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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.
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BJ's Issues Warning Guidance; Stocks Beginning to Look Expensive; Oil Price Continues Lower Friday, November 17, 2023, 9:57 am ET Friday morning, yet another retailer belched out warning guidance about slowing sales for the fourth quarter, the holiday season and beyond. This time it was discount club, BJ's Wholesale (BJ), Chief Financial Officer Laura Felice offering, "we also continue to navigate shifts in consumer behavior driven by the broader macroeconomic environment." Yesterday it was geopolitics, today, macroeconomics. Seems to be along the same talking point narrative. The company posted third-quarter adjusted earnings of 98 cents a share, beating Wall Street estimates of 95 cents. Earnings a year ago were 99 cents a share. Shares of BJ's are down five to six percent in the pre-market. The prevalence of worsening guidance this quarter has gotten to be something of a mantra for retailers. Practically every large company - from Walmart to Target to Home Depot - seems to be reading from the same songbook. Perhaps they know something Wall Street doesn't, or perhaps they're just being realistic or over-cautious. Meanwhile, stocks continue to rally, though the pace has slowed since Tuesday. For the week through Thursday's close, all the majors are ahead, with the Dow up 662 points, nearly two percent; NASDAQ ahead by 315 (2.29%); and the S&P up 93 points (2.11%). Oil got whacked on Thursday, with WTI crude closing on the COMEX at $72.90, the lowest since July. Despite the best efforts of producers to crimp supply, it appears that is not the problem, but rather, demand. Electric cars, slowing economies, work from home, and other factors have contributed to the lower price. With markets just open, all three majors are modestly lower. Overnight, the NIKKEI was up, Hang Seng down. Europe's markets are positive, up less than one percent. Gold and silver are lower, as is the 10-year note (4.447%). Oil has caught a bid, with WTI crude above $74/barrel. Gotta run...
At the Close, Thursday, November 16, 2023:
Thursday, November 16, 2023, 9:17 am ET Mood swings. Seems this market has them regularly and they started up on Wednesday, when, after all the good news that was supposed to keep the rally going, the NASDAQ and S&P suddenly had a change of heart... or mind... or mood. On Tuesday, after CPI came in cooler than expected, the market soomed ahead. Wednesday's result out of Target (TGT) sent that stock up 19.67 points, or +17.75%. Target was a stock nobody wanted for literally, years. It had peaked at 261 in August, 2021. On October 6 of this year, it bottomed out at 105.01 and closed Tuesday at 110.79. All of a sudden, nobody could get enough. Whether this recent bout of exuberance persists or was just another part of the ongoing distribution mix remains to be seen, but the stock is down a couple of points pre-market. All we really know is that stocks and markets are very, very moody, and that's despite the VIX at multi-year lows around 13-14. Thursday morning brought out the earnings report for Walmart (WMT). Adjusted earnings increased two percent to $1.53 per share on revenue growth to $160.8 billion, a 5.2% gain. The street was looking for $1.52, so the company beat, but not by very much. As has been the common thread amongst retailers this quarter, Walmart issued guidance that was less-than-enthusiastic. Prior to the opening bell, shares are down around six percent. Very moody, indeed. On the other end of the spectrum, Macy's (M) seems to be out of the doghouse, despite, according to their third quarter earnings report, net sales decreased by 7% to $5 billion compared to Q3 2022, while gross margin improved to 40.3%, a 1.6% increase year-over-year. Diluted EPS fell to $0.15, with adjusted diluted EPS at $0.21, both down from the prior year. Macy's guidance was one of cautious optimism amidst uncertain macroeconomic conditions. Well, there you have it. Uncertainty. Really. The stock is up between seven and eight percent, which isn't saying much, since it's been beaten down for so long that any news approaching positive was certain to boost the share price. The stock had been bouncing around three-year lows until it caught some bids on Wednesday. In pre-market trading Thursday morning, it has tacked on a buck and change to around 13.80. That's off a high from two years back at 34.71. So, will the market continue the happy dances of the past few weeks or is it hiding something that's bothering it? Futures aren't telling anything. The S&P is up a point, Dow futures are down 31; NASDAQ futures off 17. Overnight, Asian stocks were down. The NIKKEI dropped 95 points; Hang Seng slipped 246 (1.36%). In Europe, the Dax is up, along with Spain's IBEX, while France's CAC and Britain's FTSE are lower. Gold and silver are up, with silver heading to $24 in a hurry ($23.93). WTI crude is sliding about 70 cents, maintaining its recent range in the mid-70s. Bitcoin is down $1,100. Is it hot in here or is it just the market having hot flashes?
At the Close, Wednesday, November 15, 2023
Wednesday, November 15, 2023, 9:24 am ET Even though Monday's session was dull, the major indices took no time to make up for that and then some, adding gains that were among the best of the year on Tuesday after October's CPI came in flat. Under the assumption that CPI at 3.2% on an annual basis and flat for the month of October after a 0.4% rise in September would prompt the Federal Reserve's FOMC to keep rates on hold for the December meeting and beyond, stocks bolted higher at the open and added to gains throughout the session. Seems like everybody is champing at the bit in anticipation of lower interest rates. While the Fed has not quite achieved its target of two percent annual inflation, stock speculators assume they're close enough and will not deliver more pain to the economy via increasing the target federal funds rate. Bond traders were also caught up in Tuesday's euphoria, sending the 10-year note to 4.44%. Just weeks ago, the fear trade was the 10-year yielding above 5.00%. That lasted but a few days before buyers (primary dealers) stepped in, bought notes and bonds, and sent yields lower. With Tuesday's move higher, stocks are approaching the highs of the year from July. Another session like Tuesday and the NASDAQ will zip right past the July 19 closing high of 14,358.02. The S&P closed just a shade below 4500, and is within a few percentage points of its July 31 high for the year (4,588.96). The Dow, looking to exceed its own 52-week high of 35,630.68 (August 1) has a bit more heavy lifting to do. Target (TGT) reported earnings prior to the open on Wednesday. Despite sales and revenue lower than the year-ago period (this now has become the base case for most stocks), the company bettered lowered estimates and issued gloomy guidance for the fourth quarter, also standard for retailers this season. Plungers seem unconcerned, sending the stock up 15% in the pre-market. Discount retailer, TJX Companies (TJX), was not treated so kindly. Despite a strong quarter, similar to Target's, and lowered guidance, the stock is down two percent before the bell, though it closed Tuesday at 92.50, within whistling distance of its all-time high of 93.59 from September 14 of this year. There are all manner of oddities in the bullish run of the past two weeks, but, pushing shares of companies that are serial under-performers higher has taken hold of the speculators. Fanning the flames a little bit hotter were two economic reports this morning. Retail sales fell less than expected (-0.1) and the Labor Department reported that the producer price index (PPI) fell 0.5% in October, the largest drop since April 2020. On a year-over-year basis, producer prices were up 1.3% from October 2022, the smallest gain since July. As the opening bell approaches, the spirit of the pre-holiday rally has spread worldwide. Japan's NIKKEI surged 823 points overnight, while Hong Kong's Hang Seng index rallied nearly four percent. The mood is more muted in Europe, with major indices all sporting gains of less than one percent. Stock futures, as expected, are galloping higher. Gold and silver were solid performers on Tuesday, but both appear about to give back some of their gains. Silver has shot up from near $22.00 on Friday to $23.50 Wednesday morning.
At the Close, Tuesday, November 14, 2023:
Tuesday, November 14, 2023, 9:18 am ET Breaking from recent traits, stocks did not mechanically rise on Monday. Dating back to July 3rd, the S&P 500 posted a positive number on 17 of the last 19 Mondays. Make that 17 of 20 mow, and declines on two of the last four, so consider the Monday motif officially busted. Incidentally, keeping abreast of various stock streaks is something undertaken by people who also like the WNBA. Things happen, but they're largely inconsequential in the larger scheme. Monday's trading was dulled on anticipation of October CPI, which was released this morning by the ever-diligent Bureau of Labor Statistics (BLS).
The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in October on a seasonally adjusted basis, after increasing 0.4 percent in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment. With the notification that CPI was unchanged month-over-month, stock futures exploded higher. Dow futures, which had been holding around +20, leapt to +338. NASDAQ futures jumped from +44 to +253, and S&P futures rocketed from +4.75 to +54.50 in the blink of an eye. No less than seven officials from the Federal Reserve will be making speeches Tuesday, either amplifying the suggestion that inflation is under control or hinting that the Fed "may" have to raise rates in coming months. While a December rate hike is pretty much off the boards now, anticipation grows over the timing of rate cuts. In-the-know analysts are calling for the first of a series of cuts in July, 2024 and more after that, giving the Fed ample space to deal with what's forecast to be a shallow recession in the first and second quarters, followed by a series of rate cuts to boost economic activity just in time to validate "Bidenomics" before the November elections. What a plan! While the Money Daily view of how events will unfold may be overly cynical, it still bears watching. It should be well-known by now that everything emanating from Washington, DC - fom unemployment figures to GDP to CPI and beyond - is entirely controlled from behind the scenes, reinforcing whatever narrative is suitable for the time. The United States hasn't had a legitimate government since November 2020, when more than just the presidential election was stolen from the people. Since then, everything that the Biden administration and congress has touched has been plotted, schemed, and delivered without so much as a whimper from the opposition Republican party, actually in cahoots with the Democrats. The looting, grifting, and corruption is entirely engrained into national politics, right down to covert and overt media control. Tuesday morning also brought out the first of three big third quarter earnings reports, from Home Depot (HD). Target (TGT) and Walmart (WMT) report before the opening bell Wednesday and Thursday, respectively, not that any of that matters. Home Depot said earnings for the three months ended in October were $3.81 per share, down 10.1% from the same period last year, but five cents ahead of the Street consensus forecast. Revenue fell 3% from last year to $37.71 billion, narrowly ahead of analysts' estimates of a $37.61 billion tally. Same-store sales were down 3.1% from last year, while US comparable sales were down 3.5%. Average tickets slipped 0.3% per trip to $89.36, while the number of individual transactions slowed by around 2.4%. With so much "good" news, the stock is ahead more than two percent in pre-market trading. Share prices have dipped recently, from a September high of 330 to Monday's close at 288. Home Depot offers a hefty annual dividend of $8.36, yielding just under three percent at present prices. Lots of things beyond stocks, including oil, gold, silver, the euro, yen, and pound, got an immediate boost from the CPI report. What went south were the dollar, bond yields, and the VIX, falling to a multi-month low of 13.90. The 10-year note shed 14 basis points, checking in at 14.49, the lowest yield since September 22nd. If the inflation bogeyman has indeed been slain, expectations for continued softening in interest rates could be realized short term. Everything economic or financial has to be viewed through a political lens for the next 12 months, as the 2024 elections loom large. It would be easy to just put a permanent green light on stocks here. It appears the US economy is running on all cylinders. Next up will be a stick-save by congress, averting a government shutdown this Friday with some acceptable continuing budget resolution, clearing the way for aid to both Israel and Ukraine, though the latter may be winding down to what will be broadcast as a "stalemate," giving the Us, UK, and EU a plausible exit strategy. Yes, it's hard to keep up with those who make history.
At the Close, Monday, November 13, 2023:
Sunday, November 12, 2023, 11:26 am ET There was nothing to base anything on this past week. Any strategy might have worked as well as none at all. Trading in stocks, bonds, oil, precious metals, wheat futures, or a three-legged cockroach race was based more on the urge to speculate and gamble than investing, a word which has lost almost any rational meaning. Wall Street truly has become nothing more than a grand casino. With the institution of Zero Days to Expiration (0DTE) Options, day-trading has become normalized, with nearly 50% of all options trading having less than five days to expiration. That's how days like Friday - an explosive upside move with no discernible catalyst - happen. Time horizons have been reduced from years to weeks to days to minutes. With sophisticated models, quants, and tools, big-money brokers and dealers have the ability to take both sides of multiple bets if they so please, throw risk out the window and collect the skim. Others play riskier games, going long or short individual stocks, ETFs, sectors or entire indices. It's a shame that race tracks generally operate while the stock market is open. Expert handicappers would welcome an influx of institutional money into the pari-mutual pools. It's basically the same game, except that most tracks run races about 25 to 30 minutes apart, giving some time to catch your breath. But, six furlongs can be run in just over a minute, a mile in about a minute-and-a-half, time frames that should be appealing to the traders at Goldman Sachs, Merrill Lynch, et. al. If your investment managers told you that they were putting your money on the three-year-old filly Ipswich in the third race at Churchill Downs, you'd likely be aghast, but that's almost what they're doing with client money every day, except on weekends (reserved for hookers, champagne, yacht cruises, and blow, mostly). Stocks Other than Thursday's Fed scare decline the NASDAQ and S&P were up every day of the week. The Dow took Wednesday off as well, but, thanks to Friday's rocket ship, it was all aboard for a trip to the moon. Conversely, and oddly enough, the NYSE Composite and Dow Transports were lower Monday though Thursday, only making gains on Friday. Those two ended with a loss for the week. The Transports have closed lower 11 of the last 14 weeks and this week executed a death cross, with the 50-day moving average crossing below the 200 DMA, the same thing that befell the Composite the last week of October. A chart of the Composite shows the event as seven of eight sessions to the downside followed by five straight session gains, four striaght lower, into Friday. That's just plain freaky-streaky. Point of fact is that if not for Friday's one-day-wonder rally, all the indices would have had a down week, except for a 45-point gain on the NASDAQ (big whoop!). Not to worry, though, stocks have finished on the upside 16 of the last 17 Monday's so it's all systems go to start next week. Do the downside moves on the NYSE and Dow Transports relate in any way to the other majors? Probably not, since they're likely not as readily subjected to the domineering barrage of 0DTEs in the Dow, NAZ, and S&P. With that in mind, it's a safe bet that breadth continues to be an issue, the NASDAQ's magnificent seven making the bulk of the gains this year, this month, last week. Earnings continue to roll out, though the flow has begun to trickle. Retail will be in focus this week, which is important due to the proximity of the holiday shopping season, which, by retailer's measures, has already begun, as Black Friday deals have been extended as far back as Halloween. The ones to watch are Home Depot (HD) prior to the opening bell Tuesday; Target (TGT), TJX (TJX), and Advance Auto Parts (AAP) before the bell Wednesday; and Thursday, prior to the open, AliBaba (BABA), Walmart (WMT), and Macy's (M), with Ross Stores (ROST) and Gap (GPS) after the close. Friday before the open, one to watch is BJ's Wholesale (BJ).
Full Spectrum (30-days - 30-years) Short-term bills, one through six-months, continued in a state of suspended animation, levitating right around 5.50%, the peak of the federal funds target rate. They have been gradually easing, but the process is a tedious one. For instance, the four-month bill, a primary vehicle for government funding, peaked at 5.64% on October 6 and again on October 17, and closed out this week at 5.47%, hardly recipe for easing financial conditions. It was the "belly" of the curve, 1-year though 7 year notes, that saw the most activity, all yields rising by at least 13 basis points. Spreads worsened (deeper inversion) over the course of the week, especially the 2s-10s. While the two-year note ramped 21 bsis points higher through the week, the 10-year yield rose but four, while the 30-year bond yield fell by the same amount, to 4.73%, the lowest level since October 11, one month ago. The Federal Reserve has complete control over treasury rates. You want to see a year-end rally in stocks? Watch what the Fed does on December 12-13, the final FOMC meeting of the year. They can keep the federal funds target rate right where it is, or notch it up another 0.25%, to 5.50-5.25%, which is kind of the message Fed Chair Powell was sending on Thursday. Lower rates are not part of the present equation. That is being held in reserve as the 2024 elections near. The Fed may actually wait until they're past (no, the Fed is apolitical, right?), staving off a recession in favor of incumbents. It all depends on what the money masters behind the scenes wish, though a continuance of the deep state status quo seems the likely path forward. This isn't rocket science, nor magical thinking. As long as the treasury yield curve remains inverted and the 10-year is offering the lowest (or close to it) possible rate, everything is just fine for stocks. The minute the spreads begin getting close to normalizing (dis-inverting), it's a monkey wrench thrown into the Wall Street gear box. Just follow the spreads tables above. In September and October spreads were compressing back towards normalization. Stocks got hammered. The past four weeks saw that trend reverse and stocks got hot again. The Fed has complete control over the entire rate curve, primarily focused on the 10-year rate, aka, the benchmark, through primary dealers, who buy when they're told to buy and sell when they're told to sell. Sure enough, Goldman Sachs, Morgan Stanley, Bank of America, Wells Fargo, et. al. aren't losing money on fixed income treasuries. They make the market. They ARE the market. One can compare the list of the NY Fed's primary dealers with the bullion banks at the LBMA who suppress gold and silver and whatever else they prefer. Big surprise. Same bunch. Big club. You're not in it. There are still plenty of reasons for buying bonds, notes, bills. The majority of world trade is conducted using US greenbacks, primarily in the form of treasuries, which are considered a risk-less asset. This is despite the efforts of the BRICS, which sees US dollar hegemony as an affront peace and prosperity. Six countries will join the original five BRICS (Brazil, Russia, India, China, South Africa) nations on January 1, 2024. They are Argentina, Egypt, Iran, Ethiopia, Saudi Arabia and the United Arab Emirates. Their influence is growing, their trading bloc enlarging, but it will take years and years to dethrone the mighty dollar from its position as world reserve currency. Nobody likes shocks to the system, and that includes the BRICS.
Oil's decline coincides with contained military action in Ukraine and Gaza. WTI crude closed out Friday at $77.35, down over three dollars from last week ($80.89), and even more from two weeks ago ($85.16), three weeks ($88.30), and $90.77, four weeks ago. From last week's WRAP:
"Unless and until there's a major escalation or expansion in either of the ongoing conflicts, expect people to continue dying for no good reason and the price of oil to remain stable or decline even more, the proximate causes being slack demand and the folly of US sanctions." In concert with the price of crude oil, the US national average for a gallon of unleaded regular gasoline dropped again over the course of the week, to $3.34, down from $3.51 three weeks ago, $3.46 two weeks, and $3.40 last week, now at the lowest price since February. Prices took their somewhat normal turn this year, rising in late Spring and into Summer, falling through the Fall, heading into Winter, a positive development for businesses and consumers, a sore in the side for Big Oil. According to gasbuddy.com, outside of Florida ($3.17), the entire Southeast is now well under $3.00 a gallon, led by Texas ($2.77) and Mississippi ($2.80). Georgia ($2.83) and Oklahoma ($2.85). Alabama, Louisiana, Tennessee, South Carolina, and Arkansas all range between $2.88 and $2.93. Kentucky hit $2.98 and Missouri checks in at an even $3.00. California, dropped another dime, to $5.05. The Golden State remains the only mainland state over $5.00. Prices eased elsewhere in the West, with Washington ($4.47) down another 11 cents. Nevada fell to $4.39, also down a dime. Oregon ($4.16) eased 12 cents, along with Arizona ($3.73). The $4.00+ club, now consists of just four states. In the Northeast, New York ($3.62) leads Pennsylvania ($3.60) by two cents. The lowest prices in the region can be found in swing states, North Carolina ($3.02) and Kentucky ($2.98). Illinois ($3.48) kept in the top spot in the Midwest, followed by Indiana ($3.38) and Michigan ($3.36). The upper Midwest ranges from $3.21 (Minnesota) to $3.33 (Wyoming). Iowa ($3.06) and and Wisconsin ($3.09) appear headed below $3.00 in short order.
This week: $37,153.50 Bitcoin, now having doubled over the past year, had another outstanding week, rising by over $2,000 Sunday to Sunday. Crypto believers are all a-twitter over the prospects of a bitcoin spot ETF, yet another derivative to drive the price of an underlying asset, like gold, silver, oil, stocks, you name it. This is all that the hawkers and snake oil salesmen of lower Manhattan need to induce client money into the crypto-verse. It is their ultimate wish to have everybody entranced and invested in phantom money, pushing the price into the stratosphere, enriching themselves on gains, fees, commissions, fleecing the muppets, gnomes, hobbits, peons or whatever other disrespectful monikers by which they identify the general public. Then comes the rug-pull, courtesy of some SEC regulation or just plain old pump-and-dumping. Wow. This bubble isn't even close to popping. Interestingly, the price of silver denominated in bitcoin, according to Money Daily's proprietary SOSMBP has not been this cheap since April of 2022, so, if you deal in this stuff, convert some to silver. Most online dealers offer a 3-5% discount on purchases made with bitcoin. Apparently, they like the stuff. Less than one one-thousandth of a bitcoin gets you an ounce of silver. Can't beat that.
Gold:Silver Ratio: 87.08; last week: 85.72 Per COMEX continuous contracts:
Gold price 10/13: $1,945.90
Silver price 10/13: $22.90 As expected, precious metals took a beating this week. Gold was off by $57.20; silver dropped $1.02. You can't blame anybody who's scooping up as much silver as possible right now. The gold:silver ratio is approaching extreme, ridiculous levels again. Any time that ratio is above 85 is a signal to buy silver in quantity. It's heading back to $90 and higher, presupposing the deep state market riggers can keep military actions bottled up in Ukraine and Gaza. Should hostilities spread beyond those closely-watched enclaves of human suffering, then all bets are off the table for precious metals. Speaking on silver, it's entirely possible that sub-$21 levels could appear. It wasn't so long ago (late summer, early fall, 2022) that spot silver was trending around $17-19. In buy low, sell high parlance, victory favors the swift and the brave. But, since nothing is written in stone, $22 and change looks like a good entry point. According to most experts in the field, silver mining is in deficit. Being an industrial, commercial, and investment metal, an economic downturn could send prices reeling. Oddly enough, the devastation of war, while advancing risk preferences, might have a knock-on effect for silver to tank. Military outbreaks have a debilitating effect on economies. Mining activity might slide, but so too the inclination to buy and save. Stressed institutions and individuals might even become outright sellers. Warren Buffett's "blood in the streets" time to buy could not be any more apropos. Nothing beats hard assets that you hold personally. In case you've already got a nice stash of PMs, other hard assets to hoard include vehicles, tools, dry foodstuffs, water, fuel. Don't forget art and collectibles. They may not be in large demand in times of stress, though recent prices at auction beg otherwise. Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping included):
The Single Ounce Silver Market Price Benchmark (SOSMPB) fell back to $34.30, a loss of 59 cents, from the November 5 price of $34.89 per troy ounce.
Crime is flourishing in white collar America. Politicians bicker over budgets but have no qualms about collecting their grifted loot. Seriously, what is the Transportation Secretary, Pete Buttabitch, doing in Ukraine other than picking up a few suitcases full of cash for himself and his Democrat masters? That money flow continues, but getting more for the lost cause that is the distinctly non-democracy of the former Russian enclave known as Ukraine is proving a bit troublesome. The Senate rejected the House offering of a $14 billion stand-alone handout to Israel. Apparently, it wasn't enough for grotesque thieves like Patty Murray of Washington and her Democrat colleagues. Don't leave the Republicans blameless. They're in on the grift, belt high. Wall street kept their animal spirits alive with a me-first rally on Friday that lifted the Dow, NASDAQ, and S&P to positive weekly closes. The looting of the treasury continues apace. Wall Street's greed cannot be underestimated. Are you not entertained?
At the Close, Friday, November 10, 2023:
For the Week:
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