Money Daily Financial Money News Week of November 7 - 13, 2021 Stocks Bonds Commodities Gold Silver Oil Bitcoin

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EUREKA! Gold, Silver Outperform Equities; Diversification Across Asset Classes for Smart People

Friday, November 12, 2021, 9:15 am ET

Thursday, while the bond markets were closed for Veteran's Day (thumbs up to all who served), equities were being unloaded on the Dow, led by Disney (DIS: 162.11, -12.34 (-7.07%)), which lost nearly $40 billion in market cap in one day (for reference, that would be like disappearing eBay... which may not be such a bad idea), something else was happening on the COMEX, as gold and silver both caught bids, extending recent gains to have gold at a five-month high and silver at its best level since early August.

When it comes to diversification, most people think that holding stocks in different sectors qualifies them as smart and prudent, though the reality of the third decade of the 21st century may prove to be a bit more challenging when it comes to protecting investments and getting the most out of them.

Stocks have been nothing short of awesome since the last crash in 2008-09, but there's always the possibility of another wipeout event like the dotcom bust of 2000, or the subprime-fueled meltdown in 2008-09. In an equity market that's built its gains on cheap, constantly-depreciating currency (US$) and corporate buybacks, the underlying assets may not, in the long run, be worth what myopic investors are willing to pay for them. P/E ratios are at record levels, and, while they can go higher still, every move up in stocks is beginning to look like too much of a good thing.

In such an environment, the gains from equities might well be employed to fund asset purchases in entirely different classes, from which there are quite a few to choose.

There are fixed-income (bonds, notes), real estate, currencies, precious metals, commodities, art, collectibles, and cryptocurrencies (Bitcoin, many others) to name the majors, though there are structured investments, hedge funds, and other types of funds which may combine different classes or expand into a single asset space.

For the most part, many people are still in the 70-30 stocks to bonds portfolio via their retirement accounts, though even the staid and stodgy brokerages are now expanding into gold, silver, and cryptos. Beyond simply expanding out to other classes, currency speculation offers an even broader perspective. Holdings in different currencies (euros, yen, rubles, etc., in addition to gold, silver, and cryptos) expands the universe of diversification to another level altogether. Pricing your baseball card collection in rupees or holding a mortgage in bitcoin may not seem practicable or even practical, but there are burgeoning markets for all manner of assets, classes, and types of investments emerging throughout the global financial landscape.

One need not go to extremes, but at least moving away from a portfolio which depends entirely on the whims of the Federal Reserve or other central bank might not be such a bad idea considering how fractured and dynamic markets have become.

Here's how gold and silver ended on Thursday:

Gold: 1,864.20, +15.90 (+0.86%)
Silver: 25.30, +0.53 (+2.13%)

Of course, you could price them in yen, as Dennis Gartman became famous for, and eek out a little more value, but, for the most part, holding some of each in a secure vault either in your home or via a third party offers upside value and downside protection from stocks.

The choices are there for everybody.

Not to be overlooked, bitcoin rallied to a new all-time high on Wednesday ($69,000), but has since dropped off by around 10%.

It's been a rocky week for stocks, with the Dow down 406 points (1.12%) through Thursday. The NASDAQ had small gains Monday and Thursday, but Tuesday and Wednesday proved destructive. It closed Thursday down 267 points (1.67%), while the S&P proved the most stable, losing only 48 points (1.03%), along with the broader NYSE Composite, which is down a mere 22 points into Friday (-0.13%).

At the Close, Thursday, November 11, 2021:
Dow: 35,921.23, -158.71 (-0.44%)
NASDAQ: 15,704.28, +81.58 (+0.52%)
S&P 500: 4,649.27, +2.56 (+0.06%)
NYSE: 17,220.41, +28.38 (+0.17%)

Don't Buy the Disney Dip Because It's Only Going to Get Worse

Thursday, November 11, 2021, 8:58 am ET

Mickey Mouse, a name associated with one of the world's biggest media and entertainment conglomerates, Disney, and, at the same time, weaselly underperformance.

When a person says something is "Mickey Mouse," they're expressing dissatisfaction with performance or product. To say, "this Happy Meal is really Mickey Mouse," would suggest soggy fries and a tasteless hamburger (the usual McDonald's fare, anyhow) and general unpleasantness.

Disney reported fiscal fourth quarter results overnight and they were decidedly not magnificent nor magical, but decidedly on the Mickey Mouse side of things.

Disney's earnings came in at 9 cents per share, or $160 million. That compares with a loss of 39 cents per share, or $710 million, in the year-ago quarter. Adjusted for one-time costs and benefits, adjusted earnings per share were 37 cents in the quarter, compared with a 20-cent loss a year ago and Wall Street analysts' average estimate of 53 cents per share.

Profits from all business segments were down, including theme parks and online services.

Commenting on the disappointing quarter, CEO Bob Chapek noted that approval of Covid-19 vaccines for 5 to 11-year-olds in the US should help boost park attendance in the future.

What kind of sick, twisted, detached lunatic would equate sticking kids with experimental drugs to improved profitability? CEO Chapek, a 26-year company veteran, oversaw slumping sales of the streaming service, Disney+, adding just 2.1 million subscribers during the fiscal fourth quarter, reaching 118.1 million.

The company is a dinosaur, with inept leadership and slowing, overpriced business models which need vast overhauls. Their flagship streaming service, Disney+ is struggling in a highly competitive market.

Selling in a range around $175/share, the company does not distribute a dividend, stumbled badly through the virus crisis and continues to hype re-opening plans and expansion, when the reality is a stock that is grossly overvalued with a P/E ratio in the stratosphere because of 2020 losses and another quarter down the drain in its fiscal third quarter with a 0.32 per share loss. The latest quarter was positive, but barely so, with plenmty of pitfalls outlined in the conference call.

Following the earnings release overnight, the stock is poised to open down $10 or about six percent, at around $164 a share. Looking out six months to a year on the company's prospects, fair value might present itself at somewhere under $100 per share. This company is ripe for shorting, but Money Daily doesn't offer specific investment advice, so don't take that statement as anything other than water cooler talk. Please use your own judgement.

And don't be Mickey Mouse about it.

At the Close, Wednesday, November 10, 2021:
Dow: 36,079.94, -240.04 (-0.66%)
NASDAQ: 15,622.71, -263.84 (-1.66%)
S&P 500: 4,646.71, -38.54 (-0.82%)
NYSE: 17,192.04, -94.88 (-0.55%)

Is Something Broken? Stocks Slide; Bitcoin Hits $69,000

Wednesday, November 10, 2021, 9:38 am ET

Editor's Note: Internet service went out on Monday (fiber was actually cut), was repaired late Tuesday. Sorry for any disruption in your financial lives.

Mysteriously, stocks closed in the red across the board on Tuesday.

Bitcoin, Ether, Gold, Silver appeared to be breaking out, but not quite yet.

Someday, that's what will happen. When it does, and equity investors flee to the US Treasury market. With the federal funds rate stuck at ZERO, bonds will fall to unprecedented levels, into negative territory.

As is already known, central banks within the EU have been issuing bonds with negative interest rates for as many as seven years, followed by Japan and Switzerland. The central bank of Denmark issued the first negative interest rate bond in 2012. This development was closely watched. Since Denmark's economy did not spiral into deflation, other central bankers thought it would be a good idea to give it a try.

In this rather sophomoric posting by the World Economic Forum (WEF) - yes, those big brainy people who think depopulation will be a popular endeavor - negative interest rates are not seen as a big problem.

How much more wrong can they be? In the post, they conjure up four scenarios, the last of which is:

4) Demand for the currency could fall. This might lead to a depreciation of the currency, an increase in the price of imported goods and growing demand for the country's now cheaper exports.

That is exactly where the entire developed world is headed, because all fiat currencies in use today are debt-based. Negative interest destroys debt. Without debt, the fiat currencies are eventually themselves eviscerated.

In simpler terms, negative interest rates destroy fiat currencies. The lower the rate, and the shorter the term, the faster the currency is destroyed. The opposite side of that is price inflation for goods and services. The currency loses value, prices rise until people abandon the currency altogether. It's happened in Weimar Germany, Hungary, and, most recently, in Zimbabwe, which is currenty looking into making Bitcoin legal tender, following the lead of El Salvador.

That's where the global economy is already headed. Yen, francs, euros, and dollars will be exchanged for silver, gold, bitcoin, and other tradable assets. It is a mathematical certainty that the global population cannot adequately service odious debt levels as exist today. Add in depopulation, and the fiat currency systems face implosion at an even earlier date.

Have fun trading stocks for now, but remember that everything is transitory and the planet is well on its way to transitioning to an alternative financial system which will likely be led by bitcoin, which, moments ago, hit $69,000, an all-time high.

At the Close, Tuesday, November 9, 2021:
Dow: 36,319.98, -112.24 (-0.31%)
NASDAQ: 15,886.54, -95.81 (-0.60%)
S&P 500: 4,685.25, -16.45 (-0.35%)
NYSE: 17,286.91, -23.59 (-0.14%)

WEEKEND WRAP: Everything Continued to Ramp Higher After Fed Decided To Keep Buying

Sunday, November 7, 2021, 10:02 am ET

Wednesday's FOMC meeting and Friday's huge uptick in non-farm payrolls (+531,000) highlighted a furious week in financial markets. US stocks not only continued their recent rally, but actually accelerated through the week. The NASDAQ and S&P 500 were up every day of the week. The Dow Industrials were up four days with only Thursday's 33-point drop marring the otherwise upbeat scorecard.

All of the major indices recorded fresh all-time highs on Friday, with the Dow, NAZ, and S&P posting new all-time highs multiple times during the week. Since mid-October, stocks have been rolling higher with regularity. Barely a day went by without positive closes. The Dow, once it regained momentum above its 50-day moving average, finished in the black on 13 of 17 sessions. Not to be outdone, the NASDAQ closed on a positive not 16 out of the last 18 sessions and currently is on an incredible 10-session winning streak. The S&P 500 also gained on 16 of the last 18 trading sessions, currently boasting a seven-day winning streak.

Over the past 3+ weeks, the S&P is up 8.5%, the NASDAQ higher by 12.6%. Those are incredible, almost unprecedented gains, which investors welcome with open arms, bubble economics or not. The current Shiller PE Ratio (CAPE) closed the week at an even 40.00, a level higher than at any time ther than the 1999 NASDAQ dotcom bubble. Stocks are so completely overvalued, it's difficult to find any security worth buying, though the market did, continues to do so, and will likely go even higher from here.

All of the warnings of imminent crashes have been swept aside by global, coordinated central bank policies of QE at zero percent interest. While the Fed's FOMC policy is thought to be trimming asset purchases, they may not be doing so, calling for downside limits to buys of treasuries and mortgage-backed securities. In their statement Wednesday, they used the following language:

Beginning later this month, the Committee will increase its holdings of Treasury securities by at least $70 billion per month and of agency mortgage?backed securities by at least $35 billion per month. Beginning in December, the Committee will increase its holdings of Treasury securities by at least $60 billion per month and of agency mortgage-backed securities by at least $30 billion per month.

The Fed is continuing to increase its holdings. They are not slowing down by any reasonable measure. They are buying everything and have complete control of all financial markets, stocks, bonds, commodities, and are affecting the prices of everything from food to buildings to baseball cards and comic books.

Treasury yields indicated that long-maturities were being bought hand-over-fist. Anything two years or beyond were hot items. Yield on the 10-year note fell 10 basis points, from 1.55% to 1.45%. The 30-yield fell six basis points, from 1.93% to 1.87%. Most of the active buying was in fives and sevens, with the 5-year note yield losing 14 basis points, from 1.18% to 1.04%. The 7-year also fell 14 basis points, from 1.44% to 1.30%.

Crude oil fell under pressure, falling from last Friday's price of $83.57 per barrel to this Friday's price of $81.27. On Thursday, the price fell below $80 for the first time in over a month, closing the NYMEX NY session at $78.81. The decline had little effect on gas prices at the pump, the US national average holding steady, but higher, at $3.42. A year ago, a gallon of unleaded regular was $2.11.

Cryptos had a very steady week, with Bitcoin gaining less than one percent, currently holding in a fairly tight range around $62,000. Ethereum was making the most noise, marking a new all-time high at $4,671.00. Bitcoin seems ready to strike higher, following Ether's lead.

The week was so good, even precious metals were higher.

Gold price 10/29: $1,784.30
Gold price 11/05: $1,818.00

Silver price 10/29: $23.89
Silver price 11/05: $24.15

Here are the latest prices for common one ounce gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):

Item: Low / High / Average / Median
1 oz silver coin: 34.50 / 46.25 / 37.79 / 36.75
1 oz silver bar: 29.50 / 48.00 / 38.04 / 37.40
1 oz gold coin: 1,900.00 / 1,982.50 / 1,952.59 / 1,953.40
1 oz gold bar: 1,896.40 / 1,924.62 / 1,910.94 / 1,914.02

The Single Ounce Silver Market Price Benchmark (SOSMPB) took a hit, pricing at $37.50, a loss of $1.16 from last week's price of $38.66.

Everything in financial markets are pointing higher, a condition which would apply in a highly-inflationary environment.

Enjoy, and spend fast.

At the Close, Friday, November 5, 2021:
Dow: 36,327.95, +203.72 (+0.56%)
NASDAQ: 15,971.59, +31.28 (+0.20%)
S&P 500: 4,697.53, +17.47 (+0.37%)
NYSE: 17,242.36, +73.49 (+0.43%)

For the Week:
Dow: +508.39 (+1.42%)
NASDAQ: +473.20 (+3.05%)
S&P 500: +92.15 (+2.00%)
NYSE: +225.15 (1.33%)

Disclaimer: Information disseminated on this site should not be construed as investment advice. Downtown Magazine Inc., Money Daily and it's owners, affiliates and/or employees are not investment advisors and do not offer specific investment advice. All investments have risk. You should consult a professional investment advisor or stock broker or use your individual judgement when making investment decisions. By viewing this site, you hold harmless Downtown Magazine Inc., Money Daily, its owners, affiliates and employees against any and all liability. 2021, Downtown Magazine Inc., all rights reserved.


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