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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, January 7, 2022, 9:30 am ET
The consensus number for the December Non-Farm Payroll report, issued at 8:30 am ET was 440,000. Goldman Sachs upped their estimate Thursday to from 450k to 500k, which turned out to be way off the mark.
Upon the release of the report, which came in well below expectations, at 199,000, stock futures for US markets didn't quite collapse, but they did steadily lose ground as Friday's cash market open approached. As of 8:45 am ET, Dow futures were off 35 points. NASDAQ futures were lower by 31 points, with the tech-laden index staring at its eighth loss in the last nine sessions should the futures indication hold. All things considered, the NASDAQ down about five percent since December 28 is not quite a positive indicator.
By 9:00 am ET, futures had seen enough and took the path of least resistance lower. Dow futures were off by 70; NASDAQ, down 110, and S&P futures lower by 14.50.
Oddly enough, even with the poor jobs creation over the past two months (November was revised up by 39,000, from +210,000 to +249,000), the unemployment rate fell to 3.9% down 0.3% from the prior month. This is a startling figure, and probably skewed so much as to be completely wrong in real world terms, as anything under four percent used to be regarded as full employment since there were always people coming and going, retiring, moving, changing jobs and companies.
The way the BLS handles these estimates (and that's all they really are, wild-eyed guesses) is to just remove from the labor equation anybody who stops looking for work after a period of time (like 26 weeks), so that the unemployment figures are always quite a bit rosier than reality as people who can't find a job and are heading to - or already on - skid row are just not counted. Roughly speaking, America loses about a million to 1.5 million people a year this way. They become the kid in the basement, the homeless, the destitute and maybe part of another poorly-estimated statistic.
Yields on treasuries continue to rise as investors are shaken by recent and continued inflation and fear of more.
At year's end, 2021:
As of Thursday:
Notice a trend? All yields have ballooned, just four trading days into the new year, led by the 7-year, with a jump of 22 basis points, so close to the 10-year to be on a path to inversion. Presently, all one receives for an additional three years of lending to the government is a measly 0.08%. That's not going to pay the rent, besides the current yields well below the inflation rate, officially at 6.8% as of the most recent (December) CPI.
This is beginning to look like a real horror show. Bonds lose money; outside of a few big names, stocks lose money. Even the highly-preferred individual stocks on the Dow which offer dividends, are yielding only two to four percent for the most part. The good news is those yields will soon be higher. The bad news is the share prices will be lower.
There's a real disaster in the making as the Fed continues on its tightening path and the real economy begins to look more and more like a slow motion train wreck. Housing is already showing signs of slowing, and, with mortgage interest rates on the rise, home prices are about to come off their high perches. Rents, however, will remain higher than normal. There's just too much in the way of carrying charges - upkeep, mortgage interest, taxes - for landlords to lower rents any time soon.
The current combination of market forces is going to put a real squeeze on the economy unless wages start keeping pace with inflation or the inflation monster calms down. There's a point at which price inflation cannot be tolerated by the consuming public. With the recent food price spiral, that point may be close at hand. If people can't afford food, well, not's not go there...
All the while in this first week of the new year, prices for actual money assets - Gold, Silver, and Bitcoin - have cratered. On Thursday, gold was slammed below $1800, currently nesting around $1785, silver was smashed down near the bottom of the $22 range, and Bitcoin was clubbed down near $42,000, and just now, even lower, to $41,548. Strange how ever since the regulators allowed Bitcoin ETFs on US markets, cryptocurrencies now follow stock prices.
It's highly unusual and probably criminal, with the usual suspects playing their criminal games. Suppression of the value of competitors to fiat currency is the central bank's first and last priority. Their failure approaches with increasing ferocity.
Hope for the best. Prepare for the worst, because the worst is probably what is coming.
At the Close, Thursday, January 6, 2022:
Thursday, January 6, 2022, 8:27 am ET
For those of a cynical nature, Wednesday's trading on US markets was stale manna from heaven, a breath of freshly soiled air, a change of pace interrupted by a trip and fall.
Precisely at 2:00 pm ET, upon the release of the Fed's FOMC minutes from last month (December, 2021), stocks began a precipitous descent that wiped out most of the gains on the S&P made in the final week of 2021 and accelerated the selling already well underway on the NASDAQ, which has now traded lower six of the last seven sessions. The NAZ is already down more than three percent on the new year and shows no signs of recovering soon.
What made trading stocks on Wednesday such a remarkable exercise in buffoonery is the notion that ordinary observers are supposed to suspend logic and believe that prior to the last two hours of the session, nobody had considered what the Fed exposed in their minutes to be possible: that interest rate hikes were on the table and that most members of the voting committee were arguing for them sooner rather than later.
Most of what was in the minutes was already widely known or suspected in and around the world's trading hubs, from Wall Street to Tokyo to London. Like just about everything else these days, Wall Street staged and executed a massive con job. It wasn't the first, nor will it be the last. Retail investors - aka, muppets - were, as usual, left hanging out to dry.
As the world turns Wednesday into Thursday, international markets have furthered the selloff, with Japan's NIKKEI leading the way, losing 844.29 points on the day, or -2.88%. Other than the Hang Seng, other important exchanges are all lower. India's SENSEX lost 621.31 points (-1.03%), while Europe's DAX, CAC-30, and Euronext 100 are all lower by one to one-and-a-half percent.
Thursday looks to be setting up a continuation, though it would not be a surprise if excited dip-buying took place later in the US session. Friday offers the final non-farm payroll report of 2021, for December, which is expected to show a gain of 400,000 jobs.
How that even matters at all, when the unemployment rate is approaching full employment at four percent levels is a question only the algos will be able to figure.
The betting is that Wednesday's undertow will be reversed by the weekend. The fleecing of American investors continues apace.
At the Close, Wednesday, Janaury 5, 2022:
Wednesday, January 5, 2022, 8:34 am ET
The average American probably has meaningful contact with some level of government - federal, state, local - for maybe 30 minutes a day. That's a guess, but it's probably closer to the truth than most elected representatives and mindless bureaucratic gnomes wish to believe.
Kids, they have it different. They're subject to mass indoctrination on a daily basis at government-supported schools. It's a bad idea. Government should not be operating schools. Schools should be private. Kids are being brainwashed with stupidity on a daily basis. Take your kids out of public schools. Homeschool if possible.
For the rest of us, having somehow escaped from the 12-to-16-year public prison system called "education," life in the outside world is not dominated by the government. Sure, we travel on roads built with public funds, but they've long-ago been paid for with our tax dollars. Those who work for private firms have little contact with government in the normal workday. There may be a report to file, or some inspector may show up to try to tell us how to do our jobs, but they've become more of an annoyance and a deterrent to productivity and prosperity than they were designed to be.
People who work from home have even less association with government. It's there in the background somewhere, but, most of the time, it's hardly noticeable and easily ignored. It shows up when we pay bills, as taxes, but, overall, the bureaucrats in Washington DC, the state capitol, or the local courthouse aren't actually affecting the lives of most people in any meaningful way, other than to try to impose restrictions on people or regulate their lives in some damaging manner.
Governments have outgrown their usefulness. They are a drag on society, a waste of resources, and generally, just a plain old drag. In advanced societies, governments perform almost no useful functions. As has been made evidently clear by the events of the past two years, the main functions of government seem to be that of keeping people in a state of abject terror, fear, and under their control. The lemmings who follow their laws, regulations, restrictions, and mandates are the ones who swallowed the indoctrination pills daily during their school years without asking any questions. They blindly accepted the authority of the government without question, when all manner of authority should not only be questioned, but dissected, and eventually disregarded and discarded.
Lemmings don't question. They follow.
For the rest of us, there are choices. Nowhere in any constitution or law does it say, "you must follow and adhere to all rules of government." You have choice. If the government says you must register your gun, you can choose not to. If the government says you must be vaccinated, you can choose otherwise. If the government says you must wear green pants and party hats on Tuesdays, you really don't have to do that.
There's a limit to how far government can push people, and how much abuse people will accept. We have reached that limit. Modern governments, from the feds on down to your local councils, are, far and away, more trouble than they're worth. People pay ridiculously high taxes for the services they provide. Most of these taxes go to pay salaries of people who work for governments. The antiquated notion that government employees work for "the people" has long ago been discarded. Now, we the people work for them. We toil to support the $200,000 school superintendent, the $60,000 a year teachers who are the dregs of society, with no other useful purpose other than that of glorified babysitters and tone-deaf youth indoctrinators. We pay for the mindless trolls who shuffle papers, assist the higher-ups, and contribute to making the lives of the people more miserable than they need to be.
There are far too many people working for government, collecting benefits from government, and contributing to the furtherance of government. Making matters even worse, the various governments can't even pay their bills without going into hock to unscrupulous bankers and financiers. The federal government is carrying nearly $30 trillion of debt. And they're not paying it back. They're just paying interest on it, barely, and they always need to borrow more. If anything speaks of the uselessness of government, it is the $30 trillion elepahant in the room.
And when somebody from government comes calling and telling you that YOU owe that debt, they're lying. The American people no more owe any of the federal government's debt than the moon is made of Swiss cheese. The government racked up that debt. Let them pay for it. A good start would be to send 60-80% of government workers packing, and give the rest of them twenty percent salary haircuts, at all levels, not just federal. Local and state governments are just as guilty of extravagance and overspending as their cohorts at the top rung, the federal level. Besides, most of them are corrupt, bought and sold by special interests.
Americans, Canadiens, the people of France, Germany, Japan, China and elsewhere need to stop feeding the beast, because the beast that government has become is threatening the lives of everybody. Governments have been allowed to expand to monstrous levels. They must be put back in their place, down down the funding hole. Taxes need slashing. Regulations need repealing. They must acquiesce to the desires of the people: to be taxed fairly, to be left alone, to be subject to just laws, not arbitrary ones.
It's time for people to take back their sovereignty. It's time to downsize government, though, looking around at the hordes of sheep-like people demanding more vaccines, more tests, more help, and more tyranny, it may already be too late.
At the Close, Tuesday, January 4, 2022:
Tuesday, January 4, 2022, 9:05 am ET
If the gains made by stocks in 2021 didn't impress you, what's ahead for 2022 promises to be even more outrageously satisfying for buyers, pickers, speculators and even passive investors.
The entire planet is caught up in what appears to be a 1929-style mass delusion that stocks can only go higher and if you're not invested now, you're going to miss out on what figure to be the greatest gains of all time.
On the first trading day of the new year, the Dow Jones Industrial Average and S&P 500 closed at record prices, with the NASDAQ and NYSE Composite not far from all-time highs.
And that was just the warm-up act.
With the Federal Reserve supplying more than enough grease to their owners and participants, stocks are going to ramp higher until something breaks the trend, or the spell under which all financial managers are exposed. Trading as if nothing can ever go wrong, risk has been shown the door and kicked down the stairwell to the curb and into the street, run over by a passing limousine. JP Morgan CEO, Jamie Dimon, was probably riding inside and acknowledged only a minor bump in his otherwise smooth travel.
While stocks are running like bulls at Pamplona, the bond market is signaling something that may be even more remarkable than loose share prices. As players dove into equities, the bond market was being foreclosed upon, with rates skyrocketing after a comparatively tame end of 2022. Panic selling in the treasury complex raised rates at the middle to long end of the curve by dramatic one-day amounts.
The 10-year note and 30-year bond yields rose in tandem, 11 basis points, to 1.63% and 2.01%, respectively, as inflation expectations continue to spook the fixed income segment. 5-year and 7-year yields spiked by a similar amount, 11 basis points, to 1.37% and 1.55%. For perspective, consider that those same notes were yielding 0.36% and 0.64% a year ago. These are the highest yields on these notes since February, 2020, just prior to the financial flagellation that sent markets into a dizzying decline and subsequent recovery.
So, what does this all mean? According to anyone involved in dynamic market trading of lower Manhattan or Northern New Jersey, it means the economy is back on track. Business for the big stocks is rock-solid and there's nowhere to go but up. The perspective of a midwestern middle school teacher or southern rancher may be a bit different as the media blares on about colds, flu, viruses, and various other fear-laced narratives.
Bearing in mind that the Fed has thus far only issued promises to taper their asset-buying spree, the rest of this week and month may be a blasting off point for even more outrageous gains in the stock market. While there's apparently loads of money available to invest or gamble, a close eye should be aimed at the yield on the 10-year note. In March of 2021, the yield hit a high of 1.74% twice, on the 19th and 31st. Nobody seemed to mind much, as most stocks continued to trade in normal patterns. The NASDAQ sold off between those dates, but soon recovered.
With the 10-year yield going from 1.52% to 1.63% over the new year's weekend, equity investors appeared completely unfazed. That confidence is likely to remain unbroken until fixed equity pricing collapses and the 10-year rockets beyond 2.25% on its way to god knows where.
Until then, raise the sails. Full speed ahead.
At the Close, Monday, January 3, 2022:
Sunday, January 2, 2022, 10:06 am ET
Stocks ended 2021 with another positive weekly return, except for the NASDAQ, which closed out the year with losses both on the final trading day and final week, Friday's dull performance dragging the index into the red over the five day stretch.
Not withstanding, equities were the place to be for the year, as the main indices posted above-average gains to the delight of passive investors everywhere.
There was barely a budge in the treasury complex, the majority opinion over the thinly-traded week to leave rates intact from pre-Christmas levels. The 30-year note yielded 1.90%, lower by a single basis point from the prior week, while the yield on the 10-year note rose two basis points to 1.52%, matching the December 8 yield and the highest since 11/29. One-year notes had the greatest move, yielding 0.39%, a gain of eight basis points from the pre-Christmas level of 0.31%.
The spread on 2s-10s was 79 basis points, a steepening of the curve from the belly to the longer-dated maturities.
Oil had a solid week, gaining from $73.79 for a barrel of WTI crude to as high as $77.00 before slipping back to close out the year at $75.21. Gas at the pump remained relatively calm according to gasbuddy.com, as the national average held steady at $3.265, down 11.7 cents from a month ago, but higher by just more than a dollar from a year ago.
Ample supply, the close out of the holiday season, and the effect of the MORONIC virus variant should have a dampening effect on oil and gas prices. A relatively mild start to winter in most of the US, especially in the South and Southeastern states, should also contribute to keeping a lid on price in the near term. Joe Biden's prediction of a "dark winter" thus far has not materialized, as virus hospitalizations and deaths have not shown any significant rise through December, despite frantic cries from the propaganda media machine.
Cryptos had a somewhat uneventful week, and detractors have been oddly silent through the month of December. Bitcoin is holding fairly steady at right around $47,000, down just five percent from the prior week, but the entire crypto complex is higher by 1.22% as of this writing.
Considering the major factors of fiat deprecation and crypto adoption, Bitcoin appears poised for an early-year breakout, with the potential of new all-time highs within months, if not weeks. Equally possible is an elongation of the drift seen over the past few weeks, with the price stabilizing around $47,000-48,000 and holding there for a considerable period of as long as two to three months.
A breakdown below $40,000 seems less and less likely, owing to recent stability and Wall Street's remarkably insatiable appetite for gains of any kind. With Bitcoin being accepted more and more as a store of value, the prospects for HODLERS are good. Continuing pressure from inflation should be manifested in nearly all financial assets, cryptos included. It will take two to three weeks into the new year, however, before any significant trends will emerge.
Gold price 12/26: $1,809.20
Silver price 12/26: $22.86
Both gold and silver made healthy gains in the final week of the year just past, closing at levels higher than most of the holiday season produced. While still well off record prices, if there's any trend at all, it appears to be to the upside, with the effects from Basel III reserve requirements likely to fully blossom through the month of January.
Overall, the month of December has been quite subdued in most markets, other than in equities, where the hands of manipulators are usually most active. Going into 2022, stocks continue to be favored, though an awakening toward value over price in the final months of 2021 leave hard assets in a positive light.
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) dipped slightly over the holiday week, closing out the year at $39.39, a loss of 29 cents from the December 26 price of $39.68.
At the Close, Friday, December 31, 2021:
For the Week:
For the Year:
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