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Monday Market Movement – More Vaccines Boost Futures – Again

TOMMY EXPLAINED!!! | michaelckeysIf it's Monday we must have a new vaccine.

Every Monday for the Month of November (other than before the election – hahahaha), we have had an announcement that there is a 90% effective Covid vaccine and today it's AstraZeneca/Oxford's turn.  MRNA and PFE have already announced theirs and it looks like Pfizer is the loser in the vaccine race as theirs requires special, extreme-cold delievery while the other vaccines require only normal refrigeration.  

AstraZeneca said it would seek emergency-use authorization from the World Health Organization to experiment on distribute the vaccine in Low-Income countries and prepare regulatory submissions to authorities in countries that have early-approval programs.  Pending regulatory authorization, the shot could be available in limited volumes by year-end, with hundreds of millions more doses available each month after that

We sure need that vaccine as US Hospitalizations for Covid hit a record this weekend with 142,732 new cases yesterday, capping off another week of 1M infections in the US.  Friday we were just 3,996 short of 200,000 new infections so by next weekend we should expect to be seeing populations the size of Salt Lake City or Vancouver getting infected in a single day.   83,870 people are hospitalized around the country with a new record being set daily.

New York Gov. Andrew Cuomo warned that cases are rising so quickly in parts of the New York City borough of Staten Island that nonessential businesses may be closed and mass gatherings banned there later this week. The bodies of hundreds of people who died in the city during spring surge are still in freezer trucks on the Brooklyn waterfront.

So happy Monday!  

A Tokyo Metropolitan Government official calls for self-restraintOf course we can't blame Trump – even in Japan, with a population of 126M people living in a country the size of California, they have had 132,300 cases of the virus TOTAL and the seven people who died this weekend bring their nation's death toll to 1,981, TOTAL.  So don't blame President Trump – he's doing the best he can, right?  

Other G20 leaders (Trump boycotted the announcents) have vowed to work together to combat the Corona Virus that has now infected over 12M people world-wide.  The G20 Communiqe pledged "To spare no effort to protect lives, provide support with a special focus on the most vulnerable" – all things Trump could care less about.  G2019 leaders cautioned that economic recovery under way in some parts of the world appeared uneven and said they would suspend debt repayment for 73 poorer countries through June 2021.  

Let it burn - ND CartoonsPresident Trump left the White House at 11:15 a.m. local time, just as the closing session began, and arrived at his Virginia golf course about 45 minutes later. He participated in a session earlier in the morning on protecting the Planet, using the event to criticize the Paris Climate Accord.

By the time Trump played the 9th hole, 42 Americans had died so he told his team to "pick up the pace" and, by the time they finished lunch in the clubhouse, over 200 Americans had died during his 5-hour round of golf.  This was a new record for a Sunday – Trump will surely go down in history…

The G2019 Nations are right to be concerned about the Global Economy,  Singapore, who are a bellwether for Asia, just reported that Q3's GDP is still 5.8% below last year, much worse than expected by leading Economorons but at least and improvement from Q2's 13.2% contraction.  Singapore has started lifting some restrictions since early June - which allow most activities to resume - but some measures remain, such as compulsory mask-wearing and a cap on gatherings.  

Chart shows the year-over-year change in Singapore's real GDP from Q1 1976 to Q3 2020

Meanwhile, over in China, Caixin reports, Huaxin Trust Co. one of 68 companies licensed to conduct trust business in China and one of the largest "shadow banks" in the mainland , is trying to raise as much as 6.8 billion Yuan ($1 billion) from strategic investors as it faces a growing liquidity squeeze that’s already forced it to skip repayments on dozens of investment products over the past few months.  Even before the current episode of corporate bond turmoil triggered by the sudden defaults of state owned Yongcheng Coal and Brilliance Auto, China’s regulators had already become increasingly concerned about the hidden risks in the trust sector which plays an key role in the shadow banking sector by providing loans to higher-risk companies and those who have difficulty getting credit from traditional banks. The loans are packaged into high-yielding products which are then sold to retail investors and institutions.

China made a regulatory push to limit debt in October detailed in "China Crackdown On Property Developer Debt Sparks Fears About Systemic Crisis" and laid out the new "Three red lines" policy espoused by Beijing limiting the amount of new debt issuance.

As of Thursday, the trust firm had only repaid four products that matured recently, and extended repayment on 23 products, with the earliest coming due in September, according to its website. Huaxin Trust said in announcements  on its website that enterprises had failed to repay the principal and interest on the products forcing the company to extend the repayment dates as allowed in the terms and conditions of the trust products sold to investors.  In essence, the repackager of high-yielding debt was pushing off blame on what may soon be a cascade of falling dominoes on companies it had lent money to.

As noted by Zero Hedge:  The total assets in China's shadow bank sector have shrunk consistently since peaking in early 2018 as Beijing focused on aggressively limiting the amount of high-yielding debt issued by the sector.  However, with tens of trillions in yuan-denominated debt still outstanding within this loosely regulated offshoot of China's financial system, which still represents a last-ditch option for liquidity-challenged companies, as China's economy continues to shrink from the consequences of the pandemic regardless of the rosy and goalseeked data that Beijing is publishing on a monthly basis to convince the world – and China's massive depositor base – that all is well, we expect after the initial round of early tremors to hit China's trust companies such as Huaxin, the real shock to China's financial system is yet to come.

We began playing the Covid Crisis way back on January 23rd with a China Ultra-Short (FXP) hedge in our Short-Term Portfolio and we cashed in on a huge spike in March but now it's back to $32.50 and, in our STP, we can add 40 of the FXP March $33 ($2.50)/$40 ($1.25) bull call spreads for $1.25 ($5,000) and that will pay back $28,000 if China ends up having severe banking issues, which are not likely to be fully revealed until Q4 reporting begins.  

It's a good insurance policy that can pay us $23,000 (460%) and, if we stop out with a 50% loss ($2,500) – it's a pretty cheap policy at that.

It's a holiday week in the US, so not much going on (other than the coup).  PMI this morning, Richmond Fed tomorrow and GDP, Durable Goods, Consumer and Investor Confidence and Inventories on Wednesday – all followed by the Fed Minutes so Wednesday's going to be exiting at least.

Be careful out there.

 


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  1. Good Morning.



  2. Trump / Phil – Not only being derelict but in fact actively sabotaging the next administration – see Mnuchin's action last week. 


  3. Euphoria:

    Image


  4. Our America:

    Image


  5. I know it's what we have to hear. I know it's what the right tries to ignore but I have to say there is not a day that goes by where I don't worry, intensely about the safety of my wife, my young kids, my parents, the nanny who comes to my house everyday (who has asthma) and then indirectly – all the people who aren't lucky enough to be subscribing to high finance websites, let alone getting the medical care they need.  But at a certain point the worry just becomes too much. Not 'too much - I'm going to a house party – too much" but more like it's all consuming too much. My wife has NPR on all the time and it's literally all they talk about. The left has (rightly so) weaponised trumps inadequecies and reporting the severity of the virus is a necessary counterweight to fox and friends but it's also very hard to avoid.  I don't mind over-sharing here and saying that the whole thing has led me back to my therapist and has dulled me overall. I'm not the person I was this time last year and it's going to take more than a vaccine to get me back there. 
    I've also gotten to a point where I'm entertaining the opinion of  : if people don't know by now, that they might get COVID by hanging around with other people who don't know they have COVID, then Im not sure if any number of new cases, any harrowing stories of hospitalizations is going to change that in them.  If people don't care about getting COVID (either because Trump told them not to care or it's just not in their dna to care) then I don't know if any stories from first responders working 18 hour shifts only to get COVID and die is going to change that. 
    I guess what I'm getting at is (and Phil I don't mean you here really) why is it being reported nonstop? Of course the answer is that you have to report the news, of course.  So perhaps a better question; do we think that 400k cases a day will be the 'must give a f*ck' line on the chart?! When will people start caring? I think the answer is that those who already care and worry will be forced further down that stress hole by 24hr news cycles. Those who didn't care in August, won't care in December. 
    sorry for the rant


  6. Monkman-You've voiced my thoughts. The difficulty is not getting dragged down the black hole of depression by changing what we listen too, where we choose to put our thoughts and some positive physical and mental exercises to allay the worry. MIne is  classical music, some rock music and a project on my lakehouse that is mighty time consuming in mental and physical energy. I walk 2-3 miles in nice cool, fresh air and that is my therapist with my happy furry friend. I've found what we worry about the most doesn't happen. It is the other variables that catch us by surprise that can. I can attest after having everyone in the household with covid ie son and spouse that you can survive this with time. We are fortunate and I have no clue why I have escaped. If there was ever a time to try to keep the perspective that in time this too will pass it is now. Be OCD about cleanliness, masks and distancing. That's my mantra and something has kept me safe besides avoiding bars, restaurants, and gatherings. Best of luck to you and yours and all the Phil's readers.


  7. If we had had a government who did its job to begin with, we would not have to stress out the current situation! See Japan, or New Zealand for that matter.

    But instead, we had denying and in fact promotion of irresponsible behavior amplified by a pliable ecosystem so we now have to be bombarded every week about the death toll! And if people are not moved by 2000 people dying every day, something is wrong in this country which might also explain other things. 


  8. Good morning! 

    I guess every day now they give us another chance to short /NQ at 12,000?  

    Big Chart is starting to look like a classic Coiled Cobra pattern – they tend to strike down, hard and fast.  

    Why bother/Monk – I guess that's the kind of rousing speech we could have given to Moses or the Founding Fathers or MLK:  "People don't change – just give up".  Of course, most people do – that's why the World kind of sucks.  I had to beat that attitude out of my children in High School as it was infecting them from their peers.  I got my kids involved in local politics and, this election, on their own, they both did canvasing and if Madeline convinced just one person in Philadelphia to change their minds or show up at the polls – thank God for that!  

    I'll admit that 4 years of watching this country fall apart like Rome on speed has been very depressing.   The inevitable disease that spreads through a declining Empire as Government and systems collapse is also a lot more depressing to live through than it was to read about in books.  Watching the rise of fascism gave me, at this late stage in life, a great understanding of HOW such a thing can happen and an appreciation for just how fragile our Democracy is – and how we have to FIGHT to keep it – which is what Ben Franklin said about our Government in 1787 – "It's a Republic – if we can keep it".  

    He knew it was going to be a fight but we've forgotten that citizens have responsibilities as well as rights.

    “I'm sorry, but I don't want to be an emperor. That's not my business. I don't want to rule or conquer anyone. I should like to help everyone if possible; Jew, Gentile, black man, white. We all want to help one another. Human beings are like that. We want to live by each other's happiness, not by each other's misery. We don't want to hate and despise one another. In this world there is room for everyone, and the good earth is rich and can provide for everyone. The way of life can be free and beautiful, but we have lost the way. Greed has poisoned men's souls, has barricaded the world with hate, has goose-stepped us into misery and bloodshed. We have developed speed, but we have shut ourselves in. Machinery that gives abundance has left us in want. Our knowledge has made us cynical; our cleverness, hard and unkind. We think too much and feel too little. More than machinery, we need humanity. More than cleverness, we need kindness and gentleness. Without these qualities, life will be violent and all will be lost." – Charlie Chaplin

    That's the problem with Liberals, they believe too much in their fellow man.  My hero was Churchill, who said:  The best argument against democracy is a five-minute conversation with the average voter.”

    I'm not the same as I was 4 years ago either – I'm much more pissed off and I'm not longer tolerant of the people who are destroying our country because now I see that they may actually pull it off.  So I'm going to fight and I'm going to teach my children to fight and I do think it will make a difference because that's what we've proven time and time again – the people can rise up and overthrow the tyrants – if they only have the will to do so.

    Despair is typical of those who do not understand the causes of evil, see no way out, and are incapable of struggle.”  Vladimir Lenin

    I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts…   and beer.” Abraham Lincoln


  9. It will be difficult to effect change until the shiny objects (faux news and the internet) fade and 70 million among us will need to look for an alternative. That's where change can begin….

     

    Good Luck with that.  :(


  10. 1020

    hard to understand for an outsider that 70 mil people can be blind.


  11. Interesting TSLA up AAPL down. 


  12. Yodi

    In America you have a right to be stupid

    John Kerry


  13. covid fatigue and a country needing to be saved from the forces of evil a bad combination indeed


  14. qcmike well than I see you at the golf course and watch Rome burning!!!!!


  15. LOL, glad I let Friday's /NQ shorts run.  11,850 is the stop though.

    I figured it was good crash insurance either way.  

    Ch-ch-changes/1020 – McCarthyism came and went – I'm looking forward to the big swing left, actually.  I thought Obama was the start of it but the death throes of the right had more of a kick than we thought they would.  I think Trump has pretty much sealed their fate now – exposed the ugliness for what it is.  Like Hoover, this disaster can lead to 20+ years of Liberal control.

    TSLA/Yodi – They never learn.  AAPL we expected with the lower App revenues and the resistance at $2Tn.

    Tesla 'Bull Case' Raised to $1,000 by Wedbush

    Sure, why not?

    Right to be stupid/QC – In Florida I think it's actually required….

    Fatigue/Tommy – We're all exhausted.  Might lead to more prison reform as everyone can relate now.  


  16. phil

    any thoughts on shorting oil at 43


  17. swing left/Phil  While I'm all for a big swing, I think we need Joe to focus on policies reversed in the last 4 years and shore up programs that need help, Jobs, health care, and education (green energy is on a roll).

    What the 'squad' needs to do is build a larger carrier to land the 747ish dreams they have and I'm not sure they have the patience to build cooperation to minimize the eventual shock that comes with change….


  18. Yodi

    Yes that's what is happening

     


  19. Phil / AAPL – down over 2.5% on an up day for markets….. any thoughts on this?  The volumes have been low on these down days….   


  20. Phil / Quotes

    Interesting stuff.  And likely what i needed to hear – especially on topic of continuing to fight. 

    Trump is an enemy. A despicable prick who deserves whatever hell awaits him in this life and the next. BUT even though he mislead the people, mismanaged the crisis and even steered the sinking ship away from the safety of dry land – he was not the one who shot the torpedo that breeched the hull in the first place. Nor was he the millions of sailors who refused to wear a life vest.  There are other countries with better leaders  and they had better torpedo avoidance strategies but they also worked together as a team. We have 'torpedos are a liberal hoax' protests. (boat analogy complete)

    MLK gave his life to the equal rights of his people. Churchill defended freedom at it's core. this… this is people (unknowingly) transmitting a respiratory illness to each other because they have to go out to get beers with the boys on Friday and see grandma on Saturday.  Perhaps that's why it's depressing… because it's so fucking embarrassing.  

    It's the modification of American freedom.  You get to do what you want here and all things considered there are far fewer rules in the US than anywhere else i've travelled but i suppose this is what happens when you play ball in the house.. somebody loses an eye. 



  21. Your Brain Is Not for Thinking






  22. ETHE – really nice move going on, currently just under $100. BDC suggested buying back around $50, very nice call.


  23. Phil

    I like you comment stupid


  24. Phil

    Would appreciate your thoughts on the outlook for gold; inflation (positive) vs present, albeit resolving, political chaos and recessionary fear mongering (negative).

    Thanks


  25. The most dovish of doves Janet Yellen is going to be the next Treasury Secretary. 

    Are we finally going to get our Infrastructure Week??


  26. Markets very excited Yellen is picked for Treasury Secy.  

    What a concept, picking people with great experience to do the job!

    Oil/Tommy – Tough call into the holiday but Friday maybe and Monday for sure though, of course, a week from Wednesday will likely show a draw and then you can get badly burned so a tricky play.  I lost $50,000 shorting oil while I was on a plane to Texas.  There was a pop on the day before thanksgiving EIA report and I shorted it and it went way against me while I was on the plane Wednesday night and Thursday the markets were closed and Friday I couldn't take it any more and took a massive loss.  Kind of ruined Thanksgiving…

    Policies/1020 – Yes, that's going to be a hell of a job in the first place.  I wonder if you can do one executive order simply wiping out everything Trump did?  

    AAPL/Batman – Same thoughts I've had all month, $2Tn is ridiculous – even for a company making $60Bn a year and now we have to question the growth of App revenues.  

    Teamwork/Monk – Yes but that comes from years and decades of training and education.  It is not necessarily in man's nature to do what's good for society but it's the great advance of humanity that we TEACH our children to be better members of society but you have to tend your garden and weed out bad behavior or it grows out of control.  Live and let live is great until the people you are letting live are killing you (and the planet).