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Market Musings
The Fed's Powell suggested at the Jackson
Hole conference on Friday that interest rates might be reduced
going forward.
As a result, the markets surged upward on
Friday with the DJIA making an all-time high.
Of course, many investors are counting
their profits but forgetting that dollars are now worth
less in purchasing power.
Moreover, lower interest rates will
complicate the Treasury in selling and refinancing U.S. government
bonds and notes going forward.
In 2014,
$264B of 10-year notes were issued and they become
due and payable this year. In 2017,
$368.8B of 7-year notes also become due and
payable this year.
Now add the
new debt for this year and the problem
should scare you as the major holders of U.S. debt, namely, China
and Japan have been reducing their holdings.
Revisions to BLS employment data continues
to be negative. The ADP data is probably more reliable that the
BLS numbers.
Shipments
of cardboard boxes continue to shrink indicating
that the economy is not doing well.
Politicians fail to recognize that the
major problem facing the nation is that the U.S. dollar may be
about to implode. In the first 7 months of 2025, the U.S.
dollar index has fallen about 10%.
Until politicians take steps to live within
their income streams, the U.S. dollar will continue to depreciate
in value as inflation ravages real wages.
The effect of tariffs on the
economy is worrisome to politicians but they refuse to acknowledge
it was
their votes that have placed the United
States in the current perilous financial position.
Watch the price of gold, silver and copper going forward to
sense what is really happening.
Politicians talk about a $37 trillion debt
when in actuality the true federal GAAP debt is over 3 times that amount
using a 7% discount factor.
According to Treasury's own documents as of September 30, 2024,
the potential GAAP debt was in excess of $220 trillion.
When the economy is running less than $25
trillion yearly, it does not take an idiot to see the eventual
problem. As Minsky said, it only takes one grain of sand ...
It is not surprising to me that Trump and
Musk wonder if there is any encumbered gold left in Fort Knox. The
movements of physical gold from London and into China, Japan and
India the last few months must be concerning to the London gold
exchange.
Although the market is moving higher, our screens are finding very few quality
stocks. We went largely to cash this week in our trading
portfolio.
Remember -- "Only purchasing power counts!"
By any reasonable measure, this market is
dangerous.
Be careful ....
To review the latest FlowChart, click
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