There's nothing like a big rally on a Monday to brighten the spirits and Wall Street knows that all too well. Unfortunately, this Monday rally from out of nowhere follows a series of serious declines in stocks over the past four weeks. The NASDAQ was the only index to post a weekly gain last week, after losing three straight. The NYSE posted a positive in the prior week, surrounded by declines; the S&P and DOW have dropped four straight.
In sporting terms, the main indices would have been swept in a best-of-seven series and Monday's trading just an exhibition.
To illustrate how benign Monday's rally was, a look back from the prior highs proves instructive.
Beginning with the close of business on September 2, here are the losses for the major indices (including Monday's gains):
Dow: -1,516.44
NASDAQ: -938.91
S&P 500: -229.24
NYSE: -599.20
While those losses are not extreme, they are nonetheless significant. On a purely technical basis, stocks were severely oversold entering Monday's session and stock traders responded as they always do - especially on Mondays - by buying what are perceived to be undervalued stocks. Sadly, there are no undervalued stocks available, only stocks that appear to be undervalued relative to the rest of the market, which is absolute garbage.
A handful of stocks - particularly the FAANMGs on the NASDAQ - account for most of the trading and movement in the indices. The vast bulk of stocks go nowhere or vacillate between uncertain highs and lows, gaining with the high tides, falling on the ebbing.
Thus, it would not be surprising if Monday's rally was a one-day wonder, lacking directional follow-through on subsequent trading days. Anybody believing that stocks are poised to break through recent all-time highs (S&P and NASDAQ) is failing to read the economic tea leaves properly. The global economy has been severely damaged by the effects of government response to the coronavirus over the past six months and it appears that "officials" are looking for a second round of knockdown lockouts and assorted stupidity that accompanies a virus that has an infection mortality rate of less than 0.01. In other words, the chances of dying from COVID-19, once contracted, are less than 1 in 1000 for anybody under the age of 70, and many times greater than that the younger a person is. That is according to the CDC, which published the data a few days ago.
However, increased testing is leading once again to an increase of infection. The mainstream media is currently blaring about the Midwest, including the states of Minnesota, Montana, Oregon, South Dakota, Utah, Wisconsin and Wyoming. Minnesota and Utah having seen cases increase over the past week.
Bearing in mind that the tests return massive amounts of false positives, most "cases" result in either no or mild cold-like symptoms, the 58,461 new cases recorded on Friday across the US - even if believable - will eventually result in the death of less than 58 people, or less than the number of people murdered in Chicago over the course of an ordinary two weeks.
The message the media should be offering is not for people to wear masks, but to avoid bad neighborhoods in Chicago or refrain from traveling there altogether. Ditto for New York, Seattle, Detroit, Baltimore, etc.
In any case, the word is out that the feared "second wave" of the virus is coming. Already, California's Governor Newsom is warning and restrictions on travel, gatherings and businesses are already being re-introduced across parts of Europe.
The government/media/medical cartel of lunatics will have their way. A second wave is guaranteed, whether it is real or imagined, true or fake, and it will wreak further havoc on the global economy.
Count on it. Act (and trade) accordingly.
At the Close, Monday, September 28, 2020:
Dow: 27,584.06, +410.10 (+1.51%)
NASDAQ: 11,117.53, +203.96 (+1.87%)
S&P 500: 3,351.60, +53.14 (+1.61%)
NYSE: 12,677.54, +192.16 (+1.54%)
The last full week of September failed to bring any surprises or relief to embattled equity investors. The bulk of the trading was to the downside, as it has been for the majority of the month. Based on the possibility of another round of government stimulus checks, Friday's knee-jerk rally kept only the NASDAQ from finishing on the downside.
The NYSE Composite, which was the only index to make gains in the prior week, suffered the worst of it, along with the Dow, which still hovers just above correction territory. All of the indices were down at least 10% from their highs at some time during the week. With markets so utterly contrived and manipulated by the Fed and their covert - and overt - agents the message being sent seems to be one of confusion and contradiction, though it's becoming apparent that all is not well with the global or US-based economies.
Mainstream media continues to promote the "killer" COVID-19 narrative, though it's about as likely that there is going to be a second wave as there was an actual "first" wave. Between panicked hospital administrators, "warp speed" vaccines, unconstitutional government edicts, quarantines, lockdowns, tests famous for false positives, conflicting messages from the CDC and WHO, and nearly universal acceptance of mask-wearing, the psy-op that is the coronavirus and COVID-19 has made a mockery of a free press to say nothing of the impression and malleable nature of the world's population.
Not everybody has bought into the global panic, but the numbers of resistors are small. Most people who don't believe in the boogeyman of a particulate-based, invisible killer virus are playing along, wearing masks when not doing so would upset others, privately decrying the existence of a deep state conspiracy. Very few are willing to risk bearing the wrath of the authorities for poor social behavior, so most just play along. Meanwhile, contradictions are everywhere.
Fans are allowed at football games but not baseball games; The NFL has tested an average of 8,554 people over four periods since mid-August and produced 25 positives, a takeup rate of 0.70%, whereas the general population in most states is producing positives at rates between 4 and 15%. The same applies to Major League Baseball, which has suffered few setbacks due to the virus since the early days of their shortened season.
On the contrary, college football has had a raft of games postponed due to positive test results from players or coaches. On the whole, however, none of the very few athletes which tested positive nationwide have suffered anything more than mild symptoms similar to a common cold. Could it be that as a group they possess strong immune systems and maintain a healthy regimen of good diet and exercise?
It's obvious that the best defense against the COVID nightmare and any disease is simply being healthy. The vast majority - over 93% - of people who died from COVID-19 were over 55 years old and had at least one other medical condition. Countries in Europe are supposedly experiencing a second wave (increased testing with faulty tests producing more cases, replete with abundant false positives) and more lockdowns and stay-at-home orders are coming soon. Call it a hoax, a conspiracy, or whatever, all the COVID craziness has managed to do is make people crazy and torpedo the global economy, which, as some believe, was the plan in the first place.
With coronavirus being kept top of mind the coming week will feature one major event, the first presidential debate, in which the world will finally be able to judge the two candidates - President Trump and former Vice President Joe Biden - in a face-to-face environment and see for themselves if the persistent rumors of Biden's failing mental acuity are for real. Tuesday night's live, prime time event is a 90-minute affair beginning at 9:00 pm ET.
For the past week, as stocks and precious metals continued to sink, two markets that remained somewhat stable were those of treasury securities and oil. With the short end of the treasury curve consistently at the zero-bound, longer-dated maturities remained range-bound with the 10-year note yield falling four basis points to close out the week at 0.66%, the 30-year yield dropping five, to 1.40%. Both have remained in a tight band throughout the month, the 10-year between 0.63 and 0.72%, the 30-year between 1.34 and 1.46%.
WTI crude, which had fallen as low as $36/barrel early in the month, has recovered nicely and spent the week neatly between $39.31 and $40.31, closing out the week at $40.25. The $40 per barrel price seems to be the sweet spot for everybody from frackers to drillers to explorers.
As for precious metals, gold and silver have exhibited the kind of counterintuitive price action that only the futures market - dominated by international banking consortiums and bullion banks - can provide.
From last Friday (9/18) to this one (9/25), gold fell from $1950.86 to $1861.58. Over the same time span, silver declined from $26.79 to $22.88, a 15% drop. Nothing says "flight to safety" like rapidly declining prices of real money. Yeah, sure.
For the rest of us playing the in real world, there is the physical market, best exemplified at eBay. As has become a regular feature of the WEEKEND WRAP, here are the latest actual sale prices for commonly-purchased items on the world's top trading platform (numismatics excluded, shipping - often free - included):
Item: Low / High / Average / Median
1 oz silver coin: 31.50 / 45.00 / 37.62 / 37.68
1 oz silver bar: 30.00 / 41.23 / 33.89 / 33.75
1 oz gold coin: 1,815.00 / 2,147.22 / 1,994.04 / 1,999.94
1 oz gold bar: 1,950.00 / 1,981.80 / 1,968.12 / 1,965.62
As can be clearly seen, premiums remain high, but silver, especially, is not bowing to the spot and futures overlords one bit. Median price for a one ounce coin is more than $14 over spot, a one ounce bar, $11 over spot. It would not be surprising to see silver separate completely from the futures and spot prices and become a true world "currency of the people" if only because central banks despise silver with such unbridled passion. They would like nothing more than to push the futures and spot price down to $3 an ounce or lower.
The repeated recent attempts to shunt the value of silver are failing miserably. The physical market is close to a complete separation from the paper price.
Here's Mike Maloney discussing when he will sell his gold and silver:
At the Close, Friday, September 25, 2020:
Dow: 27,173.96, +358.56 (+1.34%)
NASDAQ: 10,913.56, +241.26 (+2.26%)
S&P 500: 3,298.46, +51.87 (+1.60%)
NYSE: 12,485.38, +119.88 (+0.97%)
For the Week:
Dow: -483.46 (-1.75%)
NASDAQ: +120.28 (+1.11%)
S&P 500: -21.01 (-0.63%)
NYSE: -348.19 (-2.71%)
Notice: This post is being written while under emergency backup power (solar), so it may be more brief than normal. Power at this location has been down for more than three hours as of 7:40 am ET. Further, power outages should be expected by everyone, everywhere. It is advisable to obtain backup power sources such as solar, geo-thermal, etc. Wood-burning stoves are strongly advised for the coming winter.
It's been an interesting week for the purveyors of paper promises known as stocks. Unless there's a massive rally on Friday, the major indices are on track for the fourth consecutive week of losses.
While the losses have not been large, they have been steady, taking the indices into or close to a 10% correction from recent or all-time highs. The Dow, NASDAQ, and S&P 500 are all trading below their 50-day moving averages. The NYSE Composite index is trading at its 200-day MA.
Asian and European indices have also been hard hit during September as, in Europe and Great Britain especially, a re-emergence of the COVID-19 virus seems to be developing, at least that's what the authoritative, tyrannical government/media/medical consortium is telling the people. Renewed lockdowns and/or stay-at-home orders may be issued within days in various European countries, primarily Germany, France, and Great Britain.
Thursday's trading action may best be described as indecisive as the indices vacillated above and below the unchanged line, eventually finishing with inconsequential gains. Futures are indicating a lower opening for Friday. A furtherance of the concentrated selling pressure would not be surprising.
(... and, at 8:08 am ET, power has been restored)
The Dow Jones Industrial Average has been hit the hardest this week. As of the close on Thursday, it is down nearly 850 points, just over three percent. The NASDAQ has suffered the least, losing 121 points, or 1.12%, but, even though this week's losses have been on the mild side, it is still down more than 10% from its September 2nd closing high of 12,074.06.
With just four trading days remaining in the month and the quarter, stocks are in a bifurcated mode: the quarter is slightly positive, but September, on its own, is vastly negative. Individuals with brokerage accounts may be in for a nasty shock when they receive their monthly statements.
What may save the stock market's bacon for the month - at least partially trimming losses - is action by congress on another round of stimulus for the American people. Both Republicans and Democrats are now scrambling to come up with a plan that makes both sides look good ahead of the November elections. Anybody with a wagering mentality would probably put money down on the House and Senate coming up with a package within the next two weeks that would offer another round of checks to middle and lower class citizens along with some partial restoration of over-the-top unemployment compensation.
It's being reported that Democrats in the House of Representatives are pulling together a $2.4 trillion plan that would include enhanced unemployment insurance, direct payments to Americans, funding for the Paycheck Protection Program small-business loan program and aid to airlines. What may ultimately push the bill to passage is any bailout for the airlines included in it. Major US airlines have been pleading for assistance from the government for months, threatening mass layoffs if they don't get some relief. Neither the Democrats nor Republicans see any positives heading into the elections with layoffs proliferating, so they may have found a key on which they can agree.
Mostly absent from this renewed effort are assistance to local governments and the US Postal Service, an issue Democrats tried to use to frame Republicans as selfish and uncaring, but their ploy failed to ignite any partisan flames. What both parties are aiming for is some kind of high ground prior to the elections, and nothing works better at buying votes than handing out cash to the electorate. While there is likely some need for many families in America for some assistance at this time, the politicians efforts are, at best, shameful and disingenuous. They're only acting because of upcoming elections. Otherwise, they'd be content to let people go homeless and starve to death.
Mark Cuban is calling for $1000 checks being doled out to every American through November. His plan calls for a stipulation that the people spend the money within ten days in a kind of "use it or lose it" function. Of course, Cuban and his billions has an ulterior motive, and that is to keep the economy moving and stocks green as grass. As the economy is almost fully dependent on consumer spending, his investments rise and fall with the general welfare of the average consumer. In a way, Cuban's desires are no different than every American though his approach to finance might be considered a bit high-handed.
It should not go without notice the most recent declines in precious metals prices on the futures and spot exchanges. The prepared paradigm calls for gold and silver to become cheaper as stocks fall off the table, as if they are one and the same. This kind of counterintuitive construct works only to benefit the paper pushers in their quest to save their failing fiat currencies. While futures may be falling along with stocks, premiums on gold and silver remain elevated. With silver beaten down below $23 an ounce and gold sold off to $1860 - a level not seen since mid-July - small investors are eyeing the pullbacks as a buying opportunity. Even with premiums, the coming weekend may be a good time to head out to the local coin shop or do some browsing on ebay or among online dealers to pick up some bargains.
With Friday's opening bell less than half an hour ahead, futures are shoring up closer to positive (NASDAQ futures are already green) though the prospects for gains on the final Friday of September still appear muted.
At the Close, Thursday, September 24, 2020:
Dow: 26,815.44, +52.31 (+0.20%)
NASDAQ: 10,672.27, +39.28 (+0.37%)
S&P 500: 3,246.59, +9.67 (+0.30%)
NYSE: 12,365.54, +6.39 (+0.05%)
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%)
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.
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%)
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