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Which Way Wednesday – Fed Edition

Will the Fed save us (again?).

Looking at the chart on the right, clearly we are in need of saving.  Those numbers are pretty up-to-date and we're starting to re-close in certain places and several airlines and auto makers have announce massive job cuts that are not going to make things better.  At least this chart will LOOK better as people will no longer be getting the benefits, which run out soon – so they will no longer be counted on this chart – having moved over to the "homeless" chart or the "impoverished" chart.  

30M unemployed is 1/10 of our fellow Americans and you know how many more businesses are struggling in your neighborhood.  Is it another 1/10th?  Will 20% of our people be out of work soon?  What happens to the economy if 20% less people are getting paychecks?  Clearly the Government, even if the Liberals take charge, will need 20% more money to prop it up and we've already spent $6.7Tn in the past 4 months just to get to this mess!

Obviously the money was mainly misdirected and wasted but is that going to change when we give Jared another $500Bn of untraceable funds to play with?  What happened to the first $500Bn?  Oh yeah, untraceable…  Well there was another $500Bn that the Treasury had and that fund was traceable but, at last count, no one was getting that money either.  

Notice how the Federal Reserve Actions are not being counted as part of our debt and that's a good thing as we've added $2.5Tn in new debt already this year and Congress is voting on another $1-3Tn to get us through Q3 but even $6Tn is barely 1/3 of our GDP and we've certainly taken a 30% hit to the economy this year – we'll find out more in tomorrow's GDP report.

The Fed still has plenty of available firepower and they are currently using it to buy assets, including stocks, in order to prop up the markets.  They've spent their entire allocation of asset money but almost none on improving liquidity or actually lending money to people who need it while the Trump Administration has spent every single penny they got their hands on already and Congress, of course, is already over budget.

I know – I'm a Liberal and I want to help people but I'm against Government waste and I'm a deficit hawk – so confusing….  

That's becuase it IS POSSIBLE to help people efficiently – we simply don't do that.  If you want to make sure children have proper nutrition, for example, spend $2.50 per day to give 50M school children a nutritious lunch and there's $25Bn a year well-spent.  If you want to stop the spread of a deadly disease, you give everyone in America 10 $1 masks per month ($3.3Bn) and fine them $100 for not wearing one in public.  That's $33Bn less fines and we cut 80% of the viral transmissions, not in theory but in PRACTICE as it's being done by most civilized nations on this planet.  

Good Marketing = The Perfect CrimeNOT taking practical measure to fight the virus CAUSES the crisis that allows the President to establish $500Bn slush funds that he can distribute to his family and friends.  Motive, means and opportunity!  

It would have been much smarter to just GIVE Trump $50Bn and ask him to go away.  Like oil price manipulation that costs taxpayers Trillions so the oil traders can steal Billions (see "Goldman’s Global Oil Scam Passes the 50 Madoff Mark!"), Trump has cost America close to $10Tn in damages already – just so he can get his hands on $50bn.

With just 6 months to go in his failed Presidency, no one is likely to hand Trump another $500Bn to pilfer, no matter how bad he manages to make things for Americans as it's becoming more clear that the real solution to this crisis is removing Donald Trump from the White House, not giving Trump $500Bn to "fight the virus" with.  So now the ball is very much in the Fed's court and we wwill see what they have to say for themselves this afternoon (2pm).  

Since mid-June, the Fed has been buying $80 billion in Treasurys a month and $40 billion in mortgage bonds, net of redemptions. But they are considering how to pivot from a program focused primarily on stabilizing markets toward one that provides stimulus. We can also watch for changes in their rate-setting policy that may allow them to float a long-term rate higher than 2% – we're going to need some inflation if we're ever going to grow our way out of this debt.

Stay tuned! 

 


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  1. Good Morning.


  2. Here is the link to today's webinar.
     

    https://attendee.gotowebinar.com/register/8461435076644759820


  3. Good Morning

    anyone see KODK—apparently huge volume Monday before Trump announcement on Tuesday—gee imagine that


  4. good morning 


  5. admin/Phil, could admin post the weekly webinar in todays chat thanks 



  6.  Sorry, been working 18 hour days and not had time to focus on markets! Besides being worried that we are just running on fumes and printed money.


  7. Good morning!

    Webinar link is here:  https://attendee.gotowebinar.com/register/8461435076644759820

    KODK – Getting into PPE, it seems.

    Me too, StJ.

    Big Chart – Looks like it's weakening.


  8. LB     WOW!


  9. And that latest plan from the GOP basically won't help the economy:

    Image


  10. My feelings are that the GOP is preparing for a big loss in November and they will use every opportunity to add gifts for their big donors without any considerations for the health of the economy before they lose control. It cannot make you optimistic for the next quarter for sure. And next year as well since they will revert to being deficit hawks as soon as Jan 2021! 


  11. SDS Jan 21 15.00 Calls – Why are they 20% down today? The mid price is 2.86 today compared to yesterday''s close of 3.55


  12. jij123 – mispricing. They were down 2-3 times what SDS was down. Looks like it has corrected itself


  13. Ouch, INTC still getting spanked.  

    TSLA right at the $1,500 line.

    LB – ROFL!   I so love being a value investor!

    L Brands Inc. shares jumped the most in four months after the retailer detailed a cost-cutting plan and said its Bath & Body Works chain managed to grow last quarter despite the challenging retail environment.

    The company, which also owns Victoria’s Secret, plans to eliminate 850 office jobs, or about 15% of its corporate staff. The effort will help it save as much as $400 million annually, including $175 million this year, L Brands said Tuesday evening.

    The brands’ divergent fortunes were on display last quarter: L Brands said it expects to report Victoria’s Secret’s net sales fell about 40% in the period, while Bath & Body Works rose 10%. It will report second-quarter earnings Aug. 19 after giving the preliminary estimate.

    The retailer is also saving cash in other ways, including a plan announced this year to close about 250 Victoria’s Secret locations — about a quarter of its U.S. stores. L Brands on Tuesday said it’s managing its inventory and working with suppliers to reduce merchandise costs. In October, the company slimmed down its headquarters, cutting about 50 employees in its offices in New York and Columbus, Ohio.

    And Wall Street celebrates more layoffs….

    SDS/Jij – May be just a blip, doesn't make sense.  Bid/Ask simply dropped off or maybe it was lagging before.  

    And what Dave said.


  14. LB/Phil…..could just be me, but it seems Victoria's Secret has had its day. Hanes is your place for underwear. Keep it simple.


  15. Picked up today expiry SPX 3200 puts at .75, small bet in case Powell can't save us. Fun money. 


  16. LB/Snow – All the kids wear Pink and VS will just have to adapt but these pendulums swing over time.

    All money will be fun money soon, Jeff.

    https://www.usdebtclock.org/


  17. Phil,

    Wonder if the Tx hospital sends him home because they have no ICU beds available? Now that would serve the dumb-ass right!


  18. Aerie is good for underwear (at least women's) – part of AEO. And their models don't make you feel bad for not being 30 lbs underweight. Any thoughts on AEO, Phil? It's up over 9% today for some reason.  (6 pairs for $25…)


  19. After the last FMOC meeting the S&P dropped 240 points.


  20. Dumb-Ass/1020,Jasu – Well I don't with corona on anyone but Karma is certainly a bitch!  

    Kiran Bedi on Twitter: "Taking responsibility for who we consume ...

    Evan Kirstel #RemoteWork on Twitter: "Karma is a bitch ...

    7 ways the coronavirus is changing millennials' money habits ...

    Consumer Data: COVID-19's Impact on Shopping Decisions – Mann Report

    AEO/Ilene – You'll have to remind me later as it's:

    Webinar time!


  21. This is something that should worry everybody about the virus:

    https://www.statnews.com/2020/07/27/covid19-concerns-about-lasting-heart-damage/

    Two new studies from Germany paint a sobering picture of the toll that Covid-19 takes on the heart, raising the specter of long-term damage after people recover, even if their illness was not severe enough to require hospitalization.

    One study examined the cardiac MRIs of 100 people who had recovered from Covid-19 and compared them to heart images from 100 people who were similar but not infected with the virus. Their average age was 49 and two-thirds of the patients had recovered at home. More than two months later, infected patients were more likely to have troubling cardiac signs than people in the control group: 78 patients showed structural changes to their hearts, 76 had evidence of a biomarker signaling cardiac injury typically found after a heart attack, and 60 had signs of inflammation.

    We have 4M people infected in the USA and it looks like that for 3M of them, their life expectancy took a hit as well as long term healthcare costs. And this applies to young and old people. 


  22. St, seems the case with most viruses, its called "viral cardiomyopathy".  Maybe Jeffdoc can chime in.


  23. Well, not a clinician here, but the mess viruses can make of your heart is pretty well-known – except to MSM, I guess: https://en.wikipedia.org/wiki/Viral_cardiomyopathy


  24. Snow/msm/COVID

    I had my entire brain removed. Now I believe with all my heart that this virus is a hoax and I don't wear a mask either.!!


  25. Not that COVID is too rare now-a-days, but my wife delivered our baby girl on Saturday morning.  My wife had a COVID test on Thursday that returned positive and then a second test on Friday that returned negative.  As a result, my wife had to go through labor alone and we're going to be contacted by Social Services to discuss what went on.  The case was so strange they ended up contacting the CDC for additional guidance.  I got tested on Sunday and it came back negative so a very strange scenario all around.  My wife is going to try to get antibody tested to see if she will be passing immunity to the little girl but, regardless, cluster-F of a time to have such inconclusive test results.

    Anyway, baby girl is healthy and relatively low-key so far and my wife is recovering well.  Knock-on-wood but so far, everything has been pretty smooth other than the initial mess.   Wife recovering well too.


  26. /JPH1121- Congratulations and best wishes!


  27. Congrats JPH!


  28. Tests/JPH – Sadly, they don't have super-reliable tests.  Rushed them out before they were ready with limited oversight because no one in our Government really wanted any testing anyway. 

    Congrats on the baby, though!  

    In the Webinar we decided to short /ES at 3,250 and /RTY at 1,500.  GDP tomorrow is likely to be ugly.


  29. congrats, JPH!


  30. GDP / Phil – I ma guessing that bad news would be good news tomorrow though, right! A very ugly number will bring the Fed deeper in and maybe Congress will realize that they need to do something. I would bet more on an upside move… But what do I know.


  31. Thanks everybody.  My poor wife had a hell of a delivery though.  Didn't last that long but my daughter is 86 percentile for weight, 91 percentile for height, and 94 percentile for head circumference with what might turn out to be red hair and blue eyes.  She's pretty!


  32. Congrats JPH! 


  33. Sounds like a new Dad  :)  - Congrats JPH!


  34. Gohmert / 1020 – On the other hand, he doesn't have to worry about long term brain and heart damage!


  35. Hi Phil, Here's a reminder for looking at AEO. I'll remind you again tomorrow if you don't see this. 


  36. LOL, StJ!

    AEO/Ilene – Yep remind me when I'm in the mood…  Good project for tomorrow.  



  37. As $600 Unemployment Benefit Expires, Many Are in Jeopardy