investmentwatchblog--2020-12-21--25 Years Later: What the Euro Has Become

Twenty-five years ago , on December 15 , 1995 , the fifteen heads of state and government of the then EU decided at a council meeting in Madrid to name the future common currency the “ euro ” and to introduce it from January 1 , 1999 , initially as a book currency at a fixed exchange rate .
The actual introduction of cash took place in 2002 .
Denmark , Great Britain , and Sweden , however , retained their national currencies—and still do today .
Poland , the Czech Republic , and Hungary , which joined in 2004 @ @ @ @ @ @ @ złoty , koruna , and forint for the euro .
From the beginning , there were two competing views on what kind of fiat currency the European Central Bank ’ s ( ECB ) money should be.1 The euro was sold to a skeptical German public as the successor to the Deutsche mark .
The common currency was not to be used to directly finance government budgets .
Many Germans feared that they would have to pay for the high debts of the southern countries .
Thus , the ECB was contractually prohibited @ @ @ @ @ @ @ it did accept debt as collateral for bank loans from the outset .
In addition , the Maastricht Treaty , signed in 1992 , provided in the no-bailout clause ( article 125 of the Treaty on the Functioning of the European Union [ TFEU ] ) that euro states were not liable for the debts of other member states .
Theo Waigel ( Christian Social Union [ CSU ] ) , the German finance minister at the time , promised that the euro would be as strong as the mark .
Today , @ @ @ @ @ @ @ “ German ” euro , as the opposite view of the euro ’ s role has steadily gained ground .
This French-Italian , or Mediterranean , view sees monetary policy as an instrument for making fiscal policy dreams come true .
The central bank is subordinate to the Ministry of Finance .
Such divergent convictions were bound to lead to tensions and conflicts .
Indeed , while a gold standard fosters international collaboration and peace , the fiat common currency has been a continuous source of conflicts .
The resulting compromises have successively @ @ @ @ @ @ @ The fall from grace began in 2010 with the direct “ rescue ” of the overindebted Greek state , when the no-bailout clause was ignored .
Subsequently , French president Nicolas Sarkozy pushed through the initially temporary the European Financial Stability Facility ( EFSF ) against German resistance .
The ECB began , still selectively and temporarily , to buy the government bonds of euro countries on the secondary market .
Today , it is engaged in a massive quantitative easing program , systematically and continuously purchasing government debt .
Just recently , @ @ @ @ @ @ @ purchase program by another €500 billion .
Germany also initially opposed the next step , the transformation of the temporary EFSF into an unlimited euro bailout fund , the European Stabilization Mechanism ( ESM ) .
The fund can lend to euro states that are effectively unable to finance themselves on capital markets .
Against the stubborn resistance of the heavily indebted southern countries , Germany insisted that ESM loans be tied to reform conditions .
In addition , and in return for its approval of the ESM , Germany demanded the adoption @ @ @ @ @ @ @ tightens the conditions of the Stability and Growth Pact .
In it , the euro countries practically commit themselves to a structurally balanced budget .
In phases of economic growth , budget surpluses are to be generated to compensate for deficits of up to a maximum of 3 percent in phases of recession .
In addition , when a state ’ s debt level exceeds 60 percent of gross domestic product ( GDP ) , it must continuously reduce the debt burden through budget surpluses .
The idea of the European Fiscal Compact @ @ @ @ @ @ @ get their public finances in order so that there would be no need to resort to the ESM in the first place .
In other words , Germany was only willing to make its taxpayers ’ money available through the ESM for emergencies if the southern countries pledged to put a stop to their overspending and overindebtedness .
The naïveté of this is obvious .
The ESM has come , but the rules of the European Fiscal Pact are not being respected by the southern countries .
The existence of the ESM has @ @ @ @ @ @ @ and the fiscally more disciplined countries do not want to use the ESM at all , while the southern countries are trying to tap it for their own purposes .
The latest reform of the ESM should be understood in this light .
This reform allows the ESM to grant precautionary credit lines that are not tied to reform conditions to “ economically sound ” states , raising the obvious question of why a healthy state would ever need a credit line from the ESM .
In addition , the ESM is now @ @ @ @ @ @ @ backstop of the Single Resolution Fund ( of the Single Resolution Mechanism [ SRM ] ) , which Germany had resisted .
This is because German taxpayers ’ money could now be used to bail out foreign banks .
Take the following example to illustrate the importance of being able to tap the ESM to recapitalize insolvent banks : let ’ s assume that a Greek bank bought bonds issued by its own government , thereby financing the generous benefits of the Greek welfare state or expensive armaments projects .
Now assume that @ @ @ @ @ @ @ its debts and that there is a haircut on Greek government debt .
Due to the losses incurred , the Greek bank is bankrupt and is recapitalized via the SRM .
As a last resort , loans from the ESM can now also be used for this purpose .
If this is the case , the eurozone taxpayers who fund the ESM indirectly pay for the Greek government debt .
As a result of the ESM reform , their money can be used to restructure the southern banking sector , which has generously @ @ @ @ @ @ @ is thus another small victory for the southern countries .
And with it , after twenty-five years , the euro is moving a little further away from the original German ideas about the euro .
The euro is further Mediterraneanized .
• 1.For a detailed history of the euro see my book The Tragedy of the Euro .
Philipp Bagus is professor at Universidad Rey Juan Carlos .
He is a Fellow of the Mises Institute , an IREF scholar , and the author of numerous books including In Defense of DeflationandThe Tragedy @ @ @ @ @ @ @ of Blind Robbery !
, Small States .
Big Possibilities .
: Small States Are Simply Better !
, and Deep Freeze : Iceland ’ s Economic Collapse .

by Philipp Bagus via Mises
Twenty-five years ago, on December 15, 1995, the fifteen heads of state and government of the then EU decided at a council meeting in Madrid to name the future common currency the “euro” and to introduce it from January 1, 1999, initially as a book currency at a fixed exchange rate. The actual introduction of cash took place in 2002. Denmark, Great Britain, and Sweden, however, retained their national currencies—and still do today.
Poland, the Czech Republic, and Hungary, which joined in 2004, also stubbornly resisted giving up the złoty, koruna, and forint for the euro. From the beginning, there were two competing views on what kind of fiat currency the European Central Bank’s (ECB) money should be.1 The euro was sold to a skeptical German public as the successor to the Deutsche mark. The common currency was not to be used to directly finance government budgets. Many Germans feared that they would have to pay for the high debts of the southern countries.
Thus, the ECB was contractually prohibited from acquiring government debt directly, although it did accept debt as collateral for bank loans from the outset. In addition, the Maastricht Treaty, signed in 1992, provided in the no-bailout clause (article 125 of the Treaty on the Functioning of the European Union [TFEU]) that euro states were not liable for the debts of other member states. Theo Waigel (Christian Social Union [CSU]), the German finance minister at the time, promised that the euro would be as strong as the mark.
Today, we are a long way from a “German” euro, as the opposite view of the euro’s role has steadily gained ground. This French-Italian, or Mediterranean, view sees monetary policy as an instrument for making fiscal policy dreams come true. The central bank is subordinate to the Ministry of Finance. Such divergent convictions were bound to lead to tensions and conflicts. Indeed, while a gold standard fosters international collaboration and peace, the fiat common currency has been a continuous source of conflicts. The resulting compromises have successively made the euro more “Mediterranean.”
The fall from grace began in 2010 with the direct “rescue” of the overindebted Greek state, when the no-bailout clause was ignored. Subsequently, French president Nicolas Sarkozy pushed through the initially temporary the European Financial Stability Facility (EFSF) against German resistance. The ECB began, still selectively and temporarily, to buy the government bonds of euro countries on the secondary market. Today, it is engaged in a massive quantitative easing program, systematically and continuously purchasing government debt. Just recently, the ECB extended and expanded its bond purchase program by another €500 billion.
Germany also initially opposed the next step, the transformation of the temporary EFSF into an unlimited euro bailout fund, the European Stabilization Mechanism (ESM). The fund can lend to euro states that are effectively unable to finance themselves on capital markets. Against the stubborn resistance of the heavily indebted southern countries, Germany insisted that ESM loans be tied to reform conditions.
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In addition, and in return for its approval of the ESM, Germany demanded the adoption of the European Fiscal Compact, which tightens the conditions of the Stability and Growth Pact. In it, the euro countries practically commit themselves to a structurally balanced budget. In phases of economic growth, budget surpluses are to be generated to compensate for deficits of up to a maximum of 3 percent in phases of recession. In addition, when a state’s debt level exceeds 60 percent of gross domestic product (GDP), it must continuously reduce the debt burden through budget surpluses.
The idea of the European Fiscal Compact was to force euro member states to get their public finances in order so that there would be no need to resort to the ESM in the first place. In other words, Germany was only willing to make its taxpayers’ money available through the ESM for emergencies if the southern countries pledged to put a stop to their overspending and overindebtedness. The naïveté of this is obvious. The ESM has come, but the rules of the European Fiscal Pact are not being respected by the southern countries.
The existence of the ESM has created another bone of contention. Germany and the fiscally more disciplined countries do not want to use the ESM at all, while the southern countries are trying to tap it for their own purposes. The latest reform of the ESM should be understood in this light. This reform allows the ESM to grant precautionary credit lines that are not tied to reform conditions to “economically sound” states, raising the obvious question of why a healthy state would ever need a credit line from the ESM. In addition, the ESM is now allowed to be used as the ultimate backstop of the Single Resolution Fund (of the Single Resolution Mechanism [SRM]), which Germany had resisted. This is because German taxpayers’ money could now be used to bail out foreign banks.
Take the following example to illustrate the importance of being able to tap the ESM to recapitalize insolvent banks: let’s assume that a Greek bank bought bonds issued by its own government, thereby financing the generous benefits of the Greek welfare state or expensive armaments projects. Now assume that the Greek government can no longer bear its debts and that there is a haircut on Greek government debt. Due to the losses incurred, the Greek bank is bankrupt and is recapitalized via the SRM. As a last resort, loans from the ESM can now also be used for this purpose. If this is the case, the eurozone taxpayers who fund the ESM indirectly pay for the Greek government debt. As a result of the ESM reform, their money can be used to restructure the southern banking sector, which has generously financed the southern states. The reform is thus another small victory for the southern countries. And with it, after twenty-five years, the euro is moving a little further away from the original German ideas about the euro. The euro is further Mediterraneanized.
1.For a detailed history of the euro see my book The Tragedy of the Euro.
Author:
Contact Philipp Bagus
Philipp Bagus is professor at Universidad Rey Juan Carlos. He is a Fellow of the Mises Institute, an IREF scholar, and the author of numerous books including In Defense of DeflationandThe Tragedy of the Euro, and is coauthor of Blind Robbery!, Small States. Big Possibilities.: Small States Are Simply Better!, and Deep Freeze: Iceland’s Economic Collapse.


investmentwatchblog--2020-12-21--China Is Back To Running Massive Trade Surpluses But SOEs Are Defaulting on AAA Rated Bonds

by Jason Burack of Wall St For Main St While China runs absolutely massive trade surpluses thanks to being nearly @ @ @ @ @ , gloves , PPE and other medical and pandemic related equipment , China ’ s @ @ @ @ @ has been allowed to strengthen by the PBOC , China ’ s Central Bank , @ @ @ @ @ to the Dollar the last few months .

by Jason Burack of Wall St For Main St
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While China runs absolutely massive trade surpluses thanks to being nearly the sole exporter of masks, gloves, PPE and other medical and pandemic related equipment, China’s currency, the Yuan, has been allowed to strengthen by the PBOC, China’s Central Bank, to around 6.5 Chinese Yuan to the Dollar the last few months.


investmentwatchblog--2020-12-21--Chinas economic collapse is accelerating, what will desperate communists do.

After the Coronavirus pandemic , China ’ s local governments , its companies and its youth- all are going bankrupt @ @ @ @ @ has given up on controlling .
Watch for full details

After the Coronavirus pandemic, China’s local governments, its companies and its youth- all are going bankrupt with speed that Xi Jinping has given up on controlling. Watch for full details
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h/t BallsDeeper


investmentwatchblog--2020-12-21--Kilauea volcano in Hawaii USA just started erupting ! Ashfall warning issued for South Big Island

New stimulus package `` might '' have $ 600 checks .
It started with a couple weeks , turned into @ @ @ @ @ now here we are 9 months into restrictions and lock downs and the government thinks @ @ @ @ @ help people ?

HFO issues PERIODS OF ASHFALL LIKELY FROM KILAUEA VOLCANO for South Big Island [HI] till 2:00 AM HST t.co/4aYeFEcVw6
Impressive view from this webcam showing a cap cloud over Mount Shasta this morning. Moist air flowing up and over the higher terrain cools and becomes saturated, resulting in the formation of the cap cloud seen here. pic.twitter.com/hq1jvq6gIB
— NWS CWSU Oakland (@NWSCWSUZOA) December 20, 2020


investmentwatchblog--2020-12-21--Government, Not Coronavirus, Is Killing Small Businesses

A video of a confrontation between Ventura County , California health officials and restaurant owner Anton Van Happen has gone viral .
The health officials were ordering Mr. Van Happen to close his business because he allegedly violated California ’ s ban on outdoor dining .
Mr. Van Happen asked the health officials if the government will pay his employees and his rent while his business is indefinitely closed .
Mr. Van Happen is hardly the only small business owner worried about how to pay bills during the lockdowns .
Many small businesses operate on a narrow profit margin , @ @ @ @ @ @ @ shut down or limit the number of customers they can serve is a virtual death sentence .
The lockdowns have already caused as many as 200,000 small businesses to permanently close .
Lockdowns , by shrinking the number of employers , lead to long-term unemployment or lower wages for many workers .
While governments have terrorized small businesses , they have typically deemed the big chain stores “ essential businesses ” so they can remain open .
The lockdowns are thus another government policy that gives big businesses a competitive advantage over their @ @ @ @ @ @ @ get from the lockdowns — including fewer competitors , more customers , and a job market with more workers competing for fewer jobs — may explain why many big businesses are not fighting the lockdowns .
Instead , most big retail chains are requiring their workers and customers to wear masks .
Many big businesses may soon deny service to those who refuse to receive a Covid vaccine .
One would think that progressives who claim to oppose policies that benefit big corporations like WalMart , Target , and Amazon would oppose the @ @ @ @ @ @ @ are unquestioningly parroting the Covid propaganda and demonizing those who dissent .
By slowing down the development of herd immunity among the population , the lockdowns could put those truly at risk in greater danger .
Lockdowns have also had negative effects such as increases in drug and alcohol abuse and increases in domestic violence .
Meanwhile , many schoolchildren are deprived of the opportunity to interact with their teachers and their peers .
Instead , these children are subjected to the fraud of “ virtual learning.
” Resistance to Covid tyranny is @ @ @ @ @ @ @ lockdowns and mandates are both unnecessary and harmful .
This resistance was largely started by small business owners faced with a choice between obeying the government or making sure they , and their employees , can feed their families .
Small business owners have been leaders in recent anti-lockdown protests across America .
Eventually the resistance will grow to the point where the politicians will be forced to either double down on authoritarianism or admit the lockdowns were a mistake .
Either way , those of us who know the truth must resist @ @ @ @ @ @ @ longer terrorize small businesses for the crime of serving willing consumers .

by Ron Paul
A video of a confrontation between Ventura County, California health officials and restaurant owner Anton Van Happen has gone viral. The health officials were ordering Mr. Van Happen to close his business because he allegedly violated California’s ban on outdoor dining. Mr. Van Happen asked the health officials if the government will pay his employees and his rent while his business is indefinitely closed.
Mr. Van Happen is hardly the only small business owner worried about how to pay bills during the lockdowns. Many small businesses operate on a narrow profit margin, so being forced to “temporarily” shut down or limit the number of customers they can serve is a virtual death sentence.
The lockdowns have already caused as many as 200,000 small businesses to permanently close. Lockdowns, by shrinking the number of employers, lead to long-term unemployment or lower wages for many workers.
While governments have terrorized small businesses, they have typically deemed the big chain stores “essential businesses” so they can remain open. The lockdowns are thus another government policy that gives big businesses a competitive advantage over their smaller competitors.
We are primarily funded by readers. Please subscribe and donate to support us!
The benefits big businesses get from the lockdowns — including fewer competitors, more customers, and a job market with more workers competing for fewer jobs — may explain why many big businesses are not fighting the lockdowns. Instead, most big retail chains are requiring their workers and customers to wear masks. Many big businesses may soon deny service to those who refuse to receive a Covid vaccine.
One would think that progressives who claim to oppose policies that benefit big corporations like WalMart, Target, and Amazon would oppose the lockdowns. Sadly, even many progressives are unquestioningly parroting the Covid propaganda and demonizing those who dissent.
By slowing down the development of herd immunity among the population, the lockdowns could put those truly at risk in greater danger. Lockdowns have also had negative effects such as increases in drug and alcohol abuse and increases in domestic violence. Meanwhile, many schoolchildren are deprived of the opportunity to interact with their teachers and their peers. Instead, these children are subjected to the fraud of “virtual learning.”
Resistance to Covid tyranny is growing as more people figure out that lockdowns and mandates are both unnecessary and harmful. This resistance was largely started by small business owners faced with a choice between obeying the government or making sure they, and their employees, can feed their families. Small business owners have been leaders in recent anti-lockdown protests across America.
Eventually the resistance will grow to the point where the politicians will be forced to either double down on authoritarianism or admit the lockdowns were a mistake. Either way, those of us who know the truth must resist the Covid tyranny until government officials no longer terrorize small businesses for the crime of serving willing consumers.


investmentwatchblog--2020-12-21--Russia Backs Another 500,000 Bpd Oil Production Increase

Despite renewed fears about oil demand due to the new coronavirus strain , the leader of the non-OPEC group in the OPEC+ pact , Russia , is still in favor of another 500,000 bpd increase in the alliance ’ s oil production from February , Bloomberg reported on Monday , citing officials with knowledge of the Russian oil policy .
Earlier this month , the OPEC+ group managed to avoid a no-deal outcome at its meetings , which went on for days amid disagreements over how the OPEC cartel and its Russia-led non-OPEC partners would act next year with the @ @ @ @ @ @ @ world .
Saudi Arabia was inclined to roll over the existing cuts , but several other members of the alliance , including Russia , were pushing for increased oil production from January .
The original plan for a 2-million-bpd increase of OPEC+ production as of January was watered down to a 500,000-bpd rise for January in a compromise agreement , largely seen as a positive outcome that avoided a break-up of the OPEC+ pact or even of OPEC .
The total production cut for January will thus be 7.2 million bpd , compared @ @ @ @ @ @ @ cut , while the ministers decided to hold monthly meetings to decide the oil production policy for the following month .
The producers in the pact “ agreed to hold monthly OPEC and non-OPEC ministerial meetings starting January 2021 to assess market conditions and decide on further production adjustments for the following month , with further monthly adjustments being no more than 0.5 mb/d , ” OPEC said at the meetings in early December .
At the monthly OPEC+ meeting on January 4 to set the production policy for February , Russia is @ @ @ @ @ @ @ , according to Bloomberg ’ s sources .
This suggests , on the one hand , that Russia is really looking to boost its oil production .
On the other hand , it could also suggest that Russia likely believes there is room for this additional supply to the market in two months ’ time , despite the virus mutation which sent oil prices plunging by more than 4 percent early on Monday , after the UK put millions of people back under a strict lockdown and many European countries suspended flights from @ @ @

By Tsvetana Paraskova
Despite renewed fears about oil demand due to the new coronavirus strain, the leader of the non-OPEC group in the OPEC+ pact, Russia, is still in favor of another 500,000 bpd increase in the alliance’s oil production from February, Bloomberg reported on Monday, citing officials with knowledge of the Russian oil policy.
Earlier this month, the OPEC+ group managed to avoid a no-deal outcome at its meetings, which went on for days amid disagreements over how the OPEC cartel and its Russia-led non-OPEC partners would act next year with the pandemic still depressing fuel demand in the world. Saudi Arabia was inclined to roll over the existing cuts, but several other members of the alliance, including Russia, were pushing for increased oil production from January.
The original plan for a 2-million-bpd increase of OPEC+ production as of January was watered down to a 500,000-bpd rise for January in a compromise agreement, largely seen as a positive outcome that avoided a break-up of the OPEC+ pact or even of OPEC.
The total production cut for January will thus be 7.2 million bpd, compared to the current 7.7 million bpd collective cut, while the ministers decided to hold monthly meetings to decide the oil production policy for the following month.
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The producers in the pact “agreed to hold monthly OPEC and non-OPEC ministerial meetings starting January 2021 to assess market conditions and decide on further production adjustments for the following month, with further monthly adjustments being no more than 0.5 mb/d,” OPEC said at the meetings in early December.
At the monthly OPEC+ meeting on January 4 to set the production policy for February, Russia is set to support another 500,000 bpd increase, according to Bloomberg’s sources.
This suggests, on the one hand, that Russia is really looking to boost its oil production. On the other hand, it could also suggest that Russia likely believes there is room for this additional supply to the market in two months’ time, despite the virus mutation which sent oil prices plunging by more than 4 percent early on Monday, after the UK put millions of people back under a strict lockdown and many European countries suspended flights from the UK.
By Tsvetana Paraskova for Oilprice.com


investmentwatchblog--2020-12-21--London in a State of Panic

London in a State of Panic

Boris Johnson is DELIBERATELY trying to destroy the British economy so he can “ Build Back Better ” following the course of Bill Gates and Klaus Schwab .
The objective is plainly to destroy as much employment as possible and that will then push the people into accepting this new world order for they will starve to death if they do not accept his payments of Guaranteed Basic Income .
His offer to retrain people is proof that he absolutely knows what he is doing – destroy the economy to make it Green without ever allowing the people to vote @ @ @ @ @ @ @ people are just the herd of the Great Unwashed unworthy of having any say in their own future .
Unfortunately , if the politicians do not call for a NO CONFIDENCE VOTE and overthrow this government or the people do not rise up and force them to do so , then Boris , Gates , and Schwab win .
There will be no economy to return to and thus it is checkmate – the end of Britain as a financial center and the end of freedom .
All for a disease with a @ @ @ @ @ @ @ including Boris himself .
Boris has created a massive panic evacuation of London because of his decree for a total lockdown .
Such a panic evacuation has not been seen since 1939 .
If the politicians do not defend the people and the country , there will be NOTHING left to ever return to .
This is a deliberate plan and the longer people allow this to take place , the greater the chance they will lose their country .
The 1969 H3N2 ( the “ Hong Kong flu ” back then ) @ @ @ @ @ @ @ zoo animals .
The death toll was 4 million – 4x that of COVID and they did not wear masks , no social distancing did not destroy jobs and small businesses .
Even Woodstock took place in the middle of the pandemic .
This is a MANUFACTURED CRISIS deliberately being used to create the new world order of Klaus Schwab .
The longer it takes people to rise up , the less the chances there will be anything left to fight for .
Boris is standing in line to kiss the ring of @ @ @ @ @ @ @ head and told to sit .

by Martin Armstrong
Boris Johnson is DELIBERATELY trying to destroy the British economy so he can “Build Back Better” following the course of Bill Gates and Klaus Schwab. The objective is plainly to destroy as much employment as possible and that will then push the people into accepting this new world order for they will starve to death if they do not accept his payments of Guaranteed Basic Income. His offer to retrain people is proof that he absolutely knows what he is doing – destroy the economy to make it Green without ever allowing the people to vote on such a major change. The people are just the herd of the Great Unwashed unworthy of having any say in their own future.
Unfortunately, if the politicians do not call for a NO CONFIDENCE VOTE and overthrow this government or the people do not rise up and force them to do so, then Boris, Gates, and Schwab win. There will be no economy to return to and thus it is checkmate – the end of Britain as a financial center and the end of freedom. All for a disease with a better than a 99% survival rate including Boris himself.
We are primarily funded by readers. Please subscribe and donate to support us!
Boris has created a massive panic evacuation of London because of his decree for a total lockdown. Such a panic evacuation has not been seen since 1939. If the politicians do not defend the people and the country, there will be NOTHING left to ever return to. This is a deliberate plan and the longer people allow this to take place, the greater the chance they will lose their country.
The 1969 H3N2 (the “Hong Kong flu” back then) affected people, pets, and even zoo animals. The death toll was 4 million – 4x that of COVID and they did not wear masks, no social distancing did not destroy jobs and small businesses. Even Woodstock took place in the middle of the pandemic.
This is a MANUFACTURED CRISIS deliberately being used to create the new world order of Klaus Schwab. The longer it takes people to rise up, the less the chances there will be anything left to fight for. Boris is standing in line to kiss the ring of Schwab and wants a pat on the head and told to sit.


investmentwatchblog--2020-12-21--Could the US economy contract at the opening of 2021?

The US is in a rather awkward interregnum period between Presidents which is more noticeable at times of change .
One way of looking at this is through the plans for another fiscal stimulus .
Back on the 5th of November we looked at the plans of the now President elect Biden .
So a US $ 3.2 trillion boost was the plan back then and it had the advantage that President Trump has been a fan of fiscal policy and the Federal Reserve was happy to oil the wheels .
Federal Reserve Chairman Jerome Powell called Tuesday for continued @ @ @ @ @ @ @ economic recovery that he said still has “ a long way to go.
” Noting progress made in job creation , goods consumption and business formation , among other areas , Powell said that now would be the wrong time for policymakers to take their foot off the gas .
( CNBC on the 6th of October ) .
So on the surface everyone was singing along with David Bowie .
From the New York Times yesterday .
As you can see that is almost a PR release a theme which continues here @ @ @ @ @ @ @ stop doing this which was frankly embarrassing .
From CNBC on Friday .
As to the details here is the New York Times again .
That makes you wonder what people have been doing in the meantime and I guess the pictures of long queues at US food banks have given us at least a partial answer .
There is help for businesses too .
Whilst all this was going on the US Federal Reserve was able to focus on its main priority .
Sounds as if they are being tough doesn ’ @ @ @ @ @ @ @ this via CNBC .
We are kind of staying with the banks again as we note a consequence of all the Federal Reserve easing .
From CNBC .
Which has led to this .
There has been quite a change from the 3.15 % of the benchmark ten-year yield to the 0.9 % as I type this .
This has been a road accompanied by a balance sheet expanded to US $ 7.3 trillion including over US $ 4.6 trillion of government bonds ( US Treasuries ) .
That seems set to continue @ @ @ @ @ @ @ I would add it to the list as maybe we are seeing a change .
What I mean by that is the US Federal Reserve has been pursuing a policy of benign neglect towards the US Dollar and it had been weakening .
For example the broad index hit 123.6 in April but in November was 114.4 .
But driven by the new Covid variant in the UK it has rallied over the weekend by 1 % versus the Euro and by 2 % versus the UK Pound .
Although there is an @ @ @ @ @ @ @ UK has detected it in scale first because it tests much more in this way that others .
So there may well be a catch up elsewhere…..
So far I have mostly noted the financial world .
So let us now look at what is called main street where we have already noted the food bank issue and can now add in this .
So a signal of another downturn heading in the opposite direction to the current consensus as show below .
I am not sure how they got to that number @ @ @ @ @ @ @ with the Covid pandemic apparently worsening I fear for the first quarter of next year .
Could we see another contraction ?
From @ Covid19tracking on Friday .

by Shaun Richards
The US is in a rather awkward interregnum period between Presidents which is more noticeable at times of change. One way of looking at this is through the plans for another fiscal stimulus. Back on the 5th of November we looked at the plans of the now President elect Biden.
Vice President Biden has proposed a wide
range of changes to the tax code and government spending. In total, he is calling for $4.1 trillion in tax increases and an additional $7.3 trillion in government spending over the next decade.
So a US $3.2 trillion boost was the plan back then and it had the advantage that President Trump has been a fan of fiscal policy and the Federal Reserve was happy to oil the wheels.
Federal Reserve Chairman Jerome Powell called Tuesday for continued aggressive fiscal and monetary stimulus for an economic recovery that he said still has “a long way to go.” Noting progress made in job creation, goods consumption and business formation, among other areas, Powell said that now would be the wrong time for policymakers to take their foot off the gas. ( CNBC on the 6th of October).
So on the surface everyone was singing along with David Bowie.
Fashion, turn to the left
Fashion, turn to the right
Ooh fashion
We are the goon squad and we’re coming to town
Beep-beep, beep-beep
The Deal
From the New York Times yesterday.
WASHINGTON — Congressional leaders on Sunday reached a hard-fought agreement on a $900 billion stimulus package that would send immediate aid to Americans and businesses to help them cope with the economic devastation of the pandemic and fund the distribution of vaccines.
As you can see that is almost a PR release a theme which continues here.
While the plan is roughly half the size of the $2.2 trillion stimulus law enacted in March, it is one of the largest relief packages in modern history.
The agreement also meant they could stop doing this which was frankly embarrassing. From CNBC on Friday.
JUST IN: House passes two-day funding bill to prevent government shutdown
As to the details here is the New York Times again.
Although text was not immediately available, the agreement was expected to provide $600 stimulus payments to millions of American adults earning up to $75,000. It would revive lapsed supplemental federal unemployment benefits at $300 a week for 11 weeks — setting both at half the amount provided by the original stimulus law.
That makes you wonder what people have been doing in the meantime and I guess the pictures of long queues at US food banks have given us at least a partial answer. There is help for businesses too.
The measure would also provide more than $284 billion for businesses and revive the Paycheck Protection Program, a popular federal loan program for small businesses that lapsed over the summer. …….The agreement is also expected to provide billions of dollars for testing, tracing and vaccine distribution, as well as $82 billion for colleges and schools, $13 billion in increased nutrition assistance, $7 billion for broadband access and $25 billion in rental assistance.
The Precious! The Precious!
Whilst all this was going on the US Federal Reserve was able to focus on its main priority.
In light of the ongoing economic uncertainty and to preserve the strength of the banking sector, the Board is extending the current restrictions on distributions, with modifications. For the first quarter of 2021, both dividends and share repurchases will be limited to an amount based on income over the past year. If a firm does not earn income, it will not be able to pay a dividend or make repurchases.
Sounds as if they are being tough doesn’t it? But then there was this via CNBC.
JPMorgan Chase, the largest U.S. bank by assets, announced in the minutes after the Fed’s test results that its board had approved a new share repurchase program of $30 billion starting in 2021.
Bank share prices joined the new party.
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Bank stocks rose across the board in after-hours trading with JPMorgan up 5.3%, Goldman Sachs up 4.4% and Wells Fargo up 3.5%.
House Prices
We are kind of staying with the banks again as we note a consequence of all the Federal Reserve easing. From CNBC.
Mortgage rates set yet another record low last week — the 15th this year and the second record in as many weeks……. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 2.85% from 2.90%, with points decreasing to 0.33 from 0.35 (including the origination fee) for loans with a 20% down payment.
Which has led to this.
As prices rise, home equity multiplies. In the past year, homeowners with mortgages, representing about 63% of all properties, have seen their equity increase by 10.8%, according to CoreLogic. That equates to a collective $1 trillion in gained equity, or an average $17,000 per homeowner, the largest equity gain in more than six years.
Bond Market
There has been quite a change from the 3.15% of the benchmark ten-year yield to the 0.9% as I type this. This has been a road accompanied by a balance sheet expanded to US $7.3 trillion including over US $4.6 trillion of government bonds ( US Treasuries). That seems set to continue for the forseeable future.
In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.
US Dollar
I though I would add it to the list as maybe we are seeing a change. What I mean by that is the US Federal Reserve has been pursuing a policy of benign neglect towards the US Dollar and it had been weakening. For example the broad index hit 123.6 in April but in November was 114.4.
But driven by the new Covid variant in the UK it has rallied over the weekend by 1% versus the Euro and by 2% versus the UK Pound. Although there is an undercut which is that it seems the UK has detected it in scale first because it tests much more in this way that others. So there may well be a catch up elsewhere…..
Comment
So far I have mostly noted the financial world. So let us now look at what is called main street where we have already noted the food bank issue and can now add in this.
New US unemployment claims for the week that ended Saturday totaled 885,000, the Labor Department said Thursday. It was the highest reading in 14 weeks. ( Business Insider)
So a signal of another downturn heading in the opposite direction to the current consensus as show below.
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2020 is 11.1 percent on December 17, up from 11.0 percent on December 16. ( Atlanta Fed)
I am not sure how they got to that number even when things looked better. But with the Covid pandemic apparently worsening I fear for the first quarter of next year. Could we see another contraction? From @Covid19tracking on Friday.
Our daily update is published. States reported 1.9 million tests, 242k cases, 3,438 deaths, and 114k people currently hospitalized with COVID-19 in the US. Both case and hospitalization counts from today are all-time highs.
Podcast


investmentwatchblog--2020-12-21--Non-stop commodities rally, economic improvement, strong breadth, rally streaks

Industrial commodities are surging in this “ everything rally ” as sector rotation occurs : It ’ s not hard to see why commodities are rallying .
Massive stimulus packages ( money printing ! )
+ global reflation theme + Chinese tariffs on Australia + a multi-year low in inventory… All of this pushed our copper Short Term Sentiment ’ s 30 day average to its highest reading ever : *part of the record sentiment reading is due to record speculator positioning towards copper There are no comparable historical cases since this is a record for copper sentiment .
Less @ @ @ @ @ @ @ term bearish for copper , but usually led to losses over the next 6 months .
We live in a world where the only way to deal with massive debts is to inflate our way out of it ( push inflation higher than interest rates ) .
Such a macro environment is long term bullish for gold and silver .
Precious metals are in a consolidation pattern right now .
Historically , breakouts on the upside led to huge gains : I have a position in silver and I believe that gold/silver will @ @ @ @ @ @ @ 2021 .
The global economy continues to improve from the depths of the pandemic .
The Conference Board Leading Economic Index is now less than -3 % below its all-time high : *The economy is worsening a little as countries grapple with massive outbreaks When the Conference Board LEI crashed and then improved in the past , the S & P 500 usually pushed higher over the next 9-12 months .
Most historical cases occurred during the first year of a multi-year bull market .
As I noted last week , stock market @ @ @ @ @ @ @ world .
The NASDAQ New High/Low ratio is at the highest level in almost a decade !
Historical cases of strong NASDAQ breadth typically occurred during the first year of a multi-year bull market .
Hence why the NASDAQ ’ s forward returns were consistently bullish : It ’ s not surprising that many indices are up 7 weeks in a row given that breadth is so strong .
Here ’ s the MSCI Emerging Markets Index : Recent historical cases of 7 week rally streaks consistently led to losses for emerging markets @ @ @ @ @ @ @ : The Russell 2000 is also up 7 weeks in a row : Once again , this was short term bearish for small cap stocks over the past decade :

by Troy
Non-stop commodities rally
Industrial commodities are surging in this “everything rally” as sector rotation occurs:
Precious metals first surged Agricultural commodities then surged Industrial metal commodities then surged
It’s not hard to see why commodities are rallying. Massive stimulus packages (money printing!) + global reflation theme + Chinese tariffs on Australia + a multi-year low in inventory…
All of this pushed our copper Short Term Sentiment’s 30 day average to its highest reading ever:
*part of the record sentiment reading is due to record speculator positioning towards copper
There are no comparable historical cases since this is a record for copper sentiment. Less extreme sentiment readings were not consistently short term bearish for copper, but usually led to losses over the next 6 months.
We live in a world where the only way to deal with massive debts is to inflate our way out of it (push inflation higher than interest rates). Such a macro environment is long term bullish for gold and silver. Precious metals are in a consolidation pattern right now. Historically, breakouts on the upside led to huge gains:
I have a position in silver and I believe that gold/silver will be one of the big winners of 2021.
Economic improvement
The global economy continues to improve from the depths of the pandemic. The Conference Board Leading Economic Index is now less than -3% below its all-time high:
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*The economy is worsening a little as countries grapple with massive outbreaks
When the Conference Board LEI crashed and then improved in the past, the S&P 500 usually pushed higher over the next 9-12 months. Most historical cases occurred during the first year of a multi-year bull market.
Strong breadth
As I noted last week, stock market breadth is very strong all around the world. The NASDAQ New High/Low ratio is at the highest level in almost a decade!
Historical cases of strong NASDAQ breadth typically occurred during the first year of a multi-year bull market. Hence why the NASDAQ’s forward returns were consistently bullish:
Rally streaks
It’s not surprising that many indices are up 7 weeks in a row given that breadth is so strong. Here’s the MSCI Emerging Markets Index:
Recent historical cases of 7 week rally streaks consistently led to losses for emerging markets over the next few weeks and months:
The Russell 2000 is also up 7 weeks in a row:
Once again, this was short term bearish for small cap stocks over the past decade:


investmentwatchblog--2020-12-21--Big news coming out of Pennsylvania. Very big illegal ballot drop that cannot be accounted for. Rigg

Big news coming out of Pennsylvania .
Very big illegal ballot drop that can not be accounted for .
Rigged @ @ @ @ @ find out , once and for all , did Biden cheat to become President like @ @ @ @ @ law school ?
PA , Ariz. , GA , Michigan and Wisconsin should agree to @ @ @ @ @ machines .
What are they afraid of , if they didn ’ t cheat ?
@ @ @ @ @ ?

Big news coming out of Pennsylvania. Very big illegal ballot drop that cannot be accounted for. Rigged Election!
Let’s find out,once and for all, did Biden cheat to become President like he cheated to get through law school?
PA, Ariz., GA, Michigan and Wisconsin should agree to let us
audit the Dominion machines.
What are they afraid of, if they didn’t cheat?
No winner without an audit?
— Rudy W. Giuliani (@RudyGiuliani) December 21, 2020


investmentwatchblog--2020-12-21--Tax dollars well spent? Our elected officials don’t suffer the same as the rest of us. And we contin

Tax dollars well spent? Our elected officials don’t suffer the same as the rest of us. And we continue to pay their salaries.

“ $ 600 for 300 million Americans is $ 180 billion .
The stimulus bill that ’ s about to pass is $ 900 billion total .
That means 80 % of this stimulus money is going to special interests and government programs while the average person gets the crumbs.
” With the latest , $ 900 billion covid-stimulus deal now done ( which unless the Democrats win the Georgia Senate runoffs in 2 weeks will be the final covid stimulus bill according to Goldman ) , attention turns to what ’ s actually in it .
First : the @ @ @ @ @ @ @ a fresh round of benefits for small businesses as well as the usual one-time pittance for peasants , amounting to a $ 600 check .
Here are the key components : Direct payments of $ 600 to most Americans ( $ 600 per adult and $ 600 per child ) ; the amounts decrease for individuals with more than $ 75,000 in income and $ 150,000 for couples .
$ 300-per-week in enhanced unemployment benefits through March .
Expiring programs for gig workers and the long-term unemployed also would continue .
$ 284 @ @ @ @ @ @ @ provides grants forgivable loans to small businesses , arguably the most successful and also most abused program of the CARES act .
This represents the bulk of the $ 325 billion the bill puts toward small businesses $ 82 billion for education : includes $ 54.3 billion for K-12 schools and $ 22.7 billion for colleges ; governors would get $ 4.05 billion to spend on education aid at their discretion .
For-profit colleges would get $ 908 million for grants to students , and another $ 1.7 billion would be set aside @ @ @ @ @ @ @ , minority-serving institutions 15 billion in grants for theater operators and owners of small performance venues .
$ 25 billion in rental assistance and an extension of the moratorium on evictions $ 13 billion in funds for food-stamp and child-nutrition benefits .
$ 30 billion for the procurement and distribution of a Covid vaccine , as well as testing and tracing .
$ 1.8 billion in tax credits for businesses to provide paid leave .

“$600 for 300 million Americans is $180 billion. The stimulus bill that’s about to pass is $900 billion total. That means 80% of this stimulus money is going to special interests and government programs while the average person gets the crumbs.”
$600 for 300 million Americans is $180 billion. The stimulus bill that’s about to pass is $900 billion total. That means 80% of this stimulus money is going to special interests and government programs while the average person gets the crumbs. — Michael Gardner (@talklibertynow) December 19, 2020
With the latest, $900 billion covid-stimulus deal now done (which unless the Democrats win the Georgia Senate runoffs in 2 weeks will be the final covid stimulus bill according to Goldman), attention turns to what’s actually in it.
First: the good news – the bill will include a fresh round of benefits for small businesses as well as the usual one-time pittance for peasants, amounting to a $600 check. Here are the key components:
Direct payments of $600 to most Americans ($600 per adult and $600 per child); the amounts decrease for individuals with more than $75,000 in income and $150,000 for couples.
$300-per-week in enhanced unemployment benefits through March. Expiring programs for gig workers and the long-term unemployed also would continue.
$284 billion for the Paycheck Protection Program that provides grants forgivable loans to small businesses, arguably the most successful and also most abused program of the CARES act. This represents the bulk of the $325 billion the bill puts toward small businesses
$82 billion for education: includes $54.3 billion for K-12 schools and $22.7 billion for colleges; governors would get $4.05 billion to spend on education aid at their discretion.
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For-profit colleges would get $908 million for grants to students, and another $1.7 billion would be set aside for historically black colleges, tribal colleges, minority-serving institutions
$10 billion for child care.
15 billion in grants for theater operators and owners of small performance venues.
$25 billion in rental assistance and an extension of the moratorium on evictions
$13 billion in funds for food-stamp and child-nutrition benefits.
$30 billion for the procurement and distribution of a Covid vaccine, as well as testing and tracing.
$1.8 billion in tax credits for businesses to provide paid leave.
www.zerohedge.com/markets/15bn-airlines-corporate-meal-tax-breaks-and-other-pork-whats-inside-900bn-stimulus-bill
h/t pikcoolski


investmentwatchblog--2020-12-21--Georgia may consider rescinding their certification!

What does this mean ?
It means that they know they ’ ve sent the wrong slate of electors , @ @ @ @ @ sending the CORRECT slate of electors .
PATRIOTS pic.twitter.com/HbETsMh2r1

What does this mean? It means that they know they’ve sent the wrong slate of electors, they will meet to determine sending the CORRECT slate of electors. PATRIOTS pic.twitter.com/HbETsMh2r1
— Tracy Beanz (@tracybeanz) December 21, 2020


investmentwatchblog--2020-12-21--U.K Government plotting to force vaccinate schoolchildren

• National Education Union says lessons should be moved online for a fortnight • Union says it will allow set-up of testing scheme and for vaccination of teachers • But Downing Street says it will continue to give vaccine to most vulnerable first • Government education chiefs insisted today that schools will reopen in January • It comes after Matt Hancock yesterday refused to rule out any changes to plans Britain ’ s largest teaching union has today demanded classes be moved online for two weeks after Christmas to give school staff the chance to get vaccinated against Covid-19 .
@ @ @ @ @ @ @ has called on the Government to cancel face-to-face lessons for a fortnight at the beginning of the new term in January .
Union chiefs say the switch to online lessons , for all but vulnerable children and those of key workers , will help reduce cases amongst students .
They have also demanded that a mass-testing programme , which has already been promised by ministers , be fully functional before students return to school .
It comes as the Government today dismissed the possibility of vaccinating secondary school pupils in England as a @ @ @ @ @ @ @ new Covid strain .
While education chiefs have vowed to keep schools open , experts are concerned that the new strain may infect children more effectively than the previous variant .
Experts were also told that keeping secondary schools open during the recent national lockdown helped to drive the spread of the new strain in badly hit areas such as Kent and London .

National Education Union says lessons should be moved online for a fortnight
Union says it will allow set-up of testing scheme and for vaccination of teachers
SAGE has asked UK’s vaccines authority to model secondary school jab roll-out
But Downing Street says it will continue to give vaccine to most vulnerable first
Government education chiefs insisted today that schools will reopen in January
It comes after Matt Hancock yesterday refused to rule out any changes to plans
Britain’s largest teaching union has today demanded classes be moved online for two weeks after Christmas to give school staff the chance to get vaccinated against Covid-19.
The National Education Union (NEU) has called on the Government to cancel face-to-face lessons for a fortnight at the beginning of the new term in January.
Union chiefs say the switch to online lessons, for all but vulnerable children and those of key workers, will help reduce cases amongst students.
They have also demanded that a mass-testing programme, which has already been promised by ministers, be fully functional before students return to school.
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It comes as the Government today dismissed the possibility of vaccinating secondary school pupils in England as a way to curb the spread of the new Covid strain.
While education chiefs have vowed to keep schools open, experts are concerned that the new strain may infect children more effectively than the previous variant.
Experts were also told that keeping secondary schools open during the recent national lockdown helped to drive the spread of the new strain in badly hit areas such as Kent and London.
www.dailymail.co.uk/news/article-9074987/Government-experts-drawing-plans-vaccinate-secondary-pupils-curb-spread-new-Covid-strain.html


investmentwatchblog--2020-12-21--So is Trump waiting until Jan 6th before taking action?

Peter Navarro releases 36-page report alleging election fraud 'more than sufficient ' to swing victory to Trump t.co/D8KrMHnFdK .
A @ @ @ @ @ Statistically impossible to have lost the 2020 Election .
Big protest in D.C. on January @ @ @ @ @ will be wild !

Peter Navarro releases 36-page report alleging election fraud 'more than sufficient' to swing victory to Trump t.co/D8KrMHnFdK. A great report by Peter. Statistically impossible to have lost the 2020 Election. Big protest in D.C. on January 6th. Be there, will be wild!
— Donald J. Trump (@realDonaldTrump) December 19, 2020


investmentwatchblog--2020-12-21--Ontario Government planning province wide lockdown Christmas Eve morning.

Global News has learned the Ontario government is currently planning to implement a provincewide lockdown beginning Christmas Eve .
The @ @ @ @ @ Monday afternoon at Queen ’ s Park from Premier Doug Ford .
According to sources @ @ @ @ @ as of Sunday afternoon , the government was expecting to implement a 28-day lockdown for @ @ @ @ @ while the north would be subject to a two-week lockdown .
As part of the @ @ @ @ @ would not return to classes as scheduled after the holidays but would spend the first @ @ @ @ @ new year at home doing virtual learning and then return on Jan. 11 .

Global News has learned the Ontario government is currently planning to implement a provincewide lockdown beginning Christmas Eve.
The announcement is expected to come Monday afternoon at Queen’s Park from Premier Doug Ford.
According to sources briefed on the plans, as of Sunday afternoon, the government was expecting to implement a 28-day lockdown for most of the province, while the north would be subject to a two-week lockdown.
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As part of the plans, elementary-age school children would not return to classes as scheduled after the holidays but would spend the first week of school in the new year at home doing virtual learning and then return on Jan. 11.
globalnews.ca/news/7534030/ontario-new-coronavirus-restrictions-2/


investmentwatchblog--2020-12-21--Senator Calls For Death Penalty Of Republicans Challenging Election

According to Sen. Jeanne Shaheen ( D-N.H. ) , Republican lawmakers who refuse to accept President-elect Joe Biden ’ s @ @ @ @ @ on sedition and treason.
” “ Each of us who are serving as senators took @ @ @ @ @ defend the Constitution of the United States .
One of the most fundamental principles of @ @ @ @ @ transition of power , ” Shaheen said .
“ These senators and members of Congress @ @ @ @ @ that we had a free and fair election in which Joe Biden beat Donald Trump @ @ @ @ @ , are bordering on sedition and treason.
” Shaheen ’ s allegations are very serious @ @ @ @ @ those individuals found guilty of treason against the U.S. “ shall suffer death.
” In @ @ @ @ @ supporters do what we have been doing for the last 4 years , then you @ @ @ @

According to Sen. Jeanne Shaheen (D-N.H.), Republican lawmakers who refuse to accept President-elect Joe Biden’s electoral victory “are bordering on sedition and treason.”
“Each of us who are serving as senators took an oath to uphold and defend the Constitution of the United States. One of the most fundamental principles of the Constitution is the peaceful transition of power,” Shaheen said. “These senators and members of Congress who have refused to acknowledge that we had a free and fair election in which Joe Biden beat Donald Trump by over 7 million votes, are bordering on sedition and treason.”
Shaheen’s allegations are very serious, considering federal law says those individuals found guilty of treason against the U.S. “shall suffer death.”
populist.press/senator-calls-for-death-penalty-of-republicans-challenging-election/
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In other words if you Trump supporters do what we have been doing for the last 4 years, then you are committing treason.
Haha!
S.M.H.
Sen, Jeanne Shaheen (D-NH): "These senators and members of Congress who have refused to acknowledge that we had a free and fair election in which Joe Biden beat Donald Trump by over 7 million votes, are bordering on sedition and treason … " pic.twitter.com/jQfcl5oaoS — The Recount (@therecount) December 18, 2020
h/t Mason Firefly


investmentwatchblog--2020-12-21--The Dems Think They Won Fairly, But This Image Says It All!

Just when you think the bubble ca n't get any zanier , it gets zanier .
When , why , @ @ @ @ @ is anyone 's guess .
I 've given up trying to pinpoint the top .

Consider Twitter followers too.
Barack Obama
@BarackObama
Dad, husband, President, citizen.
Washington, DCobamabook.comBorn August 4, 1961Joined March 2007
597.8K Following
127.3M Followers
Donald J. Trump
@realDonaldTrump
45th President of the United States of AmericaFlag of United States
Washington, DCVote.DonaldJTrump.comJoined March 2009
51 Following
88.5M Followers
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Joe Biden
@JoeBiden
President-elect, husband to
@DrBiden
, proud father & grandfather. Ready to build back better for all Americans.
Wilmington, DEjoebiden.comJoined March 2007
32 Following
21.6M Followers
AC


investmentwatchblog--2020-12-21--The FAATMAN tech stocks have gained $3.1 trillion in value this year

Facebook , Alphabet ( Google ) , Amazon , Tesla , Microsoft , Apple & Netflix collectively gained more than @ @ @ @ @ market capitalisation in 2020 .
That is a lot of new paper millionaires in a @ @ @ @ @ literally broken records .
From chart 17 in 2020 : A Year In Charts .

by chartr
Facebook, Alphabet (Google), Amazon, Tesla, Microsoft, Apple & Netflix collectively gained more than $3 trillion dollars in market capitalisation in 2020.
That is a lot of new paper millionaires in a year when US unemployment has literally broken records.
From chart 17 in 2020: A Year In Charts.
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Source: Data from Koyfin
Tool: Excel


investmentwatchblog--2020-12-21--SPECIAL REPORT: New link between Hunter Biden’s business dealings and his father

-4 million from a company tied to the Chinese Communist Party .
We know he ’ s under federal investigation @ @ @ @ @ calls it “ Russian disinformation .
”

Hunter Biden profited:
-1 million from a Ukrainian energy company.
-3 million from a Russian billionaire.
-4 million from a company tied to the Chinese Communist Party.
We know he’s under federal investigation.
But the media still calls it “Russian disinformation.”
— Rep. Jim Jordan (@Jim_Jordan) December 20, 2020


investmentwatchblog--2020-12-21--Special tax deduction this year for up to $300 of cash donations to charities! (US)

The Cares Act allows a special $ 300 deduction for qualifying donations made in 2020 .
This means that unlike @ @ @ @ @ will not be taxed on up to $ 300 of your donation .
Just remember @ @ @ @ @ in case the IRS asks .
To prevent fraud , make sure your “ charity @ @ @ @ @ by the IRS .
You can verify them here .
I thought I ’ d @ @ @ @ @ the majority of Americans and help the IRS promote this before the year ends .
@ @ @ @ @ for reading .

by 555VS66
The Cares Act allows a special $300 deduction for qualifying donations made in 2020. This means that unlike in previous years, you will not be taxed on up to $300 of your donation. Just remember to keep your receipt/acknowledgement letter in case the IRS asks.
To prevent fraud, make sure your “charity” is eligible as classified by the IRS. You can verify them here.
We are primarily funded by readers. Please subscribe and donate to support us!
I thought I’d share this relevant news to the majority of Americans and help the IRS promote this before the year ends.
Spread the word! Thanks for reading.


investmentwatchblog--2020-12-21--Cathie Wood is going strong on Takeda Pharmaceutical Co Ltd (NYSE: TAK ). They got FDA approval for

Cathie Wood is going strong on Takeda Pharmaceutical Co Ltd (NYSE: TAK ). They got FDA approval for their drug yesterday

This ticker symbol is under the radar , which Cathie Wood is purchasing over the last 3 months without a single sell .
During the last week , she bought daily .
> Takeda Pharmaceutical Company Limited ( TSE:4502/NYSE : TAK ) today announced that the U.S. Food and Drug Administration ( FDA ) has approved the supplemental New Drug Application ( sNDA ) for ICLUSIG® ( ponatinib ) for adult patients with chronic-phase ( CP ) chronic myeloid leukemia ( CML ) with resistance or intolerance to at least two prior kinase inhibitors .
The updated label includes an @ @ @ @ @ @ @ CP-CML with a daily starting dose of 45 mg and , upon achieving ≤1 % BCR-ABL1IS , dose reduction to 15 mg .
This dosing regimen aims to maximize benefit-risk by providing efficacy and decreasing the risk of adverse events ( AEs ) , including arterial occlusive events ( AOEs ) .
There is another post yesterday on this from u/EuroSStore The effect of the news is not realized yet on the stock price .
I see an easy gain here .
It has a Buy rating from Schwab Equity Rating International® .
@ @ @ @ @ @ @ company , and I am following this stock for a few months .
Disclaimer : This information is only for educational purposes .
Do not make any investment decisions based on the information in this article .
Do you own due diligence or consult your financial professional before making any investment decision .

by GloomyMention
This ticker symbol is under the radar, which Cathie Wood is purchasing over the last 3 months without a single sell. During the last week, she bought daily.
cathiesark.com/ark-combined-holdings-of-tak

Recently FDA approved their drug
news.yahoo.com/u-fda-approves-supplemental-drug-224900059.html
> Takeda Pharmaceutical Company Limited (TSE:4502/NYSE:TAK) today announced that the U.S. Food and Drug Administration (FDA) has approved the supplemental New Drug Application (sNDA) for ICLUSIG® (ponatinib) for adult patients with chronic-phase (CP) chronic myeloid leukemia (CML) with resistance or intolerance to at least two prior kinase inhibitors. The updated label includes an optimized, response-based ICLUSIG dosing regimen in CP-CML with a daily starting dose of 45 mg and, upon achieving ≤1% BCR-ABL1IS, dose reduction to 15 mg. This dosing regimen aims to maximize benefit-risk by providing efficacy and decreasing the risk of adverse events (AEs), including arterial occlusive events (AOEs).

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There is another post yesterday on this from u/EuroSStore

www.reddit.com/r/wallstreetbets/comments/kfp5kt/tak_heading_to_the_moon/

The effect of the news is not realized yet on the stock price. I see an easy gain here. It has a Buy rating from Schwab Equity Rating International®.

Note: I own shares in the company, and I am following this stock for a few months.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.


investmentwatchblog--2020-12-21--Story Time: $TSLA, SP500, 2020 Bubble & History

Let ’ s get ready to tumble !
Come Monday , $ TSLA enters the S & P 500 , as the world is aware .
This is the one you will tell your grandkids about , or at least the new crop of investors , wondering what the bubble of 2020 was like .
Tesla can be your example of the insanity….1/ For all of the cost-saving benefits of passive investing , the Standard & Poor ’ s committee that actively chooses the components for its indices will prove why passive investors are the dumb money with this coming @ @ @ @ @ @ @ into its venerable S & P 500 index .
2/ The committee is not known for a price consciousness .
It chases what ’ s hot and eliminates from its august roster what ’ s not .
3/ It ’ s disregard for fundamentals or value was seen sharply in late 1999 & early 2000 when bubble darlings like Peoplesoft , New Century Energy , Global Crossing , Xilinx , Teradyne , Quintiles Transnational , Citrix and JDS Uniphase made their way into the index .
4/ Pull up the long-term charts to @ @ @ @ @ @ @ fared post admittance .
The most prominent additions in 1999 were America Online ( discussed in my 12/5 thread ) and Yahoo , whose mania also reminds me of Tesla… 5/ Yahoo went public in 1996 , priced at $ 13 per share , opened at $ 24.50 and closed at $ 33 on its first trading day , a market cap of $ 850 million .
From there the shares zoomed ahead by more than 6x in 2 years reaching $ 354 in January 1999 .
6/ The company then bought Geocities @ @ @ @ @ @ @ 5.7B and the stock was more than cut in half , trading down to $ 120 .
Recovering by late 1999 , the wizards at S & P announced they would add Yahoo to the index on 11/30/1999 .
7/ The stock climbed 67 % from $ 210 on the day of the announcement to $ 350 on the day of its inclusion on 12/7 , one week later .
Sound familiar ?
The rollercoaster didn ’ t high point for another month .
8/ Yahoo peaked not quite a month later at @ @ @ @ @ @ @ a market cap of $ 127B on January 3 , 2000 ( the cap didn ’ t include another 124 million option shares , 38M granted in 1999 alone , which implied an additional ~ $ 50B in market cap on January 3 , 2000 ) .
9/ In hindsight , or for anyone with reason , which was lacking in those days , there was no need to count the fully diluted shares .
Why ?
Those options would not be exercised .
The stock fell 98.3 % over the next 1 @ @ @ @ @ @ @ $ 8.11 on 9/26/2001 , a market cap of $ 2.2B .
Yep .
10/ At the peak , Yahoo ’ s $ 127B market cap compared to $ 600 million in trailing 12-month revenues , so 211 times revenues .
11/ But the Yahoo and tech bulls would get right in your face ( or on the Yahoo Finance message board ) and tell you , moron , that sales had grown 141 % , 248 % , 258 % and 1,345 % in the prior 4 years , which they did @ @ @ @ @ @ @ stock dropped from a STOCK PRICE of $ 475 to $ 30 ( a mere 93.7 % in a year for those counting ) by the end of 2000 , sales still GREW by 88 % to $ 1.1B , to “ only ” 15 times revenues !
From there , however , the company flailed .
13/ Sales actually fell 35 % , from $ 1.1B to $ 717m from 2000 to 2001 , which is what drove the shares down to $ 8.11 and a $ 2.2B market cap .
To @ @ @ @ @ @ @ home page , and really the dominant search engine , competition came fast .
14/ Yahoo even eventually outsourced its search function to upstart Google if you can believe that .
Yahoo did ultimately grow its revenues another 5x to $ 5B by 2016 , when it was bought by Verizon $ VZ in 2016 for $ 4.5B , excluding a sub ’ s partial investment in Alibaba .
15/ The buyout was at a far cry from the day Yahoo came into the S & P 500 as the 30th largest capitalization @ @ @ @ @ @ @ cap of roughly $ 90B and I ’ d guess at a weight of 0.7 % .
16/ At its January 3 , 2000 peak , Yahoo had climbed to the # 15 spot in the index , well ahead of Berkshire Hathaway $ BRKA $ BRKB ( which was not yet in the index despite its mere $ 83B market cap , $ 131B in assets and $ 38B in shareholders equity . )
17/ Had Berkshire been in the index the day Yahoo peaked it would have held only the 37 @ @ @ @ @ @ @ at $ 358B , Intel $ 290B , Time Warner $ 184B , Lucent $ 171B Sun Mico $ 168B , AT & T $ 160B , WorldCom $ 148B , Dell $ 130B , HP $ 120B , Oracle $ 120B , EMC $ 116B , … 18/ Qualcomm $ 116B , DirecTV $ 102B , Verizon $ 93B , AOL $ 93B , Motorola $ 90B , and Bellsouth $ 87B .
Many of these are gone today , which leads us back to $ TSLA .
19/ Never has the @ @ @ @ @ @ @ a company so large by market cap as will be the case with Tesla ’ s inclusion .
Nor have they ever brought in a company at so high a spot in the cap-weighted index , at # 6 , one notch ahead of Berkshire Hathaway .
Insanity .
20/ Of course , by sales & profits , plenty of companies have entered the index as larger constituents , but that ’ s not what counts in the passive index .
It ’ s all about float adjusted market cap .
Fundamental valuation @ @ @ @ @ @ @ required some hijinks.21/ Tesla had cut R & D & SG & A , drew on reserves and leaned on environmental carbon credits to “ earn ” a GAAP profit for a necessary four quarters .
They did so for five .
Oddly , revenues only grew 15 % in 2019 , prior to the pandemic , in part for a reduction in customer tax incentives .
22/ Impressively , they have grown revenues 15 % for the first 9 months of 2020 during the crisis while the incumbents saw sales decline .
@ @ @ @ @ @ @ But how to value it ?
23/ On November 16 , the S & P index committee announced Tesla would be added on December 21 .
The market cap was $ 380B .
Here on Saturday December 19 , the stock price at $ 695 yields a market cap of $ 659B ( $ BRK , the current # 6 is $ 528B ) up $ 279B or 73 % since the announcement .
24/ The gain matches the percentage rise seen by Yahoo during the week between its announcement & addition .
@ @ @ @ @ @ @ the $ 215B market cap of the world ’ s largest auto manufacturer , Toyota .
Tesla ’ s $ 659B cap is on 948M shares out at 9/30 ( up 5 % since YE 2019 ) .
25/ The share count excludes another 157M unvested or unexercised option and RSU shares , which would add more than $ 100B to the market cap on a fully diluted basis .
26/ Let ’ s not count those for the same reason they were excluded in the Yahoo calculation .
Why ?
Many may @ @ @ @ @ @ @ their right mind would pay $ 659B , $ 760B diluted , for a car co w/ $ 30B in sales , little or no economic profit and an enormous growth capital need.27/ 25x sales ?
2,030x GAAP earnings ?
422x earnings assuming Toyota ’ s best in industry 6 % profit margin ?
Heck , even 85 times Microsoft ’ s 30 % profit margin ( a bone for the Tesla is not a car company but also a software/robotaxi crowd ) .
Welcome to the game , index fund investors .
@ @ @ @ @ @ @ shares float , not owned by insiders , which means the adjusted market cap weight will be $ 528B , compelling somewhere between $ 50 and $ 75B of direct index purchases , not to mention those needed by index huggers and closet indexers .
29/ The stock will come in at ~1.75 % of the $ 30.5 trillion index , itself significantly overvalued , not unlike when Yahoo peaked in January 2000 and the index peaked at over 30x earnings and 44x cyclically adjusted ( CAPE ) shortly thereafter .
30/ What @ @ @ @ @ @ @ , or the passive investor with 1.75 % of capital in the shares come Monday ?
At 15 % a year , the market cap , assuming no further dilution , grows to $ 3T over the next decade , ~10 % of the market value of the entire S & P 500 today .
31/ At “ only ” 10 % per year , the fully diluted market cap grows to $ 2 trillion , almost where $ AAPL is valued these days .
At a 10 % shareholder return , to @ @ @ @ @ @ @ need to be earning $ 67 billion .
32/ For grins let ’ s assume the company actually earns some blend of auto maker profit ( most earn ~3 % , Toyota ~6 % ) and a subscription software , robotaxi margin of 30 % .
Generously call it a 20 % blended profit margin , which I ’ d bet heavily against .
33/ At the impossible 20 % margin , $ 67B would sit under $ 335B in revenues , roughly 11 times today ’ s run rate .
Revenues will @ @ @ @ @ @ @ per year , and profits to 20 % of revenues , to get to a 30x multiple on earnings .
34/ To finance the necessary capital stock to produce $ 335B in revenues will require about half that much in capital , either debt or equity .
35/ Car companies require roughly a dollar in capital to produce a dollar in revenues , but remember we are “ assuming ” this is a software company or whatever else hallucinogens conjure up in the minds of bulls .
36/ The best course of action @ @ @ @ @ @ @ at-the-market ” blocks , with no prospectus , road show or risk warning , to the dumb money that is willing , or compelled , as is the passive crowd , to pay dangerous prices .
The dilution at today ’ s prices is infinitesimal .
37/ Through the end of 2019 Tesla had sold $ 12.7B in shares and borrowed $ 16B in debt and preferred stock .
Total capital raised of $ 28B exceeded FY 2019 revenues of $ 25B and produced a $ 6B cumulative LOSS .
38/ So far @ @ @ @ @ @ @ additional net $ 200m and sold $ 12.3B of new shares ( assuming a sale of the most recent $ 5B “ at-the-market ” ) .
Bulls revere the cash on the balance sheet , but it didn ’ t come from profit or free cash .
39/ Total capital raised is now $ 40B before retained losses .
What does Tesla earn on capital ?
Nothing yet .
Equity is less than capital raised from stock sales by the amount of cumulative losses .
Per share book is of course higher thanks @ @ @ @ @ @ @ From a business case and investment standpoint , the math doesn ’ t work .
Consider that total automobiles sold worldwide peaked two years ago at about 95m passenger and commercial car and truck units .
At $ 20,000 per new vehicle , we can call the global auto market $ 2T in size .
41/ Our example has Tesla ’ s market cap growing over the next decade at “ only ” 10 % per year to a like $ 2T .
Car companies , with the exception of Ferrari , which @ @ @ @ @ @ @ ’ t trade for one times sales .
They trade for less .
42/ Toyota , which earns a 6 % margin and 6 % on capital , trades itself at an all-time-high $ 215B on revenues of $ 280B in 2019 , less in 2020 .
43/ Auto manufacturers trade for less than sales because they make ~3 % net margins and earn that same ~3 % on capital and revenues grow at ~3 % .
We can call the industry 3x3x3 ( new material here folks ) .
The car business @ @ @ @ @ @ @ ’ s what Tesla is trying to disrupt ?
44/ The best case for shareholders : If Tesla grows the aforementioned sales for the next decade by 28 % to $ 335B ( it won ’ t ) , the stock will trade for no more than 1x sales , because it ’ s a CAR company .
45/ If it earns Toyota ’ s best in class 6 % margin , even allowing for software “ upgrades , ” it earns $ 20B and trades for 25x , or a $ 500B @ @ @ @ @ @ @ % loss from here people using diluted shares .
If sales , margins or the multiple are lower , shareholders lose more .
46/ The realistic case : The performance of the stock from here is a giant loss over time and the Tesla cult loses interest in the brand .
In fact , they come to hate the brand because of their coming stock losses , customer and employee mistreatment .
47/ Ask the guys and gals on the S and X lines about their unpaid “ break ” here at quarter @ @ @ @ @ @ @ “ volunteer their time ” to help boost production before yearend .
Sales grow nowhere near 28 % a year .
The incumbent auto manufacturers won ’ t roll over and play dead .
48/ My prior tweet elaborated on @ elonmusk using his inflated shares as currency to acquire another manufacturer w/ capacity , as he mentioned he ’ d be up for in a friendly merger of equals .
The point of that message was that the incumbents won ’ t take his dangerous scrip in a deal .
49/ That @ @ @ @ @ @ @ shares perpetually to finance his growth .
It makes 100 % sense when the shares are insanely overvalued to do so , and despite the ethics of doing so in these recent at-the-market deals .
50/ By contrast , Mr. Buffett points out he ’ d prefer new and current shareholders to have a fair experience in his company ’ s shares .
If the auto makers won ’ t take them in a deal , and they shouldn ’ t , then that leaves new shareholders to provide growth capital .
Hello @ @ @ @ @ @ @ see what happens after Monday , when Tesla assumes the # 6 perch in the index .
When the argument for passive is low fees , remind me in ten years how much of the loss in Tesla ’ s shares from here should be considered a “ fee , ” or a tax on stupidity .
52/ At 1.75 % of the index , a decline of 80-90 % would be heavy , but realistic .
Impossible to decline that much ?
An 88 % drop takes you all the way back @ @ @ @ @ @ @ year .
53/ A 90 % decline takes the cap to $ 66B , 2.2x current run rate revenues & 37x a hypothetical 6 % net margin .
A mere 80 % drop gets to a $ 132B cap , 4.4x revenues , and to give the bulls on Tesla not being a car company credit , still 37x a 12 % hypothetical profit margin .
Ridiculous .
54/ You can play around all you like w/ assumptions for growth , market share , expansion into new markets , profit & returns on @ @ @ @ @ @ @ ownership of today ’ s $ 760B fully diluted market value is highly likely to produce a disastrous investment result .
55/ Bravo , S & P .
The decision to add $ TSLA at present valuation is almost sure to exact pain on passive investors , compelled to “ invest ” 1.75 % of capital in one of the most overvalued companies on record .
Brilliant .
As the other Buffett sings , “ Come Monday , it ’ ll be all right… ” 56/ As disclosure , I have a small @ @ @ @ @ @ @ ’ t take this note as investment advice because it ’ s not .
Do your own research .
Stocks go up & down , and shorting is extremely dangerous .
Upside is capped and downside is unlimited .
$ TSLA has risen 8.3x just this year .
57/ If Tesla repeats the same return over the next year the market cap would be $ 6.3 trillion .
Two years of repeat performance and the cap becomes $ 52 trillion .
Of course , that ’ s 70 % larger than the entire @ @ @ @ @ @ @ then any short seller is long bankrupt .
58/58 END TL ; DR1 : TSLA may go down , not probably but maybe at some point after SP500 inclusion .
Why ?
It ’ s mentioned somewhere in above points comparing it to some historical events and what TSLA makes !
TL ; DR2 ( from u/rch0wdhury ) : Yahoo failed after being added in S & P .
Tesla can fail , or maybe not .
We will get to know in future .

via Christopher Bloomstran:
Let’s get ready to tumble! Come Monday, $TSLA enters the S&P 500, as the world is aware. This is the one you will tell your grandkids about, or at least the new crop of investors, wondering what the bubble of 2020 was like. Tesla can be your example of the insanity….1/
For all of the cost-saving benefits of passive investing, the Standard & Poor’s committee that actively chooses the components for its indices will prove why passive investors are the dumb money with this coming Monday’s inclusion of $TSLA into its venerable S&P 500 index. 2/
The committee is not known for a price consciousness. It chases what’s hot and eliminates from its august roster what’s not. 3/
It’s disregard for fundamentals or value was seen sharply in late 1999 & early 2000 when bubble darlings like Peoplesoft, New Century Energy, Global Crossing, Xilinx, Teradyne, Quintiles Transnational, Citrix and JDS Uniphase made their way into the index. 4/
Pull up the long-term charts to see how these “timely” additions fared post admittance. The most prominent additions in 1999 were America Online (discussed in my 12/5 thread) and Yahoo, whose mania also reminds me of Tesla… 5/
Yahoo went public in 1996, priced at $13 per share, opened at $24.50 and closed at $33 on its first trading day, a market cap of $850 million. From there the shares zoomed ahead by more than 6x in 2 years reaching $354 in January 1999. 6/
The company then bought Geocities for $3.6B and Broadcast for $5.7B and the stock was more than cut in half, trading down to $120. Recovering by late 1999, the wizards at S&P announced they would add Yahoo to the index on 11/30/1999. 7/
The stock climbed 67% from $210 on the day of the announcement to $350 on the day of its inclusion on 12/7, one week later. Sound familiar? The rollercoaster didn’t high point for another month. 8/
Yahoo peaked not quite a month later at a share price of $475, a market cap of $127B on January 3, 2000 (the cap didn’t include another 124 million option shares, 38M granted in 1999 alone, which implied an additional ~$50B in market cap on January 3, 2000). 9/
In hindsight, or for anyone with reason, which was lacking in those days, there was no need to count the fully diluted shares. Why? Those options would not be exercised. The stock fell 98.3% over the next 1 ¾ years, from $475 to $8.11 on 9/26/2001, a market cap of $2.2B. Yep. 10/
At the peak, Yahoo’s $127B market cap compared to $600 million in trailing 12-month revenues, so 211 times revenues. 11/
But the Yahoo and tech bulls would get right in your face (or on the Yahoo Finance message board) and tell you, moron, that sales had grown 141%, 248%, 258% and 1,345% in the prior 4 years, which they did. 12/
Heck, even after the stock dropped from a STOCK PRICE of $475 to $30 (a mere 93.7% in a year for those counting) by the end of 2000, sales still GREW by 88% to $1.1B, to “only” 15 times revenues! From there, however, the company flailed. 13/
Sales actually fell 35%, from $1.1B to $717m from 2000 to 2001, which is what drove the shares down to $8.11 and a $2.2B market cap. To what had been the first and dominant home page, and really the dominant search engine, competition came fast. 14/
Yahoo even eventually outsourced its search function to upstart Google if you can believe that. Yahoo did ultimately grow its revenues another 5x to $5B by 2016, when it was bought by Verizon $VZ in 2016 for $4.5B, excluding a sub’s partial investment in Alibaba. 15/
The buyout was at a far cry from the day Yahoo came into the S&P 500 as the 30th largest capitalization in the index, with a market cap of roughly $90B and I’d guess at a weight of 0.7%. 16/
At its January 3, 2000 peak, Yahoo had climbed to the #15 spot in the index, well ahead of Berkshire Hathaway $BRKA $BRKB (which was not yet in the index despite its mere $83B market cap, $131B in assets and $38B in shareholders equity.) 17/
Had Berkshire been in the index the day Yahoo peaked it would have held only the 37 spot, behind notorious tech darlings Cisco at $358B, Intel $290B, Time Warner $184B, Lucent $171B Sun Mico $168B, AT&T $160B, WorldCom $148B, Dell $130B, HP $120B, Oracle $120B, EMC $116B,… 18/
Qualcomm $116B, DirecTV $102B, Verizon $93B, AOL $93B, Motorola $90B, and Bellsouth $87B. Many of these are gone today, which leads us back to $TSLA. 19/
Never has the S&P 500 committee brought in a company so large by market cap as will be the case with Tesla’s inclusion. Nor have they ever brought in a company at so high a spot in the cap-weighted index, at #6, one notch ahead of Berkshire Hathaway. Insanity. 20/
Of course, by sales & profits, plenty of companies have entered the index as larger constituents, but that’s not what counts in the passive index. It’s all about float adjusted market cap. Fundamental valuation matters not. Qualifying for index inclusion required some hijinks.21/
Tesla had cut R&D & SG&A, drew on reserves and leaned on environmental carbon credits to “earn” a GAAP profit for a necessary four quarters. They did so for five. Oddly, revenues only grew 15% in 2019, prior to the pandemic, in part for a reduction in customer tax incentives. 22/
Impressively, they have grown revenues 15% for the first 9 months of 2020 during the crisis while the incumbents saw sales decline. No doubt the business is growing. But how to value it? 23/
On November 16, the S&P index committee announced Tesla would be added on December 21. The market cap was $380B. Here on Saturday December 19, the stock price at $695 yields a market cap of $659B ($BRK, the current #6 is $528B) up $279B or 73% since the announcement. 24/
The gain matches the percentage rise seen by Yahoo during the week between its announcement & addition. The $279B gain is LARGER than the $215B market cap of the world’s largest auto manufacturer, Toyota. Tesla’s $659B cap is on 948M shares out at 9/30 (up 5% since YE 2019). 25/
The share count excludes another 157M unvested or unexercised option and RSU shares, which would add more than $100B to the market cap on a fully diluted basis. 26/
Let’s not count those for the same reason they were excluded in the Yahoo calculation. Why? Many may go unexercised. Why? Nobody in their right mind would pay $659B, $760B diluted, for a car co w/ $30B in sales, little or no economic profit and an enormous growth capital need.27/
25x sales? 2,030x GAAP earnings? 422x earnings assuming Toyota’s best in industry 6% profit margin? Heck, even 85 times Microsoft’s 30% profit margin (a bone for the Tesla is not a car company but also a software/robotaxi crowd). Welcome to the game, index fund investors. 28/
80% of Tesla’s shares float, not owned by insiders, which means the adjusted market cap weight will be $528B, compelling somewhere between $50 and $75B of direct index purchases, not to mention those needed by index huggers and closet indexers. 29/
The stock will come in at ~1.75% of the $30.5 trillion index, itself significantly overvalued, not unlike when Yahoo peaked in January 2000 and the index peaked at over 30x earnings and 44x cyclically adjusted (CAPE) shortly thereafter. 30/
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What prospective return does the Tesla bull expect, or the passive investor with 1.75% of capital in the shares come Monday? At 15% a year, the market cap, assuming no further dilution, grows to $3T over the next decade, ~10% of the market value of the entire S&P 500 today. 31/
At “only” 10% per year, the fully diluted market cap grows to $2 trillion, almost where $AAPL is valued these days. At a 10% shareholder return, to trade at 30x earnings, Tesla will need to be earning $67 billion. 32/
For grins let’s assume the company actually earns some blend of auto maker profit (most earn ~3%, Toyota ~6%) and a subscription software, robotaxi margin of 30%. Generously call it a 20% blended profit margin, which I’d bet heavily against. 33/
At the impossible 20% margin, $67B would sit under $335B in revenues, roughly 11 times today’s run rate. Revenues will need to grow by almost 28% per year, and profits to 20% of revenues, to get to a 30x multiple on earnings. 34/
To finance the necessary capital stock to produce $335B in revenues will require about half that much in capital, either debt or equity. 35/
Car companies require roughly a dollar in capital to produce a dollar in revenues, but remember we are “assuming” this is a software company or whatever else hallucinogens conjure up in the minds of bulls. 36/
The best course of action for Tesla is to keep selling “at-the-market” blocks, with no prospectus, road show or risk warning, to the dumb money that is willing, or compelled, as is the passive crowd, to pay dangerous prices. The dilution at today’s prices is infinitesimal. 37/
Through the end of 2019 Tesla had sold $12.7B in shares and borrowed $16B in debt and preferred stock. Total capital raised of $28B exceeded FY 2019 revenues of $25B and produced a $6B cumulative LOSS. 38/
So far in 2020, Tesla has borrowed an additional net $200m and sold $12.3B of new shares (assuming a sale of the most recent $5B “at-the-market”). Bulls revere the cash on the balance sheet, but it didn’t come from profit or free cash. 39/
Total capital raised is now $40B before retained losses. What does Tesla earn on capital? Nothing yet. Equity is less than capital raised from stock sales by the amount of cumulative losses. Per share book is of course higher thanks to successful stock sales way above book…40/
From a business case and investment standpoint, the math doesn’t work. Consider that total automobiles sold worldwide peaked two years ago at about 95m passenger and commercial car and truck units. At $20,000 per new vehicle, we can call the global auto market $2T in size. 41/
Our example has Tesla’s market cap growing over the next decade at “only” 10% per year to a like $2T. Car companies, with the exception of Ferrari, which makes three cars per year, don’t trade for one times sales. They trade for less. 42/
Toyota, which earns a 6% margin and 6% on capital, trades itself at an all-time-high $215B on revenues of $280B in 2019, less in 2020. 43/
Auto manufacturers trade for less than sales because they make ~3% net margins and earn that same ~3% on capital and revenues grow at ~3%. We can call the industry 3x3x3 (new material here folks). The car business is a bad business, and that’s what Tesla is trying to disrupt? 44/
The best case for shareholders: If Tesla grows the aforementioned sales for the next decade by 28% to $335B (it won’t), the stock will trade for no more than 1x sales, because it’s a CAR company. 45/
If it earns Toyota’s best in class 6% margin, even allowing for software “upgrades,” it earns $20B and trades for 25x, or a $500B market cap, which is a 33% loss from here people using diluted shares. If sales, margins or the multiple are lower, shareholders lose more. 46/
The realistic case: The performance of the stock from here is a giant loss over time and the Tesla cult loses interest in the brand. In fact, they come to hate the brand because of their coming stock losses, customer and employee mistreatment. 47/
Ask the guys and gals on the S and X lines about their unpaid “break” here at quarter end. Rumor has it they can “volunteer their time” to help boost production before yearend. Sales grow nowhere near 28% a year. The incumbent auto manufacturers won’t roll over and play dead. 48/
My prior tweet elaborated on @elonmusk using his inflated shares as currency to acquire another manufacturer w/ capacity, as he mentioned he’d be up for in a friendly merger of equals. The point of that message was that the incumbents won’t take his dangerous scrip in a deal. 49/
That leaves Elon with having to sell new shares perpetually to finance his growth. It makes 100% sense when the shares are insanely overvalued to do so, and despite the ethics of doing so in these recent at-the-market deals. 50/
By contrast, Mr. Buffett points out he’d prefer new and current shareholders to have a fair experience in his company’s shares. If the auto makers won’t take them in a deal, and they shouldn’t, then that leaves new shareholders to provide growth capital. Hello passive crowd. 51/
We’ll see what happens after Monday, when Tesla assumes the #6 perch in the index. When the argument for passive is low fees, remind me in ten years how much of the loss in Tesla’s shares from here should be considered a “fee,” or a tax on stupidity. 52/
At 1.75% of the index, a decline of 80-90% would be heavy, but realistic. Impossible to decline that much? An 88% drop takes you all the way back to….where Tesla’s shares began the year. 53/
A 90% decline takes the cap to $66B, 2.2x current run rate revenues & 37x a hypothetical 6% net margin. A mere 80% drop gets to a $132B cap, 4.4x revenues, and to give the bulls on Tesla not being a car company credit, still 37x a 12% hypothetical profit margin. Ridiculous. 54/
You can play around all you like w/ assumptions for growth, market share, expansion into new markets, profit & returns on capital, but paying for some fractional ownership of today’s $760B fully diluted market value is highly likely to produce a disastrous investment result. 55/
Bravo, S&P. The decision to add $TSLA at present valuation is almost sure to exact pain on passive investors, compelled to “invest” 1.75% of capital in one of the most overvalued companies on record. Brilliant. As the other Buffett sings, “Come Monday, it’ll be all right…” 56/
As disclosure, I have a small short position in $TSLA. Don’t take this note as investment advice because it’s not. Do your own research. Stocks go up & down, and shorting is extremely dangerous. Upside is capped and downside is unlimited. $TSLA has risen 8.3x just this year. 57/
If Tesla repeats the same return over the next year the market cap would be $6.3 trillion. Two years of repeat performance and the cap becomes $52 trillion. Of course, that’s 70% larger than the entire S&P 500, but by then any short seller is long bankrupt. 58/58 END
TL;DR1: TSLA may go down, not probably but maybe at some point after SP500 inclusion. Why? It’s mentioned somewhere in above points comparing it to some historical events and what TSLA makes!
TL;DR2 (from u/rch0wdhury): Yahoo failed after being added in S&P. Tesla can fail, or maybe not. We will get to know in future.


investmentwatchblog--2020-12-21--Poland to fine social media companies that censor lawful speech. A new bill will prohibit Big Tech c

Poland to fine social media companies that censor lawful speech. A new bill will prohibit Big Tech companies to remove content or block accounts if the content does not break Polish law.

Polish Bill Threatens $ 2.2 Million Fines For Social Media Companies Who Censor Lawful Speech ~ Poland leads the way @ @ @ @ @ new bill which takes censorship decisions out of the hands of ideological activists at leftist @ @ @ @ @ Minister Zbigniew Ziobro announced a legal initiative on Thursday which enables individuals to file complaints @ @ @ @ @ remove or censor their posts if they don ’ t break Polish law , according @ @ @ @ @ its provisions , social media services will not be allowed to remove content or block @ @ @ @ @ them does not break Polish law .
In the event of removal or blockage , @ @ @ @ @ to the platform , which will have 24 hours to consider it .
Within 48 @ @ @ @ @ the user will be able to file a petition to the court for the return @ @ @ @ @ will consider complaints within seven days of receipt and the entire process is to be @ @ @ @

Polish Bill Threatens $2.2 Million Fines For Social Media Companies Who Censor Lawful Speech ~ Poland leads the way to liberty!
In a new bill which takes censorship decisions out of the hands of ideological activists at leftist tech giants, Polish Justice Minister Zbigniew Ziobro announced a legal initiative on Thursday which enables individuals to file complaints against social media companies who remove or censor their posts if they don’t break Polish law, according to Poland In.
Under its provisions, social media services will not be allowed to remove content or block accounts if the content on them does not break Polish law. In the event of removal or blockage, a complaint can be sent to the platform, which will have 24 hours to consider it. Within 48 hours of the decision, the user will be able to file a petition to the court for the return of access. The court will consider complaints within seven days of receipt and the entire process is to be electronic. –Poland In


investmentwatchblog--2020-12-21--AMD Sold Over 35,000 Ryzen 5000 & Ryzen 3000 CPUs While Intel Only Sold 5000 10th/9th Gen CPUs In No

AMD Sold Over 35,000 Ryzen 5000 & Ryzen 3000 CPUs While Intel Only Sold 5000 10th/9th Gen CPUs In November at MindFactory

AMD has just scored a landscape victory in the German market with the retailer MindFactory reporting that they were able @ @ @ @ @ 5000 & Ryzen 3000 CPUs while Intel ’ s processors only managed over 5000 sales @ @ @ @ @ .
The detailed numbers posted by Reddit user , Ingebor , show just how big @ @ @ @ @ for AMD ’ s Ryzen CPUs compared to Intel ’ s offerings .

AMD has just scored a landscape victory in the German market with the retailer MindFactory reporting that they were able to sell over 35,000 Ryzen 5000 & Ryzen 3000 CPUs while Intel’s processors only managed over 5000 sales in the month of November. The detailed numbers posted by Reddit user, Ingebor, show just how big of a demand there is for AMD’s Ryzen CPUs compared to Intel’s offerings.
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wccftech.com/amd-ryzen-5000-ryzen-3000-decimate-intel-10th-9th-gen-cpus-in-sales-figure-november/