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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.
PRIOR COVERAGE:
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Friday, September 6, 2024, 9:07 am ET Thursday was another not-so-pretty day on Wall Street. Only the NASDAQ was able to close higher, and that was only due to short-covering in the final eight minutes of trading. The Dow was down more than 450 points just after noon, managed to claw back some of those losses, but was still fairly badly damaged by time the closing bell clanged. Friday's trading will be largely determined by the August Non-Farm Payroll report, issued by the BLS an hour prior to the cash session open. Estimates were for around 160,000 jobs, after ADP showed August at 99,000 Thursday, the fifth straight month of contraction with losses in small business (20-49 employees, -12,000), manufacturing (-8,000), and professional and business services (-16,000). When the report was released, showing that U.S. job situation was little changed, increasing by 142,000 during August, stock futures, which were already in the dumps - Dow, -147; NASDAQ, -180; S&P, -30 - ticked up moderately, reflecting Wall Street's disappointment that there weren't actual job losses for the month, which would have pushed the Fed closer to a larger cut at the FOMC meeting in less than two weeks. The unemployment rate remained unchanged at 4.2%, according to the release. As usual, the two prior reports were revised lower, with June revised down by 61,000, from +179,000 to +118,000, and July revised down by 25,000, from +114,000 to +89,000. With these revisions, employment in June and July combined is 86,000 lower than previously reported. Considering that the August figure will likely be revised down by about 40,000, it's in line with what ADP reported a day earlier. What the report provides, in terms of the Fed's stance on interest rate policy, is very little. Employment is still increasing, not collapsing, which means at the September 17-18 FOMC meeting, the members are likely to vote for a 25 basis point cut to the federal funds rate, not 50 basis points, as most of Wall Street would prefer. Elsewhere, the U.S. dollar was getting trounced by the euro, pound, and yen in forex markets, gold spiked close to another record, hitting $2,560 on the COMEX, with silver also higher, around $29.40. WTI crude oil remained at 9-month lows, just under $70 per barrel. As the clock moved closer to the opening bell, there was more improvement to stock futures. Trying to make sense of where the market is headed up to the FOMC meeting is like doing a jigsaw puzzle in the dark with your eyes closed. It's all speculation of the worst, most sickening pretzel logic ever. As noted in Thursday's note, which got booted from X, incidentally, stocks are fake and XXXX, seriously, but nobody is allowed to point that out, or at least mention it in those terms. Average people shouldn't have to put up with the nonsense from ivory towers on Wall Street or at the Fed in hopes that their precious holdings will be shown good favor by financial masters and subsequently inflated and taxed into oblivion. There are better ways. Most people just along for the ride don't see it.
At the Close, Thursday, September 5, 2024:
Thursday, September 5, 2024, 7:50 am ET How overvalued are stocks at current levels? One popular measure of stock valuation is the price/earnings ratio, which is about as standard and time-honored a means test as can be found. More sophisticated analysts and speculators rely on the CAPE (Cyclically Adjusted PE Ratio) measure, which employs the ten-year average of a stock's earnings, factoring in inflation, which smooths out most of the noise from using merely the last year's earnings. According to CAPE valuations, the S&P is currently - and has been for some time - trading at more than double the historic median, which is 15.99, and the mean, 17.16. The CAPE at the close on Wednesday, September 4, was 35.49. With the S&P closing Wednesday at 5,520.07, should stocks revert to the mean, that would imply that the S&P be priced at 2,523.99. This is why some analysts say there's going to be a bear market that will take the S&P down 60%, or to 2,208.03, which is close enough for horseshoes or hand grenades to the CAPE mean. There is little doubt that Wall Street, the Fed, and the media wish to keep everybody engaged in stocks. After all, that's where the rubber meets the road for them, where their bread is buttered. But not everybody is enamored with the wild fluctuations and riskiness of owning .07 billionth of Microsoft or META Platforms or Nvidia. The valuations given to some stocks, especially in the tech sector, are downright stupid. There are 7.43 billion shares outstanding of Microsoft. So, if you own 100 shares, you own, roughly speaking, 0.0000013459% of the company, in shares which are held in custody FOR you, not BY you, over which you have no control. That's just one example. Others are equally bad. Wouldn't it be better to take the $40,890 invested in MSFT and put it to some other use? Of course, most people don't have $40k invested in Mr. Softie, but more and more people are awakening to the idea that their money - and it should truly be theirs - might be better off in a home-based business, a more reliable (and paid off) vehicle, extra mortgage payments or a rental property, tools, gold, guns, or a host of other things, including a pantry full of canned goods and other non-perishable food. The stock market never was for ordinary folks. It was always for rich people and still is. The average Jane or Joe doesn't really want their money tied up in mutual funds or ETFs or any kind of equity investment. They've only got a few thousand or maybe $50,000 to put at risk, and, for many of them, the slightest sign that their investment might depreciate (Yes, Virginia, stocks can go down!), gives them stress, nausea, or hair-pulling and arguments. Who needs it? Why don't we have networks like CNBC devoted to small business, or personal finance, home renovation or precious metals? Because there's no skim involved in those things. There's no percentage that can be sliced from the top and into the grubby hands of Wall Street sharks and their horde of financial advisors, stock pickers, and flim-flam fund managers. A paradigm shift in values and and ideas is underway. Such things are fluid, and always have been, but lately, under current, ongoing conditions, the shift is becoming more and more evident. The federal government is too big, too bloated, too bureaucratic, too uncontrollable, too expensive, too autocratic, too expensive, and too dumbed down and too stupid to believe that it can control and/or regulate a population of 335 million people, to say nothing of the 40 to 50 million illegal aliens that have crossed the border the last 30 years, but it does. Federal government and its legion of laws, rules, regulations, and mandates is past its prime. There are now so many laws and regulations that the government itself can't keep track of them all, much less interpret them to apply to individual circumstances. The IRS should be defunded and disbanded. The individual income tax, payroll witholding, and the Federal Reserve all predate the Great Depression. The American people should have figured out then how badly they were being screwed, but, humans being human, Americans collectively complied with the will of the government, which, as we're finding out, finally, never had our best interests at heart. So, are there alternatives? It's safe to assume that when two thirds of Americans live essentially paycheck-to-paycheck and couldn't cover a $600 emergency without dipping into savings or using a credit card, that there better be alternatives. Otherwise, the choices are somewhere between poverty, homlessness, and suicide. America's problems aren't complicated. They are, as a matter of fact, rather simple. There isn't enough affordable housing and good jobs for everybody. Those are easily solvable. First, anybody who can't prove citizenship needs to go. Once the country is rid of 20 to 30 million migrants, there is going to be more housing and more jobs. Getting rid of Democrats and DEI and transgenderism and other brain-dead policies would also likely be a step in the right direction. Getting rid of the Federal Reserve, maybe firing about 70% of the federal government workforce and half of the state and local government workforce would help balance budgets, and, with all those immigrants relocated back to from whence they came, those laid off former government people would probably find jobs. America needs to start acting like an adult, stop prosecuting wars that benefit only the military industrial complex and start arresting politicians who aren't acting in the best public interest, and that would be on both sides of the aisle, because neither Democrats nor Republicans can stand up to any serious scrutiny when pressed about their personal wealth versus whatever legislation they've forwarded in - for many - their decades of public "service." Unless Americans start acting like Americans - and that's a big ask - the country is going to continue to disintegrate. As it is, we already have Venezuelan gangs takig over apartment complexes in Colorado, Chicago, and who knows where else. Police, in these areas, are either powerless, because of sanctuary laws, or afraid, because they might get shot and killd and lose their precious pensions, to do anything to correct these obviously improper and unlawful actions. Three out of four crimes in New York City are committed by migrants, who should be in prison and awaiting deportation, but they're not, because our politicians, and our government, has failed, and done so in miserable fashion. Given these circumstances and others, the country is headed for a civil war, if one is not already well underway, at least from an aspect of lawlessness, refusal to submit to authority, and general disabuse of government in all forms. Here we are not talking about migrant crimes but everyday citizens who have had enough and are readily aware that non-compliance is a fairly safe option. The more people who just say no to whatever the government has to offer, the more people take notice and do likewise. After a while, government, from the local courts to the sheriff's office right down to the tax collectors, doesn't have the manpower to enforce its own foolish laws, rules, and dictates. Amen, brother. Anybody who's lived and breathed in America over the age of forty probably understands what's happening and isn't too happy about it. The media circus continues to want to split us up into red and blue teams by state, though that's hardly the case. Life in the cities, as opposed to rural areas, as it's always been, are two completely different animals. One can travel less than 50 miles outside any medium to large city and find peace and comfort amongst the tress, rivers, and less-traveled roadways. You can pay $1,800 a month for an apartment in Charlotte, North Carolina, or live off the land for almost nothing fifty miles away in almost any direction and people are beginning to get it. Appalachia, that amorphous stretch of America from southern New York to northern Tennessee and South Carolina is dirt cheap and resource rich. People who want out of what used to be a tolerable rat race that's become a nightmarish struggle for survival can find refuge in dilapidated properties in dire need of renovation and upgrade, and, more than anything else, people to live within and upon them. The land offers salvation and hope for the future. Americans need only hold their politicians' feet to the fire of accountability, something that hasn't been done since the very same government squelched the aspirations of a generation in the 1960s and the bulk of them buckled and conformed. Those blithe spirits who never gave up the fight are now in their 70s and 80s, but still hold the keys and light the fires of freedom, liberty, and all those glorious pursuits of happiness that were promised - and largely delivered until recently - by our forefathers. We shall overcome, not one day, but one at a time. Some day, and for some people, that day is today. Rent will be paid to either a Venezualan gang or a Delaware-based corporation. Which better serves the residents will become a debatable issue, and, it will be at that point that the future of the nation and the world will be determined.
At the Close, Wednesday, September 4, 2024:
Wednesday, September 4, 2024, 9:28 am ET The three-day Labor Day holiday didn't help alleviate the gnawing sense of impending doom that investors have been harboring since the August 5 meltdown over the demise of the yen carry trade. No, while munching on hot dogs, cold slaw, and maybe some mustardy potato salad, market participants couldn't help but reach for their cell phones to monitor international markets on Monday, as they began melting down in China, then Europe. By the time Tuesday rolled in, the trepidation began turning to activity, with stock futures falling across the board. As soon as the opening bell sounded, the selling commenced, sending tech stocks and the major indices diving. By the time the manufacturing PMI and ISM data were released, renewed concern that a recession was on the horizon accelerated the declines, sending the NASDAQ far below its 50-day moving average and into areas last covered nearly three weeks prior, when markets were rallying off the lows imposed earlier in August. Eventually, the NASDAQ would suffer one of its worst sessions of the year, and the second such drop in less than a month's time, as September, traditionally the worst month of the year for stocks, commenced in a panicky fashion. The S&P also took a decisive hit, with the index down in September seven of the last 10 years and the past four straight, losing 9.34% in 2022 and 4.87% in 2023, the average September decline from 2020-2023 a frightening 5.72%. If Tuesday was any indiction of what's ahead for stocks the rest of the month, the losses this year may rival or exceed the nearly 10% loss in 2022. Conditions are vastly different from two years ago, when the Fed was at its inflation-fighting best, raising interest rates to combat the onslaught of higher prices for food, energy, and just about everything else. Today, with the Fed set to embark upon loosening conditions via interest rate easing, the scenario is fraught with doubt and confusion. If, as the ISM and PMI reports suggest, the economy is headed toward a possibly severe recession, the timing of the first Fed rate cut - ostensibly at the September 17-18 FOMC policy meeting - the cut to the federal funds rate may indeed by of the 50 basis point variety rather than the standard 25 basis points. However, there are more data points for Fed members to consider, particularly Friday's non-farm payroll data for August, expected to show some 165,000 jobs created during the month. There is growing concern that the numbers produced by the BLS may not be trustworthy, given that the agency revised last year's numbers dramatically lower, the Bidenomic job creation engine seemingly having stalled out to the tune of an 818,000 downward revision. The BLS, the agency that also is responsible for CPI and GDP data, has been under suspicion of delivering politically-contrived messages and data to goose markets and present a false picture of the economy. There's growing evidence that Wall Street's best fund managers and traders have sniffed out the lies and are trading on instinct, considering any and all government data to be overly positive to the point of irrelevance. With U.S. markets opening momentarily, investors have to be aware that Japan's NIKKEI suffered another major blow, down more than four percent overnight, with European indices also down across the board, though not as severely. Stock futures are modestly lower, but the remainder of this shortened first week of September appears to be one that only the most daring will be compelled to open new positions. There's trouble brewing.
At the Close, Tuesday, September 3, 2024:
Sunday, September 1, 2024, 11:50 am ET Americans will have a holiday-shortened week, with Labor Day observed Monday. Along with financial markets, banks are also closed as is the Postal Service and most other government agencies, right down to the local level. It takes a special kind of stupid to celebrate "labor" when federal and state governments steal up to half of your earnings via taxation and that part that you get to keep is inflated away, but not before you're taxed at the local level when you buy food, gas, clothes, and just about everything else. So, go ahead and cook out, grill, hit the lakes and rivers and do whatever you like on Monday, but honestly, how many people are celebrating "labor"? Not many. It would be different if labor, which is one of the three forms of capital - th other two being raw materials and gold (the only true money) - was as highly regarded and revered as it used to be, like in 1776, when Adam Smith authored "The Wealth of Nations." It's not. Humans and their productivity have become increasingly slaves to financialization, taxation, and the 35-to-40-hour work week as the Age of Delusion accelerates into a higher rate of currency debasement.
What happened? In the week following Fed Chairman Powell's nearly overt statement from Jackson Hole, Wyoming, that the Fed is dead set on lowering interest rates - as if a 25 basis point cut actually matters - stocks see-sawed their way to a positive end for the week. Once again, were it not for a late Friday afternoon surge, only the Dow would have finished the week in the black. As it was, the NASDAQ lost ground, and only the NYSE Composite managed to post a gain of more than one percent. It's looking more and more like a game of pump and dump, buy the rumor, sell the news usual Wall Street bull excrement. The tech and finance sectors, both big winners year-to-date, look especially stretched on a valuation basis and due for a slide. The labor market will be in the spotlight in the week ahead, with the latest Job Openings and Labor Turnover Survey (JOLTS) slated for release for Wednesday, followed by ADP's private employment monthly report on Thursday. Friday offers the release of the August non-farm payrolls report, expected to amplify the need for the expected federal funds rate cut by the Federal Reserve at the next FOMC meeting, September 17-18. No matter what the BLS says about the number of jobs "created" during the month, it most certainly will not be accurate, but Wall Street and the financial mainstream media will lap it up like mother's milk. Next week's earnings calendar is sparse. Wednesday: Hewlett Packard Enterprise (HPE), Dollar Tree (DLTR), DICK'S Sporting Goods (DKS). Thursday: Broadcom (AVGO), DocuSign (DOCU) It's a blessing that we only have to endure Wall Street noise for four days. Then again, the assembled "leaders of the free world" will be back in session in Washington, D.C., their month-long vacations at an end. Too bad. Nobody missed them.
In anticipation of the coming rate cut in September and more to follow - the most deadly policy "error" in Federal Reserve history - short end rates, bills, were down, as everything with a maturity of a year or longer saw yields rise, with the 30-day note down 10 basis points and the 10-year note, 20-year and 30-year bonds each yielding 10 basis points more as the unclenching of the inverted yield curve embarks on a trip back to normalcy and probably recession. Note that the word "error" in the preceding paragraph was purposely put in parentheses to suggest that the back-slappers-and-stabbers at the Fed are never wrong. They know exactly what they're doing. Feel free to draw whatever conclusions you wish from that. Legendary in his own mind, financial blogger, Gregory Mannarino has gone so far as to call for a march on the Eccles building on July 4th, 2025, to "demand" constitutional money be restored and the Federal Reserve's charter revoked. Cruise missile incoming. The full spectrum spread (30 days out to 30 years) advanced by 20 basis points from -141 the prior week to -121 this Friday. the spread on 2s-10s does not exist, or, is at par, the two yields matched up at 3.91%. Now that the Fed has convinced themselves or fooled enough troglodytes, muppets, debt slaves, and serfs that they've beaten inflation (yes, all the way back down to their contrived "stable prices" +2.9% annual rate), the yield curve can moderate back to normal. Figure on 30-day notes at 4.25-4.50% within six months, and the 10-year around 4.50-4.75%, with the 30-year settling in at 5.00%, enough for the sleaze-bag primary dealers and fewer and fewer foreign investors (mostly the EU in a "wash" situation) to continue buying essentially worthless shiftbag treasuries. Maybe, unless there's a new pandemic or other phony crisis (re: November elections), the Fed will resort to emergency cuts as the stock market crashes and back to stimulus checks (remember, nobody other than Fearless Rick himself coined the phrase, "Gimme da stimmie!"), i.e., Ben Bernanke's infamous "helicopter money" to reflate the economy. Could happen, so it probably will. Seriously, with inflation in most goods and services - meaning the actual prics of things - increasing at a much faster rate of 2-3 percent annually, buying bills, notes, bonds, or anything of the fixed income variety is the simplest form of financial suicide and the whole planet seems on track to kill itself. Japan can't even raise its rates 10 basis points without the entire financial universe falling apart, as seen in the short-lived August 5th mini-crash. Treasuries, you say? Toilet paper. Spreads:
2s-10s
Full Spectrum (30-days - 30-years) Oil/Gas WTI crude oil was lower again this week, closing Friday in New York at $73.65, down from $74.96, the prior Friday closing price, a significant drop of $1.31 and closing in on the eight-month low of $71.54. WTI crude oil should be around $60 a barrel. There's megatons of it underground. Don't believe the "peak oil" hype. Gasbuddy.com reports the national average for a gallon of unleaded regular gas at the pump at $3.31 a gallon, down another two cents from last week and the lowest in more than six months. California remains the highest in the U.S. at $4.60 a gallon, up four cents from last week. The Golden State, with its penchant for high prices and even higher taxes, might consider changing its motto from Eureka ('I have found it') to "Bazinga!" (We have lost it) because the beatings are certain to continue until morale improves. Pennsylvania prices were down five cents, to $3.47, with the Keystone State remaining the price leader in the Northeast because Kamala needs them to frack and needs the votes. New York, at $3.45 is closing the gap, with prices on Long Island and around NYC much higher than upstate. Other Northeast states saw more significant declines over the course of the past week, with Connecticut down five cents ($3.35), Massachusetts ($3.31) off another four cents, and Maryland prices felling three more cents to $3.25 per gallon. Blue votes matter. Prices in the Midwest continue to fall. Illinois, down a few cents this week, has dropped from just above $4.00 four weeks ago to $3.64 on Sunday. Mississippi continued to sport the lowest prices in the country, at an incredible $2.80 per gallon, joined under $3.00 by Texas ($2.83), Oklahoma ($2.85), Louisiana ($2.86), Alabama ($2.88), Tennessee ($2.89), Arkansas ($2.93) and South Carolina ($2.95). Georgia ($3.12) and Florida ($3.30) both were stable for the week. The Midwest ranges between lows in Kansas and Missouri ($3.02), to highs of $3.36 in Michigan and $3.25 in Ohio, almost all others in a range between $3.05 and $3.20. Arizona, at $3.42, remained below $4.00 for a 17th straight week, leaving only California and Washington ($4.12) above the $4.00 level. Oregon is at $3.76 and Nevada at $3.90, each relatively flat-lining. Utah ($3.53) and Idaho ($3.56) continue to stabilize at elevated levels but are well off summer highs as the unofficial end of summer following Labor Day should see prices moderate even further. There's an election coming up.
This week: $58,091.38 Bitcoin is in a long-term downtrend, which would make sense, since the hedge fund and ETF insiders are rapidly running out of deep-pocketed clients to fleece via the "crypto miracle." After peaking just above $73,000 in March, after bitcoin spot ETFs were approved by the SEC, it's trended lower, bottoming out at $54.237 on August 5th. Surely, those rich folks who entered the market between March and July are being told by their brokers all manner of lies, projections, and theories showing how bitcoin will eventually reach $200,000 or a million dollars until the price crashes below $50,000, then $40,000, and eventually back into the teens. Then their lies and client lists will begging to vaporize as the entire world begins to recognize bitcoin and all crypto for what it really is, a giant slush fund enabling everybody, from governments down to simple scammers, to launder fiat or whatever other assets they wish to hide from view. Look, this is just the way it is in the Age of Delusion, a condition which has persisted from well before 2009, when bitcoin first came into existence, but as far back as 1913, when the 16th Amendment passed into law in the dead of night the Federal Reserve and income during a congressional recess without a quorum and ratified by the states in very sketchy manner. Precious Metals Gold:Silver Ratio: 86.70; last week: 84.14 Per COMEX continuous contracts:
Gold price 8/2: $2,486.10
Silver price 8/2: $28.68 Gold and silver prices were slightly lower for the week. Marginal gains or losses can be attributed to normal market fluctuations. This week's $12 decline in gold was overshadowed by the $1.04 loss in the silver price, something which is beginning to annoy the silver faithful as it appears the more manipulated of the two metals - after years, even decades of GATA and others complaining about gold price rigging - is indeed silver. It would make sense that the lesser of two central bank evils would be targeted, since, as reported many times by Money Daily, silver was used as money for thousands of years, aligned with gold or even separate from it. Since 1873, efforts to demonetize silver have been stock in trade for central banks since the very last thing they desire is to have circulating silver as legal tender in the hands of the general population (serfs, muppets, etc.). The Crime of '73 is regularly referenced as the end of the silver standard, though the law - the Coinage Act of 1873 - was largely just the beginning of the end, stipulating silver coins that the U.S. Mint could strike from bullion, noticeably omitting the standard silver dollar. The silver dollar began to be minted again in 1878, with the passage of the Bland-Allison Act and the first Morgan 90% silver dollars were minted from 1878 to 1904 with one reissue in 1921. After World War I, the Pittman Act stipulated to the mint to coin silver dollars and the Peace Dollar was the standard from 19211928 and 19341935. The master dies for the Peace Dollar were ordered destroyed in January 1937 and no silver dollar coins were produced again until the 1971-76 Eisenhower 40% silver dollars along with the ironic Kennedy half dollars, which were 90% silver in 1964, but reduced to 40% in 1965-1970, its final year of mintage. Legislation obviously changed coinage standards over the years until in 1965, silver was taken almost completely out of circulation with the passage of the Coinage Act of 1965, eliminating the silver dime, quarter, and half-dollar, and specifying that silver dollars be struck at a percentage of 40% silver. It's apparent that the Federal Reserve central bankers and many legislators had seen to it that silver be demonetized, which is largely the reason the gold:silver ratio remains at such levels far above the traditional norms between 12:1 and 16:1. The ratio hasn't been below 30:1 since 1980 and may never drop to more reasonable levels, especially with gold being hoarded by central banks worldwide. It will take a severe shortage of mined silver to get the price back above $30, much less the all-time highs near $50. Silver remains a useful store of value that has appreciated in tandem with gold. Silver stackers just have to learn to live with the price as it is, the nose-bleed premiums charged by dealers, and the outrageous fees charged on platforms like eBay. Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping):
The Single Ounce Silver Market Price Benchmark (SOSMPB) was down on the week, dipping to $38.41, a loss of 24 cents from the August 25 price of $38.65 per troy ounce.
Happy Labor Day. Best to enjoy what remains of the weekend with friends and relatives, or both, because soon enough all we'll be hearing are claims of foul play from foul-mouthed politicians non-stop from the first week of September probably all the way through the end of the year, because neither side is going to accept the results of the election. The question that's up for grabs is whether conditions in the cities worsen or improve if Trump wins or Kamala steals? The quick answer is they'll surely worsen under Kamala, and will devolve into oceans of chaos if Trump emerges victorious. Welcome to the new normal Age of Delusion.
For the Week:
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