COVID relief money is on the way. This thrilling news is apparently such a huge hit in Washington, DC, that none other than Nancy Pelosi is quoting songs by the Pointer Sisters.
"I'm so excited, I just can't hide it.
I'm about to lose control and I think I like it."
-- Pointer Sisters, 1982
Pelosi, for all her eccentricities, is showing her age (80), referencing a song that was released in 1982, nearly 40 years ago. Most of the people who are going to benefit from the partisan American Rescue Plan Act of 2021 weren't even old enough to remember the song. Worse yet, Nancy called it the "Biden American Rescue Plan," pretending that the pretender-in-chief, Joe Biden, actually had anything to do with the drafting of the legislation or pushing it through a divided congress.
The House voted Tuesday for two hours of debate - beginning Wednesday at 9:00 am ET - before voting on the measure, so, by noon Wednesday, the bill should become law and the spice will begin to flow sonn thereafter.
All Sleepy Joe is going to do is sign it, likely later this week, preferably before his warm milk and nap time, and the machinery of government will snap into action, sending out $1400 virtual checks (and some real ones) to millions of Americans.
With COVID on the wane (is it really over?), depending largely upon where they reside, people are finally getting back to some semblance of normalcy in their lives, going back to work, getting their kids back into schools, and someday, maybe even taking off their stupid masks for a breath of fresh air.
But, the question remains, if the American public, states, and cities largely doesn't need the extra money, why then is congress doing this?
The answer depends on who you ask. Some will say it's all about control and conditioning people for the eventuality of Universal Basic Income (UBI). Others will say it's because there are still lots of people on unemployment and the bill provides another extension of supplemental unemployment insurance over and above the usual state levels. The most cynical will say it's all about greed, corruption, and graft, and that the bill is a payoff to local officials who helped put corrupted Democrats in power in last November's elections.
Whatever the case, people are going to spend that money, states are going to shore up their ailing pension funds, and money will be sloshing around the country for the next couple of months, most of it ending up in the hands of Wall Street investors or the stocks they buy. A bunch will go into, variously, bitcoin, gold, silver, guns, ammunition, food, and paying down debt.
It's a ludicrous thing, but there isn't a sane person in the world who, at this juncture, would pass up free money, and, since Wall Street has been getting it for years, it only seems fair to give the plebes a little taste.
The net result of this spending by congress will be another huge hole in the federal budget, already on track for a record-setting deficit, financed by the Treasury and Federal Reserve, adding to the already bloated $28 trillion debt already on the books. This bill will boost the debt beyond $30 trillion.
So, the outcome is already baked into the cake. Inflation will continue, as evidenced by the CPI release this morning, up 0.4% month-over-month, and up 1.7% on an annual basis. Food and energy led the way, leaving the "core" index (excluding food and energy) up a mere 0.1%. Over the past year, food is up 3.6%, energy is up 2.4%, but since these are government numbers, those should be regarded as base numbers, with the real impact higher and about to shoot even higher over the summer and maybe exploding into the fall.
When the CPI was released, stock futures responded positively, setting up the equity markets for an open on the upside. Another boost to stocks will come when the deal is done in congress later today and the money flow into the greatest bubble ever blown will carry on for a few more months.
They're already talking about another stimulus bill, later this year. The major indices are about to rocket to new all-time highs, so, enjoy the show.
Here's George Gammon explaining how the IMF's central planning for a new Bretton Woods is a very bad idea.
At the Close, Tuesday, March 9, 2021:
Dow: 31,832.74, +30.30 (+0.10%)
NASDAQ: 13,073.82, +464.66 (+3.69%)
S&P 500: 3,875.44, +54.09 (+1.42%)
NYSE: 15,375.63, +87.25 (+0.57%)
Could Monday's trading regimen protend of things to come?
Unlikely in some ways. In others, such as Bitcoin's meteoric rise the past two days, surely.
While the NASDAQ was nose-diving into correction territory and the Dow Industrials matching it point-for-point to the upside (which was strange enough), Bitcoin was tearing off like somebody was chasing it, and, indeed, many are.
Imagine the angst from the monied crowd at being informed that they can't own a bitcoin. Worse yet, there will ever be only enough bitcoins to supply less than half a bitcoin per millionaire, which is why the price of the world's first cryptocurrency once again has vaulted over the mark of $1 trillion in market capitalization as it rose from $47,000 to over $54,000 in the past few days.
The move began Saturday morning and it's been straight up since, perhaps in anticipation of the stimulus bill that will enrich many Americans by $1400, and those with dependents by multiples of that figure. The people who will receive stimulus checks in coming days are certainly not millionaires, but, judging by how bitcoin has responded to the last round of stimulus checks issued in January, there seems to be some front-running of the expected buying crush.
This is why pundits, advocates, and promoters of cryptocurrencies have been making bold claims about the price of Bitcoin in the future. Money Daily producer, Fearless Rick, says bitcoin will possibly top $70,000 by the end of March, and almost certainly by April 15. He also has predicted the price to be around $280,000 by the end of the year, higher than Max Keiser's rosy outcome of $220,000 in 2021.
It's pretty obvious that there are copious amounts of fiat being plowed into not just bitcoin, but stocks as well. Futures on this Tuesday morning are pointing to a heady upside opening with the NASDAQ indicated to erase nearly all the losses incurred on Monday.
While buying the dip may be all the rage in equities, the same strategy may not work quite so well in the crypto universe. Waiting for bitcoin to come down to a more desirable level could leave one in the fate of those unlucky millionaires without any because it may not come down much, or, if it does, it's only down for short periods of time.
The long and short of it is that buying bitcoin at $48,000 or $54,000 won't make much of a difference when it's $200,000 or more. Gains are gains. Profits are profits. No-coiners are... poor.
At the Close, Monday, March 8, 2021:
Dow: 31,802.44, +306.14 (+0.97%)
NASDAQ: 12,609.16, -310.99 (-2.41%)
S&P 500: 3,821.35, -20.59 (-0.54%)
NYSE: 15,288.38, +36.55 (+0.24%)
Stocks staged a miraculous recovery on Friday, characterized by financial media (CNBC, Yahoo, Fox Business, etc.) as being the proximate result of the outstanding non-farm payroll report for February which showed 379,000 jobs created during the month.
Of course, that narrative is absolute hogwash. One look at the charts of the major indices prove that there were forces at work other than a superlative jobs report which contributed to the quick and sustained upticks in the price of stocks on Friday, March 5.
Dow Jones Industrial Average
NASDAQ
S&P 500
The above charts show the Dow, NASDAQ, and S&P 500 for the day. It's clear that all of them responded positive at the open, but quickly faded, then caught bids and continued to rally for the rest of the session. That action can't logically be tied to a smashing jobs report. If that had been the case (non-farm payroll data was released at 8:30 am ET), stocks would have been much higher at the open and remained at high levels through the day, as has been the case in all such instances in the past. No, the stock market could care less about another 379,000 slobs or slaves or plebes getting jobs. Interest rates, inflation fear, the stimulus bill, and other macro indicators have been moving this market.
Further, eventual gains on all the main indices were uniquely uniform, not erratic and skewed, as has been the norm for many months. In other words, the NASDAQ is usually the leader or loser by an order of magnitude, but on this day, it was nearly in line with the others. See the "At the Close" figures at the bottom of this post.
And, it all happened at the exact same time: 11:30 am ET, so the dramatic reversal can be attributed to either luck, every trader on the planet hitting their “BUY” buttons simultaneously, or the PPT… or a combination of those.
Whatever the cause, US equity markets were saved from waterfall-like declines as was the case on Thursday. The hot jobs report provided the perfect alibi for the glad-handers on TV and over at the Wall Street Journal.
Overall, the week was exciting, invigorating, and, in the end, constructive to the “all is well” narrative from the Fed. The Dow and NYSE Composite bounced off their 50-day moving averages, the S&P closed at its 50-day MA, and, while the NASDAQ ended the week below its 50-day moving average, it managed to claw itself out of correction territory on an intraday basis. The Dow and S&P 500 are both down by less than four percent from their very recent all-time highs. So, all around, success. Clink of glasses, pats on backs, jobs well done.
For now.
There will be hell to pay, it’s just not going to be paid this week. There’s still another week of trading ahead, and that will be devoted to parlor games involving the cretins currently in occupancy at the US Capitol, as the Senate ground out provisions in the COVID stimulus (the third in this series) bill handed to them by the House in record time, making some basically cosmetic changes and sending the bill back to the House for a final vote before passing it over to the current resident of the White House (whoever that may be).
The morons have been posing and preening as usual, acting like they’re doing important work. The majority of these useless idiots have never done an honest days’ work in their lives. Instead, they’re wrecking the economy, the society, and countless lives with their bribery and theft masqueraded as “stimulus.”
On that point, the people of the United States don’t need any more stimulus. The $1.9 trillion is being directed at state and local governments - a handout to shore up woefully underfunded pension accounts - an extension of additional unemployment insurance benefits, and $1400 checks to anyone earning less than $75,000 a year. Most measurements of net worth, income, retail spending and other data involving the general health of individuals and families are up sharply from a year ago when factoring in additional unemployment insurance checks for 35-45 weeks, stimulus checks, rent and mortgage moratoria, and other easy street incentives rolled out by governments over the past year.
The money will be ill-spent, but much of it will go right into the coffers of major corporations listed on the various exchanges, either in the form of outright purchases or stock investments, boosting their top-and-bottom lines, making everything on Wall Street look entirely rosy and wonderful.
Such appearances have to be kept up, unless the serfs storm the Capitol for real or the military turns its guns on the insiders rather than look like they’re protecting them.
As weeks go, this one was fairly volatile, as all assets had rather outsized price movements. The big winner was OPEC+, as the price of oil rocketed higher when this cartel of oil-producers decided against production ramps. They, and the traders in oil futures, are attempting to convince everybody that there’s demand (that’s funny) and a shortage of supply (that’s even funnier). In any case, they’re doin OK, since WTI crude oil shot up this week from $61.50 to $66.28 a barrel and prices at the pump are sure to follow. A year ago, the price per barrel was $41 and dropping. Yes, we need stimulus checks… to pay for higher-priced gasoline and fuel oil.
One problem, though, is that oil futures are in backwardation, with the prices for future contracts lower than the current price. Usually, it’s the other way around, a condition called contango. For instance, November WTI contacts are at $61.94. Who is willing to pay spot ($66.28) when you could buy it for less in eight months? Or, for $44.38 in August of 2023. That’s the bid right now. It’s backwards, thus, backwardation. Somebody - actually, a lot of people - don’t believe this high price is sustainable longer term.
Not to be outdone, the treasury complex has gone completely bonkers. If the price of oil is flashing inflation signs, the 10-year note is a wailing siren for a liquidity crisis.
On August 4, 2020 - incidentally, about the same time gold was setting a new all-time high - yield on the 10-year was a measly 0.52%. On Friday, March 5, 2020, it closed at 1.56%, triple the yield in just seven months. The short explanation is that investors are demanding a higher payout (interest rate) because they see more risk and more inflation on the immediate and mid-term horizons.
Those buyers in 2020 accepting 0.52% or 0.93% (12/31/20) are completely back-doored on their investments. They paid premium prices for protection and now can’t sell those bonds unless they’re willing to accept a massive write down from par. Nobody wants a bond returning less than one percent when current issues are fetching 1.5% or more, especially when real inflation (dollar deterioration) - and not what the Fed or some government agency tells you - is running at six to eight percent or higher and about to go parabolic.
Beyond the obvious, the Fed itself is snatching up all the TIPS (inflation protected) available to keep the inflation bugaboo as quiet as possible, but it’s raging right along. Anybody who buys groceries on a regular basis will tell you that. The best bond traders are not stupid. They clearly see the end of the 40-year secular bull market in bonds and anticipate a period of gnarly, grizzly bearish conditions for money. Conditions are very tight and about to get even tighter. Banks already are reluctant to lend, thus, the emergence of stimulus checks, mortgage and rent moratoriums, and a slow growth to no growth economy. The transition from lockdown to some kind of ordinary is going to be a long slog with many pitfalls and false perceptions, but the trend continues toward complete repudiation of the economic conditions in place and the death of fiat currencies, already worth tiny fractions of their original valuations.
It’s taken more than 100 years since the Federal Reserve System was established in 1913, but they’ve managed to squeeze nearly every last penny from the dollar. The current estimate is that the dollar has lost 98% of its value over those 108 years. Congratulations to Jerome Powell and Janet Yellen. Here are your bags of merde.
As the world emerges from lockdown hell, the recovery meme is tantamount to going from solitary confinement to the general prison population. Sure, it’s an improvement, but it still isn’t good. The bond market is imploding, and with it, the world’s towers of debt will crumble to dust.
Keeping with the money-for-nothing theme, precious metals are deemed by the powers that be to be near worthless investments and not even good hedges against severe economic conditions. Gold was down 1.94% on the week, falling from $1734.40 to a close at $1700.80. Silver got clubbed like the proverbial baby seal, dropping from $26.68 the ounce to $25.24 at week’s end, a loss of 5.4%.
While somewhat depressing for goldbugs and silver stackers, the low, low prices do represent a buying opportunity, if any price even within 10% of spot can be had at local or online dealers.
Here are the most recent prices for common gold and silver items sold on eBay (numismatics excluded, shipping - often free - included:
Item: Low / High / Average / Median
1 oz silver coin: 33.99 / 52.00 / 40.77 / 39.54
1 oz silver bar: 36.00 / 56.53 / 45.76 / 44.42
1 oz gold coin: 1,845.04 / 1,929.10 / 1,876.79 / 1,879.00
1 oz gold bar: 1,800.00 / 1,950.48 / 1,834.42 / 1,817.28
What the current eBay prices are showing is that the most recent short raids in precious metals has caused some slippage at the retail end, but not to any severe degree.
The new Single Ounce Silver Market Price Benchmark for this week is $42.62, a significant decline from last week's price of $44.34, and the first price decline in five weeks.
Last, but certainly not least, here’s Max Keiser with a double dose of Stacy Herbert, explaining and extrapolating current economic conditions into real world applications.
At the Close, Friday, March 5, 2021:
Dow: 31,496.30, +572.16 (+1.85%)
NASDAQ: 12,920.15, +196.68 (+1.55%)
S&P 500: 3,841.94, +73.47 (+1.95%)
NYSE: 15,251.83, +292.42 (+1.95%)
For the Week:
Dow: +563.93 (+1.82%)
NASDAQ: -272.20 (-2.06%)
S&P 500: +30.79 (+0.81%)
NYSE: +241.37 (+1.61%)
(Editor's Note: This post was originally supposed to be posted at roughly 8:35 am ET, Friday, March 5. We tried. It was at that time that internet service was cut off, so, this post never actually made it to the internet. What happened is that some of our town's public service workers (always remember, when you seek incompetence, look straight to government) actually cut our service provider's main fiber connection to the internet (We have an email that proves it). Thus, not only Money Daily and Downtown Magazine were offline for most of Friday (finally got it back about 4:40 in the afternoon), so were many people and businesses in Monroe County, TN. We didn't notice that the post reverted back to draft form on Blogger until about 3:00 pm ET on Saturday. The same post on Downtown Magazine (dtmagazine.com), did, fortunately, get uploaded to the internet before service was abruptly interrupted. Sorry for any inconvenience this may have caused. -FR.
Stocks took a serious nosedive on Thursday when Fed Chairman, Jerome Powell, failed to address recent volatility and other issues at a noon speech to the Wall Street Jobs Summit, carried live over the internet.
While there was little indication that Powell was supposed to reassure markets at this juncture, from the tone of his remarks it appeared that the Fed Chairman was somewhat tone deaf to recent declines in stocks and a bond market rout that was producing runawway interest yield on the 10-year note.
As close as the Chairman got to offering reassurances was the following:
“I would be concerned by disorderly conditions in markets or persistent tightening in financial conditions that threatens the achievement of our goals.”
--Jerome Powell
If the Fed's goals are to heat up the pace of inflation (which has more or less been made official policy) and keep the stock market from imploding, he's not exactly batting 1.000. The various bond, stock and commodity market would be better served to not rely upon officials such as Powell or Treasury Secretary Janet Yellen for guidance as they've proven to be largely incompetent in both monetary and fiscal policy.
The key takeaways from Thursday's carnage were:
The NASDAQ dipped into correction territory on an intraday basis when it marked below 12,757.61. On a closing basis, it would have to close at 12,685.50.
The Dow Jones Industrial Average fell more than 720 points early afternoon before retracing the losses by half.
The S&P 500 was down nearly 100 points, eventually closing down 51.
Yield on the 10-year note crested above 1.55%
Bitcoin fell roughly six percent and continues at lower levels
Silver dropped to its lowest level since late January
Gold continued its months-long decline, closing in NY below $1700 an ounce, down more than $300 from August highs
Unrelated, WTI crude oil shot up dramatically as the OPEC+Russia nations agreed to not boost production, putting pressure on prices worldwide. WTI closed above $64 on Thursday and continues higher ($65.39/barrel) in Friday's futures trading.
What comes next for markets is a double-edge sword with March non-farm payroll data due out at 8:30 am ET and the US Senate embarking upon weekend debate of the $1.9 trillion COVID stimulus bill which faces an uncertain fate.
Money Daily will stay with the narrative through the release of the payroll data in this posting, and will update on the Senate in Sunday's WEEKEND WRAP.
Boring deeper into Thursday's stock rout, the only saving grace for Wall Street was the sudden appearance of bids - likely the work of the PPT - right at the day's lows at 2:00 pm ET. The NASDAQ priced at 12,555, which would have been an 11% decline from the recent closing high had the number persisted to the session's end.
There may have been some dip-buying, but it was likely pretty thin and without spirit. With risk rising and the NASDAQ now having posted lower closes on nine of the past 13 sessions, it's doubtful that investors would be pouring money into anything that didn't offer the potential for outsized gains or at worst, price stability. Currently, there's little of either available.
After closing at an all-time high of 31,961.86 on February 24, the Dow Industrials have closed lower five of the past six sessions and are down a mere 3.25% as of Thursday's close. Similarly, the S&P 500 made a record close of 3,925.43 on the same day as the Dow and is only down four percent over the past six trading days.
What's dragged down the NASDAQ are high-flying tech stocks, which hasn't had much affect on the other indices. A four to six percent decline is surely nothing to worry veteran traders, particularly those with longer views of the market.
Getting past Friday's non-farm payroll numbers and through the passage of some kind of relief bill from congress will not be easy. With the Senate comprised of 50 senators from each side of the aisle, passing the stimulus bill intact in the form sent over by the House is unlikely, though Democrats appear intent on ramming the legislation though on a partisan basis with Vice President Kamala Harris casting the deciding vote and Biden sure to sign it.
Early next week may be somewhat rocky for markets, but while it's been only whispered, yield curve control (YCC) may be implemented by the Fed in short order, designed to keep longer-dated interest rates in line with the ultra-low short end of the treasury curve.
The 10-year and 30-year bonds have been noisy of late because of the threat of inflation. Food prices have risen for the past nine months with no signs that they're abating soon. The outwardly absurd price of crude oil is also fueling inflation by raising prices at the gas pump, a condition that can only slow any nascent recovery as the COVID crisis winds down and more states and municipalities begin the reopening process.
In less than two weeks, the FOMC assembles for a scheduled policy meeting on March 16 and 17. It is likely that, at the conclusion of that meeting, a statement designed to cool market conditions will be announced, returning markets to the preferred path of relentless gains. After all, there's an enormous amount of money being sloshed around by the Fed and Treasury, and when the public begins receiving $1400 checks, stocks are likely to be one of the main beneficiaries. The timing of a slight decline in the markets couldn't be better, ripe for retail speculation.
March's non-farm payroll was expected to show 200,000 new jobs versus a gain of 49,000 in January and the unemployment rate unchanged at 6.3%. When the BLS released the data at 8:30 am ET, everybody was stunned as payrolls increased by 379,000 in February and the unemployment rate fell to 6.2%.
Stock futures, already ramped higher in earlier activity, continued to climb, pointing to a positive open on Wall Street.
Enjoy the warmer weather. Check back on Sunday for updates in the WEEKEND WRAP.
At the Close, Thursday, March 4, 2021:
Dow: 30,924.14, -345.95 (-1.11%)
NASDAQ: 12,723.47, -274.28 (-2.11%)
S&P 500: 3,768.47, -51.25 (-1.34%)
NYSE: 14,959.41, -239.78 (-1.58%)
I rarely write in the first person personal, but today I am doing so because today is special.
Today, more than ever before, I feel confident about the economy and, more importantly, my understanding of where it is going, how it's going to effect people, and how specific markets are going to react.
For background, I've been a writer since I was five years old. I was actually publishing my own magazine when I was six. I've owned newspapers, and I've been publishing on the internet since 1999. I started writing about economics, finance and markets in 2003. I'm 67, so, I think I've got the credentials, finally, to offer reasonably good information (not advice) on stocks, bonds, real estate, financial markets, maybe even a little about cryptocurrencies, particularly Bitcoin. On that last point, I have to thank Max Keiser and Stacy Herbert of the Keiser Report most of all, but also Michael Saylor, CEO of Microstrategy.
Max Keiser and Stacy Herbert have been pounding the table on Bitcoin for over a decade. With Bitcoin at $50,000, I believe it's safe to say that they're right. Bitcoin is the future of money and the savior of wealth. Michael Saylor took the Bitcoin meme to a new level recently, investing his company's cash into it, to the tune of $4.45 billion.
But let's get to the heart of the matter. I'm looking at stock market futures and other indicators here at roughly 7:30 am ET, and I'm seeing what looks to be a continuation of the recent sell-off in tech stocks, now spilling over into mainstream stocks. Futures were down a bunch just a few minutes ago, but they're quickly heading toward positive territory. As I write, S&P futures are down 8.50, Dow futures off 34, NASDAQ futures off 31. No big deal, right?
Wrong. Big Deal. This market is diving headlong into a correction. Futures are full of fakery, maybe even moreso than the equity cash market, the COMEX, or unemployment statistics. There's my first prediction. The NASDAQ is right on the verge of a correction, of which the Dow, S&P, and NYSE will soon follow.
Wednesday's massive losses on the NASDAQ were scary enough, but investors and the general public are going to get even more agitated in coming days. I'm not saying it's going to happen today or tomorrow or even next week, but it's probable that the NASDAQ will fall another 400-800 points in short order, dragging down the other indices into a 10% correction.
Charts are telling the whole story very clearly. There was a correction in September of 2020 when the NAZ fell from 12,074 to 10,519. It nearly did it again in October, dipping from 11965 to 10822. Both times, the index fell below its 50-day moving average, but never got even close to the 200-day moving average.
What happened next? The NASDAQ zoomed higher at a nearly 45 degree angle, left to right, all the way to a top tick at 14,175.12 on February 16, the Tuesday after Martin Luther King Day and one session after reaching the all-time closing high of 14,095.47 on the 12th. The index closed lower on the 16th, down nearly 48 points and it's been lower ever since.
To get into correction territory (-10%), the NASDAQ has to dip below 12,757.61. That's about 250 points. It could do that at any time since it's already closed below the 50-day moving average as of yesterday. It will. It's almost a done deal. With the coronavirus scare fading fast, the media and the powers that be need something else with which to scare the public and the economy is always good for a quick fix.
Scare enough people and they will sell their stocks, which is the intention, to shake out the weaker hands. A little rough patch in the stock market is also good for the political class and their $1.9 billion stimulus package which is now in front of the Senate. Nothing like a weak stock market to justify spending a couple trillion dollars.
Now that I've gone and stuck my neck out on a correction, I'm going to stick it out just a little bit further and predict that the correction will not last long. The NASDAQ will go down to maybe 12,400, maybe even a little below 12,000 before the PPT or the Fed or Janet Yellen or anybody with a loud enough voice tells the world that stocks are cheap. It might even be at the next FOMC meeting (March 16-17), which means stocks get whacked down today, tomorrow, next week, then Jerome Powell and his merry band on central bankers ride to the rescue and stocks go straight up because they're there to support the markets and the economy and they see no inflation threat and look, the government just passed the stimulus bill, and so, all is good, we have spoken.
That's how it works. It'a all rigged, a con game gone wild and I've finally seen it enough times to maybe make a few bucks off it. Don't short this market. You could have on the 16th or the 18th, but, if you did, you should be getting ready to cover.
OK, so stocks are going to go down some, then right back up. Everybody's going to get $1400, cities and states are getting huge wads of cash, and thanks to the video with George Gammon below, we know that Janet Yellen is going to release another trillion dollars worth of additional QE over the next four months (he says so at about the 18:30-minute mark). And, that's confirmed thanks to this Bloomberg report detailing some of the intricacies of Yellen spending down Treasury's cash horde of $1.6 trillion to about $500 billion by the end of June. There will be tons of money sloshing around and much of it will go straight into stocks.
Yellen's spending spree may have already begun. The main buyer is the Federal Reserve, which will add to its already bloated balance sheet. That would also help explain the inordinate rise in the 10-year yield, which really started taking off in February, around the time Yellen made her announcement. It was all there to see, but few understand the implications. I certainly cannot claim to understand how all of this works. It's extremely complex, as stated in the Bloomberg article. Maybe nobody understands it exactly, but surely well less than one percent of the public does, and probably a small number of traders do. What everybody does understand, or will come to understand, is that these huge sums of money changing hands at the top of the financial food chain will have major downstream effects to the markets and the economy.
Moving on to a more obvious subject for prediction: What's the price of sirloin steak? To be honest, it's been so high for so long, I don't even bother to look any more. I'll take a stab that it's about $18 a pound. I'm here to tell you that it's going to be higher this summer and even higher by fall. At my local Ruth's Cris Steak House, a 16 oz. New York strip steak is $53, and a similar size Ribeye is $59. I happen to remember a time - not that long ago - when you could have a full dinner for two with those items on them, appetizers and tip for that price.
So, I predict there will be inflation, and it will be rampant by fall. That's probably a no-brainer.
Incidentally, and this should not go without notice, even though nobody in the financial media mentioned it, but the national debt (federal government debt) ripped past $28 trillion on Tuesday. It happened so fast, sooner than I had thought it would, I missed it too.
How about silver? Well, since the reddit-inspired silver short raid a few weeks ago, the COMEX seems to be in a particularly nasty payback mood. Silver hit $30 on the ask on February 22nd and it's been straight down since, dropping to the low $26 range and briefly with a $25 handle overnight ($25.81). It wouldn't surprise me one bit to see silver on the COMEX at $23 or even lower. There's quite a bit of support in the $22-24 range, but even at today's price - if one were actually able to buy silver at spot or even spot +10% - it's a solid buy.
I'd buy it now and buy more in coming weeks and months. The COMEX has silver rigged to the gills along with gold. They will go higher some day, when the Fed is trashed and the US dollar is absolutely worthless. We're close and getting closer, but that day is not today, and it’s probably not for some months if not years from now.
So, OK, it's getting closer to 9:30 am, before which I intend to publish, so I'm going to move along, but first, note that initial unemployment claims hit 745,000 this morning, just announced at 8:30 am by the Labor Department. While on that subject, I think it's an easy call to say that unemployment is going to stay above five percent for a long time. There's no reason to work if you're collecting unemployment checks, and the politicians are making sure those still at home in their underwear most of the day are well supplied with cash.
Bitcoin: It's going higher. At a trajectory that will be lower than the one from November, 2020 to February, 2021, Bitcoin will next rise to $70,000, before heading to $150,000 by September. If it does that, it's likely to double before the end of the year. So, on January 1, 2022, we all may be Bitcoin millionaires, with the price of one Bitcoin at $300,000 or higher. I'll be doing more on the logical limits to the price of bitcoin in future posts. (Hint: it's still very cheap. Buy some).
On the matter of Bitcoin. If you know anything about it and you hopefully have some in your possession, ask your friends the following two questions: Do you have a PayPal account? The answer is likely to be yes. Then, ask, "do you own any Bitcoin?" Wait for the answer, and it it is no, ask them "Why not?" Fun for the whole family.
Finally, interest rates and real estate: The yield on the 10-year note is going to stay put at around 1.45% to 1.55%. The Fed can't allow it to go much beyond that because it would not only affect stocks, but the mortgage market as well. Look for some volatility, but they'll tamp it down pretty soon. If they don't, my projections on stocks are going to be wrong. A yield of 1.65% on the 10-year would likely lead to a bear market in stocks and would also kill the housing market via rising mortgage rates. These things are inevitable, but just not imminent, in my view. Housing it vastly overpriced, by the way. I would not touch any real estate right now. It's all too expensive and due for a reversal on the scale of that which was seen in 2008-09. That will come later in the year or in 2022. There are too many people not paying on their mortgages or not paying rent for real estate not to crash.
There you have it. I'm long stocks (soon), silver and bitcoin. If I could, I would sell real estate. I'm not a broker and currently have just enough real estate for myself, so I'm holding. I don't do fixed income. See my post titled, "Bonds. No Bonds." for reasons why. Overall, the timing is good to buy hard assets, including gold and silver, crypto, and then prepare to purchase real estate at bargain prices with the gains.
Have a great day and week, and don't miss the video below.
--Fearless Rick (FR)
It doesn't get any better than than this video: George Gammon, the Rebel Capitalist, with the Robin Hood of Wall Street, Gregory Mannarino. Amazing insights from two of the leading investment and finance minds of our time.
At the Close, Wednesday, March 3, 2021:
Dow: 31,270.09, -121.43 (-0.39%)
NASDAQ: 12,997.75, -361.04 (-2.70%)
S&P 500: 3,819.72, -50.57 (-1.31%)
NYSE: 15,199.19, -77.83 (-0.51%)
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