早上好
Translated, that means good morning in Mandarin. Of course, I am just kidding, Comrades, but given last night’s Georgia Senate election results, I wonder if we should learn to read and write Mandarin. Through the Chinese Progressive Association, much Chinese money went into the Democrat Georgia races and Stacy Abrams’ voter registration efforts. Trevor Louden does the best job in the country of tracking the Chinese money, and you can judge for yourself in his latest interview with American Thought Leaders here.
What a tangled web the Covid-19 virus has woven. From capitalism to socialism in less than a year. Let’s see what all of this brings us in the real world.
I think last night’s apparent sweep by the Democrats of the Georgia senate seats promises to elevate the importance of the Biden Electoral College certification today. I fully expect Biden to be seated, but who can really be sure of anything in these Covid-19 times. Rumors abound of a big reveal today by the Trump administration. It has become difficult to separate fantasy from reality these days – but I will keep an open mind.
As to the stock market, yesterday’s prescription applies to today as well – so I don’t have a lot more to say on the technical details and encourage you to review yesterday’s pre-market discussion.
Following yesterday’s pre-market script, the S&P 500 index rejected lower prices but did not convincingly reconquer 3700. In an interesting twist, the overnight stock futures action looks almost identical to yesterday’s action. The overnight Globex S&P 500 Index futures briefly looked above yesterday’s high of 3717.50 but handily rejected the higher price. At this writing this morning, we are looking to open in the middle of yesterday’s S&P 500 range at 3709, just slightly above 3700 and down about 11 points from the close.
On a positive note, the Dow Jones Industrial Average futures are positive by about 33 points, and the Russell 2000 is slated to open up 2.7%. Yet the NASDAQ 100 and monsters of tech are decidedly negative this morning, down 1.43%. This indicates rotation – in addition to some selling pressure. Rotation is good – a correction only gets draconian when broad-based selling kicks in.
Yet, I led with the chart of the 10-year US Treasury yields above for a reason. As you will see, interest rates are gapping higher this morning. While the yields are still meager, the yield gapped 7 basis points, well above the key 1% level this morning. In percentage terms, that is an overnight jump of 7% in the yield, hammering treasury bond prices this morning. The interest rate trend is what matters, and this jump in rates is both alarming and telling. We had better keep a close eye on this.
Rates matter – plain and simple. When our country had $4 trillion in debt, the annual interest was about $500 billion. We have $20 trillion in debt, but the annual interest is about the same because rates dropped significantly over the past few years. It does not take a math wizard to figure out what happens if rates rise. Tick by tick, the deficit spins out of control.
The election results last night give us a one-party rule in Washington. Generally, markets like divided government. However, in this unique case, Democrats seemingly favor the globalist agenda, which may be just fine with Wall Street’s equity side – at least in the short-term.
Wall Street cares about profits more than any domestic socialist agenda. In fact, they would sell us down the river for a buck. That is the dark side of capitalism. Other than some portfolio shuffling to align with the Democrat agenda, I do not see the election results or seating a Biden administration as immediately negative for the financial markets – already in the midst of a correction of sorts. In fact, Democrat, one-party rule could even be a net positive once portfolio managers make their adjustments. Democrats are globalists – and Wall Street loves globalism.
I will have a lot more to say in the upcoming 2021 video. Still, I want to see how the day goes in Washington DC with the Electoral College certification before publishing and finalizing it.
Let me at least tease you with this one tip I will cover in detail in the video. I am calling it my Guns and Gold strategy. One of the most important things you can do this year is to buy small denomination gold and silver coins. Having an independent, non-tracked currency will be very important in the future. If Defund the Police takes hold nationally, make sure you have a gun too.
We are about to see rapid change, and not all of it good. I have some difficulty assessing timing, so the sooner you can start accumulating coins, the better.
Gold prices may or may not skyrocket, as Central Banks around the world will work to keep precious metals prices down until they are ready to reset into a non-cash system with digital currencies. My recommendation is not so much a play on gold or silver prices – though I believe both metals are undervalued. They may or may not rise short term, which makes accumulation easier. This is more about maintaining your independence in a rapidly changing world.
As always, stay tuned. Share this with your friends and family. Forewarned is forearmed.
AF Thornton