Tuesday, March 24, 2020

That was a long 6 months last week

The amount of news flow crossing the wires every hour is roughly a week's worth of information and it's numbing trying to stay caught up to date.

Markets:
This morning the financial media have given up trying to explain the why and are just reporting the what - "Markets are limit up because......well, why not?" is the basic theme.  I have a couple of theories that I'll offer up:

1) The technicals held above that 2180 level for the S&P 500 yesterday (despite the sharp sell-off) and that will embolden a lot of dip buyers. The best analogy I have, is if you throw a ball off the Empire State Building and it hits a passing plane underneath you, the fall will suddenly be reversed and the ball might bounce significantly.......until gravity kicks it and it will at some point.

2) I can't believe politics is dominating this conversation but any slush fund can't be controlled by the White House/the Treasury, etc.  It's just too much money and it's too important to just gift that money to people who will undoubtedly do inappropriate things with it, so I commend those opposing the slush fund (Congresswoman Stefanik - any comment???).  However, the truth is that they feel the need to get any deal done so maybe they relent and the slush fund is $150-200 billion --- sorry, I just threw up a little in my mouth --- and a stimulus package is passed.  Stocks might just jump 10% that day.

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It was very obvious on Sunday that the messaging coming out of some corners of the media and from talking heads was this concept that "America needs to get back to work. Yes, some people are going to die but people die every day and I'm not giving up my place in Aspen and the Hampton's so your grandmother is around at Christmas" (okay, I took a little poetic license, but that was the message).

However, I didn't think we'd hear that tone for another month - I want to be clear I'm not advocating or opposing this message but this is the rationale:

"So, maybe 1-3 million people die but what's that worth? At a million dollars a life it's $1.0 to $3.0 trillion.  We are going to spend 2-3 times that bailing out the economy if we don't go back to work."

Imagine being a healthcare worker on the front lines and hearing that messaging.  I suspect that is why Dr. Fauci was absent yesterday and replaced at the news conference by the brilliant medical mind of Attorney General Barr.

Side bar: is it too late to nominate Dr. Fauci for President?

This is not a conversation that normally takes place in public.  Rather these are the sort of actuarial calculations happen a back room when a company decides to keep their product on the market despite the odds that it will kill 20-30 people per year because the revenue it drives will vastly exceed any potential lawsuits resulting from the deaths.  However, these are not normal times.

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Random bits from the past 24 hours

* More and more people are starting to accept that this may be a recession.  However, I think they are discounting it's severity and length.  My initial thoughts are 50% worse than the Great Financial Crisis of 2008 and 3-4 quarters at a minimum. 

* The Fed has had more announcements and actions in a month than they did in the entirety of the Great Financial Crisis.

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Bailout 2.0 - if you take anything from this post - copy this and send it around to all of your friends. This should make everyone, Republicans, Democrats, and Independents sick to your stomach:

* $50 billion for the airlines (who spent $45 billion propping up their stock in the past 5 years).

* $150 billion for the Trump/Mnuchin slush fund.

* The hotel industry wants $150 billion.

* The restaurant industry wants $145 billion.

* The manufacturer's lobby wants $1.4 Trillion.

* Shopping malls want $1 Trillion.

* The greatest beggars to ever live - Jeff Bezos and Elon "I once told the truth in 1994" Musk - want $5 billion for their space toys (this alone should make anyone with a spine vote "no").

I can't believe, this is still going, but..........

* Adidas/Reebok want provisions to make sports equipment tax deductible.

* The beer industry wants $5 billion

* The candy industry wants $500 million.

* Importers want fines for dumping waived.

In order to get a few small checks sent to you, Congress is giving away our future.  Call/email your Representatives and tell them your thoughts on this form of corporate socialism (www.house.gov and www.senate.gov to find yours).

Cheers!

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