Because nothing in the financial universe travels in straight lines, stocks took the high road on Monday to prove to the world that all is well, everywhere, all the time.
Meanwhile, just a few headlines:
Protest in Kalamazoo, MI
Protests, Lancaster, PA
Protests, Cops Shot, Los Angeles, CA
Planned Protests of President Visiting Philadelphia
Protests, Sacramento, CA
Protests, St. Louis, MO
At Least 50 Shot, 10 Dead in Chicago Weekend Shootings
Shootings, Grand Rapids, MI
At Least 6 Dead in NYC Weekend Violence
Detroit, MI: 4 Weekend Homicides
46 Shot, 12 Dead in Baltimore Shootings
Food Banks In San Francisco Double
Feeding America Says 54 Million May Need Food Banks In 2020
Greater Chicago Food Depository Sees Increased Demand
Increased Demand At Memphis Food Banks
That's just a sampling of what's going on in the world's largest economy. Apparently, investors see protests, violence, and starvation as net positives.
At the Close, Monday, September 14, 2020:
Dow: 27,993.33, +327.69 (+1.18%)
NASDAQ: 11,056.65, +203.11 (+1.87%)
S&P 500: 3,383.54, +42.57 (+1.27%)
NYSE: 12,932.69, +159.65 (+1.25%)
Tuesday, September 15, 2020
Sunday, September 13, 2020
WEEKEND WRAP: Stocks Fall For Second Straight Week; Oil Skids; EU Seeks Digital Currency
For the second consecutive week, equity investments in big caps looked like the wrong place to be plying currency in these turbulent times. Led by the NASDAQ and S&P 500, stocks dumped in three of three of the four trading days following the Labor Day weekend. Hard hit were household tech names like Apple, Amazon, Google, Tesla, and Netflix, but bank stocks also participated in the widespread selling as did almost every other market segment.
Key elements driving the declines remained as they have for months: coronavirus, lockdowns, school and business closures, election concerns, mass protests, and occasional rioting. Adding to the mix were forest fires devastating Western states and ongoing international trade disputations, especially those between China and the United States. The EU had its own spat going with Great Britain, which has decided to chart its own course in its ongoing separation from the mainland economic bloc.
Overriding all of the usual issues was the usually-ineffective congress, which continued to flail about over any kind of relief resolution. It's not so much that the house and senate can't come to mutually-agreeable terms, it's more that as a legislative governing body they are feckless, unrepresentative, unresponsive and devoid of common sense. On capitol hill, there's little interest to come to the aid of the masses. It is almost as if, suddenly, the entire congress has re-discovered fiscal responsibility. Don't count on it, though. They just don't want to help out the American public, looking down from their preening and primping perches on the huddled minions like all tyrannical bodies are prone to do.
So, Wall Street managed to express its disapproval the only way it can, by selling, instead of buying, stocks. Ho-hum. Major indices all managed to end the week nesting at or near their 50-day moving averages, a meaningless tactic by the monied gang of crooks and thieves masquerading as America's bankers and financial genii. Stocks dare not fall below desirous levels, lest they incur the ire of the almighty Federal Reserve, of which its federal open market committee (FOMC) meets this coming week (Tuesday and Wednesday).
After all, the Fed has, following the fast crash of March, put the money people onto easy street once again via a binge-buying of virtually all outstanding debt, backstopping even the riskiest loans and hoisting up companies that should be headed to bankruptcy proceedings. Stocks cannot be allowed to lose value. Not only would that truncate the V-shaped-recovery narrative, but it would send shock waves of negative sentiment throughout the economy. The Fed will not stand for that, so it is expected to become the soul of dovishness as the coming week progresses.
So much is predicated on the Fed "put" that it had better work out to the advantage of the one-percenters. Otherwise, a hard dose of economic reality might just cause real panic, a shakeout from over-indulgent investment chasing, an abrupt end to churning, controlling, high-frequency spoofing, and a host of big money hijinks hat keep the wheels of financialization intact.
There might not be a crash, but a slow, steady decline in stock prices seems to be well underway. This second leg down won't inspire shock and awe, headlines of doom, or frightening one-day drops. It will be more like Chinese water torture: precise and deliberate, exacting excruciating dull pain over a long period.
Treasuries are catching onto the game gradually. All issuance of less than five years duration has been at the zero-bound for months and is not moving nor movable. The 10-year note took the bulk of the safety play, dropping five basis points in yield to end the week at a moribund 0.67%. The 30-year dropped four, to 1.42%.
Oil was the big "tell" of the week, losing any momentum it may have had, with WTI crude settling out at $37.33 a barrel, down 14% from its high of $43.39 on August 26. If stocks aren't willing to tell the whole story, oil, which greases the skids of the global economy is screaming a "run for the hills" signal.
As is usually the case when stocks get hit, precious metals had to be spanked as well, despite there being no correlation between stocks and gold or silver, but rather, in a sane world, an inverse relationship might apply.
Rather than taking an overt beating, gold actually gained on the week, though not by much. Closing out on September 4 at $1,933.94, it ended this week at $1,940.55. Silver actually did lose a little, trading down from $26.91 to $26.73 per ounce. Both moves in the metals were well short of one percent, which has to offer some hope for the proponents of real money, as the main stock indices fell anywhere from one to four percent on the week. There's always something good to be said about out-performance.
Here are the latest prices on eBay for common gold and silver items (numismatics excluded, shipping - often free - included):
Item: Low / High / Average / Mean
1 oz silver coin: 32.74 / 45.10 / 39.27 / 40.03
1 oz silver bar: 32.94 / 44.20 / 35.42 / 34.02
1 oz gold coin: 1,929.90 / 2,324.37 / 2,077.02 / 2,070.47
1 oz gold bar: 2,028.90 / 2,111.09 / 2,057.38 / 2,056.68
Notably, the ECB has been, and continues to explore the possibility of the creation of a central bank digital currency (CBDC). Central banks are afraid that big tech firms with their own digital currencies could shut them and government out of their monetary roles in national and international economies.
Now, wouldn't that be a crying shame. Central banks - all of them private institutions - wouldn't be able to wouldn't be able to issue currency at interest, create mountains of debt, impoverish millions of people, change interest rates at their pleasure, intervene in markets, prop up failing businesses, distort and destroy price discovery, leverage deposits as loans at 20:1, 30:1 or even more ridiculous ratios, create massive asset bubbles, stoke inflation, track and record all transactions, and generally enslave the entire global population with currencies backed by nothing but their own hot air and blind faith.
Would the world be a better place with a Bitcoin standard or even a Libra, the blockchain currency that is the brainchild of Facebook?
Perhaps, though the dangers are inherent and obvious. While Bitcoin, Etherium and all cryptocurrencies are supposedly secure - though most of them have been hacked or otherwise compromised - they're all electronic and would cease to operate at the most critical of times, when the lights go out. The same applies to Libra or any other privately-held cryptos, plus, they would be subject to the dictates of their owners, and less prone to market forces.
Blockchain-based currencies have the advantages of being stable, portable and divisible, but they are by no means a store of value. Only currencies backed by physical assets, such as gold and silver, maintain that standard. The ultimate answer trends toward diversification and convertibility, in terms of sovereign currencies backed by the natural holdings of individual nations, be it oil, gold, silver, water, energy, or whatever is the unique strength of a country.
It would be refreshing - if not preposterous to the central bankers of the world - to hear considerations of tried and true currencies backed by gold and silver rather than the perverse fascination with untested techno-centric solutions, but that, sadly, is not the case. The world is hurtling toward digital money at breakneck speed. Central banks have been plotting and planning its rollout for years and it will become reality. It will be centralized, globalized, prone to error and miscalculation, hackable, inconsistent, unstable, and likely to cause more deprivation and suffering than the world has been forced to bear through the last 50 years of the failing fiat experiment.
At the Close, Friday, September 11, 2020:
Dow: 27,665.64. +131.06 (+0.48%)
NASDAQ: 10,853.54, -66.05 (-0.60%)
S&P 500: 3,340.97, +1.78 (+0.05%)
NYSE: 12,773.04, +66.35 (+0.52%)
For the Week:
Dow: -467.67 (-1.66%)
NASDAQ: -459.59 (-4.06%)
S&P 500: -85.99 (-2.51%)
NYSE: -144.11 (-1.12%)
Key elements driving the declines remained as they have for months: coronavirus, lockdowns, school and business closures, election concerns, mass protests, and occasional rioting. Adding to the mix were forest fires devastating Western states and ongoing international trade disputations, especially those between China and the United States. The EU had its own spat going with Great Britain, which has decided to chart its own course in its ongoing separation from the mainland economic bloc.
Overriding all of the usual issues was the usually-ineffective congress, which continued to flail about over any kind of relief resolution. It's not so much that the house and senate can't come to mutually-agreeable terms, it's more that as a legislative governing body they are feckless, unrepresentative, unresponsive and devoid of common sense. On capitol hill, there's little interest to come to the aid of the masses. It is almost as if, suddenly, the entire congress has re-discovered fiscal responsibility. Don't count on it, though. They just don't want to help out the American public, looking down from their preening and primping perches on the huddled minions like all tyrannical bodies are prone to do.
So, Wall Street managed to express its disapproval the only way it can, by selling, instead of buying, stocks. Ho-hum. Major indices all managed to end the week nesting at or near their 50-day moving averages, a meaningless tactic by the monied gang of crooks and thieves masquerading as America's bankers and financial genii. Stocks dare not fall below desirous levels, lest they incur the ire of the almighty Federal Reserve, of which its federal open market committee (FOMC) meets this coming week (Tuesday and Wednesday).
After all, the Fed has, following the fast crash of March, put the money people onto easy street once again via a binge-buying of virtually all outstanding debt, backstopping even the riskiest loans and hoisting up companies that should be headed to bankruptcy proceedings. Stocks cannot be allowed to lose value. Not only would that truncate the V-shaped-recovery narrative, but it would send shock waves of negative sentiment throughout the economy. The Fed will not stand for that, so it is expected to become the soul of dovishness as the coming week progresses.
So much is predicated on the Fed "put" that it had better work out to the advantage of the one-percenters. Otherwise, a hard dose of economic reality might just cause real panic, a shakeout from over-indulgent investment chasing, an abrupt end to churning, controlling, high-frequency spoofing, and a host of big money hijinks hat keep the wheels of financialization intact.
There might not be a crash, but a slow, steady decline in stock prices seems to be well underway. This second leg down won't inspire shock and awe, headlines of doom, or frightening one-day drops. It will be more like Chinese water torture: precise and deliberate, exacting excruciating dull pain over a long period.
Treasuries are catching onto the game gradually. All issuance of less than five years duration has been at the zero-bound for months and is not moving nor movable. The 10-year note took the bulk of the safety play, dropping five basis points in yield to end the week at a moribund 0.67%. The 30-year dropped four, to 1.42%.
Oil was the big "tell" of the week, losing any momentum it may have had, with WTI crude settling out at $37.33 a barrel, down 14% from its high of $43.39 on August 26. If stocks aren't willing to tell the whole story, oil, which greases the skids of the global economy is screaming a "run for the hills" signal.
As is usually the case when stocks get hit, precious metals had to be spanked as well, despite there being no correlation between stocks and gold or silver, but rather, in a sane world, an inverse relationship might apply.
Rather than taking an overt beating, gold actually gained on the week, though not by much. Closing out on September 4 at $1,933.94, it ended this week at $1,940.55. Silver actually did lose a little, trading down from $26.91 to $26.73 per ounce. Both moves in the metals were well short of one percent, which has to offer some hope for the proponents of real money, as the main stock indices fell anywhere from one to four percent on the week. There's always something good to be said about out-performance.
Here are the latest prices on eBay for common gold and silver items (numismatics excluded, shipping - often free - included):
Item: Low / High / Average / Mean
1 oz silver coin: 32.74 / 45.10 / 39.27 / 40.03
1 oz silver bar: 32.94 / 44.20 / 35.42 / 34.02
1 oz gold coin: 1,929.90 / 2,324.37 / 2,077.02 / 2,070.47
1 oz gold bar: 2,028.90 / 2,111.09 / 2,057.38 / 2,056.68
Notably, the ECB has been, and continues to explore the possibility of the creation of a central bank digital currency (CBDC). Central banks are afraid that big tech firms with their own digital currencies could shut them and government out of their monetary roles in national and international economies.
Now, wouldn't that be a crying shame. Central banks - all of them private institutions - wouldn't be able to wouldn't be able to issue currency at interest, create mountains of debt, impoverish millions of people, change interest rates at their pleasure, intervene in markets, prop up failing businesses, distort and destroy price discovery, leverage deposits as loans at 20:1, 30:1 or even more ridiculous ratios, create massive asset bubbles, stoke inflation, track and record all transactions, and generally enslave the entire global population with currencies backed by nothing but their own hot air and blind faith.
Would the world be a better place with a Bitcoin standard or even a Libra, the blockchain currency that is the brainchild of Facebook?
Perhaps, though the dangers are inherent and obvious. While Bitcoin, Etherium and all cryptocurrencies are supposedly secure - though most of them have been hacked or otherwise compromised - they're all electronic and would cease to operate at the most critical of times, when the lights go out. The same applies to Libra or any other privately-held cryptos, plus, they would be subject to the dictates of their owners, and less prone to market forces.
Blockchain-based currencies have the advantages of being stable, portable and divisible, but they are by no means a store of value. Only currencies backed by physical assets, such as gold and silver, maintain that standard. The ultimate answer trends toward diversification and convertibility, in terms of sovereign currencies backed by the natural holdings of individual nations, be it oil, gold, silver, water, energy, or whatever is the unique strength of a country.
It would be refreshing - if not preposterous to the central bankers of the world - to hear considerations of tried and true currencies backed by gold and silver rather than the perverse fascination with untested techno-centric solutions, but that, sadly, is not the case. The world is hurtling toward digital money at breakneck speed. Central banks have been plotting and planning its rollout for years and it will become reality. It will be centralized, globalized, prone to error and miscalculation, hackable, inconsistent, unstable, and likely to cause more deprivation and suffering than the world has been forced to bear through the last 50 years of the failing fiat experiment.
At the Close, Friday, September 11, 2020:
Dow: 27,665.64. +131.06 (+0.48%)
NASDAQ: 10,853.54, -66.05 (-0.60%)
S&P 500: 3,340.97, +1.78 (+0.05%)
NYSE: 12,773.04, +66.35 (+0.52%)
For the Week:
Dow: -467.67 (-1.66%)
NASDAQ: -459.59 (-4.06%)
S&P 500: -85.99 (-2.51%)
NYSE: -144.11 (-1.12%)
Friday, September 11, 2020
Senate Bails On Coronavirus Relief Package; Congress Needs To Go Back On Vacation... Forever
You have to hand it to the politicians in Washington. They've really become Ninja Masters at pissing off everybody.
Back from a recess vacation that lasted more than a month, it was the senate's turn to show the American people that they care more about being re-elected than the actual welfare of those purportedly voting for them, failing to get even a slimmed-down version of a virus-related stimulus bill past a procedural vote.
Negotiations on a second round of $1200 stimulus checks have been nothing short of a made-up farce - much like the case-demic coronavirus scam - since the middle of July when Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows made near-daily visits to House Speaker Nancy Pelosi's office to work out a plan to help out struggling Americans who had to put up with virus panic, job losses, school closures, business closures, lockdowns, stay-at-home orders, mandatory mask mandates, social distancing rules, and an endless barrage of propaganda from the mainstream media designed to keep them all in line and afraid to interact with fellow human beings.
Those "negotiations" fall apart mid-August and there's been no progress since, by design. Now that the pols are back in their cozy little cocoon otherwise known as the "seat of power" in Washington DC, they figured it would be good optics for the senate to take up matters, look like adults, and give it a go. The result was another week of wasted efforts and senators on both sides of the aisle looking more like adulterers than adults, playing partisan politics with a bill that didn't even include a scrap of relief for ordinary Americans, and especially the self-employed and senior citizens.
It's not that funds are urgently needed by anybody, but the bill included $105 billion for school re-openings, and an inordinate amount of space was devoted to limitations on liabilities for governments from towns and villages to cities and states, hospitals, health care workers and medical-related businesses. It seems the purpose of the bill was to spend more money on things people already pay taxes or fees to support (schools, both public and private, primary, secondary, and colleges) and prevent individuals from suing their local governments, hospitals, et. al., rather than providing some quick cash to those who would likely go out and spend it. As it turns out, the senate can't even play CYA very well.
The senate's failure set off a wave of selling on Wall Street, which isn't particularly fond of government standing in the way of excessive amounts of cash being dispersed willy-nilly, some of which would positively end up in their greedy little hands.
If it hasn't been apparent for the past forty years, it should be plain to see that voting for senators and members of the House of Representatives is simply an exercise in futility. None of the elected people have any interest in providing representation to the people they supposedly represent and when it comes time to explain their failures they can rely on the other party as a convenient scapegoat when the truth of the matter is that both parties are really all part of one big club - and, as the late George Carlin said - "and you ain't in it."
All said, this latest scripted adventure into pseudo-politics is par for the course. Congress hasn't done much of anything of direct benefit to the American people for quite a long time, which is why the overall approval rating hovers somewhere between 12 and 15% and has for decades. It's clear that while our system of a representative republic government generally is sound, the need for massive change has never been more apparent. Term limits would be a good start, but wholesale sacking of every one of the senators and representatives would be a better solution.
After all, if all they're capable of doing is perpetuating their own failed legacy, why bother with them at all? They spend money they don't have, creating massive deficits year after year, they all somehow become magically rich while in office, and they take vacations - like the one just concluded - while their constituents are struggling to make ends meet.
If and when Americans awaken to the real problem in this country - which isn't systemic racism, police inequities, or any other platitudinous value system the media and politicians wish to deride - the massive oversizing of government at every level, there could be a reckoning, recovery, and faith in the future. It's not just at the federal level, either. The overbearing, corrupt, incoherent lawmaking and enforcement has trickled all the way down to the local levels. From cops to teachers to dog catchers, they're all on the take, they're all getting paid while what used to be a thriving middle class is decimated. The people are supposed to pay taxes to support their own enslavement, follow orders and vote for the lesser of two evils when in fact there is no choice. That has been proven over and over and over again and it gets worse with every election cycle.
Government already accounts for more than 50 percent of GDP. Where does it stop? When it's 80%, 100% and all we're doing is working to pay taxes to keep these other people - who produce nothing but rancor and divisiveness - in comfortable positions with health care we cannot afford and pensions which far exceed those in comparable positions in the private sector?
Enough is enough. There are too many politicians, too many political favors, too few parties, too many teachers, cops, pencil pushers, social workers and do-nothing workers. Put them on leave. Let them collect unemployment for a change. See how they like it.
By the way, there was another sell-off on Wall Street yesterday, meaning that all of you people trapped in 401k or other pension or stock programs from which you cannot escape lost money. And you'll continue to lose money and purchasing power as long as you play by their rules and allow some faceless stock analyst or broker to manage what used to be your money. Stock markets have been pumped up for the past 12 years - since the financial crisis of 2008 - by the Federal Reserve and stock buyback programs. Many of the companies in which your funds are invested are worthless. It just hasn't been made known to the general public, but it will be soon enough.
Oil was down once again. Over the past few sessions, WTI crude has been whacked down from the $40-42 range to a $36-38 range. Gas prices will soon follow lower, which is about the only silver lining in this upside down world of pretend and extend economics.
Stock futures are looking up on Friday morning pre-open, but it will take a gargantuan effort to produce a winning week for stocks. Thursday's pump and dump was the fourth down day in the last five. In order to produce a positive result for the week the Dow would have to be up 600 points at the close, the NASDAQ would need a gain of 400 points. Otherwise, chalk up a second straight week of losses for the major averages.
That's all for Friday. See you all back here Sunday morning for the WEEKEND WRAP.
At the Close, Thursday, September 10:
Dow: 27,534.58, -405.89 (-1.45%)
NASDAQ: 10,919.59, -221.97 (-1.99%)
S&P 500: 3,339.19, -59.77 (-1.76%)
NYSE: 12,706.69, -179.11 (-1.39%)
Back from a recess vacation that lasted more than a month, it was the senate's turn to show the American people that they care more about being re-elected than the actual welfare of those purportedly voting for them, failing to get even a slimmed-down version of a virus-related stimulus bill past a procedural vote.
Negotiations on a second round of $1200 stimulus checks have been nothing short of a made-up farce - much like the case-demic coronavirus scam - since the middle of July when Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows made near-daily visits to House Speaker Nancy Pelosi's office to work out a plan to help out struggling Americans who had to put up with virus panic, job losses, school closures, business closures, lockdowns, stay-at-home orders, mandatory mask mandates, social distancing rules, and an endless barrage of propaganda from the mainstream media designed to keep them all in line and afraid to interact with fellow human beings.
Those "negotiations" fall apart mid-August and there's been no progress since, by design. Now that the pols are back in their cozy little cocoon otherwise known as the "seat of power" in Washington DC, they figured it would be good optics for the senate to take up matters, look like adults, and give it a go. The result was another week of wasted efforts and senators on both sides of the aisle looking more like adulterers than adults, playing partisan politics with a bill that didn't even include a scrap of relief for ordinary Americans, and especially the self-employed and senior citizens.
It's not that funds are urgently needed by anybody, but the bill included $105 billion for school re-openings, and an inordinate amount of space was devoted to limitations on liabilities for governments from towns and villages to cities and states, hospitals, health care workers and medical-related businesses. It seems the purpose of the bill was to spend more money on things people already pay taxes or fees to support (schools, both public and private, primary, secondary, and colleges) and prevent individuals from suing their local governments, hospitals, et. al., rather than providing some quick cash to those who would likely go out and spend it. As it turns out, the senate can't even play CYA very well.
The senate's failure set off a wave of selling on Wall Street, which isn't particularly fond of government standing in the way of excessive amounts of cash being dispersed willy-nilly, some of which would positively end up in their greedy little hands.
If it hasn't been apparent for the past forty years, it should be plain to see that voting for senators and members of the House of Representatives is simply an exercise in futility. None of the elected people have any interest in providing representation to the people they supposedly represent and when it comes time to explain their failures they can rely on the other party as a convenient scapegoat when the truth of the matter is that both parties are really all part of one big club - and, as the late George Carlin said - "and you ain't in it."
All said, this latest scripted adventure into pseudo-politics is par for the course. Congress hasn't done much of anything of direct benefit to the American people for quite a long time, which is why the overall approval rating hovers somewhere between 12 and 15% and has for decades. It's clear that while our system of a representative republic government generally is sound, the need for massive change has never been more apparent. Term limits would be a good start, but wholesale sacking of every one of the senators and representatives would be a better solution.
After all, if all they're capable of doing is perpetuating their own failed legacy, why bother with them at all? They spend money they don't have, creating massive deficits year after year, they all somehow become magically rich while in office, and they take vacations - like the one just concluded - while their constituents are struggling to make ends meet.
If and when Americans awaken to the real problem in this country - which isn't systemic racism, police inequities, or any other platitudinous value system the media and politicians wish to deride - the massive oversizing of government at every level, there could be a reckoning, recovery, and faith in the future. It's not just at the federal level, either. The overbearing, corrupt, incoherent lawmaking and enforcement has trickled all the way down to the local levels. From cops to teachers to dog catchers, they're all on the take, they're all getting paid while what used to be a thriving middle class is decimated. The people are supposed to pay taxes to support their own enslavement, follow orders and vote for the lesser of two evils when in fact there is no choice. That has been proven over and over and over again and it gets worse with every election cycle.
Government already accounts for more than 50 percent of GDP. Where does it stop? When it's 80%, 100% and all we're doing is working to pay taxes to keep these other people - who produce nothing but rancor and divisiveness - in comfortable positions with health care we cannot afford and pensions which far exceed those in comparable positions in the private sector?
Enough is enough. There are too many politicians, too many political favors, too few parties, too many teachers, cops, pencil pushers, social workers and do-nothing workers. Put them on leave. Let them collect unemployment for a change. See how they like it.
By the way, there was another sell-off on Wall Street yesterday, meaning that all of you people trapped in 401k or other pension or stock programs from which you cannot escape lost money. And you'll continue to lose money and purchasing power as long as you play by their rules and allow some faceless stock analyst or broker to manage what used to be your money. Stock markets have been pumped up for the past 12 years - since the financial crisis of 2008 - by the Federal Reserve and stock buyback programs. Many of the companies in which your funds are invested are worthless. It just hasn't been made known to the general public, but it will be soon enough.
Oil was down once again. Over the past few sessions, WTI crude has been whacked down from the $40-42 range to a $36-38 range. Gas prices will soon follow lower, which is about the only silver lining in this upside down world of pretend and extend economics.
Stock futures are looking up on Friday morning pre-open, but it will take a gargantuan effort to produce a winning week for stocks. Thursday's pump and dump was the fourth down day in the last five. In order to produce a positive result for the week the Dow would have to be up 600 points at the close, the NASDAQ would need a gain of 400 points. Otherwise, chalk up a second straight week of losses for the major averages.
That's all for Friday. See you all back here Sunday morning for the WEEKEND WRAP.
At the Close, Thursday, September 10:
Dow: 27,534.58, -405.89 (-1.45%)
NASDAQ: 10,919.59, -221.97 (-1.99%)
S&P 500: 3,339.19, -59.77 (-1.76%)
NYSE: 12,706.69, -179.11 (-1.39%)
Thursday, September 10, 2020
Stocks Bounce, Jobless Claims Remain Elevated, Wall Street Braces For More Panicky Selling
After three straight days of losses, investors dusted themselves off and bought the dip on Wednesday, an intrepid strategy that worked wonders during the heydays of QE, but may prove harmful to a portfolio in the second leg of a bear market, which is precisely what is unfolding currently.
While stocks made a nice move on Wednesday, the major indices failed to cover the losses from even the prior session and they slumped noticeably into the close, giving up between a quarter and a third of the day's winnings.
With Thursday's opening bell a little less than an hour away, futures are pointing to a mixed to slightly lower open, just the kind of turbulence that is to be expected, especially with initial jobless claims coming in at 884,000, a carbon copy of the prior week's release.
In terms of signal to noise, selling seems to be the dominant signal, pumped action higher mostly leftover noise from the easy money short squeeze and Fed push of the past five months. Stocks are still at nosebleed levels and any punches that land are going to unleash a a torrent of blood flow. As stated in Wednesday's post, earnings season will more than likely deliver bad news. Even though expectations for most companies will have been guided lower, year over year comparisons will clearly show that growth has stalled out for many companies.
The political, social and economic climates continue to be challenging to say the least, leading to uncertainty in markets, a condition unwelcome on Wall Street. Big money will be rotating out of vulnerable positions, though finding safe havens in individual stocks may become a fool's errand as the recession proceeds and market sentiment sours.
Running to corporate bonds can only provide temporary relief and with yields at embarrassingly-low levels fund managers should find little relief there. The options available are almost certain to run somewhere between bad and horrible.
As the declining scenario unfolds - with days of gains shadowed by continued losing sessions - the winners will be those seeking not to advance their capital, but to preserve what's left of it. The recovery and expansion of the economy touted by mostly perma-bulls or spokespeople for the White House will turn out to be more in a series of false promises. This is not to say that President Trump will be significantly challenged in the election. He will win in a landslide despite the media's best effort to cloud the minds of voters with scenes of COVID-19 horrors, street protests, vandalism, looting, and rioting. His handlers have to talk up the economy. It's all they know and actually speaking the truth about a painful economic experience is strictly off limits in the charged political environment.
All of this uncertainty will eventually lead to one profound tactic. Buying gold and silver as a hedge and wealth preserver will prove to be not only prudent but probably highly profitable. The US dollar is losing strength and the Fed's opaque message of inflation can lead to nothing good, unless higher prices for everything useful or necessary somehow becomes a desirable outcome.
The message to goldbugs and silver stackers has never been clearer. With prices depressed from the month ago highs, precious metals are at bargain levels. The one caveat is that in the case of a stock market crash, the metals will also take a hit, though not as badly as one might expect. Nobody in their right frame of mind is going to sell gold at under $1900, nor silver under $24 an ounce. Those are pretty well established support levels and all indications are that they will trend higher as the economy of not just the United States, but that of every country on the planet is taken down to brass tacks and spare parts.
Markets and economies all go through phases and periods of boom and bust. As the fiat currencies - dollar, euro, yen - burn to ashes, gold and silver, the undeniable real hard money assets, will prosper.
At the Close, Wednesday, September 9, 2020:
Dow: 27,940.47, +439.58 (+1.60%)
NASDAQ: 11,141.56, +293.87 (+2.71%)
S&P 500: 3,398.96, +67.12 (+2.01%)
NYSE: 12,885.80, +197.73 (+1.56%)
While stocks made a nice move on Wednesday, the major indices failed to cover the losses from even the prior session and they slumped noticeably into the close, giving up between a quarter and a third of the day's winnings.
With Thursday's opening bell a little less than an hour away, futures are pointing to a mixed to slightly lower open, just the kind of turbulence that is to be expected, especially with initial jobless claims coming in at 884,000, a carbon copy of the prior week's release.
In terms of signal to noise, selling seems to be the dominant signal, pumped action higher mostly leftover noise from the easy money short squeeze and Fed push of the past five months. Stocks are still at nosebleed levels and any punches that land are going to unleash a a torrent of blood flow. As stated in Wednesday's post, earnings season will more than likely deliver bad news. Even though expectations for most companies will have been guided lower, year over year comparisons will clearly show that growth has stalled out for many companies.
The political, social and economic climates continue to be challenging to say the least, leading to uncertainty in markets, a condition unwelcome on Wall Street. Big money will be rotating out of vulnerable positions, though finding safe havens in individual stocks may become a fool's errand as the recession proceeds and market sentiment sours.
Running to corporate bonds can only provide temporary relief and with yields at embarrassingly-low levels fund managers should find little relief there. The options available are almost certain to run somewhere between bad and horrible.
As the declining scenario unfolds - with days of gains shadowed by continued losing sessions - the winners will be those seeking not to advance their capital, but to preserve what's left of it. The recovery and expansion of the economy touted by mostly perma-bulls or spokespeople for the White House will turn out to be more in a series of false promises. This is not to say that President Trump will be significantly challenged in the election. He will win in a landslide despite the media's best effort to cloud the minds of voters with scenes of COVID-19 horrors, street protests, vandalism, looting, and rioting. His handlers have to talk up the economy. It's all they know and actually speaking the truth about a painful economic experience is strictly off limits in the charged political environment.
All of this uncertainty will eventually lead to one profound tactic. Buying gold and silver as a hedge and wealth preserver will prove to be not only prudent but probably highly profitable. The US dollar is losing strength and the Fed's opaque message of inflation can lead to nothing good, unless higher prices for everything useful or necessary somehow becomes a desirable outcome.
The message to goldbugs and silver stackers has never been clearer. With prices depressed from the month ago highs, precious metals are at bargain levels. The one caveat is that in the case of a stock market crash, the metals will also take a hit, though not as badly as one might expect. Nobody in their right frame of mind is going to sell gold at under $1900, nor silver under $24 an ounce. Those are pretty well established support levels and all indications are that they will trend higher as the economy of not just the United States, but that of every country on the planet is taken down to brass tacks and spare parts.
Markets and economies all go through phases and periods of boom and bust. As the fiat currencies - dollar, euro, yen - burn to ashes, gold and silver, the undeniable real hard money assets, will prosper.
At the Close, Wednesday, September 9, 2020:
Dow: 27,940.47, +439.58 (+1.60%)
NASDAQ: 11,141.56, +293.87 (+2.71%)
S&P 500: 3,398.96, +67.12 (+2.01%)
NYSE: 12,885.80, +197.73 (+1.56%)
Wednesday, September 9, 2020
Rough Day On Wall Street As Second Phase Of Bear Market Gets Underway
Just back from a holiday weekend and the end of a long summer, traders went to work selling everything on Monday.
Not that stocks weren't deserving of lower valuations, they were and still are. This is just the beginning of a trend that began late last week. If this is the start of the second leg down for stocks, it promises to be slower, longer and more painful than the quick initial burst in March.
Stocks have been pumped higher throughout the fake COVID pandemic, despite an economy that has rotted from within. We are witnessing the destruction of the US economy and of what was - a mere 30 years ago - the greatest country on the face of the planet. Financialization, which began in the 80s and accelerated to its zenith in 2008, is now in the process of unwinding all of the malinvestments made through those years. Today's companies are barely profitable unless they are a niche tech company with no or limited competition such as Google, Apple, Facebook, Amazon, and Netflix, but they are all overvalued, the trade crowded, weak hands taking losses.
There may be day-to-day gains, but the trend is clearly to the downside. Stocks are being liquidated by large investors and funds. The smart money is getting out, leaving the dumb money as ultimate bag-holders. In this secondary bear market phase, buying dips will only provide returns for day-traders and some momentum chasers. Long term investors will get taken to the cleaners.
Expect this phase of the bear market to gradually undermine all investments. All major indices will exceed the lows made this March, though the entire process could take as long as two years. In the interim, the Wall Street casino is open for business, ready to scalp proceeds from unsuspecting people with money and no clue as to what's really happening.
Many of the Western states are on fire, literally, and the cites are being destroyed from within, a process that's been ongoing for many years. Older, Eastern "rust belt" cities are bankrupt, as are the states of New Jersey, Illinois, New York, and California. While the media wants everyone to focus on the presidential election and wear masks to somehow thwart an infectious pathogen that does little harm to 99.98% of the population, the pillars of industry are crumbling. Rats - brokers, bankers, CEOs - are jumping ship as the destruction accelerates.
Stocks may rebound here and maybe for more than a week or even two, but in the end they are mostly overvalued and will suffer losses just on that regard. Loss of confidence and lack of investible capital will bring stocks to more sensible levels and eliminate those who cannot make ends meet, i.e., zombie companies.
Fed intervention will not help in a condition that is turning from a liquidity crisis to a solvency crisis, two different animals.
Note well the decline in the price of oil on Tuesday. It was absolutely hammered and will continue to test lower lows over coming months. The economy is imploding and extra funny money from the government or from the Federal Reserve isn't going to fix what's broken. Crony capitalism, corruption, media collusion, and the end of globalization are all coming together to destroy what's left.
A great reset is coming, possibly before the end of the year, though the implications will reverberate throughout the global system for decades.
Thus far, stocks have seen only minor damage. When third quarter earnings begin to roll out in about a month, the handwriting will be there for everyone to see. Stocks should enter correction (-10%) within weeks and resume bear market posture (-20%) some time in October, or, at the latest, after the November 3 elections, which are certain to be a fiasco of mammoth proportion.
At the Close, Tuesday, September 8, 2020:
Dow: 27,500.89, -632.41 (-2.25%)
NASDAQ: 10,847.69, -465.41 (-4.11%)
S&P 500: 3,331.84, -95.12 (-2.78%)
NYSE: 12,688.07, -229.03 (-1.77%)
Not that stocks weren't deserving of lower valuations, they were and still are. This is just the beginning of a trend that began late last week. If this is the start of the second leg down for stocks, it promises to be slower, longer and more painful than the quick initial burst in March.
Stocks have been pumped higher throughout the fake COVID pandemic, despite an economy that has rotted from within. We are witnessing the destruction of the US economy and of what was - a mere 30 years ago - the greatest country on the face of the planet. Financialization, which began in the 80s and accelerated to its zenith in 2008, is now in the process of unwinding all of the malinvestments made through those years. Today's companies are barely profitable unless they are a niche tech company with no or limited competition such as Google, Apple, Facebook, Amazon, and Netflix, but they are all overvalued, the trade crowded, weak hands taking losses.
There may be day-to-day gains, but the trend is clearly to the downside. Stocks are being liquidated by large investors and funds. The smart money is getting out, leaving the dumb money as ultimate bag-holders. In this secondary bear market phase, buying dips will only provide returns for day-traders and some momentum chasers. Long term investors will get taken to the cleaners.
Expect this phase of the bear market to gradually undermine all investments. All major indices will exceed the lows made this March, though the entire process could take as long as two years. In the interim, the Wall Street casino is open for business, ready to scalp proceeds from unsuspecting people with money and no clue as to what's really happening.
Many of the Western states are on fire, literally, and the cites are being destroyed from within, a process that's been ongoing for many years. Older, Eastern "rust belt" cities are bankrupt, as are the states of New Jersey, Illinois, New York, and California. While the media wants everyone to focus on the presidential election and wear masks to somehow thwart an infectious pathogen that does little harm to 99.98% of the population, the pillars of industry are crumbling. Rats - brokers, bankers, CEOs - are jumping ship as the destruction accelerates.
Stocks may rebound here and maybe for more than a week or even two, but in the end they are mostly overvalued and will suffer losses just on that regard. Loss of confidence and lack of investible capital will bring stocks to more sensible levels and eliminate those who cannot make ends meet, i.e., zombie companies.
Fed intervention will not help in a condition that is turning from a liquidity crisis to a solvency crisis, two different animals.
Note well the decline in the price of oil on Tuesday. It was absolutely hammered and will continue to test lower lows over coming months. The economy is imploding and extra funny money from the government or from the Federal Reserve isn't going to fix what's broken. Crony capitalism, corruption, media collusion, and the end of globalization are all coming together to destroy what's left.
A great reset is coming, possibly before the end of the year, though the implications will reverberate throughout the global system for decades.
Thus far, stocks have seen only minor damage. When third quarter earnings begin to roll out in about a month, the handwriting will be there for everyone to see. Stocks should enter correction (-10%) within weeks and resume bear market posture (-20%) some time in October, or, at the latest, after the November 3 elections, which are certain to be a fiasco of mammoth proportion.
At the Close, Tuesday, September 8, 2020:
Dow: 27,500.89, -632.41 (-2.25%)
NASDAQ: 10,847.69, -465.41 (-4.11%)
S&P 500: 3,331.84, -95.12 (-2.78%)
NYSE: 12,688.07, -229.03 (-1.77%)
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