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Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
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Friday, September 3, 2021, 9:05 am ET
It's the first Friday of the month, so you know what that means: Non-Farm Payrolls at 8:30 am ET.
All you need to know:
120,000 jobs. Bad. Dow up 200.
900,000 jobs. Good. Dow up 200.
Wall Street wins no matter what, because if the numbers are good, well, that's good. Simple enough. If the numbers are bad, that's also good, because it means the Jerome Powell and his pals at the Federal Reserve won't be tapering their gaudy asset purchases any time soon.
Bad is good. Orwell strikes again.
On the good side, Yoshihide Suga, Japan's Prime Minister, announced he was stepping down, having served less than a year at the post. The NIKKIE surged 584 points. The bad: European stocks are lower, though only marginally.
Today is also the last trading session before Labor Day, after which everything changes. In addition to it being poor fashion form to wear white, kids go back to school, the weather is usually a little cooler, football overlays baseball for the sports nuts, congress comes back to DC from vacation, hedge fund managers return from the Hamptons, and there's some new shows on the TeeVee.
So, it's best to be like Boy Scouts used to be: Be Prepared. That used to be the motto. Today's Boy Scouts are too busy trying to figure out which of the 57 genders they might be.
Thursday's trading was quite revealing. Stocks struggled and only were saved by a massive influx of buy orders in the final 15 minutes of the session. At 3:47 pm, the Dow was up just 44 points. By 4:00 pm, at the close, it was up 131 points. Ditto the S&P. With 12 minutes left in the session, the S&P was up four points. It finished with a gain of nearly 13. The NASDAQ took a little longer. Just after 2:00 pm, it was down 24 points. It ended the day with a 21-point gain.
Not that this tells us anything other than the markets are pretty well-oiled by the bigger banks and brokerages, but it does suggest that somebody thought it might be a good idea to buy everything right at the close. That would make sense if our premise - that whatever the NFP print is, stocks will go up - is on target.
Waiting for 8:30...
In the meantime, here's the take at Yahoo! Finance: Economists look for decelerating job gains amid Delta spread. Wall Street is all set up for disappointment, but the expectations are still extraordinarily high: +733,000 expected after +943,000 in July. Bear in mind that July's numbers were completely fabricated, hiding an actual loss of more than 100,000 jobs.
Here's an interesting quote from Peter Quigley, head of Kelly Services:
"Employees are looking for something different. They're looking for flexible time. They're looking for remote opportunities. They're looking for enhanced stability in their job. They're looking for well-being programs," he added. "They're looking for up-skilling and career development opportunities. And of course, being in a safe environment and being in a welcoming environment."
Nowhere is mention made of what employees really want: Pay that keeps up with inflation, something that hasn't happened since the 1970s. No wonder so many businesses can't fill open positions. And why? Costs are through the roof, especially those mandated by government in the form of taxes, fees, and overburdening regulations.
So, here we go...
+235,000. Ugh. Big miss.
Total nonfarm payroll employment rose by 235,000 in August, and the unemployment rate declined by 0.2 percentage point to 5.2 percent. That's straight from the BLS website.
The takeaway is that the Fed won't be able to taper any time soon. Anybody with a finger on the Fed's pulse knows they can never cut rates and cutting back on asset purchases will cause stocks to decline. So, good news.
US stock market futures were flat to higher on the news, then crashed. European stocks sank lower. This should be a fun session for day-trading.
Markets are closed Monday for Labor Day. Enjoy the weekend.
At the Close, Thursday, September 2, 2021:
Thursday, September 2, 2021, 8:52 am ET
The NASDAQ made another new closing high on Wednesday, but the S&P 500 and the Dow fell short of record territory.
That's probably just fine for the S&P, but the Dow hasn't made a new closing high since August 16, when it finished the session at 35,625.40. That was more than two weeks ago. The horror!
Investigating the rather laggard recent performance of the Dow, we turn to the Dow Jones Transportation Average (^DJT), because, as any good Dow Theorist knows, where go the transports, so go the industrials... or something like that.
What do we have here? The transportation average has been unusually weak, even as oil prices have hit record highs. If one were to listen to mainstream pundits and analysts, they'd probably posit that the underperformance of the transports is more than likely tied to the Delta variant. Exactly how that logic works out is a question nobody bothers asking, because people are just lazy, but the answer is that it's just plain wrong.
The reason the transportation index closed Wednesday at 14,751.62 (up 90 points on the day) instead of nearer to its May 7 all-time high of 15,943.30 is because the recovering economy isn't exactly recovering. The last 18 months saw the transports move from a low of 6837.72 on March 16, 2020 to that crazy May 7 high. That's a gain of 133%. We should all be masters of the universe and work on Wall Street. No wonder they all have yachts and townhouses and mistresses and such.
That kind of advance is a bit much. Over the top would be putting it mildly. While the world was locked down, scared to breathe without the assistance of a mask, pondering whether to take the job of toxic Pfizer juice or the Moderna brew, the Wall Street whiz kids were making bank. Now that it has pulled back some 7.5%, are the wise guys getting a little concerned over their positions on not just the transports, but maybe the industrials as well?
Anyone who believes tech stocks, or consumer discretionary stocks are overvalued should take a closer look at some of the components of the Transportation Average. Included are railroads, airlines, trucking, marine transportation, delivery services, and logistics companies. American Airlines (AAL), Delta (DAL), Jet Blue (JBLU), Southwest Airlines (LUV) and United (UAL). Most of them nearly went out of business in 2020 and they're still nowhere near the levels of traffic and passenger load from 2019, but, shares of all of them have more than doubled off the 2020 bottoms. They don't even have P/E ratios because they're all still losing money, yet they're trading like growth stocks.
Of course, the transportation average also includes FedEx and UPS, which have soared during the economic lockdown, helping to boost the entire group of 20 stocks. One might be inclined to suggest that after a 133% ride, maybe it's time for just a wee pullback. And maybe that's why the Dow may have peaked.
Not that it has peaked, because that would be blasphemous, but, maybe it has. Nobody will know for sure whether the Industrials or Transports will end September or October in bear market territory, but if Fed Chairman Powell decides to throw a screwball instead of a curve at the next FOMC meeting, or, he faces an uprising from other Fed presidents, you can bet every last dollar both averages will fall and fall hard.
On the other hand, it might be just as wise to lean toward complete market control by the Fed, which has been on display for years and years. But, we all know this has to end somewhere, and it's likely to be a tragic finish.
Just in case anybody needs a hug with some good news, only 340,000 people filed for unemployment in the most recent survey week, as just reported by the Labor Department. That number is the lowest since March of 2020, but, let's be realistic here, anything over 200,000 is considered a bad reading.
So, there's your good news, and just like everything these days (think: "we airlifted 200,000 out of Afghanistan) it really isn't good enough to move the needle, despite media's best effort to make it sound great.
At the Close, Wednesday, September 1, 2021:
Wednesday, September 1, 2021, 8:57 am ET
Stocks were under pressure on the final day of August. Speculators and fund managers saw little need to add window dressing at the last minute as the month was all gussied up, especially on the NASDAQ and S&P 500, each of which made multiple all-time highs as the summer wore down.
The 30 Dow stocks were less impressive, though they did manage a gain of 1.2% for the month.
Considering the geopolitical tensions emanating outwards from Afghanistan, the varying degrees of virus panic, choppiness in the recovery, and alternating views on asset purchase tapering coming from different speakers at the Federal Reserve, it's remarkable that stocks have maintained and gained and that the general threat of global desperation has not affected the instincts of investors.
Is all of that about to change?
Probably not, at least not right away. After Chairman Powell soothed everyone's nerves with a maximum dose of dovishness in his keynote address at the Jackson Hole summit, stocks have elicited a air of coolness and calm, even though the speech was only three business days past. Even though Powell was signaling that the Fed isn't going to do anything to upset Wall Street any time soon, it's too early to tell whether the assembled genius of the investment community will stay the course or demand even more accommodation to the easy money regime.
It seems as though the world continues to spin smoothly, but society - especially in the United States - lurches from crisis to crisis. If it's not a pandemic, it's bungling by the Biden people, a hurricane, or floods, or fires in the Western states. It's a good thing the government doesn't have control of Mother Nature, because, judging by the response to natural disaster, giving the ability to induce weather or climate events to the federal folks would invite all too much headache, doom, and desolation.
The Biden people manage to make a mess of just about anything they can touch via policy. There's been untold numbers of data breaches, the weirdest being the Colonial Pipeline a few months ago, prompting the government to scramble trucks all over the Eastern states and close gas stations, as opposed to keeping the Southern border with Mexico wide open, allowing hundreds of thousands of illegals to enter without vetting of any kind.
Now, the government tells us to get ready for an influx of some 140,000 Afghan refugees. It's a good thing there's no virus in "ganistan," as Sleepy Joe calls it. The newly-minted migrants can catch it here in America. We've got the good stuff.
While the world awaits the next screw up from the Biden brigade, congress may take the reins of stupidity and get to work on any number of expensive, over-the-top spending initiatives. The Democrats want to spend trillions. Republicans act like they want to spend less, when deep down inside, they are just as drunk and sailor-like as their blue-tinged colleagues. Maybe they can dream up some newer ways to screw the American public and grift more money into their own pockets. They've had the better part of a month off to dream big, so nothing is off the table at this juncture. A hard breach of the debt ceiling approaches. Maybe they'll just let it all go, do nothing and see where the global chips fall. They could do worse and probably will.
This is what happens when corruption becomes endemic. Normally sane editors become hopelessly jaded. Mainstream media lapdogs begin drooling over the prospect of House members and Senators returning to work. Eventually, even the even-handed journos in the alternative space become vicious, turning on formerly revered folks like Peter Schiff or James Rickards, or even - perish the thought - Max Keiser, as Bitcoin hopes turned to dust in the Spring and early Summer, only recently making headway but seemingly stalled. The crypto granddaddy was supposed to be over $100,000 by now. What happened? All it would take is a few sharply-worded Elon Musk tweets and Bitcoin would drop into the low $30,000 range again. Congress is busy looking into ways to tax it or exploit it, whatever benefits them the most.
Much of the world has become a rather nasty place. Some people wear masks, others take vaccines, while still others refuse to get needle-pointed with unknown ingredients. Nobody knows who's right or wrong, who's spreading, who's shedding. Even your neighbor might be quietly infecting the whole street, all the while vaccinated and innocuously asymptomatic.
The CDC wants to investigate gun violence, which, as far as can be determined is not yet a disease. What's amazing is that there hasn't been even more shootings in places least expected.
But it's the corruption, the lies, the lies about lies and the statistics, and lying about the statistics that is really sending people stumbling over the edge from sanity towards behaviors that are mendacious and twisted. The political class lies about just about everything, and the mainstream TV media amplifies the lies and broadcasts them as though they were the truth. It's like a bad psy-op movie in 3D. Everybody knows it sucks, but it's all that's playing. We are forced to watch, listen, and engage. We universally hate it, though most won't admit it.
Many moons ago, during the Bush II era, Money Daily publisher, Fearless Rick, ooined the phrase, "trickle down morality." It never really caught on, either because it wasn't properly tweeted or twerked, or maybe because it struck to close to home. Politicians started it with he Iraq WMDs that never were, or maybe it was Bill Clinton's finger-wagging "I never had sex...", the media spoon-fed it and the public lapped it up. And it continued to grow and fester and morph until we are where we are today, at the apex of a completely corrupt system, complete with counterfeit currency, fake news, and all manner of mis-and-disinformation.
Finally, we're all corrupt or corrupted, infected or infectious, unwilling or unable to change. Anything pure is immediately defiled, ridiculed, or discarded. As a society, we can't continue to go on this way. It's too destructive, too painful, too real. Being the only reliable constant, change will come. It's a new month and we're all ready for some new changes.
Let's hope it's not more of the same, and this time, for the better.
At the Close, Tuesday, August 31, 2021:
Tuesday, August 31, 2021, 8:23 am ET
Since China over took the United States as the largest economy in the world a few years ago, the collapse of the US financial system has been baked into the economic cake.
Come on, now, you really don't believe the US economy - driven by debt and credit and little else - is sitll larger than China's (manufacturing), do you?
China is home to 1.45 billion people, four times the number of US citizens (and non-citizens). Forget GDP. It's nonsense. Think instead in terms of turnover, number of transactions, put the yuan on an equal footing to the US dollar and there's no comparison. China has eaten the lunch of the United States, and is now working on dessert.
Eight of China's top ten most populist cities are all larger than the biggest city in America, New York, which has a population of 8,230,290.
Shanghai - 23.4 million
Los Angeles, the second largest city in the US has a population of 3,983,540. China's 20 largest cities are all larger than Los Angeles.
The United States is dwarfed in nearly every aspect by the Asian juggernaut. Besides, the US economy is mostly paper: stimulus checks, enhanced unemployment, QE by the Fed. China's GDP is much more the result of actual sales of goods and services rather than government handouts.
China has been expanding. The United States is contracting, running home scared and scarred from a failed escapade in Afghanistan. All signs point to further deterioration to America's economy and if China and Japan stop buying our debt, it's game over.
News this morning out of China that its own economy might be cooling off a bit has sent stock futures to overnight lows and European stocks down sharply from the soft highs earlier in the day because if China's economy - which is made up largely of exports to Europe and the United States - stumbles, it means the demand is down.
China's manufacturing PMI for August fell for the fifth consecutive month, to 50.1, barely in expansion. The services sector tumbled 5.8 points from July to 47.5, from expansion into contraction. Analysts in the US had expected a print of 52.0. To say they were disappointed would be like saying Hurricane Ida was a bad rainstorm.
It won't take much to push China's manufacturing sector into contraction. The ramifications for Europe and the US are enormous and the eventual toll should be devastating to the recovery narrative so widely promoted by the mainstream propaganda machine.
The United States has put up a facade to hide the ugly truth that it is failing in many ways. The federal government is broke but continues to spend beyond its means, having to borrow 1/3 to 1/2 of its budget outlays.
The US and Europe have been living on borrowed time, kicking the can down the road since 2009 instead of fixing structural issues. Now, the US is stuck with a fake, ineffective presidential fall guy, a congress dominated by crooks, perverts, and grifters, and a consumer nation just a little bit overwhelmed by the events of the past 18 months.
It will all come to a head in September or October, but the signs of impending collapse are everywhere. If the congress is unable to pass the infrastructure bill and the reconciliation budget, plus, raise or suspend the debt ceiling, the chaos will be legendary. A failing economy with a government shutdown overhanging a liquidity and solvency crisis is a recipe for a 40-60% stock market washout.
The Fed and its team of operatives will try its best to prevent a stock market meltdown, but it's been doing that for 12 years. Eventually, there's no backstop, no rescue, no bailout big enough to stop the inexorable ball of debt from rolling downhill.
Today's trading may be less than catastrophic if the PPT intervenes, but, the margin calls will be going out. Much wealth is at risk.
At the close, Monday, August 30, 2021:
Sunday, August 29, 2021, 10:23 am ET
This week's market action doesn't require much analysis.
The simple-minded passive investors held, while the speculators all went long on Monday, and added to positions on Thursday when two Fed presidents suggested that their central bank might want to begin tapering asset purchases sooner rather than later.
All of this was lead up to Fed Chairman Jay Powell's highly-anticipated Jackson Hole keynote address on Friday morning. And, the Chairman, possessing one of the best curve balls in the central bank summer softball league, laid one right over the middle and Wall Street promptly hit it out of the park, sending the S&P and the NASDAQ to record highs and the rest of the indices up significantly.
Powell's delivery could not have been smoother. Feigning resignation that the economy was proceeding along its recovery path with all good intentions, the Chairman, a master at disguising his pitches, looked to be loading up for the fastball, but, armed cocked, let slip the master curve, apparently expected by bankers standing around the batting cage. Word has it that Jamie Dimon hit the longest bomb, into the high bleachers, though reports are unconfirmed.
The set-up by the team of Fed presidents Bullard and Kaplan, who just a day earlier prompted shrieks of horror from the investment crowd favoring unending stimuli, was played to perfection. Powell's speech was full of innuendo and "on the other hand" type of analysis, caution and concern over making a grave policy error by tapering the asset purchases too soon.
In the twisted logic that has become the norm for Wall Street, the takeaway is that the economy is doing just all right, but employment isn't quite where it's supposed to be and hitting the brakes too soon might cause a recessions, so, no, the Fed won't be cutting back on its $120 billion a month buying spree any time soon.
It went something like this:
Bonds responded to the news of the week in predictable manner. The 10-year note, which ended the prior week yielding 1.26%, rose as high as 1.35% on Wednesday before dropping down to 1.31% on Friday. The 30-year bond followed the same path, with yield rising from 1.87% (8/20) to 1.96% Wednesday, falling to 1.91 following the Chairman's speech Friday.
Nothing to get excited about in bond land. The long end of the curve, which is all that has mattered since the Fed anchored bills at zero, is lagging inflation by a country mile, but still can't rise very much lest the Fed lose complete control, which they have achieved by glomming up most of the issuance, everywhere.
Responding with a subdued "meh," cryptocurrencies remained flattish after Bitcoin topped $50,000 on Monday, but immediately retreated from that three-month-high level. It would make sense for cryptos to gain on the presumption that the Fed is going to QE longer than anticipated, so a move higher, to the $53,000-55,000 level in short order would not be surprising. So too, since Bitcoin follows no distinguishing patterns, would a retreat back to the low %40,000s, depending on the amount of fear porn dished out by central bankers, the IMF, anybody connected at the hip to the fiat economy.
WTI crude oil, which bottomed out at $62.32 on the 20th of August, rebounded sharply, ending the week at $68.67, to the delight of sheiks and pumpers worldwide. With word that the economy is intact but far from perfect, producers are going to limit supply in advance of the Labor Day holiday, as they usually do. The storm in the Gulf of Mexico, hurricane Ida, will added to the higher oil and gas price argument, as drills are idled and a disruption in supply is all but certain. Nice timing for the oil barons.
For a change, precious metals spent the week on the upside, especially after Powell's speech Friday. Gold closed out the week with a big jump to $1,817.90, up nicely, from $1780.70 on the week.
Silver, which ended the prior week in the doldrums at $23.03, ended at $24.08, with 70 cents of the gain coming on Friday. Holders of precious metals see dollar signs every time the Fed reignites its currency debasement strategy.
Here are the latest prices for common one ounce gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):
Item: Low / High / Average / Median
Our broken record department tells us that premiums remain high and retail demand is strong.
The Single Ounce Silver Market Price Benchmark (SOSMPB) settled at $41.81, an increase of 76 cents from last week's price of $41.05.
Look for stocks to continue their advances in the lead-up to Labor Day.
Thanks to Chairman Powell's magic curveball, the plodding forward continues.
At the Close, Friday, August 27, 2021:
For the Week:
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