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CPI Higher; PPI Higher; Inflation Higher; Stocks Higher; Stupidity Through the Roof Friday, September 15, 2023, 9:17 am ET As the latest government make-believe numbers indicated over the past few days, general inflation - otherwise known as debasement of the currency - is on the rise once again, the most noticeable categories belonging to energy and shelter. If there's anything the average American needs less of, it's increasing costs of rent and gas, simply put.
Since the Fed and their minions working overtime at wrecking the economy have already made palatable food unaffordable to anybody other than the richest classes, it only stands to reason that making housing and fuel unaffordable would be the next logical steps Meanwhile, in the ultimate land of make-believe (no, not Disney), Wall Street, the euphoria over everything costing more and more was palpable. Stocks soared on Thursday, as suddenly, all news - good, bad, indifferent, fake, etc. - is good news. The overarching, mangled sentiment from the titans of doublespeak in the financial media managed to convince investors (we're talking about the PPT and the NY Fed, or the olks at the Exchange Stabilization Fund here) that higher prices for everything should naturally include those of the already-overpriced stocks that we all must own. Interestingly, the odds for a rate hike next week when the FOMC does its business sloped off, the general understanding that the Fed has already paused once and will pause again, even though their increases of the federal funds target rate from near zero in March 2022 to 5.25% presently have not tamed the inflation monster. This now constitutes the old view, that crushing the economy will help get prices under control. It's actually laughable. The Fed managed to get inflation (according to the corrupted, new math CPI) down to about three percent, but that seems to be the low watermark, for now. More inflation is necessary to completely crush all hope of economic prosperity, especially for the vanishing middle class, who cannot afford food, fuel, school for their kids, 7.5% mortgage payments or $2500 rent, $65,000 new cars, clothes, or tickets to the next Taylor Swift concert (starting around $400). Essentially, if the Fed pauses again next week the "all good" signal will be loud and clear and the abject destruction of the US economy will proceed apace. By Christmas, tickle-me-Elmo dolls will be over $200 dollars, but, but, but, vacationing at DisneyWorld will be cheaper with the $1000 food vouchers when one pays full price for rooms (but, can your family eat $1000 worth of Disney dogs in four days?). Gotta have more wealth effect. With a half hour to the opening bell, futures - amazingly - have slid lower, much lower, with Dow futures falling by more than 100 points in just minutes. Did somebody awaken the sleeping quants at Goldman Sachs? Could the largest options expiration ever (today is a quad-witching day) be the cause of such recoil? Are investors (those mentioned above, plus all the ones ditching over-priced stocks the past six weeks) folding? Did somebody all of a sudden realize that 145,000 UAW workers going on strike to demand higher wages (because of inflation, maybe?) might cause car prices to go even higher? We shall see soon enough.
At the Close, Thursday, September 14, 2023:
Thursday, September 14, 2023, 9:27 am ET Seems Wall Street can have it both ways. Retail sales for August checked in at +0.6%, a number that wasn't quite as good as July, which was +0.7%, until it was - in a parade of downward revisions - lowered to +0.5%, so, that's good news. However, the bad news came right on its heels, as August PPI was the hottest since June 2022, up 0.7% on a monthly basis and 1.6% higher year-over-year, an indication that goods inflation was making a bold return. Thus, good news is good news, and, bad news is also good news. Futures were soaring just prior to the open, with Dow futures up 160, NASDAQ futures 65 points higher, and S&P futures ahead by 21 points, the ebullient mood likely having more to do with Friday's quad-witching options expiration than anything substantive, such as the wholesale wreckage of the US economy. However one likes it sliced, if markets respond anything like Wednesday's lackluster performance, all the buying will be over by 10:00 am ET.
At the Close, Wednesday, September 13, 2023:
Wednesday, September 13, 2023, 9:25 am ET Housing and gas at the pump were the main contributors to August CPI, boosting the measure by 0.6% for the month after an increase of just 0.2% in July. The annual rate of inflation was measured at 3.7%, according to the Bureau of Labor Statistics (BLS). From the press release:
The index for gasoline was the largest contributor to the monthly all items increase, accounting for over half of the increase. Also contributing to the August monthly increase was continued advancement in the shelter index, which rose for the 40th consecutive month. The energy index rose 5.6 percent in August as all the major energy component indexes increased. August's price surge of 0.6% was the largest CPI increase since June of 2022, when year-on-year inflation was rising at its fastest pace, 9.1%. The data received today was roghly in line with expectations, though the consensus opinion was for a 3.6% annual rate of increase.
What this number does is make the Fed now hopelessly committed to at least a 0.25% increase in the federal funds target rate at the FOMC meeting a week from today (September 20). Thus, not only does just about everything cost more going forward, the Fed will exacerbate the cost-of-living crisis by making all loans, credit cards, and mortgages more expensive. On the heels of this release, stock futures dropped to lows of the morning, though insiders were doing their level best to keep futures from dropping completely out of bed. In a normal market, this news would have sent futures plummeting, but, as has been shown by radical market movements, nearly daily "stick saves" by the PPT or NY Fed's trading desk, and late-day tape-painting, the current market is far from any semblance of normal. Eventually, the piper must be paid, and, as Americans are placed hopelessly behind on rents, mortgages, credit card bills, school tuition, car payments, and just about everything else, the steady decline in purchasing power of the US dollar will only worsen. It is a natural occurrence of an empire in its final days, just as the situation in Ukraine puts on display the absolute desperation of the federal government. As sure as the sun rises in the East, inflation will ravage the middle class and the current cabal in Washington, DC will amplify its war efforts. Both will end in disaster. As much as the government, media and Wall Street want to play "hide the sausage" with the truth about the economy, American citizens are nearing a breaking point. Complete citizen revolt against the ruling class in America (and probably in Europe) is not going to be easy to hide. Tuesday's declines were, as has been the case recently, better at the close than intra-day. At some point, everybody is going to rush to the exits at once, unleashing a cascade of falling stock prices. Considering the level of arrogance, greed, corruption, and dishonesty enmeshed within the Wall Street and Washington, DC political structures it could come any day, and, from the looks of things, September may be the month the wheels finally come off.
At the Close, Tuesday, September 12, 2023:
Tuesday, September 12, 2023, 10:46 am ET This being the first full week of trading in September, by and large the worst month for traders of all stripes, perhaps it might be a good time to assess conditions across America and the economy. Here's a quick rundown of just a few items: The IRS announced that its use of advanced technology (AI, mostly) to catch tax cheats has already resulted in identifying some. This is probably little more than a bluff. The IRS is one of the govenment's least-capable agencies, employing legacy software that is outdated and inefficient. Still, the IRS has consierable clout when it comes to enforcing its 50,000 pages of codes, rules, suggestions, charts, calculators, and other fumbling directives to make reporting what one owes the federal government a nightmare for individuals, but especially, corporations, partnerships, and other structures. The IRS says it plans to go after the biggest cheaters, not the middle class, targeting people with over $1 million in income and more than $250,000 in tax owed. Good luck with that. The wealthiest people in America hire the best lawyers and accountants just to deal with threats and audits from the enforcers at the IRS, so the IRS avoids them because audits generally take too long, many ending up in court, and without resolution. The calculation made by many of the high-rollers is whether it is cheaper to just pay what the government says is due or have at them with teams of lawyers and accountants. For the most part, the government hasn't "earned" their share at all, but, like parking tickets, fines, and other offenses various government bodies impose, it's easier to just pay up, shut up, and find better means of avoidance. Having the IRS attempt to close what they call the "tax deficit" between what they believe US taxpayers owe and what is actually paid is a particularly onerous task, one which the IRS is singularly incapable of accomplishing. Thanks to the recent "Inflation Reduction Act" passed by congress and signed into law by Joe Bribem, US taxpayers are on the hook for $60 billion over the next 10 years to beef up the IRS compliance and enforcement departments, something that, if voters and taxpayers actually had a say would never have happened. Anybody who's ever dealt with the IRS in a confrontational manner (see: Donald Trump) would rather the agency be defunded rather than have more money thrown at it. Founding Fathers would be aghast to witness the monstrous level to which government has grown, intruded upon the lives of ordinary citizens and increased taxation to levels they never imagined. Remember, the Boston Tea Party, which kicked off the American Revolution, was partially about a three percent per pound tax on tea. While the level of taxation was not especially harmful, the principle of "taxation without representation" was at the core of the rebellious American protest. Americans aren't represented very well today by congress, nor have they been the past 50 years or so. Congress passes the laws and appropriates money that they want to pass and appropriate, not what Americans desire. You pay your taxes, the government borrows even more and all congresspeople end up much richer than when they were first elected, some of them so addicted to the grift that they've been there for 40 or more years and are in their 70s and 80s. Moving along, the price of oil has risen quite rapidly over the past few months. On June 27, WTI crude was $67.67 a barrel. Now it's $88.70 and rising. That's an increase of 23.65% in under three months and the highest price since November, 2022. The national average for a gallon of gas at the pump was around $3.45 in late June, but it's $3.80 today. So, there's no inflation, unless you drive anywhere. Don't like it? Buy an EV and watch your electric bill soar over the moon. CPI for August will be released tomorrow and the resulting lie may include (depending on what the government wants the number to be) the recent price increases, which shouldn't shock anybody if inflation is re-ignited, though it will, urging the Federal Reserve to raise the federal funds target rate again next week. The record 22% average interest rate on credit cards will tick higher. Mortgage rates will continue to surge past seven percent. Your standard of living will decline, but, that's OK. It's football season, after all. Meanwhile, stocks are doing OK, and probably will do OK, until they don't, which could be any day now. Another crisis is already in the works. By the way, COVID is back, so get those masks ready, even though they don't work. If Americans are lucky, there will be a brief period of lockdowns, like the two weeks which turned into many more months back in 2020. By no means try to get anything fixed, like plumbing or electrical issues, or car repairs. Labor costs are through the roof and parts are becoming scarce. How long can the American public continue to allow themselves to be extorted by the government for which they supposedly voted and the corporations which are supposed to supply their comfortable retirement? Anybody still capable of rubbing two nickels together isn't counting on anything but more tyranny, more invasions of privacy, increased crime, taxes, and prices. And that's just for starters.
At the Close, Monday, September 11, 2023:
Sunday, September 10, 2023, 11:58 am ET Just about the only thing that priced higher last week was oil, and that, to varying degrees, will affect everything else. Signs are popping up, indicating a serious slowdown in the economy, stressed consumers, and dwindling job creation are just over the horizon if not already apparent in some sectors of the market and regions of the United States. The narrative of "all is well" with Bidenomics is falling apart rather quickly.
Stocks were under pressure over the holiday-shortened week. The NASDAQ and S&P fell for the fourth time in the last six weeks while the NYSE and Dow were three up and three down over the same span. The outlier is in transportation. Failing to notice that the Dow Jones Transportation Average has suffered losses over five of the last six weeks could be a telling signal that the entire market is about to roll over. From a closing high of 16,695.32 on July 28, the index has taken a steady path lower, closing Friday at 15,208.43, a loss of 8.91% and about as close to a formal correction as one can get without actually tipping into one. A major cause for concern is that the decline looks eerily similar to a pattern which occurred in late November and early December of 2021, and is developing from nearly exactly the same level, very close to all-time highs. The current panorama follows two months of incessant gains - June and July - in which the index gained 3000 points, or 18%. With higher fuel prices came the turn at the end of July, as was the same case with all the other indices, indicating institutional distribution, i.e., selling, trimming of positions in vulnerable sectors, which appears to be most, if not all of them. The unique nature of the 20 transportation stocks in the Transportation Average bodes ill for the market as a whole, signaling deeper declines in weeks and months ahead. If these indications are trustworthy, stocks could be headed for a repeat of the first nine months of 2022, a severe downturn which was abruptly interrupted with a rally in all indices, as if bottom-fishing and dip-buying had suddenly come back into vogue.
Rates held fairly firm on short-dated bills, with the three-month benchmark up just two basis points. On the longer end, the largest yield moves were in 2s, 3s, and 5s, up 11, 11, and 10 basis points respectively. Yield on the 10-year note rose ominously by eight basis points, with the 30-year higher by four. In terms of spreads, the full spectrum (30-days out to 30-years) ended the week at -119, an improvement from last week's -122, worth noting that the inversion continues to shrink toward normalizing. 2s-10s were at -69 two weeks ago, this week closing out at -72 as the 2-year remained under five percent, though just barely. Longer term, yields on bills must head lower with notes and bonds higher if there is to be any validity to the entire structure. In the worst-case scenario, the entire curve might price higher, though longer maturities would advance at a faster pace, making short-term debt even more expensive (note that the average rate on credit cards just surpassed 22%), but longer term rates even higher, as anything longer-dated than two years would be shunned, the few remaining buyers dominated by front-running speculators and the Federal Reserve itself. Should conditions in the global and US economies improve dramatically - hardly a probability worth consideration - bills, dated under one year, would decline to an area around 2.50 to 3.50 percent, with the 10-year stabilizing around four percent and the 30-year at 4.25-4.50%, essentially flattening the curve (like covid, it will take longer than two weeks). That flattening is what the Federal Reserve gamblers are striving towards, though their efforts are being thwarted by the free-spending federal government devoid of fiscal constraint. Things are about to come to a head as the Fed's FOMC will issue policy in less than two weeks (September 20) and the federal government will either find a means toward compromise or shut down non-essential operations (if most people had their way, that would be 90% of it, including congress). Odds are leaning towards a 25 basis point hike by the FOMC, though that will be guided largely by next week's August CPI release. Any signs that inflation is still not under control will prompt the Fed to take more restrictive action rather than pause for another month. The next FOMC meeting isn't until October 30 - November 1. As far as the CPI is concerned, August may prove to be a one-off, as oil prices rose the most in July and now again in September. August was something of a trough, with the price of WTI crude increasing only from $81.80 to $83.63, a mere two percent gain. September is proving to be more volatile, which the voting members of the FOMC may bear in mind when making their policy decision. in terms of the federal government operating in a rational manner, all bets are off. Democrats want to spend, spend, and spend more of the money taxpayers are increasingly reluctant or incapable of providing, held in check only by a small contingent of House Republicans, hopelessly outnumbered by the deal-makers and debt-slavers on both sides of the aisle. With the White House likely to veto any spending bill that doesn't produce a trillion dollar deficit makes House speaker Kevin McCarthy's position extremely weak, befitting his handle on leadership. This year's deficit is looking squarely at $2 trillion, as federal spending is up 16% from last year, while revenues are down 7%. Considering the disturbing lack of self-control in government, there is every reason to believe the US economy will be circling the drain in 2024. More Bidenomics is clearly not the answer for America.
WTI crude oil advanced again, up from $86.05 a week ago to $87.23 as of Friday's closing price in New York, the highest price since last November. The US national average for a gallon of unleaded regular gasoline rose by just one cent, to $3.80. According to gasbuddy.com, Mississippi still has the lowest price for fuel at the pump, down three cents this week to $3.24, followed by Louisiana ($3.29), Tennessee and Texas ($3.35). Alabama dropped four cents, at $3.36. Prices continue to drop in Florida, from $3.64 last week, to $3.57. California retained its top spot, with gas up 11 cents, to $5.41 a gallon, followed by Washington ($5.05) and Oregon ($4.71). Nevada ($4.59) and Arizona ($4.35) were higher over the week, while Utah ($4.24) and Idaho ($4.12) trended lower. Montana spiked up to $4.11 this week, while Illinois ($3.97) dropped below the $4.00 mark, keeping the number of states above $4.00 at eight. In the Northeast the highest gas prices are in Pennsylvania ($3.84) and New York ($3.85). The lowest prices in the region can be found in Kentucky ($3.45) and Ohio ($3.51). The Midwest is now getting its share of suffering, with prices in Minnesota, North and South Dakota, Wyoming and Colorado all above $3.88, led by Minnesota and Iowa, $3.96 and $3.95, respectively. Look for $4.00/gallon to become the norm within weeks as higher oil prices and bottlenecks at refineries take their toll on US drivers. Recent hikes in gas prices are not without the usual suspicions. Cars get better mileage, fewer people are driving to and from work, yet prices are higher. Something is surely rotten in America, maybe everything.
This week: $25,791.00 It should be clear to everybody by now that bitcoin and the entire crypto space has been entirely co-opted by institutions and grifting insiders. Compare recent levels to those from six months and one year ago. It's obvious that the roughly $500 billion bitcoin market cap can be and is easily manipulated. The only people benefitting from the gyrations in crypto are insiders and speculators who have made the right moves. There will be a reckoning in the vapor-currency space right around the time fiat currencies collapse, which would likely be on a continuing basis over the next four to six years. If liquidity becomes an issue - which it almost always does in recessions - bitcoin and its offspring will be destroyed.
Gold:Silver Ratio: 83.77; last week: 80.09 Per COMEX continuous contracts:
Gold price 08/11: $1,912.20
Silver price 08/11: $22.75 Declines in the prices of gold and silver were the order of the week, and, while it appears that bottoms exist around $23.00 for silver and $1942 for gold, there is no guarantee that these support levels cannot be breached to the downside. Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping included):
The Single Ounce Silver Market Price Benchmark (SOSMPB) dropped by $1.06 over the course of the week, to $35.60, from the September 3 price of $36.66 per troy ounce. Indications are that the market is being negatively affected by the lack of disposable income amongst silver buyers. With the price of food and fuel dampening demand for everything else, the gradual decline in silver prices at auction or through dealers is another signal that money and budgets are increasingly tighter. Consumers are reining in buying habits, focusing mostly on essentials over discretionary purchases. There is nothing unusual about this and it sets up a condition for dealers and precious metals sellers to hone down premiums closer to spot pricing. Should the current situation persist and resolve into a recession, expect prices for not just metals, but for everything non-essential, to fall. WEEKEND WRAP While there's little to joke about concerning the current environment, some more jocular readers may consider the metaphor from the scene in "pulp Fiction" of where Christopher Walken hid Butch's father's watch to where the media has hidden the recent decline in America's standard of living appropriate.
Like the watch, the truth about America is emerging from a dark place.
At the Close, Friday, September 9, 2023:
For the Week:
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