Entries by Phil

Happy New Year from Philstockworld!

Its Always Something GIFs - Get the best GIF on GIPHYThis was a LONG year.

I was in Thailand this time last year, working on a project with the Thai Government to bring medicinal cannabis to the country with Hemp Boca and New Age – two of our PSW Investments partners.  As with most things in 2020, that project is now on hold but it seems like a different world where I went to an airport and got on a plane and walked around a crowded terminal without a mask on, etc.  

I'm 57 years old and there's been no point in my lifetime where the world has changed so drastically.  World War I was the "war to end all wars" and then there was the 1918 Pandemic and then the Great Depression and then World War II (since the "war to end all wars" didn't, they decided just to start numbering them) and then we had a nuclear arms race then a global recession in the 70s and then the financial system melted down and now this – it's always something, isn't it?  

My Grandpa Max was born in 1903 and died in 1999 – having caught most of the action and it always gave me the perspective that "this too shall pass" though, while you are in the thick of things – it sure doesn't seem so, does it?  

We started this year optimistically with "2020 Vision – Looking at the Year Ahead in the Markets" and we called for a long on Oil (/CL) at $61 and a long on Natural Gas (/NG) at $2.16 and Natural Gas topped out at $3.40 in November but Oil hit $65 in January but then collapsed to $10 in April and is only back to $48 now.

 

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Why Worry Wednesday?

Move along folks, nothing to see here.

The new, more contageous strain of corona is in the US and McConnel killed the additional stimulus but why should that bother the markets?  The good news is, with most of the country back on lockdown, we "only" had 201,106 new cases yesterday and "only" 3,628 Americans died yesterday – which was 9% better than Monday so YAY!!!, I guess….

Here's a fun fact, there are only 924,107 "staffed" hospital beds in the US – ones where the patient can be monitored.  Only 20% of them have the potential to have ventilators – even after US having 9 months to get ready.  124,686 Americans were hospitalized YESTERDAY – most of them cycle out within a day or two but every time one lingers on, it diminishes our total capacity to care for the rest.  

The US ranks 32nd in hospital beds per capita, right behind Turkey but better than Columbia so YAY!!! again, I guess.  Remember what China did when Covid started – they built two giant hospitals just for Covid cases on just a few weeks and that country only had 90,000 cases – TOTAL.  The US will ring in the New Year with 20M cases and not one wing has been added to any hospital – no Government effort at all has been made to make sure we are prepared, leaving us no choice but to go back on lockdown.

It's one thing for the Government to say they don't want to have lockdowns because they hurt the economy but when the same Government does nothing to make it possible to NOT have lockdowns – what do they think is going to happen?  You can't govern this ineptly by accident – it has to be the plan….

California, Ohio, North Carolina and Puerto Rico now have "stay at home" orders in place – no going out unless it's absolutely necessary as their hosptial systems can't take any more patients.  PA, MA, DE, WS, KY and NM have all issued stay at home advisorys – trying to not make it an order if they don't have to.

What could possibly be better for the stock market, right?  Maybe we'll get lucky
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Toppy Tuesday – More Free Money Helps Us Re-Test the Highs

Here we are again!

Dow 30,404, S&P 3,735, Nasdaq 12,840, NYSE 14,405 and Russell 1,996.  Not only did the new $900,000,000,000 stimulus bill get signed but IMMEDIATELY after that, President Trump teamed up wiith the House Democrats to pass an additional $1,400 per citizen (of Georgia) handout to help us pay those Christmas Credit card bills and decide who to vote for in Thursday's Senate Run-Offs.

One of my big concerns is there would be selling ahead of the end of the year but clearly that hasn't happened, possibly because most people's gains are too short-term to have consequences for timing long-term capital gains, which may increase significantly next year under Biden (especially if the Democrats win the Senate).  That hasn't happened so there's no significant pressure to sell and the volume of trading is virtually none so it takes very little to manipulate the market higher and give 2020 a fantastic close – no matter what's actually wrong with the economy:

Date Open High Low Close* Adj Close** Volume
Dec 28, 2020 371.74 372.59 371.07 372.17 372.17 38,851,900


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Just Another Manic Monday – With More Free Money!

money GIFs - Primo GIF - Latest Animated GIFsMore stimulus!

Well, actually it's the exact same stimulus they've been talking about for months and it's actually half the stimulus they initially promised we'd get but that doesn't stop the market from going up and up and up and up, every single time the stimulus talks make a little progress.  This morning, not only has Trump said he'd sign the current $900Bn Stimulus Bill but President-Elect, Joe Biden, says it's not enough and he will sign a bigger one ASAP.

“Overnight, we got the stimulus deal completely out of the blue. Economically speaking, it is a major support to bridge over this difficult winter period,” said Hani Redha, a multiasset portfolio manager at PineBridge Investments. “The market is going to still be in a constructive mood.”

Hani was surprised, so why shouldn't we all be?  

While the markets look ahead to Nasdaq 13,000, the US passed 19,000,000 infections over the weekend and we'll be over 20M by New Year's Eve and adding another 5M in the 20 days it takes us to finally remove Donald Trump from office.  25M people infected, over 10M of them (1 out of 30 Americans) actively infected over the past 30 days and still potentially contageous is going to be quite a challenge to overcome for Biden.

Remember, this chart is the infection rate before the Christmas spread has had time to register and these states aren't just a little bit over 25/100,000, they are mostly double and California is almost 4 times that at 98/100,000 – PER DAY!   And we still have New Year's Eve to look forward too – it's going to be a major super-spreader event.

I know investors refuse to deal with the reality ahead of us but we're not going to magically vaccinate our way out of this.  There simply isn't enough vaccine.  According to the CDC (what's left of it under Trump), it will be late May before we have adequate coverage for the entire country to be vaccinated and it will STILL take several months AFTER that to develop enough herd immunity to make mass gatherings safe.

 

 

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Merry Christmas!

Image result for trump grinchMerry Christmas to all the survivors of 2020!  

I would list them but, if you've ever seen the Vietnam Memorial Wall in Washington, DC – well, there's "only" 58,000 names on that walls for all the American soldiers who gave their lives in that 20-year war and we would need 6 sets of those walls just to try to rembember all the Americans who have died just this year under the reign of our mad tyrant, Trump.

20,874 people are dead in Florida, 23,651 in California, 26,405 dead in Texas… nowhere is untouched, nowhere is safe – we even had a case of Covid in the South Pole this week.  But no country is suffering like America and no people are suffering like Americans with 18.5M of us now having been infected – half of them actively so as the infection rate has soared to 1.5M people per week and is very likely to hit as many as 2M people in our country per week (300,000 per day) after the holidays.

Our fellow countrymen need our help more than ever before and I was inspired by an old post on Barry’s site titled "Give and You Will Receive" listing 13 good ways we can all give every day. 

’Tis the season of giving and goodwill to all man and all that and my children used to wrap up all their old toys when they were done with them to give to children who need them more than they do.  Keep in mind that your old IPhones makes a great IPods for kids who can't afford such fancy things – even without the contract and those old kitchen appliances, tools, etc. could really help out people less forunate than ourselves.     

It’s a little thing, but if you want your kids to learn the benefits of charity, actually parting with things they like or liked and physically giving them to kids who clearly appreciate it is much more gratifying than writing a check to some anonymous organization.  The same goes for volunteering some time (and money!) at a local shelter and helping some people come in from the cold for a nice, warm meal – it makes you appreciate your
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Wednesday Worries – Trump Tweets Trouble for Stimulus Bill

I give up!

 

pic.twitter.com/v9Rdjz6DNu

— Donald J. Trump (@realDonaldTrump) December 23, 2020

 

Trump indicated yesterday that he will block the stimulus bill based mainly on the "fact" that it included other things besides Covid relief (it's also a $1.4Tn budget bill to keep the Government running) and the President says he wants to raise the direct payments from $600 to $2,000 per person, which would add another $400Bn to the bill, completely breaking the budget.  

It took two months of fighting to get this bill on the desk and suddenly Trump sounds like a Democrat, demanding a much bigger spending bill than the compromise that was finally passed on Monday with a 92-6 vote in the Senate and a 359-53 vote in the house.  If he vetoes it, lawmakers would need to either pass new legislation meeting his demand for larger stimulus checks or vote to override his veto—which requires a two-thirds threshold for passage in each chamber.  

The stock market doesn't seem to care (about anything) as it's flat this morning.  I think there's a nice percentage play in shorting the S&P (/ES) Futures below the 3,685 line with tight stops above and we could try again, of course, if we get to 3,700.  While Congress clearly has the votes to override the President – do Republicans have the will to do so?

Both chambers on Monday also passed a seven-day extension of government funding, which Trump signed early Tuesday morning. If the President doesn’t sign the aid package or have his veto overridden by next Monday, the government could shut down briefly. If Mr. Trump doesn’t sign or veto the bill within 10 days after it is passed, it would become law without his signature.  Most lawmakers have already left Washington for the holidays following the bill’s passage, so any refusal to sign by Trump kicks the stimulus into 2021.

“I am also asking Congress to immediately get rid of the wasteful and unnecessary items from this legislation, and to send me a suitable bill, or else the next administration will have to deliver a Covid relief package,” he said. “And maybe that administration will be me,


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0.9 Trillion Dollar Tuesday – Another 5% of our GDP is Stimulus

It's official.

$900,000,000,000 in additional stimulus has been approved by Congress with $325Bn for Small Businesses, which is good – as 25% of Small Businesses that were open in January have already failed and 1/3 of the remaining 75% don't believe they will last 3 more months so that would add up to half the small businesses in America failing – that would be kind of hard to recover from, don't you think?

In the final stimulus package is $600 per person of direct checks but they won't come until after Christmas – a huge mistake if the aim was to boost retail sales.  The $300/weekly unemployment bonus is still in place through March 14th and all unemployment benefits will be almost doubled in time, from 26 weeks to 50 weeks but it's the states that pay much of the unemployment so this is really going to stick it to the state budgets.  

The bill has $25Bn for tenants who are in arrears, which is really a bail-out for the landlords (who apply on behalf of the tenants) but, for the tenants, the eviction prohibition is extended until January 2021 so go rent a nice place and don't pay for it!  

$82Bn has been approved for schools, finally.  $22.4Bn is included for Covid testing so those testing companies should do well.  That's only $74/person though, won't last long if we intend to do regular testing as the countries who successfully fight the virus are doing.  Airlines are getting another $15Bn after getting $25Bn in June so that's $40Bn in bailouts for airlines this year.  Delta (DAL) is 16.6% of the US market (1/6) and their total revenues are $44Bn in a normal year and, so far this year, just $13Bn and they lost $5Bn per Q in the last two Qs so drop in the bucket, really.

We expected a bailout and chose the Airline ETF (JETS) as our Top Trade on October, 8th and 

 

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Monday Market Meltdown – Virus Mutation Trumps Stimulus

Cartoon - COVID Grinch$900,000,000,000!  

Still not enough to give us a good day in the market?  The stimulus news is baked in but the news of a new, more infectios strain of Corona Virus has pushed the UK towards stricter lock-down measures, which the rest of Europe is now considering as well.  Christmas is officially cancelled.  

The new virus strain is spreading 70% faster than the old one, which has already infected 17.5M of us (5% of the population) in the US with 315,000 deaths and 403,359 new cases on Friday alone, which would be a rate of 17.5M more infections in the next 43 days – just in time for Joe Biden to be sworn in.  Since we know Trump will continue to do nothing to slow things down and since this is the spread of the original virus strain in the US – we are well and truly screwed!  

So Merry Christmas to one an all, only 4 shopping days left and Retail Sales were down 1.1% in November from October – and that included Black Friday!  Usually, around Christmas we survey our Members for shopping reports from malls around the country but this year no one is going shopping so we can only imagine how empty the malls must be.  Online shopping is up 29.2% but onlline is only 10% of all Retail so not enough to save the rest.   Also, as we have noted before, the kind of retail that's up is masks and gloves and disinfectant – not the kinds of things that you usually go to the mall for.

U.S. Retail Sales

How's that recovery looking?  

 

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Financial Failure Friday – Dollar Dips Below 90 as BitCoin Tops $23,000

Holy cow!  

I mentioned the Dollar weakness the other day but we thought the 90 line was going to hold and we did have a very brief bounce but now we're looking terminal as that line fails to hold as well thanks to Wednesday's Fed Statement and Powell's press conference where they said they won't be changing their policy – even if the US Economy does improve.  

While FREE MONEY FOREVER may be great for the stock market, it's not very good for the value of the currency those stocks are priced in and that too is then good for the stock market – how convenient!  Dollar weakness also reflected rising expectations that Washington lawmakers will finally agree on an economic rescue package that’s seen as necessary to shore up a sagging recovery.

The European Union project stands at a fork in the roadThe Fed, in its last policy meeting of 2020, on Wednesday reassured investors the central bank would maintain its easy monetary policy stance, including its bond-buying program, until the economy shows “substantial progress” toward recovering from the damage inflicted by the virus.  Fed Chairman Jerome Powell, in his news conference, indicated the central bank wouldn’t be hasty in unwinding its monetary stimulus measures even though the central bank’s economic forecasts appeared a bit more upbeat than previous iterations.

“The FOMC’s dot-plot looked hawkish…Mr. Powell’s comments were anything but,” wrote Kit Juckes, global macro strategist at Société Générale, referring to the individual rate forecasts produced by members of the policy-setting Federal Open Market Committee.

On top of Powell's comments, Congress does seem to be moving towards another $900Bn stimulus bill so the printing presses continue to fun at full speed as $900Bn may not sound like a lot these days but it's still 5% of an $18Tn economy – as our smallest stimulus of the year.  

Shahi's Blog: Wealth Distribution in the USYour household budget would seem fine too if, every few months, someone dropped an additional 5% of your income into the checking account, right?  And what possible harm could that do?  It's just
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PhilStockWorld December Portfolio Review

Image result for one million dollars animated gif$1,535,280!  

That is up a lovely $48,402 from our November Review for, which is very nice for a month we played very cautiously,  We're up 155% for the year in our paired portfolios (LTP/STP) but the STP is, at the moment, down 42.5% as the market has been all uphill since we rebooted our hedging portfolio on October 28th.

We reviewed the Long-Term Portfolio in yesterday's Morning Report.  Well, not a review as we didn't change anything but, at the moment, I'm not inclined to.  The market keeps rising and our long positions are doing extemely well so now it's time to put some of that $48,402 in profits to work adjusting the protective hedges in our Short-Term Portfolio.  This locks in the gains of the LTP and allows us to leave those positions in play – even though we are unsure the rally will keep going.  We've been nervous since September – the hedges are what let us keep participating in the upside – they are the cost of insurance.

Short-Term Portfolio Review (STP):  $114,960 is down $76,885 from our Nov 18th Review but the gains int he LTP more than made up for it.     

 

 

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