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05-MAY 12-2023

Good morning.
Translation June 23Historically, the U.S. has had a number of debt talks to avoid a default.  And, so far, there’s always been a deal, even if it’s at the last minute… or if it’s just a quick fix before a longer-term solution can be found.
Will this time be different?  Probably not.  But just because something is unlikely to happen doesn’t mean that won’t.  The bond market is pricing in a small possibility of a debt default.  In a worst-case scenario, holders of Treasury bills will take a hit, and the financial system may see a shockwave that hits other markets, including stocks.
It may be prudent to take money out of Treasuries ahead of a potential debt default and move to cash.  And to look for downside protection from a fast – but likely brief – market pullback.

Now here’s the rest of the news:

[Video] Debt Ceiling Crisis Triggers Fear And Panic On Wall Street
The risk of a U.S. debt default is greater than it’s ever been, threatening to tip global markets into a brand-new world of pain.  For investors, there are few places to hide other than the oldest hedge in the book: gold.  The precious metal is by far the… [Read Here]

May 12, 2022

Today's ChartGood morning.
The good news?  Inflation has slightly slowed on a year-over-year basis, for the first time in seven months.  The bad news?  It’s still high at 8.3 percent.  And it came in higher than expectations.
Looking at the data shows some reasons for the unexpected strength.  Most components of CPI still rose more than 6 percent in April.  But soaring food prices – which we’ve warned about fairly often — were a big contributor.  Another big move higher was record airfare prices, as high fuel costs and a reopened economy drove prices up.
The data doesn’t give too much of a hint for next month’s changes, although energy prices are starting to drop down a bit more that we could see a further decline in inflation rates.  If that’s the case, the Federal Reserve may slow down on its market-killing rate of interest rate hikes… but that’s still a month away.  Continue to stay cautious.

Now here’s the rest of the news:

Biggest Treasury Buyer Outside U.S. Quietly Selling Billions
In times of Treasury turmoil, the biggest investor outside America has historically lent a helping hand.  Not this time.  Japanese institutional managers – known for their legendary U.S. debt buying sprees in recent decades – are now fueling the… [Read Here]

Gasoline Prices Take Another Turn For The Worst
The average price of all grades of gasoline spiked to a record on Monday, May 9, the third week in a row of increases. And according to the US Department of Energy, the average price was up 46% from a year ago, edging past the prior record of… [Read Here]

May 12, 2021

Conflict of InterestGood morning.
With a record 8.1 million job openings, it’s clear that businesses need labor.  But right now, labor has a system to game.  We’ve already seen that an extra $300 per week of federal unemployment on top of state unemployment can make for $600 or more per week.  Over a 40 hour workweek, the math says that’s $15 per hour.  With most minimum wages below that nationally, it’s clear to see that not working is what pays best right now for many low-skilled workers.
President Biden has weighed in on the matter, downplaying the effect the extra unemployment benefits are causing.  He’s also stated that anyone who has a suitable job offer needs to get back to work. Without defining the word “suitable,” however, it’s clear that the system can still be gamed.  Expect the labor market to remain out of whack as long as extended benefits remain available.

Now here’s the rest of the news:

The Jobs Picture Is More Complex Than It Seems –Bruce Yandle, Reason
Expectations for April: 1 million new jobs.  Those hopes were crushed when the BLS reported just 266,000 jobs created.  Here’s why that’s not quite as bad as it looks… [Read Here]

May 12, 2020

Who wants the talking stickGood morning.
It certainly appears that the market is looking to find new leadership but is failing to do so.  How much can tech and healthcare drag the market higher w/o greater participation?
Not that the internals were terrible today, but the Nasdaq 100 that closed nearly 1% higher had more declining stocks than advancing stocks and more declining volume.

Now here’s the rest of the news:

Fed’s New QE Operations Could Be “Last Stop” Before a Deep Recession
With each action they take to save the economy today, could it be creating more problems for tomorrow?  Here’s what could be in store for Americans. [Read Here]

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