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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.

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The Completely Fake US Stock Market, Economy, and Congress; Stocks, Gold, Silver Move Higher as Dollar Retreats

Friday, July 29, 2022, 7:24 am ET

On Wednesday, the FOMC of the Federal Reserve raised the federal funds rate 75 basis points to a range of 2.25-2.50%.

Stocks posted some of the best gains of the year.

Thursday, the Bureau of Economic Analysis (BEA) reported second quarter GDP at -0.9%.

Stocks tacked more to the upside, roughly one percent across the board on the major indices.

Somewhere amidst Wall Street's giddiness, legislators in congress agreed to work on a spending bill called the Inflation Reduction Act of 2022, sponsored by New York Senator Charles Schumer along with his new BFF (confirming that everything is fake, BFF is actually defined as a noun by the Miriam Webster Dictionary, so you can use it in a game of Scrabble and rack up some big points if you lay the tiles on the right squares) West Virginia Senator Joe Manchin.

[One Page Summary of the Bill | PDF]

This whopper of congressional fakery takes the BS meter to entirely new, never-before-seen levels, purporting to, among other lofty goals, raise $300+ billion by spending $433 billion (Energy Security and Climate Change, $369 billion; Affordable Care Act Extension, $64 billion) and raising an estimated $739 billion via:

  • 15% Corporate Minimum Tax, $313 billion
  • Prescription Drug Pricing Reform, $288 billion
  • IRS Tax Enforcement, $124 billion
  • Closing Carried Interest Loophole, $14 billion
  • So they say...

    Americans can rest assured that the spending portions of the bill, if passed as proposed, will be spent. The revenue side of the equation is a bit murkier and the math just a little bit shady.

    Senate Democrats are submitting a tax revenue proposal to the Senate Parliamentarian for inclusion in reconciliation that would raise approximately $450 billion to pay for deficit reduction, clean energy, and climate investments. The proposal's two main components would re-build the IRS and impose a 15% Corporate Minimum Tax to ensure the wealthiest Americans and corporations cannot avoid paying their fair share of taxes. By investing $80 billion over the next ten years for tax enforcement and compliance, the Congressional Budget Office estimates the IRS will collect $203 billion. Additionally, the proposal would impose a 15% domestic tax on the approximately 200 largest corporations that currently pay less than that corporate tax rate. This provision will raise $313 billion.

    The $369 billion in spending on Energy Security and Climate Change Investments include a raft of tax credits and grants to businesses and "communities", consumer incentives to buy energy efficient and electric appliances, clean vehicles, and rooftop-solar, and invest in home energy efficiency.

    It all sounds so progressive and good for the economy and ecosystem; it will end up benefitting the usual grifters and slackers while costing taxpayers overall, as usual. Senators and Members of the House are likely to receive big kickbacks and extreme campaign donations, many of them flowing in right before the primaries. Democrat coffers should be overflowing by October.

    To characterize this bill as pork-barrel would be misleading. This is more like the whole hog. Having Senator Schumer as a sponsor of the bill assures that it will benefit his corporate benefactors and cost taxpayers billions.

    Making matters even more fake than previously (which was pretty fake to begin with), the Chairman of the Federal Reserve, Jerome Powell, Treasury Secretary Janet Yellen, and Joe Brandon all claimed that the United States is not in a recession. They simply changed their definition of it.

    Since the closing bell Tuesday, stocks have ramped higher. In Wednesday and Thursday's market action, the Dow has added 768 points, the NASDAQ, a cool 600 points, and the S&P is up 152.

    Yep, inflation is now under control and there's no recession, despite initial jobless claims rising again this week, to 258,000, the 11th straight week over 200,000.

    You will own nothing and you will be happy. Congress is virtually guaranteeing the former. The latter (being happy) is a more personal issue.

    It should not go unnoticed that gold and silver have posted enormous gains over the past two days. While Wall Street may be living it up, boosting stocks back toward breakeven for the year (still a ways off), some other people are snatching up precious metals as fast as possible.

    Over the past two days, gold has risen from $1714.60 per troy ounce to $1,760.10 at present. Silver's gains are even more dramatic, rising from a low of $18.37 early Wednesday to the current price of $20.04. Both gold and silver have been in a severe downtrend since March 8, the day the LME was broken by the haywire nickel trade.

    Meanwhile, the dollar has been sliding. After reaching 108.54 on the dollar index, it's currently down at 105.81. Precious metals and the US dollar have an inverse relationship. As the dollar drops, PMs gain. While it is entirely too early to call the recent moves a trend, gold and silver pricing and the dollar index bear close scrutiny. These could become major elements of a new paradigm in currency and money.

    At the Close, Thursday, July 28, 2022:
    Dow: 32,529.63, +332.04 (+1.03%)
    NASDAQ: 12,162.59, +130.17 (+1.08%)
    S&P 500: 4,072.43, +48.82 (+1.21%)
    NYSE: 15,198.81, +167.77 (+1.12%)


    Post Fed's Rate Increase, the Only Number That Matters is Second Quarter GDP: -0.9%

    Thursday, July 28, 2022, 8:53 am ET

    Incredibly, Wednesday's FOMC policy decision to hike the federal funds rate by 75 basis points (0.75%) sparked an enormous rally in stocks, sending the S&P 500 to its highest level since June 8 and the NASDAQ to its best one-day performance since 2020 (+469.85, +4.06%).

    The Dow industrials also moved higher, gaining 436 points, the paltry 1.37% move a shadow of the percentage gains on the other indices.

    Most of the gains occurred after the FOMC voted to raise the federal funds rate, during Fed Chairman Jerome Powell's press conference, which has been characterized as a dovish response to the hawkish rate move.

    Certain to increase the cost of credit card usage, student loans, personal loans, auto loans, and home equity loans, the expectation is also for mortgage rates to increase, though not dramatically. Interest on a 30-year fixed rate mortgage hit 5.54% last week, up from an average rate of 2.96% in 2021. Higher interest rates add to the cost of financing a home purchase. The higher rates this year have eliminated marginal and some mainstream purchasers from the market or has caused them to consider buying a home at a lower price, even though prices have not fallen substantially in recent days.

    Moving beyond the Fed's continuing fight against inflation, the next worry is whether or not the country is in a recession or about to enter one. After first quarter GDP was revised to -1.6% last month, this morning marks the first estimate of second quarter GDP. Analysts have been lowering their expectations on the number over the past few months. Forecasters surveyed by the data firm FactSet have estimated that second quarter GDP will show a modest 0.8% increase on an annual measurement basis.

    Atlanta Fed's GDPNow calculus is calling for another contraction over the April-June quarter. Their website, updated just a day ago, is reading at -1.2%. If the Atlanta Fed is on target or close to the mark and GDP comes in as a negative number, it would fit the old definition of a recession, meaning the United States has already been in one since the start of 2022. Anecdotal evidence supports such a thesis, as many factors have contributed to a fractured economy, to say nothing of the runaway inflation that has terrorized families and businesses alike.

    Over the past few weeks, government officials have tried their best to limit expectations for the reality of a recession or general slump in business activity. In a country so large as the United States, getting a solid reading on economic activity for the sum of its parts is a challenging task, but recent economic data has been mixed, at best, and much of it has been distressing. Retailers have had trouble moving overstocked inventory, even at reduced prices. Walmart issued forward guidance a few days ago that indicated businesses are having trouble meeting sales and profit expectations.

    Officials, including Treasury Secretary, Janet Yellen, Fed Chairman, Jerome Powell, and even Joe Brandon himself, have all expressed views that the US in not in a recession. They've also sought to redefine what a recession actually is, though the most official definition is the one used by the NBER, which states, on its website...

    The NBER's definition emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.

    That's about as broad, nebulous, and ambiguous as it gets, so, whether or not the country is in a recession - or an expansion, for that matter - depends largely on more personal experience, like whether or not you have a job or how the local economy is faring. That's where the vague becomes familiar.

    At 8:30 am ET this morning, the Bureau of Economic Analysis (BEA) released the initial (advance) estimate for second quarter US GDP, showing the economy contracted at an annual rate of 0.9% (Fearless Rick's private prediction was -0.8%), so there you have it. According to the former "textbook" gauge for calling a recession, the United States has unofficially been suffering through one since the start of 2022, a statement that comes as little surprise to millions of underpaid, overworked, stressed out Americans.

    What this means going forward - besides the government and media lying and obfuscating the truth unceasingly - is that inflation is going to fade to the foreground as economic events will be shaped around the new, contracting economy. Signs that inflation is abating are growing, from lower prices for gas at the pump to a leveling off of food prices in many areas of the country. High retail and producer inventories are also telling towards a recessionary reading.

    Other than the masters of the universe on Wall Street, very few people expected anything but a negative number this morning. Consumers, which account for roughly 70% of GDP, are frustrated, tapped out, and using credit cards with interest rates that are going up, up, and away. Prepare for a deluge of personal and corporate bankruptcies as the third and fourth quarters of 2022 unfold.

    Not as important as the GDP reading but noteworthy nevertheless, initial unemployment claims for the week rose to 256,000, worse than the 250,000 expected and up from the prior reading of 251,000. The latest number of initial claims is the highest this year and the 11th straight week above 200,000, pitching a curve to the government's claims that the job market is "strong."

    Yes, folks, once again, you're being played.

    At the Close, Wednesday, July 27, 2022:
    Dow: 32,197.59, +436.05 (+1.37%)
    NASDAQ: 12,032.42, +469.85 (+4.06%)
    S&P 500: 4,023.61, +102.56 (+2.62%)
    NYSE: 15,031.04, +237.48 (+1.61%)


    Fed Set to Hike Federal Funds Rate 75 Basis Points; FOMC Will Likely Increase Rate at 2.25-2.50%

    Wednesday, July 27, 2022, 7:20 am ET

    In less than seven hours, the Federal Reserve's FOMC will deliver a rate policy decision for July. They are expected to increase the federal funds rate by 75 basis points, pushing the base rate to 2.25-2.50%, the highest it has been in nearly two years.

    According to the Fed, this action - and other rate hikes before and after this one - is designed to slow the rate of inflation. With the CPI currently sitting at 9.1% on a year-over-year basis, the level of price increases threatens the general economy by forcing consumers to spend more disposable income on essentials, particularly food and energy, the two CPI components that have seen rapid price appreciation over the past 18 months.

    While Americans feel the pinch at their pockets, the source of rampant inflation is the excessive money creation in response to the pandemic of 2020-21, where the Federal Reserve dropped interest rates to the zero bound (0.00-0.25%) and implemented various bond-buying schemes and quantitative easing (QE), and the federal government's issuance of stimulus checks and cheap loans to businesses, many of which did not have to be repaid.

    The sudden explosion in the money supply (M1) was no accident. The Federal Reserve had been complaining about its inability to induce their target rate of 2% inflation for years following the GFC of 2008-09. From December 2019 to February 2022, M1 increased fourfold, from around $4 trillion to more than $20 trillion. Much of the money created out of thin air by the Fed, much of it via the federal government (under the auspices of then-Treasury Secretary Steven Mnuchin and currently being mismanaged by former Chair of the Federal Reserve, Janet Yellen), went to corporations, municipalities and states, though a goodly amount went to ordinary citizens through a series of stimulus checks.

    Though the effects of the increased money supply was not immediately represented in rising prices due in many ways to lockdowns and restrictions during the pandemic, once people and businesses got back to a more regular routine, inflation - as measured by the CPI and PPI - began to take off as too much money began chasing a fixed and often restricted supply of goods and services just as Joe Biden ascended to the White House in January, 2021.

    As of May, 2020, CPI registered a yearly increase of just 0.1%, but began rising. By January of 2021, it was 1.4%. In July, 2021, CPI stood at 5.4% and continued to rise rapidly until reaching a 40-year high at 9.1% in June, 2022, the latest reading.

    In its usual manner of being well behind the curve (intentionally, since they all saw what was happening and are supposedly the brightest economic minds we have) the Federal Reserve only began responding to the elevated rate of inflation in November, 2021, promising to halt asset purchases, raise rates, and lower their balance sheet.

    The first rate hike came in March, 2022, a measly 0.25%, followed by a 0.50% hike in May, and a 0.75% increase in June, which leaves the base rate at 1.50-1.75%. After today's announcement at 2:00 pm ET, the official federal funds rate is likely to be 2.25-2.50%, if the increase is 0.75%, or 75 basis points. There are cries in the economic wilderness for a full one percent hike, and some wailing for even more, but the Fed is likely to stick to the 75 basis points most are expecting.

    After that, there is no FOMC meeting in August, so the next FOMC event is scheduled for September 20-21, followed by another meeting on November 1-2, and the final meeting of the year on December 13-14. General consensus is for the Fed to hike rates at all three of those meetings, by 50 basis points in September and 25 at the two meetings afterward, bringing the rate to 3.25-3.50%, roughly the Fed's target rate.

    Analysts are already looking ahead to 2023 and rate cuts, bringing the base rate back to somewhere in the range of 2.00% to 2.50%, as the Fed is expected to have tamed the inflation monster by then and the economy to be stabilized and ready for another growth period. As usual, that's all speculation based on pie-in-the-sky projections.

    The previous, current, and suggested future hikes have already had some effect at the consumer spending spigot, so much so that a recession is either already underway or is soon to be. First quarter GDP was measured at -1.6%, and the second quarter appears to be headed in the same direction. The Atlanta Fed's GDP Now measure is currently predicting Q2 GDP of -1.6%, and will update that prior to the FOMC statement later today. The official first estimate of 2Q GDP will be released on Thursday, prior to the opening bell.

    Most reasonable estimates of CPI see it peaking soon, if not already having peaked in June. Prices just cannot continue to rise, as people have - like it or not - limited levels of spending capacity. Wages have not nearly kept up with price inflation. Very few people have had their wages increased by eight or nine percent recently, though overall wages have increased.

    What the continued rate increased does to other markets, especially stocks and bonds, remains an open question, though the general trend is for stocks to decline as rates rise. Higher yields caused by the higher federal funds rate has resulted in a great deal of volatility in fixed income, a condition likely to continue and potentially worsen. Mortgage rates have already been hard hit, rising above five percent on a 30-year fixed rate, from roughly 2.5% at the start of the year. That has caused a significant slowdown in real estate markets and lower prices for residential properties.

    All variable rate loans, such as student, personal, auto, home equity, and credit cards are going to be hit with an interest rate increase as most are tied to the federal funds or prime rate. That will also serve to reduce spending by consumers. The economy is going to slow down. The Fed hopes it doesn't grind to a complete halt.

    As the countdown to the FOMC decision commences, stock futures are higher in the US, with Dow futures up 135 points. S&P is ahead by 33 points, NASDAQ up 170. European stocks are marginally higher. Asian markets were mixed.

    Fed Chairman Jerome Powell will hold a press briefing after the 2:00 pm announcement, beginning a half hour later.

    Enjoy the show.

    At the Close, Tuesday, July 26, 2022:
    Dow: 31,761.54, -228.50 (-0.71%)
    NASDAQ: 11,562.57, -220.09 (-1.87%)
    S&P 500: 3,921.05, -45.79 (-1.15%)
    NYSE: 14,793.55, -105.53 (-0.71%)


    With Dire Forecast, Walmart Lights the Fuse for a Wild Week on Wall Street; USA Has Obvious Problems

    Tuesday, July 26, 2022, 8:15 am ET

    Anybody paying attention - and not solely reliant upon mainstream media - may have noticed a number of things that should be obvious by now. Let's run down a few of the more salient realities in bizarro-land.

    Biden is not a serious person.

    It's hard to put this any other way than to call the current occupant of the White House (notice, here at Money Daily he has never been referred to as "president") a clown. His policies have backfired to such a degree that some people believe he's actually trying to destroy the US economy and the country itself. It's tough to disagree with that assessment. After all, he's ignited inflation at the highest rate since 1981, imposed sanctions on Russia that has sent the ruble to fresh highs and improved Russia's relations with the world outside NATO, the EU, and the Commonwealth nations.

    On his very first day in the White House, Biden issued an executive order halting work on the Keystone Pipeline and since has imposed policies that are wrecking the US energy infrastructure, limiting new exploration and drilling while promoting his variant of the "Green New Deal" at a time at which the country isn't prepared for such a radical switch, that, in the opinion of many experts, won't work.

    He falls off bikes, stumbles up stairs, mumbles during speeches, works maybe three hours a day and four days a week. Overall, the United States and the world would be better off with nobody in the White House if Biden is the best we're offered.

    Mainstream media is worthless.

    This goes without saying. The big networks - ABC, CBS, NBC, CNN, FOX - cover for inept Democrats, lie all the time, report what they want, ignoring or obfuscating important news while running a narrative that Democrats are good, Republicans are bad, and that transgenderism, diversity, inclusion and all the other catch-phrases they use are embraced by the majority in America. Nothing could be further from the truth, but they continue to press on, promoting radical agendas. The plug should be pulled on all of them.

    The major newspapers, like the Washington Post, New York Times, LA Times, Wall Street Journal and others are in on the fraud as well. Their coverage is slanted far to the left and their reporters are, by and large, nothing more than note-takers and messengers for the government.

    The US Congress doesn't serve the people.

    Besides the stimulus checks in January, name one thing the US congress has done this year to help ordinary Americans.

    Never mind.

    The Federal Reserve is a huge problem.

    Established in 1913 by foreign banking interests, the Federal Reserve System has impoverished the lower and middle classes and enriched corporations and the top one percent of the wealthiest in America for decades. They've had control of the currency for nearly 110 years and have managed to devalue the US dollar by 97%.

    Their complete control of markets around the world is stunning and devastating to regular people who try to earn an honest living, save, and raise families. The Fed was chartered by congress, which could cancel the charter at any time, but won't. The Fed causes booms, busts, and wealth disparity by means of policy, controlling interest rates and money supply. They've never been audited.

    So much power in so few hands is a danger to the entire planet. The Federal Reserve needs to be dissolved and the US needs to go back to the standards set forth in the constitution, and return to a bimetallic standard of gold and silver.

    There are more obvious things, like:

  • Sanctions aren't working
  • Treasury Secretary Janet Yellen is full of crap
  • The stock market is rigged by big money, the PPT, and the NY Fed's trading desk
  • Europe is falling apart
  • Canada is on the verge of tyranny (so is the US)
  • Australia is already gone
  • Congress wants Americans disarmed
  • Inflation is ruining middle class Americans
  • A recession is already underway
  • Crime isn't properly handled in big cities and is rising fast
  • People are fed up with government
  • That seems to be more than enough to foment public outcry and and uprising of the people, but it hasn't. This is what usually happens when governments overreach and begin to enslave its citizens. The public is too lazy, preoccupied, or too afraid to stand up and demand better treatment until it is too late. In terms of that timeline, the United States of America and its people are approaching the "too late" phase and there seems nothing capable of stopping the utter destruction of the country.

    As markets resumed trading on Monday, stocks bounded across the unchanged line, with the NASDAQ hit hardest. Once again, massive gains were made in the final few minutes of trading. At 3:09 pm ET, the Dow was down 76 points, the low of the day. It finished with a gain of 90 points. Very suspicious.

    After the close, Walmart (WMT) issued a dire assessment of current and future operations, slashing its profit forecast for the rest of the year. The company doesn't report eanings for its fiscal third quarter until August 16, but, this oddly-timed announcement sent shares of the nation's largest retailer tumbling by as much as 10% in post and pre-market trading.

    It also produced shock waves through the retail sector and the general market, sending stock futures deep into the red. European stocks are mostly lower, with Germany's DAX down nearly one percent.

    A down day on the stock market may be in the cards as the Fed begins its FOMC policy meeting on Tuesday, culminating with an expected 75 basis point rise in the federal funds rate on Wednesday. The first estimate of second quarter GDP is due for release at 8:30 am ET on Thursday.

    The fireworks are about to be lit...

    At the Close, Monday, July 25, 2022:
    Dow: 31,990.04, +90.75 (+0.28%)
    NASDAQ: 11,782.67, -51.45 (-0.43%)
    S&P 500: 3,966.84, +5.21 (+0.13%)
    NYSE: 14,899.09, +108.30 (+0.73%)


    WEEKEND WRAP: Huge Week Upcoming for Earnings Reports; FOMC Rate Hike; 1st Estimate of 2nd Quarter GDP

    Sunday, July 24, 2022, 8:02 am ET

    The week just past was notable for nothing of substance happening. It was, in many ways, a typical mid-summer week for the stock market, with financial talking heads drooling over earnings reports even though most of them were uninspiring and some were ostensibly sub-par. There was the usual drumbeat of bad economic reports, fake presidential flubs, flounders, and flops, ending with Joe Brandon coming down with a case of the sniffles, or, as is now the case when people are up to no good and down to their last excuses, COVID.

    Poor Brandon. He just can't catch a break. Or a ball. Or a joke. Or his dog. Maybe a falling knife, like his approval rating.


    Stocks

    There is no way to put a better spin on this week as it was the week before the FOMC meeting. It seemed to be the order of things to ignore anything that wasn't an instant catastrophe and just buy the damn dip (BTDD), where good news was good news if there was any (there wasn't) and bad news was just discarded as it went against the narrative and flow.

    Most people were complaining that stocks weren't going down, which is a complete sea change from the past 12 years. Retail investors were feeling like they weren't part of the story, didn't get the memo, or somehow were wrong about everything. Inflation continues to rage on, more people are picking up unemployment checks, most comapanies were reporting second quarter results that beat lowered expectations and were either lower than the last quarter or year ago results, or both. While SNAP, IBM, and Discover took on water, the rest of the market just took off, much to the chagrin of some day-trading demons who thought the bear market would just continue right along without taking a break.

    Well, they were wrong. Stocks had one of the best weeks of the year, and while that isn't saying much, it stil had plenty of doom-chasers wrong-footed. If that's too many hyphenated words in a row, apologies.

    Moving on, the coming week offers not only the FOMC policy meeting and announcement, but a bevy of top names reporting first quarter results. For a capper, the first estimate of second quarter GDP will be announced on Thursday, prior to the opening bell. As dull as last week was, this one may be an over-the-top bell-ringer (sorry).

    The Atlanta Fed's GDPNow forecast for the second quarter sees GDP falling by 1.6%. That's on top of the -1.4% from the first quarter, which, as many have pointed out, would be the textbook definition of recession. It used to be, using textbooks prior to 2008, when the NBER - the people who "officially" record economic events - changed their definition of a recession (just in time for the GFC) in January, 2008.

    IN any case, if the GDPNow folks are on the right track, it doesn't look good for the US economy and the usual "experts from JP Morgan or Goldman Sachs or Deutsche Bank will once again be proven to be vastly overpaid.

    Among companies reporting this week, in somewhat chornological order, include, on Monday: Infosys (INFY), Newmont (NEM), Whirlpool (WHR), Covenant (CVLG); Tuesday: UPS (UPS), Coca-Cola (KO), General Motors (GM), McDonald's (MCD), Raytheon (RTX), 3M (MMM), Alphabet (GOOG), Microsoft (MSFT), Visa (V), Chipolte (CMG); Wednesday: Shopify (SHOP), Boeing (BA), Spotify (SPOT), Waste Management (WM); T-Mobile (TMUS), META (META), Ford (F), and Etsy (ETSY); Thursday: Pfizer (PFE), Valero (VLO), Southwest Airlines (LUV), Mastercard (MA), Merck (MRK), Altria (MO), Apple (AAPL), Amazon (AMZN), Intel (INTC); Friday: ExxonMobil (XOM), Chevron (CVX), Proctor & Gamble (PG), and Weyerhauser (WY).

    That's far from a complete list. More than enough for the market to digest, or divest, or not.

    Treasury Yield Curve Rates

    The market for US treasuries is broken. While the Federal Reserve may still believe they have a handle on it, or wish the world to believe such, nothing could be farther from the truth. In no man's mind does a six-month bill yeild a mere three basis points less than a 30-year bond.

    The curve is inverted from six-months out to seven years, all higher than the 10-year note, the benchmark yield, which fell this week another 16 basis points, from 2.93% to 2.77%, but not before peaking at 3.04 on wednesday, the 20th. In two days, the 10-year fell 27 basis points, more than 1/4 percent. The Fed, being the buyer of last resort, has been pushing the yield down on long-dated maturities while allowing the short end of the curve to rise dangerously. This can be partially explained by the ongoing inflation and upcoming federal funds rate policy decision this coming Wednesday which will push rates higher from their current range of 1.50%-1.75%, but the reality of the situation leaves lenders and borrowers at the whims of the market, which appear to be blown by the wind.

    This year alone, the 10-year note has been as low as 1.63% and as high as 3.47%. That huge swing of 1.84%, or 184 basis points, doens't exactly inspire confidence in lenders or borrowers. Fixed income is supposed to be staid and boring, steady and unexciting. This year has been more like the Wild West with a shootout on every streetcorner.

    The FOMC plans to announce a 75 basis point hike to the federal funds (overnight) lending rate on Wednesday at 2:00 pm ET. There are bets that they will only hike a half percent and others that are urging the Fed to go "all in" against inflation with a full one percent raise. The competing themes of inflation and recession are causing the Fed to take the path of least resistance, which, in this instance, is likely to be 75 basis points. Anything other than that will raise eybrows and rattle the already frayed nerves of anxious investors in all global markets.

    Date 1 Mo 2 Mo 3 Mo 6 Mo 1 Yr
    06/24/2022 1.19 1.60 1.73 2.51 2.83
    07/01/2022 1.27 1.68 1.73 2.52 2.79
    07/08/2022 1.57 1.92 1.98 2.68 2.96
    07/15/2022 1.98 2.26 2.37 2.94 3.12
    07/22/2022 2.15 2.29 2.49 2.97 3.01

    Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
    06/24/2022 3.04 3.13 3.18 3.19 3.13 3.51 3.26
    07/01/2022 2.84 2.85 2.88 2.92 2.88 3.35 3.11
    07/08/2022 3.12 3.14 3.13 3.16 3.09 3.53 3.27
    07/15/2022 3.13 3.14 3.05 3.03 2.93 3.34 3.10
    07/22/2022 2.98 2.93 2.87 2.85 2.77 3.23 3.00
    Oil/Gas

    WTI crude continued its swoon, closing out the week at $95.02, down a couple of bucks from the previous Friday, and the lowest closing price since April 11 ($94.29). Any issues with supply and/or refinery capacity seem to have been worked out and prices are clearing to the downside without much in the way of support. Demand has slowed as US and European consumers are tapped out and weary of the extreme pricing. If current trends continue, $85 oil may become the norm within weeks. Gloom and doomers be damned.

    Gas at the pump has also been falling, though not quite as rapidly as oil nor as readily as consumers would like. If the economy teeters over from high inflation to rolling recession, look for gas prices to stabilize around $3.25-3.65 a gallon, except in the West, where it will remain in a higher range than the rest of the US.

    The Southeast is the pace to be. Every state east of New Mexico except North Carolina and Florida is showing an average price below $4.00/gallon. The national average has fallen to $4.35, 20 cents lower than the week prior and 60 cents lower than a month ago. All of the Northeastern states are under $5.00 and only the Western states of California, Oregon, Washington, Utah, and Navada are over that level, the highest being California, at $5.73. There is real relief being felt for a dwindling number of regular drivers.

    Fact of the matter is that people are just driving less than a few years ago. If the pandemic years of 2020 and 2021 taught Americans anything, it was that a five day a week commute to an urban office location was unnecessary. Instant and on-demand communication via the internet has changed the corporate landscape permanently. Many former 9-to-5 types are now heading to the office only once of twice a week and productivity has not suffered.

    There never was a shortage of fuel. No gas stations closed. It was all political. Energy companies made windfall profits and the politicians cashed in on their stocks. Inflation was all about money, or, as Milton Friedman correctly stated some many years ago, "inflation is always and everywhere a monetary phenonemon."

    Here's a very animated Milton Friedman, in 1978, explaining that the federal government and the Federal Reserve are entirely responsible for inflation.

    Rising food and energy costs may have been the plage for the past 18 months, but indications suggest that's all about to change.


    Bitcoin

    Remaining in a tight range for over a month now, Bitcoin enthusists were hoping for a breakout when the grand-daddy of crypto rocked over $24,000 on Wednesday, but the euphoria was very short-lived, as Bitcoin topped out at $24,207.50 and then began to fall. The price was over $24,000 for less than two hours. By Thursday afternoon, the price had fallen into the mid-$22,000 range.

    As of Sunday morning, Bitcoin hovered around $22,570, without direction. It, and the entire crypto space continues to look like a lost cause. Bitcoin and crypto have failed on almost all important promises. It is not useful currency, nor is it a good store of value. Privacy and anonymity have been dashed upon the shores of government regulation and media FUD. It's traceable, trackable, and can be easily lost or stolen. Sometimes, as in recent cases involving "stable-coins" and exchanges, both.

    For those other than the early adopters who already cashed out, it's been a sad adventure. Anybody buying into the hype now is seriously confused or about as demented as the current occupant of the White House.


    Precious Metals

    Gold price 06/17: $1,840.60
    Gold price 06/24: $1,828.10
    Gold price 07/01: $1,812.90
    Gold price 07/08: $1,740.90
    Gold price 07/15: $1,706.50
    Gold price 07/22: $1,725.30

    Silver price 06/17: $21.59
    Silver price 06/24: $21.13
    Silver price 07/01: $19.86
    Silver price 07/08: $19.24
    Silver price 07/15: $18.66
    Silver price 07/22: $18.49

    Gold had its first winning week in the last six, though silver continued to decline. Both of the precious metals have been in deep red since March 8, the day nickel broke the London Metals Exchange (LME). Analysts, dealers and traders are now considering that day to be precisely the day that the London's stranglehold on commodity markets was broken. Confidence in the market was shattered as the LME susupended trading and cancelled trades as the price of nickel exploded 250% higher in just hours.

    Sanctions against Russia were also adding to the pressure on the LBMA, the COMEX and CME to retreat from their decades-long suppression of gold, silver, and other commodities and carve out a solution, lest they become pariahs to their own member traders. Consequently, concentrated short positions in gold and silver had to be unwound, albeit gradually, so as not to cause severe losses or panic, which explains the four-month price declines. That stage of the plan appears to be nearing an end. New Basel III capital requirements have changed the game for the better. Precious metals may be at or near a bottom and the resulting rally may turn out to be one for the ages.

    For the better part of the past 50 years, gold and silver have been suppressed in order to support the US dollar, which, coincidentally, fell this week, hitting 106.55, after cresting at 108.08 the prior Friday (July 15).

    The buck could realistically go higher, as the Dollar Index (^DXY) is nothing more than a gauge of the dollar against other fiat currencies, though it has more than an equal chance to decline, since the run-up has been from May of 2021, at around 90. With another rate hike coming this week, markets could careen in a multitude of directions as the Fed has - judging by the state of all markets: commodities, euqities and fixed income - lost control. There are just too many moving parts between the various markets and geo-political considerations.

    A likely scenario would be one that is bad for equity traders and holders, mixed for fixed income players, and downright existential for long-suffering gold and silver investors. The dollar as the world's reserve currency is dying. A BRICS currency is on its way. Gold and silver will lead the way back to honest money.

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

    Item/Price Low High Average Median
    1 oz silver coin: 28.89 44.00 33.86 33.18
    1 oz silver bar: 27.45 41.00 34.59 34.14
    1 oz gold coin: 1,830.07 1,943.40 1,871.32 1,878.36
    1 oz gold bar: 1,805.55 1,872.60 1,826.67 1,820.47


    The Single Ounce Silver Market Price Benchmark (SOSMPB) declined significantly, to $33.94, a loss of $3.03 from the July 17 price of $36.97.


    WEEKEND WRAP

    Stocks put in nice gains, marking the sixth week of the recent pattern, down, up, down, up, down, up. Unless there's something truly remarkable about the Fed or second quarter GDP, this pattern should continue. You know what to do...

    At the Close, Friday, July 22, 2022:
    Dow: 31,899.29, -137.61 (-0.43%)
    NASDAQ: 11,834.11, -225.50 (-1.87%)
    S&P 500: 3,961.63, -37.32 (-0.93%)
    NYSE: 14,790.79, -80.34 (-0.54%)

    For the Week:
    Dow: +611.03 (+1.95%)
    NASDAQ: +381.69 (+3.33%)
    S&P 500: +98.47 (+2.55%)
    NYSE: +341.11 (+2.36%)


    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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