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GDP Up, Stocks Down; Another Make or Break Friday for Dow, NASDAQ, S&P, and Transportation Indices

Friday, December 23, 2022, 9:04 am ET

It's Friday, most of the continental United States is frozen or about to be, and stocks are looking to either extend the weekly losing streak to three straight or break out on Friday for a positive return.

After Thursday's blood-letting (which could have been much worse), here's how the majors stack up for the week so far:
Dow: +107.03
NASDAQ: -233.25
S&P 500: -29.97
NYSE Composite: +63.35
Dow Trans: -316.94

Including in the mix today the Dow Transports because that index appears to be indicative of weakness in a very important sector of the economy. If transportation companies aren't moving (sorry), business suffers. Just about every sector - from basic materials to retail - touches base with transportation, goods and services alike. Of all the major indices, it has been damaged the most this week and the downside has been pronounced since last Wednesday, sending the index from above its 200-day moving average to below the 50-day moving average in a short six sessions, five of which have ended in the red.

Similar to the other indices, Dow Transports have sold off over the course of 2022 and are down about 20% for the year. As one might suspect, there's a very discernible pattern of lower highs and lower lows as the sector is clearly not immune from interest rate and supply chain shocks.

With futures settling in slightly to the upside, Friday looks like an easy lift for the Dow, S&P, and NYSE, two of which are already in the black, but an unlikely task for the transports and tech-heavy NASDAQ. Volume is sure to be light, with more people interested in getting from point A to point B by Saturday or Sunday than trading equities today.

The winter storm is packing some of the coldest temperatures for this date in 40 years. Tracking website, at 8:30 am ET, FlightAware is showing 3,315 US flights cancelled and another 1,400 delayed. Its the second straight day of air traffic chaos. Who said "timing is everything?"

Backing up to yesterday's headline from the Commerce Department, the US economy supposedly grew at an estimated annual rate of 3.2% in the third quarter, up from the second estimate of 2.9%, after falling 0.6% and 1.6% in the first two quarters. Like most other government numbers, this one is a little suspect, being that the first estimate was released in late October, right before the midterm elections.

Of interest to a select few was the Personal Consumption Expenditures Index (PCE), which is broken down in this article by David Haggis (aka Knave_Dave). If the analysis by Mr. Haggis is correct, the US is still in a recession which began in January or possibly as early as November, 2021, an assertion denied by everybody in official Washington, and sell-out economists like Paul Krugman.

Europe, the UK and the US are all in severe recessions, though officials are loathe to admit it. The near-certainty of a furtherance of the recession - complete with layoffs and collapsing wages and prices (deflation, or, disinflation) in 2023 bodes ill for stocks and and many fixed income investments. As the Fed will continue to hike the target federal funds rate at their next two FOMC meetings, the economy and stock prices should be cratering by March, if not sooner.

The Senate reached agreement on the $1.7 trillion omnibus bill on Thrusday and advanced it over to the House, where rubber-stamping by the Democrat majority is expected, then on to Biden, averting a government shutdown and wasting more money nobody has.

With that, safe passage and a Merry Christmas.

At the Close, Thursday, December 22, 2022:
Dow: 33,027.49, -348.99 (-1.05%)
NASDAQ: 10,476.12, -233.25 (-2.18%)
S&P 500: 3,822.39, -56.05 (-1.45%)
NYSE: 15,081.53, -138.02 (-0.91%)


Trouble In Paradise? Senate Balks at Omnibus Spending Bill; Zelenskyy's Rally; Japan's Effect on Bond Markets

Thursday, December 22, 2022, 9:17 am ET

Why did stocks rally so vigorously on Wednesday?

Could it be this?:

At 10:00 am ET Wednesday, the National Association of Realtors (NAR) reported existing home sales slumped 7.7% in November to an annual rate of 4.09 million, lower than consensus expectations. It was the tenth consecutive month of declining sales for existing homes in the US. Year-over-year, sales fell by 35.4%, down from 6.33 million in November 2021.

Pretty doubtful.

Was it the aftermath of Japan's decision to hike the range on its 10-year rate from -0.25% to +0.25% to -0.50% to +0.50%?

Nope.

One word: Zelenskyy.

Appearing in Washington, DC, the president of Ukraine, a country being blown to smithereens by Russia, Zelenskyy came to the US begging for more planes, guns, ammo, tanks, and money... mostly money. Congress is poised to send Ukraine another $45 billion as part of a $1.7 trillion omnibus funding and appropriations bill, loaded with more than 4,000 earmarks for special pet projects from every state and nearly every legislative district.

In one of the most disgraceful displays of virtue-signaling (and there have been many) by the joint houses of congress, Zelenskyy was cheered and applauded by the congress as he begged for more support and vowed to keep fighting until victory over Russia. US mainstream media failed to report that for all the bluster and bravado, Ukraine is losing, and losing badly.

Support for the conflict in Ukraine is all about funding the MIC and lining the pockets of the Senators and House members who support it. It's not about democracy. It's not about lasting peace. It's about looting the US treasury and ignoring domestic problems, of which there are plenty. The US congress does not have have backing of the US public, no matter how often the media tells you it does. This is a rogue government with an unelected leader in the White House. More than merely being a national and international disgrace, politicians in Washington are on a mission to destroy the values, traditions and prosperity that made America the envy of the world.

This is end game stuff, and, while nobody can be certain of their motives and objectives, by all appearances, the non-representative government in the District of Columbia is more about corporatism and fascism, population decline, and theft thn anything else.

Stocks follow the money in the rigged casino that used to be the greatest capital market in the world and the biggest investors are leading and following the "Russia bad, Trump bad, Biden good, Ukraine good" narrative in an unashamed effort to conceal all the graft and corruption that continues to this day. One cannot overemphasize what an absolute disgrace and abrogation of duty and authority is occurring at the highest levels of the US government, industry, and media.

Moving on, in case there's actually some sense to be made of current economic conditions, GoldSeek's Vince Lanci - one of the better, no-nonsense financial writers out there - offers the following simple explanation of what Japan's latest interest rate policy directive means:

Think of a currency as the stock of its country. The Bond yield is therefore the dividend on that "Stock". The BOJ just now raised the dividend on its stock to attract investors. The following should happen.

The Yen strengthens versus the dollar as the Yen's higher interest rate attracts money.

The US 10 year Bond must weaken (its rates go up) too offset the outflow of money from its stock, the USD.

If it works, the whole world's back-end yields rise, real rates become less negative, inflation gets quelled and the central banks have less need to raise short term rates

By "back-end yields", Lanci means longer maturities, from seven years out to 30, and they have been moving since Japan's Tuesday morning announcement. As of Tuesday's close, 7, 10, 20 and 30-year yields were 3.78%, 3.69%, 3.94%, and 3.74%, up from Monday by 11, 12, 12, and 12 basis points, respectively. Those yields came in a touch through Wednesday, but none by more than 0.01%, with the 30-year essentially unchanged.

Conversely, short-end rates were either flat or slightly falling, which is according to the BoJ plan, with an able assist from the Fed.

Moving forward, discounting external or internal shocks, the yield curve should begin to (un)invert as the Fed reaches its terminal federal funds target rate sometime in the second quarter of 2023 and holds it there through the end of the year, at least. Figuring to be somewhere in the neighborhood of 5.25-5.50%, the logical chain of events would have shorter-term rates holding steady or falling while long-dated yields rise, producing, it is hoped, a somewhat normal looking curve from roughly 4.50% on the 1-month to 7.00 to 7.50% on the 30-year, with the 10-year somewhere in a range of 5.50 to 6.50% and the 2-year focused around 4.75-5.00%. In the case that the Fed fails to accomplish their inflation-beating, interest rate raising task, just about anything is possible.

As of right now, the worst inversion is at the 6-month/1-year spread, with the former at 4.68% and the 10-year at 3.67%, a spread of -99 basis points. 2s-10s are inverted by -53 basis points. It's been worse, but, obviously, the Fed still has much work to do.

Turning back to the slimy swamp that is the US capitol, there seems to be an impasse in negotiations over the $1.7 trillion omnibus bill, as Republican Mike Lee (Utah) threw a wrench into the works over immigration policy, specifically, Title 42, the Trump-era order that mandated asylum-seekers remain outside the United States while their case is reviewed, a condition highly relevant to the US-Mexico border.

Title 42 was supposed to expire Wednesday, but Supreme Court Chief Justice John Roberts issued a stay, keeping the policy in effect. Lee's amendment to the ominbus bill seeks to cut funding for Homeland Security unless the Biden administration reinstates the border control policy. Some policy wonks believe Lee's real intention is to kill the omnibus bill, which needs to be passed quickly to avoid a government shutdown (and a month-long Senate vacation) by Friday, when the current continuing resolution expires.

For his part, Republican leader Mitch McConnell is said to have a short-term funding bill ready, supplying funding through most of January when Congress will return to full sessions of both houses. Word has it that if the omnibus bill isn't passed through the Senate by Thursday night, McConnell's plan would be raised and voted upon. Whatever happens, any bill would need to go to the House for passage and onto Biden's desk by Friday night.

Time is running out. The best that can be hoped is Republicans in the Senate stall out the omnibus bill, everybody accepts a short-term fix (seems the usual method for congress), and all parties head home for the holidays. Upon their return, the House will have a Republican majority, and, actually, so will the Senate. After Arizona Senator Kyrsten Sinema declared herself an independent, joining Maine's Angus King and Vermont's Bernie Sanders, the make-up of the incoming Senate will be 49 Republicans, 48 Democrats, and three independents.

The ruse of the past two years, with Kamala Harris breaking ties, was actually a strategic blunder on the part of Republicans for not swaying the independent votes of Sanders and King, which could have produced majorities of 51-49 or even 52-48, and thwarted any bill put forward by Democrats. Washington is as cynical as it gets conceding those numbers, as Republicans could have held sway in the Senate with some slight arm-twisting. Their failure to do so indicates that they are indeed just for show as the "moral opposition", a kind way of saying that they're just the less-influential wing of the "Uniparty."

It will be interesting to see how this plays out. If the omnibus bill is stalled and the Republican short-term CR is accepted, both sides can claim victory and go home, having averted a government shutdown while keeping their long holiday schedule intact. Lord knows the American public all needs a break from these twisted narcissists.

With the opening bell less than half an hour ahead, everything is down. Futures have cratered (Dow, -200; S&P, -31: NASDAQ, -120), European stocks are flat to lower, gold and silver are lower, WTI crude is at $78.64, up a mere 38 cents.

Happy Hunting!

At the Close, Wednesday, December 21, 2022:
Dow: 33,376.48, +526.74 (+1.60%)
NASDAQ: 10,709.37, +162.26 (+1.54%)
S&P 500: 3,878.44, +56.82 (+1.49%)
NYSE: 15,219.54, +218.92 (+1.46%)


McConnell Sells Out Conservatives, Again; Japan's Gift to the West: Even Higher Interest Rates

Wednesday, December 21, 2022, 9:26 am ET

The era of easy money has come to an end.

However, the US congress didn't get the memo.

Early Tuesday, the Bank of Japan increased the potential yield on its 10-year government bonds from 0.25% to 0.50%, at the same time increasing its monthly bond purchases from $55 billion to $67 billion. The Bank of Japan holds more than half of the government bond issuance, making it the de facto arbiter of all credit in the country.

The surpising move by the central bank - the last major sovereign central bank to raise interest rates this year - sent the yen to a four-month high against the US dollar, the largest one-day jump in 24 years. At the same time, yield on the US 10-year note soared from 3.48% on Friday to 3.69% on Sunday.

By its action, Japan finally acknowledged domestic inflation, something the rest of the developed nations have been experiencing over the past 18-20 months.

At the same time, Republicans in the Senate got on board with their spendthrift friends on the opposite side of the aisle, promoting a $1.7 continuing resolution to fund the federal government through the end of fiscal 2023 (September 30) that, according to minority leader Mitch McConnell, achieves "essentially all of our priorities."

Supposedly, those priorities - in the blinkered world wherein McConnell resides - includes giving in to a lame duck Democrat-controlled House of Representatives just prior to "his party" taking control in January, supporting $45 billion more in aid to Ukraine, among other absurdities, eventually costing out at $1.85 trillion, adding to the already bloated $31.5 trillion national debt, running counter to the Federal Reserve's initiative to defeat inflation.

McConnell, like most of his "uniparty" comrades, is an utter and complete disgrace. This 80-year-old sellout should have been forced into retirement years ago. Somehow, he remains the leader of the heavily-compromised Republican party, whether they're in the majority of minority. Rather than force Democrats and his own party to compose a budget that reflects the needs of the American people, he chose to avoid the possibility of a partial "government shutdown" - a complete canard - on Friday, and instead let all the elected representatives in the nation's capitol take a nice, long holiday vacation. Lawmakers will return on January 3rd, when the new House and Senate members will be sworn into office.

Before that, the disgrace that is the US congress will welcome in Ukraine President Zelensky, who will address both houses and meet privately with Biden and other high-ranking officials. Zelensky's visit will be lauded by the congress and the press as a great show of support for Ukraine in their struggle against the "evil" Russians, in a war that has damaged Western economies much worse than Russia's and is essentially a losing effort on the part of NATO, now completely intertwined with Ukraine, pushing NATO and Russia to the brink of nuclear war.

This is what the American public has for "representation." It's anything but.

While congress clinks champagne flutes with Zelensky, Russia is tearing Ukraine to shreds, destroying infrastructure while purposely trying to inflict minimal civilian casualties. Russia has been purposely put into a box by EU, UK, and US interests, the intent of the conflict unclear, other than to further the goals of the WEF, bringing pain and desolation to Western economies.

Europe, the UK, and the United States of America are all already in recession, but congress is still stuck in 2012, thinking that bailouts, bribes, and endless money printing will solve everything. The Fed, under Chairman Jerome Powell, has other ideas. The relentless raising of the federal funds target rate over the past nine months has managed to slow inflation to a degree, but the wild, reckless spending in congress is working overtime to keep money flowing to their favorite constituents (welfare recipients, broken cities, and defense contractors) and consumer prices at higher and higher levels.

In the midst of the general stupidity and brazen self-dealing, Wall Street continues to line its pockets with fiat dollars courtesy of a market on its last legs. Stocks advanced on Tuesday and are looking to extend gains Wednesday morning. Equity futures are ramping higher (think Zelensky narrative), European stocks are up more than one percent. Japan's NIKKEI and India's Sensex were scorched again this morning.

What a sick joke.

At the Close, Tuesday, December 20, 2022:
Dow: 32,849.74, +92.20 (+0.28%)
NASDAQ: 10,547.11, +1.08 (+0.01%)
S&P 500: 3,821.62, +3.96 (+0.10%)
NYSE: 15,000.62, +62.59 (+0.42%)


Paying Attention, Connecting Dots; Japan Just Goosed the World; Lots of Crazy Out There

Tuesday, December 20, 2022, 9:40 am ET

At any given time, financial judgements are made either by listening to what other people - like the financial media - tell you or your own perceptions and knowledge.

Decisions to buy or sell anything from apples to oranges to 10-year notes to shares of IBM and anything in between are usually the function of price versus available currency, profit and loss, fear or greed. There's nothing anybody can do about the inevitable decisions we all must make concerning our lifestyles, investments, spending, saving, hedging, or standing still. There's more than enough information by which to make intelligent, rational decisions that will eventually work out as enhancements to our lives, but, sometimes we err on bad information, poor interpretation of data, listening to or following the wrong advice, or being either too early or too late.

There's also the possibility that we're all at the poker table playing against cards sharks yielding a stacked deck. They get the aces. You get the deuces.

The world is already approaching the condition of being too late to save anything from going bust, be it stocks, bonds, soybeans, bitcoin, home equity, or oil futures. Nothing is safe from the ravishes of global catastrophic contagion. Economic and currency wars are already well underway. Hot shooting wars appear to be escalating in frequency and participation. The "Great Reset" touted by Klaus Schwab and his WEF acolytes is well underway, destroying incomes, families, and lives of people worldwide. The most unprepared and unaware are taking the worst of it. Time has just about run out on making preparations and taking precautions. It's time to take action.

When Elon Musk's interest in buying Twitter was first revealed back in March, reactions covered the waterfront. Conservatives cheered, liberals moaned, the deep state objected, but, finally, after a bonafide offer, a poison pill, a few rounds of threats, lawsuits, recriminations, promises kept and some broken, the deal was finally struck in October and Musk owned the world's biggest digital soap box and echo chamber.

With the release of the Twitter Files, Musk's rationale is apparent to all. The compnay was corrupt from top to bottom, employing a left-leaning agenda designed to promote deep state interests with ample support from the DNC and the FBI. Truth was cencored. Lies were allowed. Free speech was threatened. By Musk taking the company private, he was able to unearth all the slimy details, but, the question remains, why was he allowed to do so?

One would think, with all the dirty laundry Musk has been able to hang out in the wind, the deep state, shadow government, call it what you will, would never allow it. After all, they'd done everything in their power to alter elections, shield the truth about certain viruses and medical interventions, even going so far as to bar a sitting president from posting on the platform. One would assume they'd do everything in their considerable power to stop Musk in his tracks and prevent their favorite media toy from falling into private hands and they probably did.

At some point, the insiders gave up and Musk was able to complete the deal.

And then, all hell broke loose. Matt Taibi and other trusted journalists were tasked with poring over internal and external emails, notes, and correspondence and developing the story behind the corruption. It's all out there now, from the banning of President Trump to the hiding of Hunter Biden's laptop. The word is out and it's becoming very plain to see that nobody from the highest levels of government and business and media can be trusted to tell the truth or participate honestly in the protection of US citizens or the US constitution.

We are at a nexus of history.

Could it be that everything has been meticulously planned and executed to time the most telling blow of the Great Reset to occur at the changing of the calendar from 2022 to 2023? It's not beyond the realm of possibility that the world's central banks and governments of the greatest nations have made the decision to change the structure of the world economy at 12:00 midnight on December 31. From an accountant's perspective, it's perfect. Everything gets tied up with a neat little bow on top. Every financial transaction from 2022 and prior will be accounted for under the old system. Everything after that will be on the new ledger, whatever that may be.

The world is largely not prepared for change. The globalists and world leaders have been laying the groundwork for years, however, and the final push toward global domination may be just days away. An event such as devaluation of a major currency, like the euro, or even the US dollar itself, could be on the horizon. The BRICS nations may roll out their own fledgling reserve currency for countries of the "Global South." NATO could declare war on Russia. Martial law could be imposed on the United States, or Canada (already almost there). Any of a hundred different scenarios could play out on the night of December 31 and the early hours of January 1. Or, the desired changes could be quietly slipped into place, dripped out slowly on the world economy like Chinese water torture, as has been the approach of late.

Something big may or may not happen as 2022 ends and 2023 begins, but, it appears - financially, socially, and militarily - change is inevitable, and soon.

What happened overnight on Monday (Tuesday in the Far East) in Japan offers another hint to what's unfolding. For better or worse, since maybe only 0.01% (or less) of the population understands the complexities of the global bond market, the Bank of Japan expanded the target range of their 10-year bond, a benchmark rate, from -0.25-0.25% to -0.50-0.50%, essentially blowing out their acceptable range of options from 1/2% to a full one percent.

This policy, within the framework of Japan's "Yield Curve Control" mechanism, gives the BoJ significant leeway in making purchases and supporting or debasing their currency. Reactions from the EU and US have been quick, but the response will take on better shape in coming days. Immediately, the NIKKEI fell some 669 points. US equity futures were deep in the red, but defended and pumped higher in the wee hours of the morning, but slumping back into negative territory. Stock indices from Malaysia to Korea to Germany and France are all in the red.

Japan just goosed the world. Anybody readying for some kind of "Santa Claus Rally" might as well team up with the Grinch and hide away Christmas for another year. Holiday sales are going to stink. The world is changing fast. The days of ZIRP, QE, corporate buybacks and easy money are over. What's ahead is deep austerity at best and global depression at worst and maybe even World War III.

There's a lot of crazy out there. Stay alert, connect whatever dots you can, trust your own judgement.

There are just five shopping days until Christmas and only 11 days remaining in 2022. Money Daily will be tracking global events as what may be the economic event of the century unfolds.

At the Close, Monday, December 19, 2022:
Dow: 32,757.54, -162.92 (-0.49%)
NASDAQ: 10,546.03, -159.38 (-1.49%)
S&P 500: 3,817.66, -34.70 (-0.90%)
NYSE: 14,938.03, -80.14 (-0.53%)


WEEKEND WRAP: US Stocks Ripped Lower After CPI, FOMC Rate Hike; Gold Silver Stabilize; Economic Data Declines

Sunday, December 18, 2022, 12:20 pm ET

Are we there yet?

Word of a "Great Reset" has been circulating for about three years. Recent geo-political, societal, and economic events suggest that change is in the air. The question is not whether a resetting of norms, customs, thinking and behavior is happening - it is - but how far along the process the world has progressed.

The past few weeks offered a glimpse into the future of humanity. How well the signs and signals are read and responded to will go a long way toward understanding and managing the immediate and longer term future.

Stocks

Anybody who thought November's CPI reading of 7.1% inflation was a good enough sign to buy into stocks on Tuesday had their hat handed to them while being pantsed by the Fed on Wednesday through Friday. Apologies for the rude mental image not withstanding, equity investors got taken to the cleaners without a claim ticket.

Despite the weekly losses not being of the most severe kind, the decline from Wednesday's peak - before the FOMC announcement - through Friday's closing bell were much worse. Take, for instance, the S&P 500, which, along with the other major indices, posted its second straight weekly loss, a mere 43 points. However, from the intra-day peak of 4,094.26 to Friday's close of 3,852.36, the loss was 241.90 points, a loss six times the magnitude of the overall weekly decline.

The Dow, NASDAQ, and NYSE Composite exhibited similar patterns, peaking just a half hour into Tuesday's session before tumbling back to economic reality through the rest of the week. Over the same period - 10:00 am ET Tuesday through Friday's close, the Dow lost 1692 points, the NAZ dropped 763, and the NYSE fell 778 points.

To say that the sharpest traders completely faded the wildly positive spin put on the CPI number would be putting it lightly. Anyone short the market Tuesday absolutely crushed it.

There was more to the intrigue of the week in stocks than CPI and the FOMC hike of 50 basis points on the target federal funds rate, its seventh straight advance, dating back to March's token 0.25% raise. Retail sales checked in with a November decline of 0.6%, unadjusted for inflation. From a year ago, real total retail sales are down 0.6 percent versus a ten-year annualized growth rate of 2.5 percent from 2010 through 2019. That, friends, is demand destruction writ large.

Friday's release of S&P Global US Flash PMI Composite [PDF]: registered 44.6 vs. 46.7 consensus and 46.3 from November. Services PMI: 44.4 vs. 46.5 consensus and 46.1 prior.

Flash US Manufacturing Output Index: 46.0 (November: 47.4). A 31-month low.
Flash US Manufacturing PMI: 46.2 (November: 47.7). 31-month low.

Those numbers not only suggest recession, they are, for all intents and purposes, saying the US is already in recession, along with Europe and the UK. Any numbers below 50 indicate contraction. Combined with 1Q and 2Q negative GDP, all of 2022 should rightly be labeled "recession" despite insistence by Washington, DC officials, mouthpieces and silence from the NBER that everything is just peachy.

Dovetailing into the rash of bad data was the stunning findings by the Philadelphia Fed that monthly employment data from the BLS in the form of the Household and Establishment surveys has been something of a fiction since March, 2022. The researchers within the regional bank found a huge discrepancy of 1.1 million jobs [PDF] between reported numbers and the BLS's own Quarterly Census of Employment and Wages.

Long suspected of fudging numbers for political purposes, in its own data, the BLS has reported a remarkable gap of some 2.6 million jobs between the Household and Establishment surveys from March through November. It is the Establishment survey that is routinely touted by the financial media and used by economists, analysts and traders in evaluating the employment situation. Sadly, it appears that the BLS has hoodwinked just about everybody, including, possibly, the Federal Reserve itself.

ZeroHedge, which has been alone, howling in the wilderness since July on the topic, does a great service by exposing the BIG LIE in employment.

...according to the Household Survey, just 12,000 jobs were created since March, while according to the Establishment Survey - which moves markets and sets Fed policy - the increase in jobs over the same period was 2.692 million!

Just to put an exclamation point on the "Empire of Lies" conspiracy theory turned conspiracy fact, along comes Tucker Carlson explaining how the CIA was directly involved in the assassination of President John F. Kennedy.

Hey, pal, wanna buy a bridge? Or maybe some stocks? It's that bad.


Treasury Yield Curve Rates

Fixed income has been showing a preference for longer-dated securities, as all maturities from six months to 30 years were being bought, driving yields on the long end lower. Yields on the 6-month fell four basis points; on the 1-year note, 11; the 2-year, down 16; 3-year, -16, 5-year, -14; 7-year, -11; 10-year, -11; 20-year, -11; and, finally, the 30-year broke dow just three basis points, to 3.53%.

Focusing on the 10-year, closing out the week at 3.48%, just above bottoms at 3.44% on Thursday (12/15) and 3.42% on 12/07. The 10-year yield is at the lowest weekly close in three months (3.45%, 9/16).

Considering that the major buyer of many of the longer-dated issues is the Fed itself, this crowding out will likely continue until there's a buyer's strike, demanding higher returns, an event that should commence once the Treasury is done issuing its highly inflationary paper, which may be never or could be as soon as February.

With congress hard at work crafting a continuing resolution to fund the federal government through the end of fiscal 2023 (9/30/23), the need for shorter term notes (2s, 3s, 5s, 7s) will be large, but yields will remain stubbornly depressed and below short term rates with the Fed intervening at bargain rates. Meanwhile, government funding in the 4-month, 6-month and one-year range are elevated, at 4.54%, 4.68%, 4.61%, respectively.

Treasury can live with those rates, for now, but the recent overall compression will not last. With the Fed's target FF rate now at 4.25-4.50% and aiming higher, the entire curve is about to lift off. A month or two from now, the one-month may be closer to five percent than four, and the 10-year back near the high yields from earlier this year, above four percent, so, looking at the curve flattening out and rising and still inverted at the same time just screams recession - or, in reality, extending and deepening it - through most of 2023.

As far as inversion is concerned, it's deeper, with the six-month bill at 4.68% and the 30-year at 3.53%, a spread of 115 basis points. 2s-10s are a mere 76 basis points by comparison, though that inverted spread is extraordinarily high.

Date 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr
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
12/16/2022 3.94 4.22 4.31 4.54 4.68 4.61

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
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
12/16/2022 4.17 3.91 3.61 3.58 3.48 3.73 3.53


Oil/Gas

WTI crude and most other forms of fuel finally got a bid this week, with benchmark WTI bottoming out at $70.40/barrel on Monday, rising to $77.58 on Wednesday, before settling the week at $74.50, a level still considered cheap by recent standards. With demand destruction becoming obvious - and more so after the holidays, WTI could see lower prices in January through March of 2023.

Gas at the pump was lower again, with the US national average at $3.12, the lowest in nearly 18 months. California ($4.31) and Nevada ($4.07) are the only states averaging above $4.00, with all of the Southeast and most of the Midwest under $3.00. Florida is right at $3.00, the highest of the south. Lowest prices in the nation are found in Texas and Oklahoma, both at $2.58. The Northeast ranges from $3.16 (Maryland) to $3.47 (Maine). Lower gas prices have been a welcome relief to battered and embittered US consumers, but, the ravages of 18 months of soaring inflation have destroyed household budgets, which is likely to result in disappointing holiday sales, now just a week away from Christmas.

Crypto

Bearing in mind that Bitcoin is different and distinguishable from all other crypto per its proof of work blockchain and limit of 21 million bitcoins, the entire space is still suffering from the FTX fraud and other various widespread improprieties, bitcoin took on more losses, but hope for stabilization in the benchmark crypto remains and may experience a resurgence in adoption as fiat currencies continue to slide, including the US dollar.

One bitcoin is currently valued at $16,692.20, down from last Sunday's mark of 17,154.70, and the prior week's $16,953.40. With the most recent low of $15.757.20 a month past (11/09), bitcoin could very well have bottomed, now trading below levels of two years ago.

While bitcoin may be destined to be regulated out of existence in the United States and the EU, there exists many other places in the world where it could flourish, particularly in what's known as the "global south," particularly most of Asia, the Middle East, Africa and Latin America, the latter two well positioned to emerge as powerful partners to BRICS nations, due to their wealth of natural resources.

In the case that a reasonably simple method of acquiring and storing bitcoin emerges, adoption and use could soar in places outside developed nations.

Precious Metals

Gold/Silver Ratio: 77.02; last week: 76.41

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
Gold price 12/16: $1,803.00

Silver price 11/18: $20.97
Silver price 11/25: $21.67
Silver price 12/02: $23.35
Silver price 12/09: $23.68
Silver price 12/16: $23.41

While stocks and bonds roller-coastering the week, precious metals appeared as seas of tranquility. Recent stabilization at improved levels speaks well to a continuation of the rally begun at the end of September, coincidentally, the same period in which stocks bottomed. Precious metals have recently displayed more resilience and support than equities, a signal that their advantage as stores of value are intact and well in excess of fiat currencies or any other investment vehicle.

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: 33.11 45.00 37.67 37.63
1 oz silver bar: 32.00 39.95 36.06 34.98
1 oz gold coin: 1,902.29 1,963.67 1,923.13 1,921.50
1 oz gold bar: 1,874.71 1,954.49 1,891.09 1,879.72

The Single Ounce Silver Market Price Benchmark (SOSMPB) was again lower this week, falling to $36.58, a decline of 22 cents from the December 11 level of $36.80.

As prices rise at the retail and wholesale level, retail premiums are coming down, albeit slowly.


WEEKEND WRAP

Concluding this WEEKEND WRAP are a pair of recent video presentation, the first a deep dive into the immediate and medium term future of investing and money by renowned money manager, Felix Zulauf, who describes the next three to five years as a roller coaster with black swan overtones, the second a tour-de-force by bitcoin enthusiast, Max Keiser, describing conditions in his new home in El Salvador and the future of money, bitcoin, and Western nations.

Both are action-packed and insightful, offering extreme differences in outlooks. Where Zulauf is sobering, Keiser is hilarious; where Keiser is serious, Zulauf is cautious. In total, the viewing time of the combined videos are less than a half of an American football game, so well worth the effort for anybody who desires some context to money and investing in these turbulent times.

US markets: Systemic Calamity | Felix Zulauf

Max Keiser Orange Pills Tucker Carlson

Happy Holidays!

At the Close, Friday, December 16, 2022:
Dow: 32,920.46, -281.76 (-0.85%)
NASDAQ: 10,705.41, -105.11 (-0.97%)
S&P 500: 3,852.36, -43.39 (-1.11%)
NYSE: 15,018.17, -164.11 (-1.08%)

For the Week:
Dow: -556.00 (-1.66%)
NASDAQ: -299.20 (-2.72%)
S&P 500: -82.02 (-2.08%)
NYSE: -272.88 (-1.78%)
TRANS: -24.78 (-0.18%)


Disclaimer: Information disseminated on this site should not be construed as investment advice. Downtown Magazine Inc., Money Daily and it's owners, affiliates and/or employees are not investment advisors and do not offer specific investment advice. All investments have risk. You should consult a professional investment advisor or stock broker or use your individual judgement when making investment decisions. By viewing this site, you hold harmless Downtown Magazine Inc., Money Daily, its owners, affiliates and employees against any and all liability. Copyright 2022, Downtown Magazine Inc., all rights reserved.

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