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%.




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.

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:

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. 

Eyes on.. yours truly

One of the very few planes departing

A moment of peace

Twilight sky - Venus and the Crescent moon
Extra charts in AH (usually around 5pm EST) @

Goodnight from London
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