Which Way Wednesday – Stimulus Hopes Hold off Disaster (so far)
by phil - October 21st, 2020 8:33 am
We're holding up so far.
We are flirting with disaster at the 3,420 line but, so far, it's holding up on endless promises of endless stimulus – currently over 10% of our GDP ($2Tn) is on the table to be pumped into our economy in the last 2 months of the year – just like we did in Q2 and that gave us a 20% pop in the S&P, from 3,000 in late June to 3,600 at the end of August. The question now is, can $2,000,000,000,000 give the markets another 20% boost or is it only enough to fill the hole that's been blown in this economy by the Covid Crisis?
Nancy Pelosi said she hoped that fresh stimulus spending would be retroactive, although Republican Senate Majority Leader, Mitch McConnell has warned the White House against a bigger Democrat-led deal before the election. The administration said its offer is now up to $1.88Tn, below the $2.2Tn Pelosi has pushed for. “The rise in yields suggests that the market thinks a stimulus deal will be forthcoming and that the Democrats are set to take both the presidency and the Senate at the Nov. 3 election,” said John Hardy, chief foreign-exchange strategist at Saxo Bank.
IN PROGRESS
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Adam Smith would be a Democrat! Beware common clichés about economics.
by ilene - October 20th, 2020 1:33 pm
Best-selling author and scientist David Brin shares another excerpt from his book, Polemical Judo, about the current war against democracy and how we can fight back. (Read the first, second and final chapter at the Contrary Brin Blog, and an excerpt from chapter 5, The War on All Fact People, here, and an excerpt from chapter 10, We are Different, Different is Difficult, here.)
Adam Smith would be a Democrat! Beware common clichés about economics.
Courtesy of David Brin, Contrary Brin Blog
For the longest time, Donald Trump had one issue in which he led Joe Biden… "The Economy." And it drove me crazy! If there is one issue for which the evidence is overwhelmingly open-and-shut, it is the almost perfect record of better economic outcomes across the span of Democratic Administrations versus Republican ones. And yet, no DP politician seems remotely capable of making such a case, in debate or even in position papers.
Finally, last week, polls showed Biden pulling ahead on economics, as well. But no thanks to self-gelded Democratic Party polemics!
And so, let's resume publishing chapters of Polemical Judo with Chapter Eleven, on that very topic. And yes, this is a long one! So again, I'll be splitting it in half. Because no one has the patience to read, anymore. (Read also: More on why OUTCOMES show Republican "economics" betrays markets, fiscal sense and the future: Chapter 11's second part.)
And yes, as always I have plenty to say about the week's events, as well. But this time I'll hold off, till the end.
No, you don’t get Adam Smith… and Other Rationalizations
“For as wealth is power, so all power will infallibly draw wealth to itself by some means or other.”
– Edmund Burke (1780)
In August 2019 a coalition of executives representing some of America’s largest companies issued a statement that redefines “the purpose of a corporation.”[1] No longer…
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Tipping Point Tuesday – Schrodinger’s Stimulus Moves the Market
by phil - October 20th, 2020 8:23 am
Rumors are everywhere.
The President held another super-spreader event in Arizona yesterday and he has threatened to hold one every day up to the elecion until every last Republican is infected with the corona virus. It is possible that Trump, a long-time Democrat until he decided to run for President, may have always had the goal of destroying ther GOP, who now fact humiliating defeat under his "leadership", a complete loss of power and now, even a loss of population as Covid-19 is spreading through the red states like a California fire.
Speaking to supporters at the Prescott Regional Airport, Trump bashed CNN for its coverage of the pandemic, saying it’s all the network covers. “People aren’t buying it, CNN, you dumb bastards,” he said to loud applause. Trump also referenced his own recent case of COVID-19, the disease caused by the new coronavirus. “If you have it, you have it, you get better,” Trump said (after over $100,000 worth of treatments). Over 220,000 Americans have died of COVID-19, with 5,830 deaths in Arizona alone – but at least they don't have to listen to any more of Trump's bullshit…
"Mr. President, you’re right about one thing: the American people are tired. They’re tired of your lies about this virus," Biden said in a written statement. "They’re tired of watching more Americans die and more people lose their jobs because you refuse to take this pandemic seriously. Now, more than ever, we need a leader to bring us together, put a plan in place, and beat this virus — but you have proven yourself yet again to be incapable of doing that."
Still, he might win – his followers are certainly loyal:
Meanwhile, it's all about the latest stimulus rumor for the market but nothing seems to be actually happening so, like yesterday – get ready to be disappointed. The news isn't so good either so I find it very hard to be enthusaistic about the markets today:
- Pelosi and Mnuchin make progress in stimulus talks, plan to speak again Tuesday.
- Oil Edges Lower With OPEC+ Warning of Precarious Market Outlook.
- Cut-Price Deals Show Shale’s Rapid Decline From Debt-Fueled Boom.
- Fear of Job Loss Haunts Half of World’s Workers as Crisis Rages.
- Farmers Stick With Trump, Despite Trade-War Pain.
- Wisconsin Judge Restores Restrictions on Bars, Restaurants.
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China makes it incredibly hard for foreign businesses to operate – but they stay because the money is just too good
by ilene - October 20th, 2020 1:11 am
China makes it incredibly hard for foreign businesses to operate – but they stay because the money is just too good
A shipping container passes the Golden Gate Bridge in San Francisco bound for Oakland, Calif. AP Images/Eric Risberg
Courtesy of Amitrajeet A. Batabyal, Rochester Institute of Technology
Doing business in China can be a difficult and contentious proposition for companies in many countries. Yet even with charges of intellectual property theft, forced partnerships and tight restrictions on doing business, China continues to attract foreign capital. Why do businesses want to invest in China when there are so many other “business-friendly” countries and financial markets that support foreign investment?
The United States has accused China of stealing the intellectual property of American firms, theft that is estimated at US$600 billion annually. As a precondition for doing business in China, American and other firms may be subjected to the forced transfer of their technology. In addition, regulations can require foreign investors to partner and set up a joint venture with a Chinese firm before they can do business in China.
The Chinese premier delivers the government work report at the Great Hall of the People in Beijing. AP Photo/Ng Han Guan, Pool
In 2001, after becoming a member of the World Trade Organization, China promised to open up its banking, telecommunications and electronic payment processing sectors. But action in these areas has been nonexistent or, at best, half-hearted. The Chinese telecommunications industry, for example, remains under government control, and the government has barred Facebook and Google from offering their services in China.
What’s in it for investors
Doing Business 2020, a publication of the World Bank, ranks China – in terms of the availability of credit and the ease and magnitude of tax payments – 80th and 105th, respectively, out of 190 nations in the world. Using 10 other indicators, such as protection offered to minority investors, registering property and enforcing contracts, China ranks 31st out of 190 nations in the world for the…
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The Week Ahead – Election Looms Large
by phil - October 19th, 2020 8:49 am
Two weeks to go.
Two weeks ago the S&P was down at 3,350, down about 4% from where we are now so don't get complacent – especially into the elections and ESPECIALLY when Global Covid Cases topped 40M this weekend with 8.15M in the US and growing at 0.05M per day along with 220,000 deaths.
You KNOW Trump is lying about the virus, you KNOW Trump has been lying about it since day one. You KNOW Trump is essentially doing nothing to stop it and I REALLY hate to be that guy every week but how can you let yourself be deluded by all this other nonsense when we are STILL right in the middle of a Global Crisis?
Come on people, let's not rely on the lie to make us feel good. This is the chart of how many people per 100,000 in the US are infected by the Corona Virus. In May, I said I was very concerned because passing 1/250 (400 per 100,000) means that any time I went outside and walked down the street and walked into a store – I probably either passed an infected person or touched something they had touched and we now know the virus lasts a lot longer than we thought on surfaces.
That was back in May. Now it's October and 1/2,500 people were infected as we brilliantly ended our lockdown on Memorial Day Weekend to "save" Trump's economy and now 1/40 people are infected. That means, if you go to a restaurant – even one that's 1/2 empty – you are likely there with an infected person and your children are in class with infected people and now you can't walk down the block without coming in contact with infected people and Trump is doing what to control it before it gets to 1/4 people? What? Name SOMETHING???
Our lives are at stake people – our actual lives! 220,000 Americans are dead an "only" 8M out of 330M have contracted the virus so far. That means 40x more to go and 40x 2,200 is 8,800,000 dead – that's the entire population…
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Caught in a Debt Trap
by ilene - October 19th, 2020 2:50 am
Caught in a Debt Trap
Courtesy of John Mauldin, Thoughts from the Frontline
We're caught in a trap
I can't walk out
Because I love you too much baby
Elvis Presley’s rendition of Suspicious Minds topped the record charts in 1969. The lyrics portray a romance that couldn’t work, but was also impossible to escape. That’s also a good way to describe our relationship with government debt. We know it can’t last, but we can’t walk out. We love government spending and its benefits (like Medicare, Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process can’t reduce spending and/or raise taxes enough to balance the budget, so the debt grows and grows. As it does, paying the interest plus the accumulated debt load pulls more capital away from more productive uses. This depresses economic growth, thereby generating even more spending and debt.
This has to end, and I think it will do so in the event I’ve called The Great Reset. When I first started talking about The Great Reset, we weren’t in the debt trap. We were “merely” in a situation with only bad choices. I didn’t think we would make them. Thus the underlying presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. While there will be some winners and (probably more often) losers, it won’t be fun for anyone. And it all springs from the debt trap.
Today I’ll talk about how we got into this trap, why we can’t escape without completely resetting the taxation/spending structure, and what it is doing to the economy. Let me warn you: Some of this will get political—but not in the way you might expect.
Whatever your persuasion, you aren’t going to like this. Nor should you.
Diverted Capital
I have the great privilege of being able to talk to some of the finest economic minds in the country. Rarely a week goes by that I do not spend significant time on the phone with Dr. Lacy Hunt. He and Van Hoisington write in their most…
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The State of Gen Z
by ilene - October 17th, 2020 9:30 pm
The State of Gen Z
Courtesy of Howard Lindzon
I really enjoyed this Gen Z Trends Report from Zebra IQ.
Who is Gen Z?
Download the report and it might help you spot a few trends. Share it with your kids as well.
Have a great Saturday.
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Losing money is the coolest!
by ilene - October 17th, 2020 4:56 am
Losing money is the coolest!
Courtesy of Joshua M Brown
The newest episode of my podcast just went live!
Josh talks to Ben Carlson about how it is that over 400 companies in the Russell 3000 have lost money this year but posted an average stock market return of +57%. Over 100 companies that lost money in 2020 have actually seen their share price double! WTF is going on?
Dasarte Yarnway joins Josh to talk about his burgeoning financial advisory firm and the powerful message he’s been sharing throughout the industry: Spend time doing the things you value and the rest will fall into place. Dasarte is the founder of Berknell Financial Group and the host of the Young Money podcast. Dasarte wrote a chapter in the new book How I Invest My Money, now available for pre-order.
Plus: The Fastly blow-up this week may be more meaningful than you think, BlackRock says $1.4 trillion is sitting in mutual funds with negative 3-year returns, and is it Larry Kudlow’s responsibility to help you trade the pandemic? Nope!
You can listen to the whole thing below, or find it wherever you like to listen to your favorite pods!
And be sure to leave a rating and review – they go a long way!
Get it here:
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Philstockworld October Portfolio Review (Members Only)
by phil - October 16th, 2020 8:27 am
$1,566,572!
That's up $361,550 for our paired portfolios since our September 18th review and we only made one change in our Long-Term Portfolio – selling 5 calls against our Berkshire Hathaway position. The LTP went from $1,039,240 to $1,070,623 but the big move was the Tesla (TSLA) postion in the STP, that went from -$881,087 to -673,065 (including our 50% cash-out), accounting for over $200,000 of the gains. Because of the cash-out, TSLA is now less volatile for us as we wanted to be sure our hedges were true hedges into the Elections, Earnings and the Holidays – all hitting us bang, bang, bang for the next and last 77 days of 2020.
We just did our STP review on Tuesday and we got much more aggressively short in order to cover our now $1M gain for the year. It should be noted there was an error in the price of the SQQQ June $30 calls, which were sold for $8.50, not $11.70 (the put price) but, fortunately, our other positions acquited themselves and made up for the downward adjustment. We're also half CASH!!! in the STP and that means we're flexible and ready to take advantag of earnings season and we will be looking for bullish bargains because we have PLENTY of downside protection at the moment.
- UPRO is our new hedge and the short $50 puts are rollable so, in a catastrophe that brings us down to $30, we expect to be able to roll the short puts and end up with $400,000 from the long puts from our net $179,500 entry. If that does not happen, then the short puts will pay us $20,500 in January (already in the net) and another $80,000 over the next 4 quarters so the net cost of our $400,000 insurance policy should be about $100,000 when all is said and done.
- CMG – has earnings next week (21st)
- SQQQ – cost us net $58,000 and it's at least a $300,000 potential spread (rollable as well) and, of course, we will sell more short calls to pay down that $58,000
…
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The PhilStockWorld.com Weekly Webinar – 10-14-2020
by clarisezoleta - October 15th, 2020 9:00 pm
For LIVE access on Wednesday afternoons, join us at PSW!
Major Topics:
00:04:31 – Checking on the Market
00:16:50 – WBA
00:26:42 – Trading Techniques
00:28:57 – Indices
00:31:14 – Visual Capitalist Chart: Business Closures
00:34:14 – Real GDP by State | Stimulus Package
00:47:00 – IPIC
00:51:32 – National Debt Clock
00:55:05 – Best Country to Live In
00:59:18 – COVID-19 Update
01:12:35 – More Trading Techniques
01:14:40 – XRT
01:15:32 – OSTK
01:18:32 – GPS
01:20:12 – STP
01:20:40 – LTP
01:26:14 – RH
Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW!
You can also subscribe to our YouTube channel and view past webinars here.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.