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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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Thursday, December 23, 2021, 9:03 am ET
Buy the Dip crowd got what it was looking for in a global pre-Christmas rally that had every index, from the NIKKEI to the Dax to the NASDAQ all looking exactly alike, with stocks rising throughout the day and ending on high notes.
Stocks rose back to where they were last Wednesday, following the FOMC policy announcement. Thus, stocks got their Santa Claus rally, but it was only a recoverery from three days of declines (Thursday, Friday of last week and Monday, this week).
It's ludicrous to believe these markets are anything but grand shams, designed to produce the desired "wealth effect" wherein hapless retail traders feel rich, thanks to stocks which trade without regard to valuation.
There's a price to pay for this kind of behavior. Unfortunately, that price is being paid by the poorest in society, who have not seen their incomes rise to the challenge of inflation. There is a larger price, but that's a story for another day.
This morning, the Commerce Department said durable goods orders surged up by 2.5 percent in November following a revised 0.1 percent uptick in October.
Markets are closed tomorrow, the 24th, so...
At the Close, Wednesday, December 22, 2021:
Wednesday, December 22, 2021, 7:40 am ET
Now, THAT's how to buy the dip!
Tuesday's out-of-the-blue rally proved that perceptions are often more important than realities. While stocks remained wildly overvalued even after three straight days of losses, there were still some people (ostensibly at the NY Fed's trading desk) who thought the tried and true method of the past 12 years of buying every dip no matter the circumstances, would work.
Well, they got their miracle pre-Christmas rally, but there's still work to be done.
Just to get stocks back to the levels they were at after the Fed's FOMC policy meeting at the close on Wednesday of last week, the Dow needs to rise another 435 points, the NASDAQ needs an uplift of another 224 points, and the S&P another 60 points.
So, the dip has not been fully embraced until stocks make new highs, and those highs aren't - except for the S&P, which would be within four points of its ATH - the best seen this year. For those too slow or afraid to dip toes into the equities pool yesterday, there's still time and opportunity. Judging by past experience, buying in at the open on Wednesday may not be such a bad idea, or it could be one of the dumbest trades ever... that's just how this up-and-down market rolls.
From a purely speculative perspective, he chances of rallies over the coming month are quite good. There's normally a rally in the week between Christmas and New Year's, and, if not then, the first two weeks of January are normally strong for stock plungers.
Otherwise, one could have bought some Bitcoin, which seems to have awakened from a month-long slumber. Some chartists will be happy to note that Bitcoin bounced off its 200-day moving average as of Tuesday and seems to be holding in the $49,000 range. It wasn't too long ago that Bitcoin made a new ATH itself. On November 9, it topped out at $69,000, according to this coinbase chart, though other charts peg the top at $67,582, or, $68,365, and have the date as November 10. It's a moving target.
Other cryptos are responding as well. In less than two days, Cardano (ADA) moved from 1.21 to 1.35 (+11.6%) and may still gain. There's a ton of volatility in cryptos. They should best be enjoyed with monies one can afford to do without.
If shiny objects are your pleasure this holiday season, gold is stlll holding just below $1800, and silver remains on sale in the mid-to-lower $22 range. One cannot go wrong with either of those.
As with crypto, gold and silver should be purchased from reputable sources with the objective to hold longer term than stocks. Dollar cost averaging is a solid strategy for either precious metals or cryptos.
After Wednesday, there's only one more trading day before Christmas, but investors will have a full week to ply and play up until New Year's Eve. There are enormous opportunities, but direction and asset class are the tough choices this year.
Happy Holidays and Happy Hunting!
At the Close, Tuesday, December 21, 2021:
Tuesday, December 21, 2021, 9:07 am ET
Today marks the shortest day of the year - in terms of available sunlight - in the Northern Hemisphere. In the Southern Hemisphere, it's the longest. The date, which varies from year to year, from the 19th to the 22nd, is called the solstice, which comes from the Latin words sol and sistere, meaning "sun" and "to stand still."
Winter officially begins this year on December 21, at 10:59 am ET (3:59 pm UTC). Inside the Arctic Circle, the day will be of total darkness. The sun will not be seen at all. For most residents of the US and Canada, this is not the case, where the average length of the day will be between eight and ten hours.
Moments after the solstice, Joe Biden will amble up to a podium and try to scare Americans about the Omicron variant of the infamous virus launched nearly two years ago. What should really scare Americans is the fact that many people believe this guy is the president. He's not, so paying any attention to anything he says or does is a matter of one's own conscience.
Biden will try to remind everybody to get vaccinated, boosted, jabbed, what have you, and enrich the pharmaceutical companies, testing suppliers, labs, etc. even more. Almost everything he says will be fabricated lies produced to keep this merry-go-round of media malfeasance going. If you're scared, wearing a mask, getting vaccinated and social distancing, you have officially bought into the narrative, are a rube and should be ashamed of yourself. The vaccines aren't even vaccines. They are treatments, and, beyond the fact that they largely don't work and wear off after four to six months, the adverse effects from taking them are more deadly than the virus against which they're supposed to protect.
So, today, shortest day. Check. Biden, a moron. Check.
Monday's markets were probably a better reason for people to be concerned about the near future, and the supposed "dark winter" headed directly for the American people. Stocks were walloped right out of the gate, extending losses since last Wednesday's close and the knee-jerk, short-covering mini rally.
Since Wednesday's market close, the Dow has shed some 995 points. The NASDAQ has dropped 585, and the S&P is down 142 points. Some of that is likely to be bid up today, as futures and European markets are indicating a possible moon shot at the open. As usual, most of the gains will be made by futures traders, with normal, retail investors locked out. It really does suck to be normal, and retail, on many levels.
For what it's worth, it's the NASDAQ that should get most of one's attention here. On Monday, it closed below the recent low (Dec. 3) of 15,085.47, breaking through support. Since its recent record close on November 19 at 16,057.44, the tech-haven NASDAQ is down a solid 6.7%, and while that doesn't seem like much, any drop of five percent or more is like the Black Death to heavy-hitting hedge fund managers. Not only is the NASDAQ threatening to fall into correction territory (maybe Biden's little lecture today will turn the markets upside down?), but the Dow Industrials are also hovering just above what appears to be a fairly solid support level right around, 34,000.
With markets gyrating up and down on just about every headline, the holidays this year look more like the Valley of Death than a renewing, reawakening, joyful period. There are traps and pitfalls popping up everywhere. If it's not Omicron, then it's supply chain issues, or inflation, or crime. There's a whole basket of bad things awaiting those who dare venture into the equity market. The typical investor (speaking of which, the hero of "home gamers," Jim Cramer, has a mild case of COVID, despite being double jabbed and "boosted.") can be a winer one day, a loser the next. Stocks are not for the feint of heart, or seniors. They never were, though today's Boomers, many of whom remember the days of 5% interest on bank savings account, are stuck with them.
Some may win. Many have. Some may lose. That's ahead.
With the Fed's insistence on ZIRP, QE, asset purchases and other currency debasing schemes, the safety of long-term savings has been replaced by high risk assets with the implied "put" ensuring that stocks - like houses in the mid-to-late 2000s - will never go down. The only problem with that is that stocks have to increase in price by 6-8 percent per year just to stay even with inflation, or, put mildly, dollar depreciation.
Meanwhile, in FX markets, the dollar grows stronger with every passing day. This unique phenomenon is present because the dollar looks safe compared to other fiats like yen, euros, yuan, pounds. It's explained in more details by Santiago Capital CEO Brent Johnson, who invented the term and the concept of, "Dollar Milkshake Theory", which seems to be playing out exactly as he predicted. The 2019 video is embedded below.
The paradox presented is a rising dollar at the same time Americans are experiencing the worst inflation in 50 years. With rising prices in the home market, shouldn't the dollar's value against other currencies be lower? This seeming inconsistency is yet another indication of just how broken all global markets have become. How about gold? Shouldn't it be raging higher in the face of runaway inflation? It is not. And why do stock markets all trend the same way? Is Europe the same as the United States? Mexico? Japan?
The outlier is China, where stocks are in a seriously declining position. Look at the Hang Seng, Hong Kong's stock market, which is a proxy for the Pacific Rim and generally China. It's down nearly 1/3 from its February high. China's official markets, the SSE Composite Index and the Shenzhen Component are not down as much, due to the government's overt efforts to keep them up, similar to what's been happening in the United States and Europe.
Equity markets have been significantly supported by not just the Fed or the government stimulus efforts over the past 18 months, but by stock buybacks (at record levels again) and concentrated capital flows. The same money keeps chasing the same stocks. Many names on the S&P or NASDAQ are down 20-30%. There's no breath in the market. Eventually, as the hedge funds and money managers play out their circus act, pushing valuations to extremes, the tent comes down, the animals are put back into their cages and the trucks haul everything away, leaving a barren field littered with candy wrappers and circus paraphernalia and little else.
Stock markets are approaching a "dark winter" faster than the public, which is decidedly negative. The same people who took double jabs and boosters and still got sick are the same ones who will be blindsided by the market's corrections, the coming recession, the end of inflation and a new, desperate paradigm over the course of the next few years. The era of easy fiat money is coming to an end. It must. Nothing lasts forever.
There are just three more trading days this week, then, next week, the highly-touted "Santa Rally" is supposed to emerge, but, what good is a 500 or 600-point rally on the Dow when it's already down 1500 points from its all-time high?
Be prepared for wild swings this week, next week and probably through the entire first quarter of 2022.
At the Close, Monday, December 20, 2021:
Sunday, December 19, 2021, 9:50 am ET
Editor's Note: Many of the comparison figures will be from December 5th, rather than December 12th, as Money Daily was without power and internet service on the 12th, thereby unable to record data.
The conclusion of the final FOMC policy meeting of the year was a big deal. A very big deal.
Following the initial short-squeezed, projectile vomiting puke up on Thursday, stocks went straight into the toilet, down, by varying degrees across the major indices, the worse affected being the NASDAQ, down 2.54% over Thursday and Friday, followed closely by the S&P's 1.90% decline.
If ever there was a clear signal, it was Friday's 532-point loss on the Dow Jones Industrial Average, accompanied by a 172-point loss on the Transportation Average. A statement of displeasure without nuance was delivered by investors shedding the best of class a week before Christmas.
Now, in case there is a rebound soon, be advised that there are and have been nefarious forces at work for decades, including the PPT (aka President's Working Group on Financial Markets) , members of the Exchange Stabilization Fund, various banks, members of the Fed, US Treasury, various banks, insurance companies and other financial institutions and intermediaries, who have worked to distort and manipulate financial markets.
For those invested in equities, these actors have been a godsend, boosting prices at various times, especially when markets have been at risk of melting down (like most of the past 12 years), so, it is not out of the realm of possibility that the Fed's actions from Wednesday, December 15, will be ignored - or seem to be - by financial markets, which ordinarily would respond to tapering, followed by rate hikes negatively.
With the Powell Fed planning on halting all asset purchases as soon as March, and the suggestion that rate hikes are to follow, the path for stocks appears to be on a downward trajectory. It's a bit of a paradox, because the rationale behind a QE stoppage and interest rate hikes would normally be that the economy is overheating, but these actions are more largely connected to the growing threat of runaway inflation, which is a different monster altogether.
Monetary inflation as it exists today was caused by the Fed and the federal government, which engaged in radical policies in response to the COVID crisis beginning early in 2020. The amount of over-stimulus was so great as to induce price inflation upon consumers after the asset inflation in markets had run its course.
What lies ahead are months, if not years, of higher prices in the consumer space. While the CPI and PPI figures are likely to fall slightly in 2022 as comparisons to already high inflation of 2021 are made, there is little doubt that inflation will be a huge issue in the coming year. If already record levels of CPI and PPI levels do not recede, hyperinflation will ruin the economy completely. Just about any action by the Fed at this point will serve to be destructive to growth. A severe recession may being as early as the first quarter, but more likely in the second quarter of 2022.
Since the Fed announcement, treasuries have been well-behaved, albeit at higher levels than prior to the December meeting. The 2s-10s spread stands relatively unchanged, at 85 basis points. The 30-year closed out the week yielding 1.82%; the 10-year note yielded 1.41%, down six and seven basis points from the prior week, respectively.
It might be a mistake to look to treasury yields as any kind of indicator at this juncture. The Fed's curve control mechanisms may be more powerful than their jawboning efforts on stocks.
Oil prices have also been relatively benign, closing out the week with WTI curde selling for $70.14 per barrel. The US national average for a gallon of regular unleaded gas at the pump were unchanged from a week ago, at $3.32 per gallon. Consumers can thank Joe Biden for nothing, other than the criminally-insane gesture of tapping into the strategic oil reserve, which accomplished little in terms of retail gas pricing.
Cryptocurrencies are expanding, with 15,785 coins, 446 exchanges, and a market cap of $2,203,978,372,471. As much as various detractors of cryptos would like to call the crypto coin universe a Ponzi scheme or a scam, it's difficult to square their positions with more than $2 trillion invested worldwide. Bitcoin spent most of the week pricing between $46,000 and $48,000, currently (Sunday morning, 8:57 am ET) at $47,323.51.
Silver price 12/05: $22.52
Gold and silver were stable through the week, though silver fell as gold rose, briefly pricing above $1800 on Friday. Precious metal prices continue to be suppressed by globalist operations at the COMEX and LBMA. With inflation at record levels, some out-of-the-mainstream authorities believe precious metals to be undervalued by orders of magnitude, with some projections putting the true price of gold above $25,000 per ounce and silver over $1000 per ounce.
Time will tell how the precious metal market eventually shakes out. Surely, the powers behind the Fed and globalist fiat currencies are perplexed, as, on one hand, they don't want to create gold and silver millionaires and billionaires, but, on the other hand, have massive gold holdings in all developed nations' central banks.
At the same time, the emergence of cryptocurrencies, stable coins, and other "alt" coins has created an altogether new asset class which may be stealing some thunder from precious metals. For now, both gold and silver appear to be at bargain basement price levels.
Here are the latest prices for common one ounce gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):
The Single Ounce Silver Market Price Benchmark (SOSMPB) fell over the past two weeks, to $37.34, a decline of 93 cents from the December 5 price of $38.27.
In the aftermath of the Fed's FOMC policy announcement, it appears that the only asset class particularly affected was equities, and that was to the negative. The next few weeks during the holiday season may prove to be more calm than expected, though that peace and contentment may be short-lived. Between virus antics of the health authorities and the inadequacies of the legislative branch of the federal government, it's likely that the cabal currently in control of the government and media may have more scare tactics queued up for January and beyond.
The best news of the week was that the Senate appeared unable to proceed on Biden's Build Back Better Boondoggle Bill, a measure hat called for increased spending at a time in which the government should be pulling back (don't worry, federal employees, they won't).
The coming week will be shortened by one day, as equity and bond markets will be closed on Friday, December 24.
By this time next week, Christmas will have passed, so Money Daily's WEEKEND WRAP wishes all a very Merry Christmas!
At the Close, Friday, December 17, 2021:
For the Week:
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