Jerome Powell and the FOMC Flying Usury Circus

On Wednesday, Federal Reserve Chairman, Jerome Powell, and his colleagues at the FOMC issued a statement regarding current interest rate policy and then held a press conference to discuss aspects of their ongoing operations.

According to people in the financial media, it was a big deal. This, despite the press release being almost a carbon copy of their last press release, and no change in the federal funds interest rate (0.0-0.25%), had lots of people on edge until the 2:00 pm ET announcement and somehow ended up being net positive for stocks. All of the major indices finished the session with gains, most of them made after the FOMC announcement and Powell's press conference.

It's interesting that so many people, with so much money, pay so much attention to a bunch of egghead economists who have basically wrecked the economy and debased the US$ currency by 98% over the past 107 years. Why would people commit time and effort to figure out what this group of people is doing when, on the surface, they don't really do much at all?

Well, for really, really rich people and people who manage money and assets for those people, little changes can add up to lots of money gained or lost. Big, multi-national corporations like to know that they can continue borrowing at close to zero percent interest and for how long. For those people, the Fed has maintained a constant green light pretty much since March of 2009.

People who have mortgages on their homes, vacation homes, second homes, or commercial property want to know that mortgage rates are going to stay low, being that the federal funds rate has implications for all other interest rates.

For people without much “skin in the game,” i.e., people without stocks or mortgages, the Fed’s actions mean little. Many people out in the real world pay rent instead of owning a home, and, if they’re fortunate enough to have a job, get paid in Federal Reserve Notes (AKA US$), pay their bills with cash or checks, and don’t really pay much attention to Powell and his fellow eggheads. These people are commonly referred to as “consumers,” because they consume things in the economy, like food, clothing, cars, kitchen sinks, toys, computers, and assorted goods and services that keep the economy and businesses humming along.

If, however, these consumers have a personal loan, student loan, car payment, credit card, or any other kind of debt, they are confused by all the interest in the Fed and why their interest rates are so high if big institutions can borrow money for almost nothing.

For instance, depending on one’s credit score, a new car loan can carry an interest rate as low as 4% and as high as 14%. Used car loan rates range between 6% and 21%.

Credit card rates are even worse, ranging from 14% to 25%, with penalty rates at high as 29.99%. If a consumer misses a payment or go over your credit limit they get hit with the higher rate. Credit card issuers can increase the interest rate on credit cards for any reason if the account is more than one year old and there’s no limit to how high that rate can go. They also can assess various penalties which cost the consumer even more.

So, if a person is late or misses a payment, the credit card company or bank usually increases the interest rate and likely to limit the line of credit. If a big company has trouble paying off a loan - at a very low interest rate - the bank will likely call and make arrangements, loan them more money, and, if they get into serious trouble, the Fed - yes, Jerome Powell and his egghead buddies - will bail them out.

It’s a very unlevel and unfair playing (and paying) field. It's very troubling because consumers purchase goods and services produced by the big corporations. They get low interest rates, mark up their products and charge well beyond their costs to produce, and the consumer pays, often not just the higher price (inflation), but a premium if purchased with a credit card.

Personal credit cards have been a staple of American business since the 1960s. Prior to that, interest rates were reasonable and many states had what were then known as usury laws. Banks and credit companies could not charge above a certain percentage rate. Usury laws had their origins in the Roman Empire. Beginning somewhere around 443 BC, interest rates on all loans were capped at 8 1/3%. This rate persisted almost worldwide until until 1543 AD, nearly 2000 years.

As populations grew and time marched forward to the industrial revolution, various countries and states within the United States began to write their own usury laws. Many states capped interest rates at 12 to 18%, but in 1979, the landmark Supreme Court decision in Marquette National Bank v. First of Omaha Service Corporation changed everything, allowing nationally-chartered banks to "export" their interest rate from the state in which they were incorporated, doing an end run around state usury laws.

Since then, usury laws have been nullified by federal laws superseding them. Effectively, there are no usury laws in the United States. Banks and oher financial firms can charge whatever interest rate they see fit, often referred to as predatory lending which encompasses almost of the financial industry that has been making enormous profits from consumers for decades. So-called payday loans charge interest as high as 350%, making a $1000 loan cost $4500 over the course of a year. It's actually not criminal, though it should be.

The US congress (oh, boy, them again) has allowed interest rates on credit cards and consumer loans to rise unregulated since the 1980s. A few attempts to establish a national usury rate have failed, primarily because people in congress are lobbied extensively by banks and financial firms are among the top donors to political campaigns. Thus, people in congress have juxtaposed their constituencies from the district or state they represent to the people who finance their campaign. Congress - in terms of banking and consumer protection, as well as in many other areas - doesn't represent people; it represents business, at the expense of people.

To eliminate confusion about why corporations get the best deals on interest rates and consumers get the shaft, one need look no further than congress and the Federal Reserve, which, in addition to openly promoting inflation, could reinstate usury laws, since they exert so much control over banks and credit institutions, but they don't and they won't.

That's why people pay so much attention to Jerome Powell and his FOMC Flying Usury Circus. It affects everybody in some way, from low, low interest rates for business, to high, high interest rates and inflation for consumers.

Just since 2000, total US consumer credit has increased from $1.7 trillion to over $4.5 trillion. The country is having its currency strip-mined by banks and financial firms. The Fed and congress enable it and actively promote it.

Announced Thursday morning, 770,000 people filed for unemployment benefits last week.

At the Close, Wednesday, March 17, 2021:
Dow: 33,015.37, +189.42 (+0.58%)
NASDAQ: 13,525.20, +53.63 (+0.40%)
S&P 500: 3,974.12, +11.41 (+0.29%)
NYSE: 15,731.15, +61.85 (+0.39%)

Stupid People Are Running (and Ruining) Everything

Time magazine used to be the standard for excellence in magazine journalism. Over the past number of years, the once-proud bastion of liberal news-making has slipped into irrelevance due to the evolution of the internet, sagging sales and advertising revenue, sketchy (at best) reportage, but mostly, bad leadership characterized most prominently by stupidity.

Take, for instance, their choices for "Person of the Year" over the past 10 years shown below. Four of them weren't even individual people (2011, '14, '17, '18). Making the case for extended stupidity, in 2006, the Person of the Year was awarded to "You" (kidding you not).

The other six included a three US presidents (and one VP, Harris), one for a second time (Obama), a foreign leader ((Merkel), a Pope and a nagging, teenaged environmentalist, proving just how short-sighted the editors at Time are, that they can't see beyond the people most prominent in the media, and those just seeking attention.

2011: The Protester

2012: Barack Obama

2013: Pope Francis

2014: Ebola Fighters

2015: Angela Merkel

2016: Donald Trump

2017: The Silence Breakers

2018: The Guardians and the War on Truth

2019: Greta Thunberg

2020: Joe Biden, Kamala Harris

Looking back over the past decade, this list is pretty disappointing, not so much that the individual people are largely politicians, but that the magazine and its editors think they are the most influential, or powerful, or had contributed the most to the human experience over the course of a year. Where the heck are soccer moms, grocery store clerks, gardeners, carpenters, engineers, scientists, wedding planners, babies, and the vast array of people who make life worth living just by doing their jobs. Heck, there isn't even a movie star or pop singer among them.

For better or for worse, the world lives with the likes of the auteurs formerly known as Time magazine and other formerly-magnificent publications and media outlets like the Washington Post and NY Times, which still have reporters and opinion-makers who fall over each other trying to get the inside scoop from politicians who are shadows of the great leaders who came before them.

The same can be said of business and culture. The people at the top just aren't making it for the most part. Allowing for maybe a 10% drop-off, politicians are all dirty, journalists are all vapid, business leaders are all corrupt and greedy, and movie stars and pop culturalists are snobs. The world is falling to pieces because 99% of the population has some fascination or adoration (ughh!) with the one percenters who got to where they are either through inheritance, corruption, lying, cheating, or stealing.

Sure, some survived on talent, but has anyone taken a really close look at the people who are occupying the White House lately? These folks are devoid of common sense, driven by lust for power, have accomplished little, and care more about their personal appearance and mask etiquite than they do the American people.

The one prominent leader that had a backbone, accomplishments, savvy and fearlessness - Donald J. Trump - was pilloried and cancelled by the culturalists and a broken political, judicial, and journalistic system.

Americans are like sheep being led to slaughter, the vast majority of them going willingly to slaughter. After being told to stay home, lose your job, wear a mask, stay six feet apart, and don't sneeze for a year, lots of really, really stupid people have decided to get stuck in the arm with a needle containing a mystery vaccine concoction of chemicals and fluids that haven't been adequately tested just so they can get on with whatever small part of their lives are left to them.

No wonder stupid people are leading the way down the paths of destruction. The people following are even dumber.

Perhaps we're being a little to harsh in evaluating the power people of our time. Perhaps it's always been this way, but we've failed to notice until now, now that it's probably too late to matter, but, the people who make the rules and then don't follow them, just are not very impressive.

Joe Biden, Dr. Anthony Fauci, Kamala Harris, Nancy Pelosi, the cast of SNL, Grammy winners, just seem so... disingenuous, aloof, and lacking. America, and the world, deserves better.

---

Heads up on Wednesday's trading includes a 2:00 pm ET announcement by the FOMC of the Fed that interest rates are not changing. It's not a big deal unless the Fed’s move some of their dot plots around or Jerome Powell makes some noises about inflation or velocity or money supply, all of which seems unlikely.

Looking ahead, Friday is a quad-witching day for options and futures, which may be cause for volatility.

At the Close, Tuesday, March 16, 2021:
Dow: 32,825.95, -127.51 (-0.39%)
NASDAQ: 13,471.57, +11.86 (+0.09%)
S&P 500: 3,962.71, -6.23 (-0.16%)
NYSE: 15,669.30, -106.21 (-0.67%)

Gold, Silver, Stocks, Bitcoin, Canned Goods, Water, Guns, Ammo... What Do You Really Need?

It wouldn't be a stretch of the imagination to suggest that the current occupants of elected offices in Washington, DC (your executive, senators, representatives) would dearly love to have your guns.

After all, they've had the Capitol grounds surrounded by the National Guard for two months now. Nobody goes in or out of congress, the White House, or the Supreme Court without dealing with a phalanx of GWG (Guys With Guns) supposedly there to protect the precious few from the unruly many (US citizens). It's an odd thing, this occupation of the nation's capitol. Nobody living can remember anything quite like it. Many questions about why troops are stationed in and around the US Capitol remain unanswered, but one thing is certain: the National Guard isn't there just for show. Somebody's afraid of something, and it's probably the people on the inside, afraid of the people on the outside.

Having the ability to pass laws that would give the elected people access to all the guns in the country, or, at least a record of who has guns, might, in their squeamish little brains, give them some comfort and maybe even prompt the removal of the barricades and armed guards surrounding and supposedly protecting them.

House Democrats (and a few Republicans) recently passed a couple of acts designed to exert more control over gun ownership in the United States. The proposed legislation has to clear the senate, but will need 60 votes to pass procedural hurdles, so it's unlikely that their dreams of nearly complete gun control will come to fruition. A few more Democrats in congress and some arm-twisting of Republicans, however, could result in bans on popular sporting rifles, registration of all guns bought or sold in the country (even gun sales between relatives, neighbors, or friends, and no time limit on how long the FBI could take to complete a background check (it's currently three days, but their legislation would allow the FBI to hold up gun sales and purchases indefinitely).

These measures certainly seem to be on the extreme end of the spectrum and some say even violate the second amendment, which, if anybody wishes to recall, reads as follows:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms shall not be infringed.

That seems pretty straightforward to anybody at a fifth-grade reading level or better. Apparently, the current occupiers of the Capitol don't appear to have much of a sense for following the US Constitution, nor do they seem to have a working understanding of the words, "shall not be infringed," with emphasis on the word "infringed."

For their edification, and yours, here's a commonly-used definition of "infringe" from which "infringed" is derived in the past tense or as a past participle (thanks to both Mrs. Meyers for grammar school education):

infringe
[in?frinj]
VERB
infringed (past tense) · infringed (past participle)
actively break the terms of (a law, agreement, etc.).
"making an unauthorized copy would infringe copyright"
synonyms:
contravene · violate · transgress · break · breach · commit a breach of · disobey · defy · flout · fly in the face of · ride roughshod over · kick against · fail to comply with · [more]
act so as to limit or undermine (something); encroach on.
"his legal rights were being infringed" · [more]
synonyms:
undermine · erode · diminish · weaken · impair · damage · compromise · limit · curb · check · place a limit on · encroach on · interfere with · disturb · disrupt · trespass on · impinge on · intrude on · enter · invade · barge in on · burst in on · entrench on

Gee, golly, those synonyms... erode, diminish, weaken, impair, damage, compromise, limit, curb... sure make it sound like our Founding Fathers wanted everybody to at least have unfettered access to guns, i.e., having the right to bear Arms. All the laws, regulations, and limitations on gun ownership and possession seem to fly in the face of the founding document of the United States of America. According to some sources, there are more than 55,000 laws regarding gun possession scattered through federal, state, and local statutes. That sure seems like a lot of infringing by people who are elected by "we, the people" to uphold the constitution.

No wonder they're scared. They don't seem to be doing a very good job at following the law.

Leaving the constitutional argument hanging out there like a sore thumb, more immediate concerns for ordinary people - and even oddballs and extraordinary folks - involve money, finance, and choosing on what to spend those juicy stimulus checks.

Some banks and other financial outfits have done some studies on the topic and they've discovered that people used previous stimulus checks on food, rent, and paying down debt, but also on electronics, clothes, video games, bikes, and toys at major retailers like Wal-Mart, Target, Best Buy, and others.

Bank of America concludes that the "stimmie" will largely go toward saving rather than spending, while coindesk.com sees a suspiciously high percentage of people planning on buying some bitcoin.

Other anecdotal evidence points out that much of the $1400 doled out to everybody earning less than $75,000 is going into stocks, and smaller amounts into other assets like gold or silver. Some people have already committed to buying guns and/or ammo, so the wants and needs of Americans really run the gamut of preferences, assumedly determined by how concerned about the future one may be.

People who are readying for Armageddon, full scale rioting, gun-grabbing, government overreach and so on are the ones shoring up their food and water supplies. These types used to be laughed at and called "preppers," but, since the run on toilet paper last Spring and the threat of more lockdowns and travel restrictions still loons, nobody's laughing at them any more. Today, they're being hailed as realists with good doses of common sense. Over the past year, it's a good bat that a large number of people have joined their ranks or at least began thinking seriously about what they need to have on hand for emergencies.

The gold bugs and silver stackers continue to believe there's upside in those "ancient relics" and they're right. Both of the precious metals have been employed as money for centuries. If the economy goes into the tank or things continue to spiral out of control. having some hard assets like bars or coins might be a handy trading tool. At the very least, they'll retain their value if everything else is going to heck.

As for guns and ammo, that would likely depend upon where you live and how secure you are in your possessions. Folks in the cities might think conditions have become more dangerous of late and they'd be right. Crime in large urban centers has risen dramatically over the past 12 months. Personal protection is high on the list when it comes to survival. People out in more rural areas are likely to be already well-armed, have solid supplies of food and water (many have their own wells or access to water in the wild), and may just sock that dough away in their IRA or savings account. Some will surely buy stocks or bitcoin or gold or silver or all of them.

Bottom line, one cannot go wrong with some canned goods, and, while $1400 worth of beans, peas, carrots, olives, pickles, and assorted culinary treats might be a bit on the extreme side, putting up $100 to $200 worth of extra food and bottled water seems like a no-brainer. It's all about perspective.

Here's looking at you, Green Giant.

At the Close, Monday, March 15, 2021:
Dow: 32,953.46, +174.82 (+0.53%)
NASDAQ: 13,459.71, +139.84 (+1.05%)
S&P 500: 3,968.94, +25.60 (+0.65%)
NYSE: 15,775.50, +60.30 (+0.38%)

WEEKEND WRAP: Stimulus Bill Sends Stocks Soaring; Bitcoin Over $60,000; Long Bonds Battered

Other than the relentless gains that have persisted for the better part of the past 12 years, a very discernible pattern has emerged recently in equity markets.

It's quite simple, and sensible, in respect to the working parts of the macro-economy of financial markets. When the dollar is weak, longer-duration bonds are as well (higher yields), and equities generally perform positively. The troika of moving parts was evident this week and has been a prime indicator since the beginning of the COVID panic.

Thus, for the past year, investors have had a reliable set of markers by which to set their targets. For any trader worth his or her salt, the gains off the March 2020 lows have been easily taken with generous infusions and injections of spendable currency from the Federal Reserve and the government.

The week just past was exceptionally kind.

The Dow was higher every day last week amd enters next week riding a six-day winning streak along with the NYSE Composite. Following a Monday blood-letting, the NASDAQ, despite being down three of the five days, ended the week with a three percent gain. The S&P was the laggard of the bunch but still put up 101 fresh points, making all-time highs in the process, joined by the Dow Industrials and NYSE.

It was the best week for stocks since the beginning of November, 2020.

There really isn't much more to be said about the remarkable week for stocks other than to point out that the passage of massive stimulus bills usually produce positive results on Wall Street and this big one, signed into law by Joe Biden on Thursday, was no exception.

Also of interest was the renewed battle over GameStop (GME), or, rather, the battle upon GameStop stock, wherein all measurement of fundamental price and value has been discarded by bulls and bears alike, the platform upon which the stocks and options trade turned into an arcade game replete with villians and heroes, anti-heroes, antagonists and saviors.

The merry fellows from reddit.com group, r/wallstreetbets continue to buy into the stock to the utter dismay of the short-sided hedge funds which have renewed their efforts to wring out a profit from the beleaguered company's shares. Playing both sides of the trade are Wall Street sharpies, always ready to pounce upon an amoral or immoral situation with vigor.

Shares of the stock embarked upon another wild ride this week, opening Monday at 153, soaring to an apex at 344 on Wednesday, then abruptly dropping like a rock to 198 before recovering to close the day at 263. Thursday and Friday were mildly amusing, as shares changed hands on lower volume, but finished the week at 264. Chalk up a winning week for the whiz kids at wallstreetbets. The wizened hands at the hedge funds vow revenge as the battle for absurdly-valued trades rages.

Making life for stock jocks just a little more complex was the unusual action in the treasury complex, which was somehow managed into containment for the first four days of the week. Closing out at 1.56% and 2.28% on Friday, March 5, by Thursday, the 10-year and 30-year bond yields stood at 1.54% and 2.29%, respectively, still elevated, but seemingly within some controlled range.

Friday's abrupt sell-off changed the dynamic, as yields jumped to 1.64% on the 10-year note and 2.40% on the 30-year bond. Moves of 10 basis points over the course of one day on long-dated bonds are not normal occurrance, but stock traders barely noticed. All the indices but the NASDAQ were higher on Friday, though gains were pared down during the session.

This massive repricing in what is normally one of the more stable markets in the world is likely the result of two forces operating under similar principles. First, loss of faith in the Fed's ability to control the entire curve - from near-zero at the short end all the way out to 30-years - and, secondly, rising prospects in equity markets are producing monstrous imbalances and outflows. With the Fed sopping up most of the issuance, they're basically unwilling to pay a premium for securities yielding much less than the rate of inflation, which, according to the laughable CPI figures released Wednesday, was only higher by 0.4% in February and up 1.7% from a year ago.

The Producer Price Index (PPI) for final demand (Thursday, March 11 release) increased 0.5 percent in February, as prices for final demand goods rose 1.4 percent, and the index for final demand services advanced 0.1 percent. The final demand index increased 2.8 percent for the 12 months ended in February.

Realists assume the government numbers to be off by orders of magnitude, with true inflation closer to eight to 10 percent year-over-year. Studies like the Chapwood index and John Williams' Shadow Stats offer a more honest appraisal of consumer prices, rendering bond investments among the worst in terms of preservation of capital.

Speaking of preserving capital, bitcoin and other cryptocurrencies continue to rise as individuals and corporations seek safer harbors for their money. Bitcoin, quickly becoming the de facto reserve cryptocurrency, was bid higher through the week, eventually reaching a record high Saturday, vaulting over $60,000 to an all-time high of $61,788.45.

That bitcoin continues to rise at a nearly hyperbolic rate comes as no surprise to the serious adherents who have done their due diligence on he crypto universe and bitcoin in particular. As adoption becomes more widespread, since there are a finite amount of bitcoins available (21 million), price will reflect the desirability of ownership. This should be the same for precious metals, but, as has been proven without doubt, the central banking system's reliance upon suppression of currencies competing (gold, silver) with all forms of fiat (yen, euro, dollars, pounds, loonies, etc.) is a feature of debt-based economies, whereas bitcoin - via blockchain - has proven to be impenetrable, unmaleable, and reliable.

There is mathematical certainty in the price of bitcoin. It will rise until all participants are satisfied with the level of their individual holding, the cumulative effect being upwards in relation to depreciating currencies.

Looking at bitcoin's price from another perspective, it reflects the devaluation of fiat, allowing for some variance due to the level of satisfaction (or dissatisfaction) in respective currencies.

When all participants are secure in their holdings and satisfied with the price/value constituent, bitcoin will become less a tradable asset and more a medium of exchange. With more than 100 million bitcoin wallets worldwide and an estimated 11% of Americans owning some bitcoin, penetration into the mainstream is likely still in its infancy. As fiat currencies continue to devalue and self-destruct, alternatives such as bitcoin and etherium will be sought, bought, and held.

In addition to openly and aggressively devaluing their currencies by massive issuance, central banks and their respective governments will continue to try to infiltrate, control, or otherwise degrade, dismiss, or regulate cryptos. This creates a virtuous cycle (for bitcoin), as the more governments and central banks attempt control, the faster adoption will occur.

Considering that the market capitalization of gold in existence at current prices is just north of $10 trillion ad bitcoin is just over $1 trillion, it's obvious why masses and corporates alike are flocking to the crypto universe.

Precious metals continue to be under pressure and may be shunned even more as interest rates in long-dated US treasuries rise, though that particular gauge of value may itself be tested as underlying currencies are continually debased. It is only because of the LBMA's daily price fixing mechanism and outrageous shorting in the futures market that gold and silver haven't skyrocketed.

On the week, gold was up, from $1700.80 to $1,726.85, while silver advanced from $25.24 to $26.60 on the COMEX.

Here are the most recent sale prices on eBay for common gold and silver items (numismatics excluded, shipping - often free - included):

Item: Low / High / Average / Median
1 oz silver coin: 35.50 / 54.00 / 43.94 / 41.90
1 oz silver bar: 35.00 / 60.00 / 45.80 / 44.95
1 oz gold coin: 1,833.77 / 1,994.01 / 1,926.17 / 1,931.24
1 oz gold bar: 1,800.00 / 1,879.20 / 1,842.98 / 1,835.41

It remains apparent that individuals are still willing to pay premiums for small amounts of gold or silver, but especially silver, which, to many, remains the most undervalued asset on the planet. Judging by shipping delays, minimum purchase requirements, and stock shortages in silver at almost every online dealer and the premium prices on eBay, gold and silver are still being bought aggressively, despite the efforts of the manipulators.

This week's Single Ounce Silver Market Price Benchmark (SOSMPB) rebounded from $42.62 per ounce to $44.15, a 66% premium over the COMEX price. The wide gap indicates that individual buyers of finished pieces of silver coins and bars for immediate delivery are not cowed by paper prices. Dealers, being in competitive conditions, may be reluctant to raise prices to dizzying levels, but even their premia over spot have been high for many months and even higher recently.

The price of a barrel of oil seems to have stabilized, at least so during the past week, as a barrel of WTI crude fell from $66.09 (March 5) to $65.56 (March 12). Today's price is more than double what is was a year ago, when a barrel was under $30 and collapsing, he glut eventually producing a crater at -$37.63, when sellers could literally not even give the stuff away in mid-April, 2020.

While the current number may be deceivingly high, there is the potential for a quick reversal, though the voices of industry will insist that the economy is on the mend and there is increased demand. Neither of those statements can be backed up with much in the way of fact. There are still more than 20 million Americans on unemployment, many businesses have closed up for good, and the only thing keeping the US economy afloat are timely checks to consumers, increased unemployment benefits and massive infusions of capital to states and municipalities.

Prices for gas at the pump have risen from around $2.00 a gallon a year ago to a national average of $2.86 in the United States. When oil prices bottomed in April of last year, the national average sank to decades-low $1.74. Nothing will put the brakes on economic recovery with as much force as high gas prices. With many states already over $3.00 a gallon, either the government will have to step in at some point and put on controls (a distinct possibility considering the current makeup of socialist Democrats in Washington, DC), or the natural supply-demand apparatus be allowed to prevail over speculation.

In summation, thanks to the passage of the $1.9 trillion stimulus package, the week was a grand one for equities, horrid for bonds, solid for precious metals and commodities overall, and especially robust for bitcoin - which is the leading asset of 2021 with an impressive gain of over 100% thus far - and other cryptos.

Signs of runaway inflation are beginning to emerge in places like gas stations, grocery stores, home improvement centers, used car lots, and the PPI. There is simply no way the government can dole out free currency every few months without prices being affected. Even though the government wishes to reassure everybody that inflation is under control via the CPI, the PPI year-over-year increase of 2.8 percent is notable as underlying commodity prices have been on the move.

Protecting oneself from rampant government overreach and spiraling inflation is quickly becoming an international frenzy.

That's the WEEKEND WRAP.

At the Close, Friday, March 12, 2021:
Dow: 32,778.64, +293.05 (+0.90%)
NASDAQ: 13,319.86, -78.81 (-0.59%)
S&P 500: 3,943.34, +4.00 (+0.10%)
NYSE: 15,715.21, +67.20 (+0.43%)

For the Week:
Dow: +1282.34 (+4.07%)
NASDAQ: +399.72 (+3.09%)
S&P 500: +101.40 (+2.64%)
NYSE: +463.37 (+3.04%)

Record Highs on Dow Industrials, S&P 500, NYSE Composite; How Far Can They Go?

Three of the four major US indices closed at record highs on Thursday, as the Dow Jones Industrial Average, S&P 500, and NYSE Composite Index each set new high closing marks.

Only the tech-laden NASDAQ is lagging, though its 329-point gain on the day put it within five percent of the record close of 14,095.47 achieved just one month ago.

The high stock prices are largely the result of significant efforts by the Federal Reserve and the US government to shore up citizens, businesses, and state and local governments. Thursday afternoon, Joe Biden signed into law the $1.9 trillion American Rescue Act, giving a major boost to capital markets. $1400 checks and direct deposits are being distributed beginning as early as this weekend.

With just about every entity in America soon to be flush with cash, it now appears certain that equity prices will rap even higher. The NASDAQ should be of particular interest to investors as it is currently in the unusual position of lagging the other indices when it has been customarily the since the GFC of 2007-09.

Despite futures looking a bit squeamish this morning, any position in stocks other than buying or holding would appear to be a fool's errand. Next week's upcoming meeting of the Fed's FOMC is likely to shed further light on just how much more money the central bank is willing to throw at the markets.

With $180 billion per month in QE already slated through the end of 2021, investors have the cat-bird's seat at another leg forward for stocks and housing as well. Median housing prices recently made a new high and there doesn't seem to be any reason for new and existing residential structures to command excessively high prices through the summer other than a slight tick up in mortgage interest rates, which are still close to record lows.

A 30-year fixed-rate mortgage is currently 3.462%, while a 15-year fixed rate is 2.562%, both extremely low by historical standards.

The Shiller CAPE measure for stocks currently stands at 35.67, higher than at any time in the history of the stock market (dating back to 1870) other than the level achieved at the height of the dotcom boom. While that may cause some consternation to purists, the current makeup of the US markets offers the ability to withstand absurd valuations and distortions due to extraordinary measures by the Fed and US government.

Other than a nuclear war, there isn't anything to prevent all stock indices from ramping even higher in coming days, weeks and months. The few impediments are psychology, interest rates, and valuation, none of which is a major headache for policy makers at this juncture.

Investor psychology is very high, for obvious reasons. Interest rates are controllable. The 10-year note was recently whipsawed to one-year highs, but the Fed and their proxies have managed to shore up the market and keep longer maturities from getting out of control. Yield on the 10-year reached an apex at 5.9% on Monday, but has fallen back to 5.4% as of Thursday.

Valuations, though very high, don't matter significantly to today's investors. As long as the dollar continues to slide slowly up and down in its current range, stocks will continue to catch the eye. It's no stretch to believe the Dow could hit 35,000 within six months and the S&P vault well over 4,000. Get out the party hats.

Elsewhere, gold and silver are getting crushed in the futures market again this morning, while bitcoin remains near all-time highs and is threatening to move to new levels, making it one of the very few - and likely the best - contrary indicators against dollar devaluation.

At the Close, Thursday March 11, 2021:
Dow: 32,485.59, +188.57 (+0.58%)
NASDAQ: 13,398.67, +329.84 (+2.52%)
S&P 500: 3,939.34, +40.53 (+1.04%)
NYSE: 15,648.00, +126.17 (+0.81%)