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%)

Record Five Month US Budget Deficit Surpasses $1 Trillion; Dollar Destruction Accelerating

Bloomberg News reports that the US budget deficit surpassed $1 trillion for the first five months of fiscal 2021, even before the $1.9 trillion Biden Rescue Act stimulus package deepens the shortfall. The budget gap for February was $310.9 billion, up from $235.3 billion in February 2020, according to a Treasury Department report Wednesday.

That pushed the deficit to $1.05 trillion, a record for the first five months of the fiscal year that began in October, compared with $624.5 billion a year earlier, which begs the question, "do you miss President Trump?”

Biden, the Pretend-ident, is supposed to deliver a live announcement to the general public Thursday night, in which he promises to reveal the steps forward and what is expected from the American people. Keeping in mind the current climate of fear and command coming out of official Washington Democrats, Biden is likely to stumble through some thematic platitudes about defeating the dreaded COVID virus and announce some new form of control, possibly mandated vaccinations or COVID passes for entry into concerts, sports venues, maybe even restaurants.

Short of the kind of sick, twisted, communist-style dictates the Democrats (and, let's not forget the compliant Republicans who are just as large a part of the problem), expect Biden's monologue to last no more than 20 minutes, as the doddering old fool can barely remember what day it is or where he is at a given moment.

What the US projects as government - protected from its own people by barbed wire and National Guard troops - is about as far removed from a representative Republic than the founding fathers might have envisaged. It is wholly illegitimate, so watch the address, turn it off and don't comply. American patriots desperately need to take the country back from the occupiers in Washington DC. Barring that (because nobody wants to confront the military), simple non-compliance with orders from federal "authorities" will have to suffice for now.

Whatever the case with federal government, Wall Street seems to be enjoying the ride. Despite the NASDAQ floundering just below its 50-day moving average, the Dow Jones Industrials rose to a record close on Wednesday and looks to add to those gains Thursday. Stock futures have exploded higher overnight, aided by anticipation in Europe of Thursday's ECB policy announcement, another nothing-burger designed to keep everybody in the game as ECB President, Christine Lagarde, is not expected to do much besides mumble some nonsense about bonds, bond-buybacks, swaps, and assuredness that the central bank is prepared to support the euro for the long haul.

Meanwhile, the drip, drip, drip of fiat currencies melting down into a pool of mush and worthlessness continues almost imperceptibly. The world as we know it being torn to shreds by a confluence of forces. The drive by elites for a "Great Reset" wherein they control everything right down to digital fiat in your digital central bank account, is countered by a mass exodus from dollars, euros, pounds, and yen, into anything else, but in particular, gold, silver, bitcoin, other cryptocurrencies, canned goods, guns and ammo.

Like it or not, $1400 and an extra $300 in unemployment benefits for millions of dissatisfied former workers isn't going to keep the herd in tow. In addition to what Wall Street likes to call pent up demand, there's an ample supply of pent up hatred and disgust. It seems some people still believe last November's elections were stolen from President Trump and others, and they are still seething. It's that underlying anger that keeps troops on the streets of America's capitol and the likes of Facebook, Twitter, and Google censoring much of the commentary that doesn't fit the new Democrat nanny state narrative.

The unwind will take time. With any luck it won't be too violent or disturbing to children.

In terms of upset, one need look no further than the foibles of the redditers from wallstreetbets pitted against the horde of hedge fund managers still trying to short shares of GameStop (GME). Though the mainstream media has chosen to look the other way on this one, the battle has been re-engaged and the reddit crowd seems to be winning, sending shares of the company to dizzying heights on Wednesday. GME hit 348.50, before falling back to 198.00, closing at 265. Fortunes are being made and lost minute by minute, but nobody seems to care and the SEC is powerless to do anything about it. This episodic power struggle is a portent of things to come, as society splinters and factions vie for power and control.

It's useful to keep an eye on GME, along with struggling silver and bitcoin, which has regained momentum to the upside and is approaching all-time highs from late February ($58,367). Currently checkin in above $56,000, bitcoin is a proxy for dollar devaluation and escape from the central bank matrix. It should be owned, at least in part, by everybody who desires freedom of movement and of commerce. Mass adoption continues to drive the price, as there is a finite quantity standing in stark contrast to the ever-depleting plunder of fiat currencies backed by nothing, currently being printed into oblivion.

Destruction of purchasing power takes time. The Federal Reserve has been at it for 108 years, with the past 49 of particular high quality. The passage of the latest COVID relief bill and new spending which is sure to be announced tonight by befuddled Biden are just more evidence of the Fed's ultimate intent.

Papa Joe hits the airwaves Thursday night at 8:00 pm ET (5:00 pm on the West Coast) in his first televised address to the nation since being installed in the White House on January 20. Whatever he mouths probably won't matter much in the long run but his appearance is usually good for a few minutes hate or maybe a laugh or two. Take the under, which is 23 minutes. Drinking game word is “pandemic.”

At the Close, Wednesday, March 10, 2021:
Dow: 32,297.02, +464.28 (+1.46%)
NASDAQ: 13,068.83, -4.99 (-0.04%)
S&P 500: 3,898.81, +23.37 (+0.60%)
NYSE: 15,521.83, +146.20 (+0.95%)

Nancy Pelosi Is Excited About Helicopter Money; More Inflation Will Be The Result

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.

In addition to providing a version of Ben Bernanke's "helicopter money" to the soulless American public, the bill also doles out $350 billion to states and municipalities, which, like the American people, don't need the money.

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%)

NASDAQ Tanks, Bitcoin Heads To Moon As All Millionaires Can't Own One

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.

There are just so many bitcoins out there (18.6 million, right now; only 21 million eventually) that there aren't even enough for every millionaire - upwards of 50 million - on the planet to own just one, despite nearly three out of four millionaires saying they'd like to own, or do own, some crypto.

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%)