Janet Yellen Needs To Be Retired; Comments Spark Mass Selloff

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Post 3030: Nikkei 225, Dow 30 Send Bearish Signals

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WEEKEND WRAP: Cryptos #Bitcoin and #Ethereum Ramp Higher; Stocks Flat Second Straight Week; Silver Squeeze 2 Underway

The final seven days of April was a week in which nothing of importance happened. There were no earth-shattering, mind-numbing, sensationalist stories. Stocks were moribund. The S&P 500 gained one point. One point. Nobody's getting rich on that. Google, Amazon, and a host of other big names reported first quarter earnings. The aforementioned two big tech giants posted sensational numbers and their share prices moved ahead substantially. Across the market, many companies beat estimates and contented shareholders, for now, though there was a hint of suspicion with some about the sustainability of the bull run, the prices of stocks, weary consumers, and runaway inflation.

It's that last point, inflation, that concerns people the most. Supply chain issues are cited as the proximate cause of price hikes for various goods and services, but that's mostly a cover story for the one-blind-eye corporatism that has overwhelmed world markets. In the United States, consumer goods are rising because everything consumed is imported, mostly from China, and shipping transit rates have exploded. Container ships coming West to East across the Pacific Ocean are full and return empty. That's not a supply chain issue. That's the end result of strip-mining American manufacturing down to the last screw and bolt and sending all to China.

China, in textbook communist manner, owns all the means of production. Owning little to none, the United States has been reduced to a colony of spenders and hoarders, useless eaters and takers. Multi-national companies, most listed on US exchanges, benefit greatly at the expense of consumers and small business. Since Donald Trump was taken off the world stage, China became free to raise prices, control movement, dictate consumer taste, and distort markets at will. The US government will do nothing to stop it. Skeptics attest that the government quietly is encouraging China's behavior to usher in an era of dependency and the ascent of the nanny state to extreme levels.

It took forty years or more, depending on your historical perspective, but America's industrial base has been completely demolished and now the hollowing out of the middle class is well underway, all thanks to inefficiencies or purposeful disinterest by the federal government. The declining condition in America is likely to worsen. There are widespread reports of businesses unable to fill open job positions due to the unwarranted continuation of extended unemployment benefits, rent and mortgage mortariums and other medical-related regulations, rules, or mandates. If anything, slack in the labor market on the job-seeker side should improve wages, leading to more inflation.

Otherwise, everything is just peachy.

Treasury yields bumped up a little bit over the course of the week but remained in the Fed's comfort zone. The 10-year note was up seven basis points, from 1.58% to 1.65%. Yield on the 30-year bond crept up five basis points, from 2.25% to 2.30%. These rates are leaning toward the recent high end from March, when the 10-year topped out at 1.74% and the 30-year was 2.45%. It was at that level that the Fed and investors became uncomfortable at the same time and rates were systematically screwed back down. Even at this week's levels, yields are a far cry from the start of the year, when the 10-year was 0.93% and the 30-year, 1.66%.

Not to get too math-frenzied, those increased yields represent 77% and 39% increases over four months. That's not normal, but, then again, what is normal now?

Cryptocurrencies continue to make mainstream inroads. JP Morgan's CEO, Jamie Dimon, announced that his firm would enable its high-end clients to toy around in the crypto sandbox with a managed investment vehicle while the European Investment Bank (EIB) plans to issue a two-year 100-million euro digital bond on the Ethereum blockchain network, with the sale to be led by Goldman Sachs, Banco Santander, and Societe Generale, according to analysts. Everybody with fiat-based assets wants entry to the blockchain environment, apparently.

These headlines and others sent Ethereum soaring to record highs and stopped dead the decline in Bitcoin, which dropped to $47,000 last Sunday but has since recovered to as high as $58,550 and currently is in a range between $56,000 and $57,000. Ethereum was the darling of the crypto universe, gaining over 30% on the week to just short of $3,000. It has outperformed Bitcoin over the past year, by leaps and bounds, even taking some market share from the granddaddy of cryptocurrencies.

Oil prices went haywire during the week, ascending rapidly from just under $62 a barrel for West Texas Intermediate (WTI) all the way to 65.01 on Thursday. Friday's across-the-board selloff came just in time to take the closing New York price down to a more reasonable $63.58. Gas prices didn't really respond as the national average stayed just below $2.90 a gallon with highest prices on the West coast and the lower end in the Southeast. For now, at least, prices at the pump have leveled off after the national average had risen pretty quickly in two main moves, from $1.74 to $2.24 last Spring and Summer, and the latest, protracted advance from $2.09 to $2.89 from mid-November to the present.

Much like the absurd lumber market, which has been entirely manipulated by major producers, oil prices are not quite reflective of true supply and demand forces. There's still a glut of crude and economies are not moving forward or re-opening as quickly as the rising price of crude and distillates would suggest.

Despite Thursday's obvious naked shorting on the NYMEX which took gold and silver off of their week's highs, precious metals survived another period of price dislocation by the LBMA and futures market riggers. Silver rocketed from $25.57 the ounce to $26.67 by Tuesday, then was guided lower the remainder of the week to finish Friday at $25.92. Gold's smallish gains were tempered by Thursday's $25 takedown on the NYMEX, leaving the futures price to finish the week at $1769.10, resulting in a net decline of $11 for the week.

An attempt to garnish some favor with silver stackers and the reddit.com horde at r/WallStreetSilver by Sprott Money's Craig Hemke may have re-energized the forces opposed to "paper silver" prices or turn out to be a real dud. Proof will come Sunday night into Monday morning when the futures markets open in Asia, then Europe and then to the Americas. Hemke called for a massive silver raid on May 1, urging people to purchase 100 ounces of silver on that day, which, obviously known to Hemke, was a Saturday, when futures markets were closed, thus rendering any market reaction a delayed reaction or moot point.

Having never stopped their relentless retail silver squeeze, the reddit "apes" were having fun with it, though some regard Hemke as a representative of the establishment Sprott Physical Silver Trust (PSLV) and potentially part of the problem in keeping a lid on the silver price.

However, the ongoing retail buying spree has had and is having some effect on the EFTs, SLV and PSLV, which were negatively affected by February's first silver strike by the redditers and have since been offloading inventory according to this insightful article by Austrolib of The End Game Investor at Seeking Alpha. Keeping an eye peeled on silver and gold this week should be top of mind for anti-fiat proponents.

Here are the most recent prices for common 1 ounce gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):

Item: Low / High / Average / Median
1 oz silver coin: 38.00 / 58.00 / 43.87 / 42.48
1 oz silver bar: 35.00 / 49.97 / 40.91 / 40.22
1 oz gold coin: 1,895.49 / 1,993.00 / 1,929.80 / 1,917.59
1 oz gold bar: 1,818.25 / 1,970.00 / 1,871.06 / 1,869.27

The weekly eBay survey shows both gold and silver to be stubbornly holding onto premia, with Money Daily's Single Ounce Silver Market Price Benchmark (SOSMPB) advancing 33 cents to $41.87 over the week. Coins remain preferable to bars in both metals, with roughly a three percent (3%) premium for coins over bars at median prices.

While this week may be regarded as hum-drum or otherwise subdued, movements in precious metals and cryptocurrencies suggest that a storm is brewing and nothing will be able to stop its advance over time. Changes, especially radical currency reassignment, take time, measured in years and decades rather than moments and hours. It's worthwhile to disregard market noise in these situations, focusing on longer-term conditions. Being prepared for chaotic events in political, societal, and economic arenas is not for the feint-hearted mor pound-foolish. It requires vigilance and steadfast nerves as the daily drone of mass media often paints a picture that is far removed from actual on-the-ground reality.

Changes are happening all around us. Perception, being able to discern the real from the imagined, underpins the acquisition of useful knowledge.

Many more big cap companies report first quarter earnings this coming week, but after that the earnings deluge will begin to wind down. Money Daily purposely did not report on the Fed's FOMC meeting in this edition of the WEEKEND WRAP as it was a major nothing-burger and completely inconsequential.

A bit of housekeeping to close out the WRAP: This coming week may be the end of regular Money Daily posts on Google's Blogger platform. The posts have been simultaneously published there and on the home site at dtmagazine.com. It seems as though Google's bots are interpreting some traffic on the home site as "invalid." As is usual with the behemoth, no explanation has been forthcoming and Fearless Rick has been getting a little tired of the regularity of Google's one-sided authoritarianism. The plan, so far, is to post a title and a link to the actual post here on blogger, but publish only on the hoe site and possibly on Substack, which appears to be more "author-friendly."

Money Daily and Downtown Magazine create this work. Google and Blogger are nothing more than platforms and facilitators. They don't own our work, nor should we be subject to censorship, be it overtly or otherwise. Enough is enough.

At the Close, Friday, April 30, 2021:
Dow: 33,874.85, -185.51 (-0.54%)
NASDAQ: 13,962.68, -119.86 (-0.85%)
S&P 500: 4,181.17, -30.30 (-0.72%)
NYSE: 16,219.33, -156.67 (-0.96%)

For the Week:
Dow: -168.64 (-0.50%)
NASDAQ: -54.13 (-0.39%)
S&P 500: +1.00 (+0.02%)
NYSE: +13.13 (+0.08%)

Japan's Nikkei 225 (^N225) a Leading Indicator of a Bankrupt, Zombie Planet

The metric of Debt to GDP is a simple enough concept, a lazy way of viewing the economy of an entire nation or amalgam of nations (such as the European Union) with a snapshot of its indebtedness versus its supposed productive output.

Both sides of the equation are subject to wildly varying interpretations, many of them decidedly arguable against the accepted norms of economists and globalist thinking.

Japan, a victim of its own hubris and misguided principles in banking and governance for the past forty years is widely believed to claim ownership of most-indebted developed nation on the planet status. Its running Debt:GDP calculus falls in the range of 266%, by far the highest among developed and emerging countries.

In other words, if the government of Japan endeavored to pay down its debt or to retire it altogether, It would require more than 2 1/2 years of the entire country's gross production - all sales, transfers, payments in both the private and public sectors - to do so. It's an absolute absurdity to consider. The total cost of every plate of sushi, every circuit board or car or government payout for anything would have to go toward debt payment.

It's obvious to anyone who's ever tried to balance a budget that included a job, a mortgage, car payment and maybe some credit card revolving debt that to do so would require an impossibility. You would not be able to buy food, pay for utilities, or spend any money on anything other than debt owed. After a week, you'd be unable to proceed for the simple fact that you'd be dead. So it is with a nation's debt. It's simply not possible to pay it all back quickly, if at all. In fact, the debt of all developed nations continues to grow, not contract. There is not a single developed or emerging economy that is even attempting to address these odious debt loads.

They cannot ever be repaid, thus, they never will be. They will only grow and grow until the interest alone, even at a paltry 0.01% becomes an unbearable burden. While Japan may be the worst-case scenario, the EU, USA, Great Britain, India, and China are on the same pathway of economic destruction. The ability by central banks to conjure money (currency) out of thin air and then lend it at interest to any interested party - usually a government entity or multi-national business concern - has put the entire planet into an untenable condition of insolvency from which there seems to be no escape.

The calculation of Debt:GDP is, however, only the beginning. What's not included in that formula is personal and business debt. Most people, whether they own a home or rent, are insolvent. A seemingly successful family with two-wage earners living in a tony suburb are probably in over their heads with a massive mortgage on their property, probably car payment, maybe a student loan and possibly even some outstanding credit card debt. They're underwater. Should one of them lose their job, the result would likely be the loss of their home and most of their good intentions. There simply wouldn't be enough money to pay all the bills. The result, likely after months if not year of struggling to make ends meet, would be a visit to the bankruptcy court, whisking away all the debt by yet another government fiat, ordering your debts dissolved.

The same is true for many of the largest companies listed on the various stock exchanges. When measuring a company's net worth, one will find, invariably, that the amount of debt exceeds the company's equity, usually expressed as shares of stock, plus retained capital in various assets. While these companies routinely return some shareholder value in reported earnings, their bottom lines are a disaster common to the business world. In Wall Street parlance, this is known as debt to equity. Many firms are overweighted in debt. When they payments come due, they borrow more. The Federal Reserve and other central banks enable such behavior by buying up the debt of even the most egregious debt offenders.

There are some, though not many, companies that aren't underwater, that have large cash hordes above and beyond their debts. These would be the Googles, Apples, Berkshire-Hathaways, and Amazons of the world. They accumulate cash at such a mind-boggling rate that they don't need to borrow at all to meet payroll, normal operating expenses or even business expansion. They, and the central banks effectively own the world.

Taking into account all the individual, business, and government debt (right down to state and local levels), the total level of indebtedness for any country dwarfs the oft-cited Debt:GDP formula making the complete condition much worse than the superficial analysis touted by experts and TV talking heads lead the public to believe.

Japan's situation is at the leading edge. The government is completely insolvent, though their investments cover the spectrum of financial instrument madness. They own debt. They own mortgages. They own stocks. The Bank of Japan (BOJ) owns a piece of just about everything. They cannot collapse because the result would be a global catastrophe, but the reality is that they are the linchpin of the financial system. Their hands are tied into every aspect of modern life, with emphasis on their own population. The Japanese people, surprisingly, are savers, not spenders, which is cited often as a major reason the Japanese economy has stagnated for so long.

That may or may not be true, but the fact of the matter is that many astute Japanese households don't trust the financial system and are invested in hard assets beyond the currency of the yen, primarily gold. Some individuals in Japan are like the "preppers" in the United States. They've prepared for what they see as the inevitable decimation of the global financial system.

There's a certain mathematical probability to all of this and the Nikkei 225 is a proxy for the world's bankrupt, zombified status. Should the Nikkei break down, so with it goes the economy of Japan, and like dominoes, the rest of the world.

Those of us in the United States or Europe focus on our own stocks, our own trades and economy, our own problems, but it would be wise to keep a jaded eye on our neighbors across the seas.

Approaching the final trading day of April, stock futures have turned ugly, with the Dow sporting a -145 and NASDAQ futures off nearly 100 points. The Nikkei closed down 241.34 points, at 28,812.63, well off the February 16 high of 30,467.75, a 5.4% decline over the past 2 1/2 months. Should the Nikkei's losses extend to 10% or 15%, the effects will be felt far and wide. Stay tuned.

Tomorrow is May 1. Enjoy the Kentucky Derby at Churchill Downs and have a great weekend.

AT THE CLOSE, THURSDAY, APRIL 28, 2021:
Dow: 34,060.36, +239.98 (+0.71%)
NASDAQ: 14,082.55, +31.52 (+0.22%)
S&P 500: 4,211.47, +28.29 (+0.68%)
NYSE: 16,376.00, +53.87 (+0.33%)

Fed Shrugs Off Inflation, Again; Biden Plan: Handouts and Higher Taxes

A funny thing happened on the way to the FOMC rate policy meeting which concluded Wednesday afternoon at 2:00 pm ET.

Stocks ramped higher immediately upon the release. For some reason, a reiteration by the Fed that interest rates would remain at the zero bound was celebrated as good news. But, as the session would to a close, stocks retreated to almost exactly where they were just prior to the announcement.

See here:

Index: at 2:00 pm / at close
Dow: 33,828.81 / 33,820.38
NASDAQ: 14,054.91 / 14,051.03
S&P 500: 4,184.23 / 4,183.18

So, does that imply the Fed is out of the loop? That whatever they say - as long as it's roughly the same message as the prior statement - is disregarded?

Probably yes on both counts. The Fed is just there to oversee the destruction of the fiat regime, which is on its final descent into oblivion. People trading chits, stocks, certificates, even cryptos, realize that it's all just paper, backed by nothing, soon to revert to its intrinsic value, near zero. With short term interest rates at .01% or .03%, the time value of money has been eliminated from any quantifiable equation. Money, in terms of fiats, has been deemed by the Federal Reserve, to have almost no value. There is literally no reason to hold onto it for any longer than necessary, which, if one is a functioning member of society, would mean hours, or even minutes.

Get your check. Pay your bill. Buy food, clothes, gas, a car, a bird cage. It's better to have a physical object in hand than wait for the price to come down or a better deal elsewhere, because it's probably not going to happen, at least not as long as the Fed insists on easy monetary policies and printing more at the drop of a hat.

The Fed also doesn't see inflation as a long term issue, though nobody in the building trades see the price of lumber coming down any time soon. The same goes for people who shop for food. Canned goods remain one of the smartest purchases one can make in this environment. For what it's worth, that 79-cent can of cut green beans will hold its value for years while the dollar loses the remaining 2.15% of its purchasing power.

So much for the first iteration of Wednesday's public finance double-header.

In the nightcap, Joe Biden took to the podium before an assemblage of other brain-dead political hacks to explain how he plans to help usher in the complete destruction of the US economy, outlining his absurd plan to spend another $1.8 trillion that the government neither has in hand nor possesses the ability to borrow and repay. Not that they can't borrow $1.8 trillion, or $5 trillion or even more. The Fed will gladly loan it out. The federal government simply has no reasonable way to repay it. They've already ballooned this year's deficit to over $1 trillion, and the fiscal year is just past the mid-point. And, there's that $28 trillion in outstanding debt that continues to accumulate interest that they cannot and never will pay back.

Calling his agenda "The American Families Plan" the White House bills Biden's hair-brained $1.8 trillion spending fiasco as "a once-in-a-generation investment in the foundations of middle-class prosperity – education, health care, and child care."

Excuse people for being dense or old-school, but isn't the foundation of middle-class prosperity a good job, stable home, hard work, and individual responsibility?

Biden seems to have lost touch with his own Baby Boomer roots and maybe even those of Millennials, Xs, Ys, and Zs. Education hasn't paid benefits in decades. That's why people with degrees are working as baristas at Starbucks. Health care is an expense that continues to skyrocket out of control, and child care is only a consideration if one has kids under the age of eight.

Anyhow, the "plan" is a blend of tax credits, free tuition to community colleges, paid family and medical leave, expansion of the child care tax credit and a string of tax hikes aimed at the upper echelon of society by increasing the top individual tax rate from 37% to 39.6% and raising the capital gains tax rate from 20% to 39.6% for taxpayers making over $1 million.

Coupled with the infrastructure plan currently dying in congress, the latest spending proposal by the occupier-in-chief would not create any new jobs, raise anybody's pay except maybe some social workers and IRS agents, and would result in higher taxes for individuals and businesses.

Joe's plans are no-go. The government can’t afford it and people won’t want to pay for it. Biden might as well be whistling past the grave of the US economy with these numbskull, Obama-era-inspired ideas.

AT THE CLOSE, WEDNESDAY, APRIL 28, 2021:
Dow: 33,820.38, -164.55 (-0.48%)
NASDAQ: 14,051.03, -39.19 (-0.28%)
S&P 500: 4,183.18, -3.54 (-0.08%)
NYSE: 16,322.13, +48.82 (+0.30%)