Money Daily Financial Money News Week of September 12 - September 18, 2021 Stocks Bonds Commodities Gold Silver Oil Bitcoin

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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:

9/4-9/11/2021
8/29-9/4/2021
8/22-8/28/2021
8/15-8/21/2021
8/8-8/14/2021
8/1-8/7/2021
7/25-7/31/2021
7/18-7/24/2021
7/11-7/17/2021
7/4-7/10/2021
6/27-7/3/2021
6/20-6/26/2021
6/13-6/19/2021
6/6-6/12/2021
5/30-6/5/2021
5/23-5/29/2021
5/16-5/22/2021
5/9-5/15/2021
5/2-5/8/2021
4/25-5/1/2021
4/18-4/24/2021
4/11-4/17/2021
4/4-4/10/2021
3/28-4/3/2021
3/21-3/27/2021
3/14-3/20/2021
3/7-3/13/2021
2/28-3/6/2021
2/21-2/27/2021
2/14-2/20/2021
2/7-2/13/2021
1/31-2/6/2021
1/24-1/30/2021
1/17-1/23/2021
1/10-1/16/2021
1/3-1/9/2021
12/27/20-1/2/2021
12/20-12/26/2020
12/13-12/19/2020
12/06-12/12/2020
11/29-12/05/2020
11/22-11/28/2020
11/15-11/21/2020
11/8-11/14/2020
11/1-11/7/2020
10/25-10/31/2020
10/18-10/24/2020
10/11-10/17/2020
10/4-10/10/2020
9/27-10/3/2020
9/20-9/26/2020
9/13-9/19/2020
9/6-9/12/2020
8/30-9/5/2020
8/23-8/29/2020
8/16-8/22/2020
8/9-8/15/2020
8/2-8/8/2020
7/27-8/1/2020
7/20-7/26/2020
7/13-7/19/2020
7/6-7/12/2020
6/29-7/5/2020
6/22-6/28/2020
6/15-6/21/2020
6/8-6/14/2020
6/1-6/7/2020
5/25-5/31/2020
5/18-5/24/2020
5/11-5/17/2020
5/4-5/10/2020
4/27-5/3/2020
4/20-4/26/2020
4/13-4/19/2020
4/6-4/12/2020
3/30-4/5/2020
3/23-3/29/2020
3/16-3/22/2020
March 14, 2020
March 13, 2020
March 12, 2020
March 11, 2020
March 10, 2020
March 9, 2020
March 5, 2020
March 1, 2020

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Stocks Dive, Then Rally Thursday, Setting Up for Quad-Witching Friday As Evergrande Overhangs Markets

Friday, September 17, 2021, 8:33 am ET

Being a Friday, economic news will be light to non-existent, so it's an opportunity to take a look ahead and assess without having to factor in any extraneous elements.

First, though, Thursday's market mayhem needs a look. Off the backdrop of fairly benign retail sales for August (up 0.7%, but July revised lower by the same amount, producing a wash), stocks opened to the upside but quickly reversed course. The Dow was up nearly 130 points within minutes of the opening bell sounding, but a half hour later was down 103 points and hit what turned out to be the day's low just before 11:00 am ET, with a loss of 274 points. The area around 34,510-34,540 is turning out to be a considerable support level, as the Dow has bounced off there three consecutive sessions.

Dip buyers were out in force, as the Dow fell, so too the NASDAQ and S&P, with the latter coming within points of its 50-day moving average, triggering buy programs. The remainder of the session was devoted to closing down short positions and timorous buys that nonetheless moved all the indices into plus territory with an hour remaining in the session. These gains did not hold up, as the NASDAQ - as usual - ended up the only major in positive territory at the close, though the losses on the other indices were stemmed significantly.

The buys off the lows should prove counter-productive in the longer scheme, serving only to delay the inevitable pullback in equities, which, despite recent weakness, are still up handily for the year. There's simply too much uncertainty for stocks to make much headway to the upside. The charts are signaling more declines dead ahead.

Friday is setting up to be a potentially volatile session, as it is another quad-witching day, with quarterly options and futures expiring. We say potentially because the degree of craziness often is tempered by the volume of bets on either side of the coin. With markers both to the up and downside, sometimes they just cancel each other out, producing a dull session. So, Friday's trade should be mostly about timing, on a very, very short-term basis. We're talking minutes and hours rather than days, weeks or months to turn a trade.

The most severe overhang continues to blow out of China, where the Evergrande collapse continues to run its course toward a significant liquidity crunch. The company plans to offer discounted real estate to investors who are currently being stiffed, which is not really a great solution. Many small investors put down significant sums up front on new developments that have now vanished. Offering them a discount on what's already proven to be garbage is not going to attract many willing parties. The investors want their money back, and they've protested at the company's headquarters and reportedly (Straits Times) have some of the executives held captive inside their offices.

As that saga will play out over the next two to three weeks, the main focus for investors should be on China markets in general and US bank stocks in particular. If the real estate collapse spreads beyond China's markets, US banks holding foreign debt would be impacted first. This looks like a Lehman moment for China, though opinion is mixed as to how seriously it will affect China and the global economy, separately.

Silver and gold were beaten down on Thursday, sending silver below $23 for the first time since last November. Gold lost $40.40, settling at $1753.70. There's a chasm for silver below $22 all the way down to the range of $16.50-18.00, while gold could potentially free-fall down to support at $1550-1600. If the current breakdown gets extended, those levels are in play. Gold's most serious low point was at $1683, back in March. As of the virus madness, gold dipped down to $1474 in March 2020.

Silver fell as low as $22.15 in November 2020. When markets tanked in March 2020, silver hit $12 an ounce. This is not to say that those levels will be attained, it's just illustrative to see how volatile precious metals have been the past 18 months.

There's still an hour to the US open as of this writing, but signs for another down session are present. US equity futures were hovering near their lows but have recovered in the past half hour and European stocks have turned from positive to negative.

Even though the week thus far has a tinge of redness, the main indices are all holding gains through Thursday's close. The Dow is up 144 points; NASDAQ up 67; S&P up 15; and the NYSE Composite ahead by a mere 13 points.

The present concern is over the plight of small investors locked into 401k or other retirement-type plans that cannot move rapidly in or out of positions as the bigger, self-directed traders and brokerages can. The risk is that the big money moves out of stocks hurriedly, leaving retail investors holding the bag.

Don't be a bag-holder.

At the Close, Thursday, September 16, 2021:
Dow: 34,751.32, -63.07 (-0.18%)
NASDAQ: 15,181.92, +20.39 (+0.13%)
S&P 500: 4,473.75, -6.95 (-0.16%)
NYSE: 16,576.77, -50.11 (-0.30%)


Flash Rally Based on No News; Unemployment Claims, Retail Sales Static; China Real Estate the Real Issue

Thursday, September 16, 2021, 9:00 am ET

There was a notable absense of headline-making economic news by which to prompt Wednesday's flash rally. Usually, by the end of the day, Yahoo! Finance, CNBC, or some other trusty stock cheerleading media outlet will assign a rationale to the broad macro movement in stocks. By and large, these cheap headline parlor tricks are nothing more than imaginative covers for lack of insight.

The reality is that there are normally a handful of big stories, along with truckloads of smaller, more specific news items moving stocks minute by minute. At the end of the day, financial editors look for something by which to make sense of it all. The best plan is to ignore the headlines and seek more specific information.

To point up the futility of all this headline-making, here are two headlines running simultaneously on the Yahoo! Finance home page.

Stock futures rise ahead of retail sales data - Yahoo! Finance

U.S. stock futures edge lower before retail sales report -- MarketWatch

Remember, it's never a good idea to get financial advice from any business that has an exclamation point in its name.

What's more likely to be delivering directional nudges to investors is the continuing saga of Evergrande, the Chinese real estate giant that is in the process of Lehman-izing. In other words, it's going belly up and threatening to take down a huge chunk of the global economy with it. The company has missed payments on loans, and has announced that not only will it not be paying interest on its debt, it's not going to pay back the principal either, and has suspended trading on its bonds.

Oops!

The company, China's largest real estate developer, announced Wednesday that trading on its bonds would be suspended for a day, the 16th, and resume trading on the 17th. Ironically, the announcement was made on the same date that Lehman Brothers collapsed in 2008. It's deja vu all over again as real estate loans go bust.

Most affected will be the largest banks in China, along with players in the shadow baking system. How far down the rabbit hole of derivative bets is as yet unknown, and probably won't be known until things really start to unravel.

The price of real property in many of China's markets has collapsed over the past months, some by as much as 90%. It's like the US sub-prime crisis on steroids, and is more likely than anything else to be weighing on investors minds, not just in China, but in markets globally.

That might help explain why US markets dropped like rocks on Tuesday after the August CPI revealed very tame inflation numbers.

At the Close, Tuesday, September 14, 2021:
Dow: 34,577.57, -292.06 (-0.84%)
NASDAQ: 15,037.76, -67.82 (-0.45%)
S&P 500: 4,443.05, -25.68 (-0.57%)
NYSE: 16,497.23, -138.15 (-0.83%)

What still needs explanation is Wednesday's rally. It could be just another incidence of "buying the dip", a strategy that actually has worked quite well for most of the past 12 years. Like everything else in life, it will keep working until it doesn't, and maybe that time has come.

China, which likes to keep all information bottled up and away from Western media - incidentally, a phenomenon that's become rather ubiquitous in the United States recently - is not going to be able to keep the actual implosion of its real estate market a secret. It's already been leaking out, but Americans, and probably Canadians, Europeans, everybody, won't get this information from mainstream media.

Seriously, has anyone seen a story about Evergrande or the Chinese real estate market on the CBS nightly news? ABC? NBC? CNN? That is not a rhetorical question and it begs another: how soon does the collapse of China's real estate market affect the rest of the world?

To answer that, a look at US banks may offer a clue. Bank of America (BAC), JP Morgan Chase (JPM), and Citigroup (C), the three largest commercial lenders, are all down since June. Are they exposed to Chinese real estate? The answer is that they're all exposed, to greater or lesser degrees, via their derivatives. Who knows? JPM might have derivative bets against China, thinking it will fall, while Citi is making bets the other way. The derivative market is so opaque, literally no one person knows what's inside it.

One matter is certain. If China's real estate market is melting down, it will have a global effect. How great or small is the question, but it appears that real estate in China may be the worst investment of 2021 and that it is so bad, it threatens the rest of their economy, and that of the world.

So, as futures decline awaiting August Retail Sales and the weekly unemployment claims data, the headlines may be screaming about those items, but the real story lays beneath the noise and confusion at the surface.

Retail sales for August came in at plus 0.7% month over month, the exact opposite of expectations calling for a 0.7% decline, but, throwing cold water on the report was the revision to July's data from -1.1% to -1.8%, making today's headline number a complete wash.

Initial unemployment claims numbered 332,000, higher than expected, and still far higher than what would be considered sustainable or improving.

At 8:50 am ET, futures are trending lower. Gold and silver are being beaten down as the dollar gains.

Short accordingly.

At the Close, Wednesday, September 15, 2021:
Dow: 34,814.39, +236.82 (+0.68%)
NASDAQ: 15,161.53, +123.77 (+0.82%)
S&P 500: 4,480.70, +37.65 (+0.85%)
NYSE: 16,626.88, +129.65 (+0.79%)


Stocks Stumble After CPI Shows Inflation Slowing; Dow Transports In Correction, Down 10.4%

Wednesday, September 15, 2021, 8:23 am ET

Stocks took a rightly deserved beating on Tuesday after the Bureau of Labor Statistics (BLS) released the August CPI data, showing inflation beginning to slow.

The news was so good, in fact, that Wall Street responded in the negative, realizing that any good news can only help the Fed decide earlier on when and how much to taper from their monthly $120 billion in asset purchases. Stopping the steady flow of fresh cash to Wall Street cannot be tolerated, thus, for the most cynical reasons, stocks got sold.

There's also the argument that stocks are overvalued, or, that the "recovery" from the virus panic of the past 18 months is not exactly the economic miracle that was promised. For whatever it's worth, inflation is probably on the lower end of the worries list. There are labor shortages, enhanced unemployment benefits have ended, the rent moratorium is over, the congress seems hell-bent on raising taxes, and the issue of the debt ceiling has not even begun to be debated. Those are problems. Inflation, that mostly comes and goes, and it seems that the current spate of it was mostly centered on energy and transportation, as gas at the pump, fuel oil, natural gas, and used cars were the main contributors to the surge in prices.

Tuesday's slippage was led by the Dow and the NYSE Composite, the broad index most people like to ignore. Another one that is seen by the few, the brave, the most astute, is the Dow Jone Transportation Index, which fell into correction territory (-10%) for the fourth time in the past two months.

The magic number of official correction status is 14,348.97. That is exactly 10% below the 15,943.30 close on the Dow Transports from May 7 of this year. The previous three times the Transportation Average has fallen into correction - not that anybody noticed - were July 19, August 4, and August 9. That the Transportation Average is down 10% may not be a big deal to some. After all it's up about 15% on the year, so why worry?

The upshot is that the primary trend on the Dow Jones Transportation Average has reversed. What was bullish has now become bearish, and on Tuesday, the Dow Jones Industrial Average confirmed the trend reversal by failing to close above 34,894.12, the interim low set at the close on August 19. Tuesday marked the fourth consecutive session in which the Industrials failed to exceed the prior low. That constitutes, in Dow Theory, a confirmation of the primary trend reversal on the Transportation Average. In other words, the stock market has turned negative.

There's more evidence of the trend reversal on the charts of the Industrial Average. The August 2nd session, which ranged a full 384 points but only ended up losing 97 by the closing bell, engulfed the prior six sessions, with the highs and lows of that day exceeding the highs and lows of those six preceding sessions. That's normally a sign of an imminent change in direction.

When the Industrials made a new all-time high on August 16, closing at 35,625.40, the top was in place. Since then the Industrials have lost more than 1000 points, what amounts to a still-minuscule three percent decline. However, the technicals don't usually lie. Since the top was put in, the Industrials have closed lower 13 out of the next 20 sessions. That doesn't exactly exude confidence, nor does the fact that the Industrials have closed below their 50-day moving average the last four sessions.

There's plenty of news out there by which to move markets, but, these technical indicators, based on sound Dow Theory, say the next move is to the downside and it may be an extended one. Inflation, which the Fed has tried to create for the last twelve years with only moderate success, is trending back down, and, with the various stimulus measures played out and the federal government seeking tax hikes across the board, but mostly on the "wealthy" (those people who own 90% of the stock market), stocks could end up in correction within weeks, though it will probably be months (think November), and by the second quarter of 2022, the economy is likely to be in free fall, with all attendant disinflationary forces at work.

Hedge accordingly.

At the Close, Tuesday, September 14, 2021:
Dow: 34,577.57, -292.06 (-0.84%)
NASDAQ: 15,037.76, -67.82 (-0.45%)
S&P 500: 4,443.05, -25.68 (-0.57%)
NYSE: 16,497.23, -138.15 (-0.83%)


CPI Falls, August Rise Only 0.3%; Japan's NIKKEI 225 Hits 31-Year High; Stocks Set for Frothy Open

Tuesday, September 14, 2021, 9:16 am ET

Inflation has been a key topic for investors and consumers alike over the past six months, as higher prices and product shortages have proliferated. While members of the Federal Reserve and even Treasury Secretary Janet Yellen have deemed the recent spate of inflation "transitory," the general opinion appears to believe that this inflation is more systemic and longer term than financial leaders maintain.

Investors point to Milton Friedman's dictum that "inflation is always and everywhere a monetary phenomenon," and the meteoric rise in the money supply, which rocketed from $4.2 trillion to more than $16.2 trillion between March and May 2020, and now stands above $19.4 trillion, to confirm their argument that the dollar cannot be stretched much further before breaking. Prices for everything from lumber to new homes, used cars, to beef, pork, and chicken have been rising at a much faster pace than people's wages, making it more and more difficult for average Americans to maintain their standards of living.

Responding to the price hikes in food, the Joe Biden's people announced a permanent 25% increase to the food stamp program in August. The largest increase in the history of the Supplemental Nutrition Assistance Program (SNAP) goes into effect on October 1, and will affect all 42 million recipients. Along with the recent roll out of monthly child tax credit checks direct to families, these efforts to shore up the bottom parts of the otherwise "booming" economy will drive prices even higher.

Policy makers, the genii in Washington DC, apparently are unable to see past the ends of their noses when it comes to finance. All they've been able to do to help out the American public during the virus crisis (most of the economic damage caused by their lockdowns and restrictions) was to throw cash around via extended and additional unemployment benefits, stimulus checks, forgivable business loans and other handouts to the needy and well-to-do alike.

A key gauge of inflation - the understated Consumer Price Index (CPI) - was released Tuesday morning and the headline number makes the case for the Fed's "transitory" tag.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in August on a seasonally adjusted basis after rising 0.5 percent in July, the U.S. Bureau of Labor Statistics reported today.

That's a huge drop from the past three month's data, and very much unexpected. Year-over-year, the CPI has inflation running higher by 5.3% on a non-seasonally adjusted basis, down from July's 5.4% figure. The 0.3% figure is the lowest in six months.

The index for all items less food and energy rose 0.1 percent in August, its smallest increase since February 2021. Along with the indexes for household operations and shelter, the indexes for new vehicles, recreation, and medical care also rose in August. The indexes for airline fares, used cars and trucks, and motor vehicle insurance all declined over the month.

The main driver of the recent inflation is primarily centered in the energy sector, which is up 25% year-over-year. The component breakdown is more revealing. Gasoline (all types) is up 42.7%, fuel oil (home heating) is up 33.2%, and natural gas for heating is up 21.1% from a year ago. Prices for used cars and trucks are up 31.9% over the past year.

Taking out those obvious contributions to the upside, general inflation is not troublesome, though the CPI is often criticized for its methodology, which tends to tamp down price increases below what's seen anecdotally by consumers.

Wall Street was overjoyed at the news, with futures spiking. Dow futures were down 40 points prior to the 8:30 am ET release, and have skyrocketed beyond +125 with less than a half hour to the opening bell. NASDAQ and S&P futures made similar moves higher.

Bitcoin, gold and silver all made moderate gains upon the release.

While the knee-jerk reaction is likely to boost stocks in the near term, there may be trouble brewing. A slowdown in inflation might suggest that the recovery is not proceeding as quickly or robustly as desired. Watching how stocks move over the remainder of the week may offer some clues to the future.

Overall, however, the CPI figures represent some welcome news for consumers and producers alike. Stable prices are much preferred to rapidly rising or falling prices. Still, there's still a need to calculate the effects and counter-effects of stimulus and the ending of unemployment stimulus and rental assistance.

With this key data drop out of the way, the next major catalysts for markets are the ongoing negotiations on the 2022 budget in congress and next week's FOMC meeting. For its part, congress has seen fit to wrangle over the size of tax increases rather than address the high-spending programs in the "human infrastructure" budget. Also hanging over the heads of congress is the debt ceiling, which will need to be addressed within the next three weeks as Secretary Yellen has again warned that the government is running out of money... and time.

For the Fed, this gives them ample room to shift the timeline on asset purchase tapering whichever way they like.

Overnight, Japan's NIKKEI 225 advanced for the 11th time in the past 12 sessions, lifting the average to a level last seen during the nation's bubble economy period. On Tuesday, the popular gauge of leading stocks closed at 30,670.10 in Tokyo, surpassing February's peak, finishing at its highest level since August 1990.

Having struggled since the near-term February high, the NIKKEI has spent the past six months in a declining pattern, finally bottoming out at a close of 27,013.25 on August 20. The index began to move higher in fits and starts, even as the 50-day crossed below the 200-day moving average a few days later, in what is known as a "death cross."

On September 3rd, the resignation of Prime Minister Yoshihide Suga boosted the index a whopping 585 points higher.

Suga's resignation paves the way for more stability and hopes for better equity returns. Taro Kono, a popular candidate among foreign investors, is the current favorite among the public to replace Suga as the leader of the ruling party, according to a poll by Nikkei and TV Tokyo.

A reshuffle in the Nikkei 225 that will add heavyweights Nintendo Co., Keyence Corp. and Murata Manufacturing is also seen as a catalyst for the recent move. According to Bloomberg, JPMorgan, Baillie Gifford and BNP Paribas Asset Management are among investment firms who are becoming more positive on Japan.

At the Close, Monday, September 13, 2021:
Dow: 34,869.63, +261.91 (+0.76%)
NASDAQ: 15,105.58, -9.91 (-0.07%)
S&P 500: 4,468.73, +10.15 (+0.23%)
NYSE: 16,635.39, +71.91 (+0.43%)


WEEKEND WRAP: Stocks Stumble in September; Bitcoin Goes Mainstream; Congress Dawdles on Debt Ceiling, Budget

Sunday, September 12, 2021, 10:13 am ET

September is off to a very rocky beginning. In just the first seven trading days (three last week, four this week), the Dow Jones Industrials have lost ground on six of them; the S&P lost ground in five of seven sessions, likewise, the NYSE Composite.

The NASDAQ started the month with four positive sessions, followed by three in the red. Friday's slide took it well into negative territory for the month.

Friday's sell-off sent the Composite and the Dow to closing numbers below their 50-day moving averages. It was the second straight close below that benchmakr level for the Dow.

The Dow Jones Transportation Average has been the best negative indicator available. Losing another 75 points on Friday, it closed below its 50-day moving average for the fourth consecutive session, though this is nothing new for the Transports. Since June 10, the trannies have closed below the 50-day moving average 51 of 64 sessions. While the other major indices were making new all-time highs, the transportation average was suffering its worst downturn since March 2020, closing Friday at 14366.89, a 9.9% decline from its closing high of 15943.30 on May 7, just 18 points away from being "officially" in correction.

All indices closed Friday at or near the lows of the day, an ominous sign for what's directly ahead. There are many issues outside the purview of Wall Street, largest among them the growing divide over vaccination and the entire "virus" narrative being preached daily from the propaganda platforms of the mainstream media. America, recently described as red and blue, denoting conservative and liberal factions, has devolve further, into vaccinated versus unvaccinated, followers versus truthers, maskers versus breathers, and even "woke" versus "patriot." These divides are being fueled by the media and government, especially from Joe Biden's bully pulpit at the White House.

On Thursday, Biden announced his intention to sign an executive order mandating that businesses with 100 or more employees require all employees to be vaccinated or undergo regular testing if unvaccinated. The order has yet to be posted and as yet is not signed, nor will it be law even if or when Biden signs it.

Biden did sign two related executive orders Thursday, aimed at federal employees and contractors to the federal government. White House Press Secretary Jen Psaki said Thursday the EO for contractors would take effect when Biden signs it, with a "ramp up" period of about 75 days. The executive order for federal workers, also issued Thursday, called for guidance to be released within 7 days.

Nearly all 27 Republican governors voiced opposition to Biden's proposals, along with many employee unions. Additionally, healthcare workers are balking at being vaccinated, many walking off hospital jobs or actively protesting vaccine measures.

More than anything else, the virus crisis is sending shockwaves through society and affecting business and government nationwide. The spectacle of overflow college football crowds the past two weekends - and the promise of the same at NFL venues today - and at baseball games nationwide belies the myth of the virus, as 100% of the crowds are maskless and there are no protocols for vaccination checking at the vast majority of sports venues. People are simply not having it, despite the harsh rhetoric from the White House.

Meanwhile, congress continues to plod along toward a reconciliation budget and legislation for infrastructure and either raising or suspending the debt ceiling. Treasury Secretary Janet Yellen warned lawmakers again on Thursday that the government would run out of money in October if new legislation was not authorized.

At this point, with congress in an extended state of partisanship, there is no certainty on any issue, and the possibility of the United States defaulting on its debt has become a very real one. Variably described as feckless and irresponsible, the US congress could do to stocks what investors, pundits, and analysts cannot: move them in very sharp and unforeseen directions in rapid order. Pinning ones economic future on the US congress is likely not a strategy most investment professionals would advise, though that appears to be the situation presently.

Going beyond politics, many of the major banks issued stock market warnings in the past week to ten days. Morgan Stanley, Bank of America, Deutsche Bank, Citigroup, Credit Suisse, and Goldman Sachs have all sent out red alerts to investors, suggesting a either sharp correction or a slow burn lower, which might be a worse outcome. It would not be unusual for stocks to take a dive and investors to cash in on profits. September and October are historically difficult months for equities, and currently there are more than enough potential downside catalysts to cause a correction or crash.

Optimists contend that the Fed has the market's back, though even that is in doubt after the ECB decided to move forward with tapering asset purchases this week, a topic the Fed has been openly pondering for months. The Fed's next FOMC meeting is September 21-22. Some guidance on tapering is expected at that time, though there's little to no chance that rates could be raised until some time in 2022.

So, is it time to panic ahead of the panic and sell everything, or just sell losers, or go "all in" and short the market? Money Daily does not offer specific investment advice, but the signs of imminent financial danger are present. If last week's slide continues to gain momentum, things may get pretty dicey, pretty quickly.

Through the week's carnage in stock markets - European and Asian markets were also whipsawed - the treasury market offered no indication of anything, either positive nor negative. Yield on the 10-year note advanced a mere two basis points, from 1.33% to 1.35%, while the 30-year was stagnant, holding at 1.94%, week over week.

Receiving some positive news this week was the crypto market, as the county of El Salvador ("The Savior") became the first sovereign nation to recognize Bitcoin as legal tender, though one would not have guessed such was the case, judging solely by market response, which was predominantly negative, though it may have been a case of "buy the rumor, sell the news" strategy. Bitcoin fell from a high of $52.944 to $42,830 in a matter of 12 hours, from 11:00 pm ET on Monday, September 6, to 11:00 am ET, Tuesday, September 7, just as El Salvador was making bitcoin legal tender alongside the US dollar.

The sudden slide was more likely an instance of central bank disturbance, as promoters of fiat currency sold bitcoins to divert attention away from what could be the seminal cryptocurrency event of the decade. Central bank displeasure at bitcoin and all currencies they do not control is an open secret, well known by adherents of precious metals. Slamming the price of cryptocurrencies requires nothing more than building up a reserve of a specific coin and then summarily dumping them onto one or more exchanges in rapid order.

Since central banks can simply print up as much fiat as they need (otherwise known as counterfeiting), any losses incurred deploying such a strategy would be insignificant, so long as their favored fiat currency remains the dominant medium of exchange. Once that dominance is reduced significantly, either by mass rejection of dollars, euros, yen, et. al., or mass acceptance of an alternative such as Bitcoin, Cardano, or Etherium, Gresham's law would be inverted, as good money would chase out bad. The central banks undoubtably view Bitcoin and other cryptos as mortal enemies, and have sought to stamp them out, though doing so has proven difficult and possibly expensive.

Over the years, Bitcoin and the entire crypto universe have proven resilient against efforts by central banks and government authorities to ban, regulate, or de-platform them. Now more than a decade since inception (2009), Bitcoin has been declared dead hundreds of times, but continues to gain, both in price and acceptance, a tribute to its blockchain structure and to the desire of people worldwide for honest money. Since the events of September 6 and 7, price has rebounded into the $45-46,000 range, and has been somewhat stable over the past five days and nights.

In the face of a brazen attempt at rigging the price lower, stability provides Bitcoin with a some degree of trustworthiness, an element which may prove necessary for successful integration of crypto into the acceptable currency category. The events of this week - including the announcement by Ukraine of their intent to make Bitcoin legal tender in the country - are just another skirmish in ongoing currency wars, which are heating up on other fronts, especially surrounding efforts by Russia, China, Brazil and others to de-dollarize their economies.

While the BRIC countries may eventually force a return to a gold standard, smaller nations are beginning to line up in the crypto queue as Panama and Cuba also recently announced plans for crypto frameworks. Additionally, the African nation of Nigeria has nearly legitimized crypto, as it boasts the second highest daily crypto volume, behind the United States.

In the oil market, there were signs of rare, continued price stability in the aftermath of OPEC+ reinstating 400,000 barrels per day of production at the beginning of the month. WTI crude ranged from a low of $68.14 per barrel on Thursday to a high of $69.71, it's closing price Friday. Gas prices in the US continue to average around $3.17 to $3.18 per gallon, with prices in the Southeast lowest (under $2.56 and up) and highest in the West ($3.58 and higher).

Precious metals actually tracked stocks fairly efficiently, as if those two disparate investments had anything in common. Silver ended the week in free-fall, closing Friday in New York at $23.68 per ounce, down a full dollar from the close on September 3. Gold also was unceremoniously whacked repeatedly, ending the week at $1786.80, likely the reward of posting a one-month high at the end of last week, of $1,827.60 the ounce. The drop, week over week, was 2.3%.

At the retail end, buyers continued to snap up small purchases at seeming discount prices. No recognition of the COMEX smackdowns or LBMA "fixings" were apparent in finished products, though retail outlets online were beginning to loosen policies and lower prices. On eBay, it was a different story, as shown below.

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
1 oz silver coin: 39.00 / 49.95 / 45.07 / 45.85
1 oz silver bar: 32.15 / 54.75 / 42.08 / 38.87
1 oz gold coin: 1,879.25 / 1,936.15 / 1,907.14 / 1,905.51
1 oz gold bar: 1,865.35 / 1,899.02 / 1,877.95 / 1,872.69

The Single Ounce Silver Market Price Benchmark (SOSMPB) settled at 42.97, a huge jump of $1.88 from last week's price, $41.09, reinforcing strong retail rejection of the LBMA and COMEX manipulated pricing scheme.

There's so much going on in the finacial world right now that it's difficult to keep track of all the developments in China, Russia, emerging nations, crypto, and in the EU and Japan. It's not just the government institutions that appear to be creaking under their own weight, but the money backing sovereign nations is likewise under assault. Entrenched institutions are so overweight with corruption, they've called upon social media giants to hide the truth from the masses. Google, Facebook, and Twitter are the primary actors in government-sponsored censorship, a practice that is allowed to continue unfettered, as the banishment of free speech is a powerful tool of the tyrants in charge, masquerading as leaders, democrats, republicans, liberals, and conservatives.

Sovereign governments have engaged fascism virtually overnight, combining their dictatorial powers to rule by edict with a captured mainstream and social media construct promoting militarism and medical oppression. Such concentration of power has proven destructive in the past and it is repeating history in the present. Where the evil and corruption begins and ends is unfathomable, though it is undeniable. From France to Canada, Australia, and the United States, personal freedom is at stake from the "democratic" tyrants who are really nothing more than brutal dictators hiding behind a facade of equality. The social contract has been badly broken by elitist elements, to the detriment of regular citizens everywhere. Should such blatant oppression continue, the likely conclusions are ghastly to consider, but the world seems more on the precipice than ever in recent memory.

Hedge accordingly.

At the Close, Friday, September 10, 2021:
Dow: 34,607.72, -271.66 (-0.78%)
NASDAQ: 15,115.49, -132.76 (-0.87%)
S&P 500: 4,458.58, -34.70 (-0.77%)
NYSE: 16,563.48, -99.64 (-0.60%)

For the Week:
Dow: -761.37 (-2.15%)
NASDAQ: -248.02 (-1.61%)
S&P 500: -76.85 (-1.69%)
NYSE: -346.24 (-2.05%)


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.

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