WEEKEND WRAP: Stocks, Cryptos, Precious Metals All Grind Higher; Oil, Interest Rates Trend Lower

In what was a fairly lackluster week in financial markets, equities still managed to ramp higher, with the Dow, S&P 500, and NYSE Composite each closing a new all-time highs on Friday. Still the laggard, the NASDAQ closed out the week fewer than 200 points from it's all-time closing high (14,095.47, 2/12/2021).

The slow churn higher had "stimulus checks" writ large all over it. Pin money freshly distributed from the federal government to its subjects has that kind of effect. Gains were likely hold down by institutional money racking profits on selected issues. With markets soaring, it's worth noting that first quarter results will begin flowing to the street, leading off with bank stocks, the bulk of the biggest reporting this coming week. The most interesting aspect will be whether credit loss reserves are amped up by consumer lenders, those being primarily, JP Morgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), and Citigroup (C).

The breakdown of release dates goes like this:

Wednesday, 4/14 (before opening bell): JP Morgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS)

Thursday, 4/15 (before): Bank of America (BAC), Citi (C), US Bancorp (USB), Truist (TFC)

Friday, 4/16 (before): Morgan Stanley (MS), Ally Financial (ALLY), PNC (PNC), BNY Mellon (BK), Citizens (CFG)

What's expected are solid, if not spectacular, results from the banking sector. As a group, banks and secondary lenders have been shielded from the worst financial effects of the pandemic by easy monetary policies at the Fed, widespread mortgage forbearance, and loose reporting standards. If there's any pain in the sector, it won't be substantial nor widespread.

In the treasury complex, some degree of yield curve control has been undertaken by the Federal Reserve. The 10-year note dropped five basis points over the week, from 1.72% to 1.67%. The 30-year was steady, losing one basis point, from 2.35% to 2.34%. Persistent fears of inflation may be premature or altogether unfounded. The Fed continues to jawbone that rising rates and price inflation are transitory or not sustainable, despite indisputably rising prices for food, many consumer goods, building supplies, durable goods, and transportation.

The Fed seems to have at least one blind eye when it comes to reporting inflation.

Oil continued to trend lower during the week, the price of WTI crude close last Friday (4/2) at $61.45 per barrel and fell out of favor right away Monday morning, ending the session at the low of the week, $58.65. Price did not recover much for the remainder of the week, getting as high as $59.77 before finally finishing Friday at $59.32. The declines over the past three weeks began showing up at the gas pump though the national average, according to AAA, remains elevated, at $2.86 a gallon.

States bordering the Gulf of Mexico appear to be declining fastest, a trend that could spread North and West should the decline in oil pricing extend into summer months.

Cryptocurrencies made some noise during the week as the total market cap for the entire crypto space topped $2 trillion, with Bitcoin holding the bulk of that, $1.1 trillion. The granddaddy of crypto popped above $60,000 early Saturday, as a massive spike late Friday night boosted the price from $58,000 to $61,218.97 as of 1:00 am ET Saturday.

The move marked the second time the price of Bitcoin had exceeded $60,000, the first such occurrence less than a month prior, on March 13, when it reached an all-time high of $61.788.45. Etherium has also been on a tear, rising nearly 20% in the past month to its current level, above $2,100. Crypto news reports were understandably excited, with predictions of BTC $200,000 and higher were being circulated once again.

To say the least, remarks by the SEC's Hester Pierce (aka Crypto Mom) that "you'd have to shut down the internet" in order to ban bitcoin or cryptocurrencies, were impactful. After noting that the window of time for banning Bitcoin has passed, she further added, "I don’t see how you could ban it. You could certainly make the effort. It would be very hard to stop people from [trading Bitcoin]. So I think it would be a foolish thing for the government to try to do that."

What Pierce pointed out has been the general thinking inside the crypto community for some time. Governments around the world surely would like to regulate currencies, be they foreign, domestic, cash, gold, silver, jewels, bitcoin or barter, but there's a major barrier to outright banishment, being that cryptocurrencies are peer-to-peer, decentralized, and outside the realm of fiat currencies. There's no need nor want for government involvement. Government and central banks are just going to have to learn to deal with a multi-currency world going forward, one which is very likely to be dominated by non-government-based currencies with transparent, though largely untraceable, transactions.

Related, gold and silver investors finally caught a break, with precious metals showing signs of bottoming over the past week. With gold falling as low as $1685.25 (3/30), it ended last week (4/2) at $1729.80. Through Friday's close in New York, gold finished at $1744.10, though it had risen to $1756 just a day before.

The outlook was also enthusiastic for silver, which ended the week at $25.25, but had been as high as $25.58 on the COMEX Thursday. Both metals have been recently downtrodden, some say due to the emergence of bitcoin and crypto in general as an alternative, while others complain of price manipulation via the LBMA price fixes and COMEX futures trading. The truth probably lies somewhere in between.

Presented below are the most recent prices paid for common one-ounce gold and silver items on eBay (numismatics excluded, shipping - often free - included):

Item: Low / High / Average / Median
1 oz silver coin: 37.70 / 51.00 / 41.29 / 40.00
1 oz silver bar: 37.75 / 47.00 / 42.69 / 42.85
1 oz gold coin: 1,877.51 / 2,103.15 / 1,944.58 / 1,943.39
1 oz gold bar: 1,837.64 / 1,895.00 / 1,848.42 / 1,844.34

This week's survey revealed a couple of interesting side notes, especially pertaining to gold coin availability. Searches on eBay for gold coins without numismatic significance, like SA Krugerrands or US Eagles, have been in decline for months, but this week were extended. The common search for "1 oz gold coin" lasted through nearly 500 entries before finding a dozen samples representative to Money Daily standards. This indicates that gold coins are being hoarded, which would make plenty of sense, since the price of gold has been lower recently and gold coins are the standard for individual investors.

In that same vein, prices for gold bars were seen to be roughly $100 lower in the sample and there was an abundance of them available. That particular price differential has been noted before, though this gap is the largest in more than a year of tracking prices and the gap seems to be widening.

On the silver side of the ledge, the opposite was the case. On average, a silver bar was selling for $1.40 more than a silver coin, with the median price showing a $2.85 gap ($40.00 vs. $42.85). The simple conclusion is that gold coins of similar weight are worth more than gold bars, while the opposite is true - though to a lesser extent - for silver. In the end, all these samples are one ounce. The difference in price is likely an anamalous preference.

Money Daily’s silver pricing model, Single Ounce Silver Market Price Benchmark (SOSMPB) stands at $41.71, down 43 cents from last week’s $42.14, though still comfortably in the range above $40/troy ounce.

AT THE CLOSE, FRIDAY, APRIL 9, 2021:
Dow: 33,800.60, +297.03 (+0.89%)
NASDAQ: 13,900.19, +70.88 (+0.51%)
S&P 500: 4,128.80, +31.63 (+0.77%)
NYSE: 15,956.37, +69.81 (+0.44%)

FOR THE WEEK:
Dow: +647.39 (+1.95%)
NASDAQ: +420.08 (+3.12)
S&P 500: +31.63 (+0.77%)
NYSE: +204.13 (+1.30%)

S&P Makes Another Record Close; Gold, Silver Bid; 20 States Now Support Constitutional Carry Gun Laws

After Monday's massive run-up, stocks entertained a third straight session of lackluster trading on Thursday, with major indices inching higher, the S&P making another all-time closing high, while the NASDAQ led the way, up more than one percent on the day, closing to within 166 points of its own record close (14,095.47, 2/12/21).

Clearly in catch-up mode, the NASDAQ could reach the promised land with another reasonably good advance or two. It has lagged the other main indices since mid-February, only briefly entered correction territory and is again showing signs of speculative excess.

Elsewhere, gold and silver enjoyed a rare upside flight, with gold moving higher by $18.20 by the New York close, at $1755.80, but it gave more than half of that back in overnight trading on the COMEX. Silver closed at 25.44, up 34 cents on the day. It also had priced lower overnight.

Academy Sports & Outdoors (ASO) 29.05, -1.73 (-5.62%), got taken down a peg or two, as expected, but the anti-hedge followers at reddit group, r/wallstreetbets, have clambered into the breach, pushing the stock back up to 31.00 in pre-market trading. It's up +1.95 (6.71%) overnight, turning JP Morgan's block trade of nine million shares into a whole new clown show. While the redditers may have noble intentions of creating a level playing field in the markets, all they're really doing is pushing select asset prices to even more extreme levels and causing distortions, effectively blowing an even bigger bubble.

While Joe Biden was issuing controversial executive orders to restrict gun ownership, Tennessee Governor Bill Lee signed a bill which recently sailed through both houses of the state legislature to allow adults over 21 to carry - open or concealed - handguns without the need of a permit or gun safety training.

That makes it an even 20 states with so-called constitutional carry.

Here's the list in alphabetical order:

Alaska

Arizona

Arkansas

Idaho

Iowa

Kansas

Kentucky

Maine

Mississippi

Missouri

Montana

New Hampshire

North Dakota

Oklahoma

South Dakota

Tennessee

Utah

Vermont

West Virginia

Wyoming

Have a fun Friday!

At the Close, Thursday, April 8, 2021:
Dow: 33,503.57, +57.27 (+0.17%)
NASDAQ: 13,829.31, +140.51 (+1.03%)
S&P 500: 4,097.17, +17.22 (+0.42%)
NYSE: 15,886.56, +47.76 (+0.30%)

Another Lehman Moment? Signs Are Pointing To Bigger, Systemic Rot In Global Finance

Wednesday marked the second straight session in which stocks were subdued. The indices were split, with the Dow and S&P up, the NASDAQ and NYSE Composite down, ever so slightly.

Tuesday's trading was dull. On Wednesday, watching paint dry might have led to more productive outcomes than what happened in so-called equity markets. The NASDAQ traded in a narrow band of fewer than 80 points. The S&P 500 moved 15 points from low to high, finishing with a six point gain.

It was almost as if the market was anticipating another shoe to drop, and, like magic, JP Morgan suppled the loafer, putting up a block of 9 million shares of Academy Sports & Outdoors after hours, in a move that is eerily similar to the wholesale unloading of stocks a few weeks ago when family office, Archegos, blew up over leveraged bets and the subsequent margin call which Money Daily featured yesterday.

In that post, a "Bretton Woods moment" was mentioned. Today, the urge to reference the fall of Lehman Brothers in 2008 as the kickoff to the Great Financial Crisis (GFC) is irresistible. The world of high finance may be headed for another "Lehman moment."

Before Archegos, there was Greensill Capital, which went belly up in early March, inflicting wounds on Credit Suisse and other banks and businesses, including the coal mining concern of West Virginia governor, Jim Justice, Bluestone Resources, SoftBank, and the steel and mining empire of Sanjeev Gupta, GFG Alliance, which employs 35,000 people worldwide. Financial media have largely overlooked the story, which has raised havoc in industries tied into Greensill's innovative, leveraged business model of supply chain finance. The New York Times offers an interesting background perspective.

So, yesterday, up popped Academy Sports and Outdoors (ASO).

KKR took the company public on October 1, 2020.

Sporting goods retailer Academy Sports and Outdoors Inc ASO.O sold shares in its initial public offering (IPO) on Thursday at $13 apiece, below its target range, to raise $203 million, according to a person familiar with the matter.

The IPO valued the Katy, Texas-based Academy Sports and Outdoors, which is owned by U.S. private equity firm KKR & Co Inc KKR.N, at $1.1 billion.

Academy Sports had aimed to sell 15.6 million shares at a target price range of $15-$17 per share.

The lockup period for insider shares ended April 1 and those shares are now hitting the market, but not before the price of ASO doubled from its IPO six months prior. It's now coming back down in a hurry. After topping out at 33.48 on Tuesday, it opened Thursday at 29.52 and continues to fall. Other than Zero Hedge no other news outlet seems to be aware of this developing story.

It might be just another run-of-the-mill scandal involving shoddy and shady accounting practices (ASO's two quarters were both blowouts, more than doubling street estimates), or it could be that other shoe hitting the floor as part of a systemic, approaching, global meltdown.

The IMF and World Bank are meeting this week, addressing the pandemic, income inequality, climate change and funding to less-developed nations. Here is a transcript of remarks and answers to questions by World Bank President David Malpass.

Finance ministers and representatives from central banks at the second virtual G20 meeting of the year agreed to use "all available policy tools for as long as required" to help out countries negatively impacted by the coronavirus. That would be just about every nation on the planet, so one could call the G20 countries, "all in."

As a reminder of where things could be headed, here's the author of "The Big Short," Michael Lewis, telling late night host Steven Colbert in 2015 that the banks should not have been bailed out in 2008.

At the Close, Wednesday, April 7, 2021:
Dow: 33,446.26, +16.02 (+0.05%)
NASDAQ: 13,688.84, -9.54 (-0.07%)
S&P 500: 4,079.95, +6.01 (+0.15%)
NYSE: 15,838.85, -39.11 (-0.25%)

Why Is It Wednesday? Systemic Corruption, Media Blanket, the IMF and a Bretton Woods Moment

There are cycles in everything.

To every thing there is a season, and a time to every purpose under the heaven

Ecclesiastes 3:1

The above quote is from the Old Testament. Boomers may recall the verse as part of the Byrds 1965 hit "Turn, Turn, Turn."

(Not to belabor the point, but Ecclesiastes is one of the more poignant and instructive books of the Bible. Consider its opening verses (Ecc. 1:2-4):
Vanity of vanities, saith the Preacher, vanity of vanities; all is vanity.
What profit hath a man of all his labour which he taketh under the sun?
One generation passeth away, and another generation cometh: but the earth abideth for ever.)

Economics is full of cyclical examples, as is farming (plant, grow, harvest, dormancy), as are our lives. We work Monday through Friday and take weekends off. We shower in the morning, take rest in the evening, and so forth.

But, why is it always Wednesday? What is at the root of Wednesday in the cyclical patterns of life and economics? Here at Money Daily Wednesday's have generally become the day in which all the angst and frustration and truth and evidence is released. Money doesn't matter. Stocks up or down seem to be of little importance. There are bigger issues and they usually come to light on Wednesdays. So be it.

Today is no different.

About three weeks ago, Michael Burry, the founder and lead investor of Scion Asset Management made famous by the book and movie, "The Big Short" stopped tweeting. His last tweet included this:

"Tweeting and getting in the news lately apparently has caused the SEC to pay us a visit,"

Since then, silence from Mr. Burry, one of the most honest and insightful investors of this era. Let's leave that as food for thought for now.

Shortly after Burry's last tweet (around March 16 or 17), Archegos Capital blows up (here's a timeline, oddly enough on Yahoo! Sports, not Finance) as leveraged investments trigger margin calls on varios media companies, among them, ViacomCBS (VIAC). Since peaking at $100 a share on March 22, shares have been more than halved, the current price is hovering around $44.

That rapid descent in the share price of ViacomCBS is kind of strange, being that the company has had positive earnings with blowout results, beating consensus estimates the past four quarters. Apparently, the company was issuing stock and the sale didn't go well at all. ViacomCBS's stock had fallen 9% on Tuesday as the company marketed the offerings and by Wednesday, after it priced, the stock was down 30% from Monday's high.

Well, maybe that $100 a share price on the exchanges was just a little bit inflated.

At the same time, other Archegos companies were deflating. From March 23 to March 26, Tencent Music Entertainment (TME) dropped nearly in half. Baidu, Inc. (BIDU) also got whacked. Goldman Sachs and Morgan Stanley, backers of Archegos, got out early. other banks, specifically, Nomura ($2 billion in losses) and Credit Suisse, got burned as Archegos went belly up.

Supposedly, on Friday, the 26th, Goldman Sachs sold more than $10.5 billion of shares in ViacomCBS, Baidu Inc and Tencent Music Entertainment Group, among others. Morgan Stanley offloaded $8 billion worth of shares. Deutsche Bank sold $4 billion of shares related to the Archegos swaps in a private deal on Friday, according to "a source."

Obviously, there was some risk partitioning and loss-sharing among these banks. Those stocks had been falling for days. Deutsche Bank has been on the verge of bankruptcy for most of the past decade. Another painful loss could have tipped over the bank and maybe the global financial system, again.

Credit Suisse (CS) is on its knees, having taken a $4.7 billion loss on Archegos and a similar meltdown earlier, Greensill Capital. They fired two executives in relation to the bad trades. Boo-hoo. They'll get millions in severance pay and retire to private islands.

Meanwhile, the banks are not exactly scions of English language usage. Goldman Sachs says their losses are "not material" while Credit Suisse is said to be "well below the standard we have expected." How much did Goldman lose? $40 million, half a billion? More? Peons and muppets will never know. The standards to which Credit Suisse is "expected" are losing only $2 billion in a quarter, perhaps.

Funds blowing up. Banks running for cover. Media in the dark. Sounds all too familiar, doesn't it? People like Michael Burry can't be allowed to comment on such matters. Too dangerous.

Naturally, the media doesn't delve into these matters with any kind of objective journalism or investigation.

Then there's the personification of systemic corruption, Janet Yellen, as acting Secretary of the Treasury, who hates Bitcoin, favors a global minimum corporate tax, and just gave the IMF the green light on increasing reserves (SDRs) by $650 billion, a move which some estimate will cost the United States some $180 billion, though Yellen insists the deal will be a "wash."

Yellen is meeting with finance leaders from various G20 nations this week as the IMF and World Bank conduct their annual meetings. She called the meetings a "Bretton Woods" moment, referencing the 1944 conference which made the US dollar the world's reserve currency. Ironically, the conference and meetings are taking place in Argentina, the epicenter of credit defaults for decades.

Something big is about to come down and it's not likely to be good news for developed nations, though the media will paint the picture in vastly different shades and colors.

Why not? After all, it's Wednesday.

*Post #3011

Here's Max Keiser and Stacy Herbert discussing Archegos, margin calls and Contracts for Difference (CFD). Lawrence Lepard is Max's guest in the second half of the show.

At the Close, Tuesday, April 6, 2021:
Dow: 33,430.24, -96.95 (-0.29%)
NASDAQ: 13,698.38, -7.21 (-0.05%)
S&P 500: 4,073.94, -3.97 (-0.10%)
NYSE: 15,877.96, +7.62 (+0.05%)

Dow, S&P 500, NYSE All Close At Record Highs, The End Not Within Sight Nor Sound

With the S&P 500 sailing well past the 4,000 mark to yet another new record close, the Dow putting 35,000 by year-end within earshot and the NYSE Composite joining the gang of indices setting new all-time highs, only the NASDAQ is lagging due to the improbable negative sentiment toward tech stocks.

That distaste for everything internet, interconnected, artificial-intelligenced and spacey is not likely to persist for long. With the first quarter having closed out last week, it's nearly time to roll out the corporate results. From the looks of things, the Spring earnings season is going to be a blockbuster for bulls and a backbreaker for the long-suffering bears.

The third round of stimulus checks continue to make their ways into the hands of hungry consumers in a nation tired of lockdowns and social-distancing. The near-capacity crowd at Monday's Texas Rangers' home opener in Arlington and crowded beaches in Florida are telling signs that the American public is more than ready to get back to something resembling normal, be it "new" or otherwise. There's never been a better time for the words "pent up demand" to roll off the lips of traders, speculators and investors, with hundreds of millions of Americans eager to get back to work, to school, to play, and to recreate.

It's true that the NASDAQ - usually the leading index - has taken a back seat to other gauges of American business productivity, it's equally true that the stocks largely representative of the newer, greener, technology-driven haven't been down for long and aren't far from records themselves. The NASDAQ made its last record close on February 12, when it settled at 14,095.47. After Monday's blast higher, driven by a blowout March jobs report, the NASDAQ is a little less than 400 points - or 2.8% from setting a new high mark. Earnings of the major tech players aren't due for release for another few weeks, but the overall market will likely drag everything higher as banks and consumer stocks take the lead in reporting.

Whether or not one buys into the recovery narrative, all Wall Street needs are positive earnings and promises of more money doled out by the Fed and the federal government to ramp gains to astronomical levels. While many consider stocks already massively overpriced, they remain the primary vehicle for wealth appreciation. When even the longest-term treasury bond is returning a paltry 2.36%, the appetite for stocks will remain strong and unsatisfied. If indeed stocks are bubbly and about to burst matters little to the investing class. They've made money from vapor before and the current equity environment is ripe for tantalizing expectations of stratospheric stock prices.

The Teslas, Googles, Apples and Amazons of the world will still attract enormous piles of capital regardless of their fundamental, underlying valuations. All the economics books and investing mantras have been throw out of 60-story windows. All that remains of what used to be known as market discipline and due diligence has been cast aside in this extend and pretend environment. Trillions of dollars have been pumped into the economy and the markets and there's not a single sign that the spigot is going to close any time soon. Those who believed the GFC of 2008-09 was the end of the Fed and the American economy failed to check with Ben Bernanke, Janet Yellen, and Jerome Powell. They obviously have other plans in mind and as destructive as their radical print and spend policies to the long term health of the country may be, they are in charge and fueling the markets.

Economics is an odd science, maybe more of an art essentially, as theories come and go, some time-tested, others flying by night, but there's no mistaking that the world is caught up in a vortex of fiat money chasing real and imagined assets. Its not likely to end soon unless something equally revolutionary takes the place of non-stop QE, relentless printing, and the bailing out, cancellation or otherwise propping up of everything from major corporations to student debt.

Tradition be damned. This is a new age, and while it may not be "different this time," it sure fells like it is.

Enjoy the ride, but make sure to have an eye on the exit doors and alternative investments.

At the Close, Monday, April 5, 2021:
Dow: 33,527.19, +373.98 (+1.13%)
NASDAQ: 13,705.59, +225.49 (+1.67%)
S&P 500: 4,077.91, +58.04 (+1.44%)
NYSE: 15,870.34, +118.09 (+0.75%)