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Another Day, Another Bottom 5/4/20

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Less Support from the Fed Forces Re-evaluation of Stock Market  2 - TECHNICAL TRADER MAY 4, 2020 I am rescinding the comments I made last week about the

Looks bullish

Gold, held in physical form and outside the financial system. This does not include allocated accounts or storage.

I am rescinding the comments I made last week about the long term trend. The Fed’s commitment to maintaining a bullish trend in stocks is now in doubt, and the long term indicators on the market index charts are ambiguous.

The outlook is rife with uncertainty. We don’t know when or if the Fed will re-deploy its tactical carpet bombing of deeply embedded, indigenous bearish forces.

It’s like the Viet Nam war. The Fed has overwhelming firepower, but it may not be committed to using it because of the astronomical long term cost fighting an entrenched enemy. We need to watch to the technical indicators closely to try to determine what each side is doing and will do, and which might have the upper hand.

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The Federal deficit hit $1 trillion in April. That’s a cool 1,500% increase year to year. That’s for one month.

This is based on the April 30 Daily Treasury Statement month to date totals. It is an estimate based on my simple subtraction of outlays from revenues. It is not official, and the official number may differ when the Monthly Treasury Statement is released on May 13.

Still, a trillion, is a trillion. And the final, official number should be in this ballpark. This is an increase of $941 billion from the April 2019 deficit. Keep in mind that back in the “good old days, before the 2017 tax cut and spending increase, April typically saw a surplus. So even before the pandemic, these numbers were bad.

Obviously, this blowout is due to the Pandemic Pandemonium Panic Relief Programs spending. But it’s also partly due to the plunge in revenue, and embedded increases in regular budgetary spending.

Here are the current horrible numbers, along with the immediate outlook, and what it means for stocks and bonds.

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The Fed just posted how much help it will give the market next week and son of a gun! It’s cutting again. The implications of this are yooge! Apparently Jaysus saves not! At least not the stock market. Doesn’t he care? Is this ritual sacrifice?

Here’s what you need to do now to protect yourself from Jaysus Powell’s Revenge.

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Some fun reading for you Lee. 

https://www.newyorkfed.org/markets/primary-and-secondary-market-faq/corporate-credit-facility-faq

Balance sheet items related to the SPV and CCFs will be reported weekly, on an aggregated basis, on the H.4.1 statistical release titled “Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks,” published by the Board of Governors of the Federal Reserve System.

That's $750bn of credit. Maybe. From my reading recipients must prove they can't get credit otherwise. At this point it sure seems like unless a corporation is already a zombie they can get bank credit. I suppose that  as of today banks will now start discriminating a bit more. Or better yet borrower putting desperate calls into their banks begging to be denied a loan.

If I was a stock picker I would simply pick the stocks of those that get credit from the Fed.

I see more an more stories that state the amount of cash on hand as the lead metric. If you get a couple of billion from the Fed you should be good there.

 

 

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As President Trump presses for states to reopen their economies, his administration is privately projecting a steady rise in the number of cases and deaths from coronavirus over the next several weeks, reaching about 3,000 daily deaths on June 1, according to an internal document obtained by The New York Times, nearly double from the current level of about 1,750.

 

The projections, based on modeling by the Centers for Disease Control and Prevention and pulled together in chart form by the Federal Emergency Management Agency, forecast about 200,000 new cases each day by the end of the month, up from about 25,000 cases now.

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But, meh, reopen, meh, my tattoo shop, meh, because, "fascists," meh, "slave state," meh, "boolish," meh....

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