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Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.

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Economic Data, Corporate Reports Sending Mixed Signals; Core PCE for December Falls, Prompting Calls for Rate Cuts

Friday, January 26, 2024, 9:18 am ET

Final earnings reports for the week came in after the close Thursday and early Friday morning. Included were a trio of financial firms, led by Visa (V), American Express (AXP), and Capital One (COF).

Late Thursday, Visa reported adjusted earnings of $2.41 per share, up 11% from last year, on 9% revenue growth to $8.63 billion. Up sharply year-to-date, investors are seen taking profits on the earnings release, sending shares tumbling in post-and-pre-market trading. Shares were trending down two to three percent an hour before the opening bell.

Also on Thursday, Capital One, the nation's largest credit card provider, released fourth quarter and full year results that showed Capital One's GAAP earnings tumbling 63% to $1.67 per share against estimates of $2.56 per share, the result of adding to loan loss provisions and a payment to FDIC to replenish the insurance fund from bank bailouts in 2023. All of the large financial institutions, like Bank of America, JP Morgan Chase, Charles Schwab, Citigroup and others, were forced to pony up to the FDIC in the latest quarter.

While the FDIC charge is a one-time item, the largest institutions face the prospect of repeating the payments if more banks fail going forward. More worrisome perhaps is the trend of increasing credit loss provisions, something all banks and financial companies have done consistently over the past year to 18 months.

Wednesday morning, American Express revived spirits as shareholders were rewarded with a record year. Among the highlights were record full year revenue of $60.5 billion, marking a 14% increase on a reported basis and 15% on an FX-adjusted basis, full-year EPS of $11.21, up 14%. Net income grew by 11% to $8.4 billion for the full year.

However, the company did increase provisions for credit losses significantly, to $4.9 billion, up 40% from the prior year. AXP shares were higher by two percent in the pre-market.

Another company reporting was Intel (INTC), which reported GAAP earnings of 63 cents per share against a loss of 16 cents per share in the year-ago quarter, but issued guidance for the first quarter that stunned investors. The company projects first quarter adjusted earnings to come in at a mere 13 cents per share on revenue of between $12.2 billion and $13.2 billion, falling well short of Wall Street's expectations.

Shares of the computing giant were down close to 10 percent in the pre-market. With a p/e ratio hovering around 40 and a paltry annual dividend of 50 cents, prospects for the company are not encouraging. If the US and global economies are slowing, which is all but certain, Intel could see its share price falling back to 2022 levels, when it bottomed at $25 per share. The stock is set to open below $45 on Friday.

Thursday's initial release of 3.3% fourth quarter GDP lifted stocks, there appears to be a problem or possibly more problems than the market has anticipated. Increasing loan loss provisions by banking interests reveals that credit card use has reached an apex and consumers are beginning to default in large numbers. While the GDP print may have been impressive and unexpected, it was nonetheless lower than the third quarter's 4.9%.

Meanwhile, the Fed's favored inflation indicator, Personal Consumption Expenditures (PCE) Index and the core index which excludes food and energy were stable in December, rising 0.2% in December and up 2.9% from a year ago, the lowest annual increase in nearly three years on the core. Regardless, stock futures have been wobbly all morning, taking into account the most recent earnings reports and the economic data provided by the BEA indicating the possibility of lower interest rates sometime this year is still possible.

Mixed messages in data and corporate reporting are confusing markets, but not to the extent that would derail the ongoing rally. The S&P 500 has finished at new record highs five days running.

With the opening bell imminent, Dow futures are flat, with the S&P up 4.25 and NASDAQ down 25. Oil is lower after steady gains pushed the price of WTI above $77/barrel on Thursday. Gold and silver are modestly higher.

At the Close, Thursday, January 25, 2024:
Dow: 38,049.13, +242.74 (+0.64%)
NASDAQ: 15,510.50, +28.58 (+0.18%)
S&P 500: 4,894.16, +25.61 (+0.53%)
NYSE Composite: 16,889.52, +120.28 (+0.72%)


Non-GAAP, Adjusted, Diluted Earnings May be Misleading; Investors Deserve Better; Are They Being Played for Fools?

Thursday, January 25, 2024, 9:11 am ET

Rolling through earnings season, the regular stock market cheerleaders on CNBC, Bloomberg, and elsewhere always highlight earnings from big name companies, touting their industrial strength, their positive growth, their earnings per share, revenue, and a host of other high-sounding metrics intended to lead one to believe what they want viewers to believe: stocks are good, stocks go up, stocks are the best investment ever.

Well, some people aren't so easily convinced, which is why there are markets, traders, touts, analysts, and big investment houses that deal with all manner of equities, from penny stocks to massive giants like Microsoft, Apple, Google and others.

What's been a rarely-mentioned concern over the past few years is the growing trend for companies to report a variety of earnings guages, from GAAP (Generally Accepted Accounting Principles) to non-GAAP, to adjusted, to diluted, and even some more obscene and obscure measurements, like EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which obscures true profitability of a company.

There's no better time to acquaint oneself with the various measurements and gauges of profitability and earnings growth potential than in the midst of earnings season, like the one currently underway and there's no better place to educate oneself than at investopedia.com, the website devoted to sharing knowledge about investing.

For instance, the site defines "Share dilution" as when a company issues additional stock. Therefore, shareholders' ownership in the company is reduced, or diluted when these new shares are issued. Dilution may actually deflate earnings per share because it may include stock options, warrants, convertible shares, preferred shares and all other shares - such as non-exercised executive stock options - of a company.

Adjusted earnings can mean just about anything the bean-counters prefer, but, usually, it means they're leaving out "one-time" expenses, like losses on a discontinued project, costs incurred from layoffs, etc., thus increasing EPS.

Some of these are GAAP, some are not. EBITDA is definitely NOT.

What some companies are reporting these days are figures that are the result of massive buy-back programs, wherein company stock is repurchased by the company itself, taking those shares out of circulation. By reducing the number of shares outstanding, the company's profits are enhanced on an EPS basis. Adjusting, diluting, and other accounting measures tend to skew results for good or bad, and it may be difficult for retail investors who aren't armed with the requisite knowledge to understand such practices to get a clear picture.

Anybody over the ripe old age of 40 probably remembers the catch-phrases of the "new economy" from the dot-com boom and bust. Back in those heady, halcyon days of internet adolescence, terms like "eyeballs" and "stickiness" were attached to startup companies that were popular and had lots of traffic but were actually losing money hand over fist.

At the beginning, it was fine. All of these stocks like Pets.com and eToys were soaring. Once 1999 turned to 2000 and investors began to actually examine the books (many companies were using "pro forma" accounting) and analyze growth and profit potential, the party was over and the NASDAQ crashed, taking down the Dow and S&P to varying degrees.

Is the same or similar happening today as companies employ various means to avoid the truth, embellish results or completely bamboozle the trading public?

Probably not to the degree seen in the late 90s ad early 2000s, but, how companies report their earnings should be of concern to anyone with skin in the game, whether that be through an individual account or via an IRA, 401k, or other investment plan.

Thursday morning, Dow Inc. (DOW) reported fourth quarter results that were somewhat on the shady side of reality. Consider:

GAAP loss per share was $0.15; operating earnings per share (EPS) was $0.43, compared to $0.46 in the year-ago period and $0.48 in the prior quarter. Operating EPS excludes significant items in the quarter, totaling $0.58 per share, primarily from a one-time non-cash settlement charge aligned to our pension de-risking plans.

Net sales were $10.6 billion, down 10% versus the year-ago period, reflecting declines in all operating segments due to slower global macroeconomic activity.

The operative words are sprinkled throughout the press release, but "GAAP loss", "operating eps", "excludes significant items", and "pension de-risking" stand out. One has to wonder why a company would exclude "significant items" from their reporting. If they're "significant", shouldn't they be included? As far as pension de-risking is concerned, well, go fish. That could be anything from selling shares of companies losing money to shooting current employees (de-risking) or maybe just firing them. It leaves much to the imagination, mostly of their accounting team.

On Wednesday, DuPont de Menours, the company that at one time had merged with Dow, reported preliminary results for the fourth quarter and full year 2023 on Wednesday, somewhat presaging Dow's underwhelming report. It was an unmitigated disaster, the stock closing at 64.20, down 10.49 points (-14.04%). The company doesn't officially report until February 6. Talk about getting out in front of an oncoming steamroller. These guys jumped the shark and screwed the pooch all in one press release.

Were they protecting their former partners at Dow? One can only assume there was an ulterior motive. In any case, there's plenty of skullduggery in the back rooms of Wall Street firms. Caveat Emptor should be plastered over every financial website and stock offering.

After the bell Wednesday, Tesla (TSLA) reported fourth quarter earnings that fell pretty hard on holders of the stock, sending shares down eight to 10 percent n post-and-pre-market trading. Closing Wednesday at $207.83 already down 16% year-to-date (it's still only January), it's expected to open sub-$190 on Thursday. That's setting some of the tone for the Thursday session.

Adding to the downbeat pre-market leanings, airline stocks, Southwest (LUV) and American (AAL), reported before the open. American reported record revenue for the year and beat expectations for the quarter.

However, they did include the following footnotes:

1. The company recognized $173 million of net special items in the fourth quarter after the effect of taxes, which principally included $216 million of non-operating net special items for charges associated with debt extinguishments and mark-to-market net unrealized losses on certain equity investments. The company recognized $1.0 billion of net special items in 2023 after the effect of taxes, which included operating net special items of $979 million principally related to one-time charges resulting from the ratification of a new collective bargaining agreement with American's mainline pilots, as well as non-operating net special items of $362 million for charges associated with debt extinguishments and mark-to-market net unrealized losses on certain equity investments.

2. Please see the accompanying notes for the company's definition of free cash flow, a non-GAAP measure.

3. All references to total debt include debt, finance and operating lease liabilities and pension obligations.

4. Adjusted earnings per diluted share guidance excludes the impact of net special items. The company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time.

#2 gets the award for obscuring the opaque, a footnote referencing other notes for a "company" definition of a non-GAAP measure. Wowser!

Anyhow, American is soaring, Southwest is up a little, but they're facing a strike by flight attendants who think pilots got a better deal (probably right on that account).

Stock futures are gyrating like a pole dancer's pelvis.

The dance continues. Remember to find a seat when the music stops.

At the Close, Wednesday, January 24, 2024:
Dow: 37,806.39, -99.06 (-0.26%)
NASDAQ: 15,481.92, +55.97 (+0.36%)
S&P 500: 4,868.55, +3.95 (+0.08%)
NYSE Composite: 16,769.25, -31.62 (-0.19%)


Earnings Reports Suggest Big Gains for Stocks on Wednesday; SAP, Netflix, Progressive Leading the Way

Wednesday, January 24, 2024, 8:40 am ET

Fueled by earnings results and growth forecasts, get ready for a stock melt-up on Wednesday after a lackluster Tuesday session.

Stocks drifted aimlessly for much of the day on Tuesday until finally getting some energy after 3:00 pm, a late-session move to which investors have become all-too-familiar. After the bell, Netflix made some noise with its fourth quarter and full year results.

Netflix showed net income of $938 million, or $2.11 per share, up 1,658% from the year-ago period. This result missed the earnings per share (EPS) of $2.22 that analysts had forecast and also fell a bit short of the company's guidance of $2.15. The company offered outstanding guidance for Q1 2024, seeing EPS at $4.49 per share and strong growth for the full year. The stock traded up nine to 10 percent in post-and-pre-market trading.

Other companies reporting after the close were Texas Instruments (TXN), which reported a miss, sending shares lower by three to four percent, and, Covenant Logistics (CVLG), which reported fourth quarter earnings of $0.93 per diluted share and non-GAAP adjusted earnings of $1.07 per diluted share, both of which came in below year-ago figures of $1.37. Nevertheless, shares were up two percent pre-market.

As dawn broke over the Eastern US, earnings reports from AT&T (T), Abbot Labs (ABT), Progressive (PGR), Kimberly-Clark (KMB), and SAP (SAP) received mixed reviews.

AT&T reported adjusted earnings of 54 cents a share, below analysts' estimates of 56 cents a share and down from last year's 61 cents a share. Shares of the company, trading close to 20-year lows, fell four percent to $16.50 per share. The company offers a dividend of 1.11 per share, a yield approaching seven percent.

Abbot Labs reported fourth quarter GAAP diluted EPS of $0.91 and adjusted diluted EPS of $1.19, which excludes specified items. In other words, the company is sucking wind, with GAAP results lower from the prior quarter ($1.14) and year-ago ($1.03). At some point, companies like this are going to have to reconcile everything to GAAP and stop trying to put lipstick on their pig-like operations. Shares are down two pecent in pre-market trading. The dividend yield is less than two percent, making this company an outright sell or short. Their guidance was uninspiring. It made and all-time high in 2021 and has yet to surpass it, though it trades within 10 percent of the mark (140.74, December, 2021).

Progressive Insurance (PGR) blew away estimates for the quarter, reporting $3.37 per share, against $1.40 from the year-ago period. Investors like what they're seeing, sending shares up five percent despite trading at an all-time high.

Kimberly-Clark reported quarterly adjusted earnings of $1.51 per share, citing softness in demand for their consumer products with many customers switching to cheaper generic brands. Analysts had expected a per-share profit of $1.54. This company's results offers an insight to the ongoing price gouging (aka, inflation) by major brands that has been a feature since mid-2021. Consumers, caught in a no-win situation, are beginning to cut back or switch, which, as seen here, will have a material effect on company profits.

Finally, a sign of things to come, as SAP SE (SAP) reported results in line with estimates but announced a restructuring which would eliminate 8,000 jobs in 2024. That announcement sent shares soaring by the most in three years, up more than six percent in the pre-market. Also reporting a structural change was eBay (EBAY), which reports earnings February 20, with a 1,000-job layoff, roughly nine percent of its workforce, citing improvements in AI. There go the jobs, most of which will be in tech or customer service.

Have a nice day. A computer will be doing your work from now on.

Futures are soaring on the various results, most of which were positive for major companies. NASDAQ futures: +151; Dow: +143; S&P +27 an hour prior to the open.

Gold, silver, and oil are all up. The 10-year note is stabilizing around 4.14%.

At the Close, Tuesday, January 23, 2023:
Dow: 37,905.45, -96.36 (-0.25%)
NASDAQ: 15,425.94, +65.66 (+0.43%)
S&P 500: 4,864.60, +14.17 (+0.29%)
NYSE Composite: 16,800.86, +21.37 (+0.13%)


Earnings Season Gets Into Full Swing; Middle East, Ukraine Remain Unresolved; China's Economic Woes Deepen

Tuesday, January 23, 2024, 9:08 am ET

The usual Monday rally was tempered during the afternoon on anxieties over earnings, the direction of the US economy, and doubts over the Fed cutting interest rates in March or even at all before summer.

Even as the Dow and S&P indices made fresh all-time highs, a collection of troubling circumstances kept stocks contained as traders trundled through a downbeat late session. Adding to the worries are the ongoing conflicts in the Middle East and Ukraine, neither of which are going well, expansion of hostilities in Yemen and Iraq, turmoil in the election space, and a congress that seems to have trouble walking and chewing gum simultaneously, kicking the proverbial appropriations can down the road a bit further, as the House and Senate avoided a partial shutdown last week with a patchwork extension that would keep some agencies operational until March 1, others to March 8.

The bill was signed by somebody in the White House, assuring that the federal government would continue borrowing and spending for another six weeks.

Tuesday is chock-full of earnings reports, including Netflix (NFLX) after the close, but, prior to the opening bell, a trio of Dow components reported, with mixed results.

3M may need some of its own scotch tape to hold itself together in 2024. The company reported fourth quarter earnings of $2.42 per share for the fourth quarter, compared with $2.18 per share a year earlier, but warned on 2024 expectations, sending shares down seven percent in the pre-market. The company also faces a slew of lawsuits stemming from defective earplugs used by the military. Settlements will cost the company many millions.

Verizon (VZ) posted EPS of $1.08 pe share, a decline from the year-ago period of $1.19, the lack of growth a continuing theme among top-tier companies. Verizon did report a growing number of wireless subscribers, which boosted the stock in pre-market trading by about four percent.

Johnson & Johnson (JNJ) reported results somewhat in line with expectations, given analysts are able to wade through the various adjusted, non-GAAP, diluted earnings the company presents. With annual revenues of $85 billion, there's plenty of grist for the accountants to mill. Shares were essentially flat prior to market open.

Dragged down by 3M, Dow futures were down about 40 points an hour before the open. S&P futures got a boost from strong results out of Proctor & Gamble (PG), but were weighed down by Lockheed Martin, the defense contractor down three percent before the open. NASDAQ futures were the best of the bunch, up about 50 points.

A mixed open is expected amid a great deal of uncertainty which is likely to persist through the next two to three weeks of earnings season. With stocks priced past perfection and geo-political events rapidly developing, stocks could face a very bumpy ride.

In the background, China's economy continues to deteriorate. The housing crisis continues unabated, despite leadership's efforts to shore up developers just as the major stock indices are taking a beating. As large as it is, China represents not just a canary in a coal mine, but a larger bird, on the order of a turkey, condor, or legendary dodo. Economic contagion from the People's Republic could have far-reaching effects on markets worldwide.

In a back-handed kind of way, China's woes can be attributed in part to ongoing US and EU sanctions on it and other countries in the emergent "Global South", and to slack demand from the very same Western nations.

Current affairs represents a mixed bag with little good inside. Trading individual stocks may become even more of a speculative gamble given the various headwinds aloft.

At the Close, Monday, January 22, 2024:
Dow: 38,001.81, +138.01 (+0.36%)
NASDAQ: 15,360.29, +49.32 (+0.32%)
S&P 500: 4,850.43, +10.62 (+0.22%)
NYSE Composite: 16,779.49, +49.94 (+0.30%)


WEEKEND WRAP: S&P Marks Record High as Treasury Yields Spike; Gold Remains Above $2,000 with Silver in Focus

Sunday, January 21, 2024, 11:15 am ET

The S&P 500 made a new all-time high on Friday, eclipsing the mark made more than two years ago, from January 2022. Hostilities escalated in the Mid East, drawing in more nations to the growing conflicts.

Stocks

For all the hype and excitement of a new all-time high on the S&P 500 index, the week as a whole boiled down to only a massive upside push Friday from options expirations. Other than Friday, stocks were down for the better part of the week, and, in fact, they NYSE Composite finished in the red.

The Dow was up less than one percent for the week, while the NASDAQ powered ahead by 2.26%. The S&P was up 55.98 points for the week, but 58.87 points just on Friday. Without the extra shove higher on Friday, the new record would not have materialized, but, thanks to algorithms and high frequency trading, ta-da! here we are.

The Dow Jones Transportation Average continues to not validate the all-time highs on the industrial average. Per Dow Theory, indicating no change in the primary trend.

Whether or not these new levels are sustainable is debatable. The stock market has, for the better part of the past three decades, taken its own path, disregarding world politics and economic data as it so pleases. There's still a lingering group looking for the Fed to cut interest rates at the March FOMC meeting, though that legion has been cut down to size by Fed speakers downplaying the necessity of rate cuts and urging caution on inflation.

What the Fed does or does not do shouldn't matter, and it may not. The re-emergence of Donald J. Trump onto the political scene changes much of the equity calculus. Policies from his first term as president were mostly positive and mainly on the side of the regular guys and gals who voted for him, the deeply righteous, conservative right wing that is the backbone of American politics. That group has had more than their fill of Biden policies and a congress stuck on stupid. They're ready to elect Trump for a second term, the stolen election of 2020 be damned.

Should there be election tampering come November, it's more than likely to be in the House and Senate or even local races because should Democrats lose control of the White House, they'd certainly like to retain some semblance of power and prerogative in congress if possible. It's clear that Trump should be the president come this time next year. Trying to prevent the inevitable would be a fool's errand. Thus, one shouldn't put it past the Democrats to try (see: Ukraine).

Trump, for all his bluster and boasting, is good for the country and most of Wall Street's most embedded veterans know this, so there's a distinct possibility that the market may be looking forward a year or more and the outlook appears solid. The other side of the coin is that the economy has to survive until then, which may not be an easy play. Still in play are earnings, of which there will be no shortage in the week ahead.

Monday includes reports from United Air Lines (UAL), Logitech (LOGI), and Zion's Bancorp (ZION).

Tuesday is loaded, with General Electric (GE), Verizon (VZ), 3M (MMM), Haliburton (HAL), Johnson & Johnson (JNJ), Proctor & Gamble (PG), DR Horton (DHI), and Lockheed Martin (LMT) before the open. After the closing bell, Netflix (NFLX), Texas Instruments (TXN), Covenant (CVLG) report.

Wednesday's offerings include AT&T (T), Abbot Labs (ABT), Progressive (PGR), Kimberly-Clark (KMB), and SAP (SAP) before the bell, and Tesla (TSLA), IBM (IBM), Sands (LVS), and Crown Castle (CCR) after the market closes.

On Thursday, American Airlines (AAL), Alaska Air (ALK), Southwest (LUV), Blackstone (BX), Humana (HUM), Valero (VAL), and Dow Chemical (DOW) before the bell. Later, it's Intel (INTC), Visa (V), T-Mobile (TMUS), and Capital One (COF).

Friday's reports come from American Express (AMX), Colgate Palmolive (CL), Stellor Bancorp (STEL), and Norfolk Southern (NST), all before the bell.


Treasury Yield Curve Rates

Date 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr
12/15/2023 5.54 5.54 5.44 5.47 5.33 4.95
12/22/2023 5.54 5.52 5.44 5.45 5.31 4.82
12/29/2023 5.60 5.59 5.40 5.41 5.26 4.79
01/05/2024 5.54 5.48 5.47 5.41 5.24 4.84
01/12/2024 5.55 5.47 5.45 5.37 5.16 4.65
01/19/2024 5.54 5.47 5.45 5.39 5.21 4.84

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
12/15/2023 4.44 4.13 3.91 3.94 3.91 4.19 4.00
12/22/2023 4.31 4.04 3.87 3.92 3.90 4.21 4.05
12/29/2023 4.23 4.01 3.84 3.88 3.88 4.20 4.03
01/05/2024 4.40 4.17 4.02 4.04 4.05 4.37 4.21
01/12/2024 4.14 3.92 3.84 3.91 3.96 4.32 4.20
01/19/2024 4.39 4.18 4.08 4.12 4.15 4.47 4.36

Yields on long-dated maturities rose steadily over the past week, apparently with no impact to equity markets. The 30-year yield and 10-year both advanced 16 basis points. By contrast, the 2-year yield drove 25 basis points higher, back to the space it occupied two weeks ago. Meanwhile, yields on fives out to 30s, excepting the "kink" on the 20-year bond, are suddenly normalized (dis-inverted).

The push toward normalization (dis-inversion) of the yield curve took on new significance this week as the full spectrum spread fom 30-days out to 30-yars rose to -118, the best level since early December, but, 2s-10s expanded out to -24, as short-term rates, 6-months out to two years, remain stubbornly high.

Handicapping the Fed's ultimate goal of normalizing rates is more art than science, but Fed officials may be able to accomplish their task by aroound the election in November, cutting twice, possibly three times, which would put yields on 30-day bills at 5.00-5.25% or 4.75-5.00% and exerting their iteration of yield curve control to bring the 30-year up above five percent, eventually settling in closer to 6.00%, which would actually consist of a great degree of normalcy. Equity and credit markets may not like that result, but the US needs to sell treasuries, and preferably long-dated ones to foreigners, so their rates must be competitive or even above those offered by other countries.

Bear in mind, the last time the Fed tried to close down the inversion gap, stocks took a turn for the worse, declining from August through October as inverted spreads narrowed.

Reference the end of 1995, when the curve looked like this:

Date 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
12/29/1995 N/A N/A 5.10 N/A 5.17 5.18 5.18 5.25 5.38 5.49 5.58 6.01 5.96

That is what a pretty flat curve looks like in an expansionary environment, with less than one percent in yield from the short to the long end.

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

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

Oil/Gas

$73.43 was the closing price in New York on Friday. Attempts to punch it higher by the Houthis and their Red Sea assaults haven't had much effect as inflation in everyday goods and services has flattened demand globally.

According to gasbuddy.com, the national average for a gallon of unleaded regular gas at the pump rose four cents, to $3.08.

The Northeast and the West coast continue to exhibit the highest prices, but price hikes were seen in near Midwest states, with Michigan ($3.03), Indiana ($3.06) and Ohio ($3.10) all jumping up, likely due to frigid temperatures and snow-covered roads hampering timely delivery. By far, the cheapest gas is found in Oklahoma ($2.54), although the price rose five cents on the week. Arkansas and Kansas are next, at $2.61, followed by Mississippi ($2.64), Texas ($2.65), and Missouri ($2.66). Prices in Florida remain elevated, at $2.98, the highest in the Southeast, and Georgia ($2.95)

Sub-$3 gas pushes through the Midwest all the way up to Iowa and Wisconsin ($2.71), North Dakota ($2.74), Minnesota ($2.77) and Montana ($2.84).

California ($4.49) is now the only state on the mainland with prices above $4.00. Washington, the next highest, chipped in at $3.97. Nevada is next at $3.76, followed by Oregon ($3.62), Arizona ($3.10), and Idaho ($2.95).

In the Northeast, Pennsylvania ($3.34) remains the highest, followed by New York ($3.24). The lowest prices in the region are West Virginia ($2.94) and Delaware ($2.97). Every other state in the Northeast is just over $3.00.


Bitcoin

This week: $41,600.80
Last week: $42,441.30
2 weeks ago: $44,167.90
6 months ago: $29,912.10
One year ago: $22,714.80

Now that it's become clear that the approval by the SEC of not one, or two, or even six Bitcoin Spot ETFs, but 11 of them is not providing ample "animal spirits" to push the price of bitcoin into the stratosphere as suggested by the likes of Larry Fink (BlackRock), the discredited Anthony Scaramucci (the Mooch), and many others, maybe these "hodlers", promoters and other crypto fanatics can shut the hell up about it going to $100,000 or $200,000.

For those not interested in things of dubious monetary value, it's amusing to watch the purchasing power of the US dollar (US$) and of bitcoin decline together. Someday, maybe, bitcoin will achieve escape velocity and rally to over $100,000. Rest assured, should that occur, the US$ value will be something far less than it is today. The $20 cup of coffee will have arrived.

One only needs to reference the price of an existing home to get an idea of just how fast US currency is being debased. Or, you could just go grocery shopping. ($4 for an 8-ounce bag of chips is a bit extreme)

Another interesting figure is existing home sales in the US, which have declined to nearly a 30-year low. Nobody can afford a place to live. Good luck with your bitcoin.


source: tradingeconomics.com


Precious Metals

Gold:Silver Ratio: 89.30; last week: 87.91

Per COMEX continuous contracts:

Gold price 12/22: $2,064.50
Gold price 12/29: $2,071.80
Gold price 1/5: $2,052.60
Gold price 1/12: $2,053.60
Gold price 1/19: $2,031.80

Silver price 12/22: $24.47
Silver price 12/29: $24.02
Silver price 1/5: $23.39
Silver price 1/12: $23.36
Silver price 1/19: $22.75

Gold has maintained a price above $2,000 for 38 consecutive days (since December 14, 2023) on the COMEX continuous contract. Since the peak of December 27 of $2093.10, the price has declined by as much as $84, or roughly four percent. Silver has been treated worse. Reaching a high of $25.86 per ounce on December 1 - leading gold - the price has declined by $3.11, or 12 percent, a poignant reminder of just how much silver is despised by central bankers than gold, one of which they hold in reserve, the other of which they hold none.

If it is to be believed that silver will lead gold to its desired end, or the desired ends of central bankers, there's reason to believe that the stuff of mythical surfboards (Marvel comics) and hammers (Beatles) is going to be further debased, bringing the price to as low as nature allows in the futures markets. In other words, get ready for silver to test the most recent lows around $20.00 (2023 low) or even worse case scenarios of $17.83 (2022 low) or even $11.77, the 2020 pandemic-induced low.

The price of gold and the extremities of the gold:silver ratio, however, should prevent a price collapse. After all, even with gold in excess of $2,000, the ratio is closing rapidly upon 90, a figure that should have every hand into the silver cookie jar without reservation. Silver remains the official measurement of a dollar in the United States, despite the fact that the use of fictional Federal Reserve Notes (FRNs) have long ago rebuked constitutional mandates.

For a sense of what the current, ongoing market price of silver in terms of FRNs really means, consider the following:

The constitutionally-mandated "US dollar ($)" contains 371.25 grains of pure silver, or 0.7734375 troy ounces of silver. Silver at the current market price of $22.75 (FRNs) exposes the fallacy and fantasy of FRNs and how this rogue currency has inflated away all value. If one is to treat FRNs as "dollars" and go so far as to render them as constitutional dollars, the value of an ounce of silver would have to be divided by the constitutionally-mandated 0.7734375 troy ounces of silver. In such a convoluted, contrived experiment in derivation of the true current value of a constitutional dollar, the equation becomes: 22.75 (FRNs) / 0.7734375 = $29.41 (value of a constitutional dollar expressed in FRNs).

Thus, it would take $29.41 FRNs to equal one constitutional dollar, the last time such a thing existed being before the establishment of the ficticious Federal Reserve System (which is not federal in the least and has no reserves) in 1913. Another way of expressing it would be to say that the purchasing power of Federal Reserve Notes have been debased by 96.6%. ($1 x 100%) / $29.41 = 3.4%. Prior to 1913, an ounce of .999 pure silver could be purchased for $1.29. Obviously, that's not the case today.

Even if the central bank consortium manages to ratchet down the price of gold by artificially reducing the price of silver, there's also the stopping power of self-preservation to be considered. At the same time that the gold:silver ratio begins to reach beyond its already absurd levels, gold remains a Tier 1 asset to them, and, as such, their Achilles heel. The central banks and their cohorts cannot press down too violently on silver lest they make a mockery of their own existence. Well, so much for wishful thinking!

Downside price pressure on silver, and in turn, gold, will be persistent enough to keep any mania from being fomented, but also not enough to keep buyers away as long as dealers, traders, and central bankers insist on pricing precious metals in the fictitious Federal Reserve Notes. Oddly enough, as FRNs are debased and fade into obscurity just as all fiat currencies eventually do, the price of silver and gold may become rather static or even fall. Their value, however, as always, will be many times greater than whatever currency they replace.

Mises.org has a very good article detailing the constitutional dollar's value in silver terms, which have never been repealed or changed by any law. It would actually take an amendment to the consitution to change the official designation of "the dollar."

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

Item/Price Low High Average Median
1 oz silver coin: 30.00 56.00 37.32 35.50
1 oz silver bar: 29.76 41.00 35.11 34.00
1 oz gold coin: 2,098.30 2,200.00 2,145.16 2,151.35
1 oz gold bar: 2,101.78 2,157.79 2,127.19 2,124.09

The Single Ounce Silver Market Price Benchmark (SOSMPB) dropped like dead weight from the prior week, to $35.48, a decline of $3.09 from the January 14 price of $38.57 per troy ounce.


WEEKEND WRAP

Presidential politics in the USA and elections in many countries around the world may serve to upend the status quo that's been guiding the world down the wrong path for some time. Evidence from the elitist gathering in Davos this week revealed something of a panic in the ruling class, especially over Trump's huge effort in Iowa and some harsh words from invited guests (see below).

The Davos crowd, those poor, lost souls seeking only to be understood better by the masses, have labeled this year's theme as "Rebuilding Trust" at a time when almost nobody trusted them in the first place. Not to be too optimistic, but there are signs of change in the wind.

President of the Heritage Foundation, Dr. Kevin Roberts, supplies the best three minutes at Davos' WEF:

At the Close, Friday, January 19, 2024:
Dow: 37,863.80, +395.20 (+1.05%)
NASDAQ: 15,310.97, +255.37 (+1.70%)
S&P 500: 4,839.81, +58.87 (+1.23%)
NYSE Composite: 16,729.55, +113.25 (+0.68%)

For the Week:
Dow: +270.82 (+0.72%)
NASDAQ: +338.21 (+2.26%)
S&P 500: +55.98 (+1.17%)
NYSE Composite: -69.98 (-0.42%)
Dow Transports: +121.81 (+0.79%)


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