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Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
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Friday, October 4, 2024, 9:09 am ET It's the first Friday of the month, so we all know what that means: STOCKS GO UP! Because every month, the statistic-keepers at the Bureau of Labor Statistics (BLS) - whose favorite meal is waffles and fudge - use the first Friday to release their estimate of labor market growth, the monthly non-farm payroll report (NFP). This month's report, featuring September's best guess, is of vital importance, coming less than five weeks before Election Day and fast on the heels of the FOMC's latest stumble into economic never-land, the 50 basis point rate cut, offered when stocks and home prices are close to all-time highs. Pure genius. In any case, private expert guessers are looking for a number around +132,000, after August's soon-to-be-revised-lower +142,000, but what may influence bond and equity markets more directly is the end of the four-day longshoremen's strike, dockworkers agreeing to go back to work until January 15, 2025, while details are arranged after various managements offered a 62% wage increase over six years. The average dockworkers already makes over $100,000 a year for moving containers around, so why not more? These raises will no doubt prove to be wildly inflationary as everything imported and arriving at East Coast and Gulf ports will be subject to higher moving costs. God Bless America. As for the NFP, the lower the number the better, according to the pretzle logic of Wall Street. A weaker labor market and possibly a higher unemployment rate would prompt the Fed to lower interest rates faster, suggesting another 50 basis point cut at November's meeting, which concludes the day after Election Day, November 6. There is no FOMC meeting in October, so whatever the Fed decides will not affect voting, polling or whatever is involved in choosing more paid politicians. While awaiting the all-important (even though it's nowhere near reality) NFP, stock investors were somewhat lulled to sleep the first four days of the week, leaving the Dow Jones Industrial Average down 301 points through Thursday's closing bell, the NASDAQ off by 201, and the S&P down 38 points. Awaiting the 8:30 am ET release, stock futures were modestly higher, WTI crude oil was advancing beyond its highest level in a month ($74.60), with gold and silver flat, close to recent highs. The BLS came in with a number that may have shocked even the most pessimistic FOMC voting members, showing job gains of 254,000, more than 100,000 higher than the average estimate. Making matters even worse for the "more rate cuts" crowd, July and August were revised higher,, up 55,000 in July and 17,000 in August, which, along with the September number have to be considered music to the ears of Kamala Harris and any other Democrats seeking re-election. This is the BLS cooking the books at its very finest. The unemployment rate fell to 4.1%, and wages were up 13 cents for the month and 4.0% year-over-year. Yippie! More inflation! Cut another 0.50%! All of this is simply bad news for the Fed, which now appears to be completely wrong-footed and politically motivated. Wall Street, as usual, was ready to celebrate no matter what, initially choosing elation at the prospect of a strong economy, higher inflation, and, naturally, higher stock prices rather than shock and dismay that the Fed may only cut rates 25 basis points in November and maybe not at all in December. Persistent suggestions of a strong economy might even lead the Fed to reverse course and resume raising rates, but, it being election season and without a meeting before the main event, the Fed will be happy to sit back at watch the drama unfold. With the news fresh in the stirring pot, stock futures took off to higher ground, as did the dollar and bitcoin. Gold, silver and crude took modest hits to the downside. A half hour before the opening bell, it appears that stocks will ride the news higher, regardless of their desire for lower interest rates and easier money. As unexpected as the NFP print was, there doesn't seem to be anything that Wall Street doesn't like, even $7 bags of potato chips or $12 cans of coffee. "Higher for longer" has now taken on a very different tone. This was entirely unexpected, but Wall Street, as usual, gets its bread buttered on both sides as the American consumer struggles to pay rent and eat. Meanwhile, bond vigilantes aren't buying it, sending the 10-year note higher by eight basis points. Is the Fed paying attention? Just in case you need a little something to take your mind off economics, finance, and politics, here, for your listening pleasure, the Allman Brothers performing "In Memory of Elizabeth Reed" off their Idlewild South LP:
At the Close, Thursday, October 3, 2024:
Thursday, October 3, 2024, 8:56 am ET Mike Maloney, author of the landmark video series, "Hidden Secrets of Money" explains in fine detail how the Federal Reserve System is bankrupt and trapped in a self-created system initiated by former Fed Chairman, Ben Bernanke (ironically awarded the Nobel Prize in Economics in 2023), known as Quantitative Easing (QE). During the 2008 Great Financial Crisis (GFC), Bernanke and his fellow Federal Reserve Regional Presidents and voting members of the FOMC embarked on radical policies designed - in their minds - to rescue the world's economic system. While it's been 16 years since that stepping off point, the evidence collected by Mike Maloney in his latest video, 30 Seconds to Midnight: THE FED JUST WENT BANKRUPT shows, with alarming accuracy, the depth of the Fed's upside-down condition and how it is trapped in a death spiral from which it cannot escape.
Literally, the U.S. currency is being debased at an alarming rate, the U.S. Treasury sabotaged from the inside by former Fed Chair Janet Yellen, who should never have been nominated for the job of Treasury Secretary, much less confirmed by the utterly corrupt, irresponsible, and incompetent U.S. Senate, paying upwards of $1 trillion in interest on the nearly $36 trillion federal debt in fiscal 2024. Becoming more and more difficult to control its own operations, the Federal Reserve System has been sending IOUs to the U.S. treasury since September, 2022, now totaling more than $200 billion, the currency, instead of going to the government to help reduce the deficit by a small amount, went instead to member banks of the Federal Reserve as interest on bank reserves at an increasing rate as Powell and the FOMC raised interest rates. This was set in motion by current Fed Chairman, Jerome Powell when he increased the money supply This is the mechanism by which the biggest banks on the planet - JP Morgan, Bank of America, Goldman Sachs and many others - remain solvent, on paper at least, and also why inflation raged and is still a threat to re-ignite and send the currency into hyper-inflation, similar to the levels of the Weimar Republic in the 1920s or Zimbabwe in the late 2000s. All the while, the Federal Government continues to operate as a bankrupt corporation, continuing to issue debt, purchased by the Fed and cycled through to its primary dealer banks. The process, according to Mike Maloney, is unstoppable and will produce a crisis the likes of which the world has never known. While Maloney's video provides evidence of the distress at the Fed and in the U.S. financial system, it is difficult to understand all the inner workings that have led to this point, but, make no mistake, a financial crisis has been building up and it is about to be unleashed, not coincidentally, just as the national elections take place. October is a month usually associated with financial crises, and it is so for good reason. The Federal Reserve, as much as it would like to claim its apolitical position, is a political entity in the extreme. Crises are managed as well as possible until just prior to elections, then unleashed as an "October Surprise" to rattle markets and people and influence voting preferences. Nothing the Fed does is separated from politics. As a distinct entity separate from the government and accountable to nobody other than its shareholders (the world's largest banks), the Fed's influence on U.S. politics is monumental. So, where does that leave the American people, stock market investors, and bond holders? Wherever it is, it isn't a good place. Within a very short time, probably before Election Day, November 5, but possibly afterwards, the stock market is going to go into a tailspin. Treasury yields are going to spike as investors seek better return on bills, notes, and bonds. There's a very real possibility that the Fed will reverse course and begin raising interest rates again to hold back inflation, though they also may lower rates to assuage the crisis they created. No matter the case, the next three to four months are going to be extremely chaotic, all by design. Democrats, desperate to hold onto power in the White House and in congress, will resort to any level of evil. They've already tried to eliminate Donald Trump - the main threat to their control of power - through the courts and by assassination. He is America's only hope, along with the team of patriots who have aligned themselves with him - Elon Musk, Tulsi Gabbard, Robert Kennedy Jr., and others. The future of America, and by extension, the world, rides on the results of the upcoming election. Money Daily has made the assumption, based on available evidence, that Trump is actually well ahead in the polls, regardless of what the propagandized mainstream media reports, and will win the election handily, if it's allowed to proceed without interference. We stick to this assumption not because it is the most desirable outcome, but due to the idea that the desperate Democrats have underestimated the American public. While perhaps not the most politically astute citizenry, Americans are not stupid or gullible enough to elect an empty suit, promoted to the candidacy through corrupt means, such as Kamala Harris. Americans, left, right, center, man, woman, transgender, and of any race, sees right through her and her phony campaign. There is simply no way she can win the election without massive cheating taking place. If Harris is announced as the winner on or about November 5, it will be due to cheating, plain and simple, or the incapacitation of Mr. Trump. In that case, all bets are off concerning anything social, political, or economic. A Harris victory signals the end of democracy in the United States, worse than the last four years under the imposter Biden. The level of anger and distrust of the federal government in rural America will reach new heights and foment civil uprisings. I wish there was better news to bring, but wishing that conditions could be better is not a solution. Americans need ot act in their own best self-interest. The current power structure of the federal government and the Federal Reserve is at an unsustainable point and radical reform is necessary. With unstable conditions at the Fed and in government, the media continues to point to Friday's September Non-Farm Payroll release as a signal for what's ahead for interest rates and Fed policy. Keeping in mind the fallacy that the Fed isn't really interested in fighting inflation any more and is all of a sudden focused on the labor market, the jobs data from September probably won't matter much at all. If the report shows jobs slipping, it will give the Fed incentive to cut rates faster by doing a 50 basis point cut in November. Stocks will likely rally. If the report is reflective of a strong labor market, the Fed may slow their pace, offering a cut of just 25 basis points. Stocks may rally, but the odds favor a decline. Day-to-day noise in markets isn't trend-setting. The path that the Fed has taken for years points to a growing crisis that is about to erupt, and that is a huge negative. Naturally, other factors are in play, including the conflicts in Ukraine and Israel, the blooming disruptions from the dockworkers strike which began October 1, recovery efforts from Hurricane Helene, and more. But, a financial crisis overwhelms all. One would be well advised to stock up on necessities, fill the pantry and have at least a month's worth of food, water and cash on hand while staying on the lookout for Black Swans. Three months' worth of cash and necessities might prove to be even more prudential.
At the Close, Wednesday, October 2, 2024:
Wednesday, October 2, 2024, 9:27 am ET Fast approaching its 250th anniversary (2026) the United States of America holds great promise for its citizens. It's time we got around to fulfilling some of the hopes and dreams of people young and old, black, brown, or white, male and female, and to do that the problems plaguing this country need to be addressed, the sooner the better. First on the agenda of cleaning up the current mess that defines our character is to rid government of the rampant corruption that crosses party lines and extends down from the federal level all the way to local municipalities, cities, towns, and villages. That effort could start right away if we had a Justice Department and FBI that was less intent on prosecuting Donald Trump and his cohorts and more engaged in rooting out bad actors in congress, in the White House, on Wall Street, in board rooms, in Statehouses, on City Councils and in the judicial realm. Of course, the current make-up of miscreants operating within the FBI and DOJ aren't exactly saints themselves, so, it's likely that Americans are going to have to tough it out until nearly the end of January of next year before anything even roughly resembling reform begins to appear. That assumes Donald Trump winning the election, which, by any reasoned account, he should, handily. The race between Trump and Harris is not even close. The polls so widely and generously offered by the mainstream media are rife with oversampling that favors Harris, either stacked with 25% more women or an equal amount of Democrat voters. Given a poll that is large, half male, half female, one third Republican, one third Democrat, on third independent, and equally split among urban and rural voters would undoubtably favor Trump 99 out of 100 times no matter which state or states participated. If the polls are so wildly out of whack in order to rationalize a steal like in 2020 (and, please, stop with the "Biden won, Trump tried to overturn the election" nonsense. Trump won and everybody knows it) or to keep Americans glued to their TVs and the endless stream of pharmaceutical ads punctuating the mainstream propaganda, what does that say about the media in America? In a nutshell, it says they've failed. It says they are nothing more than the public relations arm of the Democrat party and that they do not engage in actual journalism, but are rather well practiced in jingoism, sloganism, socialism, plagiarizing, misinformation, disinformation and outright lying. The mainstream media represented by the giant media conglomerates at CBS, NBC, ABC, CNN, FOX, the New York Times, Washington Post and USA Today should be put on trial for colluding to defraud the public. They all speak and write from the same crib notes, parroting each other in a cacophony of sound bites that are normally overwhelmingly false, distorted and unfavorable towards anybody not toeing the company line. These companies need to be broken apart and the Telecommunications Act of 1996 needs to be amended to strip away much of the concentration of power that's been wielded by the biggest media companies, in the main, to ill effect. Better yet would be conspiracy indictments against most of the top 20 anchors, editors, and reporters at these companies, trials, and mass dismissals. The mainstream media in America is an absolute disgrace. They have failed the American people in their obligation to report news in an unbiased, honest fashion. That's not much to ask, but, sadly, they're to a man or woman, not up to it. They've been co-opted by sponsors and politicians to do their bidding, carry their water, kiss the ground upon which they walk. Once again, standing back and taking for granted media bias and propaganda, ignoring the problem, doesn't get it fixed. It's well past time that these purveyors of untruth be exposed, deposed, and disposed of, for the good of the country, along with financial reporters and bureaucrats at agencies like the EPA, BEA, IRS, BLS, and elsewhere throughout government. Th corruption is so deep and so well-entrenched it will take decades to unearth all of it. Tuesday night's Vice Presidential debate underscores the the depth of unfairness and underhanded tactics the media employs to keep Americans believing in their fake news productions. From the pre-debate shrieking about how close the election is to the post-debate bullet points about how "cordial" and "polite" this debate was, the effort by the media was to take a swipe at Trump for being rude or crude (but, that's the Donald, like it or not), by comparing this debate to his, and to avoid the awarding the obvious "winner" medal to J.D. Vance. Anybody possessing the analytical skills of an average 6th grader couldn't help but see how badly Walz was being run over by J.D. Vance, who displayed a commanding, even-tempered presence while ripping Walz to shreds on issue after issue. If the debate proves to have any impact at all, it may register with undecided voters that they'd prefer to have Vance sitting next to the next president rather than Walz, which implies that Donald Trump will once again be the president of the United States and America can begin healing from the deep wounds inflicted by the sick, twisted agendas and policies of the Biden-Harris administration and its lapdog media. After scrolling through nearly three pages of search results on Startpage's News tab, one article appeared that seemed to have the correct grasp on the situation, an opinion piece in the LA Times by Scott Jennings headlined, JD Vance won the debate with Tim Walz, hands down. They won't, but the media needs to stop harping on January 6, the worn out tome of "Trump still thinks the election was stolen", and tightness of the race. Americans, between inflation, wars, threats of wars, natural disasters, and crime, have much more to concern themselves with than another "down-to-the-wire" presidential contest. This country needs to get about fixing what's broken, not in three or four months, but starting right now. Here are some suggestions: Every man or woman of voting age needs to re-examine the election of 2020 and decide for themselves whether they think Joe Biden was duly elected or whether the results were fixed to deny Trump a second term, which he absolutely deserved. Once convinced one way or another, Americans can then begin to act on their convictions, regarding whoever is running the country from the White House as imposters, and consider their myths, lies, and directions not as orders, or laws, or "rules", but rather, as suggestions, to be followed or not. Government agencies need to begin serving their customers, not just taking up space in the bureaucracy. The Treasury needs to stop borrowing so much money, and congress needs to stop appropriating amounts that exceed revenues. A good start would be to abolish the Department of Education, cut Homeland Security by 20% and all other agencies by a minimum of 10%, freeze all federal wages, limit government contracts and penalize expense overruns, especially in military procurement. Impose the Taft-Hatley act to cut short the dockworkers strike. Provide ample assistance to the victims of Hurricane Helene, especially in North Carolina and Eastern Tennessee. Fast track insurance claims. Expedite rebuilding of homes damages or swept away by the floods. Fix the roads. It wasn't so long ago that Biden and congress passed an Infrastructure bill. Where's that money? Start deporting illegals. Stop funding them, coddling them, supporting them. Send them back from whence they came. And, please, stop funding Ukraine and Israel. Stop those wars, or, at least disengage America from them. Down the road, when Trump becomes president, perhaps some change will come, but here's one idea that could really jumpstart the American economy: tax breaks for small businesses. Not just little things like credits or a lower rate on earned income, we're talking about a 50% cut in all fees, obligations, contributions, and taxes for any company, sole proprietor, partnership, or corporation that makes less than $250,000 net in a year. FICA: half off; Medicare: half off; withholding: half off; state tax: half off; federal tax: half off. Do you think that might encourage some people to start their own businesses or expand existing ones? The bane of our existence is largeness. From mega-corporations to overgrown government, large and in charge equates to less freedom, fewer choices, and bad outcomes for individuals, to say nothing of the deleterious effect it has on entrepreneurship. America needs to start fixing what's broken, much of it created by our very own government. It will take great effort from individuals, citizens who want the best for their families, friends, and their country. It will not be easy, but it can be done. And it needs to start happening now, not in a few weeks, or a few months, TODAY. Carpe Diem. By the way, yes, I did call the top of the market yesterday at the open. The U.S. economy is in a shambles. It's all downhill from here and the media will try to blame it all on Trump. Stocks are headed for a 35-50% decline. How do I know? Let's just say studying business, finance, and economics for the past 40 years does give one certain useful knowledge and insight.
At the Close, Tuesday, October 1, 2024:
Tuesday, October 1, 2024, 9:44 am ET Stocks on the NASDAQ and S&P 500, and probably the Dow Industrials are currently anywhere from 35-50% overvalued, so, does this mean that the new all-time highs achieved Monday on the Dow and S&P are indicative of a top? The NASDAQ is about 450 points from its record close (18,647.45, July 10). The techie top may already be in place. Price to book on the S&P at 5.15 is above the level reached just prior to the dot-com crash in March, 2000 (5.06) and nearly double the median, 2.83, and 40% higher than the mean, 3.05. If, as laws of nature which have not been cancelled by Keynesian economists, prevail, the normal reversion to the mean would put the S&P 500 at around 3,500, just below the bottom put in place in October, 2022, at the bottom of the short-lived bear market and just prior to the Fed beginning its rate hiking regime, now, apparently concluded. Other metrics show similar overvalue signals. The Shiller CAPE stands at 37.00 prior to the opening bell on Tuesday. A nationwide dockworkers strike began at midnight, idling more than 45,000 International Longshoremen's Association (ILA) members at over three dozen facilities across 14 Gulf and East Coast ports, from Boston to Jacksonville to New Orleans and Houston. The strike comes at a critical juncture, as millions across the states of Florida, Georgia, South Carolina, North Carolina, Virginia, and Eastern Tennessee begin recovery efforts in the aftermath of Hurricane Helene, which dumped excessive rainfall on North and South Carolina and Tennessee's Eastern towns and villages. The devastation from overflowing dams and rivers is likely to be remembered as one of America's worst natrual disasters. The city of Asheville, North Carolina appears to be the hardest hit. Roads and bridges have been washed out and residents are - a week later - without power, water, food, and virtually any means of escape. With election day, November 5, now exactly five weeks away, the timing of the dockworkers strike and the devastation in the heartland could not be more impactful. How Wall Street will respond remains a mystery. Since late October of 2023, stocks have been levitating higher and higher still, without much regard to fundamentals like price:earnings ratios, dividend yields or any of the old school metrics that used to offer insights for investors making choices. Today's equity markets aren't those of your grand-daddy. Not by a long shot. Today's markets are macro-dominated, starting with actions by the Fed, as if the people ensconced in the Mariner Eccles Building are endowed with supernatural powers to defy logic, physical laws, and market signals. They're aided by a shadowy consort of investment professionals spread across the investing landscape at various government facilities and quasi-government operation centers. These are the people who produce radical market movement, such as the one evidenced on Monday, when the major indices seemed to be falling out of bed on some of Fed Chairman Jerome Powell's suggestions. In a speech at a conference of the National Association for Business Economics in Nashville, Tennessee, Powell seemed to infer that rate cuts might be more gradual in coming months than the 50 basis points slashed at the September 17-18 FOMC meeting. All of the major indices raced to their lows of the day at about 2:30 pm ET, but just as quickly reversed course, not because Powell had suddenly walked back his comments or some other news items catalyzed stocks higher, but because those infamous dip buyers emerged from the shadows. In the final hour-and-a-half of trading, the S&P gained 57 points, the Dow added 375 points and the NASDAQ picked up 189 points, the ticker moving from the low to the high of the day. Such radical swings and adjustments are neither natural nor normal, though they appear to be occurring with greater frequency as all the indications of either a recession or a re-ignition of inflation or worse keep making appearances. It would be easy to just roll with the punches as Wall Street tends to do, but some people are more insightful, and and maybe a little skeptical and see exactly what's happening. The economy is dead in its tracks, hiking interest rates when the "official" indicators (and most Fed mouthpieces, including Powell himself) give the economy high grades seems out of place, and the Fed's planned future of rate cuts would suggest that something is rotten in Washington and in lower Manhattan. The top is likely in place for stocks or very close to being there. The scenario close to the election would be for markets to swoon as Trump is elected to a second term. Politicians and the media would put the blame squarely upon his shoulders, which has been their plan all along. Whatever one thinks of the U.S. electorate, it is not collectively stupid enough to elect an unpopular empty suit such as Kamala Harris. Prepare for impact.
At the Close, Monday, September 30, 2024:
Sunday, September 29, 2024, 9:55 am ET Why did Volodymyr Zelensky, ersazt president of Ukraine, visit presidential candidate Donald J. Trump at Trump Tower on Friday? It's a perplexing issue that requires further insight. Let's unpack the details. First, Zelensky spent the better part of his visit to the U.S. promoting his "victory plan", which turned out to be just another plea for more weapons, more money, and more time in his failing fight against Russia. He more or less was rebuffed by Democrats until he met with Biden, who promised another $7.9 billion in aid, the usual grift. Meanwhile, State's Antony Blinken and national security advisor Jake Sullivan had been notably quiet and subdued during Zelenzky's visit. That is likely because while the Biden administration was weighing the merits of giving Ukraine long-range missiles to strike deeper into Russia, the Pentagon stepped in and essentially told the president and his team, "enough is enough." Russian President Vladimir Putin had issued a no-nonsense message, updating Russia's nuclear deterrence policy, essentially stating that if a non-nuclear country (Ukraine) used weapons provided by or guided by a nuclear country (United States, England, France) to critically endanger the sovereignty of Russia, his country reserved the right to respond against the nuclear power with nuclear weapons. The Pentagon, knowing that the United States and Europe could not endure a nuclear exchange, one that could end up in complete destruction of most of the planet, told the administration that they would not back supplying long-range weapons to Ukraine. In it's most raw essence, the Pentagon ended the Ukraine conflict, or at least the level of U.S. involvement that it would entertain. Thus, after Zelensky made the rounds, criticized Trump and his VP choice, J.D. Vance, he eventually met with the candidate and emerged from the meeting talking peace rather than victory, which is, at this juncture, nearly an impossibility. The meeting with Trump is either more gas-lighting by the Democrats or an indication that they've thrown in the towel on Kamala Harris, seeing internal polling moving strongly towards Trump nationally and in many of the battleground states. The only rationalization for a Harris victory in November would require massive cheating on the part of the Democrats, even more extreme than the hanky-panky pulled off in 2020. The Democrats, top to bottom, have run roughshod over the United States for nearly four years. Sensing that Americans are fed up, and won't tolerate much more, they're willing to call it a day, slink away (nobody will be held accountable for anything), blame Trump for failure in Ukraine and probably lump an economic crisis in his lap as well. They and their supplicant, proselytizing, prostitute propaganda media connections will spend the next four years hectoring Trump as they did during his first term, questioning and thwarting his every decision, firing up their base of lunatic radical true believers in the streets. Knowing they cannot win the White House under normal conditions, they'll focus on holding onto whatever power they have in congress, ceding the election to Trump, who has been surging over the past few weeks. Kamala Harris is an unpopular imposter, and most Americans recognize the fraud. In that regard, Trump has already won the election. The next month or so will have the media spinning the "close election" story, even though they know they're lying through their teeth.
Meanwhile, he stock market seems to think everything is wonderful, despite evidence that everywhere one looks, governments, from China, to the EU, to England and the U.S., are slashing interest rates and engaging in stimulus plans, The Shiller PE, or CAPE, as some refer to it, the average price earnings ratio over a 10-year period, rose this week to 36.90, closer to the 38.58 post-pandemic thrust, but far from the all time granddaddy of excess, the November 1999 "irrational exuberance" dot-com fiesta of 44.19. Note that all three of these calculations exceed the 1929 pre-crash level of 31.48, suggesting the Great Depression was somehow less of a disaster in market terms. To the point: stocks are extremely overvalued, have been extremely overvalued since the middle of 1997, and probably will be overvalued for a while longer. Since late 1990, only for about six months, from October 2008 to March 2009, during the GFC, did the Shiller PE fall below the median of 15.99. The rest of the time, roughly 33 years, it's all been financial engineering, fantasy, stock prices moored to anything intangible, and Skittles-shitting-unicorns. In other words, it's all hype, fake, phony baloney, and it's about to end. Nobody pays 25 to 36 times earnings for anything, except on Wall Street. A dollar invested in a typically-overvalued Wall Street stock on the S&P, NASDAQ or NYSE Composite would be recouped, via earnings, in 25 to 36 years. Who makes these kinds of bad investments? Money managers, the people handling the 401k or retirement accounts of millions of workers and retirees, hedge fund gamblers, mutual fund managers... in other words, most of the people "playing the stock market" with less skin in the game than a minx at a cock fight. Wall Street pros have been getting rich as hell on your dime. Some of the smarter folks have gotten some of their money out, but many are trapped by the odorous regulations and withdrawal requirements and they're going to pay a steep price in terms of lost wealth potential.
All of the major indices were up again this past week, though only marginally. All were ahead by less than one percent except for the zany Dow Jones Transportation Average, which popped 2.74%. Peak stupidity seems to have aligned itself with the stock market and bitcoin. Just as Kamala's election is beginning to look doubtful, stocks may have run out of narratives like AI and China stimulus. There's only so much pumping and pimping the deep forces can do before stocks reach stupid levels, which is right about where they now are.
Short-term yields continued to drop this week, reflecting the 50 basis points the FOMC cut from the federal funds target rate and should be stabilizing near these levels. They are still inverted - sloping upward rather than down - with the spread between one month and one year yields an even one percent. That's where inversion ends and normalcy begins, with two-year notes holding steady at 3.55%, three-year notes at 3.49% and fives at 3.50%. slightly down-sloping. After that, sevens through 30-year bonds range higher, from 3.60% to 4.10%, the usual "kink" in 20s just a five basis point glitch. Spreads continue to steepen, with 2s-10s now at 30 basis points, and full spectrum a docile -80. By January, after two more expected FOMC cuts in November and December likely totaling up to 75 basis points (50 in November, another 25 in December, best guess at this time), the yield curve may become close to fully normalized. If the federal funds rate is 4.00-4.25%, short yields will begin falling in line and longer term yields will get a slight boost. The "curve" will be more or less flat for a while before steepening back towards actual normalcy if the Fed continues to chart a path back to sub-3.00% and possible stimulus in the form of QE, though direct handouts seem to have worked wonders in the recent past and there's the possibility of the government stepping up with more checks to citizens in 2025, regardless of who's in the White House, though it looks like it's almost a lock for Trump. Look for an overdue correction within the next six weeks. Might be time for more street hijinks before the election. Trump is winning, Kamala is losing and some people can't handle that construct. Spreads:
2s-10s
Full Spectrum (30-days - 30-years) Oil/Gas Closing Friday in New York at $68.64, WTI crude oil was down nearly $3.00, from $71.25 the previous Friday. Oil continues to trend lower, despite efforts by speculators to drive prices higher. There's an obvious demand holiday coming from China as well as most Western nations which are on the brink of recessions if not already underway. WTI crude oil should continue falling into the mid-to-low 60s and perhaps into the 50s before correcting, but economic conditions, such as they are, could keep a lid on both production and price. Gas prices will continue to tumble, at least until the end of October and the election and probably beyond that. Gasbuddy.com reports the national average for a gallon of unleaded regular gas at the pump at $3.21 a gallon, three cents above last week's price. California's claim to the highest gas prices in the country remains in place, at $4.65 a gallon. In Pennsylvania, prices were static, at $3.32, with the Keystone State remaining the price leader in the Northeast, albeit near the lowest level in 18 months. New York fell six cents, to $3.22. Connecticut and Massachusetts ($3.08) both are experiencing price drops, though in Maryland the price jumped 16 cents, to $3.23 per gallon. Prices in the Midwest continue to waver, with Illinois - just above $4.00 two months ago - was up a few cents this week, to $3.49 on Sunday. Mississippi remained the lowest in the nation for a second straight week, at $2.64, followed by Louisiana and Texas ($2.69). Oklahoma is at $2.73, Tennessee, $2.74, and Alabama, $2.75, following higher by Arkansas, $2.80. South Carolina and Missouri both check in at $2.86. Georgia remained below the $3.00 barrier for a third straight week, at $2.95. Florida ($3.16) remains the outlier in the South. Sub-$3.00 gas can now be found in 16 U.S. states, mostly in the Southeast and Midwest, but now including New Jersey and Rhode Island. That's down two states from the peak (18) two weeks ago. New Hampshire, Virginia, Nebraska, Iowa, and South Dakota all reported $3.00 even Sunday morning. Arizona, at $3.30, remained below $4.00 for a 21st straight week, leaving only California and Washington ($4.03) just barely above the $4.00 level. Oregon is at $3.64 and Nevada at $3.91. Utah ($3.53) and Idaho ($3.46) remain well off summer highs.
This week: $65,731.50 The slush fund got slushier this week as liquidity pumps were opened to full throttle. Speculators drove the price of vapor higher, though still well below the March peak just above $73,000. Mirroring and exceeding gains in the stock market, should a correction develop, expect bitcoin to suffer extensive liquidation.
Gold:Silver Ratio: 83.99; last week: 84.03 Per COMEX continuous contracts:
Gold price 8/30: $2,536.00
Silver price 8/30: $29.25 September's been a pretty damn good month for precious metals, with gains of over four percent on gold and six percent on silver, even with Friday's not-unexpected drawdown. Whether or not a pullback from record levels occurs, gold and silver should continue to demand attention from long-time holders and stackers, plus a growing cadre of investment advisors now suggesting some allocation to gold as an inflation hedge in client portfolios. As prices continue to hover near record levels, and, particularly now that most Western nations plus China are slashing interest rates and/or considering some level of stimulus, the upward trend remains intact. Silver, this week, broke through $33 briefly on the COMEX, but, as usual, was batted back down by the usual suspects. It does appear, however, that the $30 to $31 range is being established as a key support level. Silver's breakout could happen at any time. All that's needed is a significant catalyst, though dealer prices and ebay sales are already indicating that interested parties will tolerate premiums well above spot prices. 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 marginally higher this week, to $40.48, a gain of seven cents from the September 22 price of $40.41 per troy ounce. Premiums on silver continue to reflect sufficient demand amid rumors of supply shortages and generally higher prices in international markets. Gold premiums remain in place at about $100 above the COMEX continuous contract for one-ounce coins and $65-75 for one-ounce bars. WEEKEND WRAP Get over it. Trump is going to be president again and try to reverse the damage done to the U.S. over the past four years. Democrats, naturally, will oppose his every move. That's life. Roll Tide.
At the Close, Friday, September 27, 2024:
For the Week:
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