Wednesday, March 18, 2020

If I had a trillion dollars....

I may have shared this image before but it's worth repeating.

This is $10,000 of $100 bills.

$10,000

This is $1 million in $100 bills.
$1,000,000 (one million dollars)

This is $100 million.

$100,000,000 (one hundred million dollars)


Okay, here we go $1 billion.

$1,000,000,000 (one billion dollars)


However, when you start hearing people on TV talk about a trillion dollars here or there but they don't have a way to offer free COVID19 tests remember this image.  $1 Trillion....

$1,000,000,000,000 (one trillion dollars)
The point is that these are astronomical sums of money that we are talking about.

The markets continued to swing wildly as we have a daily tug of war between collapsing fundamentals and hourly stimulus proposals. There are some real signs of market stress that I won't go into too deeply but it is possible one of the biggest hedge funds in the world run by one of the world's richest men might be blowing up (couldn't happen to a nicer guy - he's a grade A jerk).

The challenge for the US economy is that we spend borrowed money to buy imported products.  While our reaction to the market declines have been historic, the irony is that thus far our markets have held up when compared to overseas markets which are already down 40-50%.  Ultimately, our reliance on the leveraged consumer probably means the impact will be greater here than overseas.  Something to keep in mind.

The list of crazy ideas floated today included:

1) The Federal Reserve buying up corporate debt (this would be covert bailout for hedge funds).  If you love your country, you should oppose this idea. 

2) Bailing out the airlines and Boeing continues to gain steam - Together Warren Buffett and another hedge fund own about 25% of the airlines.  The idea that we are contemplating bailing out one of the wealthiest people in the world (AGAIN - remember all of his banks we saved in 2008) is appalling.  I would be the world's greatest investor if I got bailed out every 10 years.

3) A 30 day national lock down.  Right now this is just a rumor, but I think this is so stupid some people might push it hard.  The idea is we close everything - the market, every business, literally everything for 30 days and the virus magically goes away.  In China you can pull this off, but in the US where 60% of one particular political party representing probably 80 million citizens think this is being blown out of proportion, you are going to cause mass chaos.  If you live in NY/DC/LA this might seem logical but they have no idea the blow back they will get if they try this in Tuscaloosa.

Who knows what tomorrow will bring? The markets initially soared on then news of $800 bil of stimulus from the ECB (up 4%) but two hours later they are sliding, now down 2% and falling.  We are getting very close to some important points of technical resistance that could provide great bounce points but frankly no one knows because if funds start blowing up all of the normal rules go out the door.

Cheers!

Thanks again - almost 500 people came to check out my ramblings today.  Feel free to share or shoot me any questions at blantier2@gmail.com.  You can also follow me on twitter @brianlantier for biting sarcasm and dark humor.




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