This past week's shock and awe $1 trillion monetary bazooka got the S&P back to where it was trading Tuesday the week prior (March 17th). At this rate, the Fed should just go to eTrade and starting handing out checks to trapped gamblers.
However, in the coming week(s) it gets far more interesting. As of Friday's stimulus bill signing, the Fed is on the hook to finance a $3 trillion 2020 Trump deficit, record corporate bond issuance, and soon record municipal bond issuance. All in the middle of a credit crisis with global spreads blowing out cycle wide. While junk bonds and EM bonds go bidless.
There is no concern that they will be successful:
"State and local governments around the nation are confronting a severe economic downturn of uncertain depth and duration."
Yet the municipal bond market—where defaults are historically rare—should weather the current storm"
To be sure, there is now more risk in the municipal bond market. The coronavirus has caused much of the economy to shut down, putting local budgets under strains. Income-tax and sales-tax revenues are likely to decline"
In other words, budgetary outlays to combat the virus are going up, while state and local revenue is going down. Which will mean new bond issuance across the country.
The Fed doesn't even have control over the repo crisis and the Treasury market, but now they are going to control a global credit explosion.
Sure.
Meanwhile, this past week, Trump's approval rating rose despite his non-stop buffoonery. I should say because of his non-stop buffoonery. So far, there has been no amount of incompetence and idiocy that can shake his base. It's the exact same complacency we see in the markets, based on a denialistic belief in fairy tales. These shared over-confident beliefs must crash and burn before this market can be trusted from the long side. So far the decline has been brutal in the face of complacency. A testament to how much pain these zombies can take. Constant bailouts and constant bullshit have kept panic in check so far. Nevertheless, one could not have imagined a more Darwinian ending to this era of fraud and criminality. Proof that Mother Nature has her little surprises for over-confident hairless monkeys.
Getting back to the casino, what we need to see to put in a tradeable low, specifically, is a hard selloff in these last MAGA cap Tech stocks: Microsoft, Amazon, Google, and Apple. These are still viewed as safe havens:
Here we see the Nasdaq 100 middle pane. In the top pane we see the MACD indicator showing the distance between the 50 and 200 day moving averages. It's a measure of momentum. Until we see a death cross (50 below 200), we won't reach bottom:
Here is the close-up view of Bailout-utopia:
If you think it's been fun so far, wait to see what happens when these last MAGA caps give up their bid. The machines will go into meltdown mode.
Here we see that the oil volatility index reached a new record high this week, and yet oil speculators INCREASED their long positions despite the collapse in crude oil.
Indication of extreme complacency from too many bailouts.
Outside of t-bills, there is nowhere to hide in Trump Casino. Those who are adhering to traditional investment advice, are about to get wiped off the map by their trusted psychopaths.
"Stay the course"
In summary, until the Trump Idiocracy gives up on bailouts, bullshit, and buffoons, Trump Casino is going much lower.
