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Broken Markets, Broken Promises, Broken People and the Scourge of Anomie

Friday, March 3, 2023, 8:41 am ET

The massive rally that came out of nowhere (attributed to Atlanta Fed President Bostic by the regularly-uninformed financial media) changed the entire calculus of the market. While interest rates were soaring to new heights, stocks had languished through the first three days of the week, extending a trend that's been persistent throughout February and into March.

While hustling maniacs in the 0DOT (Zero Days to Maturity) options market were twisting in the wind, the 10-year note hit 4.09%, prompting action from the PPT, NY Fed trading desk, and other high-handed hedge funds betting it all on the success of American enterprises. In an instant, the major indices zoomed higher, the bulls generously rewarded with four distinct boosts on afternoon intervals. Just after noon, the Dow was clinging tenuously to a 48-point gain while the other indices were mired in the negative.

It was clearly time to act.

From 12:20 to 12:33 pm ET, the Dow gained 94 points, but the NASDAQ and S&P were still in the red. Obviously, more direct action was going to be necessary.

From 1:32 to 1:33 to 1:37 pm ET, the S&P went vertical, gaining 15 points in three minutes, moving from the red into the green. The Dow ripped higher by another 106 points, and the NASDAQ added 42 points. All in three, maybe four minutes! Obviously, all traders, globally, were reading from the same book and not only on the same page, but exhibiting even monosyllabic synchronicity. Mon dieu!

Despite such heroic market-making, the NASDAQ refused to cross the unchanged line. This would take a little longer, as all the indices dipped slightly. From 1:46 to 2:04 pm ET, the NASDAQ moved 75 points higher, finally nestled in the warm glow of positive returns on the day. The Dow added another 147 points and the S&P put on 20.

Their mission accomplished, the fixer consortium lolly-gagged through the remaining session, content with smaller infusions of freshly-conjured capital, the final push a bit of insurance from 3:20 to 3:40 pm ET, adding 17 points on the S&P, to for the NASDAQ and another 112 to the Dow.

Now, you may be reading this and thinking, "this clearly is fiction. The markets are orderly. Bostic's comments were dynamic and everybody was paying attention."

If that's how you think, we here at Money Daily have multiple bridges we'd love to sell you.

The PPT is real. The NY Fed's trading desk is real. Hedge funds are real. Deep-pocketed, influential combines, like Blackrock and Vanguard, are real. Almost nothing you see or hear from mainstream sources is real.

Rigging of markets has been a staple of trading since Babylonians first laid out tablets to count wheat production. What occurs on a regular basis on US markets, international markets, commodity platforms, the COMEX, Forex, etc. is nothing new. Maybe it's a bit more sophisticated, but it all appears quite obvious to anybody with a trained eye.

By the way, after the incredible boost to stocks on Thursday, why did bitcoin drop $1200 in less than an hour last night? The obvious answer is that bitcoin is nothing less than a money-laundering platform for Wall Street and other miscreant abusers, a completely unregulated, anonymous currency vending machine.

Thursday's advance was nothing more than a coordinated effort to keep the equity markets from another daily and weekly loss. As of Wednesday's close, all the main indices were down for the week. As Thursday's session headed into the afternoon, the S&P and NASDAQ were even deeper underwater. There are vested interest in the United States and around the world resistant to natural market forces and they have been and will continue to use their money and power to keep their three-card monte game going for as long as they are able, which, as has been evident since the GFC in 2008, can be a very, very long time.

As Friday's session approaches, the set-up should be familiar to all. Futures are up, European markets are positive, overnight, Asian markets put on gains. US indices are just slightly - less than 0.60% - higher for the week, so a positive finish would result in a win for the week, though it wouldn't take much of a downdraft to send markets reeling, as the Dow, S&P, and NASDAQ are all trending right between their 50 and 200-day moving averages. Anything can happen.

At the risk of sounding like a broken record, the news is fake, the markets are fake, the currency is fake, the president is an imposter and the congress is at least 90% compromised, lest they actually take up matters that might develop into positive change.

Many Americans and Europeans complain of helplessness, hopelessness, and a depressed attitude toward the world as it has evolved. They feel isolated and alone, unrepresented, stressed out and ignored. There are reasons for that. The world has been subjected to some very strange things the past three years, going on four. Nobody offers explanations worth two cents for why it seems everybody has gone completely loco. People have generally been left to fend for themselves. The social contract has been shredded by the very people entrusted to keep it whole. Psychologists and sociologists call it anomie.

...anomie is a social condition defined by an uprooting or breakdown of any moral values, standards or guidance for individuals to follow.

It doesn't have to be that way. There are things anybody can do to foment change, resist the superior forces at work and take steps toward a brighter future. Plant a garden. Talk to your neighbors. Buy gold and silver. For God's sake, the suppression of precious metals has kept them at bargain-basement prices for most of the past 50 years. Silver is still especially cheap.

The US economy is in tatters, infrastructure in the United States hasn't been upgraded for decades, government statistics are largely lies. If you have the means, you can get out, but, truth be told, there aren't many places any better off.

Maybe you like having a third of your paycheck taxed away before you even see it, funding government policies of which you do not approve, being told what to do, where to go, and how much to pay by authorities lacking morals. Well, if that's the case, you might as well just move along, take another dose of whatever they're doling out and slowly trudge along toward your end.

If you have any will and sense left, you will take action to better your fate, somehow, some way. It isn't easy. Nothing worth fighting for ever is.

At the Close, Thursday, March 3, 2023:
Dow: 33,003.57, +341.73 (+1.05%)
NASDAQ: 11,462.98, +83.50 (+0.73%)
S&P 500: 3,981.35, +29.96 (+0.76%)
NYSE Composite: 15,524.52, +88.22 (+0.57%)


Make or Break for Dow Jones Industrial Average; Salesforce (CRM) Jumps, Macy's (M), Best Buy (BBY) Issue Glum Guidance

Thursday, March 2, 2023, 9:48 am ET

On Tuesday, the Dow Jones Industrials closed at the lowest level since November 9, 2022 (32,513.94). The index appeared headed for another loss on Wednesday, before a spirited (and by that, meaning aided either by drink or ghosts) saved the day for the bulls.

Trading in a closing range of just more than 2000 points - between 32,513.94 and 34,589.77 - since November 7, the 30 industrials haven't made any significant headway even as the S&P and NASDAQ made solid gains in January. The Dow's January 13 peak of 34,302,61 stalled the rally and was still almost 300 points from the top of the range.

It has been nearly four months since the Dow made a meaningful move. Since sliding near the lower end of the range currently, any upside move would merely retrace old steps and would rightfully be regarded as more noise than signal. Otherwise, a move below the range might trigger an even deeper decline, since the Dow is currently encamped between its 50 and 200-day moving averages, roughly 300 points above the 200-day.

Being deep in the throes of a serious bear market, the Dow's leadership is unquestioned, having fared better than the S&P and NASDAQ, but it is in correction territory again, down 10.12% from its December 30, 2021 high (36,338.30). Falling below the current range could trigger another bout of selling, as confidence in the markets and the US economy continues to wane.

There may be some positional trading developing, especially in light of Salesforce's (CRM) massive 16% gain pre-market, following an earnings beat Wednesday after the close. Hounded by activist investors who seek to turn the company around, Salesforce stock has been nearly halved since topping out at 307.25 on November 5, 2021. It closed Wednesday at 167.35. Any gains it makes in Thursday's session will buoy the Dow, at least in early trading.

On the earnings front, Macy's (M) is being bought pre-market after posting horrible numbers that otherwise beat analyst expectations. Macy's earnings and revenue fell for the third quarter in a row. Earnings dropped 23% to $1.88 per share as revenue slid 4.6% to $8.26 billion.

Grocery chain Kroger (KR) returned EPS of $3.06, adjusted EPS of $4.23 for the full year 2022, achieving adjusted EPS growth of 15%. For the fourth quarter, Kroger's put up operating profit of $826 million on EPS of $0.62; adjusted EPS of $0.99.

Electronics retailer Best Buy (BBY) reported top and bottom line earnings beat for the fourth quarter, but warned of weakness in the consumer discretionary segment, a recurring theme of other retailers (Target, Lowe's, Macy's) that reported this week.

Running behind this morning, so that's a wrap.

Keep a close eye on the Dow, especially 32,513. The index bounced off that number - the low end of its current range - on Wednesday.

At the Close, Wednesday, March 1, 2023:
Dow: 32,661.84, +5.14 (+0.02%)
NASDAQ: 11,379.48, -76.06 (-0.66%)
S&P 500: 3,951.39, -18.76 (-0.47%)
NYSE Composite: 15,436.30, +7.33 (+0.05%)


All Signs Point to Bad Places

Wednesday, March 1, 2023, 9:19 am ET

February is now the past, and it wasn't so good for equity investors. Judging just from economic and corporate reports from yesterday and today, March figures to be downright ugly.

Considering the economic reports that have been released recently, there should be little doubt about the direction of the US economy, and, by proxy, the fates of Europe, Britain, Australia, New Zealand and Canada.

In all of these countries, the citizenry has been reduced to chattel. Their voices don't count. Their votes don't count. Their lives don't matter to the people in power. In a way, it's a wonder the elitist government, media, and business leaders put up with them at all. They believe the "common man" (or woman) is not necessary in their plans to dominate the world and usher in the "Great Reset."

In their view, they have everything they need to survive even a nuclear holocaust. Sadly, intellectual honesty requires a few more brain cells than most of them possess. They fail to understand what a world without a thriving middle class is a world nobody wishes to inhabit. In such a case, there would be no traffic, but also no need to pump oil, refine it into gasoline and sell it to consumers. Many fewer people would be around to do menial tasks, like raising farm animals and tending fields, keeping the lights on, providing defense against invaders.

Who would make movies or TV shows? Would there be baseball and football games? And if, so why? Sporting events aren't necessary. Essentially, there'd be less of everything, including people, and life would be fairly dull and uneventful. Is that what they desire?

These recent economic reports beg to differ with their "smarter than you" mentality.

Consider:

The stock market, despite the outward appearance of companies making products, delivering services, and turning steady profits, the reality is that all of Wall Street's metrics have been boosted by inflation the past two years, and that's after having been boosted by stock buybacks, easy money, even easier credit for more than a decade. Certain companies may show increases in revenue, but, strip out the 15-40% higher prices and they're going backwards.

Here's a sampling of economic reports, and these are just from Tuesday:

  • Chicago PMI for February indicated contraction for the sixth straight month, registering a reading of 43.6, dipping from 44.3 in January (any number under 50 indicates a slowdown).
  • January International Trade in Goods was -$91.5 billion, up from -$89.7B in December. (This used to be known as the trade deficit. Maybe it still is, but redefining everything, from the definition of a recession to diluted adjusted non-GAAP earnings has that certain air of inauthenticity about it.)
  • Durable Goods Orders for January were -4.5%, the lowest tally since April 2020. These are big-ticket items. Nobody's making them, so, apparently, nobody is buying them.
  • US home prices fell for a sixth consecutive month [PDF] according to the latest report by S&P CoreLogic Case-Shiller Indices.
  • Dallas Fed economists warned of a 19.5% housing market correction in a Tuesday research report.
  • A manufacturing survey published Monday by the Federal Reserve Bank of Dallas found the state's factory activity contracted for the first time since May 2020.
  • The Richmond Fed's survey of manufacturing activity for February fell from January's -11 to -16. The manufacturing index was negative for a second successive month. The services index was negative for a fifth successive month. The shipping index of the manufacturing survey fell to its lowest level since May 2020.
  • Subprime auto loans that were at least 60 days late rose to more than 6% in December.
  • Need any more convincing evidence that the US economy is not improving, but slowing just about everywhere?

    More reports will be coming out in days and weeks ahead. Like clockwork, the various government departments have little better to do than measure the input and output of Americans. Sometimes, they even report honest figures.

    There are very good reasons for the US economy to be hitting stall speed or decelerating. One could point to the disgraceful leadership at the White House, but preference should be directed to congress, which does nothing of benefit to the American public and has authorized more than $120 billion to Ukraine for a war that the US prodded Russia into, has resulted in hundreds of thousands of deaths, relocation of millions and probably can't be won.

    Congress and whichever president was in office has produced no budgets nor surpluses since 2001, running deficits every year since.

    Then there's the Federal Reserve, which, on top of creating the worst inflationary period since the 1970s via their loose policies between the GFC (2008-09) and the Covid lockdowns (2020-21), and goosing the money supply by some 40% in 2020 alone, now finds itself fighting against the inflation they themselves created, hiking interest rates at the last ten FOMC meetings, starting with March, 2022, and they're not done yet.

    Thanks to the Fed's rate hikes, interest rates on credit cards now average more than 19%, and a 30-year fixed-rate home mortgage is approaching seven percent. The Fed's purpose is to slow down the economy. It appears they're doing the job quite well. Meanwhile, Americans can't keep up with credit card debt, rents, or auto loans.

    So, stocks should go higher, right?

    Not necessarily. Financial headline writers are getting awfully creative, however:

    Lowe's Stock Inches Up As Mixed Q4 Results Offer Weak Guidance, Slow Traffic Outlook.

    Read that one a few times, closely. Concentrate. Mixed results, weak guidance, slow traffic. Stock inches up (pre-market, of course).

    Kohl's swings to surprise loss and issues bleak outlook - That's more like it, but why is anything negative always referred to as a "surprise?" It's not surprising that bad things happen. Kohl's (KSS) reported a loss of $273 million, or $2.49 per share for the quarter ended Jan. 28. Industry analysts had projected per-share profits of 97 cents, according to a poll by FactSet. It's OK to laugh at the prior sentence. The industry analysts must be living somewhere far removed from shopping districts to be that far off.

    Shares of Kohl's are off eight percent, but that's just the pre-market.

    Wendy's (WEN) is a case-in-point, having released full year 2022 results this morning. Full year revenue for 2022 was $13.3 billion, up from $12.5 billion in 2021, but, Wendy's opened over 275 restaurants in 2022 and their figures are not inflation adjusted. If they're not going backwards, they're flat at best.

    Then there's Dow component, SalesForce (CRM) (what a joke!): Salesforce paying Matthew McConaughey reported $10 million a year for creative help despite laying off 8,000 employees. All right, all right, all right... for McConaughty, maybe, but shares of CRM are down from 306 in November, 2021, to around 160 today.

    Seriously, how good can things be if even Dollar Tree (Now $1.25 Tree) (DLTR) is struggling? The company released fourth quarter and full fiscal 2022 results this morning and issued scary guidance. Pre-market, shares are down about three percent.

    Here's a surprise. With all that good news, stock futures have turned from positive to quite negative with a half hour to go before the opening bell.

    Oh, yeah, one more reason the economy isn't advancing. There are a million or more fewer Americans than there were in 2019, thanks to Covid and the miracles of medicine (Phizer, Moderna, et. al.). Supply and demand. It's a thing.

    Ring-a-ding-ding (h/t Chairman of the Board, Frank Sinatra)

    At the Close, Tuesday, February 28, 2023:
    Dow: 32,656.70, -232.39 (-0.71%)
    NASDAQ: 11,455.54, -11.44 (-0.10%)
    S&P 500: 3,970.15, -12.09 (-0.30%)
    NYSE Composite: 15,428.97, -63.96 (-0.41%)


    Stocks Will Continue to Languish through 2023; Target Beats, But Guidance Is Low, Management Floundering

    Tuesday, February 28, 2023, 9:05 am ET

    Stocks rebounded Monday from the worst week of 2023, but there was little commitment to the trading regimen as stocks slumped from an early rally. Highs were made shortly after 10:00 am ET, gradually fading as the session wore into a lackluster close.

    Demonstrating a familiar bear market chart pattern (up early, down late) stocks are evidencing all the signs of a weakening macro environment. Manifested in individual stocks, the paucity of positive earnings surprises for the fourth quarter and full year 2022 are acting as an anchor for markets, pulling everything lower.

    Companies are facing significant headwinds in the form of inflation, an out-of-control government doing nothing to shore up the economy, repeated hikes to interest rates by the Fed, and a generally stagnant economy lacking positive catalysts.

    Mired in a ridiculous, grinding war mentality and unmindful of the harm being done by expanding deficits, the federal government may prove to be the most deleterious of any of the elements affecting economic strength. Washington, DC has been out of touch, implementing polices that people neither want nor need, and continuing others that are outright harmful, such as the ongoing covid hoax, open borders, and hate-filled, divisive rhetoric spewing from the mouths of inexperienced, lame, agenda-driven zealots.

    No economy can thrive when under the thumb of reckless leadership. Congress has been proving that for decades and now they are joined by possibly the most inefficient, inept, thoughtless insurrectionist administration the country has ever seen. From cancel culture to transgenderism to covid to climate change to Ukraine and hatred of Russia, steering the country in the wrong directions is causing downstream effects that exacerbate the condition. People are angry at government, their neighbors, their employers, foreigners, their families. How can these people be expected to be committed to their careers and families with so much negative overhang?

    On top of that, corporate America is an absolute failure, devoid of innovative ideas, constructive planning, or positive reinforcement. Executives at the highest levels are more interested in their bonus packages than growing their businesses, a condition that has been evident for years through stock buybacks, accounting gimmicks, and assorted excuses for declining performance.

    The secret nobody wants to mention is that the fourth quarter of 2022 was an absolute disaster. Retailers were dead right after Thanksgiving and the usual post-holiday sales were sparse, due to cash-strapped consumers, lack of interest, and all the elemental issues facing people in their day-to-day existence. If anything, the fourth quarter is setting up a first quarter that may tear the curtain down and expose the US economy for what it really is: a hollowed out corpse.

    Target (TGT) reported early Tuesday morning with fourth-quarter (ended Jan. 23) profits of $876 million, $1.89 per share, well above estimates of around $1.40, but a poor comparison to $1.54 billion and $3.21 per share a year ago. Revenue was $31.4 billion, narrowly beating estimates.

    The company expects adjusted earnings per share to be $7.75 to $8.75 for the year, lower than analyst estimates, which are looking for more than $9.00.

    In pre-market action, shares of the retailer were initially up a little more than one percent, but quickly reversed and are trending lower. While Target beat EPS and revenue projections, the company warned about the future, issuing what's become standard for retailers this quarter: high inventory overhang, possible recession, inflation, changing consumer habits.

    Essentially, Target management envisions an extension of the rough patch which began early in 2022. This quarterly is the first of the last four that exceeded EPS expectations. Like many US companies, improving profitability amid an inflationary environment and rising operational costs is a tall order. Target is stuck between a rock and hard place. On the one hand, they need to move products, but consumers are strapped. Alternately, they can offer discounts and incentives, cutting into the bottom line.

    As a large, multi-segmented operation spanning the country with over 1900 stores and 450,000 employees, Target may need to depart from its general strategy rather than straining resources to deliver results for shareholders. With such a large footprint, a general assessment should determine where to cut costs, close underperforming stores and shed headcount. Such actions may appear to be downsizing to the masses, but could prove to be right-sizing into an new economic environment.

    Failure to make strategic changes at opportune moments, rather than swimming against the tide - as the company appears to be doing - usually results in those changes being forced upon management, a situation most companies would seek to avoid.

    Investing in corporate America may be one of the worst mistakes young investors can make. Unless radical change is made to the way the government and economy operates, the way media reports, the harmful effects of central banking and fiat currency, the remaining years of this decade will be a lost opportunity. Politicians, bankers, and elite executives have squandered the available resources and divvied them up amongst themselves, leaving the middle class shattered, dreams broken, confidence lacking.

    At the Close, Monday, February 27, 2023:
    Dow: 32,889.09, +72.17 (+0.22%)
    NASDAQ: 11,466.98, +72.04 (+0.63%)
    S&P 500: 3,982.24, +12.20 (+0.31%)
    NYSE: 15,492.93, +28.47 (+0.18%)


    WEEKEND WRAP: China-Russia Alliance for Real; NATO Commitment Ebbs; Currency Aspirations May Fuel Lower Gold Prices

    Sunday, February 26, 2023, 10:36 am ET

    Geo-politics took center stage this week, inflation and domestic issues played bit parts in the ongoing international saga.

    STOCKS

    The Dow notched its fourth straight loss on a weekly basis, this one the worst of five this year against only three positive weekly closes, down more than 1000 points and nearly three percent. The Blue Chips ended Friday down for the year 331 points, an even one percent loss. By contrast, the NASDAQ dropped for only the second time this year, but also the second weekly loss of the last three after opening 2023 with five straight winning weeks thanks largely to the relentless hedge fund short squeeze. On a year-to-date basis, the NASDAQ is easily the best of the indices, sporting a gain of 8.87%, or, about 928 points.

    For a more level experience, the S&P 500 posted its third straight week in the red and fourth of the year, putting the weekly tally at four up, four down, though the index is only ahead by 130.54 points for the year, or 3.4%. Likewise, the NYSE Composite, off 375 points on the week, also posted its third consecutive losing week, and fourth of the year. The Composite ended a streak of six straight daily losing sessions on Thursday, but finished in the red again Friday, leaving it up less than two percent on the year. Clearly, there is less than solid support for stocks at this juncture, owing to a variety of negative factors.

    Some of the rationale for stocks not being fully embraced by the investing public are the ongoing political and military issues concerning Ukraine, Russia, and China. As the week marked the one year anniversary of Russia's invasion and special military operation, the rhetoric was amped up to ear-piercing levels. Joe Biden issued statements from both Kiev and Warsaw, Russia's president, Vladimir Putin, responded with a lengthy sermon to party loyalists, and China chimed in with a 12-point peace proposal as the US accused it of supplying Russia with lethal weapons, quickly denied in harsh tones by China. Not to be lost on the general public was the US hypocracy, as they have been openly supplying Ukraine with all manner of weapons, logistical assistance, and oodles of cash.

    Fear of more interest rate hikes by the Fed was another contributing element to stock losses. The Fed now appears to be even more intent on quashing inflation than following the February 1 FOMC meeting and press conference in which Chairman Powell mentioned disinflation at least a dozen times. The PCE data released Friday, showing inflation re-igniting, has turned his own words against him while presidents Bullard and Mester made sure to inform the public that they favored a larger increase in the federal funds target rate at that last FOMC confab.

    Most of all, however, stocks are turning lower due to performance, which was less than stellar for 2022, especially in the fourth quarter. December's holiday cheer was largely replaced by empty coffers and stagnant inventory for retailers despite monthly retail sales data showing a steady uptick. There's also a question of the veracity of recent government data, as many results - like January's huge surge in employment - don't seem to match up well against reality. Quietly, government agencies tracking the economy are issuing revisions and seasonal adjustments, skewing results mostly in the direction of an economy bounding along when limping seems the general gait.

    There has been a paucity of earnings surprises from the fourth quarter, which is troubling not only because its often a strong quarter and December a month that rings the register, but also because companies in just about every sector are showing lower EPS than in the fourth quarter of 2021 and declining revenue as well, squeezing profit margins. If the performance of America's large publicly-held companies indicates anything, it is suggesting a tired, slowing economy, not one moving forward.

    The government and media is trying to keep with the upside narrative, but it appears to be more difficult to do so with straight faces and fewer people are buying it. Facts matter.

    The week ahead looks to be a bumpy one, as February is likely to close out (Tuesday) in the red for all the majors, which are currently negative for the month, but none moreso than the Dow, off a whopping 1270 points in February. Because Friday will only be the 3rd day of March, non-farm payroll data has been pushed back to the following week, February 10, but the market will still have to wade through various reports. Monday offers durable goods, pending home sales, and the Dallas Fed's manufacturing survey.

    Tuesday's data includes Case Shiller housing, Chicago PMI, and the Richmond Fed's services index. ISM manufacturing and EIA oil data are released Wednesday and Thursday brings weekly initial and continuing unemployment claims. Overall, it's a fairly light menu.

    The earnings calendar is also light, with most major companies already having reported. The focus will be Tuesday, when Target (TGT) reports and Wednesday, when Lowe's (LOW), Kohl's (KSS), Dollar Tree (DLTR), Salesforce (CRM), and Wendy's (WEN) hit the wires. Thursday leads off with Best Buy (BBY), Kroger's (KR), and Macy's (M). That's about it.

    Stocks may be able to overlook data and regain some lost ground. Worst case scenario calls for resumption of the bear market, still lumbering along.


    Treasury Yield Curve Rates

    Date 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr
    01/27/2023 4.61 4.64 4.73 4.76 4.81 4.68
    02/03/2023 4.61 4.67 4.70 4.80 4.82 4.79
    02/10/2023 4.66 4.77 4.79 4.89 4.89 4.89
    02/17/2023 4.64 4.81 4.84 4.95 4.99 5.00
    02/24/2023 4.68 4.83 4.86 5.02 5.06 5.05

    Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
    01/27/2023 4.19 3.90 3.62 3.58 3.52 3.77 3.64
    02/03/2023 4.30 3.96 3.67 3.61 3.53 3.77 3.63
    02/10/2023 4.50 4.19 3.93 3.86 3.74 3.96 3.83
    02/17/2023 4.60 4.33 4.03 3.95 3.82 4.01 3.88
    02/24/2023 4.78 4.52 4.19 4.10 3.95 4.11 3.93

    Last week saw the first instance of any yield with a five-handle. The number increased to three this week, as 6-month and 4-month bills joined the one-year note in the cinco club. That the 4-month bills are now yielding more than five percent is particularly worrisome since this maturity was only recently added to the curve rates and is one of the primary borrowing platforms of Janet Yellen's Treasury Department.

    Higher interest rates on government loans is perhaps the most ominous outcome from the Fed's inflation fight. Unrestrained government borrowing in the face of what appears to be a durable, drawn-out battle over the debt ceiling can only amplify the damage already done to US government finances ($31.4 trillion and growing). With interest rates on a path of "higher for longer" and deficit spending a federal fixture, interest on the debt will grow to more than $700 billion this fiscal year and over a trillion in fiscal 2024, which begins October 1, making interest on the debt one of, if not the largest single budget item, a recipe for disaster, default and a re-ordering of government finances.

    Interest rates were higher across the entire curve, most pronounced in the center, with 2-year notes rising 18 basis points, 3-years up 19, and the 10-year note hitting 3.95% (+13 bp). Panic set in the last time the yield on the 10-year exceeded four percent back in October of last year. Extreme pressure and suspected heavy buying by the Fed itself came to bear in November, pushing the benchmark 10-year down to a yield of 3.42%. Since then, the Fed has raised rates twice more - December and February - and the trend suggests they're still on a path higher.

    Recent data indicates that inflation has not been brought under control to a satisfactory degree, meaning the Fed will continue hiking until it has the economy firmly by the throat and squeezes the last breaths from it. Market participants should not be under any illusions about the economy and interest rates. While on the surface, the Fed's actions appear to be the driving force to a slowing economy, but reality suggests the US economy has been slumping since the beginning of 2022 or sooner and data supplied by the government have been shading the truth to a large extent.

    Add to the woes and slippery slope upon which the Fed and the government are currently coasting the unwind of 12 years of profligate spending on easy money, exacerbated by massive inflows in 2020 and 2021. Saying the situation is dire would be putting it lightly.


    Oil/Gas

    WTI oil priced Friday afternoon in New York at $76.45, down ever so slightly from $76.56 at the close last week, and more from two weeks ago ($79.95, 2/10), but it traded as low as $73.83 this past Wednesday before being bid. There's nothing surprising about lower energy prices in the midst of a global slowing. Expect oil to continue its path lower at least until May and possibly even longer. A target in the 60s cannot be ruled out and will likely become a reality if evidence of a slowed economy takes root.

    Prices at the pump continued to fall again this week. Gasbuddy.com reports the national average at $3.33, down three cents from last week ($3.36). The Southeast led the way lower this week. Texas has the cheapest gas in the country, averaging $2.87, down 11 cents just this week. Other Southeastern sates followed the flow. Mississippi is at $2.92. Oklahoma is next at $2.95. Alabama, Louisiana, South Carolina, Arkansas, Tennessee, and Kentucky are all showing prices at $3.00 or lower. Georgia is at $3.11; North Carolina, $3.13.

    California ($4.70), Washington ($4.12), Nevada ($4.16), and Colorado ($4.04) are the only states averaging above $4.00. In the Northeast, Pennsylvania continues the region's highest, at $3.62, though it is slowly receding.

    These prices are well below prevailing prices a year ago, averaging around $3.50. With demand slack and what has to be considered an average to mild winter, prices should continue to decline in the near term. Naturally, geo-political events could change the direction of prices, however, conditions that drove prices higher last year no longer apply. Producers have actually slowed the flow with no deleterious effect to supply or price. It's very possible that a national average below $3.00 could present itself within the next few months.


    Bitcoin

    Crypto got trashed again this week. Bitcoin peaked on Presidents Day at $24,809, then fell each of the next four days, taking a loss of more than $1,600 (-6.90%) into the weekend.

    This week: $23,182.10
    Last week: $24,680.90
    2 weeks ago: $21,797.10

    Crypto is evidence of more than ample supply of "stoopid money" still sloshing around.


    Precious Metals

    Gold:Silver Ratio: 87.11; last week: 84.61

    Gold price 01/27: $1,943.90
    Gold price 02/03: $1,877.70
    Gold price 02/10: $1,876.40
    Gold price 02/17: $1,851.30
    Gold price 02/24: $1,818.00

    Silver price 01/27: $23.73
    Silver price 02/03: $22.40
    Silver price 02/10: $22.01
    Silver price 02/17: $21.88
    Silver price 02/24: $20.87

    On January 26, gold peaked at $1959.40. Silver topped at $24.37 just 12 days earlier. Both metals have been in serial decline for a month running. Whatever argument can be made for higher prices must be discounted, rose-colored glasses removed. Supply chains have been restored, dealers are flush with cash and inventory. There's no good reason for premia to remain at high levels, as evidence continues to mount that at least some parts of the world will soon transition to a gold standard, jettisoning fiat currencies in favor of honest money.

    Led by the BRICS, the pan-Asian association of the Shanghai Cooperation Organization (SCO), and the Eurasian Economic Union (EAEU), countries outside Western influence have defied sanctions imposed by the coalition of the US, EU, and UK, and are making significant headway towards a multi-polar system that eviscerates Western (largely US) hegemony.

    In the case that a return to some form of honest money, a gold standard, or similar construct develops over the next six months to two years, gold and silver - and indeed, all commodities - could face radical re-pricing, the current underlying trend suggesting prices lower than what prevails today.

    While there are more than enough pundits and analysts shouting about $5000 gold and triple-digit silver, those absurd flights of fancy fail to discount what an end to the fiat regime would entail. It's been proven that all assets and currencies could be at least partially backed by precious metals, particularly gold, but it's difficult to imagine the countries pushing for currency reform jacking the level of their most basic asset to a much higher price.

    What continues to be seriously out of order is the gold:silver ratio, which has all the trappings of fiat finagling and excessive financialization via the LBMA, COMEX, and CME. When global currencies are re-ordered, the expectation that holders of precious metals will become instant millionaires is nothing more than wishful thinking. A closer inspection of the current condition suggests that either gold is overvalued and silver is closer to being fairly priced or silver is simply central bankings' most hated form of currency, evidence of such outstanding over hundreds of years. Making an assumption that the gold:silver ratio will return to a more reasonable level in the near future is not beyond imagining. A ratio approaching 20:1 and possibly even lower is not out of the question.

    Gold and silver have been money for thousands of years. Inflation, being the result of debasing fiat currencies, has to be discounted as a hangover from a dismal past and broken system. If the world returns to a gold standard, silver would almost necessarily become an integral element of it. There is more than enough gold to reprice regional assets and eventually global ones and there's ample silver available to be melted into coinage, not just in the rest of the world, but also in Western nations, which will likely resist the currency shift initially before finally devaluing to levels consistent with prevailing Eastern practices.

    The needed change from fiat to hard currency will not likely be an instantaneous one. It's more likely to take years for full implementation, given the animus from West to East and vice-versa. The BRICS or some form of international union will eventually develop a reserve currency to rival the US dollar and bring the world back to sanity. This assumes that the United States will not plunge the world into global conflict. Should a wider war between the Western nations and a Russia-China coalition, all bets are off.

    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: 25.99 41.00 32.79 32.50
    1 oz silver bar: 29.23 39.97 33.73 33.00
    1 oz gold coin: 1,904.99 2,030.00 1,941.37 1,937.99
    1 oz gold bar: 1,884.41 1,938.34 1,905.69 1,900.31

    The Single Ounce Silver Market Price Benchmark (SOSMPB) absolutely crashed this week, falling to $33.01, a crushing decline of $5.29 from the February 19 level of $38.30.


    WEEKEND WRAP

    The world is at an inflection point. Events of the past week clearly identify Russia and China in a closer relationship while the NATO nations are wavering in their support of Ukraine, resisting the urgings of the United States neocons to send more armaments and more lethal weapons to the front lines of a desperate, ill-advised military escapade. Even within the United States, certain elements - mainly House Republicans - are speaking out against further support of Ukraine and the American public has clearly shifted against further expansion and spending on an expedition to nowhere.

    Russia clearly will not back down and continues to take ground, inflicting severe losses on Ukraine forces. NATO supplies are running behind and more than a few NATO countries are expressing concern that their own military readiness is being adversely affected. The over-hyped and overstated "unity" of NATO is under assault, though Western consumers of mainstream media will hardly hear a word of it. Eventually, the media focus will shift away from the military equation as a solution is sought in the Ukraine situation. The longer Russia takes the battle to Ukraine, the closer Western countries come to an ultimate compromise, ceding much of Ukraine to Russia, putting further aggression on a back seat.

    Western economies have suffered greatly from military adventurism. Further economic, political, and societal pain needs to be arrested before the entire construct collapses. It would be a most grave mistake to take the current conflict beyond Ukraine's borders. The ruling cabal in Washington, DC is not going to completely self-destruct on its own. They are too-heavily invested and will find a means to tiptoe gently away from conflict without admitting defeat. It's the way it's always done, as in Iraq, Afghanistan and even as far back as Vietnam and Korea.

    Saner heads will prevail, even if those heads reside in places like Moscow, Beijing, and New Delhi.

    At the Close, Friday, February 24, 2023:
    Dow: 32,816.92, -336.99 (-1.02%)
    NASDAQ: 11,394.94, -195.46 (-1.69%)
    S&P 500: 3,970.04, -42.28 (-1.05%)
    NYSE Composite: 15,464.46, -120.46 (-0.77%)

    For the Week:
    Dow: -1009.77 (-2.99%)
    NASDAQ: -392.33 (-3.33%)
    S&P 500: -109.05 (-2.67%)
    NYSE Composite: -375.70 (-2.37%)


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