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Thursday, October 6, 2022

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Super Tuesday – G7 Fails to Guarantee Free Money

What the Hell were people expecting?

The markets rallied insanely yesterday on expectations of a 50-point rate cut along with coordinated cuts around the World and tax cuts and Santa Clause, etc., etc. – total idiocy.  This morning the futures are turning down already as the G7 "Emergency Meeting" has not actually come up with any actual emergency measures – it's more like one of those "hopes and prayers" messages after a school shooting – good luck guys!  

 Of course the G7 doesn't have the power to do much – only to suggest and, as Trump pointed out, the Australian Central Bank lowered their rates by another 0.5% but keep in mind that Australia was on fire a few weeks ago and NOW they have the virus AND their primary trading partners are China and Japan – that's a little worse off than we are.

Image result for mnuchin g7 cartoonKeep in mind the lunacy that is going on here – we are having emergency G7 meetings led by Steve Mnuchin (a Goldman Sachs Bankster) who is telling the Global Finance Leaders that they must lower rates to prop up the markets BECAUSE THEY ARE 8% below their all-time record highs.  Propping up the markets is very expensive and it adds to government debt and it only helps the Top 1%, who own 90% of the stocks – what is the real agenda here?

Remember that Steve Mnuchin's primary experience after leaving Goldman Sachs in 2002 was overseeing the complete collapse of Sears as a Board Member from 2005 until 2016 when Trump decided he was the perfect guy to supervise the collapse of the United States of America as well…

Going more into debt can't be the answer for every problem – especially when it's "Let's go more into debt by giving more money to rich people."  The money doesn't trickle down – it's been 40 years of this BS and it has NEVER trickled down – it's a ridiculous strategy that used to be called "Voodoo Economics" until the Republicans realized they could win elections and, more importantly, win campaign contributions by making it the cornerstone of their economic platform.

Image result for adelson trump cartoonThat's why Shelly Adelson, who's worth $37Bn, is giving $25M to Trump and $100M to other GOP candidates this year – Trump's tax policies have already saved him Billions of Dollars and will save him Billions more over the next 4 years if Trump is re-elected while Bernie Sanders thinks Wynn (WYNN) Casinos should pay more than the (negative!) -$497M on $1.25 BILLION in Operating income they (un)paid in 2018 and perhaps Shelly should pay more than 12% taxes on his $4.2Bn income.  

It's Super Tuesday today with 14 states holding primaries including Texas and California and it's very possible that Bernie will sweep and essentially lock up the nomination – that will make things interesting for Corporate Profit forecasts as roughly 20% of corporate profits are the results of the Trump Tax Cuts, something Bernie and a Democratic House will quickly put a stop to in 2021.

And well they should as we are $1.2Tn in debt this year and, if Trump does get more stimulus pushed through to boost his re-election chances then Bernie, like Barack will come into the White House in a year that we are already running a $1.5Tn annual deficit.  No wonder Shelly is fighting so hard to keep Trump in office, 3% of that deficit has been going right in Adelson's pockets!

Image result for trump vegasObviously, it would be unfair for a man earning 76,363 times more than the Average American ($55,000) to pay more taxes than the Average American ($17,000) but it would be nice if at least we didn't have to PAY HIM $497M to fund the expansion of his casino in China.  What's more likely to happen under Trump is that we will be bailing out Mr. Adelson as his "vital" casino business is having a rough quarter due to the virus.  After all, who else do we know who owns a casino that might want a bailout?  

We'll be watching those bounce lines this morning and nothing less than taking back the strong bounce lines and holding them (without failing) for 2 days will convince us the sell-off is over.  Until then, we will patiently watch and wait:

  • The S&P, for example, fell from 3,400 to 2,900 so 500 points and a bounce is 20% of the drop so 100 points so 3,000 is a weak bounce and 3,100 is a strong bounce.  
  • The Dow was 29,500 to 25,000 so 4,500 would be 900 but we'll call it 1,000 as it's not an exact science and 100 points on the Dow is 10 seconds these days – and the Dow loves round numbers.  So 26,000 is weak and 27,000 is strong. 
  • Nasdaq fell from 9,600 (because 8,000 is the base so it's the 20% line and that overrules any other spike around it) to 8,400 because we have 400-point lines working so 8,800 is weak and 9,200 is strong.  8,400 is the weak bounce line off 8,000.  
  • Russell 1,600 is the main line and 1,400 is strong support so that's the range but we fell from 1,700 back to 1,450 so 250 means 50-point bounces to 1,500 (weak) and 1,550 (strong) 

While yesterday's recovery was very impressive – it didn't happen because the virus disappeared or the supply chains restarted or all the cancelled conferences are back on.  No, it happened because people think we are getting AT LEAST a 1/2-point rate cut and we can go back to blowing our market bubble – until the virus takes the breath from our lungs, anyway...

 

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I know why the market's going down… it's all the millenial market movers that can't get in on the action because Robinhood is still down! LOL.

Someone already started up a class-action suit yesterday, and today Webull.com is milking the hell out of this for free advertising for their platform. 

This can only end badly for Robinhood.

Robinhood – being down is the best thing they could do for their customers. If they can't log in, they can't make any more bad trades.

Also – last Emergency Fed Cuts

Oct 2008  Lehman 50bp
Jan 2008 Stock Crash 75bp 
Aug 2007 – Subprime 50bp 
Sept 2001 – 9/11 50bp 
April 2001 – Weak economy 50bp  
March 2001 Tech bubble 50bp
Oct 1998 – Russia / LTCM 50bp 

No good example of the greatest economy ever!

 

 IBM    I was thinking of buying IBM at $131 and selling the September $120 calls for $16.5. ??  anybody's thoughts 

Thats pretty darn conservative 

the Dow only went as low as 26,100 today. This is a sad, pathetic joke. Investors are substantially underestimating the damage the quarantine effect has already had on the Q2 through Q4 earnings, let alone could happen going forward. It's hard to imagine being long Dow over 15,000, and maybe lower. 10,500 would be 50% higher than it's last low in 3/2009.

Stockbern -The IBM trade would net you max 4.2% return for 6 1/2 months, not worth the risk, IMO.

I would suggest, a short term trade with a possible higher potential. I'd buy M at $12.75.  It goes ex divd on 3/12 for.377.

I'd sell the the 3/13 13.5 call for $.21.  If stock stays below 13.5 you get the divd and keep the premium,or .$587 on your outlay , or 4.4% in 10 days.  If called away and you miss the divd, you make $.75 or  5.8%.

M is  yielding an unbelievable 11.80%.  This should help cushion the downside.

If not called away, write another OTM call a few months out.

Just a thought.

The Bug – Yeah, the YMCA has been empty for a week or so. No wait time on the weight machines!

Why the F is TSLA still up

doesn't make sense

Phil, Biodiesel, and Albo    Thanks for your comments all of which make a lot of sense.  

Tsla is up because some analyst ie yahoo upgraded the stock. Not a lot of traffic in Sarasota county which is strange for this time of year in Fla.

And these idiots on Fox Business, Fox News and CNBC all high-fiving each others yesterday on that record day! No high five today – or maybe some for the rate cut! But again, how is that a sign of a healthy economy!

Again, if we have some stability, competence and transparency at the helm, things might be different. But it's all chaos, lies, incompetence and obsession with the markets. And golf… What we need now is luck. Trump has been lucky so far – inherited a good situation, no major disaster – but the winds might be turning.

Phil, UA/UAA Under Armour what do you think….their bonds have traded much lower, Dec 2018 was the low and far from that level today, not to imply they wont lose value, but holding up considering.
 

-1600 on the /ES tick. We're about halfway to the first circuit breaker kicking in. I've never seen it before but this looks like it could be the day.

Looks like the 30 year treasury is at a fresh low.  Soon we wont have much left to cut, negative interest rates anyone?

 it could be like this:  oh man I'm all out of cash

LOL stockbern, if Kylo Ren is all outta cash then I'm screwed! 

Fed rate cut is basically pushing on a string now – the actual rates have been going down anyway:

https://www.motherjones.com/kevin-drum/2020/03/donald-trump-has-already-gotten-the-interest-rate-cut-he-wants/

In fact, the primary purpose of lowering short-term interest rates—which the Fed controls—is to nudge down long-term rates—which the Fed doesn’t control. But as it turns out, that’s already happened:


Over the past year long-term rates have gone down about 1.5 points. In just the last month they’ve gone down half a point. They are currently at levels below anything Barack Obama enjoyed. I doubt that Trump knows this, but he’s already gotten the benefit of a huge reduction in the interest rates that really matter. He should quit griping.

Can play COST short term for a bounce.

Phil, I always check a questionable companies bond to see where they are trading before I venture into the stock. UA has had a lot of issues but the new CEO is a turnaround guy. I was asking about the stock and pointing out the bonds arent trading as though they are going BK.

market might run up!!!

 

Lyft shares seeing quick pop higher in recent trade; move attributed to comments at conference where company said that it is not seen a demand reduction because of COVID-19.

 

Maybe not yet, but they will.

Still a little short on the day from that rip during the fed. I am probably the sucker here but that selloff earlier seemed like it was growing bigger teeth than anything last week. 

Bonds acting crazy too.

Phil

Did adjust WYNN ?

Thanks

Wonder if there's an easy way to sanitize packages from AMZN.

Would Lysol wprk ?

If there is any easy way, very bullish for AMZN.

Not sure that Uber and LYft will suffer significantly as people will opt for a smaller exposure than say a bus. They still need to get from point A to point B. Besides a driver that is ill would not be driving in the first place. Besides the drivers have to keep a very clean car and I hear Lysol sprays are antiviral. 

The 5 minute candles on the /ES are amazing 20 point swings…..

There's 30 points….

Switching to 1 minute chart!

Third chance for the bounce off of 3k… 

$500 per minute…with a single contract!  🙂

….unfortunately, that's not me….  🙂

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