Today is Good Friday, the day Christians commemorate the crucifixion of Jesus after he was betrayed by his buddy, Judas.

The day is also known as Great Friday, Holy Friday, Great and Holy Friday… and, by some, Black Friday, not to be confused with the day following Thanksgiving, when retailers turn the corner to profitability for the year.

As Wall Street follows a Christian holiday calendar, for the most part, the markets are closed today.

Customarily, we don’t write or publish on days the markets are closed. Today’s a little different, however, because we wanted to share with you a few details we observed during the week but didn’t publish.

On Tuesday, while we were writing about the Treasury’s “contagion index” and the “special situation” buying opportunity at Charles Schwab, the payment processor ADP reported 145,000 jobs were created in March. The number was below the anticipated 200,000+ sparking fears that the economy is, in fact, sleepwalking its way into recession.

Two market events followed. The first is exciting for economy wonks… the yield on the 10-year treasury yields dropped to 3.31%. Meaning the bond price “rallied” as investors sought longer term safety than stocks.

Here’s why it’s significant. Take a look at the 1-year rate. A year ago today the 1-year was paying 1.8%… today it’s paying 4.5%. As we noted, the 10-year is 3.3%.

The yield curve further “inverted” on Tuesday.

Why is that significant? Well, since 1955, the yield curve has inverted 6 to 24 months before every recession… only giving a false signal once in that time span.

Like I said, wonky stuff. But a detail worth paying attention to. The markets are jittery enough without adding a receding economy to the mix. Below, you’ll see some hard data showing why the Treasury and Federal Reserve are increasingly out of parlor tricks while trying to deal with bear markets, panics or recessions.

Less academic, and perhaps more important this week, is what happened to the gold price. On Tuesday, when the ADP jobs report was released, the gold price moved above $2,000.

The last time gold crested the psychological barrier at 2,000 was on August 7, 2020… on the eve of a 19% drop in the stock market.

On August 7, 2020 gold closed at $2028 but only stayed there for one day.

It hasn’t risen back above $2,000 since then. That is, until Tuesday. This week’s 4-day stretch above $2,000 is going to raise some eyebrows. Institutional investors may even take notice. For the week, the midas metal is up 24%.

Hmn.

We’ll leave you with a third set of observations relayed to us by our friend Adam Baratta, editor-in-chief at Brentwood Research. Adam has gone on record, here in The Daily Missive, forecasting that if gold can hold steady above $2,000… it’ll break out to its next resistance level: $3,000. Enjoy your holiday, Addison.

From Adam Baratta

Near-death experiences often change human behavior. When they don’t, it’s the sign of an addiction and derangement.

Three weeks ago, banks began failing. We believe it’s systemic and a result of the mandate for banks to own the “risk-free” treasury. However, with another “emergency” procedure (aka bailout) from the Federal Reserve, it’s as if nothing happened.

Except something so much bigger has. Our markets are addicted, and the Fed doctor is all too ready to provide more medicine.

All one needs to see are the heightened amount of emergency procedures that have been necessary to keep the patient alive in recent years.

Below is a list of major necessary Fed actions over the last 40 years.

Pay particular attention, forty years ago, we went to the doctor for check-ups every 3 years. Today our monetary system is in the emergency room an average of every 40 days.

1980 – 1999
(One Major Program every 3.33 years)

• Discount Window: This program provides short-term loans to depository institutions, including commercial banks and credit unions, to help them manage their liquidity needs.
• Monetary Targeting: A monetary policy strategy that focused on targeting a specific growth rate for the money supply in order to achieve price stability and promote economic growth.
• Open Market Operations: The Fed’s purchase and sale of U.S. Treasury securities in the open market to influence the money supply and interest rates.
• Banking Supervision and Regulation: The Fed is responsible for supervising and regulating banks and other financial institutions to ensure their safety and soundness.
• Reserve Requirements: Banks are required to maintain a certain amount of reserves with the Fed to ensure they have sufficient liquidity to meet their obligations.
• Money Market Mutual Fund Liquidity Facility (MMLF): A program that provides loans to banks to purchase assets from money market mutual funds to stabilize the market during times of stress.

2000 – 2009
(One Major Program every 1.25 years)

• Interest Rate Cuts: The Fed lowered the federal funds rate in response to the 2001 recession, the September 11 attacks, and the financial crisis in 2008.
• Quantitative Easing (QE): The Fed purchased trillions of dollars in government bonds and mortgage-backed securities to stimulate economic growth and keep interest rates low.
• Term Auction Facility (TAF): A program that provided short-term loans to banks to help them meet their liquidity needs.
• Commercial Paper Funding Facility (CPFF): A program that provided loans to companies to issue short-term commercial paper, to increase liquidity in the commercial paper market.
• Primary Dealer Credit Facility (PDCF): A program that provided overnight loans to primary dealers to ensure the availability of credit to the financial system.
• Term Asset-Backed Securities Loan Facility (TALF): A program that provided loans to investors to purchase asset-backed securities, such as auto and credit card loans, to increase lending.
• Foreign Currency Liquidity Swap Lines: Programs that provided foreign central banks with U.S. dollars to stabilize financial markets during the global financial crisis.
• Money Market Mutual Fund Liquidity Facility (MMLF): A program that provided loans to banks to purchase assets from money market mutual funds to stabilize the market during times of stress.

2010 – 2019
(One Major Program every 8 months)

• Quantitative Easing 2 (QE2): A monetary policy in which the Federal Reserve purchases long-term Treasury bonds and other securities in order to increase the money supply and stimulate economic growth.
• Operation Twist: A monetary policy in which the Federal Reserve buys long-term Treasury bonds and sells short-term bonds to flatten the yield curve and lower long-term interest rates.
• Mortgage-Backed Securities Purchase Program (MBS): A program in which the Federal Reserve purchases mortgage-backed securities from banks and other financial institutions to increase liquidity in the market and support the housing market.
• Term Deposit Facility (TDF): A tool used by the Federal Reserve to offer interest-bearing deposits to banks and financial institutions in order to drain excess reserves from the banking system.
• Term Auction Facility (TAF): A program that allows banks to borrow funds from the Federal Reserve at auction in order to improve liquidity in the short-term lending market.
• Money Market Mutual Fund Liquidity Facility (MMLF): A program in which the Federal Reserve provides loans to financial institutions to purchase high-quality assets in the money market, in order to prevent a run on money market funds.
• Primary Dealer Credit Facility (PDCF): A program that allows primary dealers, which are banks and financial institutions that trade with the Federal Reserve, to borrow funds at a discount rate in order to improve liquidity in the market.
• Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF): A program in which the Federal Reserve provides loans to financial institutions to purchase asset-backed commercial paper in order to improve liquidity in the market.
• Commercial Paper Funding Facility (CPFF): A program in which the Federal Reserve purchases commercial paper from issuers in order to improve liquidity in the market.
• Term Asset-Backed Securities Loan Facility (TALF): A program in which the Federal Reserve lends money to investors who purchase asset-backed securities in order to support the market for these securities.
• Central Bank Liquidity Swaps: Agreements between the Federal Reserve and other central banks to exchange currencies in order to provide liquidity to financial institutions and improve the stability of global financial markets.
• Discount Window Lending: A tool used by the Federal Reserve to lend funds to banks and other financial institutions at a discount rate in order to improve liquidity in the market.
• Overnight Reverse Repurchase Agreement (ON RRP): A tool used by the Federal Reserve to temporarily absorb excess reserves from banks and other financial institutions by lending them Treasury securities overnight.
• Standing Repo Facility: A tool used by the Federal Reserve to offer overnight repurchase agreements to primary dealers on a standing basis, in order to improve liquidity in the market.

2020 – 2023
(One Major Program every 40 days)

• PPPF (Paycheck Protection Program Liquidity Facility): Provided loans to financial institutions to support small businesses under the Paycheck Protection Program.
• SMCCF (Secondary Market Corporate Credit Facility): Purchased corporate bonds and bond ETFs to support credit markets.
• MMLF (Money Market Mutual Fund Liquidity Facility): Provided liquidity to money market funds.
• TALF (Term Asset-Backed Securities Loan Facility): Provided loans to investors for purchasing asset-backed securities.
• PPPLF (Paycheck Protection Program Liquidity Facility): Provided loans to financial institutions to support small businesses under the Paycheck Protection Program.
• MSNLF (Main Street New Loan Facility): Provided loans to small and medium-sized businesses.
• MSELF (Main Street Expanded Loan Facility): Expanded the scope of MSNLF to include larger businesses.
• PMCCF (Primary Market Corporate Credit Facility): Purchased bonds directly from eligible issuers.
• FIMA (Foreign and International Monetary Authorities): Provided foreign central banks with access to US dollars in exchange for their own currency.
• CPFF (Commercial Paper Funding Facility): Provided loans to companies issuing commercial paper.
• SLF (Self-Liquidating Loans Facility): Provided loans to banks against collateral such as car loans and credit card receivables.
• PDCF (Primary Dealer Credit Facility): Provided loans to primary dealers (large financial institutions) in exchange for collateral.
• OIS (Overnight Indexed Swap) Facility: Provided loans to foreign central banks in exchange for US Treasury securities as collateral.
• FLP (Fed’s Liquidity Provision to Support Lending to Consumers and Businesses): Provided liquidity support to financial institutions to support lending to consumers and businesses.
• BTFP – Bank Term Funding Program: an emergency lending program created by the Federal Reserve in March 2023 to provide emergency liquidity to U.S. depository institutions.

So it goes,

Addison Wiggin
The Wiggin Sessions

P.S. From our “Meanwhile, Back in France” file, it seems pension protesters have now taken over the Paris offices of BlackRock, the private equity firm most notably maligned recently for championing ESG policies in their investments.

Across the country, protesters are also still burning stuff:

In a recent Wiggin Session with economist Martin Armstrong called The Plot to Seize Russia, Martin asserts Western European governments “need” the war between Russia and Ukraine because, otherwise, they won’t be able to fulfill generations of built up pension obligations.

“Fighting a war,” we paraphrase what Armstrong believes, “is the only way European governments can default on pensions without losing political power.”