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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.
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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Friday, December 17, 2021, 9:15 am ET
With all the excitement over the latest Fed announcement (seriously, when did the world become addicted to stupidity?), one would assume that stocks are flying high and up for the week.
Such an assumption would be very much incorrect. Only the NYSE Composite is up on the week (+35.52 points). It was the only major index higher on Thursday as well. The rest had only Wednesday to cheer with the bulk of the gains made after the 2:00 pm ET FOMC announcement that the Fed was going to taper purchases more rapidly and think about raising interest rates.
The S&P got close to making an all-time closing high on Wednesday, but came back to earth on Thursday, down 41.18 on the week. The Dow hasn't done badly, down 73.35 (0.20%) thus far. A different story has emerged from the NASDAQ, as tech has largely been hammered this week, losing 385.15 points, or, 2.47%.
An hour before US equity markets open, futures are pointing lower. NASDAQ futures are down 180 points. Dow futures are lower by 150 points.
Could it be that Jerome Powell's Federal Reserve chums have gotten the inflation problem all wrong, again? Remember, it was these same pseudo-intellectual economists that told the world that inflation was "transitory." That was before the CPI and PPI figures blew out the past six months and are likely to continue inflicting pain upon consumers well into 2022, despite the Fed's puny efforts to stave off damaging price acceleration in normal goods and services.
Cutting back on asset purchases and jawboning about interest rate increases amounting to less than one percent over the next year is unlikely to do much about real inflation running at eight to 10 percent, "unofficially." Soon enough, the projections by people like John Williams' Shadowstats will emerge as the true levels, well beyond the criminally-insane figures produced by the corrupt federal government.
Yesterday's slip and slide was a precursor for what's to come on Friday and possibly through the end of the year. Santa Claus isn't going to save markets (if they're allowed to trade freely) this year because all his costs have gone through the North Pole roof of his magic workshop. Nobody escapes runaway inflation. Note even Santa.
The Dow was up 255 early in the session, but slumped through midday, bottoming out 150 points below the prior close for a 405 point slide intraday. The usual post-3:00 pm rally didn't quite hide the damage, only shading it.
Meanwhile, Democrats in congress have apparently called it quits on passing their signature legislation, the deficiently-named Biden's Build Back Better Boondoggle Bill, a multi-trillion-dollar catastrophe that might have been the final nail in the coffin for the republic known as USA. Everybody from Wall Street to Main Street should be cheering the demise of this demonstrably bad legislation and thanking West Virginia Senator Joe Manchin for standing up against the tax and cheat tyranny that has enveloped Washington, DC and many other parts of the country. We could use about 99 more like him.
Democrats appear to be making preparations to bring the reconciliation package to debate early in 2022. With any luck, more support for the legislation will be lost after congress hears from constituents over the holiday break. Both the Senate and House are itching to get out of town early this year. The political climate in the nation's capitol is toxic.
As the Chinese curse goes, we live in interesting times. Much of the interest could have been avoided if people took time to understand one simple statement:
Interest is the charge you pay for the service of borrowing your own money from the future.
If the federal government was truly working for the benefit of the American public, it's unlikely that they would have run up $29 trillion in debt. There are Founding Fathers rolling over in their graves.
The American public needs to take action against the spreading bureaucracy and the communist/fascist tendencies in the federal government. Donald Trump exposed them. The people need to dispose of them.
At the Close, Thursday, December 16, 2021:
Thursday, December 16, 2021, 9:24 am ET
If there was a economic equivalent to Star Trek's "Warp Speed" meme, Jerome Powell's rapid turnaround from transitory inflation to raging inflation and the Fed's FOMC policy response might qualify, but certainly, the stock market's reaction to the dovish/hawkish Fed message would be on target.
What the FOMC statement revealed was that the Fed had vastly underestimated the effect of their vastly overabundant easy money and stimulus response to the virus crisis in 2020 and early 2021, thereby creating an oversupply of currency which released the consumer price inflation monster, which was, after all, their ultimate goal. Mission accomplished. That much is obvious according to the Federal Reserve's newest policy directive, to accelerate the tapering of their asset purchases (doubling down on them in January).
According to the statement, "Beginning in January, the Committee will increase its holdings of Treasury securities by at least $40 billion per month and of agency mortgage?backed securities by at least $20 billion per month," the Fed's monthly asset purchases will fall to (at least) $60 billion, down from (at least) $120 billion. The choice of wording in the Fed's statement is purposely ambiguous in that they say they are committed to taper the asset purchases, but couch it in terms of increasing them. In effect, the Fed is saying that they "could" buy more than $60 billion combined in January. That's the hawkish part. No wonder Wall Street gets so excited over the near-monthly announcements by the Fed.
Nowhere in the Fed's brief statement is there any mention of a federal funds rate increase, which Wall Street plungers now believe to be three in the pipeline for 2023. That would raise the interbank lending rate to a still-easy 0.75%, which, with inflation running in excess of six percent (probably more like 11%, but that's a story for another post), is akin to trying to put out a house fire with a garden hose. That's the dovish part of the message. While analysts are screaming that the Fed will begin raising rates as soon as the taper is complete (likely March, 2022), the Fed hasn't said a word on that other than in their dot plot charts. Chairman Powell and other Fed officials have repeatedly stated that tapering and rate hikes are not the same thing and should not be conflated. Just because some, or most, Fed governors believe they will raise rates in 2022 - according to their dot plots - doesn't make it so. They probably will, but they'll need to proceed with great care, as the tightrope their walking is pretty slim.
Whatever Wall Street wants to believe, they will, and they acted upon the statement, to dot plot and Powell's ensuing press conference like rabid dogs over a dead cat, buying up everything in sight, sending stocks soaring... almost back to where they were five days ago.
Well, whoop-die doo. The same people who were selling last week bought back stocks at lower prices. So much for honest, functional markets.
The Fed's tightrope is simple: it's either Weimar-style global hyperinflation or 1929-style global depression, which is one of John Rubino's core concepts in the second half of the Keiser Report video embedded below. The video is strongly recommended. It is not, as some people would claim, a "must watch" video. Here at Money Daily, whenever the words "must watch" or "must read" appear, the browser automatically closes the tab to make room for more important items. The preferred term in these parts is "recommended."
As far as the Fed's choices are concerned, they apparently haven't made up their minds, or maybe they have, so it looks like we're going to get some of both. Consumer prices are already approaching nose-holding levels of inflationary stench, especially in some food and energy prices, but, when the price spiral out of control, then the Fed will raise rates beyond which nobody will borrow any amount, bringing on what they hope will be the greatest depression ever.
Insofar as the Fed and federal government purposely bungle everything they touch, there's a very good chance that most of the world will never experience 1000% or more inflation nor will there be beggars on the street selling pencils for a nickel (we already have beggars, and they don't sell anything). Hyperinflation and depression are concepts thrown out into the psyop to make people act irrationally. Neither is likely to become full-blown.
Enjoy the video. Happy Hunting!
At the Close, Wednesday, December 15, 2021:
Wednesday, December 15, 2021, 9:17 am ET
No wonder stocks had such a good run last week. It was all a set-up for this week's
Prior to the opening bell, the BLS released November's PPI, which came in at a record. Year-over-year headline PPI reached +9.6%, a new all-time high since reconfiguration of data in 2010. Using the old data, which was a more honest estimate of price realities, one would have to go back roughly 50 years or more to find a higher year over year increase. That would be the 70s, when Watergate, the OPEC oil embargo, Nixon's closing of the gold window (1971), wrapped around a 10% devaluation of the dollar and the emergence of "floating" currencies, the precursor to what are know today as "FX markets."
That sobering history of global dollar hegemony was just the start of what's brought the world to where it is today: on the brink of a catastrophic currency collapse crisis which is being forwarded and fronted by the Fed and its central bank allies, mostly in Europe. Gradually, but now with quickening pace, the world's primary currencies are being destroyed, their purchasing power a fraction of what they formerly were.
Those who remember the glorious seventies, replete with big hair, disco music, and leisure suits (arghhh!), are, in the main, baby boomers in their 60s and 70s today. The 1973 devaluation caught some headlines, but was quickly dismissed by young and old alike. After all, a new home could be purchased for around $25-30,000, and a brand-spanking-new Chevy, Ford, or Japanese vehicle could be had for less than $4,000. Of course, median household income was hovering around $8-10,000, gas was still well under a buck (it rose from 0.40 to 0.90 during the decade) and a postage stamp was six to eight cents, rising during the decade to 15 cents.
Compared to today, it was an enjoyable time to be alive. Jobs were plentiful and the corporatists and globalists had just begun shipping jobs and factories off to Mexico, China and other third-world-type countries where wages and the cost of living was much lower than in the United States.
Today, median household income is around $79,900, the cost of a new home is somewhere north of $400,000, a postage stamp is 58 cents, and a gallon of gas, at roughly $3.15 a gallon, is a relative bargain, though nearly everybody complains about it.
With the recent hike in food prices to astonishing levels (a rack of lamb can run as high as $170; a standing beef rib roast of decent size - 48 ounces or more - can run over $200), inflation has caught the attention of the eating public, which is everybody who is not starving. And this is only the beginning of inflation's run. The US is less than a year into CPI over five percent and PPI above six. There's a very good chance that it's going to get worse, possibly much worse, as in Weimar Germany or Zimbabwe-style "hyperinflation" worse.
And that's where the numbers lie. Taking the top 10% out of median household income leaves that figure for the lower 90% somewhere around $48,000-$52,000, and even lower in some states. Spending an equivalent of 8-10 years income on a house purchase doesn't make much sense, even at low interest rates. The sweet spot for homebuyers used to be three to three-and-a-half years' income. Forget those days. They're gone. And the materials used to build new homes are garbage compared to construction standards of the 70s and 80s.
Americans, and, generally speaking, the rest of the world are being barraged with financial repression form all sides. You and yours may be making more money, but the money buys less and, by and large, the goods or services are smaller, cheaply-made, and built to last only a few years, such as appliances, small and large. Cars may be the exception. Many autos built in the 2000s and 2010s can run for up to 200,000 miles and beyond. Repairs are another story altogether, as are oil changes, which have skyrocketed the past 10 years from $15 to $19 to more than $50 for the average car. And then, there are the countless ways government steals your income via taxes and fees.
Yes, economically, things are getting worse... and worse. Today the Fed wraps up its final meeting of the FOMC for the year, at which time Fed Chairman Jerome Powell is expected to announce a ramping up of the asset purchase tapering schedule (such tortured English is standard for the Fed and all monetary authorities), so that they'll be humping the economy a little bit less in coming months, and maybe not stimulate at all by, say, March or April of next year.
Happy dreams. Once the Fed takes its fingers off Control-P and stops printing (QE, they call it) dollars, the wheels are going to come right off, so, they'll almost certainly find a new way to pump the economy and they're not going to mention it to any of us rubes. If they don't, what looks today like runaway inflation is going to turn into recession and depression, this time complete with shortages of everything from batteries, to chips, to computer programmers.
What the world has been forced to endure since February 2020 is what amounts to one of the greatest frauds ever perpetrated. The ginned-up pandemic numbers caused a supposed panic in Washington, DC, wherein legislators funneled trillions of dollars to the American people via loans, stipends, enhanced benefits, helicopter money (stimulus checks) on top of the trillions the Fed made available to their friends in the business world.
The world was flooded with fiat currencies. Dollars, euros, yuan, yen were being doled out to the masses like candy.
All that money got spent and now the rubes are hitting the credit cards again, just in time for Christmas. The US Senate just passed a bill raising the debt ceiling by $2.5 trillion, saying it could last into 2023, or, roughly 14 months. Wow! And they're not done spending nor lining their own pockets yet.
The Fed's FOMC announcement is set of 2:00 pm ET this Wednesday afternoon, followed by a press conference with Jerome Powell himself. Fireworks are expected.
At the Close, Tuesday, December 14, 2021:
Tuesday, December 14, 2021, 9:22 am ET
Editor's Note: Yes, it's been a few days since Money Daily has appeared. Saturday is an off day, but that's also when power and internet service was lost. High winds knocked down some trees which clipped the power and fiber lines, so from around 10:30 am Saturday (12/11) until Monday (12/13) around 4:30 pm, Money Daily was internet-deprived (power came back on Saturday night; the fiber line owner isn't the nicest guy in the world, nor the most efficient or customer-focused)
Thus, there was no WEEKEND WRAP on Sunday because the data needed to compile the week's comings and goings were unavailable, as was the means to transmit it. Fortunately, Monday is also a down day, so only one day's worth of the indispensable narrative was missed. It was a short vacation.
Stocks took a bit of a beating on Monday, an unsurprising development after the blowout week just past. The Dow gained nearly 1400 points last week, gave a little back Monday, as did the rest of the indices.
The NASDAQ is interesting, being stuck in a seemingly endless loop within the 15,000-15,999 range since October 18, except for one brief flight to 16,057.44, an all time high, registered on November 19. So, what's next for the tech high-fliers? 14,000 or 16,000?
Making a fresh ATH last week was the S&P 500, closing at 4,712.02 on Friday, though it lost nearly one percent on Monday. It's probably not much of a stretch to believe that the S&P would surpass that number in coming weeks, if not by year's end, then certainly in the first few days or weeks of 2022. However, the market is being tested in various ways, one which will possibly come to fruition today, when the senate argues and then votes on a measure to raise the debt ceiling.
Treasury Secretary Janet Yellen has warned congress that the debt ceiling could be breached by December 15, so the assembled morons who think they know something about government, politics, and money has better get it right. It would be a shame if some holders of treasury bills went without their usual coupon payments.
That congress and the phony occupant of the White House will raise the debt ceiling is a tragi-comedy in the making. Nobody cares any more about what people in Washington DC do other than the syncopate media and some imbeciles in places like New York, Los Angeles, San Francisco, or Chicago. Everybody knows the US government is bankrupt, the more than $29 trillion it owes to various entities will never be repaid, instead, the Treasury - with abundant assistance from the Fed - will just roll it over at some preposterous, pretend rate, like 0.92%, and move along gradually toward outright insolvency. They've been at it for more than 50 years, so why stop now? It's a successful grift, after all.
Would you an I enjoy such luxurious lending we could buy new cars every year, have the best flat screen TVs and the latest electronics (like all the cool kids) and never have to worry about repaying all the debt building up. We would just borrow more until death, at which point Mr. Banker would seize all assets, leaving nothing for our progeny (sorry, kids).
The same fate will befall the federal government, but in a slower, more tortured manner similar to Senate hearings and debates (boring, worthless, revealing nothing not already known). The federal government will, some day, begin defaulting on various bills, notes, or bonds, taking out creditor after creditor behind the Lincoln Memorial and summarily shooting them, financially speaking. By the time they get around to defaulting on the debt China owns, there won't be much left for the Fed and the CCP to divide. As is said in legal debt/default circles, "good luck collecting."
But, what the government owns (maybe, because the Fed might own it... refer to Mike Maloney on this and even he doesn't know for sure) is gold, and that is confiscatable, so somebody's going to lay claim to it. And what happens when somebody wants somebody else's gold? Well, usually, guns and drones and bullets and missiles come out of hiding and people die. But before that, there are the states to consider. Most, if not all, hold within their borders some federal land, and that will be claimed. Some states (Nevada, New Hampshire, Utah) are already supporting alternative currencies like goldbacks and others are considering similar measures. Bitcoin is growing in popularity and usefulness, and, there's always the coin of gentlemen, silver, as a step beyond barter.
So, while the fiat system continues its slow path to insolvency, other currencies will take its place in different places. The so-called blue state, red state divide will determine which currency is best for each, and, while civil war 2.0 isn't necessarily a foregone conclusion, some aspects of it will likely reach fruition as the union is gradually dissolved, maybe not officially, which won't really matter, but in real terms, on the ground, in cities, towns and villages fighting for freedom, sovereignty, and survival.
Aware that gold (and silver) is being gradually devalued on a global scale by the machinations of the LBMA and COMEX, is there a good reason to hold any as protection against currency, political, and societal collapse? Maybe, since the central banks or sovereign nations own large quantities, they'll just re-value gold in a new world order great reset, making them solvent, or nearly so, and the rest of the world without gold reserves, poorer.
If governments fail, or fall, and central banks do so alongside, the actual value of gold may be nearer to nil than anyone wishes. What the central banks and nations do not have, beyond their hot air claims on everything, are silver and bitcoin. That's where you want to be investing because odds are that central banks will revalue gold, but silver will also be revalued as a matter of history, and probably at a ratio much lower than the current ratio of near 80 or beyond. Think 30:1 or 20:1 or 16:1 for all practical matters.
There's always the ultimate hedge: solar panels, which contain trace amounts of silver but also provide free energy from the sun (you'll need some components, wires, and batteries or other storage). With some silver, bitcoin and solar energy, your future will be considerably brighter than those who settled their financial futures on stocks or gold.
Then, all you need is a little land...
At the Close, Monday, December 13, 2021:
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