Friday, 27 March 2020

Who should bail it out?

US equity indexes closed powerfully lower, sp -88pts (3.4%) at 2541. Nasdaq comp' -3.8%. Dow -4.1%. The Transports settled -4.3%.

sp'daily5



VIX'daily3



Summary

US equities opened very significantly lower, as the three day bear market rally - which is what it was, came to an end. The afternoon saw considerable chop, leaning on the upward side to 2615, but then spiraling lower to 2534, a rather classic (and not surprising) case of 'rats selling into the weekend'.

Volatility picked up, with the VIX settling +7.4% at 65.54.
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Who should bail it out?

As we proceed along the twisted path within the twilight zone, I'm hearing many of the same things I heard in 2008/09.

Original tweet thread/link:
https://twitter.com/NickPerrotta2/status/1243564831778779138



On an individual level, any failing business is a soul destroying event for both the owners and employees, but that is the nature of business. There is a risk of failure, as much as there is one of success.

Q. Is it such a radical thought (I realise to most it is), that a business have cash reserves to help them survive at least a few months of 'crisis' ?

Ohh, and I don't want to hear anything along the lines of 'this time is different'. The fact remains, the entire economic system has been perpetually on the edge of the financial abyss for years. Most companies are loaded with debt, leveraged to an insane degree, and have next to zero cash reserves.

I have ZERO sympathy for such companies, especially the mid/large cap' giants. Boeing is a prime example of the INSANITY in the early 21st century. A company that spent tens of billions on stock buybacks to manipulate their EPS and stock price upward, and when a crisis occurs... they immediately go to the US Govt'/taxpayer with a begging bowl... or rather... a 'request/demand' list. 

... and most pathetic of all, is that the US Govt' are doing exactly as they have been asked. The political elite really do care that CEO Calhoun* is able to afford a 100ft yacht. 

*Keep in mind, Boeing, lead by Calhoun, continues to attempt to pressure the FAA to re-certify the 737MAX, an inherently unbalanced plane, trying to fix a hardware problem, via a software update. Incredible!

Your view...


For the record, I would vote 3.

Ohh, and I want to make it clear, I don't much agree with the current lockdown, which is sending the US/global economy into a depression. The lockdown is almost entirely pointless, except for 'flattening the curve', in terms of the number of old/ill people who are being affected by the virus, and pressuring the healthcare system.

I'm well aware some of you don't wanna hear that. Further, is it now borderline illegal to suggest the lockdown is a 'net problem', rather than a 'net solution'?

I'm guessing you might also be the same person who in late Jan/early Feb', (even as late as early March?) who didn't see what was coming, and who didn't prepare ahead of the populace who would (inevitably) turn hysterical, and empty the shelves in your local grocery store.

We have an interesting summer, and more so... autumn/winter ahead. 
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Eyes on.. yours truly

One of the very few planes departing

A moment of peace

Twilight sky - Venus and the Crescent moon
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Goodnight from London
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Thursday, 26 March 2020

Leverage at Print Central

US equity indexes closed powerfully higher, sp +154pts (6.2%) at 2630. Nasdaq comp' +5.6%. Dow +6.4%. The Transports settled +4.1%.

sp'daily5



VIX'daily3



Summary

US equities opened on a positive note, which was a distinct improvement from overnight/pre-market. The gains were impressive considering the horrific weekly jobless claims number of 3.283M.

Powell appeared...


.. and duly suggested "... we may well in a recession". Ya think?

The afternoon saw considerable chop, but with a closing ramp to new cycle highs. Volatility was in cooling mode, the VIX settling -4.6% at 61.00.


Leverage at Print Central

The following is highly recommended, even if you can't stand 'the progressives'...



So... a special '$500bn fund'.
That fund is itself arguably to seen as being funded via the US Govt' issuing t-bonds, which will be bought by... can you guess?

Indeed, Print Central will be the buyer of those bonds, well, shortly after they've first been bought by the primary dealers, who then sell them to the Fed with a slight markup. Its good work if you can get it.

Of the $500bn fund, $75bn is set aside, with the other $425bn being credited to the Fed, whom might  leverage it up by 10x, offering a possible collective loan of $4.25trn to large/mid cap' US businesses.

In addition to the financial issues, the ethical conflicts and implications of what the Fed have begun are monstrous. The following is more of Dore, but with guest Rattigan. Again, whether you like either, its highly recommended...




 ps. If you're not mad after viewing the above, check you have a pulse.
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Goodnight from London
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Wednesday, 25 March 2020

Remaining very unstable

US equity indexes mostly closed higher, sp +28pts (1.1%) at 2475. Nasdaq comp' -0.4%. Dow +2.4%. The Transports settled +2.4%. Near term outlook offers some bearish drama into the weekend.

sp'daily5



VIX'daily3



Summary


The day began with another wheel barrow of guests on clown finance TV, not least Bullard - whom I'm still guessing with succeed Powell, and followed by the Ben Bernanke.


Bernanke was actually reluctant to even admit the US is in a recession, never mind an actual depression (GDP <10%). For now, the big names are mostly tip toeing on what is a horrific reality. 

With sig' gains reversing to sig' declines in early morning, this came to mind...


A $2trn bailout works out to around $14k per US taxpayer. These remain wild times within the twilight zone, and yes, we're gonna need a bigger bailout.

US equities settled mostly net higher, despite an ugly closing 15mins, as Sanders was threatening to block a bailout bill.

Intraday price action remains very unstable, as reflected in the VIX, which today settled +3.7% at 63.95. Thursday will be 'interesting', not least as we're due a 'historic' weekly jobless claims number.
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Bullish the green shoots of spring!

A rare sight these days, as the London skies are bizarrely quiet.

Another sunset closer to British Summer Time (BST)... due 2am, Mar29th.
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Goodnight from London
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Tuesday, 24 March 2020

Rebounding on bailout hopes

US equity indexes closed extremely higher, sp +209pts (9.4%) at 2447. Nasdaq comp' +8.1%. Dow +11.4%. The Transports settled +12.5%.

sp'daily5



VIX'daily3



Summary

US equities opened powerfully higher on hopes of a bailout agreement/vote, and built gains into the early afternoon.

Meanwhile, CEO Calhoun of Boeing was doing the media rounds...


His claim that the current aid packages can't be compared to past 'aid packages' is laughable, but even more so... contemptible. Boeing spent tens of billions in precious cash on stock buybacks. Hell, the company only withdrew the dividend last week.

Your views...


For the record, I'd support a bailout, but only if the US taxpayer takes control of 100% of the equity. Its safe to say Calhoun won't be accepting anything like that.
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In early morning, the Cramer was once again actively cheerleading for multi-trillion bailouts, and touting the importance of the Fed... just as he did in 2008.

The 'look', when Cramer needs a bailout

The afternoon saw considerable equity chop, with a closing hour ramp to settle at the highs, with VIX settling +0.1% at 61.67.
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One of the few departing planes

A brief moment of serenity
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Extra charts in AH (usually around 5pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
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Monday, 23 March 2020

No limits in the twilight zone

US equity indexes mostly closed very significantly lower, sp  -67pts (2.9%) at 2236. Nasdaq comp' -0.3%. Dow -3.0%. The Transports settled -2.0%.

sp'daily5



VIX'daily3



Summary

US equity futures saw extreme swings in pre-market, as the Fed announced it would now be purchasing corp' bonds. We're just one step away from Print Central buying stocks.

Despite the news, equities took another swing lower into the open, with the SPX printing 2191 in late morning.

A few tweets, that relate to the Fed's corporate bond buying...


Those are just two examples that came to mind. The implications (not least ethical) of months, and eventual years, of the Fed buying corporate debt, are wide ranging.


The Cramer

In the days, weeks, and months ahead, whenever you hear the Cramer talking about 'the market' or 'capitalism', keep in mind, he only supports such concepts when it suits him.

Cramer, supportive of infinite QE

The Cramer has always gone crying to the Fed or the US Govt' whenever things turned against him and his 'big money' friends. We saw it in 2007/09, and he has been at it since the market broke m/t rising trend last month.

The Cramer is supportive of the Fed's HEIST against the American people. The Cramer IS a communist, who has long believed in one rule for the societal/political elite, and one rule for the working poor. The financial historians of the late 21st century and beyond, will not look kindly upon those who actively supported zero/neg' rates, and QE, the latter of which is an effective THEFT of real assets, using money created out of nothing. Cramer isn't the only one though...



CNBC wheeled on the Tepper for the lunchtime show, to also air his support for further bailouts and 'Whatever it takes' from the Fed.

The afternoon saw broad equity chop, leaning on the weaker side. Volatility notably failed to mirror the lower low in equities, with the VIX settling -6.7% at 61.59.
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Meanwhile...

Death, the mall, and Pizza
Today's junk mail consisted of a 'dignity funeral plan', an attempt to lure me to a shopping mall which is (probably) closed, and home delivery pizza. Am I meant to order the funeral plan after the Pizza, or after I get to the mall that is closed until summer?


No limits in the twilight zone

Today's action from the Fed is just another reminder that we're ever deeper within the twilight zone.



Arguably, rather than an actual bell at the NYSE, they should just play the above track, in respect to the Fed. You know its just a matter of when Print Central starts buying stocks... not if, right?
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Sunset in the city of Corona
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Extra charts in AH (usually around 5pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
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Sunday, 22 March 2020

Sunday Spring Sunset

A little glimpse into the world of yours truly...

5.47pm GMT, UK clocks will change March 29th

A British Airways Boeing 747, (probably) carrying Corona tainted passengers to the USA

Spring Magnolias

Summer heat is coming!

That light post needs to go

... and once more... night shall fall.
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Yours... fading into the sunset.

Saturday, 21 March 2020

Weekend update - US equity indexes

It was a severely bearish week for US equity indexes, with net weekly declines ranging from -17.3% (Dow), -15.8% (NYSE comp'), -15.0% (SPX), -13.9% (Transports), to -12.6% (Nasdaq comp').


Lets take our regular look at five of the main US indexes

sp'500



Nasdaq comp'



Dow



NYSE comp'



Trans





Summary

All five US equity indexes saw very severe net weekly declines.

The Dow lead the way lower, with the Nasdaq comp' most resilient.

YTD price performance:


The Nasdaq comp' is most resilient so far this year, currently -23.3%. The SPX is -28.7%, with the Dow -32.8%. The NYSE comp' is -34.4%, with the Transports -37.3%.


Departing the city of Corona

Looking ahead

There is a fair amount of econ-data due, and the weekly jobs data will merit attention. Consensus is for a net weekly gain in claims of around +787K, vs +281 prior week. However, some (such as Goldman) are expecting as high as 2.25/2.50M.

Clearly, the market will be focused and impacted on further Corona related news headlines, of which there will be literal.... thousands.

Earnings: NKE (Tues'), MU (Wed'), LULU, GME (Thurs'),

Econ-data: 

M - Chicago Fed' nat' act' index
T - PMI comp' flash, new home sales, Richmond fed manu'
W - Durable good orders, FHFA HPI, EIA Pet'
T - Weekly jobs, Q4 GDP (third print), intl' trade, wholesale invent', Fed' bal' (4.30pm)
F -  Pers' income/outlays, consumer sent'
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London - a city collapsing into economic depression

Final note

The bull market from 2009 has decisively concluded, and its something even the mainstream cheerleaders have started to publicly admit. February's monstrous bearish engulfing candle was indeed a warning that March wouldn't go so well.

spx' monthly1b


We have a break of l/t rising trend, as a number of other chartists have highlighted recently. The SPX has already seen a 38% fib' retrace of the gains from 2009. I will merely add that a multi-week bounce is due, but such a bounce is to be seen as such, as the US/global economy collapses into a recession (two quarters of GDP < 0.0%), if not a depression (two quarters of GDP < -10.0%).

The Fed will no doubt be pressured to do more (not least from the US President), which will mean increased printing - to buy corp' bonds, and eventually stocks. Rates are clearly going to be taken negative, if not by Powell, then his eventual successor... the Bullard.

As for Corona, well, you should know the numbers by now... and where we are headed. Ohh, and be careful out there... in the twilight zone!

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Have a good weekend
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*the next post on this page will likely appear 5pm EDT on Monday.