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Is the Party Over or Will Stocks Continue to Rally after GDP, Amazon, and Apple Sour Markets?

Thursday, April 28, 2022, 8:52 am ET

This is how the logic - or lack thereof - supposedly works:

Because the US economy contracted by 1.4% in the first quarter - constituting one-half of the equation for a technical recession (2 consecutive quarters of contraction in GDP) - the Fed would not be able to raise interest rates, or not raise them as aggressively as they seem to be intending. Because low interest rates are Wall Street's main food source for stock buybacks, deal-making, and all kinds of fun price-raising activity, the never-ending QE/ZIRP party would continue.

That is why stock traders and speculators took a little while to figure it out on Thursday, but, once they did, it was off to the races, nearly taking back all of the losses incurred on Tuesday, after a dull Wednesday session.

There is a little bit of faulty thinking involved in Wall Street's euphoria. The wide-eyed speculators and in-house brokers gleefully selling shares to the momentum-chasing retail buyers may have overlooked this little nugget:

If the economy is going in reverse, the companies on the stock exchanges are likely to be negatively affected, less profitable and just maybe not worth the prices people are paying for shares of them.

To that point, a message was delivered by two of America's technology titans, when Apple (AAPL) and Amazon (AMZN) released their first quarter results after the closing bell.

Even though Apple beat street estimated on the top and bottom line with Revenue of $97.3 billion versus $93.98 billion expected, and adjusted EPS of $1.52 beating expectations of $1.42, the company warned on its earnings call that it would see a hit to revenues and earnings in the "$4 billion to $8 billion range" during the current quarter due to China locking down entire cities in its fight against the virus and ongoing silicon shortages.

Essentially, Apple executives warned that the company is unable to get products like the iPhone, iMac, and MacBook assembled, shipped, and into the hands of consumers with its usual efficiency. Bummer. Also a timely excuse in the face of possible lagging demand (remember that recession thingy?).

For Amazon's role in the after-hours drama, the world's most popular shopping destination posted a $3.8 billion loss for the quarter, its first since 2015, in its core retail business. Revenue and profits were buoyed by Amazon Web Services (AWS), the company's cloud and service division, which saw revenue grow by 37% to $18.4 billion in the quarter. That amounted to an operating profit of $6.5 billion, up 57% year-on-year.

Still, EPS came in at $7.38 versus expectations of $8.36, spooking investors in a 180-degree reversal from the last time Amazon posted results. In early February, shares of Amazon were pounded prior to the release of fourth quarter 2021 results, only to be whipsawed higher when the company announced a huge beat, based mostly on an acquisition and some tricky bookkeeping maneuvers.

This time, Amazon shares were higher on Thursday in anticipation of first quarter results (+128.59, +4.65%), only to be dashed in after-hours and pre-market trading (-286.09, -9.89%).

All that sets up what is sure to be an entertaining final day of trading for the week. With all the ups and downs, here's the scorecard for the week as of Thursday's close: Dow, +104.99; NASDAQ, +32.23; S&P 500, +15.72; NYSE Composite, -24.19; Dow Transports, +256.79.

Futures seem to have bottomed early this morning, and are rising as the opening bell awaits. Dow futures are off 88 points, NASDAQ down 131, and S&P futures lower by 30 points.

Shares in Asia were strong overnight with Japan's NIKKEI up 461.30 (+1.75%) and the Hang Seng in Hong Kong ripping higher by 813.22 points (+4.01%). European bourses are sporting gains. Basically, ever country's stock indices are up except for India.

Will the US buck the trend and drop on Friday or follow the crowd to end four straight weekly losses on the Dow and three straight on the NASDAQ and S&P.

Party on...

At the Close, Thursday, April 28, 2022:
Dow: 33,916.39, +614.49 (+1.85%)
NASDAQ: 12,871.53, +382.63 (+3.06%)
S&P 500: 4,287.50, +103.54 (+2.47%)
NYSE: 16,032.68, +290.88 (+1.85%)
Dow Trans: 15,324.13, +391.33 (+2.62%)

Recession Looming: US GDP Shrinks by 1.4% (-1.4%); Markets Stunned; Fed Trapped in Untenable Position

Thursday, April 28, 2022, 8:55 am ET

Just a few words about Wednesday's trading action on US equity markets: weird, confused, non-committal, unnatural, shallow, deranged.

Notice the words rigged and manipulated are nowhere to be found. Markets more than likely are keyed by heavy hitters with big trades, multiple strategies, and hordes of brokers. The little guy has little chance to compete with the high-rollers. Wednesday's intractable patterns show why day-traders normally get slaughtered. Modern markets are no place for amateurs.

Looking beyond one of the more bizarre sessions in recent memory - and that's saying a lot - early Thursday morning has European stocks flying high, US futures scaled to the upside and a general narrative of earnings watch, which is usually bullish in the larger scheme. After some pretty scary declines lately, traders are looking for anything to rally upon, so, with more than 100 S&P 500 companies reporting this week, earnings reports from some big names can help stem the tide of losses.

Past the closing bell Wednesday, Meta Platforms (formerly Facebook, FB) and PayPal (PYPL) reported with Meta profiting $7.5 billionn for the first quarter, down by 21 percent from the same time a year ago, marking the company's first back-to-back profit decline in over a decade. The company also reported active user counts up by four percent. That seemed to be enough to send shares 16 percent higher in after-hours and pre-open markets, at a price of nearly 30 points higher than Wednesday's closing price of 174.95.

Of course, it bears notice that the stock is down from a September 7, 2021 high of 382.18. Seems some speculators are searching for any kind of good news, taking the active user number over the fundamentals in this case. A 21 percent decline in profits year-over-year isn't usually something to bet the house on, but such is the reek of desperation.

PayPal said the company earned a profit of 88 cents per share on an adjusted basis, in line with analysts' expectations. PayPal's revenue rose eight percent, to $6.5 billion, above Wall Street estimates of $6.4 billion.

$323 billion in payments were processed in the first quarter, up 15% from a year earlier. Venmo, PayPal's online user app, posted a 12% jump in payments processed to $57.8 billion. The company boasted 429 million active accounts, up nine percent from the prior quarter. Shares were slightly higher heading toward the opening bell. PayPal stock has been hammered, from a high of 308.53 on July 23, 2021, to a closing price of 82.61 as of Wednesday's close.

All things considered, PayPal maybe deserves a little boost. Either that or it's still overvalued, with a P/E above 24. The payments space is becoming more crowded, but PayPal is still a powerhouse and first-mover.

Merck (MRK) and McDonald's (MCD) reported before the open Thursday morning. Merck reported net income of $4.31 billion, or $1.70 a share, for the quarter. Excluding one-time items, the company said it earned $2.14 a share, easily topping analyst estimates of $1.83. That's some fast-talking one-time exclusions that put the drug company over the top. Time for some more Xanex on this one.

Mickey D's turned some tables as it emerged from re-opening panic. Revenue was $5.67 billion versus $5.57 billion expected and adjusted earnings per share (EPS) were $2.28 versus $2.17 expected. Revenues and earnings were both high-water marks from McDonald's in 2021, and this year appears to be trending in a positive manner. Same store sales in international markets were up 20% from a year ago, though that figure has to be due to lockdown conditions in many locales last year. Shares were indicated about two percent higher.

Earnings excitement led up to the government's initial estimate of first quarter GDP, which came in an hour prior to the opening bell. The reported number was a stunner.

US GDP for the first quarter of 2022 declined by 1.4%. That's -1.4%, which means that if Q2 GDP also declines, we're already in a recession (defined as two consecutive quarters of negative GDP), a condition that significantly challenges the Fed's suggestions of continuous rate hikes for the remainder of the year. Raising rates into a recession would constitute central bank hari-kari. This number is sure to send shock waves throughout the global financial system. The Federal Reserve is, in a word, F--ked.

On the news, US stock futures remained elevated but well off their earlier highs. With 45 minutes to the opening bell, Dow futures were +176, NASDAQ futures +208, S&P futures +46.50.

Prepare for crash landing.

In the background of all the heady news, the US Dollar continues to wallop its peers, especially the yen and euro. USD/JPY broke above 130 on Wednesday, a 20-year low for Japan's favored currency. It continues to worsen as the Bank of Japan refuses to raise interest rates, continuing unlimited fixed-rate operations to defend Yield Curve Control, setting up quite the carry trade on the pair. The EUR/USD slumped below 1.05 as the dollar has reached its best levels against the euro since April 2017.

Both Japan and the Eurozone are telegraphing a severe currency crisis, which should benefit gold, silver and bitcoin. Bitcoin is on the rise, approaching $40,000, but gold is flat to lower ($1886) and silver continues to be smashed, trading as low as $23.11 the ounce. Ouch!

Seriously, you can't make this stuff up!

At the Close, Wednesday, April 27, 2022:
Dow: 33,301.93, +61.75 (+0.19%)
NASDAQ: 12,488.93, -1.81 (-0.01%)
S&P 500: 4,183.96, +8.76 (+0.21%)
NYSE: 15,741.82, +47.58 (+0.30%)

Meltdown: Stocks Slump as NASDAQ Makes New Lows; More Pain Ahead Courtesy of Congress and the Fed

Wednesday, April 27, 2022, 8:56 am ET

Gains from Monday's miracle rally were eviscerated within the first 15 minutes of Tuesday's trading and stocks fell even harder as the session progressed, ending with the Dow off by more than 800 points, the S&P just above its worst two closes of the year and the NASDAQ finishing the day at a 16-month low (December 14, 2020: 12,440.04).

Selling was not confined to a specific sector or even a basket of sectors. Selling was across the board and it was relentless. Multiple attempts to rally during the afternoon were met with more pressure, sending stocks to their lows of the day at the close, an ominous sign that nothing appears capable of halting.

With the Federal Reserve set to raise the key federal funds rate by 50 basis points (0.50%) in a week's time and promises to keep increasing interest rates until inflation is under control, hopeful stock investors are stuck in a nightmare scenario, caught between urges to sell and to hold onto what wealth that has not already vanished. It's the classic case of fear versus greed, and it's not FOMO (fear of missing out), but a real, persistent fear that asset values are going to continue falling until a suitable bottom is discovered. The depth of the decline and the time element are still undetermined, but it's becoming apparent that many bulls are turning into bears, selling winners and losers alike in hopes of holding onto some of the gains earned over the past 13-14 years since the economic collapse of 2008-09.

Through the past decade, prior to the onset of the COVID crisis (February, 2020), money was easily made in stocks as the Fed bought assets at a steady, nearly-uninterrupted pace (QE) and stock buybacks were aided and abetted by the Fed's ultra-low interest rates (ZIRP).

At the depth of the pandemic mini-crash in March 2020, the Fed instituted policies that bailed out every asset from mortgages to high yield bonds to junk while the federal government, via the CARES act, pumped trillions more into the economy, propping up small business (which utterly failed) and individuals with stimulus checks, otherwise known in Fed circles as "helicopter money."

Even as lockdowns, restrictions, masking, and virtue-signaling reached absurd proportions, fresh dough circulated through the economy, stocks zoomed higher, and eventually, in 2021, inflation began to fire on all consumer cylinders. Initially downplaying the extent to which 2020's wild currency debasement (money printing) would have on prices, Federal Reserve officials coined "transitory" to explain the rapid price hikes in consumer goods, but by October had to admit that inflation was a tiger which they were determined to tame.

Slow to the process, the Fed made announcements, each one more threatening to Wall Street's easy money playground then the prior ones. Finally, on January 3rd, 2022, the treasury market provided the market with proof:



Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
12/31/2021 0.73 0.97 1.26 1.44 1.52 1.94 1.90
01/03/2022 0.78 1.04 1.37 1.55 1.63 2.05 2.01

Rates jumped higher, literally over the New Year weekend. Risk was rearing its ugly head and nowhere was it more prominent than in longer-dated bond maturities. As interest rates rose, bond prices fell. The days of easy money had come to an abrupt ending, though few noticed. In fact, the Dow Industrials and S&P 500 made new all-time highs on January 3rd, the first trading session of 2022. It's been downhill ever since.

It got worse...

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
02/01/2022 1.18 1.39 1.63 1.76 1.81 2.19 2.12

and worse...

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
02/25/2022 1.55 1.76 1.86 1.96 1.97 2.37 2.29

and worse...

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
03/25/2022 2.30 2.51 2.55 2.56 2.48 2.74 2.60

and even worse...

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
04/19/2022 2.61 2.81 2.91 2.95 2.93 3.19 3.01

Over the past week, treasuries have rallied eased off interest rates a bit, though the change from December 31, 2021 to April 26, 2022 is nothing short of remarkable. Short term rates - 1-month, 2-month, 3-month, 6-month and one-year bills - have also increased while inversions occurred with regularity across the longer end of the curve.

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
04/26/2022 2.54 2.72 2.79 2.80 2.77 3.03 2.86

Fact of the matter is that treasury yields will go higher when the Fed officially announces their rate hike on May 3rd, a week from today. And they will go higher still when they pump up the federal funds rate at the next meeting in June and again in July and beyond, all in the name of fighting inflation, which is a nicer way of saying that everything now costs more, including the cost of financing your new car, house, credit cards, and any other loan one might need.

Though the debt bubble hasn't yet popped, it is deflating, although Wall Street has apparently become the first victim, and with that millions of people's wealth tied to a 401k, IRA, or other pension plans is being crushed. The debt burden is shifting to consumers in a very, very big way and it's going to hurt the lower and middle class (what's left of it) the worst. That's about 90% of the population, and the higher-wage-earners and wealthier are not exactly exempt either.

Those people, largely in stocks and bonds, are getting slaughtered as well, all thanks to the Federal Reserve painting itself into a corner from which it cannot escape. As they tighten, economic conditions will deteriorate and a recession is all but assured. Should they abandon that plan and begin loosening money again, hyperinflation is on the menu.

It's a safe bet that they'll provide healthy doses of both. The next two years figure to be the most-challenging ever for Americans and the rest of the world. Japan and the Eurozone are already at the mercy of the dollar and about to collapse, politically, socially, and economically. The US will be last, and possibly the worst, and, while the Federal Reserve can be put to blame for the extent of the commencing economic cataclysm, it is the US congress, and it has always been the US congress which usurped its authority to coin money and gave it to the Fed in 1913 and has never once thought of taking back its power and authority.

Congress authorized the creation of the US central bank, the Federal Reserve, and they can decommission it any time they choose, but they won't. Instead, they'll blame anybody, anything, from COVID to Russia to consumers themselves for the problems stemming from America's decomposing currency.

There are voices who try to tell Americans that we're all in this together. Such talk may sound soothing to some, but the reality is that wealthy CEOs, congress and officials at the Federal Reserve could care less about ordinary citizens, who have become nothing but raw meat for the maw of the grinder.

They don't care about you.

Here's the late, great George Carlin putting it all in perspective in just over three minutes (Warning: truth, vulgarity):

We sure could use a few good men like honest George Carlin these days.

At the Close, Tuesday, April 26, 2022:
Dow: 33,240.18, -809.28 (-2.38%)
NASDAQ: 12,490.74, -514.11 (-3.95%)
S&P 500: 4,175.20, -120.92 (-2.81%)
NYSE: 15,694.24, -360.53 (-2.25%)
Dow Trans: 14,748.01, -484.41 (-3.18%)

Busy Week for Earnings as Musk Takes Twitter; Silver Slashed, Euro in Death Throes, Nearing Dollar Parity

Tuesday, April 26, 2022, 9:05 am ET

Following the drubbing stocks took Thursday and Friday of last week, Monday's highly-anticipated open was to be expected. Stocks generally fell, with the Dow Industrials down more than 400 points in the early going.

Conditions were such that dip buyers - or perhaps the NY Fed's trading desk - came to the rescue, eventually sending the Dow, NASDAQ and S&P to reasonable gains by days' end. The NYSE Composite finished down just two points. How Monday's trading translates into the remainder of the week depends largely on sentiment, especially surrounding first quarter earnings, which have thus far been all over the place, though few companies are reporting very strong numbers.

Already on Tuesday we have a number of big names reporting, including 3M, which reported early.

3M's (MMM) GAAP earnings per share were $2.26, down 18 percent year-on-year. Adjusted earnings per share were $2.65, down 10 percent year-on-year from $2.95 in 2021. The stock, a bellwether for the Dow Industrials is down in pre-market trading, sending stock futures lower in response.

Across the pond, HSBC, Europe's largest bank, dropped plans for expanded stock repurchases as earning fell short of expectations. Pretax profit of $4.17 billion for the first quarter ending on March 31, was down from $5.78 billion a year earlier, though analysts were tuned into the banks' slower quarter, expecting $3.72 billion, on average.

The bank said expected credit losses came in at $600 million in the first quarter, a huge difference from the same period last year, when it unlocked $400 million of reserves. The bank's general outlook was rather gloomy, as it has operations through most of Europe and Asia, and has been pressured by developments in Ukraine and Russia, along with a drop-off in business in Hong Kong and China, where lockdowns and restrictions on movement persist.

Elon Musk's purchase of Twitter grabbed all the headlines overnight as Twitter's Board of Directors accepted the world's richest person's bid of $44 billion for the popular social network. How Musk will change the company is still a matter of great speculation, though lines are split wide open between the left and right. While most conservatives hailed the move as a positive step forward for free speech, woke leftists have been grinding their teeth and threatening a mass exodus, similar to the threats made by Hollywood chest-thumpers over the election of President Donald J. Trump back in 2016, saying they would leave the country if he won. He did, and loudmouths like Alec Baldwin stayed right where they were, actually making scads of money imitating the president in SNL skits.

Speaking of Trump, it's almost certain Musk will reinstate his account once the deal becomes final. After all, Trump was the "Leader of the Twit" with more than 80 million followers. His opponents are afraid Twitter offers him too big a platform and too much opportunity to express the truth.

Musk has detractors, but the move is a positive one that will have serious ramifications on society and politics. Twitter, along with Facebook and Google, were largely responsible for wide-ranging censorship in the run-up to the 2020 election and its aftermath. Taking Twitter out of the news suppression business is a positive development for the US and the world.

With a half-hour before the opening bell, other developments to watch closely are the continued assault on silver on the COMEX and the deterioration of the Euro against the dollar.

Spot silver, which was as high as $26.15 as late as April 18, is down again, at $23.64, after being beaten down five consecutive sessions. While gold has suffered losses, dropping from above $1900 down to $1800 in recent days, silver's decline has been more pronounced.

As for the Euro, it has reached its lowest level in six years, checking in at $1.0682 as FX trading continues to grind it lower against the US dollar. With the Yen already suffering badly, it appears the days of fiat currencies are dwindling rather quickly. The dollar remains the strength, only because it is in a little better shape than its peers and also retains world reserve currency status for the time being.

At the Close, Monday, April 25, 2022:
Dow: 34,049.46, +238.06 (+0.70%)
NASDAQ: 13,004.85, +165.56 (+1.29%)
S&P 500: 4,296.12, +24.34 (+0.57%)
NYSE: 16,054.76, -2.10 (-0.01%)

WEEKEND WRAP: Fed Tightening to Cause Economic Disruption, Asset Bubble Bursting on Grand, Global Scale

Sunday, April 24, 2022, 10:24 am ET

In the aftermath of Thursday and Friday's massive drawdown in equities, now may be an appropriate time to announce the popping of the "everything bubble" and demise of the "buy the dip" trading technique.

Even though the final two sessions of the week were downright disturbing to bullish sentiment, the general direction of stocks since the start of the year has been decidedly lower and anybody who failed to recognize the obvious bearish patterns forming on various sectors and then the entire market were left holding the bags on Friday as the 981-point loss was the Dow's worst since Oct. 28, 2020, sending the industrials to their fourth straight week of declines, along with the NYSE Composite. The NASDAQ and S&P 500 fell for a third straight week.

Putting the week in perspective, the downside was the worst for the NASDAQ, which has underperformed the other averages since November, 2021, and are once again down more than 20% since November 19. 20.04% to be exact.

Year-to-date, the Dow is down 7.58%; NASDAQ, 18.91%; S&P, 10.94; NYSE, 6.79%; Transports, 8.57%. The only index which showed a gain the past week was the Dow Jones Transportation Average. It gained 223 points, or 1.50%, as the late-week drawdown failed to overwhelm the 620-point gain it put on Monday, Tuesday, and Wednesday.

As of Friday's close, the Dow Jones Transportation Average is down 11.58% from its all-time high (17,039.38, November 2, 2021).

Though investors may feel some degree of relief that the trading week ended mercifully on Friday at 4:00 pm ET, there's likely to be some reticence heading into Monday's session. While there are some very big names reporting first quarter earnings in the coming week, those individual names may not matter as much as general market sentiment, which has turned, once again, decidedly bearish.

Additionally, the major averages are still above the lows set back in early March. A key level is 4170 on the S&P, which put in a double bottom close to that level March 8th and 14th. NASDAQ also approaches its March 14 low of 12,581.22, while the Dow looks for support at its March 8 bottom of 32,632.64, which remains nearly 1200 points lower.

While stocks may not plunge to fresh depths this coming week, the temptation to close out positions ahead of the May 2-3 FOMC meeting is palpable. The Fed practically telegraphed its intention to hike rates 50 basis points at that point, plus another 75 basis points in June and 50 more in July. Those raises alone would get the federal funds rate to at least 2.00%, but the Fed is also expected to continue hiking in September, November, and December. Whether those raises are 25 or 50 basis points will likely depend on the condition of both the stock market and the general economy, with the prior the Fed's preference.

Since denying the bear market condition will be considered the height of foolishness in less than two weeks, it's worth considering the effect these coming interest rate increases will have on stocks and inflation.

With inflation running at a red-hot 8.5% according to the CPI, raising rates will supposedly tame that number to something more reasonable, especially since comparisons to 2021, when inflation was already rising at a fairly brisk pace, should be easier for the Fed. That's the plan, anyway, but tighter business conditions are likely to wreak havoc on stocks. With the 10-year note expected to expand out to five or six percent (BTW: that's pretty close to the norm from 1945 to 2000.), yields will look superior to potential stock gains and dividends, so a shift of money flows out of stocks and into bonds is expected.

A weak economy, even with inflation expectations being tamped down, may potentially fall into recession before year's end, and almost certainly by the first half of 2023. When the major averages fall 30-40-50% or more is when the globalist vultures will swoop in and buy stocks on the cheap, and not a moment sooner. Warren Buffett will buy more income-producing businesses, Larry Fink, CEO of Blackrock, will buy more residential property, and Bill Gates will probably be snatching up the dwindling supply of farmland available, plus other hard assets.

From here until the end of next summer is likely to be one of the worst periods for investing in stocks since 2008. Dip buyers will be slaughtered, attempting to time the bottom, which won't be fulfilled until the last greater fool has purchased shares in a dying company.

Yield Curve Rates

For all the attention given to stocks as the week wore down, treasuries were being routed as well, especially on the short end and in the "belly" of the curve, which looks to have become impregnated over the course of the past seven days. Yield on 30-day bills was as high as 0.50%, settling at 0.46% at the close of business for the week. The action was in the 1-year note, up 22 basis points, the 2-year, +0.25, 3-year, +0.21, and 5-year, +0.25. Some of these were the highest rates in three years, particularly the two-year, which hit 2.73% on Thursday before closing out at 2.72%. The curve was inverted at various levels, with 5s and 7s higher than 10s, and the 20-year bond yielding 19 basis points more than the 30-year, which itself was equal to the 7-year, at 2.95%.

Date 1 Mo 2 Mo 3 Mo 6 Mo 1 Yr 2 Yr
04/14/2022 0.37 0.57 0.79 1.25 1.84 2.47
04/22/2022 0.46 0.64 0.83 1.34 2.06 2.72

Date 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
04/14/2022 2.67 2.79 2.84 2.83 3.09 2.92
04/22/2022 2.88 2.94 2.95 2.90 3.14 2.95

Carnage in the treasury market has been a hallmark for most of the year and should continue to worsen as the Fed goes through the arduous process of attempting to tame the inflation nightmare. Nothing good can be said about bonds now other than, from an investor's standpoint, they're looking better and better than stocks just about every day. It's amusing, since less than a year ago, bonds were thought of as certain losers in an inflationary environment. That sentiment is about to be tested by time.


WTI crude oil front month futures continue to be under pressure even though the Russia-Ukraine war and supply shortage narrative persists in the mainstream media. The cold, hard fact that there is no shortage of oil, only a shortage of cooperation, willingness and delivery issues, belies the elevated price levels which have continued a free-fall from the $123.70 high put in place March 8th. Like just about anything else touched by globalist hands, the price of crude oil is largely a contrived one and unlikely to persist much longer.

All of the evidence points to less use of oil and petroleum in the pandemic aftermath. More people work from home than in 2020 or 2021, cut back on driving and otherwise are careful about overspending on fuel. At least that's the case in America. Europe, which is still dithering over a ban on all Russian oil and gas production, is very much over a barrel (pun intended). To cut off roughly 30-40% of the Eurozone's energy supply in one fell swoop is tantamount to financial suicide, though the leaders of various nations in the EU are considering just such action.

If there is any saving grace for Europe, it's in Germany, which has expressed caution over cutting off ones nose, hands, feet and other extremeties in order to save face or virtue signal for climate change or environmentalism. With some good fortune, a few sane heads may save Europe from self-destruction.

In the US, the national average for gas at the pump is $4.12/gallon, up a nickel from a week ago, but down 12 cents from a month past. Prices have moderated in many areas, especially in the heartland midwest and southeastern states where prices range from $3.92 in South Dakota to $3.70 in Georgia. California remains well above all the rest at $5.69 per gallon for unleaded regular.


As long as the NASDAQ declines, bitcoin will be under pressure. It has tracked the NASDAQ almost perfectly since the advent of various ETF and other derivative vehicles were put into play last year. Year-to-date, Bitcoin is down 17.22%, the NASDAQ down 18.91%. Until that changes, or unless bitcoin adoption rates dramatically increase, little change is expected in the current formula. With expectations for any NASDAQ gains minimal at best, bitcoin could see prices down as much as 30% from current levels within months. If there is somehow a breakaway from the NASDAQ-Bitcoin paradoxical alignment, that would change, though there are no signs of that occurring any time soon.

Currently, bitcoin is back below $40k, at $39,558.90. $38-40,000 being a strong level of support, any breakdown through there could trigger even lower prices.

Precious Metals

Gold price 04/03: $1,928.50
Gold price 04/10: $1,950.40
Gold price 04/17: $1,974.90
Gold price 04/24: $1,932.50

Silver price 04/03: $24.76
Silver price 04/10: $24.91
Silver price 04/17: $25.70
Silver price 04/24: $24.19

Precious metals, as is the usual case during stock selloffs, were slapped down like unruly children, the priority given to silver, which, as we all know is the more hated of the two since it is not only more affordable, but nearly-universally accepted as money by the more common folk and as an industrial and medicinal commodity of untold value.

Central bankers fear silver more than gold not just because they do not hoard it as they do gold, but because it is the most reasonable alternative to fiat currencies. It is so vastly undervalued at the LMBA and COMEX levels as to defy all measure. If silver were even to be valued at the historically-significant price level of 16:1 per ounce of gold, it would be $120 per troy ounce TODAY.

The mere fact that silver did not break to all-time highs when gold did in 2021 makes the case that suppression of silver is far more pronounced and serious than that of gold. When gold eventually makes its move to double, triple or beyond its current levels, silver should rise at an even faster rate, though anybody who's invested in the shiny metals is virtually assured that day may never come, lest the entire global financial system is destroyed.

Regardless of central bank disdain, silver continues to be the top choice for surviving and thriving in a reconstituted global financial system.

The weekly Sunday survey of prices for finished goods on ebay makes it apparent that small investors are still willing to pay extreme premiums for both gold and silver, despite central bank suppression on a global scale.

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

Item/Price Low High Average Median
1 oz silver coin: 34.60 46.61 40.71 40.65
1 oz silver bar: 33.65 46.00 39.87 40.51
1 oz gold coin: 2,038.42 2,133.80 2,071.42 2,065.93
1 oz gold bar: 2,023.33 2,093.54 2,039.32 2,035.42

The Single Ounce Silver Market Price Benchmark (SOSMPB) dropped slightly over the course of the week, to $40.41, a decline of 58 cents from the April 17 price of $40.99. The benchmark level has been above $40.00 for six of the last seven weeks.

With the Fed set to go on a rate-hiking spree not seen since Paul Volker sent the federal funds rate into the stratosphere in the late 1970s, punching the base discount rate to as high as 20%. Under the tutelage of Chairman Jerome Powell, it's unlikely that the Fed will go to those extremes to tame inflation, though the shock is going to be significant regardless of where and when the Fed stops ratcheting up on interest.

Home mortgages are already above five percent on a 30-year fixed loan and credit card interest is generally tied to either the federal funds or prime rate, both of which will continue to rise though the end of 2022, at least. The Fed's future policy will affect everything from stocks to food prices to oil and gas, to varying degrees. Overall, financial conditions will tighten significantly from the free-for-all days of ZIRP and QE that have held sway for the better part of the past two decades.

A newer paradigm is oncoming, it's progress unflinching and unpredictable. The necessity of taming inflation is paramount to the policy of the Federal Reserve and there is no reasonable cause for stopping it. A crash landing is almost guaranteed.

That said, some big names will be releasing first quarter earnings in the coming week, including Alphabet (parent of Google, GOOG), Meta Platforms (FB), Coca-Cola (KO), UPS (UPS), Microsoft (MSFT), Visa (V), 3M (MMM), PayPal (PYPL), Apple (AAPL), Twitter (TWTR), Intel (INTC), McDonald's (MCD), Merck (MRK), ExxonMobil (XOM), Chevron (CVX) and many more. Check your favorite earnings calendars for exact times and dates.


At the Close, Friday, April 22, 2022:
Dow: 33,811.40, -981.36 (-2.82%)
NASDAQ: 12,839.29, -335.36 (-2.55%)
S&P 500: 4,271.78, -121.88 (-2.77%)
NYSE: 16,056.87, -442.47 (-2.68%)
Dow Transports: 15,067.34, -342.88 (-2.23%)

For the Week:
Dow: -639.83 (-1.86%)
NASDAQ: -511.79 (-3.83%)
S&P 500: -120.81 (-2.75%)
NYSE: -454.65 (-2.75%)
TRAN: +223.20 (+1.50%)

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. Copyright 2022, Downtown Magazine Inc., all rights reserved.


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