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Stocks Indicated Lower as Short Week Comes to Quick End; NASDAQ Up Eight Straight Weeks Friday, June 23, 2023, 8:40 am ET For the week, through Thursday's close, major indices have been uniformly lower, though NASDAQ has outperformed its peers, holding a loss of just 59 points (-0.43%). The Dow has shed 352 points, or, 1.03%, while the S&P has sustained a loss of 27.70 (-0.63%). The NYSE Composite has suffered the most, down 194 points (-1.23%). Bear in mind that these figures comprise just three days of trading, as the current week was shortened by the federal holiday known as Juneteenth. Thursday's session was remarkable for its resistance to selling pressure. The S&P and NASDAQ actually made lows for the day right at the opening bell, proceeded to erase them and actually end the day on positive ground. The Dow was choppier, bottoming briefly just before 11:00 am ET, finishing with a minor loss. June 15 (last Thursday) might prove to be a top for the major indices. On that date, NASDAQ, Dow, and S&P registered closing highs for the year. The NYSE Composite saw its best closing price since February 2nd. NASDAQ outpaced all, registering a YTD gain of nearly 33%, compared to the 16% gain on the S&P, with the Dow and Composite checking in with roughly four percent gains. Obviously, it's too early to claim the recent downturn as a trend, but the peaks of June 15 have now become resistance levels for each of the major equity exchanges. Stocks will need a catalyst to regain the high points. This may come in the form of second quarter earnings reports which will shed some light on the economy and individual companies beginning in about three weeks. Depending on investor reaction to earnings, new highs could be achieved or fresh lows the experience. Stock performance during earnings seasons is usually tied to fundamentals, which should be a positive for tech stocks, even though they are currently overbought by most measures. What will be revealing is action between now and the release of second quarter reports. For the tech sector, that's a span of anywhere from three weeks to a month out. Stocks could continue to trend lower, setting up a condition for earnings season in which the vary same stocks could witness big gains, not threaten recent highs, and still be considered a win for the fast traders and fast talkers that dominate the markets. Therein, micro meets macro, as stocks hit resistance and fall, just as none of the major indices have been able to escape bear market dynamic in place since January, 2022. As the final session for the week comes into focus for the Americas, Asian stocks were battered across-the-board overnight, with Hong Kong's Hang Seng index losing nearly two percent, the culmination of a four-day losing streak measuring losses at 6.13%. European stocks are also shouldering mid-session losses of less than one percent with US stock futures trending lower. At 8:25 am ET, Dow futures are down 131 points; NASDAQ, -105; S&P, -25. Will the NASDAQ stretch its weekly win streak to nine or is this the end of the line?
At the Close, Thursday, June 22, 2023:
Thursday, June 22, 2023, 9:23 am ET Welcome to summer. The summer solstice officially occurred Wednesday, June 21, at 10:57 a.m. EDT (14:57 GMT), when the sun reached a point directly overhead the Tropic of Cancer (latitude 23.5 degrees north, and also the title of a great novel by Henry Miller). Even though Wednesday marked the beginning of the sunny summer season, another interpretation is that hours of sunlight will gradually decrease across the northern hemisphere as the season unfolds. As an allegory to the stock market does less sunlight translate into lower stock prices? While that may be a stretch for even the most ingenious economic forecasters, recent trading, charting, and commentary has been signaling that a downturn is imminent. The Dow, NASDAQ, and the S&P 500 have been down the past three sessions, and stock futures have been trending lower Thursday morning. Analysts from Goldman Sachs, JP Morgan, Bank of America and elsewhere have been predicting a recession for the second half of the year fairly consistently. The Fed is actually seeking to slow the economy, first quarter GDP was just barely positive (+1.1%) and the Atlanta Fed's GDPNow real-time forecasting tool is trending just below two percent for the second quarter. For the most part, corporate profits have been stagnant for the better part of the last two years and there are signs that consumers are tapped out. Credit card usage is at an all-time high, a signal that inflation has taken a deep bite from the public's purses and wallets as wages have not kept pace with inflation for more than two years. With government borrowing at record levels, squeezing out corporate issuance, there isn't much wiggle room left in fixed income financing. Companies are reluctant to issue debt at elevated rates. High borrowing costs are the current issue facing corporates. Repaying at excessive rates is a future concern. China's re-opening, much ballyhooed by the financial press the past six months, has failed to materialize. For all intents and purposes, China may be in worse financial condition than the US. Their housing market has not yet purged all the bad borrowing from the boom years, unemployment - especially among youths - is rising, and, with US-China relations at a decades-long low, exports are in limbo. Europe is fast becoming the economic basket case of the world, and, while Asia and the global South may be emergent, their prosperity depends largely on bi-lateral trade with non-US-aligned partners, driving dollar hegemony into the ground. Just about any economic indicator is signaling decline. The regional Fed surveys have been weak for most of the past six to nine months, and other indicators, such as capacity utilization, various PMIs, and retail spending have been well off the mark. Rather than a "recovery" from the wallop of 2022, there appears to be more pain ahead for US consumers and business. How bad can it get? That depends on one's risk assessment and overall outlook. On the bright side, the Fed could completely halt its inflation-fighting rate hikes and begin lowering the federal funds target rate. There could be a peaceful resolution in Ukraine. Congress could cut taxes. Those things are unlikely to occur. It's more probable that NATO will continue to fund and supply Ukraine with arms, the Fed's pause will only last a month or two, and, since congress hasn't dome much of anything to benefit the general public in the US, lowering taxes seems to be about the furthest thing from their minds. One indicator that appears to be truthful is the price of oil. It's been trending lower, even as OPEC+ has initiated various production cuts over the past year. A consistently low price for crude oil is a very good indicator of a slowing or stagnant economy because it usually is related to slack demand. People's pockets are pinched, leaving less and less discretionary money for travel, vacations, idle driving through the countryside and such. These days, most people are pinching pennies at supermarkets and gas stations, combining trips to save on fuel. The work-from-home movement that began during the pandemic has taken on a life of its own. More and more people have begun to understand the rigors and hidden expenses of commuting to work, the price of dressing properly, buying lunches at restaurants, child care, and so on. Commuting from the bedroom to your home office eliminates much of those unnecessary expenses. Office space occupancy rates proves that the work from home movement is well-entrenched and probably here to stay. All of that leads to having to buy less gas, subsequently keeping a lid on oil prices. Look for WTI crude to dip well into the $60s and possibly around $56-58 per barrel come September/October. There's a global glut and lack of demand which isn't ending any time soon. The best the producers can do is cut production to bare minimums. The best government can do is keep sanctions in place. Neither are working. Positioning for what appears to be a deep, long-lasting recession is important. Investors in companies like Amazon, Google, Apple, Facebook, and others in the tech space have been richly rewarded the first half of 2023. Those may be looking to trim their exposure here, fueling a good part of the decline. Other stocks, from consumer discretionary all the way down to mining and basic materials haven't contributed much to the first half rally and may actually be underpriced, though they will be vulnerable to a general decline in stocks, possibly just not as severely as others. It seems that the more conservative the investment the past six months, the worse the performance. That appears to be about to change. Today's highlights include more Fed-speak from Chairman Jerome Powell as he sits before the Senate Banking Committee. Wednesday's House testimony was more of a reiteration of what Powell's been saying for the past 18 months, that the Fed is committed to fighting inflation and restoring the "neutral" rate of inflation to two percent. Nothing he said indicated that the Fed was even remotely thinking about lowering interest rates. The assumption that the FOMC will hike rates another 25 basis points at the July meeting is probably correct. Adding to the somewhat depressing news, just hours ago, the Bank of England hiked interest rates for the 13th consecutive time, punching up their key lending rate by 0.5%, to 5.00%. That's not helping. Prepare for a continuance of the 2022 bear market. Despite the ungodly gains of the past six months, a new bull primary trend has failed to emerge. Stock indices should test September-October 2022 lows within the next six to nine months.
At the Close, Wednesday, June 21, 2023:
Wednesday, June 21, 2023, 9:12 am ET Apparently not content with dark pools, HFT, algorithms, front-running, spoofing and other crafts of the securities trade, people from Fidelity, Schwab and Citadel launched their very own crypto exchange with an additional round of funding, just days after the SEC sued the two largest exchanges in the world, Coinbase and Binance. Coincidence? No, of course not. The good folks at the big financial firms have had this in the works for months. Gary Gensler and his happy band of regulators just greased the skids a bit for their friends in the real world, those cleaner-than-a-baby's-bottom stock traders and insurance brokers. One wonders when real estate firms will get involved. After all, trading residences for ephemeral tokens with no real backing is the future, right? The new firm is known as EDX Markets (EDX), and, for the cynical crowd, their CEO, Jamil Nazarali, says, "EDX's official launch allows our outstanding team to bring to crypto the same values and standards of competition, transparency, fairness and safety that investors in traditional assets expect and enjoy." Surely, everybody getting four percent interest in their money market funds are champing at the bit (no, no pun there) to get a crack at the most speculative asset class (the word "asset" a slightly subjective term these days) since sub-prime MBS nearly took down the global financial structure. US Treasury bills, those securities with a shelf life of less than one year, are assets, too. They're currently paying upwards of five percent, and, like magic, they vanish like the fog when they mature. So, who wouldn't want something with negligible basis, priced by experts, drifters, grifters, graphic artists, wordsmiths, plumbers, tidy-men, your aunt Sarah and anybody else holding them? They're all accredited investors. Every one of them. What separates EDX Markets from the usual flim-flam fare is that it's not actually an exchange where an individual can just link to a bank account, put in some money and buy some crypto-coins. No, with EDX, you an buy crypto, but supposedly through your usual broker at Fidelity, Schwab, or Citadel, which means the purchases will generally be bigger than cousin Ernie's $200 sent from his mom's basement, carry fees, and likely be pooled for "wham-bang" market effect, which will no doubt spur more speculation and, viola! higher crypto prices. The levels of greed, deceit, graft, and corruption are getting out of hand. Maybe there should be a new word for it all, something like bafaslimint or deruggpull. For all anybody knows, these Wall Street guys and gals may be on the up-and-up after all, just searching for "the next big thing." No doubt they'll tout their extensive use of AI and knowledge of markets, trends, geo-politics, Taro cards, and palm readings to assure their investors that their trades are 100% backed by the company's reputation and maybe put a pride symbol next to their names just to be sure. Like Freddie Mac and Fannie Mae (still in receivership), there will be some government entity making sure that all trades are settled in an amicable, self-congratulatory manner. This is end of empire stuff, where people make up things out of thin air for other people to buy, kind of like, er, Federal Reserve Notes. Trading a rapidly-depreciating currency for pure vaporware... why not? Wall Street's best and brightest deserve to profit on Armageddon, but, when the hammer falls for th final time, they'll be just as broke as the next guy or gal, but that next guy or gal will at least know how to build a deck, or mend a skirt, milk a cow, harvest corn, bake a cake, change a tire, and therein lies the hope of generations. Additionally, BlackRock has filed with the SEC for a bitcoin spot ETF, something the agency has yet to get behind. Over the past few years, there have been more than 30 filings for a bitcoin-related EFT, though none have met with approval. With its immense cache in the markets, BlackRock might just be able to pull enough strings to convince the agency that now's the time. Not to worry, Gary Gensler is on the job, assuring that these tokens of bitcoin, ethereum, litecoin, et. al., are securities, just like stocks, and bonds, and... conch shells, tulip bulbs and Beanie Babies. With that, bitcoin ripped nearly 10% higher from Tuesday afternoon, gaining from 26,660 to 28,940 as of Wednesday morning. Caveat Emptor. Following the idle holiday known as Juneteenth, investors hid under their desks after the Commerce Department reported the biggest increase in housing starts since 1990, an 11-sigma event signaling a massive resurgence in residential construction, not exactly what Wall Street desires as it gives the Fed another reason to hike interest rates even higher, given such robust economic data. The short, four-day trading week will be loudly punctuated by two days of testimony by Federal Reserve Chairman Jerome Powell, who sits before the House Financial Services Committee on Wednesday, and heads to the Senate Banking Committee Thursday. The Fed has already published Powell's House remarks. Following prepared remarks to both bodies, the Chairman will take questions from elected officials. Expected to have sizable impact on markets, Powell is afforded the luxury of amending his Wednesday statements on Thursday, should he need to make clarifications or move stocks in a desired direction. Be prepared for some serious swings through both sessions, though nothing that hasn't been part and parcel of market action of late. A half-hour prior to the US opening bell, stock futures have drifted lower (Dow Futs: -73), European stocks are marginally lower after Asia traded mixed overnight.
At the Close, Tuesday, June 20, 2023:
Sunday, June 18, 2023, 1:35 pm ET Beginning a celebration of the nation's newest federal holiday a day early is not an punishable offense (yet), so no note from your parents, teachers, or doctors are required should you skip the reading of today's WEEKEND WRAP and savor it later on Monday, when markets are closed. If you are boating, golfing, vacationing, or otherwise relishing in the final days of Spring, carry on. Your money and the markets will wait. Stocks This marks the eighth straight weekly gain for the NASDAQ. During that stretch, it has gained 1617.11 (13.40%) from 12,072.46 (April 21) to 13,689.57 (June 16). The S&P is up five consecutive weeks. The ascent of the Dow has been less spectacular, though lately impressive, on the rise three straight weeks, gaining nearly 1400 points from May 31 (32,908.27) through Friday, June 16 (34,299.12), making a high closing figure for the year on Thursday (34,408.06). Not to be outdone, broad index of the NYSE Composite, is up three straight weeks also, putting on nearly 1000 points since May 31 (14,887.14), to Friday's close (15,795.12). Equity gains have been outstanding in the face of nearly risk-free short-term debt, yielding between four and six percent, depending on duration and quality. There's really no secret behind winning stocks. Despite the Fed's best efforts to tamp down inflation and the general economy at the same time, wide-eyed speculators, unsatisfied even with the newly-found bond bonanza, keep reaching higher, the debt ceiling resolution and FOMC's pause offering a bright green light to plow ahead. Fear of a recession, previous touted to get underway in the first half of the year, have been shoved back to the fall, with some analysts suggesting that there won't be one at all, or even if there is, it will be short-lived and shallow, just like the thinking of most of Wall Street's brightest lights. Given the reluctance on the Fed's part to inflict any pain that's more than a pinky blister, the dim bulbs may believe they have re-discovered the philosophers' stone, though instead of turning base elements into gold, their new invention turns corporate shares into increasing amounts of fiat currency. As such, it fits the definition of a fallacy, as the ancients readily found. Where right is left and sometimes wrong in the current Clown World establishment, these gainers can be found on occasion to be looking over their collective shoulders at the rising prices chasing after them. They need not worry, however, as the Federal Reserve has their backs, or so they assume. In their blinkered universe, it's green as far as the eye can see. They can gallop all the way to their chosen finish lines, wherever they may be set. Nobody is blaming them for success. The laggards are a bit grumbly, though, pointing to stretched valuations on the falling sky. For now, it's up, up, and away.
The FOMC pause this past Wednesday was about as acute an inflection point as could be had, considering the Fed's relentless pursuit of inflation-fighting higher interest rates which ended abruptly after 12 consecutive increases. Whether or not the Fed decides to hold at this level or "touch up" with an additional insurance hike of 25 basis points at the July 25-26 meeting remains to be seen. If not, then rates would remain at 5.00-5.25% until the September 19-20 meeting at the earliest. At worst, rates are on hold for another 5 1/2 weeks. Smoke 'em if you got 'em. Locking in a CD or other interest-bearing instrument for six months or a year would, in all likelihood, be a safe and prudent play at this juncture. Anybody reaching for explanations or pivot points will not the week ending May 12, when the five and seven-year notes briefly un-inverted against the 10-year. That indiscretion was quickly corrected the following week when the five-year gained 31 basis points, the seven was up 29, but the 10-year modestly added only 24 bps. Since that time, the story has been the two-year note, up by 0.72% the past five weeks, broadly outpacing the gains on all longer-dated notes and bonds. By comparison, yield on the 10-year note is just seven basis points higher than on May 19, whereas the two-year is up 42. Inversion will remain; short-term borrowers will be bled. 2s-10s were further inverted over the week, from 84 to 93 basis points. Rather than inclining forward towards flat or the normalcy of "un-inversion", the direction appears to be going in the opposite direction, practically screaming "recession" at the trading hordes, but possibly holding one off for later, attempting to dispel the evil rumors that the US economy is not the pride of the planet. 132 basis points is the inverted spread from the one-month out to 30-years, four basis points lower than last week. The Fed has sought to stand economic theory on its head for at least the last 20 years. So far, they've managed to convince pretty much everybody that they're right almost all of the time, except when they're wrong, to which they never admit. Up their sleeves are rabbits, gerbils, and long, multi-colored handkerchiefs (after all, it is Pride Month) by which to fool the world with financial legerdemain. The West is gasping; the BRICS are laughing.
WTI crude oil closed out the week at $71.44, a little more than a buck better than last week's close at $70.35, but still below the June 2nd price of 71.87. OPEC+ production cuts are still a threat for chasing prices higher, though a consensus is building that crude is plentiful, cheap, and will continue to ooze out from the ground in the faces of "peak oil" adherents, the entire spurious theory having been now fully debunked. With oil prices stabilizing at lower-than-expected levels, the main concerns are at the bottlenecked distilleries, keeping petrol at the pump at excessively high levels given slack demand. Looking back to the last comparable time period oil prices were this low (May-June, 2021), gas at the pump was averaging $3.03 to $3.09, and by September, $3.18 per gallon. Today, in 2023, with prices for WTI crude no higher than $74.34 since May 2nd (ample time for re-supplying fueling stations with cheaper gas) and trending lower, gas, according to gasbuddy.com's national average, remains 15-18% overpriced at the current level of $3.54, with prices close to $5.00 in both Washington and California (both averaging $4.81) and Illinois hitting $4.01 as of this writing. This week's national average is about three cents lower than last week's $3.57, so there may still be hope that big oil won't be posting record profits this quarter, though most aren't counting on it. Eventually, despite whatever lipstick the media sensationalists want to paint on the pig's lips, prices will have to respect reality, hopefully to a better degree than the normally-accepted "they're screwing us again," public meme. Prices remain lowest in the Southeast. For the fourth straight week, Mississippi is the only state averaging under $3.00, but inching upwards, from $2.94 to $2.97 this week. Nearby states were next lowest. Louisiana ($3.09), Texas ($3.09) and Arkansas ($3.11) were fairly static on the week. The West is still the worst as the gouging appears to be on a regional bias. Oregon prices were up six cents to $4.47, a 24-cent rise from just two weeks ago ($4.23). Arizona ($4.15) and Utah ($4.03) continue to trend lower, while Nevada ($4.23) looks like the swing state, up just a penny. Prices in Illinois were up by another nickel to $4.01, remaining the highest in the Northeast/Midwest, joining the $4+ club, making it the seventh current member. Other than Illinois, prices in the region are more reasonable, ranging between Virginia ($3.34) and New York ($3.65).
This week: $26,531.10 $30,000 remains resistance for bitcoin, but, chartists will note that there are no sustained price levels beyond that. From late 2020 through near the end of 2022, bitcoin was a massively-blown bubble that rapidly deflated from May through July, 2021, then just as quickly reflated to a peak at $64,400 in November. Subsequently, the price action was all downhill, step-laddered from $40,000 to $30,000, to $20,000 and finally, $16,000 by November of 2023. Crypto enthusiasts should by now be well aware of the precarious condition of all crypto, though many continue to cling to the belief that bitcoin alone is exempt from market variables and winds of change. While it is substantively true that bitcoin is separate from all other coins and tokens, it still stands as the biggest thorn in the fiat cabal's side, and, as such, will suffer an inglorious demise. One caveat, hope upon hope, is that while bitcoin may crash, so too will the fiats. This offers a view similar to those of gold and silver enthusiasts, that on the "other side" of the currency wars, bitcoin will be counted as one of the survivors.
Silver:Gold Ratio: 81.20; last week: 80.97 Per COMEX continuous contracts:
Gold price 05/19: $1,998.60
Silver price 05/19: $24.02 Clearly, gold and silver are now rangebound, coincident with passage of the debt ceiling suspension and pause on the federal funds rate. With some semblance of stability in place and interest rates holding at high levels, the arguments opposed to precious metals are plain to see. That does not imply anything other than the fiat cabal of Western central banks being back in full control of all markets, suggesting further suppression of gold and silver prices. How much longer the controlling interests remain intact in the face of ongoing de-dollarization and the now unambiguous movement of BRICS-aligned countries toward a competing reserve currency to that of the US dollar, and, to a lesser extent, the euro is only a matter of time and geo-politics. Rumor of the BRICS unveiling their new currency at their upcoming August 22-24 summit (15th annual) may prove to be premature, though the trend remains clearly for a bi-polar or multi-polar currency regime in the near future (3 months to 3 years). While historically, currency revaluations have been sudden and abrupt, the BRICS approach, primarily fostered by China and Russia, may prove to be more of a process than a radical re-alignment. Many, possibly most, people are unaware of the changes underway in global economics, gold and silver adherents are more informed than average, making any minimalist price movements somewhat moot points. The larger picture of a gold-backed currency returning to the world stage grows greater with each passing day and every fiat fumble forward. Precious metals remain a constant hedge against any and all financial tom-foolery and mendacious meddling. Thus, pricing matters less than volume, as in ounces or kilos of real money. According to auction and online dealer prices, there's little standing in the way of a continuing appreciation of the value of precious metals by a growing audience, especially in the East's developing and emergent economies. Regardless of measures to suppress prices in the fiat realm, the promise of gold and silver as MONEY - an accepted means of exchange and store of value - is improving and gaining widespread acceptance. Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping included):
The Single Ounce Silver Market Price Benchmark (SOSMPB) was relatively stable, rising to $37.80, a gain of 34 cents from the June 11 point of $37.46 per troy ounce.
As much as the mainstream media tries to convince their dwindling public audience of whatever current narrative they're promoting, the propaganda lines are growing blurry, the themes tiring, and viewership fading. A case in point is that utter collapse in ratings by NBC, which just this past week resorted to airing golf's U.S. Open in prime time on Thursday and Friday night, pre-empting the usual vacuous offerings, the likes of which include "Magnum, P.I.", "The Blacklist", "Hot Wheels: Ultimate Challenge", and the consistently flaccid "Dateline NBC." These midgets of TV broadcast infamy will return to their usual time-slots next week to their hundreds of zombie fans. In the meantime, the golf is pretty good if one is into such stuff, the final round already underway this Sunday, Father's Day. To be totally fair, at least NBC isn't pandering to the Juneteenth crowd. Monday's prime time offerings consist of mostly unwatchable "American Ninja Warrior", "The Wall", and "The Weakest Link", the latter appropriate for the peacock network, strutting around like it rules the world when in fact it is being ignored. With nothing but freakish, fantasy, and fandom from Hollywood and little but game show retreads and remakes on network television, is there any reason to believe the ongoing Writer's Guild of America (WGA) strike won't end up with out-of-work scribblers seeking free wi-fi connections from their cardboard box street abodes? Producers are convinced they can all be replaced with ChatGPT, AI, and CGI special effects. They're correct to a degree, though they run up against the great GIGO (Garbage In, Garbage Out) data destroyer. Meanwhile, all the true creativity belongs to the internet, streaming visuals and audibles endlessly, led by Tucker Carlson, Elon Musk and hordes of other truly creative folks. So long, MSM. You won't be missed.
At the Close, Friday, June 16, 2023:
For the Week:
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