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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, March 18, 2022, 8:31 am ET
After gains every day this week the Dow Jones Industrial Average is ahead by 1536 points, which, if it holds, would be the largest weekly point gain since the first week of November, 2020.
What happened in November, 2020? The memory bank takes us back to the stolen presidential election, in which Joe Biden, who spent the better part of the campaign in his basement, somehow managed to defeat the very popular populist President, Donald J. Trump, garnering more votes than any presidential candidate in history, even more than the magical Barack Obama.
It was a total sham, as was the reaction of the stock market, as votes continued being counted, altered, evidence trashed, and the Big Steal accomplished right before the eyes of the world. Those awake and cognitive knew what was happening. Somehow, a coup d'etat was taking place in the world's greatest constitutional republic.
From November 2nd to the 6th, the Dow gained 1822 points. The week prior, October 25-30, it had fallen by 1837 points. Quite the turnaround. Wall Street apparently got what they were hoping for: a completely malleable half-wit puppet who would do the bidding of the elite globalists without question, and the end of mean-tweeting Trump, a president who ostensibly put people before politics.
So, here we are. President Trump helped lower fuel prices, spurred economic activity, stood up to China and Russia, helped create millions of jobs. The economy flourished, despite the swamp in Washington opposing him at every turn.
Under the false, illegitimate, feckless controllers of the Biden administration, gas is $4.33 a gallon on average, the economy is stalling out, inflation is outrageous, and the government is keen on aiding Ukraine - the heart of decades of corruption and money laundering by congress, big business, and government cronies - and possibly starting a wider conflict that could get millions of people displaced, injured, or killed.
Isn't it grand? The NASDAQ, up 770 points (6.0%) and S&P, ahead by 207 points (4.93%) are also looking for their best gains since the 2020 elections.
Stole elections have consequences, and war is a rich man's racket. Wall Street is apparently enamored with the government's willingness to reside on the wrong side of history and mainstream media's cheerleading for the losing side of the regional conflict. It will amount to the victimization of Ukraine, a not-unforeseen development and a tactic employed by socialists of all stripes for many, many years.
While the outcome of the Ukraine-Russia conflict is nearly a certainty, Wall Street's massive gains for the week may not be so positively aligned. With little more than an hour before the opening bell, US equity futures are declining, as are stocks in European markets, where losses are approaching 1 1/2% and more, the trading session just hours old.
If the week-long rally in stocks ends abruptly on this quadruple-witching Friday, it may be nothing more than the usual adjustment and game-playing by the big money market controllers who make hay whether the stock sun is shining or there are clouds overhead. Observers can rest comfortably in the knowledge that the sham markets are functioning properly, all to the benefit of people who don't actually need any more money.
Money Daily's accounts and interpretations of global economics and politics may seem highly cynical to some, but that's because the truth is usually the first victim in conflicts, be they military, social, or financial. The world is in flames.
At the Close, Thursday, March 17, 2022:
Thursday, March 17, 2022, 8:33 am ET
There was little doubt that the Fed would raise the federal funds rate by 0.25% on Wednesday and that exacting posture sent US stocks skyward for a second straight session.
The Dow has added 1110 points over the past two days, taking it out of the "danger zone" of a correction. The Industrial Average is down 6.89% year-to-date, but the measured nature of the FOMC response was obviously soothing to more than a few as global tensions mount over territory and resources and inflation continues to rage on domestic fronts, not just in the US, but globally. Year-to-date, the NASDAQ is still down 15.13%, the S&P, 9.15%.
The Fed indicated that it would continue raising the federal funds rate at each meeting for the remainder of 2022. That means the overnight rate will rise from the new 0.25-0.50% to 1.75-2.00% by December. A smattering of opinion makers believes the Fed will never get there. Pressure from a declining stock market and threat of a recession will force them to either halt the increases or reverse course.
Among other highlights, the Fed mentioned that they would announce winding down their balance sheet at a future meeting, though they did not indicate how soon that might occur. Considering their choices, that may be a distant opportunity. For now, as expressed in their Implementation Note, the plan is to...
Roll over at auction all principal payments from the Federal Reserve's holdings of Treasury securities and reinvest all principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities (MBS) in agency MBS.
They're working hard to prevent a housing crash.
Warnings of severe food shortages have begun to circulate, high fuel prices causing the price of just about everything else to rise on top of the strife in Ukraine shutting off much of the world's wheat production and a shortage of fertilizer - which comes largely from Russia - are factors ramping up the fear element in the general population.
Much of what the mainstream media throws out to the public is exaggerated at least, outright lies at worst. The truth - apparently now a violation of journalistic standards - is somewhere in between or outside the narrative. Nevertheless, stocking up on canned goods and filling freezers has become an international habit. Because people have been so attuned to shortages and preparedness by the recently-retired pandemic, there's a chance that there won't be a repeat of the kind of hoarding seen at various points over the past two years.
People may already be pretty fully-stocked, so, what looks like a coming shortage - especially in the USA - may turn out to be less-impactful than the fear-mongers expect.
Additionally, the inflation which started roughly a year ago will soon, through the magic of CPI year-over-year comparisons, begin to decline, probably by May or June because the rate of increase, measured against already-high figures from 2021, will be lower.
Take, for instance, an item that was $10.00 in May 2020. The official CPI y-o-y in May, 2021, was 5.0%, making the new price, $10.50. If this item rises another 50 cents through May, 2022, to $11.00, the increase will only be 4.76%, which the Fed and the government number-fudgers will count as a win. Unless inflation spirals completely out of control - in the face of rate hikes at every FOMC meeting the rest of the year - official CPI figures will be coming down, even though prices are still rising. CPI may have already peaked or will peak with the release of March numbers, due for release in about a month's time, or April, once the recent effect of $4 and $5 gas comes out of the calculation.
Everything will cost more, but the government and the Fed will say they're doing their jobs well.
Prices for gas at the pump, which has been the primary driver of inflation over the past 16 months, are expected to peak by July, unless they already have. That is, unless geo-political conditions worsen and oil supplies tighten. It may happen, but probably not.
The big fear being bandied about is World War III and the threat of nuclear war. Even though Biden and his team of neocon neophytes keep ratcheting up the pressure on Russia via sanctions and by arming the Ukraine forces, the NATO numbskulls have already determined that they don't want to go to war with the Soviets. Despite the propaganda from the TV war evangelists, Russia continues to steadily advance throughout the country and has advanced, sophisticated weaponry that the NATO allies in Europe don't really want used against them. Long term, Europe would likely win a war against Russia. Short term, the devastation of a war in Europe would be overwhelmingly bad for politics, economy, and society in general, which is why it's still a long shot.
The short story is that Russia will control Ukraine at some point within the next few months. Lots of people were fooled into thinking Russian forces would waltz in and take over in days or weeks. What has yet to be explained by the media - because the government didn't really want you to know - is that NATO and the US have been building up Ukraine's forces for the better part of the past decade, and especially since the Maidan revolution in 2014. fighting has been a staple in the Donbas region for eight long years. Russia had been supporting the forces on Ukraine's Eastern border, but eventually had to engage with troops of its own as the situation - an angry opponent at Russia's border - became untenable.
The media and the congressional circus can plead the case of Ukraine and praise the comedian leader, Zelensky, all they like, but the truth is Putin had to act and his troops will finish their mission, which is the de-militarization and de-Nazification of Ukraine. Zelensky has had multiple opportunities to agree to a cease-fire and compromise, but he remains defiant, acting in accordance with the will of his puppet-masters in Washington, DC, and Brussels.
Zelensky will not surrender. He prefers to see his country blown to bits and his armed forces dead and buried. That's the way this is going, but Russian forces have the firepower and the will to prevail before the conflict becomes protracted.
However Ukraine evolves, the lies of the Western journalists - mostly tools of the CIA or Deep State - will continue to obfuscate the truth. Just as they did in Vietnam, Iraq, Afghanistan, and in countless other jurisdictions, they will put on the positive spin, right up until the US, UK and NATO turn tail and run, which they always do.
The chances of engaging in a war with Russia, and then, China, are slim to none, and Slim just left town. That's for another time and place. Maybe 2026, but not right away. Noting that it is a possibility, people of the world have choices to make. Fight, flight, or just stand back and watch. None of them are particularly agreeable.
At the Close, Wednesday, March 16, 2022:
Wednesday, March 16, 2022, 9:30 am ET
At 2:00 pm ET today, Wednesday, March 16, the FOMC of the Federal Reserve will release its policy statement, ostensibly raising the federal funds rate by 0.25% (25 basis points). While Wall Street and equity investors will be nervously tuned into this announcement, it's rather something of a sideshow in the larger scheme of things.
As it is, yield on the ten-year note popped to 2.18% on Tuesday and looks to be going higher, sending the funding markets closer to crisis. whatever the fate of the rapidly-inflating US economy, there's much more going on behind and beyond the central bank's maneuvering.
Sponsored and initiated by the EU, United States, UK and NATO, the Russian military offensive in Ukraine is helping reshape society, politics, and economics worldwide. In some ways, it is actually leading the way forward from a uni-polar US dollar reserve currency to a multi-polar competitive system which will enjoin the gradually failing dollar (plus all other fiat currencies), a commodity-backed Chinese yuan or renminbi, and an all-encompassing crypto standard, spearheaded by bitcoin. Those will be three three "reserve" currencies likely to dominate the next decade, though the US dollar standard - which has been debasing for years - is almost certain to crash and burn at some point. It's already happening, as inflation ravages US consumers. Inflation, which looks like rising prices to most people, is, in reality, loss of purchasing power, i.e., currency debasement.
Emergence of a new system of finance is overdue, some 51 years since Richard M. Nixon closed the gold window permanently and ushered in an era of unbacked fiat currency as the new standard. Since 1971, currencies have been backed by "full faith and credit" of the US government, which essentially means backed by nothing.
Federal Reserve Notes (FRNs), commonly referred to as US dollars, are not issued by the US government. It's a common misperception that belies the "full faith and credit" argument. Were FRNs actually backed by faith and credit, they'd be worth almost nothing, a level they are rapidly approaching. The United States is $30 trillion in debt, and that's not counting unfunded liabilities such as medicare and social security. Some economists peg actual US debt at well beyond $100 trillion. DoubleLine's Jeffrey Gundlach pegs it at $163 trillion. That's a boatload.
Beyond that point, Michael Hudson implies that it's not just federal government debt (that $30 trillion albatross), but student, credit card, mortgage, auto loan, corporate, and personal debt that is the real bogeyman in the US system. Since the Federal Reserve - the actual issuer of all debt notes disguised as "dollars" - was thrust upon an unsuspecting public in 1913, the value of the dollar has diminished by 98%. What's left of it is the remaining hyper-inflating two percent that is currently being burned.
Pepe Escobar, a brilliant editor-at-large of Asia Times takes the argument to a new level, citing the end of the petro-dollar, which has sustained US dollar hegemony by making all transactions in oil dollar-dependent for the past 45 years via a series of agreements between Saudi Arabia and the United States, wherein the US pledged military support in exchange for Saudi Arabia pricing their oil in dollars.
Those agreements have been on increasingly shaky ground for the past year, since Joe Biden became a resident of the White House. The Saudis remain one of the world's leading oil producers. They were reportedly aghast at America's sudden abandonment of Afghanistan in 2021, fearing the same fate may someday befall them.
Escobar explores the Russia-led Eurasian Economic Union and China agreeing to design the mechanism for an independent financial and monetary system that would bypass dollar transactions. This underscores Tuesday's development, first reported by the Wall Street Journal, that the Saudis are considering pricing some of their oil in yuan, an overt threat to the petro-dollar system and something that could contribute largely to further erosion in US dollar hegemony and world reserve currency status.
As the United States and its allies moved against Russia with sanctions and seizures of capital, assets, and possessions (yachts, villas, other assets), it sought to alienate Russia from the rest of the world, but increasingly appears that the sanctions and weaponization of the US dollar is only going to succeed in alienating the US, UK, and Eurozone from the rest of the world. In other words, the sanctions have backfired, Russia continues to press gradually forward in Ukraine, and China owns the cat-bird seat, picking up the pieces while aligning itself further with Russia, India, Eurasia, the Middle East, Africa and Latin America.
The reality is that the US, along with its allies, are trying to bully not only Russia, but the rest of the world as well. The US, UK and eurozone comprises roughly 1.3 billion people, or, lest than one seventh of the world's population. While these allied countries have plenty of military might, the rest of the world does so as well, and many of them are not amused. Beyond Russia, China, and India, smaller nations are put off by the bullying of the US and its allies, and are aligning themselves with China via the Belt and Road Initiative (BRI), which has grown by leaps and bounds since its conception in 2013. More than 200 countries have agreements or endorsements with the BRI, including even some European nations, specifically, Italy and Greece.
With the turmoil caused by goading Russia into a military conflict in Ukraine, the US and its allies have opened up a real can of worms which will be doled out across the globe over many years. These are truly epochal times, upheaving the economic cohesion of the planet to the detriment of the aging, corrupt, US-UK-EU-centric power bloc.
Economic upheavals do not happen overnight, though the rapidity - via the conflict, sanctions, counter-sanctions, and realignments of alliances - of recent developments suggest the change may be happening at a pace to make most people uncomfortable.
For now, to afford the basic necessities of life, the world is looking at asset diversification into gold, silver, bitcoin, and cash (fiat currency).
The final word goes to Mike Maloney, who's been talking and educating the world about money for decades. He opines on the fast-evolving global situation.
At the Close, Tuesday, March 15, 2022:
Tuesday, March 15, 2022, 9:11 am ET
One could be excused for taking a pass on Monday's session and Tuesday's as well, since the only important development this week - outside of a possible escalation or peace compromise in Ukraine - is Wednesday's FOMC policy decision announcement at 2:00 pm ET.
Straight from the broken record department, stocks rose at the open, slid during the heart of the session and flatlined into an uneventful close. There's really no necessity to assign blame or causation; this is just how it goes. There are still a smattering of bulls around, apparently unfazed at being slapped silly in a deteriorating economic climate. Buying the dip has become a failed art since the start of the year. Every attempt at a rally is met with heavy-handed sellers, seeking to get out, get away, get their profits and run. Where they're going is an open question, because there's really no place to hide except in energy stocks or defense contractors.
ExxonMobil (XOM), Chevron (CVX), Lockheed-Martin (LMT), Northrop Grumman (NOC) have been star performers the past three weeks, but those gains are being leveled off. In the case of XOM, the stock is down from 91.46 to 81.88 in just the past five days. It pays to keep close attention to holdings, trades, speculations and take profits quickly (pay the government 40%).
Gold and silver have been summarily smacked back to earth. Gold was $2050 an ounce a week ago, today it's $1923 and falling. Silver was above $27 an ounce briefly; today it's $24.70. Go fish.
For pure folly, the most stable asset the past five days has been bitcoin, which has held steady in a range around $38,750. For all its allure, bitcoin may turn out to be one of the few assets that the international cabal of central bankers and industrial mega-monied corporations can't directly malign. The indirect hits are common, but, because of bitcoin's immutable blockchain functionality, it can't be broken.
Financial repression - which has been an ongoing market feature since 2008 - is unlikely to vanish or even diminish in the coming months and years. It is more than likely to worsen, as the oligarchs and one-percenters of the world tighten the screws on general populations. Inflation is only going to worsen matters, and when that's run its course, a hard recession will likely destroy whats left of confidence and opportunity.
Mankind should be able to enjoy the fruits of its labors rather than have to hide or protect them from ravenous hordes of speculators and manipulators. Presently, that's not how the world works.
US stock futures are higher, indicating a positive open, even as European stocks are down, though closing in on unchanged at this time. China is facing a depression. Stocks have been losing value at a rapid clip, much worse than in the US or Eurozone. The Hang Seng has been down nearly five percent two consecutive days and China's major property developers are nearly bankrupt. Much of China's wealth is in real estate, but that bubble has burst and the same seems to be headed for the rest of the world.
In all probability, the FOMC will raise the federal funds rate 25 basis points (0.25%) Wednesday, which will only exacerbate an already unstable situation.
There isn't much of anything good to say about current economic conditions.
At the Close, Monday, March 14, 2022:
Sunday, March 13, 2022, 9:12 am ET
In case anybody was still wondering, US stocks are firmly in a bear market.
Because the financial media and all the analysts at the major brokerages are of the same mind, relying on the rigid, widely-accepted definition of a bear market as a 20 percent decline from the most recent high mark, almost nobody is calling the current market a bear.
All the talking heads are waiting for another shoe to drop, for the magic number to be attained on the downside. Just as intellectual turgidity is a trait of most dictators, so too is groupthink, or consensus usually a sign of intellectual vacuity.
According to the "experts," if the Dow Jones Industrial Average is down 14%, and has been trending lower for two months, that's not a bear market. Such faulty logic dictates that investors should wait until the Dow falls another six percent, and then, sell their stocks, because, bear markets are bad, even though they are usually short-lived (about 11 months on average), stocks will go lower and investors can buy back the ones they sold at lower prices.
OK, that's fine for the usual brain-dead retail rubes who think owning a basket of stocks is "diversified," and that other asset classes don't exist. People with exponentially more brain cells have moved substantial amounts of their portfolios to gold, silver, bitcoin, real estate, collectibles, and other tangible assets. Hard assets.
And while bitcoin isn't an asset one can touch and feel, it is, in the words of Lawrence Lepard, "the monetary debasement fire alarm." Max Keiser has echoed in similar tones, theorizing that bitcoin has been sopping up excess liquidity.
Assuming that Mr. Keiser is correct, how is it that Bitcoin is hovering around $39,000, down more than 40% from its all-time high around $68,000 on November 11, 2021? Bitcoin could be down so much because it was around that time that the Fed was admitting inflation to be endemic instead of "transitory." The Fed also announced that it would exit its QE program in coming months, which it did, finally, just this past week.
But the signal had been given that liquidity would soon be drying up. Coincidentally, that's right around the same time that the NASDAQ peaked, closing at 16,057.44 on November 19, 2021. It has since fallen by 20.01%, precisely the numbskull definition of "bear market." There are no accidents in financial markets. The NASDAQ and Bitcoin have both been falling because there is a liquidity crisis dead ahead. With the NASDAQ down 20%, the S&P down 12.5%, and the Dow down an even 10%, those of like minds are comfortable calling the current condition a bear market.
Treasuries have been sending the same signal. On December 3rd, 2021, yield on the 10-year note bottomed out at 1.35%. As of Friday, it was 2.00%, and recently had been as high as 2.05%. Liquidity is falling, risk is rising. Bond sellers are demanding more for their time investment and prices (the opposite of yield) are falling. All of the 10-year bonds from August 1, 2019 are underwater.
The most recent week in the treasury complex could not be more informative. Yield on the 10-year note rose 26 basis points (1.74% to 2.00%), but the 30-year rose only 20, ending the week at 2.36%. Shorter durations rose faster, flattening the curve. Yield on 2-year notes rose 25 basis points, from 1.50% to 1.75%. Three-year notes rose 29 basis points, 1.62% to 1.91%, but fives and sevens were both up 31 basis points, 1.61% to 1.92%, and 1.70% to 2.01%, respectively. The yield on the seven-year bond surpassed that of the 10-year, a slight inversion and signal that the US - and by extension, the world - economy, is soon to transition from a stagflationary construct to a recessionary decline.
While it's probably too early to call for a recession in 2022, a few, such as Goldman Sachs, have mentioned such. When the FOMC meets this week and announces a 25 basis point hike in the federal funds rate, the matter of a recession will become much clearer, as will the case for a bear market. The two-day event ends on Wednesday, March 16, at 2:00 pm ET, with the policy statement, followed by a press conference with Fed Chairman, Jerome Powell.
With Russia pressing its offensive in Ukraine and sanctions, counter-sanctions, asset seizures and threats run amok, the Russia-Ukraine conflict seems to be stretching out longer than anticipated. Russia has the upper hand at present, with the capitol, Kyiv, virtually surrounded and locked down. It won't be long - probably some time in the coming week - that Russia initiates its final assault on the city, largely achieving its stated goals of de-militarizing and de-Nazification of the country. Once Kyiv falls, the rest will be mop up and counter-insurgency fighting. It will take months for Ukraine to stabilize, but before that, oil prices will remain high, though WTI crude has cooled off a bit from above $123 (3/8) to the close on Friday, $109.09.
That slight decline did nothing to halt the incessant increase in the price of gas at the pump. The US national average currently sits at $4.335 for a gallon of unleaded regular, a record high. That's up 24.7 cents from a week ago and 86 cents over the past month. Soon enough, prices will either settle lower as demand wanes and/or the US finds other sources to replace the lost Russian oil. In reality, there are no shortages, but that didn't stop the energy giants from sticking it to consumers, as they usually do at any hint of disruption.
Congress, predictably, did nothing to ease pain at the pump, which they could easily do by slashing or temporarily halting the federal gas tax of 18.4 cents on every gallon of gasoline and 24.4 cents on every gallon of diesel, but instead voted heavily in favor of a $1.5 trillion budget deal, which will fund the federal government through the end of the fiscal year (September 30). Congress deserves derision in abundance.
Bitcoin held steady though much of the week, resting currently at the bargain-basement level of $38,544. A wipeout in the stock markets (the Dow has been down five straight weeks and eight of the past 10, the NASDAQ and S&P down seven of 10 weeks in 2022) would probably affect the price of bitcoin in a negative manner, though that's the opposite of what should occur. Given time, more and more people will flock to alternatives of gold, silver, and bitcoin, shedding US dollars, euros, yen, and other fiat currencies. The possibility of a gold-backed yuan, renminbi, or ruble grows with each passing day.
Precious metals continued their prolonged advance, as both gold and silver registered end-of-week prices at higher levels, gold for three straight weeks, while silver's rise has been ongoing week-over-week for six weeks (since 1/28).
With Russia holding considerable leverage at present, being both a producer of gold ore and a buyer of bullion, and also holding considerable amounts of silver, the COMEX riggers are having a difficult time suppressing the prices. As shown by depleting supply at dealers and by activity on eBay, smaller investors aren't wasting any time, buying at whatever opportunity, and at accelerating prices.
Silver price 02/27: $24.31
Here are the latest prices for common one ounce gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):
What will it take for individual and institutional investors to hedge or abandon stocks and then fiat currencies altogether in exchange for harder money, gold, silver, bitcoin and other commodities? A stock market crash of 20-40%? Inflation above 10% (the official CPI figure is 7.9%, though that is widely accepted to be grossly under-reported)? Open warfare between Russia and the United States or a NATO ally (Poland?)? An alien landing?
Nobody can say for certain what will trigger a stock market crash or a currency crisis, but both are assuredly anticipated.
Everybody needs to be playing for keeps now.
At the Close, Friday, March 11, 2022:
For the Week:
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