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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 31, 2021, 10:35 am ET
Editor's Note: Money Daily is not big on predictions. That's because they're just as likely to be wrong as right, and sometimes plain old dumb luck turns out to be the prevailing factor between success and failure.
Making predictions on political, social, or financial matters isn't easy. Besides the obvious reputational risk, there is no shortage of actors and participants, and change events are often difficult to foresee. Spending August through January every year making between 12 and 16 weekly predictions - against the oddsmakers' spreads - on NFL games and an equal amount of high-level college games is what fFearless Rick does to keep himself grounded, on game, and above all, humble. Predicting the outcome of football games is tough. Financial matters are probably more difficult to predict.
It's difficult to beat the odds. Doing so consistently is nearly an impossible task, which is why the past two decades of financial returns are tainted with an air of fraud and deception. So many people cannot possibly be right about stocks going up and "buying the dip" strategy and always winning. There's always a reckoning in a fair game.
Before presenting the dubious awards for 2021 and predictions for life in 2022, a brief recap of trading on the second-last session on 2021.
Stocks, for a change, lost ground, offering to the least-informed a perception that markets aren't rigged after all. Stocks can go down. However, the losses were limited and minor. The NYSE actually finished in the black.
Cryptos floundered. Gold and silver posted healthy gains and continue on an upward trajectory as the US markets prepare to open.
Person of the Year: Joe Manchin. The senior senator from West Virginia single-handedly brought down what looked to be one of the more devastatingly stupid pieces of legislation even witnessed in congress: Biden's Build Back Better Boondoggle. For the time being, Manchin saved America, much as Trump did from 2016-2020, however temporary that salvation may be. Vladimir Putin, President of Russia, was a close second and he's the leading candidate for 2022 honors.
Fraud of the Year: FOUR-WAY TIE. COVID-19, VACCINES, JOE BIDEN, ANTHONY FAUCI.
Most under-appreciated event of the year: The completely avoidable and untimely death of home run king, Hank Aaron.
Stocks: Higher, probably much higher, in 2022, if only because that's been the trend for the last 12 years running. There are no tethers holding back valuations, which are as high or higher than any ever seen in 1929, 2000, or 2007. That's not to say there won't be a correction, or even a crash at some time in the coming year. There's a 60% chance of stocks losing more than 20%, and a 90% chance of a 10% correction on the major indices.
Bonds: Inflation is supposedly lighting a fire under the treasury complex, but it's barely noticeable since the "Powell Pivot" at the last FOMC meeting (December 14-15), where the Chairman announced an acceleration of the asset purchase tapering (only the Fed can manage to adulterate the English language so profoundly). If the 10-year-note ever yields more than 2.50%, it will be a disaster.
The last time that level was exceeded was May 2019, a time that feels like eons ago and might as well be. Since then, the general direction for yields has been lower. Rising yields imply losses and the absence of fear. With fear not just prevalent, but overwhelming, the odds are for bond yields to trip over themselves all the way to zero. Figure on the 10-year note to yield less than one percent later in 2022, but also more than two percent, probably by March or April prior to a reality check.
Cryptos: Other than Bitcoin, cryptos are pure speculation. Being hard money, Bitcoin should appreciate, to what levels are completely unknown. Wall Street has gotten into the game, which means the price of Bitcoin will be sent in any direction possible, but eventually, to the moon, as adoption continues to spread and the decimation of the dollar and the purchasing power of the world's reserve currency accelerates. Bitcoin is likely to be seen as the best alternative to fiat currency. It will make new highs in 2022 and beyond. $150,000 is a virtual lock in 2022. Bitcoin could be valued much higher than that, however, and will be, as time marches forward.
The one immutable fact about Bitcoin is that due to its self-imposed limit of 21 million Bitcoins, the price (in whatever terms one measures, yen, euros, dollars, etc.) will rise until anybody who wants some has as much of it as they desire. That's of ultimate importance. If nobody wanted to own Bitcoin, its value would be zero. Obviously, many people, companies, and institutions want to own it (current estimate is 100 million users), and more people want to own some every day. Mathematics assures a rising price.
Hash rate and adoption are relentless features of Bitcoin. Price is arbitrary, owing to measurement disciplines (or lack thereof). The overwhelming evidence of Bitcoin's emergence as currency and store of value is impossible to overstate. It has all the characteristics of what could be described as a global reserve currency, which means, that in time, Bitcoin's value could be many multiples of what it is currently. It is likely the best investment of he next ten to twenty years.
Oil: People are using less of it, and, with the coming population decline (thank Klaus Schwab and his WEF pals for that), alternatives will become more attractive. Global warming, or climate change, are facades set up to fool the bulk of humanity while the elites cash in (or out) of their global bets. While overall, energy prices are likely to rise, so too people's willingness to escape to alternatives. Solar works. Wind, not so much, but the advancements in solar technology will keep a lid on oil and natural gas to some extent. The price of WTI crude oil is not likely to exceed $100 per barrel simply because of supply and demand dynamics. The most likely scenario for 2022 is for oil to remain rangebound between $60 and $85 per barrel.
War with Russia 100% likelihood. The US or a NATO ally will cause conflict in Ukraine, but Russia will be blamed. The ultimate conflict is probably going to be contained to Eastern Europe, but the social, political, and financial ramifications will exceed all boundaries. It is likely to be the seminal event of 2022 and possibly the decade of the 2020s.
War with China 10% probability. since China is winning on most fronts, especially financial ones, why would they risk devastation of war? The US is still the world's leader in weapons of destruction and desire to use them, but China is playing a much longer game with its winning hand of the Belt and Road Initiative (BRI). A war with China would signal the end of the United State of America.
Secession and State's Rights It's nearly a zero chance that any individual US state would secede from the union, though talk of such and threats of doing so will proliferate in 2022, especially from the Southeastern states, particularly Texas, Alabama, Tennessee, and Florida. Oregon and Washington states may be cause for concern, but for entirely different reasons. Outliers: the Dakotas. State's rights will be more prominent, as the corruption in Washington, DC reaches epic proportions. Mass migration from Blue states to Red will accelerate.
Corruption: Already at historic levels, 2022 will witness bizarre examples of in-your-face larceny, injustice, corruption, and theft at the highest levels of government and business.
Dollar: As counterintuitive as it may seem, the value of the dollar will rise in relation to other currencies, if only because it appears better than the pound, euro, yen, etc. and remains the reserve currency. Eventually, it too will disintegrate, though that is likely to take quite a bit longer than just one year.
Inflation: Yes, and maybe hyperinflation in Europe by September. The US is not quite there yet.
Europe: Stick a fork in it. The EU is done.
Tyranny vs. Democracy: More of the former, less of the latter. Long-term trends.
Protests and Uprisings: The trend is for fewer protests, but more violent ones. Actual popular uprisings have not yet reached the boiling point, though there's an insidious, internal, individualized mistrust of government swelling up globally. Rather than paying violence with violence, people are using technology to thwart the viciousness of government violence and threats of it. Best opportunities for true political upheaval are in Europe, especially Italy and Spain, even though the people there are already in mass defiance of their governments. Civil unrest could accelerate and spread rapidly if economic conditions deteriorate, which is likely.
US and Global GDP: Even though they are horribly inconsistent and misleading indicators, GDP still plays a role in decision-making from the halls of congress to corporate board rooms to kitchen tables. Because of inflation, GDP will look - and be reported as such - like it's rising when the truth of the matter is that living conditions in much of the world are declining. US GDP will hover around three percent, global will be higher, but most people won't be able to see an improvement.
COVID: Yeah, it's permanent, but hardly deadly. More a control mechanism than a disease. Most variants will be common colds or seasonal flu, repurposed to fit the hidden operational genocide narrative.
Finally, we leave 2021 with a favorite clip from the film, "The Big Short," which, in our view, captures much of what's still wrong with the world 13 years beyond the Great Financial Crisis (GFC):
Happy New Year!
At the Close, Thursday, December 30, 2021:
Thursday, December 30, 2021, 9:05 am ET
Just in case anybody has lost count, the Dow Jones Industrial Average rose for the sixth straight day, setting a new all-time closing high just in time to make all the rosiest predictions of 2021 come true.
The Dow was actually 80 points higher with fewer than 10 minutes remaining in the cash session. Coordinated bid-rigging likely was the cause for the flash sell-off.
The levels of deceit, corruption and criminality within the inner circle of Wall Street is unmistakable, so large that it is no longer concealed. It's right out in front for everybody to see. Over these past six sessions of gains, the Dow is up just 560 points, so it's possible that the rally that will mark the beginning of the new year may be just getting started.
At the same time, threats to the fiat regime are being kept in check. Gold remains hovered over $1800 the ounce; silver is gradually creeping towards $23 per ounce as Basel III regulations on precious metal collateral requirements are about to be applied to British banks on January 1. The London bullion market is the world's largest hub for gold trading and vault storage.
Basel III implementations will impose stricter collateral requirements for unallocated gold. Going forward, Basel III capital requirements stipulate that these accounts must be backed by 85% of their value with physical metal or other "high quality liquid assets" (HQLA) as collateral on the bank's balance sheet. (Previously, there was no backing whatsoever required!)
Opinions on how the requirements will affect the price of gold are diverse. Since the requirements apply to unallocated gold accounts, some commentators argue that they will impair bullion banks' ability to keep gold prices under pressure in the COMEX market because the banks won't want to tie up precious collateral just to suppress the price of one asset.
British banks have tried to push back the implementation of the regulations - which are non-binding - or establish loopholes. Their efforts have been the subject of great speculation on how the regulations will affect the pricing of precious metals, though the current thinking is for a negligible one.
At the end of the day, suggestions such as those of the World Gold Council, which estimates that the resulting lower trading volumes may render gold less relevant or make gold less attractive as an asset class, appear to be on the winning side for gold bugs and individual investors. Either the price will skyrocket or collapse, presenting either a solid gain for the coming year or opportunity for further acquisition at even further suppressed prices.
No matter what occurs, it looks like a win for holders of physical.
At the Close, Wednesday, December 29, 2021:
Wednesday, December 29, 2021, 9:16 am ET
Stocks largely ran out of vaporware on Tuesday, except for the Dow Industrials, where the party never ends. The NASDAQ and S&P ended four-day rallies, with the S&P falling short of another all-time high close.
Oher financial assets were gliding along with the equity gains for a while, but on year could be complete without playing whack-a-mole with competitors to fiat currencies, specifically, gold, silver, bitcoin, and, for the most part, all other cryptocurrencies.
In New York, gold closed at $1,811.90 on Monday, fall slightly on Tuesday, and then got dumped overnight, falling to a level around $1,790 prior to the opening bell on Wall Street. Silver was similarly beaten down, from a high of $23.40 on Monday to its current nesting area around $22.60. Bitcoin dropped from $52,000 to $46,654, and is rebounding as of this note to around $47,500.
It's a shame the masters of the universe ruling high and mighty over Wall Street and the financial destinies of the rest of the planets inhabitants, don't get it that their corrupt reign is coming to an end. Finance has become a game played by billionaires, leaving the rest of the world behind. It's not a sustainable architecture, as was clearly illustrated by the dotcom crash, and then, less than a decade later, by the sub-prime crisis, which, for all intents and purposes, signaled the beginning of the end of the fiat era.
Since March of 2009, stocks and the entire global financial system has been puffed along by ZIRP, NIRP (Europe and Japan) and what central bankers like to call "Quantitative Easing" or QE, which is nothing other than monetization of government debt and counterfeiting.
For a long time, central banks held a monopoly over currency and counterfeiting, managing to inflate away the value of their fiats gradually, over decades, but, since 2000, and especially since 2008, their efforts to maintain an air of supremacy and dignity has failed miserably. Real rates of interest are negative around the world and purchasing power has been decimated in just the past year. There's no wonder that the controllers, politicians, bankers, and their allies in media have to terrorize the populace, lock them down and subjugate their thoughts, words, and freedoms.
The game is nearing an end. 2022 will likely be the final year in which central bank tyranny can maintain itself.
At the Close, Tuesday, December 28, 2021:
Tuesday, December 28, 2021, 9:30 am ET
There are but few words to describe the seemingly-limitless rise of US stocks over the past four sessions.
"Retarded" comes to mind, but, sophisticated people aren't supposed to use that word in our new, "woke" culture.
Consider: the S&P 500, bellwether of the major North American indices, has put on 223 points in the past four sessions, a gain of nearly five percent (4.88%). The rationale behind this overture to the gods of stocks was nothing. There were no major data releases, no geo-political event, no prophetic analysis. The only reason stocks were bid higher was because of the massive amounts of money lent or handed to markets, corporations, and individuals over the past two years. Stock buybacks are again at record levels. Fed policies reek of easing when they should be tightening and inflation has struck not just consumer goods and services, but has actually accelerated the pace of asset appreciation.
People with money tied to retirement accounts via 401k plans or other schemes probably are giddy over these recent developments, but these kinds of things usually end badly. The S&P, up 29.47% year-to-date, resembles the NASDAQ in 1999, when valuations were thrown out the window in exchange for dubious measurements as "eyeballs", "stickiness", and "first-mover effect" on stocks whose underlying companies had yet to earn their first dollar of profit.
Reckless Fed monetary policies and ruinous fiscal policies by congress and the US treasury have, over the years, managed to destroy all price signals and discovery. Rather than relying on time-tested valuations, the current mania seems to be one resembling the "greater fool" theory, wherein stocks are bought, then sold, to some market participant dumber than the one prior. There's nothing moving the stock market forward other than the notion that it continues to rise, similar to the sub-prime mortgage boom and bust of the mid-to-late 2000s.
While some of the junior traders on Wall Street are probably too young to recall the events of 1999 and 2000 during the dotcom rally and crash in any manner other than fleeting memories from pre-school, a few probably were around for the devastation of 2008-09. They, and their more adult counterparts, have apparently learned nothing from history, as they have been fed a pablum of forever gains brought about by easy money policies.
When the gains begin to unwind, which they undeniably will, none of them will be surprised, though, just like in 1929, they will be. There have been more than enough warning signs and danger postings to keep risk contained in a workable framework, but the real danger lies not in the fact of recent sharp gains, but in the perception that greater gains lie directly ahead. In less than a week, the calendar will flip over to 2022, and with it either a sea change in attitude or more of the same. Even the best of the Wall Street hucksters, grifters, and guessers have to admit that January, 2022 is setting up for some major volatility.
While the US media remains focused on two less important issues - Omicron and Russia/Ukraine - China continues to make inroads into the Western Hemisphere, specifically by the recent signing of a "Belt and Road" initiative with the nation of Cuba.
China's forays into Central and South America are nothing new, but they pose a great risk to the United States in particular as they gradually usurp the power hegemony that has long kept south of the border countries on a short leash. Gaining influence in areas that used to be the sole province of American enterprise gives China a valuable weapon against American industry and finance. The response from the White House to China's momentum into Western economics has been the usual garbled, incoherent noise, bowing to the perceived supremacy of the mew masters from the Orient.
As the current powers debate further sanctions against the non-existent enemy that is Russia, China has, over the past ten years, established commercial ties around the world, having taken over just about the entire continent of Africa, much of Europe, and is now setting its sights on America's closest neighbors.
The threat is real, and developing at breakneck speed. America's response to China's growing influence worldwide has been weak and ineffective, almost as if the powerful in Washington have already ceded control to the CCP.
Major changes are underway. That much has been obvious to anybody with open eyes the past few years. What lies ahead may not be to the liking of most citizens of the "land of the free."
At the Close, Monday, December 27, 2021:
Sunday, December 26, 2021, 9:34 am ET
With Christmas on the horizon, as has become somewhat of a tradition, Wall Street rewarded itself with excessive gains Tuesday through Thursday, negating the declines of the prior three sessions.
None of the major indices made all-time highs other than the S&P 500, which only set a closing high on Thursday. It did not reach an intra-day high. The other indices finished the week with some distance below the highs from late November.
Overall, with stocks declining for three days following the FOMC meeting, the gains were more symbolic than anything else, a kind of tribute to greed and wealth consolidation.
The treasury market exhibited an orderly selling pattern over the four-day trading week, as the curve steepened overall, 30-year yields rose from 1.82% to 1.91%, the highest in a month. The same pattern was seen in the 10-year note yield, up nine basis points from 1.41 to 1.50, the most generous yield since 12/08.
Rising yields across the curve has been a persistent feature the entire month. Heading into the new year, such a feature could possibly prompt the Fed to decelerate its asset purchases even faster than previously announced, possibly shutting them down altogether in February rather than March, in effect, slamming on the brakes instead of easing to a controlled cessation.
Bitcoin and other cryptos experienced some holiday joy, albeit short-lived, as Bitcoin rose to its best level in two weeks, above $51.000, but was slowed on Christmas Day, dropping back to a tight range just below $50,000. Bitcoin's recent charts appear to be signaling attempts at rallying, though there are more than ample forces working against it, such as every central banker on the planet pushing their indefatigable fiats and voices from the world of analyst hell, haters of anything that might compete with the current currency regime.
Joe Biden's efforts to lower gas prices, like everything else he's touched in the nearly a year since blowing flatulence into the White House, have failed. Prices for gas at the pump have not decreased by any significant degree. The national average in the US for a gallon of unleaded regular is, according to gasbuddy.com, $3.25, down about 13 cents from a month ago and a nickel from a week ago. That a four percent decline since Thanksgiving. Thanks, Joe.
With skills honed from nearly half a century in the US congress, Joe Biden has proven to be a first-rate bungler during his brief stint at the White House. His incompetence is matched only by the reluctance of the American citizenry to remove him and his illegitimate "government." Let's Go, Brandon.
WTI crude oil is headed in the opposite direction, up from $70.86 on December 17, to $73.79 as of Thursday's (12/23) close. While oil prices may decline at the end of the holiday season in about a week, there's no guarantee of that, making the case that whatever easing of prices at the pump were experienced (minimal), they are probably going to be short-lived.
Silver price 12/19: $22.35
Gold and silver were each in demand as prices rose into the holiday weekend. While prices for both metals have been recently bid higher, the most recent gain can partially be attributed to the "holiday effect," similar to the Fed's so-called "wealth effect," wherein people feel more inclined to disregard price in favor of acquisition. In some ways, the rise of most financial assets during the holiday period can be linked to the overall inflation and the urge to buy right away before prices increase, or FOMO (Fear of Missing Out).
As with most theoretical or popular psychological constructs, there's no preponderance of evidence such mental and emotional conditions actually exist. The observations and extrapolations are purely anecdotal.
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) rose significantly over the course of the shortened week, to $39.68, a gain of $2.34 from the December 19 price of $37.34.
That's a wrap. Happy Holidays!
At the Close, Thursday, December 23, 2021:
For the Week:
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