold held in storage by ETFs reflects a growing demand for the precious metal.
While the ETFs are required to hold gold in storage at a percentage of their actual outstanding stock, shares of ETFs are not redeemable in gold and serve as a buffer against physical price increases. Touted as a safe way to invest in gold, they serve to track price increases on the paper (futures and spot) markets. The SPDR Gold Shares (GLD) ETF is up from 142 to 162 this year, roughly the same percentage in gold futures.
As pure derivatives, the gold and silver ETFs cause more confusion and actually dilute the pool of gold buyers. People investing in gold or silver ETFs are actually serving to keep a lid on prices by not engaging in active physical purchase and storage of their own gold.
The ETFs are yet another reason why gold and silver are orders of magnitude lower than where many believe they should be. Speculative in nature, they can be driven in any direction by well-timed buys, sells or shorts.
Oil prices have hit a rock at about $38 per barrel. That could change Wednesday when a monthly report from the Organization of the Petroleum Exporting Countries (OPEC) is released.
At the Close, Tuesday, June 16, 2020:
Dow: 26,289.98, +526.82 (+2.04%)
NASDAQ: 9,895.87, +169.84 (+1.75%)
S&P 500: 3,124.74, +58.15 (+1.90%)
NYSE: 12,161.47, +218.57 (+1.83%)
Tuesday, June 16, 2020
Stocks Stutter, Rise On Fake Fed News; Federal Debt Surges Past $26 Trillion; Argentina Default Triggers CDS
Wall Street got a bit of a shock Monday morning as stocks sold off first in the futures market and transitioned into a gap lower at the opening bell. What looked like a continuation of Thursday's selloff - interrupted by the dead cat bounce Friday - turned out to be a short-lived event.
With the Dow down below 25,000, losing more than 700 points just minutes into the session, buyers began to emerge, pushing stocks higher by 2:00 pm ET, the major indices had made up considerable ground. The NASDAQ was already positive when the Fed issued a press release, rehashing some old news to make it look new to the algos.
The press released looked like the Fed was launching another credit facility for corporations when in fact this facility (SMCCF) had been in the pipeline since March. They announced they'd begin buying individual corporate bonds, so that when companies go looking for a lender - for whatever purpose - they need look no further than the Federal Reserve, now not only the buyer and lender of last resort, but of first resort as well.
Per the Fed's press release:
That sent all indices into positive territory, and everything was again alright with the world as stocks sported gains to start the week.
Whether the "recovery" looks like a V or no V, the US national debt vaulted past $26 Trillion over the weekend without much fanfare (in fact, none). Some thought it would make it by the 4th of July. It came in 45 lengths ahead of predictions, like Secretariat winning the 1973 Belmont Stakes.
By the end of June the federal government will have added more than three trillion dollars ($3 trillion) to the national debt, an astonishing pace. At the current run rate of a trillion every two months, by the end of 2020, the debt would rise to $29 trillion, and to $35 trillion by December 2021. What's either frightening or amusing about the growth rate of the national debt is that it is more likely to accelerate than back off as the dollar heads for a fiscal cliff. Combined federal, state, and local government expenditures currently account for nearly half of America's GDP, and, since nearly half of that is borrowed, it means a good quarter of the GDP is an accounting fiction. Government produces exactly nothing of value. They spend. Total combined spending by government will exceed $10 trillion for the fiscal year ending on September 30.
If one were to take from the GDP calculation all government spending that was done on borrowed money, GDP wouldn't be over $20 trillion as the official version purports. Instead, it would be bumping up against $15 trillion. If one took out all the purchases made on credit cards or by mortgages, it would be even lower. The fact is that the GDP calculation is a convenient reference for Wall Street and government, but it does not really reflect the actual condition of the economy. What's happening is that as expenditures are growing, tax revenues are falling, and borrowing must continue to rise to fill the gap.
It's about as an unsustainable condition as one could imagine. With any luck (and even that's in doubt), the entire system might make it through to November, just in time to implode after the elections. That's hardly a certainty. The US and global economic systems are now so fragile that about a third of the entire global GDP is borrowed. Eventually, half of GDP will be borrowed, then all of it, at which time the system will have completely broken down. Companies which must borrow just to meet payroll cannot last. Governments which borrow to meet spending demands cannot last. Consumers with low to no income and piles of debt will default. It's beginning to happen and will accelerate in the third and fourth quarters of this year.
Everything is in play. Jobs, retirement funds, even Social Security, a ponzi scheme from the start that may not make it through the end of this decade.
Not to be outdone, Argentina extended the deadline for negotiations for a fourth time, to June 19, on $65 billion in sovereign debt.
They missed a $500 million interest payment in May, prompting the lenders to meet with Argentine officials to discuss a solution. It also triggered a credit default swap (CDS) event. Lenders of Argentina's debt include PIMCO, BlackRock, and Franklin Templeton. Because CDS are private contracts, it's not known whether any of them hold the swaps, which acts as insurance against default.
One thing is for certain. Somebody's out $1.5 billion and some other entities made a killing on the trade. Problem arise in credit default swaps are when the company insuring against the loss doesn't have the funds to cover the bet when it goes south. That's what happened with AIG in the GFC back in 2008. If Argentina doesn't solve this issue soon (it may already be too late) other swaps are sure to be triggered, more people will lose money and the derivative market may begin to look like a pock-marked battlefield.
Could Argentina be the canary in the coal mine that sets off a wave of sovereign defaults? Possibly, though such things tend to take years to develop and there are many attempts at remediation in the interim. Sovereign defaults are at the end of the list of things about which central banks need to worry. For now, they've got global stock markets that will melt down without their tacit support, growing civil unrest, and COVID-19 with which to contend.
Their plate seems rather full for the moment.
At the Close, Monday, June 15, 2020:
Dow: 25,763.16, +157.62 (+0.62%)
NASDAQ: 9,726.02, +137.21 (+1.43%)
S&P 500: 3,066.59, +25.28 (+0.83%)
NYSE: 11,942.91, +75.74 (+0.64%)
With the Dow down below 25,000, losing more than 700 points just minutes into the session, buyers began to emerge, pushing stocks higher by 2:00 pm ET, the major indices had made up considerable ground. The NASDAQ was already positive when the Fed issued a press release, rehashing some old news to make it look new to the algos.
The press released looked like the Fed was launching another credit facility for corporations when in fact this facility (SMCCF) had been in the pipeline since March. They announced they'd begin buying individual corporate bonds, so that when companies go looking for a lender - for whatever purpose - they need look no further than the Federal Reserve, now not only the buyer and lender of last resort, but of first resort as well.
Per the Fed's press release:
The Federal Reserve Board on Monday announced updates to the Secondary Market Corporate Credit Facility (SMCCF), which will begin buying a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers.
As detailed in a revised term sheet and updated FAQs, the SMCCF will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds. This index is made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility's minimum rating, maximum maturity, and other criteria. This indexing approach will complement the facility's current purchases of exchange-traded funds.
The Primary Market and Secondary Market Corporate Credit Facilities were established with the approval of the Treasury Secretary and with $75 billion in equity provided by the Treasury Department from the CARES Act.
That sent all indices into positive territory, and everything was again alright with the world as stocks sported gains to start the week.
Whether the "recovery" looks like a V or no V, the US national debt vaulted past $26 Trillion over the weekend without much fanfare (in fact, none). Some thought it would make it by the 4th of July. It came in 45 lengths ahead of predictions, like Secretariat winning the 1973 Belmont Stakes.
By the end of June the federal government will have added more than three trillion dollars ($3 trillion) to the national debt, an astonishing pace. At the current run rate of a trillion every two months, by the end of 2020, the debt would rise to $29 trillion, and to $35 trillion by December 2021. What's either frightening or amusing about the growth rate of the national debt is that it is more likely to accelerate than back off as the dollar heads for a fiscal cliff. Combined federal, state, and local government expenditures currently account for nearly half of America's GDP, and, since nearly half of that is borrowed, it means a good quarter of the GDP is an accounting fiction. Government produces exactly nothing of value. They spend. Total combined spending by government will exceed $10 trillion for the fiscal year ending on September 30.
If one were to take from the GDP calculation all government spending that was done on borrowed money, GDP wouldn't be over $20 trillion as the official version purports. Instead, it would be bumping up against $15 trillion. If one took out all the purchases made on credit cards or by mortgages, it would be even lower. The fact is that the GDP calculation is a convenient reference for Wall Street and government, but it does not really reflect the actual condition of the economy. What's happening is that as expenditures are growing, tax revenues are falling, and borrowing must continue to rise to fill the gap.
It's about as an unsustainable condition as one could imagine. With any luck (and even that's in doubt), the entire system might make it through to November, just in time to implode after the elections. That's hardly a certainty. The US and global economic systems are now so fragile that about a third of the entire global GDP is borrowed. Eventually, half of GDP will be borrowed, then all of it, at which time the system will have completely broken down. Companies which must borrow just to meet payroll cannot last. Governments which borrow to meet spending demands cannot last. Consumers with low to no income and piles of debt will default. It's beginning to happen and will accelerate in the third and fourth quarters of this year.
Everything is in play. Jobs, retirement funds, even Social Security, a ponzi scheme from the start that may not make it through the end of this decade.
Not to be outdone, Argentina extended the deadline for negotiations for a fourth time, to June 19, on $65 billion in sovereign debt.
They missed a $500 million interest payment in May, prompting the lenders to meet with Argentine officials to discuss a solution. It also triggered a credit default swap (CDS) event. Lenders of Argentina's debt include PIMCO, BlackRock, and Franklin Templeton. Because CDS are private contracts, it's not known whether any of them hold the swaps, which acts as insurance against default.
One thing is for certain. Somebody's out $1.5 billion and some other entities made a killing on the trade. Problem arise in credit default swaps are when the company insuring against the loss doesn't have the funds to cover the bet when it goes south. That's what happened with AIG in the GFC back in 2008. If Argentina doesn't solve this issue soon (it may already be too late) other swaps are sure to be triggered, more people will lose money and the derivative market may begin to look like a pock-marked battlefield.
Could Argentina be the canary in the coal mine that sets off a wave of sovereign defaults? Possibly, though such things tend to take years to develop and there are many attempts at remediation in the interim. Sovereign defaults are at the end of the list of things about which central banks need to worry. For now, they've got global stock markets that will melt down without their tacit support, growing civil unrest, and COVID-19 with which to contend.
Their plate seems rather full for the moment.
At the Close, Monday, June 15, 2020:
Dow: 25,763.16, +157.62 (+0.62%)
NASDAQ: 9,726.02, +137.21 (+1.43%)
S&P 500: 3,066.59, +25.28 (+0.83%)
NYSE: 11,942.91, +75.74 (+0.64%)
Sunday, June 14, 2020
Markets Skid, Ending Three-Week Win Streak As Rally Falters; Gold, Silver Continue Abusing Futures Pricing; Treasuries Rally
Stocks broke off a streak of three straight winning weeks courtesy of a trend-reversing, cascading selloff Thursday that erased all or most of June's gains.
The downdraft followed two straight days of minor losses and may have put a punctuation mark on the market's 11-week rally. The NASDAQ, which made a fresh all-time closing high on Monday (9,924.75) and crested over 10,000 on Wednesday, took a 517-point collapse on Wednesday. Like the Dow, which lost over 1800 points, the loss was the fourth-highest one-day point decline in market history. For both indices, the three higher point losses all occurred this past March.
Friday was snapback day, though the gains were paltry compared to the prior day's losses. Stocks gained back less than a third of what was surrendered on Thursday.
The late-week action prompted market observers to question the solidity of the recent rally, which, in V-shaped manner, took the markets straight off their March lows and out of bear market territory. Stocks had gained even as entire states were in lockdowns and the COVID-19 virus raged across America. Stocks continued to rise in the face of nationwide protests against police violence in the aftermath of the death of George Floyd at the hands of Minneapolis police. Many of the protests turned violent, as disruptive elements rioted and looted stores.
Fueled by emergency lending by the Fed, stocks seemed to be out of touch with mainstream economics, a condition not unusual for Wall Street types. Thursday's turnabout was broadly-based and unsparing of any sector though banking and tech stocks were leaders to the downside.
Coincidentally, protesting fell off as well, probably due to uprising fatigue. After two weeks of marching around in hot weather, the movement became somewhat pointless and many lost interest in reform toward better policing, though success was claimed in some areas, such as Minneapolis, where the city council decided to defund and disband the police, and New York, where measures were take by legislators to ratchet down the heavy-handed tactics of its force.
In Louisville, Kentucky, the city council voted to ban no-knock warrants. The resolution was passed in reaction to the death of Breonna Taylor, who was killed in a March no-knock raid at the wrong address.
One city in which protests have not tailed off is Atlanta, the scene of widespread rioting and looting early on, where chief of police, Erika Shields, has resigned on Sunday after officers fired upon and killed 27-year-old Rayshard Brooks Friday night.
And, in Seattle, the madness reached a climax on Monday as officials decided not to defend a police precinct, resulting in protesters, led by Black Lives Matter (BLM) taking over a six-block urban area and renaming it the Capitol Hill Autonomous Zone (CHAZ).
All of this is a backdrop to pent-up emotions and outrage that were magnified during the coronavirus lockdowns. Some people, took issue with Wall Street's rapid rally, citing it as an affront to societal mores and economic inequality. By the looks of where markets were heading on Thursday, the impact of the lockdowns and protests finally have reached lower Manhattan.
Treasuries staged a solid rally at the long end of the curve through Thursday, with the 10-year note yield falling from 0.91% to 0.66% and from 1.69% to 1.41% on the 30-year. On Friday, bond prices fell, with the 10-year closing out at 0.71%; the 30-year bond finished at 1.45%.
Precious metals rose early in the week, but were tamped down as the week drew to a close. Gold reached $1742.15 before ending the week still elevated at $1733.50. Spot silver was as high as $17.87 an ounce, closing at $17.62 on Friday. Spot and futures prices continue to trend toward irrelevance as premium prices for physical metal and shortages continue into a third month. Many dealers show popular items out of stock or with significant delivery delays, a condition that has persisted for retailers since the onset of the coronavirus.
eBay continues to light the way for purveyors and buyers alike, with calculable prices (at premiums over spot) and rapid, reliable deliveries. Here are the most recent prices on select items from ebay sellers (prices include shipping):
Item: Low / High / Average / Median
1 oz silver coin: 25.50 / 36.20 / 31.00 / 29.90
1 oz silver bar: 19.95 / 35.20 / 29.32 / 29.88
1 oz gold coin: 1,837.00 / 1,900.52 / 1,857.86 / 1,855.40
1 oz gold bar: 1,806.00 / 1,880.00 / 1,840.52 / 1,832.63
As far as stocks are concerned, after the FOMC meeting concluded Wednesday and the Fed committed to keep the federal funds rate at or near the zero-bound at least until the end of 2022, investors got a little jittery over their engineered V-shaped rally, the overall stability of the global economy, and valuations heading into the end of the second quarter and some supposedly horrifying earnings figures coming the second week of July.
The coming week may be epochal or apocalyptic as Friday offers a quad witching day as stock index futures, stock index options, stock options, and single stock futures expire simultaneously. There should be some volatility showing up at the convergence of day-trading, options players and real-time economics all roll together.
While Thursday's massive decline in stocks sent shock waves through the markets, Friday's returns were uninspired and had the look of a an exhausted rally on its final legs. Trading was sluggish at best and flatlined around 2:00 pm ET only to be saved by late-day short covering and the usual hijinks by backroom operators (NY Fed).
If stocks fail to close higher next week - as this week marked the end of a three-week uptrend - damage could become more or less permanent. While many placed hope in the Fed's power to purchase as many types and varieties of bonds that confidence was shattered on Thursday and should lead the way back to some fundamental rethinking of market dynamics.
Nothing goes up or down in a straight line, but this week should provide some clues as to the ultimate short-and-long term market direction.
At the Close, Friday, June 12, 2020:
Dow: 25,605.54, +477.37 (+1.90%)
NASDAQ: 9,588.81, +96.08 (+1.01%)
S&P 500: 3,041.31, +39.21 (+1.31%)
NYSE: 11,867.17, +208.00 (+1.78%)
For the Week:
Dow: -1505.44 (-5.55%)
NASDAQ: -225.27 (-2.30%)
S&P 500: -152.62 (-4.78%)
NYSE: -774.27 (-6.12%)
The downdraft followed two straight days of minor losses and may have put a punctuation mark on the market's 11-week rally. The NASDAQ, which made a fresh all-time closing high on Monday (9,924.75) and crested over 10,000 on Wednesday, took a 517-point collapse on Wednesday. Like the Dow, which lost over 1800 points, the loss was the fourth-highest one-day point decline in market history. For both indices, the three higher point losses all occurred this past March.
Friday was snapback day, though the gains were paltry compared to the prior day's losses. Stocks gained back less than a third of what was surrendered on Thursday.
The late-week action prompted market observers to question the solidity of the recent rally, which, in V-shaped manner, took the markets straight off their March lows and out of bear market territory. Stocks had gained even as entire states were in lockdowns and the COVID-19 virus raged across America. Stocks continued to rise in the face of nationwide protests against police violence in the aftermath of the death of George Floyd at the hands of Minneapolis police. Many of the protests turned violent, as disruptive elements rioted and looted stores.
Fueled by emergency lending by the Fed, stocks seemed to be out of touch with mainstream economics, a condition not unusual for Wall Street types. Thursday's turnabout was broadly-based and unsparing of any sector though banking and tech stocks were leaders to the downside.
Coincidentally, protesting fell off as well, probably due to uprising fatigue. After two weeks of marching around in hot weather, the movement became somewhat pointless and many lost interest in reform toward better policing, though success was claimed in some areas, such as Minneapolis, where the city council decided to defund and disband the police, and New York, where measures were take by legislators to ratchet down the heavy-handed tactics of its force.
In Louisville, Kentucky, the city council voted to ban no-knock warrants. The resolution was passed in reaction to the death of Breonna Taylor, who was killed in a March no-knock raid at the wrong address.
One city in which protests have not tailed off is Atlanta, the scene of widespread rioting and looting early on, where chief of police, Erika Shields, has resigned on Sunday after officers fired upon and killed 27-year-old Rayshard Brooks Friday night.
And, in Seattle, the madness reached a climax on Monday as officials decided not to defend a police precinct, resulting in protesters, led by Black Lives Matter (BLM) taking over a six-block urban area and renaming it the Capitol Hill Autonomous Zone (CHAZ).
All of this is a backdrop to pent-up emotions and outrage that were magnified during the coronavirus lockdowns. Some people, took issue with Wall Street's rapid rally, citing it as an affront to societal mores and economic inequality. By the looks of where markets were heading on Thursday, the impact of the lockdowns and protests finally have reached lower Manhattan.
Treasuries staged a solid rally at the long end of the curve through Thursday, with the 10-year note yield falling from 0.91% to 0.66% and from 1.69% to 1.41% on the 30-year. On Friday, bond prices fell, with the 10-year closing out at 0.71%; the 30-year bond finished at 1.45%.
Precious metals rose early in the week, but were tamped down as the week drew to a close. Gold reached $1742.15 before ending the week still elevated at $1733.50. Spot silver was as high as $17.87 an ounce, closing at $17.62 on Friday. Spot and futures prices continue to trend toward irrelevance as premium prices for physical metal and shortages continue into a third month. Many dealers show popular items out of stock or with significant delivery delays, a condition that has persisted for retailers since the onset of the coronavirus.
eBay continues to light the way for purveyors and buyers alike, with calculable prices (at premiums over spot) and rapid, reliable deliveries. Here are the most recent prices on select items from ebay sellers (prices include shipping):
Item: Low / High / Average / Median
1 oz silver coin: 25.50 / 36.20 / 31.00 / 29.90
1 oz silver bar: 19.95 / 35.20 / 29.32 / 29.88
1 oz gold coin: 1,837.00 / 1,900.52 / 1,857.86 / 1,855.40
1 oz gold bar: 1,806.00 / 1,880.00 / 1,840.52 / 1,832.63
As far as stocks are concerned, after the FOMC meeting concluded Wednesday and the Fed committed to keep the federal funds rate at or near the zero-bound at least until the end of 2022, investors got a little jittery over their engineered V-shaped rally, the overall stability of the global economy, and valuations heading into the end of the second quarter and some supposedly horrifying earnings figures coming the second week of July.
The coming week may be epochal or apocalyptic as Friday offers a quad witching day as stock index futures, stock index options, stock options, and single stock futures expire simultaneously. There should be some volatility showing up at the convergence of day-trading, options players and real-time economics all roll together.
While Thursday's massive decline in stocks sent shock waves through the markets, Friday's returns were uninspired and had the look of a an exhausted rally on its final legs. Trading was sluggish at best and flatlined around 2:00 pm ET only to be saved by late-day short covering and the usual hijinks by backroom operators (NY Fed).
If stocks fail to close higher next week - as this week marked the end of a three-week uptrend - damage could become more or less permanent. While many placed hope in the Fed's power to purchase as many types and varieties of bonds that confidence was shattered on Thursday and should lead the way back to some fundamental rethinking of market dynamics.
Nothing goes up or down in a straight line, but this week should provide some clues as to the ultimate short-and-long term market direction.
At the Close, Friday, June 12, 2020:
Dow: 25,605.54, +477.37 (+1.90%)
NASDAQ: 9,588.81, +96.08 (+1.01%)
S&P 500: 3,041.31, +39.21 (+1.31%)
NYSE: 11,867.17, +208.00 (+1.78%)
For the Week:
Dow: -1505.44 (-5.55%)
NASDAQ: -225.27 (-2.30%)
S&P 500: -152.62 (-4.78%)
NYSE: -774.27 (-6.12%)
Friday, June 12, 2020
So Much for That V-Shaped Recovery as Dow Sheds 1861 Points, NASDAQ Drops 527
That rally - the one that started on right away on March 24 with a 2100-point gain, the day after the Dow bottomed out at 18,591.93 - is over. Smart traders made money. Anybody who was fretting about their retirement account and didn't exit, well, there's still time. The market giveth and taketh away. In this case, thanks to emergency measures by the Fed, the market gave almost everybody who didn't get out a gold opportunity to make for the hills.
If you're still in, you're either a day-trading maniac or just plain stuck on stupid. There are other asset classes. There's always cash. This second leg down is likely to be much more severe than the first because it will take months instead of days to wipe out trillions in invest dollars. Rest assured, at the end of the second leg, everybody's a loser.
Putting it all into perspective, after the major indices fell into bear market territory - defined as down more than 20% - the duration of the bear market was record for brevity: five weeks. Not that those five weeks in the doldrums will go down in the history books as a traditional bear market; they'll likely be remembered as the start of the Greatest Depression, spawn of the coronavirus, oil shock, and global plebeian protests because the stock market decline began again in earnest on Thursday, June 11.
The loss on the Dow was nearly seven percent, ranking it just outside the Top 20 in percentage terms, but number four in regards to points lost. It ranks behind three other losses, all from this year, which is about all one needs to know about stocks in the year 2020. The NASDAQ loss of 527.62 was also the fourth-highest, point-wise. Similarly, the three greatest point losses in NASDAQ history also occurred just this past March.
No, there will not be any v-shaped recovery as the market charts suggested. That was all a fantasy, spun out of whole cloth from the Federal Reserve. After all, how could stocks rally when unemployment was somewher in the neighborhood of 15%, people around the world were dying from a pandemic, whole nations and most states in the US were shut down for anywhere from a month to ten weeks, corporate earnings were in the toilet and second quarter results were still a month down the road?
The fairy tale rally never made any sense and never will except in regards to some very rich people making even more money without doing a damn thing. Rest assured, most of them were selling today or have either significantly trimmed their positions or added hedges, by which they'll enrich themselves even further on another downdraft.
There is likely to be a snapback on Friday. No telling which way it will eventually eventually turn, but recent market action offers a strong indication that a 1200-point swing to the upside on the Dow might be key to understanding the psychology of crazy. Anything less than that would leave the Dow just below its 200-day moving average.
Be mindful that despite the Dow's 9,000-point gain (yes, that's right, 9,000 points!) over the past 12 weeks, the current chart is one of a primary BULL market according to Dow Theory. The Industrials exceeded the December 2018 lows to the downside, and then erupted to the upside, cancelling out the bear reversal. Dow Transports confirmed the move, doing the same.
Nobody is betting on conformity with current market conditions. The Fed's emergency rescue facilities have only added to the overall distortion from QE, ZIRP, and other experiments in currency counterfeiting. Hanging one's hat on theories dating back to the early 20th century might engender more anguish than reward.
Some will call Thursday's pullback "healthy", but those are probably the perma-bulls in the room. Anybody who can say with a straight face that the US or global economy is healthy ought to be selling used cars rather than stocks.
WTI crude fell more than $3 on the day, from a range around $39 to $36. Gold and silver were unceremoniously smashed lower on futures markets, but, as has been a repeating theme, will likely bounce back quickly as premiums and shortages persist.
The long end of the treasury complex continued to rally, dropping yield in the 10-year note and 30-year bond from 0.91% and 1.68% last Friday to 0.66% and 1.41%, respectively.
Stay liquid.
At the Close, Thursday, June 11, 2020:
Dow: 25,128.17, -1,861.82 (-6.90%)
NASDAQ: 9,492.73, -527.62 (-5.27%)
S&P 500: 3,002.10, -188.04 (-5.89%)
NYSE: 11,659.17, -790.05 (-6.35%)
If you're still in, you're either a day-trading maniac or just plain stuck on stupid. There are other asset classes. There's always cash. This second leg down is likely to be much more severe than the first because it will take months instead of days to wipe out trillions in invest dollars. Rest assured, at the end of the second leg, everybody's a loser.
Putting it all into perspective, after the major indices fell into bear market territory - defined as down more than 20% - the duration of the bear market was record for brevity: five weeks. Not that those five weeks in the doldrums will go down in the history books as a traditional bear market; they'll likely be remembered as the start of the Greatest Depression, spawn of the coronavirus, oil shock, and global plebeian protests because the stock market decline began again in earnest on Thursday, June 11.
The loss on the Dow was nearly seven percent, ranking it just outside the Top 20 in percentage terms, but number four in regards to points lost. It ranks behind three other losses, all from this year, which is about all one needs to know about stocks in the year 2020. The NASDAQ loss of 527.62 was also the fourth-highest, point-wise. Similarly, the three greatest point losses in NASDAQ history also occurred just this past March.
No, there will not be any v-shaped recovery as the market charts suggested. That was all a fantasy, spun out of whole cloth from the Federal Reserve. After all, how could stocks rally when unemployment was somewher in the neighborhood of 15%, people around the world were dying from a pandemic, whole nations and most states in the US were shut down for anywhere from a month to ten weeks, corporate earnings were in the toilet and second quarter results were still a month down the road?
The fairy tale rally never made any sense and never will except in regards to some very rich people making even more money without doing a damn thing. Rest assured, most of them were selling today or have either significantly trimmed their positions or added hedges, by which they'll enrich themselves even further on another downdraft.
There is likely to be a snapback on Friday. No telling which way it will eventually eventually turn, but recent market action offers a strong indication that a 1200-point swing to the upside on the Dow might be key to understanding the psychology of crazy. Anything less than that would leave the Dow just below its 200-day moving average.
Be mindful that despite the Dow's 9,000-point gain (yes, that's right, 9,000 points!) over the past 12 weeks, the current chart is one of a primary BULL market according to Dow Theory. The Industrials exceeded the December 2018 lows to the downside, and then erupted to the upside, cancelling out the bear reversal. Dow Transports confirmed the move, doing the same.
Nobody is betting on conformity with current market conditions. The Fed's emergency rescue facilities have only added to the overall distortion from QE, ZIRP, and other experiments in currency counterfeiting. Hanging one's hat on theories dating back to the early 20th century might engender more anguish than reward.
Some will call Thursday's pullback "healthy", but those are probably the perma-bulls in the room. Anybody who can say with a straight face that the US or global economy is healthy ought to be selling used cars rather than stocks.
WTI crude fell more than $3 on the day, from a range around $39 to $36. Gold and silver were unceremoniously smashed lower on futures markets, but, as has been a repeating theme, will likely bounce back quickly as premiums and shortages persist.
The long end of the treasury complex continued to rally, dropping yield in the 10-year note and 30-year bond from 0.91% and 1.68% last Friday to 0.66% and 1.41%, respectively.
Stay liquid.
At the Close, Thursday, June 11, 2020:
Dow: 25,128.17, -1,861.82 (-6.90%)
NASDAQ: 9,492.73, -527.62 (-5.27%)
S&P 500: 3,002.10, -188.04 (-5.89%)
NYSE: 11,659.17, -790.05 (-6.35%)
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