WEEKEND WRAP: Rough Week All Around; Stocks, Bonds, Bitcoin, Gold, Silver All Lower

It was another tough week for equities. The NASDAQ and S&P suffered through a second straight week of losses, while the Dow had held up well until Friday's 469-point washout.

As counties and states come out of pandemic-inspired economic restrictions and other madness and the general economy begins to mend, stocks may be involved in a little buy the rumor, sell the news kind of action. Wall Street made hay throughout the COVID crisis, and now the sharpies may be taking profits before what promises to be an uneven recovery period.

Two months into 2021, the major indices have come off their recent highs and are close to flat for the year. The Dow is up just one percent, the NASDAQ has put on a gain of just over two percent, while the S&P is in between those two. The big winner is the NYSE Composite, comprised, in the main, of small caps, up 3.34% on the year.

For investors with short attention spans or investment horizons, the period between February and May could prove to be unsettling. March and April are often months in which rallies die or bull markets turn to bears. There's not a lot of reason for concern presently, though the $1.9 trillion stimulus bill passed by the House on Friday is likely to undergo some revisions in the Senate and passage is not, at this time, guaranteed. The pols have set a deadline for mid-March, when extended unemployment benefits run out. Getting the bill to Biden's desk - where he is sure to sign it - is the top priority for the Democrats and Republicans in the Senate may want to inflict some political pain after the second failed impeachment of Donald J. Trump. A staged floor fight may be on the agenda as the Republicans want to look like they're fiscally responsible participants and they'll be joined by a few Democrats in making some changes to the legislation.

In the end, the bill will pass through with the payments of $1400 to individuals mostly intact, but some other non-COVID-related items stripped out. It will be another huge waste of time and taxpayer money, but in the end most of it will be borrowed, boosting the federal budget deficit well past the $2 trillion mark. Already, the cumulative FY21 deficit through January 2021 (four months) is $736 billion, putting the current spendthrifts in Washington, DC are on pace to shatter last year's $3.13 trillion deficit.

By the time congress passes the current handout proposal before them, the federal debt will have surpassed the $28 trillion mark which is currently just $36 billion short of that number. With a run rate of about $3.67 billion per day, the national debt should be pretty close, if not beyond $28 trillion, by this time next week.

The latter part of the week saw round two of the attempted short squeeze by the group known as WallStreetBets over at reddit.com, as some unwary hedge funds layered back into short positions and put options against GameStop (GME) while the redditers waited for the ambush.

While this second go wasn't nearly as successful as the first round in late January, GameStop stock did see its share of wild-riding activity. On Wednesday, when the assault began, the price rose from the low to mid-40s earlier to nearly 100 by the close of trading. On Thursday, the shorts were sweating, as the stock opened at 150 per share and rose as high as 177, before coming in somewhat to 109. Friday, which was also options expiration day, the price went as high as 143 and as low as 87 and change, finally ending the week at 101.74.

Individual results surely vary, but it's a safe bet to say some shorts got smoked and some "amateur" traders from the reddit crowd gained a few shekels in the process. The organized efforts have now gone mainstream and are probably going to remain a feature of Us markets for the foreseeable future. Hedge fund managers beware: the proletariat are on the march for your money.

Equity investors were hardly alone in their sorrow. They were joined by all manner of plungers including those in Bitcoin and other cryptocurrencies and especially in precious metals, as gold and silver were hammered lower on the criminal COMEX.

Bitcoin suffered some serious losses after hitting an all-time high of $58,367 last Sunday morning (Feb. 27). It dropped as low as $43,365 just minutes prior to this posting. The world's leading crypto was down 24% on the week, presenting a buying opportunity for those intrepid enough to believe in a future devoid of central banks.

Etherium also took some blows by sellers. It reached an all-time apex on February at $2041 and currently is holding ground around the $1320 to $1375 level.

Yields on treasuries threatened to run off the page, with the 10-year note hitting 1.54% on Thursday before settling out at 1.44% Friday, sitll a full 10 basis points above the previous week's close. The 30-year was under stress as well with the yield topping out at 2.33% on Thursday. Friday's miracle bond rally send the yield back down to 2.17, which was still three basis points better than the prior week's close.

This is a very jittery market in fixed income and those with money on the line are extremely risk averse, so more volatility should scare yields higher and prices lower unless the Fed and the federal government can convince the world that price inflation is not an issue. Good luck with that, Jerome and Janet.

Crude oil (and other commodities) seemed to be the only place to hide, though it wasn't pretty. WTI crude opened the week at $61.67 per barrel and closed out on Friday at $61.66, but not before reaching a 52-week high of $63.53 on the 25th.

Precious metals were summarily dismissed on the COMEX and by the LBMA price fix in London. Goldbugs received no mercy at the hands of the control freak bullion banks. Gold was as high as $1809.95 on Monday, but spent the remainder of the week dropping off the charts, finally diving to $1734.40, its lowest level since last June.

In the face of a reddit.com-inspired raid on short sellers, silver was similarly battered, topping out around $28.15 on Monday, only to slide down to $26.68 the troy ounce at the New York close on Friday. The constant badgering and rampant mauling of gold and silver prices by the four large bullion banks has become a bone of contention for many in the precious metals space, but more optimistic souls continue to buy the dips and hope for a better future.

While the effect on the gold price at retail was obvious, with premiums still significant but prices lower all around, smaller silver retail buyers were still hungry for metal, which has been in short supply recently, though the shortages seem to be abating with the silver short raid a few weeks in the rear view. Nonetheless, one ounce prices for immediate delivery on eBay and elsewhere continue to ratchet higher. Silver seems to have separated the price of 1000-ounce bars, the province of COMEX and the LBMA, from single ounces and bars and coins up to 10 troy ounces. There appears to be a quite healthy appetite for the money of gentlemen.

Here are the most recent sales on eBay of common gold and silver one ounce items (numismatics excluded, shipping, often free, included):

Item: Low / High / Average / Median
1 oz silver coin: 38.00 / 68.95 / 47.88 / 43.79
1 oz silver bar: 39.00 / 64.90 / 44.95 / 40.75
1 oz gold coin: 1,849.00 / 1,995.22 / 1,909.88 / 1,886.01
1 oz gold bar: 1,846.45 / 1,873.83 / 1,859.07 / 1,856.91

Results of this week's survey puts the Single Ounce Silver Market Price Benchmark (SOSMPB) at $44.34, 40 cents higher than last week's price ($43.94) and the fourth consecutive weekly gain for Money Daily's proprietary silver gauge.

Upcoming this week are some interesting names reporting fourth quarter 2020 and full year results, leading off with Warren Buffett's Berkshire Hathaway (BRK.A), which actually reported on Saturday (Feb. 27). The results are likely to give the indices a boost come Monday, as the holding company delivered outstanding numbers.

Earnings per share (EPS) were $23,015, up 28.5% year-over-year (YOY). EPS beat the consensus estimate of $16,177.03 by 42.3%. Net investment gains were $30.8 billion, up by 24.6% YOY. Buffett also released his annual letter to shareholders [PDF].

After the close on Monday, high-flying Zoom Video Communications (ZM) reports what figure to be exceptional numbers. The mood may not be as bright on Tuesday when retailers Nordstrom (JWN), Target (TGT), Abercrombie & Fitch (ANF), and Kohl's (KSS) release. Keep an eye out after the bell for emerging discount grocer, Grocery Outlet (GO), which has beaten EPS estimates handily in each of the past four quarters.

Wednesday gives us Dollar Tree (DLTR) before the open and American Eagle Outfitters (AEO) after the close. Thursday's releases include grocery chain Kroger's (KR), BJ's Wholesale (BJ), and Costco (COST). Big Lots (BIG) and Ruth's Hospitality (RUTH), operator's of the famous Ruth's Chris Steak Houses close out the releases Friday, prior to the opening bell.

Also, of great interest at the end of the coming week is the Labor Department's release of February Non-farm Payroll. The current estimate is for 110,000 new jobs created during the month, following some months of disappointment. January saw a mere 49,000 jobs created nationwide, taking some shine off the recovery bloom.

That's a wrap.

At the Close, Friday, February 26, 2021:
Dow: 30,932.37, -469.64 (-1.50%)
NASDAQ: 13,192.35, +72.92 (+0.56%)
S&P 500: 3,811.15, -18.19 (-0.48%)
NYSE: 15,010.47, -196.20 (-1.29%)

For the Week:
Dow: -561.95 (-1.78%)
NASDAQ: -682.12 (-4.92%)
S&P 500: -95.56 (-2.45%)
NYSE: -352.23 (-2.29%)

Sorry, Internet Outage Kept Us Offline Thursday, Feb. 25

Another day, another internet outage.

While running the underground fiber (100+ MBS), the ditch witch ripped up our old AT&T cable and poof! No internet.

The good news is that Moeny Daily is now running at super fast speed.

Will this enhance our writing? Probably not, but one never knows.

The NASDAQ suffered a serious blow on Thrusday. Will be looking into it.

See you Sunday for the WEEKEND WRAP.

They're Ba--aack! WallStreetBets Crew Sends GameStop Stock Soaring, Shorts Running for Cover

Wednesday turned out to be quite the fascinating day from a stock market and global finance perspective. While Fed chairman, Jerome Powell, was wrapping up his testimony to congress, promising more stimulative measures if needed to revive the economy, the Federal Reserve Systems' global payment network was on the fritz, as the system that allows wire money transfers crashed with intermittent disruptions for two to three hours, according to various reports.

The outage to FedACH and FedWire impacted banks, brokers, and mortgage lenders' ability to transfer funds in large and small amounts and also individuals and small corporations which employ the service to move payroll, deposits, and other sensitive financing.

Service was restored mid-afternoon, Powell went back to wherever he goes after speaking publicly and stocks were up across all indices in the US. All seemed to be going smoothly until shares of GameStop (GSE) began stretching out gains made earlier in the day around 2:00 pm ET.

After closing 44.97 on Tuesday, GameStop was already sporting a three to four-point gain when it began picking up momentum. BY 3:00 pm, it was at 53, hitting 67 a half hour later. Volume was spiking as was trading on related options, especially those with a nearby strike date of Friday, February 26. Trading in GME was halted twice in the final hour of trading, but the price continued upwards into the close.

By the 4:00 pm final bell rang, GameStop was in reddit wonderland, sporting a 91.70 handle, even as reddit.com was coincidentally knocked briefly offline. After hours, GME was up as high as 200 per share, backing off to around 150 overnight and into the pre-market.

Here's a note, posted early Thursday morning on the r/wallstreetbets forum at reddit.com explaining the situation to the incels.

If GameStop hits 800 before 2/26 we will trigger the Mother of All Short Squeezes, read up. from r/wallstreetbets

What is amazing about this second attack against the short-sellers of GME is not that the redditers have re-assessed their position, but that shorts have piled back into GameStop with many betting that the stock would retreat further. Could these hedge fund types have been so short-sighted to not realize the reddit crowd would be watching and waiting, especially after how they were shafted in the first attack?

The answer is yes. While the identities of the shorts, call sellers, and put buyers are as yet unknown, the level of activity in GME call options was extreme over the past two weeks. Wallstreetbets minions were watching, and it appears they have the hedgies trapped into losing positions again.

If the redditers are successful, it will mark an important pivot point for markets globally, signaling that the ordinary controllers of stock, bond, options, and futures markets are in the throes of a violent economic uprising, spurred by inequality and fomented over social media.

As the silver market - another touchstone of r/wallstreetbets - continues to evidence stress and a severe supply shortage, the entire financial system could be on the brink of collapse, thanks largely to some creative organizing and strategizing by any number of smart disrupters on reddit and elsewhere.

While the focus of the financial news punditry will be on GameStop for much of the next two days, the treasury and bond markets are where the real action lays. On Wednesday, the 10-year note spiked again, shooting past a 1.40% yield and closing out at 1.389%. Yield on the 30-year bond closed up three basis points to 2.24%, the highest yield in more than a year.

Also higher is crude oil, with WTI pricing above $63 a barrel. While a good number of Keynesian-style economists view higher oil prices as a sign of recovery, they fail to realize that it translates directly into higher prices for automotive fuel, which acts as a tax on everybody, hitting those at the lower economic levels the hardest. Unless the price of crude is corralled soon, gas at $3 and $4 a gallon could be just over the horizon, a level that would put a serious damper on the general economy while adding to inflationary pressures, which themselves are already showing signs of bubbling over into hyperinflation.

The next few days will be exciting, challenging, potentially life-changing, but the next six months will tell the global fortune for years ahead.

At the Close, Wednesday, February 24, 2021:
Dow: 31,961.86, +424.51 (+1.35%)
NASDAQ: 13,597.97, +132.77 (+0.99%)
S&P 500: 3,925.43, +44.06 (+1.14%)
NYSE: 15,539.42, +180.28 (+1.17%)

Why Nobody Needs To Worry About Stocks Right Now

On Tuesday, the S&P 500 broke a five-day losing streak, gaining just under five points as the widely-watched index bounced right off its 50-day moving average.

Not so fortunate was the NASDAQ, which ended in the red for the fifth time in the past six sessions. It finished the day resting right on its 50-day moving average.

The distinct impression is that there's either something magical or important about those 50-day moving averages, an astute observation as most trades these days are of the programmatic, algorithm-blessed, computer-driven, non-human kind, keyed to respond to headlines and trend lines, like the moving averages.

When these trend lines are violated or even touched down upon, the algos are instructed to buy, hitting just about anything vulnerable. Just in case there's insufficient thrust to move the index or group of stocks off the point, there are always humans, such as the PPT, to pick up the baton of endless stock wins and boost prices higher.

Obviously, such chicanery has been going on for some time now and it's been especially poignant since stocks got slammed at the outset of the coronavirus last year.

We've recently celebrated the one-year anniversary of the beginning of the 2020 crash. On February 20, 2020, the S&P dropped a massive 113 points. It kept falling, almost daily, until reaching the bottom at 2,237.40 on March 23rd.

Since then, the S&P has put on quite the show, closing on Friday, February 12 of this year at 3,934.83, a near doubling off the lows and an overall gain of 1697 points.

The NASDAQ was a little less spectacular at the start of its decline, but it made up for any lack of bedazzlement on the upside. On February 20, 2020, the NAZ shed 67 points to end the day at 9,750.97. But, the following session, it took a 74-point hit, closing out the week at 9,576.59. The following Monday, February 24, the index gulped down a 355-point loss, finishing at 9,221.28.

Losses continued to pile up on the NASDAQ until finally hitting bottom on March 23rd when it closed at 6,860.67.

Over the ensuing 11 months, the NASDAQ did actually double in price, topping out at 14,095.47 on February 12, less than two weeks ago.

Now, before bemoaning the recent declines, bear in mind that investors have been making hay just holding onto stocks for the past year. The NASDAQ ended Tuesday's session at 13,465.20, a 630-point decline from the all-time high. Boo-hoo. The mighty NASDAQ has shed almost five percent. The decline on the S&P has been even less enthralling, down an entire 53 points from less than two weeks ago. The end at 3,881.37 Tuesday marks a loss of less than two percent.

It would be justifiable to suggest that investors are far from worried. After all, they have their man, Jerome Powell, at the Fed, and their lady, former Fed Chair, Janet Yellen, at Treasury, ready to jawbone to the extreme should any doubt enter the minds of shaky-handed newbies in the investment community.

Powell appeared, virtually, before the Senate Banking Committee on Tuesday, telling Senators, “The economy is a long way from our employment and inflation goals,” while reaffirming the Fed's commitment to easy money policies for the remainder of 2021 and likely beyond. According to the Chairman, the economic recovery is only just beginning.

As for Yellen over at Treasury, she doesn't have to say much, as everybody knows she'd like the $1.9 trillion Biden/congress COVID relief bill to be even larger. From her perspective, the $1400 per individual in the bill would be better if it had an extra zero attached to its end. For all her love of easy money, assigning a dovish posture to Janet Yellen would be a mistake. She's more an accommodative hawk, carrying a bazooka loaded with canisters of $100 bills, ready to fire off in any direction.

With these two backing stocks over anything else, Wall Street is probably more juiced for a "buy the dip" moment than worried about further declines.

Until somebody issues some dire, unmistakable warning or rings a bell for the top, stocks should continue an easy glide path into the stratosphere.

At the Close, Tuesday, February 23, 2021:
Dow: 31,537.35, +15.66 (+0.05%)
NASDAQ: 13,465.20, -67.85 (-0.50%)
S&P 500: 3,881.37, +4.87 (+0.13%)
NYSE: 15,359.13, +18.66 (+0.12%)

The Folly of the Dollar Index, GDP Fakery, Pandemic Confusion

folderol
[?fäld?räl, ?fôld??rôl]
NOUN
falderal (noun)
trivial or nonsensical fuss.
dated
a showy but useless item.

There's a lot of this folderol afoot. Much of it has been with us for quite some time. Some of it is recycled. Some is new.

Let's start with the dollar index or the Dixie (^DXY) as it is commonly known to the slithering creatures who “manage money.”

It's a joke. The dollar index is a construct made popular by some delusional specialists in the business of fractional reserve currency debasement. What they call "money" is not really that. It's currency at best, and, whether it's denominated in US$, yen, euro, yuan, pounds or loonies, it's value is approaching toilet paper status.

Anybody over the age of 50 recognize the traits of a depreciating currency, as they've lived with it continuously since birth. What used to buy a bag of apples in 1975, buys one, maybe two, today. The apples aren't bigger or better. They've pretty much stayed the same. What's changed is the purchasing power of the currency.

A 15 ounce box of Oreo cookies was 55 cents in 1974. You can buy a plastic package of Oreos for about $4.00 nowadays, but the net weight is probably some weird number like 13.2 ounces. You pay more, you get less.

What the dollar index does is compare the US dollar to a basket of other fiat currencies, i.e., backed by nothing, printed to infinity, eventual value approaching zero. It rises and falls in line with the varied perceptions of the rest of the gang, which are:

Euro (EUR), 57.6% weight

Japanese yen (JPY) 13.6% weight

Pound sterling (GBP), 11.9% weight

Canadian dollar (CAD), 9.1% weight

Swedish krona (SEK), 4.2% weight

Swiss franc (CHF) 3.6% weight

No, I didn't see gold or silver in there either, which is the point. Comparing the US$ to the yen or the pound, or comparing the loonie to the krona is like comparing rotting apples to rotting peaches, or rotting onions. There's a lot of rot and stench, but little value. Leave them be for a while and they'll be worth nothing other than more scrap for the landfill or the compost heap.

What the dollar and the rest of the fiat gang needs to be compared to is gold or silver or oil or apples or some other commodity that has been around long enough that it has some recognized value. Gold is a good choice. In 1971, the last time the US$ was tied to it, gold was $35 an ounce. It's been bouncing around $1800 lately and was over $2000 recently.

The gold Eagles your grandfather held in 1971 or thereabout were nice items. Today, they're priceless. You could have bought 10 one-ounce gold coins with $350 in 1971. That same money will get you a little less than 2/10ths of an ounce, if you're lucky. The gold didn't change. The dollar did. It lost value, about 98% of it. So, if somebody asks your opinion of gold and the US dollar, throw them a buck and tell them that's your "two cents."

If the dollar index isn't a bad enough measure of value, consider the government's use of GDP to measure economic activity. According to what the great minds in government and finance tell us, GDP measures the monetary value of all finished goods and services made within a country during a calendar year. Everything. New cars. Dental work. Your kid's lawn mowing. All of it. And that's all well and good, but it's fake as all get out because it's measured in dollars, and they're worth less and less every year.

So, if economic output (GDP) was $1.073 trillion in 1970, and a shade over $21 trillion in 2019 - before the pandemic - it sure looks like the United States has grown by leaps and bounds. There should be 800-story buildings, trains that travel at the speed of light, and everybody should be rich.

We're not.

The economy has improved somewhat, maybe, over the past 50 years, but is it 20 times better now than it was then?

Doubtful. We don't even have discos any more. In some ways, the country has gotten worse. Look at roads, bridges, the power grid. Most of that stuff hasn't been updated since the 1950s or even before. Infrastructure has stagnated. The rest is just inflation, or, devaluation of the dollar.

It's a nice day when the government announces some quarter of GDP was up three percent. However, failing to tell you that inflation was five percent exposes the fakery in their numbers. The country has been going backwards for at least the past 20 years, probably longer. Sure, we have the internet, smart phones, better automobiles. But, we're still building houses out of wood, concrete, and recently, plastic, and prices for those have gone through the roof (pun intended). The median price of an existing home was $303,900 in January, 2021. In 1971, the same house would have set one back about $26,000.

We've come a long way, baby.

And then there's our current curse, the COVID-19 pandemic, which, if chart-reading hasn't gone out of fashion, appears to have run its course. Date from the Covid Tracking Project shows testing, cases, hospitalizations, and deaths all plummeting, by anywhere from 30 to 70 percent.

For instance, the number of cases reported for a day fell from a peak of 295,121 on January 8 to 52,530. A majority of states are reporting less than 1000 new cases a day. Many, like Arkansas, Wyoming, Idaho, Iowa, Nevada, and New Mexico are well under 500 with deaths and hospitalizations falling in similar fashion.

This thing is over. People are done with it. We have vaccines. We've socially-distanced. We've worn masks. Sometimes two of them at once. We've isolated, lock-downed, sacrificed for the greater good, skipped work, kept kids at home, got jabbed with vaccines, there’s herd immunity, and we're done.

Wait, wait, wait a minute. Dr. Fauci tells us we're not going to be “out of the woods” until fall.

What is this guy smoking? This delusional, self appointed demigod of disease says that even people who have been vaccinated have to continue wearing masks and social distancing. What? Why then even bother with the vaccine? On the other hand - or side of his mouth - Fauci says that teachers don't have to be vaccinated to go back to work safely.

Yes. No. He's not confused. He's a fraud. He should take a permanent lid with the fake president. We're done with idiots.

Apparently, we're done with tech stocks, too. Look at that drop on the NASDAQ. Probably more where that came from.

At the Close, Monday, February 22, 2021:
Dow: 31,521.69, +27.37 (+0.09%)
NASDAQ: 13,533.05, -341.42 (-2.46%)
S&P 500: 3,876.50, -30.21 (-0.77%)
NYSE: 15,340.47, -22.22 (-0.14%)