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 

 

IN PROGRESS

 

 

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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Which Way Wednesday – 3,700 Fed Edition

Shorting sure does seem pointles, doesn't it?

No matter what the news, the market seems to climb higher and no one seems to notice (or care) that the Dollar continues to get weaker, down almost 5% since September.  That's a 5% Tax on you total net worth thanks to these inept economic policies so when you wonder where all this stimulus money is coming from – it's being extracted from every Dollar you've ever made in your life and every asset you own (if they are Dollar-based).  

The Dollar is down 8% since July and down more than 10% since March while the S&P 500 has climber from 3,100 to 3,700, which is 20% and that makes sense because earnings are priced in Dollars so the weak Dollar gives you a 10% inflated view of earnings and stocks are priced in Dollars, so the weak Dollar gives you a 10% inflated view of the value of the stock.  There's really nothing there – yet people get excited!

Let's say, for example, your mom takes your temperature and it's 98.6 and the temperature outside is 75 degrees.  Later she takes your temperature and it's 37 degrees and the outside temperature is now 24 degrees.  Clearly it's the freezing temperatures that have frozen your body, right?  Or perhaps the first reading was in Fahrenheit and the second was in Celsius?  

That's what we're doing when the Dollar, which is the "constant" we measure value by, drastically changes during the course of a year.  It leads us to get false readings in all of our data and causes us to make false conclusions since the underlying assumption in the markets (and all trading algorithms) is that we have a consistent base of measurement.  This is a huge flaw in the system!

Our last Long-Term Portfolio Review was on November 17th ("Tesla Tuesday – Musk Makes the S&P 500 and our Long-Term Portfolio Review") and, at the time, we were up a whopping 159%, at $1,295,033 for the year (because what hasn't worked this year in a bullish portfolio?) and we decided to cash out many positions.  Fortunately, I have an unadjusted version so we can see how much…
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Toppy Tuesday – More Free Money and Fed Hopes Keep Us on Top

Up we go again.

Index Futures are up 0.666% and the Dow (/YM) is testing 30,000 again, which is a really good shorting line.  We had fun shorting the Nasdaq (/NQ) at 12,500 yesterday into the close and it's back over it again this morning so it will be a lagger to the Dow if it crosses back below and also playable with tight stops above.  

Why short?  Because 30,000 on the Dow and 12,500 on the Nasdaq are good lines of resistance and likely to be rejected without an actual catalyst and everyone is already expecting Stimulus and more Fed Action so it's easier for bullish traders to be disappointed than rewarded.

The S&P, for it's part, is having trouble at the 100-hour (2-week) moving average at 3,666 (so also a good short on /ES) and has no real support all the way back to the 400-hour (2 month) moving average at 3,525.  As this is a 2-hourly chart, these moves can be very quick.  Most of the gains came in the first week of November, when the S&P popped 200 points on relatively low volume to 3,640 and we're pretty much still there a month later – that's not real strength.  

 

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Monday Market Movement – Up and Up into the Holidays

There's always a bright side.

In this case, for vaccine makers, $130Bn in unexpected revenues over the next 4 years and, as I noted back on Sept. 28th in "The Week Ahead – 3,350 is Critical for the S&P 500" and our corresponding Top Trade Alert, "Pfizer (PFE) made $16Bn last year and you can buy that whole company for $200Bn at $36 per share so just 12.5 times earnings… While Pfizer may not ultimately "win" the vaccine race, they are a solid blue-chip pharmacuetical company who are clearly able to keep up with the BioTechs WHILE making a healthy profit.  Isn't that the kind of company we like to invest in?"

As you can see, PFE is going to generate $21Bn in additional revenues next year alone – a nice boost to their normal $50Bn in revenues and, while they may not make much profit selling their Covid vaccine next year (state of emergency regulations), they will make follow-on revenues for years to come.  That's how PFE became our "value play" in the virus space.  

The investing premise was simple, the others had gotten away already so we went long on PFE, which was lagging the rest of the sector – a horse no one believed would win the race but we made a place bet – simply betting our horse would finish the race and, even if it didn't, it was still a good horse and we'd run it in future races.  

Johnson and Johnson (JNJ) was also sure to be in the running and is a good, reliable stock but, at $400Bn in market cap, it's twice the size of PFE and would then draw less net benefit from a new line of revenues.  That's why PFE is up over 20% since late September and JNJ is only up 2.5%.  You don't have to be psychic to predict the future of a stock – you just have to pay attention to trending condisions in the news and the markets and think about how that will impact their business down the road.  

That's what our Top Trade Alerts are all about.  Sound investing ideas that are not following the short-term trends – we're focused on the long-run and we generally make nice, sensible trades that aren't swinging fot the fences – but will still make very nice returns if they are successful.

 

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Faltering Friday – Failure at Dow 30,000

Anoher day another 3,000 deaths.

Meanwhile, Mitch McConnel and the Republican Bastards in Congress postponed the vote on a simple one-week stop-gap bill to keep the Government running past December 11th – which is today.  If they don't get back to the table, Federal Agencies shut down and Federal workers get furloghed including agencies that are critical front-line defenses in fighting the pandemic.  Tens of thousands of additional lives could be lost if the Repbulicans get their way today.

Mostly it's the Senate – only 67 hard-line Republican Representatives voted against the measure vs 343 reasonable people who voted for it but the Senate is a different animal altoghether – full of wealthy, entitled White Men whose families don't suffer the consequences of contracting Covid-19 because they go to the best hospitals and get the best treatment – so what do they care if they condemn tens of thousands of American Citizens to death?  Like President Trump – they are immune.  

The chart above, of the deadliest days in US history, is already out of date with 3,055 people dying on Wednesday and another 2,974 yesterday and the daily death rate is now tracking towards 4,000 per day over the next few weeks (merry Christmas!) and may get worse than that if people insist on migling on Christmas the way they did on Thanksgiving.  

1,800 people a day die of heart disease in America on an average day and 1,640 die of cancer so Covid-19 is now the leading cause of death in America.  Not in the world – just in America, where 4 times more people die per population than the even the next 9 worst nations in the World.  That's the real tragedy, this is a preventable tragedy – every single day something could be done to reverse these numbers and every single day nothing is done by Trump and the GOP – NOTHING!!!

German magazine Stern doesn't hold back with their anti-Trump cover | Metro  NewsIt's the lack of outrage that I find outrageous.  

Adolf Hitler was the leading cause of death for Jews from 1939-1945 yet 6M divided by 365 divided by 6 years = "only" 2,739 deaths per day.  Trump's negligence is killing


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3,054 Thursday – US Hits Record-High Deaths, Europe Increases Stimulus

Printing GIF | GfycatMORE FREE MONEY!

And even more for us as 3,000 less Americans get to share it with us every day.  In 365 days, that would be over 1M people dead – assuming we stay at "just" 3,000 deaths per day, of course.  That's not very likely though as Trump's own Coronavirus Response Coordinator, Dr Deborah Birx, is now warning us that the upcoming December surge in COVID-19 cases will be the "worst public health event" that the country will ever face.   "This fall/winter surge is combining everything that we saw in the spring with everything we saw in the summer - plus the fall surge going into a winter surge," said Birx.

Experts who spoke to Salon also emphasized that the public health crisis is not some distant future event; it is already upon us.

"They [hospitals] are overwhelmed already," Dr. Alfred Sommer, dean emeritus and professor of epidemiology at Johns Hopkins Bloomberg School of Public Health, wrote to Salon. "Many are not just near the breaking point in physical capacity, but what is too often overlooked, their staff are exhausted, physically and emotionally, with no let-up in sight."

History's deadliest pandemics: Plague, smallpox, flu, covid-19 - Washington  Post"Respiratory disease always get worse in the fall and winter," Benjamin wrote to Salon. "So this natural increase plus the lack of aggressive use of masks, social distancing and closures of large events will make this outbreak worse. Influenza during this time will also make it worse unless people get their flu shots.  We just came off Thanksgiving when far too many people travelled and congregated, spreading this highly infectious disease; and Christmas is coming up, when even more people who are infectious will be congregating with family and friends and spreading it further."

Sommer also noted that winter is helpful to the virus' need to spread, as people are "getting closer together indoors," while dry air "helps to 'preserve' the virus in the air and surfaces longer."  Sommer lamented that so many Americans shirk public health advice, such as mask-wearing and avoiding congregating in…
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Wonderful Wednesday – More Free Money Gives us S&P 3,700!

Turnaround Tuesday – More Stimulus Rumors as Powell Speaks$916,000,000,000

That's the price of S&P 3,700 as the Trump Administration proposed just under $1Tn in additional stimulus including another $600 per person in direct checks.  The new stimulus does not include $300/week unemployment compensation and that's still a big sticking point with the Democrats.  Crafting a liability shield for businesses, schools and health-care providers facing coronavirus-related lawsuits has been a priority for Republicans throughout the negotiations, while Democrats have pushed to send more aid to state and local governments.  

Along with state and local aid, the $908 billion bi-partisan framework at the center of the current negotiations would add $300 to weekly unemployment benefits, provide $82Bn for schools, $16Bn for the distribution of Covid-19 vaccines and $288Bn in relief for small businesses.  Both the White House and some lawmakers are making a late push to include the new round of direct payments in the next bill. One of the most popular parts of stimulus legislation Congress passed in March, the last round of direct payments sent $1,200 per adult and $500 per child to many American households, at a cost of nearly $300Bn.

Clearly we need the stimulus.  We are still 10M jobs down from where we were in February and job growth has ground to a halt and the virus is raging out of control with 215,000 new infections yesterday as we now top 15M cases in the US, adding more new cases every day than the country had TOTAL at the beginning of April.  More cases every week (2M) than we had TOTAL at the beginning of June and more cases for the month of December (8M) than we had TOTAL through the middle of October. 

That is how fast this problem is accelerating and Mitch McConnel and the GOP have been blocking additional virus relief for over a month now playing games to time it so they can look like the good guys just ahead of the Georgia Senate elections, where voting begins next week to decide if we're going to keep McConnel as the Senate Majority leader to plague Biden the way he has been a literal plague on this Nation.

Here's a chart of the 10 WORST countries on
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