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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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Stocks in Flux as BRICS Add Six and Markets Await Jackson Hole Speech by Fed Chair Powell

Friday, August 25, 2023, 9:15 am ET

Whatever triggered Thursday's slide, whether fear of Fed Chairman Jerome Powell delivering another hawkish tome at the Jackson Hole conference or latent musings over BRICS announcing the addition of six new members on January 1, 2024, it caught people's attention. The countries that will be joining BRICS are Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. The combined population of the six new members is close to half a billion people, adding to the BRICS population dominance over any other trading bloc.

In any case, market declines began in earnest promptly at 10:00 am ET, about the time T-Mobile announced layoffs of 5,000 employees. The drop in durable goods orders (-5.2% on expectations of gains of 4.2%) and initial unemployment claims may also have played a role, though that data was announced prior to the market open, at 8:30 am ET.

The sudden shift in sentiment was more than likely just another market-rigging pump-and-dump churn, which has been a signature for US stocks of late, especially the Dow Industrials. Stocks slid steadily downhill the remainder of Thursday's session, adding size to mounting losses that have accumulated throughout August.

While Bloomberg posted a somewhat misleading article early on Friday, touting stocks "on track for weekly gains" when they're actually mixed, with the Dow staring at a third consecutive weekly loss. As of Thursday's close, the Dow is off some 401 points, while NASDAQ is up 173, but the S&P is near flat, up just six points, and the NYSE Composite is down 67.

Gap Inc. (GPS) and Nordstrom (JWN) reported quarterly results after the market close on Thursday. Gap's results were mixed. Adjusted earnings of $0.34 topped estimates for 10 cents per share, but revenue of $3.55 billion fell short of the $3.57 billion estimate. Shares are higher in pre-market trading by less than one percent, trading in a range of $9 to $10, far from the May 2021 high of $35.

Nordstrom beat the Street on both top and bottom lines, but warned of historically high theft levels, specifically "flash mob" type of heists involving multiple perpetrators. Nordstrom stock, a steady loser for the past five years running, is trading two percent lowe in pre-market, at 16.33.

As far as Friday's markets are concerned, whatever was the catalyst for Thursday's deep dive into the red, it has apparently all been resolved as of Friday morning. Equity futures are uniformly higher, with the Dow leading the charge to the opening bell, though it is up less than half a percent an hour before markets open.

adding to the mixed message of this morning, early trading is unlikely to indicate much of anything, as Powell's Jackson Hole speech won't begin until 10:00 Eastern time. That's when the real action will commence.

So far, however, stocks seek a rosy close to the week. Asian stocks were up overnight and European indices are all sporting midday gains.

Gold has made progress all week after bottoming out near $1900 the week ending August 18. It's currently bid at $1,945.20 according the the COMEX continuous contract. This is a significant shift from the steady string of declines that prevailed over the prior three weeks.

Silver has also managed to catch multiple bids, peaking at $24.65 on COMEX. Bear in mind, spot prices are below those of the continuous contract, as they are hardly useful any more as premiums on both gold and silver remain at extremely lofty levels.

Meanwhile, over in the land of fixed income securities, US treasuries have retreated on the long end, with the yield on the 10-year note around 4.23% after peaking earlier in the week at 4.34%. The 30-year bond has slipped 15 basis points, from its high of 4.45% to 4.30%.

The obvious tinkering in treasuries, which constitute benchmarks globally, is only making matters worse and more distorted, exacerbating the inverted quality of the yield curve.

The 30-year fixed rate mortgage hitting 7.5% isn't helping matters.

At the Close, Thursday, August 24, 2023:
Dow: 34,099.42, -373.56 (-1.08%)
NASDAQ: 13,463.97, -257.06 (-1.87%)
S&P 500: 4,376.31, -59.70 (-1.35%)
NYSE Composite: 15,683.01, -140.27 (-0.89%)


BRICS Conference Not Consequential, but Plans to Add Six Members; Nvidia Blows Out Earnings, Stock Soars; Jackson Hole Opens

Thursday, August 24, 2023, 9:25 am ET

After all the talk and speculation about a new reserve currency or a trading mechanism coming out of the 15th BRICS summit held this week in South Africa, it turns out that all of the predictions were dead wrong.

The BRICS issued the XV BRICS Summit Johannesburg II Declaration [PDF], a 26-page PDF that speaks broadly about global issues, embraces not only the UN, but the IMF, 2030 Agenda for Sustainable Development, climate change and reduced carbon emissions initiatives, and the establishment of sustainable industries, multi-polarism, international cooperation, and a host of other high-sounding platitudes that eventually amount to not much more than hot air, similar to the usual noise that emanates from G7 meetings.

The only notable policy change was the agreement to invite new members. The brief mention near the very end of the communique reads thus:

91. We have decided to invite the Argentine Republic, the Arab Republic of Egypt, the Federal Democratic Republic of Ethiopia, the Islamic Republic of Iran, the Kingdom of Saudi Arabia and the United Arab Emirates to become full members of BRICS from 1 January 2024.

The wording, "we have decided to invite" is something of a misnomer. For all intents and purposes, these countries have already applied formally for membership and most have developed commercial, political, and military ties to the existing BRICS countries. Inclusion as of January 1, 2024 is probably nothing more than a formality and all the "invitees" are expected to accept membership as there are no rigid guidelines or criteria to follow.

While the "new world currency" was removed to a back burner, the absence of any mention of it in the final statement from the summit leaves open the impression that there is still work to be done before the BRICS upset the entire global economic order, which is probably a prudent decision, given how easily triggered to military responses the US and its NATO allies are.

Perhaps, in consideration of ongoing conflicts in Ukraine, Sudan, Syria, Yemen, and less-impactful situations in Niger, Haiti, and elsewhere, BRICS leaders may have thought it best to not appear belligerent, instead, delivering a sober, friendly-sounding declaration that won't double the price of gold or result in a nuclear conflagration and/or World War III. For all their military might, BRICS countries, led by Russia and China, have repeatedly and openly cited their opposition to armed conflict as a means of settling disputes and their positions seem to be sincere. Perhaps they also understand the self-destructive nature of Western politics and are content to patiently witness the slow collapse of the West or wait for leadership change.

Whatever the case, BRICS are likely to soon become BRICS+, cementing a foothold in the Middle East and Northern Africa, while acknowledging Argentina's urgent need for monetary reform and trade enhancements, over the rumored protestations of neighboring Brazil. With Argentina's ascension, the BRICS have the two largest countries in South America within their camp.

Invitation to Iran, along with Saudi Arabia was almost a no-brainer. It would have been very poor politics indeed to invite one and not the other, so the BRICS closed down any animosity that may have existed and will soon have control of both sides of the waterways accessing the Persian Gulf. No doubt President Xi of China must consider this vital area of extreme importance to not only the BRICS movement, but also to its own Belt and Road Initiative (BRI).

Meanwhile, across the Atlantic, life proceeded along the usual lines of ignoring the obvious on Wall Street, flipping off Standard & Poor's and their bank downgrades, sending stocks high on Wednesday despite substantial negative overhangs.

In addition to the burgeoning banking crisis, the Labor Department on Wednesday lowered its estimate of total payroll employment in March by 306,000, a revision Wall Street naturally regards as not a big deal, or perhaps even a good sign that the Fed might pause its rate-hiking regime as the economy is showing signs of buckling.

In earnings news, Nvidia (NVDA) came to the market's rescue after the close Wednesday by blowing out second quarter earnings. The stock was seen trading six to eight percent higher overnight and in the pre-market. On the flip side, another retailer is feeling the pinch from mass robberies at its stores. Dollar Tree (DLTR) attributed losses to ongoing theft at a multitude of locations, the stock trading down about seven percent.

With markets set to open shortly, stock futures are mixed, with the Dow lower and the NASDAQ and S&P higher. Gold and silver have been exhibiting signs of strengthening while crude oil goes in the opposite direction. WTI is currently pricing around $78.50.

As the BRICS meeting concludes, the Fed's Jackson Hole Symposium opens today, with Chairman Jerome Powell set to deliver the keynote address on Friday.

Have at it.

At the Close, Wednesday, August 23, 2023:
Dow: 34,472.98, +184.18 (+0.54%)
NASDAQ: 13,721.03, +215.13 (+1.59%)
S&P 500: 4,436.01, +48.46 (+1.10%)
NYSE Composite: 15,823.27, +132.97 (+0.85%)


Retail, Banks Lead Tuesday Declines; BRICS Have Not Produced Fireworks... Yet: AI Bets All In on Nvidia as Foot Locker, Peloton Implode

Wednesday, August 23, 2023, 9:10 am ET

Retail stocks and financials took it on the chin Tuesday as the BRICS summit commenced in South Africa.

News flow wasn't very positive prior to the opening bell, as Dick's Sporting Goods (DKS) went limp in the pre-market, losing more than 20% after posting ugly second quarter numbers, with earnings per diluted share of $2.82 compared to $3.25, or $3.68 on a non-GAAP basis, during the prior year quarter.

Macy's reported increasing delinquency rates on credit cards and BJ's Wholesale Club beat the Street estimates, but on an EPS basis, earnings of 97 cents per share were lower than the year-ago period of $1.03 and same store sales tumbled into the red, down 5.3% year-over-year.

All of these stocks opened to the downside and stayed lower the rest of the session. At the end of the day, BJ's was down 5.16%, Macy's fell 14.05%, but Dick's was simply pitiful, losing nearly a quarter of its market cap, down 24.15%.

The entire financial sector, from big banks to regionals to credit card purveyors, was stunned by downgrades from Standard & Poor's (S&P), specifically lowering their ratings on five regional banks: KeyCorp, Comerica Bank, Valley National Bancorp, UMB Financial Corp and Associated Banc-Corp. All traded uniformly four percent lower, except UMB Financial, which lost just more than three percent.

Elsewhere in the space, Bank of America dropped 2.44%, JP Morgan, -2.07. Wells Fargo was down 2.33% and Citigroup dropped 2.50%. Credit card pushers were also in the red, with American Express (AXP) falling one percent, Discover (DFS) losing 3.23% and CapitalOne (COF) down 3.93%.

Banks and financing companies are facing a mixture of exposure to a collapse of commercial real estate, shrinking deposit balances, credit card delinquencies and rising rates of defaults, and asset value deterioration from the Fed's lightning-quick interest rate increases over the past 18 months.

Goldmoney's Alasdair Macleod clarifies the assorted issues facing banks and other financial intermediaries in a recent essay

In the background lurks the BRICS, holding their 15th annual summit in Johannesburg, South Africa, as tension builds for Western economies over anticipation of the group's intentions toward a trading currency to compete with the hegemony of the US dollar.

As if downgrades, sagging retail sales, and the BRICS plans weren't enough, the treasury market is experiencing a massive selloff in long-dated maturities amidst the long-standing negativity of an inverted yield curve.

The 10-year note currently carries the lowest yield of the entire treasury complex at 4.34%. Comparatively, the 30-day bills are yielding a rotund 5.54%, while the 30-year yields 4.42%. Even though interest rates are already at multi-year highs, investors pile into the 10-year as a matter of survival. While the yield is less than what's available at both shorter and longer durations, many firms are committed by policy to hold it as part of their portfolios and its benchmark status brings in buyers no matter the environment.

However, rates are more than likely to increase even more as inflation seems to be not quite yet conquered and the Fed's main weapon is a higher for longer strategy, putting banks in deeper and deeper water.

On the international front, the BRICS summit has not produced tangible fireworks that would affect markets in a significant manner, but the countries participating are unlikely to show their hands until issuing some sort of concluding memorandum on the 24th, coinciding with the commencement of the Kansas City Fed's Jackson Hole Symposium, which runs through Saturday, August 26.

After the close Wednesday, tech darling Nvidia releases second quarter results, largely expected to be huge, given the surge in AI-driven strategies. Shares of the chip-maker have been on a roller coaster the past month, trading in an elevated range between 408 and 481.

Checking in on earnings releases Wednesday morning, it appears another "woke" enterprise is going belly up. Peloton (PTON), once valued as high as $162/share (December, 2020), closed Tuesday at $6.99, but is trading around $5.00 per share after the company reported a net loss of $241.8 million, or 68 cents per share, for the three-month period that ended June 30, compared with a loss of $1.26 billion, or $3.72 a share, a year earlier. Sales dropped to $642.1 million, down from $678.7 million a year earlier.

Oh, ye of little faith... and big bellies.

Seems being in shape is out of vogue this morning, as the purveyor of running shoes and other sports-related footwear, Foot Locker (FL) appears to be something of a dumpster fire, with the stock down by more than 30% in pre-market trading. Details: Q2 Non-GAAP EPS of $0.04, revenue of $1.86B (-9.9% Y/Y), comparable-store sales decreased by 9.4%. Fiscal year 2023 outlook: calls for sales to be down 8.0%-9.0% from prior guidance of 6.5%-8.0%, with comparable-store sales to be down 9.0%-10.0% from prior guidance of 7.5%-9.0%. Oops!

Kohl's (KSS) joined the party by reporting sales down 53% in the quarter, as adjusted earnings per share came in at $0.52, above analyst estimates of $0.23 for Q2, according to Bloomberg data. Earnings per share were $1.11 in the same time period a year ago. Shares are trending slightly (about 1%) higher as it looks cheap at around $25 after falling from a high of $62 in March, 2022.

Bucking the trend was Abercrombie & Fitch (AF), soaring 16% in pre-market trading. The company blew past estimates for the second quarter, reporting EPS of $1.10 vs. 17 cents expected, and revenue of $935.3 million vs. $842.4 million expected. Net income for the three-month period rose to $56.9 million, or $1.10 per share, from a loss of $16.8 million, or -33 cents a share, in the year-ago period.

Abercrombie said it now anticipates net sales will rise by about 10% for the full fiscal year, up from $3.7 billion in the prior year. It had previously expected growth of between 2% and 4%.

The market weighed in a half hour prior to the opening bell in NY by sending equity futures lower, though still modestly positive. WTI crude oil is down, dropping to as low as $78.31, the cheapest its been in a month. Gold futures for October are at $1937 and rising, as is silver, vaulting over $24 per troy ounce.

BRICS summit enters day two. Fed Chairman, Jerome Powell is set to address the assemblage at Jackson Hole on Friday morning.

Carry on...

At the Close, Tuesday, August 22, 2023:
Dow: 34,288.83, -174.86 (-0.51%)
NASDAQ: 13,505.87, +8.28 (+0.06%)
S&P 500: 4,387.55, -12.22 (-0.28%)
NYSE Composite: 15,690.28, -55.93 (-0.36%)


Watch BRICS Summit LIVE; Leaders to Deliver Remarks; Lowe's, Baidu Beat, Macy's Sees Credit Card Delinquencies; Dick's Slammed

Tuesday, August 22, 2023, 8:56 am ET

While it's pre-dawn in Los Angeles, evening in Shanghai, it's early afternoon in Johannesburg, South Africa, at the site of the 15th annual BRICS summit, which has the potential to make monumental changes in global economics and allow an escape route from the debt traps of the West.

Interested parties can view the various speeches, discussions and panels live, below (thanks, Youtube).

Thus far, on day one of the summit, talk has centered around trade and commerce, and there was already glancing mention of a unified currency facilitating trade among BRICS countries and peripheral nations. It is likely that the most anticipated development of the conference will be held off until near the end, when some kind of announcement concerning agreement on a trading currency will be formally introduced.

As the summit progresses, anticipation rises in BRICS and Western finance centers. The world may experience a radical redesign of global economics in a matter of days.

Beginning at 14:10 GMT (10:10 am ET), the leaders of the five BRICS nations are slated to deliver remarks. Here's the schedule:
14:10 - 14:20 gmt - Statement by H.E. Mr Cyril Ramaphosa (10 mins) President of the Republic of South Africa
14:20 - 14:30 gmt - Statement by H.E. Mr Luiz Inácio Lula da Silva (10 mins) President of the Federative Republic of Brazil
14:30 - 14:40 gmt - Statement by H.E. Mr Vladimir Putin (10 mins) President of the Russian Federation (Pre-recorded message)
14:40 - 14:50 gmt - Statement by H.E. Mr Narendra Modi (10 mins) Prime Minister of the Republic of India
14:50 - 15:00 gmt - Statement by H.E. Mr Xi Jinping (10 mins) President of the People's Republic of China

In the meantime, financial centers continue to operate as normal, with the overhang of massive change blurring the usual market dynamics in varied, and mostly unseen, ways.

As the opening bell in the US and other Western Hemisphere countries approaches, gold and silver are making a statement, even in the corrupt, heaviy suppressed COMEX futures markets. Gold has regained the $1900 level, while silver tipped its hand on Monday, rising from $22.79 on Sunday afternoon to $23.30 through Monday's New York close and heading higher in early trading.

Monday's equity markets displayed more resilience following a week that threatened the "all is well" narrative so often spouted by supporters of the current financial regime. Stocks took an early turn lower, but were boosted back into positive territory, led by the NASDAQ. At the end of the day, stocks were split, with the Dow and NYSE Composite lower, the S&P and NASDAQ sporting gains.

Fully detached from reality, Western financial media is already honing in on AI and Nvidia's earnings announcement, even though the company won't report until after the close on Wednesday. Viewers and readers shouldn't expect much in the way of balanced reporting on the BRICS conference from Western media outlets. A number of hit pieces have already been making the rounds, from the usual sources of mis- and dis-information propaganda, The Washington Post, New York Times, the Guardian, Financial Times, BBC, and others.

Eary Tuesday morning, building supply and home improvement retailer Lowe's (LOW) reported second quarter earnings.

Here's what investors saw as a prime opportunity to spike the stock two to three percent higher in pre-market trade:

"Lowe's said adjusted earnings for the three months ending in July were pegged at $4.56 per share, a 2.4% decrease from the same period last year but 6 cents ahead of the Street consensus forecast of $4.49 per share.

Group revenues, Lowe's said, slipped 9.25% to $24.96 billion, narrowly missing analysts' estimates of a $25 billion tally. U.S. same-store sales fell 1.6%, compared to the Refinitiv forecast of a 2.4% decline."

-- TheStreet.com

While the company managed to beat lowered expectations, note that EPS was down 2.4% from a year ago, gross revenues down 9.25%, and same-store sales dropped 1.6%. Bear in mind, none of these figures are indexed to inflation, which makes the revenue figure look much worse, since prices in 2023 are much higher than they were in 2022.

This reeks of goal-seeking behavior by manipulative Wall Street henchmen. The only reason this company, and many others, continue to survive is because prices have risen so much and so fast. In normal times, Lowe's, with its nearly 10% revenue decline, would be roundly thrashed. Similar results from other reporting companies saw initial gains, only for the stock to sell off in subsequent sessions.

A few prime examples include Lowe's competitor, Home Depot, which got a boost last week on earnings to as high as $336, but closed Monday at $324. Ditto for Target (TGT), which spiked 10 points - from 125 to 135 - on its earnings release August 16, only to close at 127.79 Monday. Investors are being routinely fooled by lowered expectations, and beats that are below year-ago results. The misleading audacity of these reporting companies and the financial media is egregious and undermines confidence in markets and companies rather than being supportive, as intended.

Eventually, everybody catches onto the elite plans of pump and dump, resulting in a severe downturn or crash. The amount of BS that is being shoveled by financial and mainstream media these days would fill most of the nation's landfills.

Macy's provided a dose of reality, beating estimates, while providing insight into credit card delinquencies, saying their earnings were "negatively impacted by an increased rate of delinquencies across all stages of aged balances within the portfolio." In other words, some people are so tapped out, they're missing payments.

Macy's reported adjusted EPS of 26 cents versus 13 expected, and same-store sales -7.30% versus -9.36% expected. Year-over-year EPS has collapsed from $1.00 in 2022 to 26 cents in 2023. For the mathematically-challenged, that's a 74% decline. Ouch.

The retailer reiterated that sales volume would be down by as much as seven percent this year. Shares of Macy's are down pre-market. The price has fallen from $24.41 in early February to a close of $14.73 on Monday, trending even lower.

Baidu (BIDU), China's version of Google, smashed expectations with a blowout quarter, temporarily shutting down talk of China's imminent economic collapse.

Dick's Sporting Goods, the "woke" anti-gun retailer, was slammed 20% in pre-market trading after reporting earnings per diluted share of $2.82 compared to $3.25, or $3.68 on a non-GAAP basis, during the prior year quarter. Some people obviously didn't get the "Bidenomics" memo.

The Richmond Fed and Existing Home Sales are due out at 9:00 am ET.

At the Close, Monday, August 21, 2023:
Dow: 34,463.69, -36.97 (-0.11%)
NASDAQ: 13,497.59, +206.81 (+1.56%)
S&P 500: 4,399.77, +30.06 (+0.69%)
NYSE Composite: 15,746.21, -3.96 (-0.03%)


WEEKEND WRAP: Stocks, Long-Dated Treasuries Under Pressure; BRICS Summit and Fed's Jackson Hole Symposium on Tap

Sunday, August 20, 2023, 12:52 pm ET

Stocks have had a good year thus far, though the month of August has evidenced a shift toward profit-taking and distribution, as Europe and the US economies gird for what appears to be a nasty recession in the fourth quarter, stretching into 2024.

Companies reporting what appear to be in-line or above-expectation earnings have been met with waves of selling. Bonds, measured by rapid yield increases in long-dated treasuries, have been under extreme pressure since mid-May, with yields rising dramatically over the past three weeks.

The underlying causes constitute a menu of distressing situations, from weakening economies (most recently China) to confusion and apprehension concerning the future of the US dollar and its reserve currency status. Countries, led by China, Russia, and cohorts in Asia, the Mideast, Africa and South America, have been encouraging and engaging in bi-lateral trade, bypassing the dollar, the trend unmistakable with the BRICS summit now just days away.

Currency wars are well underway. Russia's rouble has been trounced of late, along with China's yuan and Argentina's peso, which fell to 0.002 to the US$. This is the natural extension of de-dollarization, as Western nations fight back in a blistering assault on the currencies of the leaders of the BRICS and their allies.

Debt, currency confidence, and interest rate woes are exacerbated by the unease surrounding the BRICS summit in the week ahead. By as early as Tuesday there could be a radical shift in global economics... or not. No matter what happens in South Africa, site of the BRICS summit, or, consequently, Thursday and Friday at the Jackson Hole Symposium, a world of hurt lies in wait, not just for some countries, but probably all countries. The global economy is stressed to a point not seen since Nixon shifted global standards by closing the gold window back in 1971.

What occurs this week and in months ahead will have implications likely to persist for decades.


Stocks

No doubt, there are serious concerns among investors, obviated by the struggles of stocks through the middle of the week, as declines were maintained on Tuesday, Wednesday, and Thursday, before leveling off in a relief wait-and-hold on Friday, the majors closing near the unchanged mark on the day.

Being a big options expiration day, Friday's trading was quite the exercise in react and reload. There were likely more than a handful of traders caught wrong-footed, but, by mid-morning the fear trade had been wrung out and sporadic bouts of dip-buying emerged. Re-positioning for September and October was on the radar, though trading was light. That's not likely to be the case when markets open Monday. With the back-to-back BRICS summit and the Jackson Hole symposium Tuesday-Wednesday and Thursday-Friday, respectively, widespread turmoil is to be expected as the world prepares for shifting from fiat to real money, i.e., backed by physical assets, presumably gold.

Losses taken over the course of the week were just half the story, almost literally, since the peak of July 31. For the month thus far, the Dow has shed 1,130 points; the NASDAQ, 1,056; and the S&P, 220. Fittingly, the tech-heavy NASDAQ, which has had the best performance of the major indices this year, that has performed the worst, losing 7.36% over the past three weeks.

These declines accumulated over the latter half of second quarter earnings season. Many companies are showing signs of stress and distress, with revenue and EPS below what was reported for the same period a year ago. Sequential earnings disappointment does not bode well for future growth. The US economy would have to pivot in a very big way for companies to start showing strengthening earnings and revenues, which, making matters even worse, are not indexed to inflation.

Currently, there are too many negatives in front of companies and quite a number have issued third and fourth quarter and full year earnings warnings, incluidng just this week, cuts to annual expectations by Home Depot (HD), Walmart (WMT) and Target (TGT). Fears of a recession, primarily from tapped-out consumers, are growing.

Though likely to take a back seat to news flows from the BRICS and Jackson Hole confabs, a few more important companies (mostly retailers) report second quarter earnings this week, among them:

Tuesday: Baidu (BIDU), Macy's (M), Dick's Sporting Goods (DKS), Lowe's (LOW), Toll Brothers (TOL), Urban Outfitters (URBN).

Wednesday: Peloton (PTON), Foot Locker (FL), Advance Auto Parts (AAP), Kohl's (KSS), Williams-Sonoma (WSM), Abercrombie & Fitch (ANF), Guess (GES). All-important Nvidia (NVDA) reports after the close.

Thursday: TD Bank (TD), Burlington (BURL), Petco (WOOF), Dollar Tree (DLTR), Nordstrom's (JWN), Gap (GPS), Intuit (INTU), Workday (WDAY).

Volatility almost certainly will be on the rise in the week ahead.


Treasury Yield Curve Rates

Date 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr
07/14/2023 5.37 5.49 5.49 5.53 5.52 5.34
07/21/2023 5.43 5.54 5.50 5.54 5.53 5.35
07/28/2023 5.47 5.54 5.52 5.57 5.54 5.37
08/04/2023 5.54 5.51 5.54 5.52 5.50 5.33
08/11/2023 5.54 5.51 5.54 5.54 5.52 5.36
08/18/2023 5.53 5.52 5.55 5.54 5.52 5.35

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
07/14/2023 4.74 4.35 4.04 3.94 3.83 4.11 3.93
07/21/2023 4.82 4.44 4.09 3.97 3.84 4.10 3.91
07/28/2023 4.87 4.52 4.18 4.08 3.96 4.22 4.03
08/04/2023 4.78 4.45 4.15 4.10 4.05 4.36 4.21
08/11/2023 4.89 4.56 4.31 4.26 4.16 4.45 4.27
08/18/2023 4.92 4.63 4.38 4.34 4.26 4.55 4.38

Ten- and 30-year Treasury yields peaked at their highest levels since 2007 and 2011, respectively on Thursday, then backed off slightly on Friday, though not by any substantial amount. They remain near the highest seen this cycle and are unlikely to back off much more. Driving long-dated maturities higher is massive redemption, the probable sellers being foreign holders of US debt, as the de-dollarization trend escalated this week. With China, Russia, and Argentina's currencies collapsing, there's little doubt that these countries and others sold off their reserves of US$ in retaliation, a trend that will almost certainly continue, squeezing the United States and the Federal Reserve into an ever tightening grip.

By far, the majority of investors, especially passive ones, keep eyes on stocks as a measure of economic strength or weakness. Nobody alive has ever witnessed a wholesale attack on US treasuries, and this one is in the very, very early stages. As currency wars heat up, the likelihood of a bond rout increases, the bottom line of defense the Federal Reserve, which would act as buyer of last resort should the situation become untenable.

Forget everything you think you know about bonds. An extended run on treasuries would force the Fed to give up its inflation fight and become a net buyer of treasuries again, expanding its balance sheet and eventually forcing Jerome Powell and his cohorts to start lowering rates rather than increase them.

The rise in yield on the long end of the treasury yield curve is pushing dis-inversion at a faster pace. 2s-10s advanced to -66, from the -73 level of the past two weeks. Full curve inversion, (1-month out to 30 years) continues to advance, to -115, from -127 last week, and -133 the week prior.

The curve could dis-invert (return to normal) rather rapidly if long bonds continue to be sold and especially if the Fed pauses in September. An emergency rate cut in response to either long bond outflows, further erosion of inflation via the CPI and PPI, or other external events would likely normalize rates much sooner than expected, fostering a global recession as markets are fractured and economies flounder.


Oil/Gas

Oil and gas stabilized and moved lower on the week, with WTI crude ending at $81.40, down significantly from last week's closing Friday price of $83.04/bbl., and the US national average for a gallon of unleaded regular gasoline leveled off at a robust $3.83, same as last Sunday.

WTI traded as low as $79/bbl. on Wednesday, and the outlook is for the price to remain in a range around $75-82, but not higher. Supply/demand dynamics suggest that because of the recent price run-up, everybody is pumping, despite indications to the contrary from OPEC+. America is pumping at the fastest rate since the Trump years, and may soon surpass the record level of 13 million barrels per day (November 2019), hitting 12.770 million in March.

According to gasbuddy.com, Mississippi remains the cheapest place to buy gas, dropping a penny from last week, to $3.29, followed by Louisiana ($3.35) and Alabama ($3.43). Texas held steady at $3.43, but Tennessee increased to $3.47, Georgia and North Carolina, both both backed off from $3.60, dropping to $3.56 and $3.58, respectively. Florida, the Southern outlier, rose eight cents, to $3.79.

California continued to ramp higher, with gas now averaging $5.20 a gallon, followed by Washington ($4.98). Oregon ($4.68), Nevada ($4.40), Utah ($4.21), Idaho ($4.09), Arizona ($4.23) were all higher over the course of the week. Illinois ($4.13) and Colorado ($4.00) increased the number of states at $4.00 or above to nine. Closing in are Montana ($3.99) and Wyoming ($3.94).

In the Northeast/Midwest region, beyond Illinois, the highest gas prices are in Pennsylvania ($3.89), New York ($3.88), and Michigan ($3.86). The lowest prices in the region can be found in Kentucky ($3.57) and Ohio ($3.57).


Bitcoin

This week: $26,066.20
Last week: $29,352.80
2 weeks ago: $28,992.70
6 months ago: $24,450.40
One year ago: $21,510.40

Bitcoin got slammed to earth this week, losing more than $3,000 in value, a drop of more than 10%.

As Money Daily posted last week:
Bitcoin got a bit of a boost this week but increasingly appears to be dead money.

...and the week before:
If Bitcoin is unable to hold $29,000, the subsequent decline should be back to the $25-26,000 area.

Here we are. That didn't take long, now, did it?


Precious Metals

Silver:Gold Ratio: 82.80; last week: 84.05

Per COMEX continuous contracts:

Gold price 07/21: $1,963.90
Gold price 07/28: $1,958.80
Gold price 08/04: $1,940.30
Gold price 08/11: $1,912.20
Gold price 08/18: $1,887.90

Silver price 07/21: $24.78
Silver price 07/28: $24.48
Silver price 08/04: $23.73
Silver price 08/11: $22.75
Silver price 08/18: $22.80

Gold continues to get slammed by the usual conspirators, while silver actually advanced on a weekly basis, though not before it was sold down to as low as $22.42 before rebounding. Considering that the ongoing price suppression tactics are focused on gold, silver may have shown its hand, as it is perceived as less of a threat in the global currency wars and also has been in supply deficit for three years running.

Of course, prices for both metals could make radical moves this week and forward. Everything is up for grabs.

Here are the most recent 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: 30.00 53.98 40.49 39.48
1 oz silver bar: 32.27 43.95 37.55 37.25
1 oz gold coin: 1,980.84 2,076.00 2,019.98 2,013.84
1 oz gold bar: 1,899.99 2,037.08 1,973.81 1,980.71

The Single Ounce Silver Market Price Benchmark (SOSMPB) rose massively, by $3.86, over the course of the week, to $38.69, from the August 11 price of $34.83 per troy ounce. This is one of the best gains on a weekly basis since the SOSMPB was established in early 2020, and a huge rise from last week, which the lowest price in the measure in nearly six months ($33.01, February 26).

Between supply deficits spanning three years, according to mining statistics, and the imminent onset of perhaps a new currency regimen out of the BRICS summit in the week ahead, silver seems to be running ahead of the crowd scrambling to buy before it is too late.

Silver, widely regarded as the most-undervalued asset on the planet, and also recognized as being a main target for price suppression by entrenched fiat currency purveyors in the LBMA, COMEX, and US Exchange Stabilization Fund, is sending a strong signal that change is imminent.


WEEKEND WRAP

There's a strong probability that things are going to get a bit crazy this coming week, with the BRICS Summit and Jackson Hole Economic Symposium being held back-to-back. Ominously, the Jackson Hole event has as its theme, "Structural Shifts in the Global Economy," suggesting that there is likely to be some pushback once the BRICS have concluded their meetings and disclosed the way forward.

As for advice, if one isn't already been apprised of current conditions, one might want to do some reading and catch up. This installment of "Live From the Vault" features Andrew Maguire and Rob Kientz, a forensic economist with some poignant and frightful insights. An investment of less than an hour viewing time may be worth its weight in gold.

This is not a week to make radical decisions based upon what happens at the dual economic conferences. Standing pat, doing nothing and taking a wait-and-see approach may not only be prudent financially, but soothing to one's mental state.

At the Close, Friday, August 18, 2023:
Dow: 34,500.66, +25.83 (+0.07%)
NASDAQ: 13,290.78, -26.16 (-0.20%)
S&P 500: 4,369.71, -0.65 (-0.01%)
NYSE Composite: 15,750.17, +15.79 (+0.10%)

For the Week:
Dow: -780.74 (-2.21%)
NASDAQ: -254.07 (-2.59%)
S&P 500: -94.34 (-2.11%)
NYSE Composite: -393.21 (-2.44%)
Dow Transports: -509.25 (-3.14%)


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 2023, Downtown Magazine Inc., all rights reserved.

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idleguy.com July 2024
IdleGuy.com July 2024, Vol. 1 #6