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Stocks Tumble on Day After FOMC Rate Push; US, EU Economies Slumping Towards Humble Year End

Friday, December 16, 2022, 8:23 am ET

Wall Street's messy trading in the aftermath of the latest FOMC rate increase is certain to raise eyebrows worldwide concerning the precarious position of some of the world's leading advanced nations. Calling Great Britain, USA, France, Germany, and the rest of the EU and UK "advanced" may soon become a misplaced moniker as Western economies spiral into a vortex of inflation, recession, despair and value destruction, the proximate causes identified as corruption, malfeasance, and intentional policy errors at the highest levels of government and finance.

There's no mistaking that the world has become a more dangerous, less prosperous place in 2022. Following two years of fake virus panic attended to by relentless stimulus undermining the purchasing power of Western nation currencies, the stealth taxation of inflation will soon be transitioning to varieties of shortages, outages, and recessions.

In the United States, major cities are being reduced to slave plantation ghettos, the populations scorched by rampant crime, corrupt politicians, increased taxing and surveillance, reduced services, and an undeniable general malaise. From New York to Chicago to Los Angeles and everywhere in between, events of the past three years have sapped the people of their will, killed millions, destroyed lives of the survivors, and isn't nearly at an end.

If the stock market is any indication of what lay ahead for the global and national economies, 2023 is likely to be a year in which desperation becomes endemic and chaos reigns supreme.

One wonders how we got to this place. After all, in the USA and other developed nations we vote for our "leaders" in hopes that they will intelligently and morally guide the country to prosperity, civility, and peace. The opposite has happened as Americans, Europeans, and subjects of the Commonwealth begrudgingly allowed elections to be stolen, treasuries looted, lies propagated, censorship flourishing. A breaking point is close at hand.

On Thursday, equity market became nearly unanchored, the session bottoms merely a warning of the capital being looted right before our eyes. Rallies and markups of the past few months were little more than a set up for the sharp short-selling underway by elite traders, strip-mining companies of all kinds. If Thursday's trading was a continuation of the underlying theme of 2022, Friday's $4 trillion options and futures bonanza could easily spill out into one of the worst days of the year, a year in which there have been plenty of bad days, bad weeks, bad months.

Of all the trades that are to take place on Friday, focus should be on the wildly overvalued 30 Dow Jones Industrial components and the high tech companies that have bourne the brunt of 2022's selloff. NASDAQ is once again close to the lows of the year, those made mere weeks ago. The absolute bottom of the NASDAQ came on October 14, when the index closed at 10,321.39, followed just two weeks later with a close of 10,342,94 (November 3) and another beatdown to 10,353.17, November 9.

The tech sector had a respite the past month, but inherent weakness has re-emerged. Thursday's close was less than 500 points from the apparent triple bottom of October and November. Intra-day, the NASDAQ was only slightly lower (10,775.61), indicative of a buyer's strike against stocks appearing to be facing an extinction-level event.

Cases in point include:

  • Amazon (AMZN), $88.45, -48.09% YTD, just two points off its 2022 low.
  • Apple (AAPL), $136.50, -25.00% YTD, six points from its low.
  • Alphabet (GOOG), $91.20, -37.13% YTD, low of $83.49, November 3.
  • Tesla (TSLA), $157.67, -60.58% YTD, at a 25-month low.
  • Ample rationale to buy the dips on these shares is available to day-traders, morons, sheep, and otherwise clueless retail speculators. The blood-letting in these overhyped companies is only beginning. For real carnage, look to other standards in tech, down 65-80% this year, like META, SNAP, and a host of other companies.

    On the opposite end of the spectrum, Dow stocks have had the best of it, down a mere 9.25% this year, as opposed to the S&P (-18.78%) and the NASDAQ (-31.72%), but a host of them appear - owing somewhat to the obvious allure of a healthy dividend - overvalued and overdue for a mean reversion.

    Currently trading at 349.83 (-11.51% YTD), Goldman Sachs hit bottom in June at 281, but has turned sour of late, down from a peak of 388 the day after Thanksgiving. There was plenty of "giant squid" left over on Black Friday and beyond, along with its declining earnings and $10.00 dividend (2.77% yield). Goldman Sachs has forayed into retail banking as its deal-making and trading profits are hitting the skids. That 2.77% yield could easily become 3.50 or 4.00% as the stock declines. You lose, you win. Your portfolio screams out in anguish as you lose money against the inflation monster.

    In case you don't want a dividend because you can get three percent in a savings account, how about some shares of Salesforce (CRM), added to the Dow in September, 2020, the company that produces HR software and steady profits hasn't done so well since hitting the big board. Peaking at 307 last November, it's currently trading at 130. Of course, its P/E ratio somewhere in the range of 470-510 means it will be a winner, someday, for sure. Um, hum.

    Those are just a few examples. The full list of the 30 blue chippers is here. Most of them return dividends, but, with the Fed hellbent on raising interest rates through the roof, why take on the risk of owning stocks? Maybe there's a good reason, but, considering how unstable equity markets have been and will continue to be, it doesn't make a lot of sense.

    As far as performance is concerned, the Dow is down less than one percent on the week (-274 points), the NASDAQ is looking a bit more impaired, off 194 points (-1.76%), with the S&P down a mere 38 points (-0.98%) through Thursday's close. Everything looked rosy after November's CPI reading came in a soft 7.1%. The Fed's insistence on fighting inflation via higher interest rates changed the mood Wednesday afternoon and into Thursday's bloody session. Ending the week in the red would be a third straight loser for all three indices.

    Overnight, the NIKKEI lost more than 500 points. European stocks are all lower, the FTSE and CAC-40 each down more than one percent. Futures are off the lows, but still very weak: Dow -300, S&P -30, NASDAQ -50.

    Whichever way stocks move today, there's little doubt that more downside is in store in weeks and months to come. The Dow is currently down less than 10% year-to-date. On September 30, it bottomed at 28,725.51, a level sure to be tested at some future date. The bear market is intact and continuing, the end is not anywhere close at hand.

    The fat lady hasn't even left her dressing room.

    At the Close, Thursday, December 15, 2022:
    Dow: 33,202.22, -764.13 (-2.25%)
    NASDAQ: 10,810.53, -360.36 (-3.23%)
    S&P 500: 3,895.75, -99.57 (-2.49%)
    NYSE: 15,182.28, -312.70 (-2.02%)


    Markets Respond Negatively to Fed's FOMC Rate Hike to 4.25-4.50%; Gold, SIlver Struck Down; Dow Looks Expensive

    Thursday, December 15, 2022, 10:02 am ET

    Editor's note: This post would have gone online about 8:45 am ET, except that a visit to ZeroHedge (yes, we still use them from time to time for info despite being banned) caused a browser crash and a long time out. Sorry for the delay.

    Well, now they've gone and done it.

    On Wednesday, the Federal Open Market Committee (FOMC) issued their policy decision voting unanimously to raise the target federal funds rate by 1/2 percent (50 basis points) to 4.25-4.50%, their seventh consecutive rate hike in as many meetings, dating back to March of this year.

    While this rate raise was less than the previous four straight 0.75% bumps, it was by no means dovish, nor was it the last, a point emphasized by Fed Chairman Jerome Powell in his press briefing following the release. Market reaction was notably negative, as the reality of a Federal Reserve seriously chasing inflation with knives drawn becomes standard understanding. Stocks on the major averages quickly slumped from earlier gains into the red, finishing the session with reasonable losses compared to intra-day declines.

    At the lows of the day, the Dow was down 365 points, but managed to erase more than half of those losses by the close. The same pattern was witnessed on the S&P, NASDAQ and NYSE Composite. Other than the NASDAQ, which has been the whipping boy through most of 2022, the indices remain in an overbought condition near recent highs and without a viable support level.

    The Dow Industrials appear the most vulnerable, having put on gains of more than 5000 points since mid-October, trading recently in a range at or near mid-August highs. For the most part, traders have fled tech stocks with nose-bleed valuations and either negligible dividends or none at all for the perceived safety of the top companies representing the Dow, all of which return dividends. However, recent interest rate pumping by the Fed have made treasuries and other fixed income plays appealing compared to Dow stocks as nearly risk-free returns of three to four percent and higher have emerged.

    What that means is that the most-favored companies will be in competition with bonds in terms of dividend yield and will have to produce solid earnings to keep share prices elevated, a tough task for most of the Dow 30 as the economy appears to be rolling over into a recession.

    A sharp correction based on lowered earnings expectations could shatter the hopes and dreams of easy money in Dow stocks and possibly produce an across-the-board cascading effect through the rest of the equity market. That woud be the logical conclusion to the most recent bear market rally, especially considering the Dow's peak was on November 30, the day of Powell's speech at the Brookings Institute which the market wrongly (or possibly by design) interpreted as dovish, closing at 34,569.96.

    Tuesday's intraday high exceeded that 11/30 level, topping out at 34,586.30, but it was made at 10:00 am ET and was followed immediately by a 630-point selloff, only to recover some of the losses by the end of the session. The pattern of morning highs and afternoon lows is a recognizable feature of bear markets, which, despite what any broker or analyst might profess, stocks are still experiencing.

    On the off chance that the Dow improves from these levels, it would only indicate that traders are holding on for a dividend payout early in 2023. Most companies announce dividends with their quarterly reports and investors must be holding stocks through a certain date (ex-dividend) to receive the proceeds. The Dow may experience some turbulence through the final weeks of December, but a more decisive move could occur during earnings season, late Janaury through mid-March.

    In the interim, the S&P appears vulnerable to wide-ranging shocks as it hovers between its 50 and 200-day moving averages, unlike the Dow, which has exceeded both. With more issues available to move the index, the S&P offers a tantalizing mix of dividend-payers and growth stocks, ripe for wild moves in either direction, though the current condition begs for downside. From a short term perspective, stocks appear poised for another leg lower, especially through the first quarter of next year. Declines could happen quickly or may be drawn out, dependent mostly on market sentiment through the holidays and investor appetite for either taking on risk or shedding losers into the new year, now that the heavy lift of CPI and the FOMC rate hike have passed. Considering the current risk profile, one might need nerves of steel to make positive forays through the end of the year.

    There's as good a chance of the Grinch stealing all the holiday spirit as there is of Santa (or Jesus) spreading gifts and joy. When families tally up the costs of this year's holidays, they might be happy that the cost of their favorite turkey, ham, or roast isn't even higher. Sticker shock over holiday purchases will extend into the new year when the credit card bill, complete with new, higher interest rate, arrives.

    As such, stock pickers will have a cornucopia of issues from which to choose, though more than a few may find getting up the nerve or the money to make trades may be cause for consternation. As any hedge fund manager will attest, if you haven't made money in stocks by December, you might as well pack up for vacation or head to the casino and see how you do at the slots or tables.

    This surely isn't a time to be plotting revenge on the Fed, the emergent culprit behind equity losses of 2022. It's more a time to watch, wait, assess the condition of both the market and your own balance sheet and plan for the year ahead, which is likely to be as - if not more - challenging than this year from an investment perspective.

    With that morsel of counsel, it's worth noting that Friday is a quad-witching day, with options and futures expiring on individual stocks and indices. There is more than $4 trillion in various derivative trades of all kinds, so Thursday and Friday's sessions may experience some volatility. After that comes two weeks of relative calm. About the only issue that may raise eyebrows on Wall Street would be the US congress passing a huge omnibus spending bill, having laid out the runway for passage by next Friday. Politicians being the spendthrifts that they are, their $2 trillion spending blueprint probably won't cause any Wall Street types to lose sleep.

    Now that Powell and company have done their deed, hiking rates a final time in 2022 with a promise of more in 2023, markets may take on a sober appearance this holiday season. Largely in response to the FOMC statement, Thursday morning stock futures are off sharply and the masters of manipulation have managed to wrestle precious metals down from pre-FOMC highs. Gold is down more than $30 and silver off a buck this morning (note to stackers: bars and coins make delightful stocking stuffers). European markets followed Asian counterparts by selling off by 0.50 to 1.50% as the ECB voted to raise their key interest rates by 1/2 percent.

    Additionally, retail sales for November fell 0.6% month-on-month, to the lowest level since... hmmm... last December. Initial unemployment claims fell to 211,000, the lowest since September.

    Lay off the egg nog, cheese puffs, and dessert tray. The vegetable platter is where you want to graze. This is no time to be bloated and overstuffed.

    At the Close, Wednesday, December 14, 2022:
    Dow: 33,966.35, -142.29 (-0.42%)
    NASDAQ: 11,170.89, -85.93 (-0.76%)
    S&P 500: 3,995.32, -24.33 (-0.61%)
    NYSE: 15,494.98, -67.57 (-0.43%)


    Stocks Surge, Then Fall on CPI as Fed Prepares Release of FOMC Policy Statement

    Wednesday, December 14, 2022, 9:16 am ET

    Any suggestion that the Federal Reserve would reduce the expected 1/2 percent boost to the target federal funds rate was quickly dispatched as of Tuesday's opening bell. Stocks opened at a huge gap forward but proceeded to decline over the ensuing hours, giving up almost all of the gains by early afternoon.

    The Hasty turnabout was likely prompted by general understanding that even though November CPI showed inflation slowing to +7.1% year-over-year, the decline was hardly enough to influence votes on the FOMC. Thus, stocks on major indices still being largely overvalued, sellers emerged, eager to take profits from unsuspecting plungers and retail lemmings.

    In the Fed's relentless pursuit of busting the forces of inflation, the blunt instrument that is interest rate manipulation has been employed to maximize results. Indications of their effectiveness are apparent by the declining CPI numbers over the past five months, following the June peak just over nine percent.

    Getting close to seven percent annual inflation is a laudable accomplishment of the Federal Reserve, though hardly enough to change the overriding dynamic. Four consecutive 75 basis point advances have been effective in reducing inflation from the Fed's perspective, to the point at which they now have the option of easing off the rapid advance to a 50 basis point hike to be announced at Wednesday's 2:00 pm ET release.

    The move will increase the target rate to 4.25%-4.5% at the final monetary policy meeting of 2022, pushing borrowing costs to the highest level since 2007, the period prior to the Great Financial Crisis spurred by loose lending and dodgy securitization of mortgages in sub-prime and derivative malfeasance.

    Countering the fallout from banking's bad behavior during the GFC, the Fed cut interest rates to zero and began what is known as quantitative easing (QE), avoiding a liquidity squeeze potential insolvency of many large financial institutions.

    Conditions are radically different today, as the Fed deals with the opposite end of the spectrum, too much money in the system causing rising prices on everything from housing to food to fuel. The resultant price inflation on consumer goods has strained household budgets as wages have failed to keep pace.

    In coming months, the Fed, along with the American public, will experience the lagged effect of rising interest rates as prices ease, but also in other dynamics. Bank lending to business, already down sharply, slows to a crawl, mortgage rates maintain a high level, forcing down home prices, while rates on credit cards, personal loans, auto financing, home equity loans, and student loans become prohibitive, leading some households towards insolvency and bankruptcy.

    Elsewhere, the cost to service debt by business and government will rise dramatically as debt is refinanced at ever-rising rates. The burden on businesses already on the fringe will be exceptionally difficult, forcing those with high debt burdens to shed employees, cut expenses, and seek other remedies to service their burgeoning financial burden.

    Cost to service federal government will be particularly onerous as short-term obligations, typically in the range of three months to seven years, get rolled over at higher rates. The process has already begun, an example being two-year treasury notes, which yielded 0.78% at the start of 2022, and have now advanced to 4.22%. Other short-term bills and notes - out to 10-years - have seen similar moves, all of which increases burden of government debt, pushing congress into a vicious debt spiral and growing deficits.

    The beginning of crushing federal debt servicing is already making news. In November, the government ran a deficit of $249 billion, a 30% increase from a year earlier. The deficit will only grow larger as rate increases from earlier this year begin to be reflected at larger and larger levels in government borrowing costs.

    As congress hurries to put together a package to avert a government shutdown by Friday, members of the House have reportedly reached agreement that would extend the deadline for a continuing resolution to next Friday, December 23, giving them time to craft a omnibus bill that would determine spending through the end of fiscal 2023, i.e., September 30.

    As they usually do, lawmakers are giving short shrift to the proceeding debt crisis, instead focusing on putting together a bill that would increase spending with no heed given to funding before the new congress is seated on January 3rd, when Republicans take control of the House. In typical congressional fashion, more emphasis is placed upon political considerations over budgetary concerns. Since the size of US government debt is already at an untenable level over $31 trillion, no attempt to reign in spending will be made. Even if Republicans rail against the omnibus solution presently under debate, their resistance will be a token one, more political posturing than budgetary restraint. In the end, no matter what legislators agree upon, the deficit this year and next are likely to exceed $1 trillion, with a $2 trillion deficit a distinct possibility.

    Interest on government debt alone accounted for $47 billion in November, nearly 10% of entire federal outlays. As interest rates rise, that number will expand, and may soon exceed total defense spending. Only three areas of spending would then be higher: social security, health, and medicare.

    Government deficits continue to be at loggerheads with the Fed's inflation fight. Enormous spending bills, such as the one currently making the rounds on Capitol Hill, exacerbate the inflation problem the Fed is trying to quell. With net interest expense exploding higher, congress would be well-advised to reign in other outlays, though the possibility of that happening are about as remote as America winning the World Cup. In other words, it ain't gonna happen and inflation will not be contained unless the Fed is prepared to take rates to much higher levels.

    With the Federal Reserve going one way and the government going the opposite direction, a crisis of unimaginable severity could unfold in 2023. While the Fed may appear to be slowing the pace of rate hikes when their policy decision in unveiled this afternoon, it's a safe bet that Chairman Powell will throw cold water on any rally during his press conference.

    Bearing in mind that today's event is only a few paragraphs in a much longer epic tale, the market reaction will be most noisy and largely insignificant to longer term prospects.

    At the Close, Tuesday, December 13, 2022:
    Dow: 34,108.64, +103.60 (+0.30%)
    NASDAQ: 11,256.81, +113.08 (+1.01%)
    S&P 500: 4,019.65, +29.09 (+0.73%)
    NYSE: 15,562.54, +93.88 (+0.61%)


    November CPI Smallest of 2022 at 7.1%; Mike Maloney's Warning to the Fed

    Tuesday, December 13, 2022, 9:30 am ET

    Here at Money Daily, every attempt is made to filter out the day-to-day noise and make sense of markets, economies, and money on an ongoing, regular schedule. What often misses the point is that one-off or one-day events, like an earnings report or today's CPI reading, will influence longer term investment strategies. Sometimes they do, sometimes they are hardly relevant.

    What's important to keep top of mind is one's preferential risk profile in conjunction with longer term objectives. Investing, for lack of a better term, isn't a day-to-day activity, nor was it ever meant to be, even after the onset of the internet, online brokerages, day-trading and cryptocurrencies. Investment was always and is still a longer term objective. To have more money or assets above and beyond the current rate of inflation or exchange somewhere down the road is the goal.

    People such as Warren Buffett and Max Keiser remind us that trading on a basis of fewer than four years is speculation or gambling, not investing, but that dictum is often obscured by trivial matters and even more so by important matters. Today's November CPI data and Wednesday's FOMC policy rate decision may seem like big deals in these times, but how they affect future prospects may be seen in a much different light a year or two from now.

    It is at these points in time, especially within the nexus of the current crisis, that it pays to have longer term perspective, such as goldsilver.com's Mike Maloney offers at the end of this missive.

    Maloney, known primarily as an expert in and purveyor of precious metals, mentions them only briefly or not at all in this lengthy warning to the Federal Reserve. Instead his presentation is a series of charts and commentary, detailing the Fed's predicament in terms of inflation, money supply, housing, stocks, and interest rates. He explains in good detail how far beyond normal the current economic climate really is and is unapologetic in his desire for the Fed to guide the economy towards a soft landing.

    No spoiler alert here. Readers are encouraged to view this video in its entirety and judge for themselves, keeping in mind long-term vistas. What will the world look like in a year, two years, five years? What happens today and tomorrow will contribute to the future of the global economy, though they are only a few of many mor factors, some of which have come before, others yet to be revealed.

    Before November CPI data was released this morning, markets and futures were already buoyant, with Dow futures up more than 200 points and European stock indices sporting reasonable gains of less than one percent. When the data hit the wires at 8:30 am ET, showing a tiny 0.1% monthly increase and a reading of 7.12% year-over-year, futures absolutely exploded to the upside, with Dow futures soaring by nearly another 700 points, up a whopping 902 points just seconds after the release. S&P futures were up more than 100 points while NASDAQ futures exploded to nearly a 500-point gain.

    As cooler heads began to assess the data, futures came down slightly, though still indicating a huge upside swing at the open. European stocks reacted in a similar manner, with the DAX, CAC, and FTSE all spiking higher, though not to the degree of US stock futures.

    Core CPI was expected to rise 0.3% monthly (+6.1% YoY), but came in much cooler, at +0.2% MoM and +6.0% YoY.

    The 7.1% yearly inflation number was the smallest of 2022 and the lowest since December, 2021 (7.04%). Inflation may have peaked in June, when it hit 9.06%. Subsequent rates have been lower, with July at 8.52%. August at 8.26%, September at 8.20%, October at 7.75%.

    This is the biggest one month drop (-0.6) in the year-over-year data since April 2020, meaning, to most people, peak inflation has passed,

    The Consumer Price Index for December 2022 is scheduled to be released on Thursday, January 12, 2023, at 8:30 am ET, but well prior to that, the FOMC will issue their final target federal funds rate decision at 2:00 pm ET Wednesday, followed by a presentation and press conference by Chairman Jerome Powell at 2:30.

    The Fed is widely expected to hike another 1/2 percent. The timing of the CPI release could not be more consequential to their decision, though it would appear to be in line with their contention that prior interest rate increases have begun to work on inflation, so there's little reason to believe they'll sway from their half-percent hike.

    At the Close, Monday, December 12, 2022
    Dow: 34,005.04, +528.58 (+1.58%)
    NASDAQ: 11,143.74, +139.12 (+1.26%)
    S&P 500: 3,990.56, +56.18 (+1.43%)
    NYSE: 15,468.67, +177.62 (+1.16%)


    WEEKEND WRAP: Quiet Week Ends in Tears on Wall Street; China Kills Petrodollar, Installs Petroyuan in Middle East

    Sunday, December 11, 2022, 10:00 am ET

    Markets are ruled by supply, demand, value, and other factors, the most prominent, by far, emotion. In particular, greed and fear are the two main drivers of all markets, and this past week, fear won. Investors shifted away from stocks into gold, silver, and the very shortest duration treasury bills (1, 2, 3-month).


    Stocks

    While the past week was less exciting in terms of news and data than almost every other week this year, it turned into a peck of sour grapes for the bullish side, as the major indices produced the deepest weekly slide since September. In addition to accelerated tax-loss selling, there was an overwhelming tone of desperation, exemplified, in a large sense, by Friday's end-of-session drawdown, which took the averages from what appeared to be a ho-hum end to the week to a raging dumpster fire in the final 45 minutes.

    Even with the losses, stocks retain a look of overvalue. The S&P ended the week 357 points above its October 12 bottom (3,577.03) and the Dow is still ahead 4,751 points from the September 30 closing low of 28,725.51.

    Only the NASDAQ appears to be anywhere near fair value (though that's a subjective measure). As of Friday's close, the NASDAQ is just 683 points above the October 14 closing low for 2022 of 10,321.39. Tech has seen more than its fair share of abuse, the NASDAQ leading the majors to the downside with a 30.49% loss year-to-date.

    The worst drop of the week belonged to the Dow Jones Transportation Average, shedding more than five percent. The big drop in the trannies put to rest the murmurings about an end to the bear market, at least according to Dow Theorists, who maintain the Industrials and Transports were - and are - nowhere near reversing the primary trend.

    Considering that stocks on the S&P and in the Dow are still relatively overpriced, the NASDAQ is likely to be pulled to new lows as the other indices continue shedding value and price. Whether or not that happens by year end will largely be determined by events of the coming week, which include the November CPI reading on Tuesday and the FOMC policy meeting and announcement which concludes on Wednesday, the 14th.

    The release of CPI data and an expected 50 basis point hike to the federal funds rate will be the main fireworks show prior to year-end quad witching on Friday (11/16) in options and futures. The coming week is set up to be rather explosive and bets are leaning towards further drawdowns for stocks.


    Treasury Yield Curve Rates

    Date 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr
    11/11/2022 3.71 4.00 4.28 4.36 4.52 4.59
    11/18/2022 3.93 4.23 4.34 4.46 4.61 4.74
    11/25/2022 4.16 4.33 4.41 4.52 4.67 4.76
    12/02/2022 3.91 4.25 4.34 4.52 4.65 4.69
    12/09/2022 3.81 4.13 4.31 4.54 4.72 4.72

    Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
    11/11/2022 4.34 4.17 3.95 3.89 3.82 4.24 4.03
    11/18/2022 4.51 4.28 3.99 3.92 3.82 4.13 3.92
    11/25/2022 4.42 4.20 3.85 3.78 3.68 3.97 3.74
    12/02/2022 4.28 3.99 3.67 3.61 3.51 3.79 3.56
    12/09/2022 4.33 4.07 3.75 3.69 3.57 3.82 3.56

    On the whole, treasuries with maturities longer than three months were sold off slightly, with the except of the 30-year bond, which was flat, at 3.56%, for the week. The biggest moves were in one-month (+10 basis points) and two-month (+12) bills. Notes were sold, sending rates modestly higher, with the 2-year up five basis points, 3s, 5s, and 7s up eight, and the 10-year up just six basis points.

    Positioning seemed to be most important, with less regard given to price. Like stocks, bond trading saw one of the dullest weeks of the year.


    Oil/Gas

    WTI crude prices fell from $79.88 to $71.59 on the week, the lowest price for a barrel since December 22 of last year ($72.76)

    With crude declining to near one-year lows, gas at the pump, according to the national average quoted by gasbuddy.com, continued its drop, to $3.23, down 15 cents from last Sunday's reading of $3.38, marking the low for the year. The last time filling the tank was this cheap was October 2021, which seems like an eternity ago after inflation ate into disposable incomes of Americans like a ravenous, wounded animal.

    The prices of both oil and gas have been sliding since their peaks in June. The highest price for gas was found in California ($4.47). In addition to the Golden State, only Nevada ($4.26) and Washington ($4.00) were at or above the $4.00/gallon mark. A total of 15 states are now averaging under $3.00/gallon for 87 regular, with all of the Southeast except Florida ($3.13), and North Carolina ($3.03) at or below that level. Texas and Oklahoma are the least expensive, at $2.67. Sub-$3.00 gas can also be found to the north and west, in Kansas ($2.90), Colorado ($2.95), Iowa ($2.97), Wisconsin ($2.85), and Kentucky ($2.99). Adjacent states are headed in the same direction, though on average above the $3.00 threshold. Prices below $3.00 can be located mostly in urban areas, like a Christmas miracle!

    All of the Western states, parts of the Midwest, and all of the Northeast are still above $3.00, the worst of it in Pennsylvania ($3.78), Oregon ($3.97), Idaho ($3.79), and Arizona ($3.68).

    The biggest news this week came from the oil sector as the EU, along with the UK and United States, attempted to impose its price cap on Russian oil, with the Western alliance of nations agreeing to $60 a barrel for Russian crude. At issue is how to implement the "cap" and what penalties to impose on transgressors of what has to be the most ridiculous economic tool ever devised. The force behind the cap, Janet Yellen, and her fellow finance ministers, have become the laughing stock of world for this plot and for the limitless backfiring sanctions they've attempted to impose on Russia and its trading partners since the advent of conflict in Ukraine.

    Their hubris and lack of intellect may be matched only by their respective national leaders, such as the clownish Biden, Macron, Trudeau, and Scholz.

    In response, China's leader, Xi Jinping, spent the week in the Middle East, forging ties with Arab nations, effectuating the death of the Petrodollar and birth of the Petroyuan as oil-producing Arab League nations such as Saudi Arabia, Kuwait, United Arab Emirates (UAE), and others agreed to sell oil to China priced in yuan, the Chinese currency.

    China and various Arab states also signed agreements on other trade and military objectives, paving the way for China's Belt and Road Initiative (BRI) through the Middle East and into Africa. A good deal of speculation is also swirling around Saudi Arabia's inclusion into the BRICS alignment. China's forays into world geo-politics mark further erosion in US and Western hegemony, and, along with Russia's resistance to NATO prodding, advance of a bi-polar financial and commercial world.

    Continuing debasement of fiat currencies in the West is at some point in the near future going to be countered by a BRICS-based currency with commodity backing, a portion of which will no doubt be gold. The signs of such an event approaching rapidly have been developing for years, but have taken on new life and purpose since the Ukraine conflict began in February. Eastern nations, spearheaded by Russia, China, India, and Brazil, are moving forward with plans to develop a rival reserve currency in opposition to the US dollar and its underpinnings at the World Bank and International Monetary Fund (IMF).


    Crypto

    One bitcoin is currently valued at $17,154.70, up marginally from last Sunday's $16,953.40. Carnage from the demise of FTX and Alameda Research having subsided, bitcoin and other crypto have staged a small rally, though the entire sector remains somewhat clouded in scandal. Some Washington DC capitalists continue to call for further regulation in the space despite a changing of the guard coming in January as newly-elected House and Senate members take their oaths.

    What becomes of bitcoin and crypto in general in 2023 will likely be more of the same - regulation and scandal - until such time that the general public becomes completely dissuaded. Prospects for fast gains have faded badly over the course of the past 18 months and should continue as use cases for crypto remain unappealing for commerce and as currency.


    Precious Metals

    Gold/Silver Ratio: 76.41

    Gold price 11/11: $1,774.20
    Gold price 11/18: $1,752.00
    Gold price 11/25: $1,768.10
    Gold price 12/02: $1,811.40
    Gold price 12/09: $1,809.40

    Silver price 11/11: $21.80
    Silver price 11/18: $20.97
    Silver price 11/25: $21.67
    Silver price 12/02: $23.35
    Silver price 12/09: $23.68

    Gold traded well below $1800, but rebounded nicely over the course of the week off Monday's $1779 low. Likewise, silver traded as low as $22.23 on Tuesday, but made impressive gains the remainder of the week to finish at a seven-month high, down 1.41% on the year.

    Gold is down just one percent year-to-date. Considering the fates of all other asset classes this year, gold and silver would appear to be near the top of investing choices for 2022 and may prove to be the ultimate choice for 2023.

    The big decline on silver in Sunday's survey of eBay prices may be due to the recent gains pushing premiums lower. The continuing prospect and rumors of a shortage in silver have kept premiums at exceedingly high levels over the past six months. That trend may be abating if COMEX prices continue to come into alignment with reality. The same cannot be said for gold. Being a pricier asset than silver in small quantities, the premiums remain reasonable.

    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: 30.67 48.00 37.26 36.50
    1 oz silver bar: 33.35 45.00 36.94 36.50
    1 oz gold coin: 1,879.00 2,045.00 1,932.32 1,919.49
    1 oz gold bar: 1,852.24 1,917.51 1,890.08 1,886.51

    The Single Ounce Silver Market Price Benchmark (SOSMPB) was again higher this week, falling to $36.80, a decline of $2.32 from the December 4 level of $39.12.


    WEEKEND WRAP

    By most accounts, the first full week of December was a quiet one, though underneath the flashing of stock prices on the "Big Board", international developments that demanded attention were taking place in Russia and the Middle East. What was most obvious was China's Xi Jinping's very public trip to Saudi Arabia and other gulf states, by which he displayed China's growing worldwide influence and more or less put an end to US dominance in the gulf region. By agreement to sell oil priced in yuan, Xi managed to finish off what was left of the Petrodollar and install the Petroyuan as the new standard.

    China and the Arab states this week took hammers and nails to the coffin that is Europe, the UK, and the USA. Western hegemony, led by US reserve currency status, is quickly coming to an end.

    At the Close, Friday, December 9, 2022:
    Dow: 33,476.46, -305.02 (-0.90%)
    NASDAQ: 11,004.62, -77.39 (-0.70%)
    S&P 500: 3,934.38, -29.13 (-0.73%)
    NYSE: 15,291.05, -108.89 (-0.71%)

    For the Week:
    Dow: -953.42 (-2.77%)
    NASDAQ: -456.88 (-3.99%)
    S&P 500: -137.32 (-3.37%)
    NYSE: -475.87 (-3.02%)
    TRANS: -758.14 (-5.22%)


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