There's trouble ahead.
The Dow Jones Industrial Average doesn't fall for 10 straight sessions without there being a good reason.
Likewise, numbers like this don't exist in a vacuum:
At the Close, Wednesday, December 18, 2024:
Dow: 42,326.87, -1,123.03 (-2.58%)
NASDAQ: 19,392.69, -716.37 (-3.56%)
S&P 500: 5,872.16, -178.45 (-2.95%)
NYSE Composite: 18,986.96, -530.65 (-2.72%)
From all indications - including the very suspicious close of the S&P on Friday's snapback rally right at its 50-day moving average - stocks are headed lower, along with just about everything else, except eggs, but that's due to scare-mongering continuity over bird flu. Like a lot of things these days, that's largely fake, just like the 2025 stock market forecasts from analysts at Merrill Lynch, Goldman Sachs, JP Morgan, et.al.
Yields on treasury notes and bonds - two years out to 30, were higher this week, meaning fixed income investments were down.
In his weekly Credit Bubble Bulletin comment, Doug Noland cites the blowout third quarter federal trade deficit (Current Account) of $310.9 billion as a significant risk to global economic stability. His thinking:
From my perspective, this week likely concludes the post-August 5th “risk on” recovery and speculative melt-up. Year-end trading dynamics add a layer of complexity, raising the possibility of a rally and year-end markup - or intense hedge fund selling to protect fading 2024 gains (and payouts). Especially in this highly speculative environment, market squeezes can erupt at any time. But it appears that there is elevated risk that de-risking/deleveraging gains momentum from here. And with inflation and growth elevated even before Team Trump takes the world by storm, euphoric markets, all dressed up for a fun Fed easing cycle party, now face the reality of a divided and more hawkish Federal Reserve.
Put simply, there's a chance for a Santa Claus rally next week, but don't count on it being anything significant. January is probably going to be challenging.
Global economic conditions are currently, for lack of a better word, "concerning." A better word may be "chaotic", but things aren't completely out of hand yet. Within a month's time, they likely will be.
There was no escaping this week's downside disruption. Stocks were down everywhere from England to India. Politically, Europe is a basket case, with governments nearly unable to rule in Germany, France, and England. Canadians are looking for Justin Trudeau's scalp. South Korea impeached its president and people are marching in the streets of Seoul.
Maybe conditions are already "chaotic."
Stocks
Stocks suffered through the worst week since late July - early August, but the trend reversal seems to be just getting started. Time will tell whether the heavily-managed U.S. equity markets are going to reach back up to all-time highs under Trump-enomics or stumble and roll over like it's 2022 again. Odds seem to favor the latter, though there's nary a stock-picker or financial pundit willing to admit that Trump's policies may be just a little deflationary.
Dow Transports were down the most, 4.90%, the transportation average having fallen 15 of the last 18 sessions. From a technical and Dow Theory standpoint, the demise of the Dow Industrials the past three weeks was confirmed - if not aligned completely - by the Dow Jones Transportation Average. There was a large November 5-6 election euphoria gap on all the indices. The Dow filled it this week; NASDAQ and S&P have yet to do so. The S&P is going to be looking for support around 5,780 over the next few weeks or even days.
Much of what will occur over the final six trading sessions of 2024 will have to do with the willingness - or lack thereof - of investors to hold gains into the new year. Greed has its limits. Fear, particularly FOLIA (Fear Of Losing It All) goes hand-in-hand with instability.
Friday's pump higher may have been soothing to some, but it doesn't appear to be very convincing. Volume was quite robust on Friday, but that had more to do with quad-witching, options and futures expirations. There may have been more exercising of put contracts than of calls, buying in at lower levels in hopes to turn a profit short term.
Once again, we are reminded that hope is not a strategy.
Treasury Yield Curve Rates
| Date |
1 Mo |
2 Mo |
3 Mo |
4 Mo |
6 Mo |
1 Yr |
| 11/15/2024 |
4.70 |
4.67 |
4.60 |
4.52 |
4.44 |
4.34 |
| 11/22/2024 |
4.72 |
4.67 |
4.63 |
4.53 |
4.46 |
4.42 |
| 11/29/2024 |
4.76 |
4.69 |
4.58 |
4.52 |
4.42 |
4.30 |
| 12/06/2024 |
4.57 |
4.50 |
4.42 |
4.42 |
4.34 |
4.19 |
| 12/13/2024 |
4.43 |
4.43 |
4.34 |
4.36 |
4.32 |
4.24 |
| 12/20/2024 |
4.43 |
4.42 |
4.34 |
4.35 |
4.29 |
4.27 |
| Date |
2 Yr |
3 Yr |
5 Yr |
7 Yr |
10 Yr |
20 Yr |
30 Yr |
| 11/15/2024 |
4.31 |
4.27 |
4.30 |
4.36 |
4.43 |
4.70 |
4.60 |
| 11/22/2024 |
4.37 |
4.32 |
4.30 |
4.35 |
4.41 |
4.67 |
4.60 |
| 11/29/2024 |
4.13 |
4.10 |
4.05 |
4.10 |
4.18 |
4.45 |
4.36 |
| 12/06/2024 |
4.10 |
4.05 |
4.03 |
4.09 |
4.15 |
4.42 |
4.34 |
| 12/13/2024 |
4.25 |
4.21 |
4.25 |
4.33 |
4.40 |
4.69 |
4.61 |
| 12/20/2024 |
4.30 |
4.32 |
4.37 |
4.45 |
4.52 |
4.79 |
4.72 |
Yield curve flattening was completed this week, and now the Fed has proudly achieved un-inversion or dis-inversion with the spread from 30-days out to 30-year (full spectrum) at a solid +29 basis points, exceeding 2s-10s at 22, the best levels since June 2022. There's only some fine-tuning on the short end left to get the whole thing sloping upwards. Three and six-month yields are probably closer to where the one month yield should be now that the Fed has cut the federal funds target rate to 4.25-4.50%.
Wednesday’s rate cut, dot plots, and Chairman Powell's remarks were rebelled against on Wall Street. The stock jocks didn't like the idea that the Fed may not cut as quickly or as deeply as advertised and they screamed "foul", pulling money out of equities in a mad scramble.
The Fed is still likely to cut, but not because Wall Street likes cheap credit. They'll be cutting as the U.S. enters a recession along with much of the rest of the world. A lot of people will hardly notice. People with their futures tied to the stock market will.
It's worth noting that 2s-10s have been normalized since the end of August, so the process is already well underway. The Fed will continue to cut, regardless of the Chairman's rhetoric, though they may pause at the January
28-29 meeting. Trump will have been in office for just over a week, so the Fed might just want to hold off until some of the expected dust settles.
Trump is coming, and he's bringing Elon Musk, Vivek Ramaswamy, DOGE, and a horde of swamp-busters with him.
28 days and counting until the Biden years get swept unceremoniously into the dustbin of history. God help us.
Spreads:
2s-10s
9/15/2023: -69
9/22/2023: -66
9/29/2023: -44
10/06/2023: -30
10/13/2023: -41
10/20/2023: -14
10/27/2023: -15
11/03/2023: -26
11/10/2023: -43
11/17/2023: -44
11/24/2023: -45
12/01/2023: -34
12/08/2023: -48
12/15/2023: -53
12/22/2023: -41
12/29/2023: -35
1/5/2024: -35
1/12/2024: -18
1/19/2024: -24
1/26/2024: -19
2/2/2024: -33
2/9: -31
2/16: -34
2/23: -41
3/1: -35
3/8: -39
3/15: -41
3/22: -37
3/28: -39
4/5: -34
4/12: -38
4/19: -35
4/26: -29
5/3: -31
5/10: -37
5/17: -39
5/24: -47
5/31: -38
6/7: -44
6/14: -47
6/21: -45
6/28: -35
7/5: -32
7/12: -27
7/19: -24
7/26: -16
8/2: -08
8/9: -11
8/16: -17
8/23: -09
8/30: 00
9/6: +06
9/13: +09
9/20: +18
9/27: +20
10/4: +5
10/11: +13
10/18: +13
10/25: +14
11/1: +16
11/8: +5
11/15: +12
11/22: +4
11/29: +5
12/6: +5
12/13: +15
12/20: +22
Full Spectrum (30-days - 30-years)
9/15/2023: -109
9/22/2023: -99
9/29/2023: -82
10/06/2023: -64
10/13/2023: -82
10/20/2023: -47
10/27/2023: -54
11/03/2023: -76
11/10/2023: -80
11/17/2023: -93
11/24/2023: -95
12/01/2023: -105
12/08/2023: -123
12/15/2023: -154
12/22/2023: -149
12/29/2023: -157
1/5/2024: -133
1/12/2024: -135
1/19/2024: -118
1/26/2024: -116
2/2/2024: -127
2/9: -117
2/16: -103
2/23: -112
3/1: -121
3/8: -125
3/15: -109
3/22: -112
3/28: -115
4/5: -93
4/12: -87
4/19: -77
4/26: -70
5/3: -85
5/10: -87
5/17: -94
5/24: -99
5/31: -83
6/7: -92
6/14: -113
6/21: -103
6/28: -96
7/5: -101
7/12: -108
7/19: -103
7/26: -104
8/2: -143
8/9: -131
8/16: -138
8/23: -141
8/30: -121
9/6: -125
9/13: -117
9/20: -80
9/27: -80
10/4: -75
10/11: -58
10/18: -54
10/25: -38
11/1: -18
11/8: -23
11/15: -10
11/22: -12
11/29: -40
12/6: -23
12/13: +18
12/20: +29
Oil/Gas
WTI crude oil slipped $1.07 over the course of the week, ending at $69.58 as of Friday's New York close. Despite disruptions and military operations throughout much of the Middle East, the flow of oil continues steadily along, right into economies that are slowing considerably. There's ample reason to believe that oil cannot be pricing at anything close to $70/barrel for much longer. Major economies in Europe and China are sputtering badly, with much of Europe already in a recession, with the U.S. looking like it is about to follow suit.
Trade issues are coming to the forefront, particularly, tariffs that have been proposed by incoming President Trump. There will be disruptions to supply chains and various goods and services. Food and energy - two of the main components of the last round of inflation (though oddly not in the "core") - will not likely increase because the U.S. produces enough on its own to keep prices in check.
Oil prices have been under pressure for the past eight months, falling from a peak of $86.91 on April 5 to current levels.
Gasbuddy.com is reporting the national average for a gallon of unleaded regular gas at the pump of $3.03 a gallon, a mere two cents higher than last week.
California continues as price leader, at $4.30 a gallon, up two cents from the prior week and well below prices prevailing during the summer.
Pennsylvania prices are down another two cents this week, at $3.21, with the Keystone State holding the high price in the Northeast. New York was unmoved at $3.11. Connecticut ($3.02) and Massachusetts ($3.01) were the same, while Maryland remained below $3.00, down to $2.89 per gallon. Notably, with holiday travel approaching, the Northeast corridor of states west from Massachusetts to Illinois all remain above $3.00.
There were some upsetting price movements in the Midwest, led by Illinois rising from $3.20 to $3.24 and Ohio ($3.12) and Indiana ($3.11) both remaining over $3.00 Sunday morning.
Fuel prices in Oklahoma ($2.49) continue to be by far the lowest in the nation, despite rising five cents this week. Following are Mississippi ($2.56), Texas, Louisiana, and Arkansas ($2.63), with Kansas at $2.66, Tennessee at $2.69. Alabama shows $2.72, South Carolina, $2.75, Missouri, $2.77. At long last, Florida dipped to $2.99.
Sub-$3.00 gas can now be found in at least 31 U.S. states. The Northeast and West coast remain over-$3.00 holdouts.
Arizona ($3.07) dropped another five cents on the week, continuing a long trend. Oregon checked in at $3.42, Nevada at $3.54, and Washington at $3.90, leaving only California above $4.00. Utah ($3.01) and Idaho ($3.04) were under $3.00 for just a week, but are well below summer highs.
Bitcoin
This week: $95,712.22
Last week: $103,002.00
2 weeks ago: $99,645.69
6 months ago: $64,407.00
One year ago: $43,768.45
Five years ago: $7,312.05
Bitcoin couldn't resist the fire sale of assets, taking a deep plunge from all-time highs above $107,000. In stock market terms, that decline of more than 10% is known as a correction. As the leading asset year-to-date, it's worthwhile to track bitcoin for clues to stock market movement.
Precious Metals
Gold:Silver Ratio: 87.78; last week: 86.00
Per COMEX continuous contracts:
Gold price 11/22: $2,743.20
Gold price 11/29: $2,673.90
Gold price 12/6: $2,654.90
Gold price 12/13: $2,665.90
Gold price 12/20: $2,640.50
Silver price 11/22: $31.85
Silver price 11/29: $31.10
Silver price 12/6: $31.49
Silver price 12/13: $31.00
Silver price 112/20: $30.08
The selloff in gold wasn't very severe, only down $25 and change from last week. Silver was another story, down 92 cents on the week, a three percent dip. Both remain at elevated levels, but still in a fairly reasonable range. Silver dropped to as low as $29.20 on Thursday, but rebounded sharply Friday.
Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping):
| Item/Price |
Low |
High |
Average |
Median |
| 1 oz silver coin: |
35.00 |
45.50 |
38.94 |
38.00 |
| 1 oz silver bar: |
34.00 |
44.01 |
37.88 |
37.57 |
| 1 oz gold coin: |
2,707.20 |
2,813.47 |
2,761.96 |
2,759.42 |
| 1 oz gold bar: |
2,731.04 |
2,789.00 |
2,746.50 |
2,737.68 |
The Single Ounce Silver Market Price Benchmark (SOSMPB) was down significantly, to $38.10, a loss of $1.92 from the December 15 price of $40.02 per troy ounce.
WEEKEND WRAP
The week was far from pretty, or festive. It was, for many, downright depressing. Consider it a bearish flinging of a cannonball across the bow. Bears are far from hibernating, instead, grinding their teeth, ready to claw and chaw at overpriced stocks. Shorts are seeking candidates.
Warren Buffett is still hoarding cash.
At the Close, Friday, December 20, 2024:
Dow: 42,840.26, +498.02 (+1.18%)
NASDAQ: 19,572.60, +199.83 (+1.03%)
S&P 500: 5,930.85, +63.77 (+1.09%)
NYSE Composite: 19,119.44, +161.23 (+0.85%)
For the Week:
Dow: -987.80 (-2.25%)
NASDAQ: -354.13 (-1.78%)
S&P 500: -120.24 (-1.99%)
NYSE Composite: -609.93 (-3.09%)
Dow Transports: -819.44 (-4.90%)
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