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One Last Look 5/19/20

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Tomorrow is the last day of MBS settlement week that saw the Fed pump $265 billion into dealer accounts. Most of it is now done and deployed but a  little more to come on Wednesday. 

https://liquiditytrader.com/index.php/2020/05/15/treasury-issuance-catches-up-with-qe-and-thats-not-good/

Dicsucs. 

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That said, the rally had absolutely nothing to do with a vaccine and everything to do with $265 billion. 

https://www.statnews.com/2020/05/19/vaccine-experts-say-moderna-didnt-produce-data-critical-to-assessing-covid-19-vaccine/

Market comes roaring back because the rally had absolutely nothing to do with the vaccine in the first place. Finmedia just makes shit up because they need cover stories. 

Yesterday the WSE had the lowest traffic weekday in a long, long time. Bears have crapitulated. 

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UNCLE WARREN HAS BEEN TRUMPED BY THE FED

Uncle warren not getting any bargains so far unlike 2008.

It seems that no one wants his expensive capital.

As they can get all the cheap capital they want from the FED.

 

 

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THE MARKET IN MORAL HAZARD

That's all we have left.

A market in moral hazard.

This rally from the march lows looks old and tired and about to give up.

Apples stock price back in Fed bail out pumping QE4 fairyland above $300.

 

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6 minutes ago, Jimbo said:

UNCLE WARREN HAS BEEN TRUMPED BY THE FED

Uncle warren not getting any bargains so far unlike 2008.

It seems that no one wants his expensive capital.

As they can get all the cheap capital they want from the FED.

 

 

The Buffet bashing is sky high. I think the last time it was that high was: In the year 2000...

But I also have to say I'm not a big Buffet fan. It is absolutely no magic what he has done. Everyone can make a google search and find dozens of academic articles where folks found out why he was successful. The key takeaway is that he was leveraged, at least 2,5 to 1 or even 3 to 1. He never spoke about that.

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THIS IS NOT UNCLE WARREN BASHING

I do not regard my post as in anyway derogatory of Uncle Warren.

I like Uncle Warren.

He was a great capital allocator, now he is just a good one who has reverted to the mean.

Just a statement of fact.

Fed bashing post yes.

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12 minutes ago, Jimbo said:

UNCLE WARREN HAS BEEN TRUMPED BY THE FED

Uncle warren not getting any bargains so far unlike 2008.

It seems that no one wants his expensive capital.

As they can get all the cheap capital they want from the FED.

 

 

Exactly...

Top is going to be in early 2023. Fed can keep market high until inflation start to show.

More free money is on it's way and more to come....

Bullshit until it isn't....

 

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Doc,

this is another article from Snider:

https://alhambrapartners.com/2020/05/18/stocks-havent-been-moneyed/

 Could you please check it out? I read it, but I have a hard time to understand what he tries to say. The things he says about banks and 1929 and so make sense,  but then he argues that FED balance sheet and stock market performance are not correlated??? I mean, ok, maybe it is true that there is not perfect correlation, but to deny that there isn‘t any is just weird. At the end he says that since the 1930‘s stocks get only talked up by words and promisses??? In all it is a very weird article I have to say.

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7 minutes ago, Jimbo said:

THIS IS NOT UNCLE WARREN BASHING

I do not regard my post as in anyway derogatory of Uncle Warren.

I like Uncle Warren.

He was a great capital allocator, now he is just a good one who has reverted to the mean.

Just a statement of fact.

Fed bashing post yes.

Sorry, I did not mean you, I meant how Buffet is perceived in the (social) media right now. Like „ah, the old fart, he doesn‘t get it!“. That is exactly how many thought about him in early 2000 cause he was not invested in internet stocks.

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1 hour ago, fxfox said:

Doc,

this is another article from Snider:

https://alhambrapartners.com/2020/05/18/stocks-havent-been-moneyed/

 Could you please check it out? I read it, but I have a hard time to understand what he tries to say. The things he says about banks and 1929 and so make sense,  but then he argues that FED balance sheet and stock market performance are not correlated??? I mean, ok, maybe it is true that there is not perfect correlation, but to deny that there isn‘t any is just weird. At the end he says that since the 1930‘s stocks get only talked up by words and promisses??? In all it is a very weird article I have to say.

I know Jeff. He's a good guy. His office is about 2 miles from my house in West Palm. I have syndicated his posts on WSE for years.

However, I've been reposting fewer and fewer of them either because I don't understand them or because my take is diametrically opposed to his. I'm not saying he's wrong and I'm right. I'll let you be the judge of that. My research is thorough and logical, and I communicate my analysis and conclusions as well as I possibly can.

There was never any mistaking what was coming this week and what would happen, and I warned about it for weeks. I'm just mildly surprised that the market hasn't broken out yet. Time's up this week. It may take a day or two to deploy Wednesday's settlement.   

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Also, I'm not in the business of explaining other people's work.  If you don't understand it, chances are that I don't either. 

Outside of the folks whom I repost: Snider, Smith, Noland, Sanders, Knight, Calhoun, Gurdgiev, and Henrich, I don't read other people's research.  These folks were kind enough to give me reposting permission.  I generally only skim the posts to check and see that they're based on solid logic. I don't always agree with them, and I don't repost everything they write. Reposts are not endorsements. 

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There is shockingly little coverage of  yesterdays Moderna's vaccine press release today. You have to look real hard to find anything about it on the NY Times website this AM.  An effective vaccine is a game changer but having one and getting it out the door in early 2021 leaves a gap.  It's all well and good if there is a vaccine announced as good to go in July, while workers risk infection for 6 or 8 more months. That right there is a huge story and one can think of many others. LIke you know, a probable end to this as a public health crisis, but looking around the net this AM there is almost nothing about it  beyond what the press release said.  It's fking weird.

I did find that a month ago they  got a grant from the government that could reach $483 million. To fund the study and it says, to start building production capability.  Why them, then?  That story is dated 4/16.

https://www.wsj.com/articles/u-s-awards-up-to-483-million-to-moderna-to-accelerate-coronavirus-vaccine-development-and-production-11587075412

I don't doubt their press release but it seems too good to be true. The very first vaccine trial is a success, The company with a half billion dollars in a government grant in it's pocket. Case closed. Huh?

I've been hoping our expert Sandy will weigh in. Then again,  there isn't much one can say scientifically, about a press release

 

 

 

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 I suppose the Fed might be good with a little upside swing move on TNX as that would fit in with the recovery story.  But I doubt it.

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