Your Account Has Been Suspended 4/3/20

[DrStool]

It's possible. But I tend to think it's November 1929, not November 1987.  

[Jimi]

Twitter hasn't reinstated me - makes me sort of pissed off, because I used a handle associated with a web domain I purchased a decade ago. Now that identity is "suspended" for reasons I do not know, and for reasons they have never specified. 

I mean, compared to your rants, I'm a freaking piker - so, it's really strange.

[DrStool]

They suck. 

[Jimi]

2 minutes ago, fxfox said:

All those „bullish setups“ go always back only to 2000 or so. Never have I seen one that goes back to the 70s or even the 30s. So if the market we are in right now will be like 2000-03 or 2008/09 there are some valid points for a bull case. But if not, one can throw that stuff into the garbage can.

If prevailing wisdom sees the current setup like those post-2000, only because of historical myopia, then they may bring that analogy into reality though group-think decision making.

Then, the mudder-fadder bottom can fall out like it's November 1929.

[SiP]

During GFC FED and UST waited a lot. same for CBs from all around the world.

This time they announced QE almost in the same month as lockdown / selloff. Same for program for corpo/sme  and liquidity.

So this time the response in v.quick, not like in 2008 or 2009, one year after the peak at sp500.

So this is different.

They also did swap deal with EM CBs already. They actually already used all tools at their disposal and triple the force (enlarge QE many times vs past QEs or cut rates to zero).

So the LOW could be in because of that. 

 

The main question that we all should be asking is:

1. Is this a hurricane event? like in Miami - close for 10 days (here 1 month) and everything back to normal)

2. IS this something bigger (like "national" katrina hurricane. In that case after two years still local GDP didnt recover 100%)

 

The second question is of course about dollar squeeze. King dollar. Great article this week from Noland, must read.

http://creditbubblebulletin.blogspot.com/2020/04/weekly-commentary-king-of-sovereign.html

The third question is: what about china. Will they handle this crisis, again? Supply chains are breaking, they are losing new orders.  

 

I understand that FxFOX is saying that the LOW is already IN.

Me - I dont think so, we should test the low. I think the economic data will get worse. This will last at least till june 2020. 

   

[DrStool]

By the way. I have another website. It's called the Wall Street Examiner. It has some good articles. 

Obviously this time is very, very different from the past dozen years. We had the greatest crash in history and it came from the very top, not a second wave, as is historically the norm. 

The banking system is wiped out. There's no resiliency because the bubble expanded too far. Its surface became brittle. The surface collapsed instantly. There's no internal structure to hold anything together, so great was the leverage. All of the net capital in the world has been utterly destroyed. There's no capital. The system is insolvent. It is now taking 300-400 billion a week of cash injections into primary dealers, and countless billions of other support operations by the Fed and other central banks to keep the system barely functioning at all. 

We are in final and total systemic collapse. We may be starting a cyclical bull market, but I doubt that it will retrace even 50% of the first leg down. I believe that this is November 1929. The market will be higher this summer, but much lower by this time next year.  

[SiP]

So you prefer 1929 style. Copy paste scenario is here

[DrStool]

That's my unscientific, and as yet half assed theory, which I will flesh out in Liquidity Trader.  

[DrStool]

Helluva chart. 

Yes, I think the current environment is quite similar. The 90% leverage that killed the market in 1929 is even worse today. Forget retail margin requirements. Meaningless. The whales are all using repo and all kinds of other credit and hedging. Plus the futures market barely existed in 1929.  I don't know how to compare the leverage now versus then, but I think that today is just as bad or worse.  Layers and layers of shit upon shit. Structured finance is worse than cancer. 

[SiP]

If that is true, then buy physical assets which are easy to sell like gold coins. In the end this paper money would be wipe out, even if gold would drop during begining of this crisis becasue of "sell everything". Then, all "paper ETFs" would be gone and gold or silver could rise like 10 to 100 times. Who knows.

But this is the case if you believe in total reset. I heard this story too many times to believe. I still think they will handle that, maybe from lower levels. Their ammo is unlimited. For me, Japan is the front runner. They have like 240 % debt to gdp ratio and still manage to keep their economy afloat. So what will happen to Japan will happen to eveyone in the end. US has low debt to GDP levels when compared to Japan. Actually Im more affraid about Italy and other south countries. After changes to policies ECB has room to print till 2023. There was a problem with CB capital (hit limit on germna debt), but they change the limit last month. So they could print an buy italian debt till 2023.

At the moment since 17 march I have 15% of my portfolio in stocks. Already have 40% increase. I invested in hard assets stocks like gold miners, telecoms.

Im thinking about going long with 50% of my retirement money. Its like 2009. The questions is - whether its too early since GFC lasted 1,5 year. But that was different story. FED acted after 1 year. This time they did it very quickly.  

[SiP]

WTI is interesting

 

Log | channel

 

and

Linear | previous lows

[DrStool]

we could have a hyperinflation bull market.  $500 billion a week in money printing by the Fed alone is enough to trigger massive inflation. 

[Jorma]

3 minutes ago, DrStool said:

we could have a hyperinflation bull market.  $500 billion a week in money printing by the Fed alone is enough to trigger massive inflation. 

As you say though, so much of the money "just flows out into space and dissipates."  Well seemingly. Who knows?  It's still the same old story that the Feds money is trapped in the financial system buying new debt, to keep a bid under the old debt.  Not much leaks out into the economy, as always. Less really right this moment but some will start to flow right now. How much? Not as much as was flowing before I'd say. 

 One thing I have not seen mentioned is that with so many trillion flying around the amount of purely criminal phoney supposedly  'money good' and 'nearly money good' paper must be huge and growing.  Not a thing to encourage sacred confidence in our money.  

 

[Jorma]

That the money isn't any good is an idea which one would think might start to get some traction. 

[DrStool]

Not quire right.

All of the money that the Fed pumps into the Primary Dealers is spent into the economy. Every penny.  The Fed is monetizing the Treasury Debt. The dealers are just middle men getting a cut. That $500 billion that the Fed pumped in this week went into the Treasury's account within days, and it's being spent as we speak. Bank deposits and money supply are soaring. 

I have to think that this is extremely bullish for gold, but we have to let the technicals do the talking on that.  

Other governments are also borrowing and spending at never before seen levels. At the same time, production of everthing is being cut. It's not hard to imagine $200 oil or $5000 gold. 

So far, the evidence is that the money printing is outracing the money destruction, by far, especially since stocks have stabilized in recent weeks.