Which Way Wednesday – Nasdaq 10,000 Edition

You've got to short the Nasdaq at the 10,000 line!

The first time we hit 5,000 on the Nasdaq was back in 2,000 – and we all know what happened then!   It took us 17 years to get back to 5,000 and that was good consolidation and we popped right over it and stayed there.  Well, we didn't stay there – the Nasdaq took off like a banshee and gained another 50% in 18 months and now, another 18 months later, another 33% move higher and we're at 10,000.

Even a small retracement from here can spell big money shorting the /NQ Futures, which pay $20 per point, per contract.  At the moment, the Nasdaq is over 10,000 so we play it when it crosses back under and use the 10,000 line as a stop line.  We're just looking for psychological resistance or profit-taking at this point – there's no particular Fundamentals behind shorting the Nasdaq – especially if Apple (AAPL), which makes up 15% of the index, is heading towards $350/share.  

Without taking into account a very slow 2nd quarter, which winds down this month, the price/earnings ratio on the Nasdaq is now over 30 times earnings vs 23 times earnings last year so, even without the damage done by the virus, the Nasdaq has gotten 30% more expensive to buy now.  Oddly enough, that's nothing compared to the Russell 2000, which is trading at a whopping 55 times earnings at 1,500 vs "just" 36 times earnings last year.  So, if the Russell can blast 50% higher from 35 times earnings – why can't the Nasdaq?  

Is the bond market embarking on a 1946-like 35-year cycle of ...Keep in mind that stocks are an alternative to bonds and, since bonds are paying less than 2%, what is 50 times earnings but a 2% annualized return.  While stocks are risky, there's also a chance the stock becomes more valuable over time and stocks make a better hedge against inflation as Corporate Profits are likely to inflate along with everything else.  

Housing hasn't been a good investment since 2007 despite the low rates and that's because property taxes are eating into the gains in property value – forcing…
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Testy Tuesday – Infections Up, Markets Down Ahead of the Fed

Food pantries in New York City are turning people away.  

While we have been marveling at the returns from the S&P 500 and the Nasdaq in the past few months, more and more peoplle are starving and less and less assistance is available to help them as the virus people no longer believ in continues to rage out of control.

I don't want to be your Cassandra, my "gloomy" outlook costs us the subscribers who like to hear BUYBUYBUY to confirm their bullish bias and, these days – there's a lot of them!  Still, like the prophet, I am cursed to utter truths, yet I am rarely believed.   

One reason for that is that I operate on a longer time-frame than most people.  I'm always looking at the Future but the Future is a muky place and it's very hard to judge distance – even when the direction is very clear.  With the virus it's all been about the numbers and we could tell by those numbers that the lockdowns were ending too early.  How early?  Who knows?  Just early and then how damaging?  Also don't know – but we are now finding out the hard way.

The Food Banks, for example, are 39% closed due to lack of funding, lack of food or lack of workers in a city that has been devastated by the virus.  In the Bronx (Black Neighborhood) 87 of 174 Food Banks were forced to shut down – HALF!  When you lose a food bank you lose their donor base but you don't lose the NEED for food and people from the Bronx then have to travel to other places to get it and that puts more pressure on those Food Banks – a very bad cycle. 

New York The Food Bank provides 21M meals per quarter and the US Government has dropped $2.7Tn (so far) in direct stimulus which has (so far) made the World's top 400 Billionaires $565Bn richer since the pandemic began.  As I mentioned above, I do a lot of math and $5 x 20M = $100M and there are 27 THOUSAND $100Ms in $2.7Tn so it would take 1/27,000th of the aid (or 1/5,650th of the…
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Monday Market Momentum – Up into the Fed Meeting

Federal Reserve Thanksgiving | Leave The Plantation OrganizationUp we go again.

Of course, we're up today because Europe and Asia are up and they are up because we were up 2.5% on Friday and they are just catching up but that doesn't stop our pre-market traders from seeing a rally in Europe and trying to catch up to that – even though their rally was a reaction to our rally and yes – it's all total BS but that's the way the market works, so don't whine about it

Despite the record-high markets (or maybe the record-high markets are because of them?), Congress is still talking about another stimulus package on top of the $3Tn they've already doled out plus the $4Tn the Fed has been tossing around.  House Democrats already passed the HEROES Act in mid-May, which would provide a one-time payment of up to $6,000 to households and come with a mammoth $3 trillion price tag which, so far, the Republicans have shut down because this money would actually go to people, not Corporations – so they've been pushing their own bills but stimulus is stimulus – more or less.

The extra $600/week unemployment benefits for our 25M unemployed citizens runs out on July 31st at which point this party could come screeching to a halt as that's $2,400/month x 25M = $60Bn/month of stimulus that could be taken away – then who's going to order take-out?  

This economy is fake, Fake, FAKE yet we have many many people in willfull disbelief (Jerry) who would much rather go on as if everything was great than face the truth – that the Government (Elaine) is just putting on a big show to make the voters feel better and is generally lying about the economy's "performance."  To George (skeptics), it just doesn't seem likely that things could be going so well – given the actual evidence he sees of economic performance yet even he WANTS to believe all the "breathing, the panting, the moaning, the screaming" is all for real and, unlike Elaine – you're not going to have a moment of truth with this Government – so enjoy your fantasy!

Even Friday's Non-Farm
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Non-Farm Friday – Back to Work Edition

COVID Small Business Resources in Chattanooga, TNWe're waiting on Payroll Data.

Last month, in the April Report, the US Economy lost 20.5M jobs and, though "experts" are expecting another loss of jobs – we re-opened much of America in the middle of May, so it's very possible we show a net gain for April as people got back to work.  Expectations for this report are for around 8.5M additional job losses but the Futures are antiipating a positive number and are already up 1%.

Keep in mind, of course, that's AFTER the Government created a $700Bn Paycheck Protection Program that handed out money to employers in exchange for not laying off their employees during the crisis.  Figure the average worker makes $5,000/month including wage deductions and that's 2 months so $700Bn/$10,000 = 70 MILLION JOBS that the Government paid to salvage – otherwise this could have been, by miles, the greatest loss of jobs in American history.

Maybe now you understand why the Republicans were suddenly cooperating with the Democrats and supporting that stimulus package.  It's very hard to be re-elected when 50% of the voters don't have jobs!

ImageThat's why this jobs report tells you nothing about the real health of the economy.  It's a fiction that's been concocted by the Government so the people are not generally aware of how hard-hitting this disaster has been.  Yesterday, they were already talking about another $1Tn of stimulus by the end of June – anything to keep Q2 GDP from being down more than 50% – which is the current forecast by the Atlanta Federal Reserve.

8:30 Update:  Wow, we did get a gain of 2.5M jobs – that's great and miles better than the low expectations set by leading Economorons.  That puts our Unemployment Rate at 13.3%, MUCH better than 20% expected though Average Hourly Earnings fell 1% and that's not good for the workers but GREAT FOR WALL STREET (isn't everything?).  

Doesn't matter why, the Futures are up like a rocket though, in keeping with the theme of the last two weeks – unemployment for Black people still rose 2% - which makes sense since we've already reported that very little of the PPP money made it into the hands…
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3,100 Thursday – S&P 500 Tests Our 10% Line

3,135.

That's the 10% line above our Must Hold Level of 2,850 on the S&P 500.  If we can get over that and hold it, then we will have secured the rising 50-day moving average which will "Life Cross" over the 200-day moving average around June 19th and THAT would be a very bullish set-up into the summer – assuming the re-opening is getting into full swing by then.

So TECHNICALLY, the markets are in good shape but let's keep in mind that it cost us $6.7Tn to buy this technical rally and it's likely to cost another $2.3Tn to keep it going and that will put the National Debt around $28Tn more than 3 TIMES the $9Tn of debt we had in 2007 – before the Financial Crisis.  $10Tn was added during Obama's 8 years in office and now another $10Tn is being added during just 4 years of Trump (so far) – that's a much faster pace than Covid was spreading back when Trump said we shouldn't worry because we only had 5 cases in the US!

 

IN PROGRESS

 

 

 

 

 

 

 

 

 

Which Way Wednesday? Just Kidding – Markets only go Up!

The Bear Will Not End Until The Fed Is Buying Stock ETFs | Seeking ...Yawn!

This is getting boring.  Every day the stock market goes up and up while we read about the Protests and the Riots and the Cold War with China and the Unemployment and the Virus and the Debt and the Economic Slowdown….  None of that matters on Wall Street because the World's Central Banks printed $20,000,000,000,000 of new money this year and almost all of that money went into the stock market.  So much so that the Fed now directly buys ETFs.

The five largest purchases by the Fed, in order, were iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT), Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH), iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and SPDR (JNK).

Free Markets Are Dead: Fed To Start Buying Junk Bonds, High Yield ...That's right, the Fed now buys junk bonds and the majority of these ETFs are managed by Blackrock (BLK), who also runs the Fed's debt-buying programs (once again, the Fed is NOT a Government Agency – it is a Banking Cartel made up of Bankers to protect the interests of Bankers).  Still, even for bankers, this seems a little fishy.

Buying Junk Bonds is a round-about way of giving CASH!!! to Corporations but in a way that the average American does not understand.  The companies issue bonds that normally would not get purchased at low interest rates but the Fed steps in and buys them all at the issue price so they are effectively giving the companies ($148Bn in Q1) loans far below the fair market value and ignoring the risks involved.  Since the only people that can be hurt by this are the taxpayers – why the F not?  

That $148Bn will be dwarfed by the Q2 lending, which is still underway and you can see what a party this is for Blackrock, whose stock jumped 20% on massive volume as the Fed started buying everything they had to sell.  This is simply a long-term game-changer for BLK and other Junk Peddlers – ALL bonds get sold – no one goes Bankrupt. …
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Tuesday Turmoil – Trump Threatens More Violence

This is how we now treat Freedom of Speech and Assembly in America.

Day 7 of the protests and the President is ratcheting up the rhetoric, telling the Governors they have to "DOMINATE" the streets and, yesterday afternoon, in a scene you would think was from a movie where they want to establish that the Leader is an evil man who could not care less about his people, a PEACEFUL crowd was violently cleared from the Presidents path so he could walk to a church, hold a prop bible and make a speech threating to us the US military to put an end to the protests.  

This is the point in the movie where you cut away to the heroes working from their basements with a plot to overthrow the monstrous tyrant, right?  Well, here's two such heroes who are willing to speak up – one from an attic and one from a garage:

And how are the markets reacting to the violence and the chaos all across America?  Well the Dow Futures are up 170 points (0.666%) this morning at 25,630 and if that's not a sign to short /YM, I don't know what is!  There is now a total disconnect bet

 

 

IN PROGRESS

 

 

Monday Marching Madness

George Floyd Death - NBC News | NBC NewsThe First Amendment is getting a workout this weekend! 

Usually the Second Amendment gets all the attention as it's backed by the gun lobby but the First Amendment needs a lobbyist it seems as the President is attacking the Freedom of the Press and Speech – which used to be a big one in this country that we cared deeply about – and now "the right of the people peaceably to assemble, and to petition the government for a redress of grievances" is under attack as well

 

IN PROGRESS

 

 

Faltering Friday – Low-Volume Rally Sputters into the Weekend

Here's the weekly S&P 500 ETF (SPY) Volume Chart since we topped out at S&P 3,390 back in February:

Date Open High Low Close* Adj Close** Volume
May 28, 2020 304.65 306.84 302.24 303.07 303.07 90,767,807
May 25, 2020 301.93 306.84 295.46 302.97 302.97 284,174,000
May 18, 2020 293.05 297.87 291.95 295.44 295.44


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GDPhursday – Does Anything Matter?

"Nothing really matters,
Anyone can see,
Nothing really matters,
Nothing really matters to me
." – Queen 

Does GDP even matter?

We'll see this morning as we're going to get the worst GDP reading since 2008 - and that's just for Quarter 1, Quarter 2 will be much worse – there's no stopping that now (another Queen song) and that number will show a double-digit decline in GDP so -5% for Q1 is actually tame by comparison.  

8:30 Update:  As I write this, the S&P Futures are up 0.25% at 3,040 and the Dow is up 0.7% at 25,700.  In addition to GDP we have the Durable Goods Report, which is showing a 17.2% drop in April and -7.4% ex-Transportation, which shows you how bad Transportation was in April.  We also had another 2.12M Americans file for Unemployment – also worse than expected but none of this seems to be affecting the markets – which are chugging along at their pre-market highs.

We can only assume that Liquidity Trumps all other things – as does the Oligarchy and that was on full display in this "Tax Fairness" Report which shows how $434Bn of the Government's $2.7Tn bailout (so far) has gone directly to America's 630 wealthiest people (Donald Trump is #248) a 15% increase in their $2.6Tn total wealth in the past two months!

16 new Billionaires were added to the Forbes List, including Trump's pal Kanye West – that's in the past 60 days!  During that same 60 days, 38M American's lost their jobs, 1.5M became infected with Coronavirus and 100,000 died but, as the President says – they are soldiers going to war for Capitalism, right?

“The surge in billionaire wealth during a global pandemic underscores the grotesque nature of unequal sacrifice,” said Chuck Collins, director of the IPS Program on Inequality and co-author of the Billionaire Bonanza 2020 report. “While millions risk their lives and livelihoods as first responders and front line workers, these billionaires benefit from an economy and tax system that is wired to funnel


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