Second Leg Of The Bear Market Amidst An Epochal 400-Year Cycle

Despite the NASDAQ marking an all-time closing high of 12,056.44 on September 2nd, the month has not been kind to tech stocks in general or the NASDAQ in particular. Wednesday's 330-point decline sent the NASDAQ well into correction territory. The level of 10,850.80 was 10% off the high, so Wednesday's close at 10,632.99 has the index off by 11.8% in just 15 trading sessions.

The S&P 500, which also made an all-time high on September 2, closing at 3,580.84 that day, is also nearing correction levels. Wednesday's close of 3,236.92 marked a 9.6% drop from the high.

The Dow Jones Industrials, which has yet to exceed its February 12 record close of 29,551.42, dropped another 525 points on Wednesday after losing 510 points on Monday. In between, Tuesday's 140-point gain amounted to nothing more than a dead cat bounce. On Wednesday the cat was formally pronounced dead, as 28 of the 30 listed blue chips posted losses. Only Johnson & Johnson (JNJ), on news that it's coronavirus vaccine was entering phase 3 trials, and Nike (NIKE), which smashed fiscal first quarter earnings, saved the industrials.

In what could be the worst trade ever, NIKE stock soared nearly nine percent, closing at an all-time high of 127.11. Nike's 0.95 cents per share earnings doubled expectations (0.47) as apparently more people working or lounging at home have been ordering sneakers off Nike's website. The reasons that the Nike trade might turn out horribly are multiple, especially the current P/E multiple of 74, a number usually reserved for IPOs and hot tech start-ups. Nike is neither of those and further, its third quarter gains can largely be attributed to an influx of orders from people getting an extra $600 a week on unemployment during the first month of the quarter. Nike's fiscal first quarter ended August 31, meaning the company benefitted from two months (June and July) in which millions of unemployed people were making bank staying at home.

What do people who were making $400 a week working who had a windfall of an extra $200 a week buy? Sneakers. And TVs. Best Buy's third quarter earnings should be reasonably good.

Nike's blowout quarter comes on the heels of two consecutive earnings misses and the company's quarterly sales of $10.6 billion were about 1/2 percent below year-ago figures. Worst trade ever? From the looks of it, RobinHood traders and momentum chasers just did it.

Getting back to the Dow, the world's most widely-watched index finished up Wednesday down 9.4% from it's closing high, so any further setback will send it (and the S&P) through into correction. Considering the multivariate issues facing investors - COVID, elections, violent protests, slumping economy, enormous government deficits - it would make perfect sense for this correction to morph back down to bear market levels, especially since the Dow never completed its comeback. The record-breaking performance by its neighbors in the S&P and NASDAQ were fueled by the Federal Reserve throwing in a kitchen sink's worth of programs and facilities to shore up the sinking stock markets off the March lows and were primarily vaporware.

Beyond the Dow not reaching its previous record high, it's counterpart in the Dow Theory calculus - the Dow Jones Transportation Average - did in fact surpass it's all time high, just a week ago, peaking out at 11,555.14 on September 16. Just as the Transports have to surpass prior highs or lows to confirm a primary trend change from bull to bear or vice versa, the Industrials have to do likewise.

While the Transports did make new highs, the Industrials DID NOT, thus, a bear market and its March lows remain in play as the primary trend and any bulls who profess that the bear market which bottomed out on March 23 actually ended on June 8 when the NASDAQ recovered beyond its all time high, is full of themselves and needs to go back to investing school.

Depending on who's citing statistics, bear markets typically last between 14 and 22 months, not 11 weeks, as per the NASDAQ's phoenix-like rise from late March into early June. If this bear is just average, an 18-month variety, we are only six months into it. Discounting the concept that this bear market could be one of the worst ever, on a level beyond the sub-prime crash of 2007-2009 or the Great Depression, which lasted for decades and culminated in World War II, stocks are very early in the game.

It can safely be assumed that what's occurring presently is just the start of the longer, slower, more painful second leg down of a protracted bear market, as markets are now following the historic script rather than the ill-advised and famously-promoted "V-shaped recovery" narrative pushed forward by the financial media and administration caterwaulers, Steven Mnuchin, Larry Kudlow, and even, sadly, the president himself.

What the world is experiencing is not a run-of-the-mill slump or recession that's isolated to one or a few countries. This is a global solvency event encompassing every nation on the planet. This is the end game for fiat currencies backed by full faith and credit of central, private banks, not sovereign treasuries. Nations, companies and individuals are on the hook for the debt-binging of the past 50 years to the tune of more than $258 trillion, a number which has ballooned beyond the reported 331% of global GDP.

Renowned financial scholars Max Keiser and Stacy Herbert explain how the overriding trend dates back to 1602, the end of feudalism and the beginning of public stock ownership. The second part of the report features the conclusion of a segment with esteemed Dr. Michael Hudson focusing on the ideas of the late anthropologist, David Graber.

The 400-year cycle now coming to an end is not cyclical nor secular, but rather epochal.

We may be living in interesting times, but few, if any, wanted them to be this interesting.

At the Close, Wednesday, September 23, 2020:
Dow: 26,763.13, -525.05 (-1.92%)
NASDAQ: 10,632.99, -330.65 (-3.02%)
S&P 500: 3,236.92, -78.65 (-2.37%)
NYSE: 12,359.16, -243.38 (-1.93%)

Congress Provides For Itself Only; Federal Reserve Keeping The Lights On With Failed Currency

After markets closed with meaningless gains on Tuesday, the House overwhelmingly passed a stop-gap spending resolution to keep the federal government functioning through December 11. The measure now goes to the Senate, where it is certain to be adopted, and then on to the president's desk for final approval.

There is complete certainty that this spending measure will be signed into law, since it keeps the bankrupt federal government - which added another $3 trillion to the now $26.8 trillion in debt just this fiscal year (ends Sept. 30) - operating through the all-important elections.

The preening peacocks inhabiting the halls of congress and various enclaves in and around Washington, DC, adorned in the finest designer clothing and fanciest suits, made sure to keep their power party going, all at the expense of US taxpayers, who foot the bill - that part not financed by the Federal Reserve - for their fantastic folly of fiscal failure.

While these very same representatives of "the people" were unable to find the means to produce a second stimulus bill for the public, finding common ground to fund their own exploitative escapades was easily accomplished. If anything, this clearly shows that the elected officials in the federal government and their unelected underlings have little to no regard for their constituents while at the same time hoisting themselves up on pedestals of pride and glory, paragons of virtue and goodness.

They are nothing more than common grifters, the lot of them, fattening themselves on public funds, enriching themselves through insider information without regard to the welfare of the country. Wallowing in trillions of dollars of unpayable debt, they've expanded the federal debt to GDP ratio beyond 136 percent with no end to their profligate spending in sight.

As a whole, the United States congress - and to a large degree the present and previous holders of the office of the presidency - have, in the short span of 50 years, decimated the economy of the country. They are not alone in their insolvency. Most states, run by equally incompetent money-grubbers and cullers of favor, are also deeply indebted to the central bank, the Federal Reserve, itself an illiquid, insolvent fantasy.

The Federal Reserve has more than $7 trillion on its balance sheet, comprised of mortgage-backed securities, treasury bills, notes, and bonds, corporate debt, junk debt, and municipal debt, all marked to magic at flawed, make-believe par values. Without the ability to create currency out of thin air, the Federal Reserve would be first in line at the collection agency, followed closely by the zombie banks and corporations which cannot survive without central bank generosity. The vicious cycle of a central bank plying their very own monopoly money to prop up deeply-indebted banks, corporations, and governments has just about run its course. The currency is nearly worthless and everybody knows it.

The Federal Reserve, the US central bank, funder to the country and the rest of the world, is, and has been bankrupt since 2008, if not at an earlier date. The underpinnings of the global economy are shattered and nothing speaks to this reality more than the continuing stomping down of the price of gold and silver futures contracts and their counterparts in fraud, spot prices set by the London Bullion Market Association (LBMA).

The ability of the participants in these frauds - central banks, commercial banks, bullion banks and others - have managed to keep the prices of precious metals - real money - under wraps for decades. That overt manipulation of perception, making people believe that paper and promises are worth more than physical gold and silver has kept their fraud going since the end of the gold standard when then-president Richard M. Nixon formally closed the gold window on August 15, 1971.

Prior to that, US dollars were redeemable in gold. Since then, US dollars have been redeemable for debt, war, crime, unkept promises, and assorted military actions. Reality has been in suspended animation via normalcy bias for nearly 50 years. In the beginning of the fiat era, nobody wanted the system to fail because it was working for everybody. As time progressed, fiat currency has worked for fewer and fewer people. Incomes stagnated for most of the middle and lower classes while the rich got richer to the point at which we have arrived today: nothing is "normal," everything is contorted, twisted, contrived, absurd.

Already there is blood in the streets, literally, in cities large and small. Tens of millions are unemployed. Business failures have reached epidemic proportions atop the false narrative of the coronavirus and COVID-19. The country has fallen apart, fractured by the purveyors of a phony currency that has lost 98% of its value since 1913.

Stock prices and home prices are hand-in-hand the most egregious manifestations of the fraudulent currency. These assets are so overinflated as to make even the most bovine bulls blush. The median existing house price jumped 11.4% from a year ago to a record $310,600 in August.

In August of 1971, the median price for an existing single family home was roughy $26,400. The price released on Tuesday by the National Association of Realtors is nearly a 12-fold increase from 1971. Incomes have not kept pace.

Median income in 1971 was around $7000 a year. Today's median income is approximately $43,000, if one has a job. That's about a six-fold increase, which is why it now takes two incomes to afford a home, when it took only one in 1971 and prior. Nobody was able to keep pace with rampant asset inflation, which is a cover for the reality of an eroding currency and loss of purchasing power.

As the world spins through space and 2020, careening towards a date with destiny around November 3rd, there is no normal, new or otherwise. Everything is a distortion of reality, so take it with a grain of salt. The price of an ounce of silver is surely not $24, nor is $1892 the real price of an ounce of gold. It's all based on the faulty perception of a currency based on nothing but faith and hope having value. Faith is in the issuer, and the hope is that the value is retained.

Hope died in 1971. Faith is taking the next train out of town.

In case you missed it (we did), Episode E1594 of the Keiser Report, Pushing Plastic, Holding Junk Bonds is a tour de force for Max, Stacy, and, in the second half of the show, Max's guest, Michael Pento. This episode features some interesting historical perspectives from the 1970s, evoking memories of hippies, plastic recycling and the ghost of New York City mayor Abe Beame and Felix Rohaytn, chairman of the Municipal Assistance Corporation which was largely responsible for bringing the city back from the brink of bankruptcy in 1975.

If you're not old enough to remember the 1970s firsthand, consult with a local baby boomer friend or relative or do some reading. There is plenty of work on the internet which does justice to the period. It was a fascinating time in which the United States - and the rest of the world - formally, albeit mostly unknowingly, abandoned the gold standard and entered the age of floating fiat currencies, the era which is quickly and painfully coming to a dramatic conclusion.

Highly entertaining and informative, the show aired on September 17, just prior to the death of Ruth Bader Ginsburg.

At the Close, Tuesday, September 21, 2020:
Dow: 27,288.18, +140.48 (+0.52%)
NASDAQ: 10,963.64, +184.84 (+1.71%)
S&P 500: 3,315.57, +34.51 (+1.05%)
NYSE: 12,602.54, +40.76 (+0.32%)

The Current And Future Condition Of Currency Is A BlackRock Black Hole

After Monday's scary opening of a brand new week of investing on Wall Street (how exciting!) and the subsequent buying spree that left the NASDAQ - which was down as much as 270 points - just a little below unchanged and reduced losses on the Dow by half, there are probably more than a few people wondering just what's happening to their stock portfolio, 401k, pension plan, college fund (yeah, that's a good one), or even those paper notes in the wallet.

Courtesy of the world's oldest central bank - Sweden's Riksbank - we now have the answer... well, in a manner of speaking. The image at right shows a page from the 19-page document the country's central bank sent in response to a request by Bloomberg News for details of BlackRock’s research into the central bank's bond-buying program.

"The Swedish corporate bond market exhibits a number of singularities when compared to other Anglo-Saxon markets," the document showed. Almost everything else was blacked out.

The central bank, which is due to announce its next policy decision on Tuesday, said a further 68 pages of the report couldn’t be shared at all, as they, "in their whole, are covered by secrecy."

Therefore, in case anybody wants to know what's going on in the world of international finance or even your local credit union, they should refer to BlackRock, the publicly-traded company that the US Federal Reserve employed months ago to execute their own bond-buying scheme. BlackRock is still doing the Fed's - and other central banks' - dirty work, which, under normal circumstances would have been outlawed by the Fed's own charter, but, since there's a pandemic and central banks apparently have outrageous superpowers that allow them to violate laws and the constitutions of most countries, a fully-redacted explanation is about the best one can expect.

In other words, you, peon, are not supposed to see what's happening behind the curtain. You are supposed to remain clueless and intellectually vacuous. The central bank knows what's best for you. A life of debt servitude and poverty is your manifest destiny and how that is achieved you are not allowed to know.

If heavily-redacted central bank documents involving the currency of an entire nation isn't enough to shake up the few remaining trusting souls who think banks are all on the up-and-up, perhaps the report released Monday by the International Consortium of Investigative Reporters (yes, in a world dominated by fake news, there is actually such a group) will convince otherwise.

The group's investigation, known as FinCEN, revealed that a number of large international banks - including HSBC, JP Morgan Chase, Barclay's, Wells Fargo, Citibank and many more - were involved in money laundering for drug cartels, criminals, and oligarchs, all while their own compliance departments were flagging the transactions with suspicious activity reports filed with the US Treasury's Financial Crimes Enforcement Network, or FinCEN.

Though thousands of such reports - known as SARs - were received by Treasury, but little to nothing was done in the vast majority of cases.

Money that was laundered or funneled to shady organizations, crime families, or drug cartels between 1999 and 2017 amounted to more than $2 trillion.

While international banks routinely break laws, aid corrupt criminal enterprises, and launder money without interference, ordinary individuals wishing to withdraw as little as $2000 from a US bank are often subjected to outrageous questioning about the purpose for the withdrawal and are often told to return at a later date because the bank branch does not have the funds available.

It's no wonder that taking cash out of a bank branch might be troublesome, since the Federal Reserve reduced reserve requirements for financial institutions to zero, effective March 26th of this year.

Along with the recent nationwide coin shortage, restrictions on cash transactions in Europe and other countries, the future of of currency appears to be headed for a black hole.

Meanwhile, what used to be money, silver, along with gold, was slaughtered in the futures markets, losing roughly 10% in the course of a few hours. Silver futures slid from near $27 overnight to under $24 by 11:00 am ET. Gold briefly dipped below $1900 an ounce and has since recovered only slightly.

The obvious manipulation of gold and silver prices via the futures market for paper derivative contracts and adherence to these faulty price discovery mechanisms and spot prices set by the London bankers defies logic, unless you're a central banker, and then it makes perfect sense.

As is well known, central banks, which create currencies - dollars, yen, francs, euros, yuan - out of thin air, despise competition. Gold, and especially silver, is competition to their phony, fake, fiat currencies. As long as everybody uses them, all is well. The moment gold or silver become valuable, raising the public's interest in them, central bankers get very nervous and commit overt efforts to tamp down the rising prices of what's been money for thousands of years.

What's really happening is that their favored fiat is losing purchasing power at an exceedingly rapid rate as they magically produce more easy money and inject it into the system, creating inflation by increasing the money supply. Gold and silver would naturally be sought at higher and higher prices since their quantities are limited by what's already above ground and what's being mined on a regular basis, otherwise known as simple supply and demand.

Monday's market action is a prime example of how all markets are rigged against the best interests of the non-wealthy. While the Dow chopped its losses in half and the NASDAQ recovered almost fully, gold and silver were kept lower, bolstering the perception that they are not in demand when the exact opposite has been obvious for many months.

Until the COMEX and the LBMA are either ignored, exposed as frauds or dissolved, there will be no price discovery of value in precious metals. Both institutions are dominated by the same banks that launder money and assist in market-rigging of everything from LIBOR to individual stocks and bonds, including such standouts as Citibank, Goldman Sachs, JP Morgan Chase, and Morgan Stanley, which are all market makers in addition to being full members of the LBMA.

Putting it lightly, gold and silver investors have been getting short-changed for decades, ever since Nixon and the world abandoned the gold standard in 1971.

The future of money is looking more and more like a black hole, covered by a BlackRock.

At the Close, Monday, September 21, 2020:
Dow: 27,147.70, -509.72 (-1.84%)
NASDAQ: 10,778.80, -14.48 (-0.13%)
S&P 500: 3,281.06, -38.41 (-1.16%)
NYSE: 12,561.78, -271.79 (-2.12%)

WEEKEND WRAP: Stocks Continue Slide; Politics Adds Volatility To Markets

Taking it on the chin for a third straight week, stocks were not the idyllic space they had been through Spring and Summer. With the November elections just more than six weeks away, political rhetoric began to heat up after Friday's close, when Supreme Court justice Ruth Bader Ginsburg passed away at the age of 87.

Words of consolation and remorse outpoured from the usual sources, but just as quickly the mood turned political as Senate majority leader, Mitch McConnell, and other Republicans began making plans for confirmation hearings once President Trump sends up a nominee to replace the deceased justice. Democrats voiced opposition, suggesting that any Supreme Court appointment should wait until after the elections on November 3rd.

Gnsburg's demise having been widely anticipated, it's likely that President Trump had already developed a short list of potential replacements and will send a nominee to the Senate on short order. With a 53-47 majority, the chances of a nominee surviving what should amount to circus-like hearings and a full senate vote are contentious and will add fire to an election season that already has plenty of divisive issues for the electorate to contemplate.

Trump recently released a list of 20 possible contenders for the vacancy, among them 11 women, including circuit court judges Bridget Bade, Barbara Lagoa, Martha Pacold, Sarah Pitlyk, Allison Jones Rushing, Amy Coney Barrett, Elizabeth Branch, Joan Larsen, Britt Grant, Allison Eid, and Kate Comerford Todd, a former senior vice president and chief counsel for the US Chamber Litigation Center.

On Saturday, President Trump announced that he would name a woman as a nominee to replace Ginsburg and that he would announce his decision this coming week.

As the election approaches, markets face more turbulence from various sources. Politics may begin to overshadow the fading narrative of COVID-19, though it would not be surprising to hear more warnings of another wave of infections from the likes of Anthony Fauci and other pandemic and vaccine proponents.

While the Dow Industrials were essentially flat on the week, Friday's trading was particularly troubling with the intraday low briefly below 27,500, but stocks rallied weakly into the close, shadowing losses that could have been more severe.

Decelines Thursday and Friday erased 850 points from Wednesday's intraday high of 28,351.36. More concering is the Dow's retreat from the September 3 five-month high of 29,164.38. All tolled, the Dow's recent losses put it only 6.4% below its all-time high of 29,551.42 from February of this year, so, despite the pullback, the move is likely to be considered a healthy consolidation from an overheated position by market observers.

The NASDAQ finished up its third straight week of losses as Thursday and Friday's results sent the daily tally under its 50-day moving average for the first time since late April. Leading the way lower were the FAANMGs (FB, AAPL, AMZN, NFLX, MSFT, GOOG), darlings of the tech space, which had put on incredible gains since March and were ripe for a pullback. Somehting

Also falling below its 50-day moving average on the daily chart, the S&P 500 suffered its third consecutive week sustaining losses.

A lone winner on the week was the NYSE Composite, which put in a fractional gain. It's worth mentioning that the NYSE and Dow Industrials have not achieved new highs since the March crash, as opposed to the NASDAQ and S&P, both of which have set multiple records since the COVID Crash. Whether or not the recent losses continue on into a correction will likely play out over the next two weeks, but certianly some direction will be discernable when companies begin reporting third quarter results beginning the second week of October.

Weighing in on recent activity, former Fed governor, Randall Kroszner, opined that the after-effects of COVID-19 would be longer-lasting and more profound than those stemming from either 9-11 or the Great Financial Crisis of 2008-09.

What should be of particular note are bank stocks, among the earliest to report. Giants Bank of America (BAC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS) and others begin rolling out third quarter results right after Columbus Day (October 12). Loan loss reserves will be in focus as banks and other financial insitutions like credit card issuers CapitalOne (COF) and Discover Financial (DFS) have been handing out deferrals and forbearances like candy to cardholders and mortgagors unable to make required monthly payments.

With the easy skipping of payments having mostly run its course, credit insitutions are beginning to end these programs, some requiring regular montly payments on credit cards in September. The nationwide program of mortgage forbearance on federally-insured loans continues through the end of 2020. Even with these programs in place, expectations for massive defaults by consumers are going to put a dent in bank stock earnings for the period, as they have done in the first and second quarters.

Volatility returned to markets in a big way in September. The remaining days of the month and into October appear poised to heighten the uncertainty and keep markets from any meaningful andvance. The potential for a correction or a return to bear market conditions are heightened.

During the week, treasuries saw little change, with yields on the 10-year note and 30-year bond rising three basis points, to 0.70% and 1.45%, respectively. Complacency in the bond space may turn out to be short-lived, though the fixed income market has shown to be resilient throughout the COVID crisis. With the Fed pretty much assuring that the federal funds rate will remain at or near zero through 2023 in Wednesday's FOMC policy anouncement that steadfastness should continue in the absence of a severe pullback in stocks. Much of what's currently on the plate of traders and investors has been priced into stock and bond markets. Visions of 2021 may not be as sanguine.

The price of crude oil rose throughout the week, with WTI bouncing off the 9/11 close at $37.33 to finish the most recent week at $41.11 a barrel. Crude remains ranebount between the high 30s and low 40s.

Precious metals were under pressure again, expecially nearing the end of the week, a somewhat contradictory position. Gold was up a mere $10, rising to a Friday close of $1,950.86 from the prior week's finish at $1940.55. Year-to-date, gold is up 28.58%.

Spot silver was barely changed on the week, closing at $26.78 an ounce, up a mere five cents from the previous Friday finish.

While spot prices continue to stagnate, the buying of precious metals as a hedge against everything continued at a rapid pace with stackers and savers gobbling up available inventory from dealers at premium prices. The following are the most recent prices for common items on eBay (numismatics excluded, shipping - often free - included):

Item: Low / High / Average / Median
1 oz silver coin: 32.00 / 37.50 / 35.76 / 36.00
1 oz silver bar: 33.50 / 42.45 / 37.01 / 35.94
1 oz gold coin: 2,000.00 / 2,104.06 / 2,067.29 / 2,057.05
1 oz gold bar: 1,975.13 / 2,071.22 / 2,050.02 / 2,060.86

At the Close, Friday, September 18, 2020:
Dow: 27,657.42, -244.56 (-0.88%)
NASDAQ: 10,793.28, -116.99 (-1.07%)
S&P 500: 3,319.47, -37.54 (-1.12%)
NYSE: 12,833.57, -114.88 (-0.89%)

For the Week:
Dow: -8.22 (-0.03%)
NASDAQ: -60.26 (-0.56%)
S&P 500: -21.50 (-0.64%)
NYSE: +60.53 (+0.47%)

Stocks Slide Into Friday, Looking To End Two Week Skid

Note: Google's Blogger platform (where these posts are created) has forced all users into their new format, which should still be in Beta. Apologies in advance for any formatting or typographical errors (no spell checker that we could find).

Stocks took another dive on Thursday and are looking to close out the week on a positive note. The major indices are still up for the week, but not by much. A repeat of Thursday's action on the NASDAQ would send that index into the red for the third straight week, while the Dow is already up nearly one percent on the week and the SA&P 500 clinging to a 16-point gain.

Inaction by congress to pass another COVID-related stimulus bill has Wall Street somewhat flummoxed to say nothing for the Federal Reserve, which seemed to be begging for some form of fiscal relief, saying that monetary policy alone could not effectively bring about a meaningful recovery.

Futures are indicating an opening with a very slim upside.

At the Close, Thursday, September 18, 2020:

Dow: 27,901.98, -130.40 (-0.47%)

NASDAQ: 10,910.28, -140.19 (-1.27%)

S&P 500: 3,357.01, -28.48 (-0.84%)

NYSE: 12,948.45, -49.41 (-0.38%)