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DrStool

It Makes Me Sad - 5/8/20

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13 hours ago, Jimi said:

I've come to understand why you sometimes seem at war with yourself.

I see what you did there. 

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The Trump Regime is now going all out to suppress pandemic bad news.  This is dictatorship, pure and simple. Let's see how well the "free" press, handles it.  I suspect that coverage will be spotty.  

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Does anyone here read Jeff Snider's analysis? I'd like some feedback, if so. 

 

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Anyone who shared with the world the “Hoof Hearted” video can’t be all bad.

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3 hours ago, DrStool said:

Does anyone here read Jeff Snider's analysis? I'd like some feedback, if so. 

 

I gave up on his stuff because I could never figure out what he is for exactly. He seems to be against everything but what is he for? The old Zero Hedge question. The answer there was to entice and keep the Frothy Right in a continual state of agitation.

On the May 8th post my first question is what portion of total credit is consumer CC credit. I spent a couple of minutes looking it up. I failed.   In any case what matters is total credit, not one series.

Keep in mind that "consumers", people, don't mean a thing now. 

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6 hours ago, DrStool said:

Does anyone here read Jeff Snider's analysis? I'd like some feedback, if so. 

 

Here is a interview with him from Oct 2019:

https://mises.org/library/jeff-snider-explains-repo-market-flare-fed’s-phony-solution-and-global-dollar-problem
 

I think it is really worth a listen, if not to say it is a MUST listen. He sounds like he is readng your stuff. Talks also about tbe Primary Dealers and their role. He talks a lot about a „shadow money“ and „shadow banking“ system. That point is a bit hard to get but it is maybe worthfull to dig a bit deeper into it.

I like reading his Alhambra stuff you link on the WS Examiner. He doesn‘t seem to be a lunatic or so. 

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A note about Gold:

given the circumstances we are in right now Gold should be much much higher, far above 2000, maybe even flirting with 5k or so. The fact that it is even FAR away from seeing its ATH in USD should make Gold bulls very nervous. 
Gold would anticipate inflation, it would not simply REFLECT it.

Gold says: There will be no inflation.

„Asset bubble shows that there‘s inflation!“ I say: Which asset bubble? There are 5 stocks which go up and the whole world hides in them. The rest just prevented falling totally apart.

What really happened in March? We don‘t know yet exactlly. My theory is that it was all about Blackrock. That one can‘t go bust or the whole world collapses. You have to realize that everyone on earth has the MSCI World in some way in his portfolio. Every 401k is constructed that way. It is all about them.

The introduction of the 401k‘s and the introduction of negative interest rates were one of the biggest financial policy mistakes mankind has ever done,

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9 minutes ago, Jorma said:

Ah, Mises Institute.  OK. 

Well, that explains not everything 😂

Interesting was the part when he was asked what the FED should have done instead regarding 2008 and so. His answer was:“Hmmm, I dunno, hard to say“.

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Basically it is important to make sure what we talk about. Do we talk about making money in tbe stock market or do we talk about being right and reasonable.

Let‘s take Noland as an example. If you go back to 1998 for example he was right and everything he wrote made sense. But you can virtually feel between the lines that he thought the asian currency crisis was THE top. It was not. I‘m quite sure that during the aftermath of the SLA crisis he was bearish throughout the whole 90‘s.

So again, it makes sense what he writes and so, but if you would have give him 1 million in 1990 he would have all lost it by 2000.

I often think about the famous „Club of Rome“ quote from 1974. It marked the low which was never seen again. It seems some perma bears were members of the Club...

Most of the perma bears did never trade or had any stake in the stock market. They don‘t know how it feels if you lose 30, 50, 60%... I would like to know how their perfect world would look like. Sometimes I think they just wish the time back when they lived in an all-white suburban neighbourhood in the 50s,  mum was at home, daddy had a well paid job and just bought his new station waggon. That‘s it. Childhood memories.

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Reading Jeff on Twitter he says L-shaped, Fed powerless because banks won't create credit period, output crashing - decades long depression - compares to the 1930's and Japan... says the fragility has been building for years and the virus was just the trigger. In other words he's a bundle of joy!  

 

https://alhambrapartners.com/2020/05/04/eurodollar-universitys-making-sense-episode-6-shocking-to-some-fragility/

 

https://twitter.com/JeffSnider_AIP

 

Oh and Elon Musk says he's pulling Tesla out of California and moving it to TX or NV and is using Alameda County, CA. 

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I don't understand him sometimes, and when I do, I don't agree with his take. But I'll keep publishing him if you think it's worthwhile. 

I mean, it's perfectly obvious to me that the Fed does create reserves, and just as obvious that so called "reserves" are meaningless. The other side of reserves is the cash asset circulating in the banking system. When the Fed buys assets, it creates a deposit reserve liability on its balance sheet that is simultaneously money in the banking system.  

Reserves are an after effect of what happens when the Fed buys a note or bond from a dealer by making a deposit in the dealer's account at the Fed. It's the next trade that the dealer does with that cash that matters. Everything else is an afterthought. When that trade settles, the money then becomes a reserve with one exception. 

The dealer may use the cash to buy another bond, note, or bill from the US Treasury. In that case, the money goes into the US Treasury account at the Fed, to subsequently be spent by the US government. When the Treasury spends the money, it usually makes a direct deposit into the bank account of the payee. These deposits become assets of the account holders, and a joint liability of the bank and the Fed.  

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As we've always said here .. fundamentals don't matter.  Just beating your head against a brick wall imo.  Trading is all about what everyone else is doing, no point in being a contrarian, go with the crowd.  Charts are where it's at ..😏

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The following I copied from a tweet from „Sahil Bloom“ from twitter:


A Thread on Markets

It is the year 1500 and you enter a market in Renaissance-era Italy.

There are buyers and there are sellers. Prices of the various goods are determined by the interaction by and among these individuals.

Now in walks Mr. FEDerico, a man of endless means.

Mr. FEDerico climbs a tower in the center of the market and proclaims, “I am a buyer of any and all goods in this market, regardless of their price.”

He climbs down off the tower and exits the market to return to his mansion.

What happens in the market when he leaves?

Sellers, knowing they have a buyer, increase their prices. Buyers, previously unwilling to pay these prices, realize they can flip and sell the goods at a higher price, so increase their bids.Even you, the silent observer from the future, are tempted to get in on the fun!

The fun continues for a while. Buyers and sellers flip goods at higher and higher prices, turning profits as they do. Wealth accumulates.The poor and middle class are forced to go to a market several cities away. They can’t afford to pay 5000 Florin for a bag of corn...

But one day, Mr. FEDerico returns to the market, climbs the tower, and proclaims, “This market is incredible, bustling and vibrant. I am no longer needed and will move on to new cities in need of my brilliance!”

What happens next?

Without a buyer at any price, sellers frantically try to sell. But buyers are silent, and prices plummet.Back in your time machine, you see the irony - Mr. FEDerico never actually had to buy anything, only his intention to do so.“History is wild,” you say, “I prefer 2020.”

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