investmentwatchblog--2020-05-09--California county launches snatch-and-grab program

Are you ready for this week ’ s absurdity ?
Here ’ s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty , your finances , and your prosperity… and on occasion , poetic justice .
19 residents of Ventura County , California have died so far from Covid .
That ’ s 0.002 % of the population .
Most places would consider this a rounding error .
But in Ventura County , it ’ s 19 too many .
So the county government has now launched a ‘ contact tracing @ @ @ @ @ @ @ and perhaps more later , to track down people who might have Covid , “ immediately isolate them , ” and then “ find every one of their contacts ” to isolate those people as well .
They also state that , if someone has Covid and is living in a home with other family members , “ we ’ re not going to be able to keep the person in that home .
.
.
” This is a mass surveillance apparatus that effectively amounts to a snatch-and-grab .
You get a @ @ @ @ @ @ @ removed from your home and taken away from your family because some county bureaucrat traced you to someone who might have the virus .
It ’ s like “ pre-crime ” , but even more ridiculous… I mean , look at the words they ’ re using– it ’ s up to the government now to decide who gets to stay in their own private property with their families .
Click here to watch it yourself .
Kshama Sawant is a member of the City Council of Seattle , and a proud Socialist @ @ @ @ @ @ @ criticize Amazon , one of the most popular whipping boys of the Bolsheviks : “ The super-rich are out of touch with the reality they inflict on the majority of humanity .
They will ruthlessly extract the price of this pandemic recession from workers , unless we fight back .
# TaxAmazon.
” When a Twitter follower under the handle @ KarlMarxJunior suggested , “ How about # NationalizeAmazon ?
” Sawant responded : “ Yes , corporations like Amazon need to be taken into democratic public ownership , to be run by @ @ @ @ @ @ @ need militant mass movements , strike actions at workplaces , to begin to fight to win this .
Because it will be a political strike against billionaires.
” Click here to see the Twitter thread .
Recently we told you how police departments in many cities across the Land of the Free were adopting new policies to NOT arrest people for petty or victimless crimes .
The idea was to keep jails from being overcrowded petri-dishes which would spread Covid-19 .
And some Texas cities were among those easing up .
Officers received @ @ @ @ @ @ @ committing a heinous crime : doing nails and eyelashes from their homes .
In an undercover sting operation , police officers caught the two women attempting to market and sell their services .
Police charged the women for a violation of the lockdown order , and held them in jail on $ 500 bond each .
This is the new criminality in 2020 : women painting nails in their own homes .
Cities with strained budgets are wondering how they are going to get through the economic devastation caused by the lockdowns .
@ @ @ @ @ @ @ is how cities use their scarce resources– to stake-out and arrest women for giving pedicures .
Click here to read the full story .
Nashville Mayor wants to hike property taxes 32 % in “ crisis budget ” The “ crisis budget ” plan of the mayor of Nashville is to cut spending , and raise taxes .
Now that the hard times have hit , governments will take more , and give you less .
Nashville was overspending and racking up debt in the best of times .
And now that the @ @ @ @ @ @ @ expects to miss out on $ 470 million of tax revenue over the next year or so .
For homeowners , that means a property tax increase of about $ 625 per year on a $ 250,000 house .
“ In the end , hard , hard decisions have to be made , ” the Mayor said .
“ Everybody is sacrificing in this budget.
” But it ’ s hard to see where the city is making sacrifices .
The new budget doesn ’ t lay-off any city employees , and in @ @ @ @ @ @ @ $ 115 million .
Click here to read the full story .

by Simon Black
Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, your finances, and your prosperity… and on occasion, poetic justice.
Ventura County, CA to hire dozens of Covid spies
19 residents of Ventura County, California have died so far from Covid. That’s 0.002% of the population.
Most places would consider this a rounding error. But in Ventura County, it’s 19 too many.
So the county government has now launched a ‘contact tracing’ initiative to hire 50 investigators, and perhaps more later, to track down people who might have Covid, “immediately isolate them,” and then “find every one of their contacts” to isolate those people as well.
They also state that, if someone has Covid and is living in a home with other family members, “we’re not going to be able to keep the person in that home. . .”
This is a mass surveillance apparatus that effectively amounts to a snatch-and-grab. You get a knock at the door and are forcibly removed from your home and taken away from your family because some county bureaucrat traced you to someone who might have the virus.
It’s like “pre-crime”, but even more ridiculous… I mean, look at the words they’re using– it’s up to the government now to decide who gets to stay in their own private property with their families.
Click here to watch it yourself.
Seattle City Councilmember calls for nationalizing Amazon
Kshama Sawant is a member of the City Council of Seattle, and a proud Socialist.
She recently took to Twitter to criticize Amazon, one of the most popular whipping boys of the Bolsheviks:
“The super-rich are out of touch with the reality they inflict on the majority of humanity. They will ruthlessly extract the price of this pandemic recession from workers, unless we fight back. #TaxAmazon.”
When a Twitter follower under the handle @KarlMarxJunior suggested, “How about #NationalizeAmazon?” Sawant responded:
“Yes, corporations like Amazon need to be taken into democratic public ownership, to be run by workers for social good. We will need militant mass movements, strike actions at workplaces, to begin to fight to win this. Because it will be a political strike against billionaires.”
Click here to see the Twitter thread.
Undercover cops arrest women for working from home
Recently we told you how police departments in many cities across the Land of the Free were adopting new policies to NOT arrest people for petty or victimless crimes.
The idea was to keep jails from being overcrowded petri-dishes which would spread Covid-19.
And some Texas cities were among those easing up.
We are primarily funded by readers. Please subscribe and donate to support us!
But not Laredo, Texas.
Officers received an anonymous tip that two women were committing a heinous crime: doing nails and eyelashes from their homes.
In an undercover sting operation, police officers caught the two women attempting to market and sell their services.
Police charged the women for a violation of the lockdown order, and held them in jail on $500 bond each.
This is the new criminality in 2020: women painting nails in their own homes.
Cities with strained budgets are wondering how they are going to get through the economic devastation caused by the lockdowns. Revenue is drying up.
And THIS is how cities use their scarce resources– to stake-out and arrest women for giving pedicures.
Click here to read the full story.
Nashville Mayor wants to hike property taxes 32% in “crisis budget”
The “crisis budget” plan of the mayor of Nashville is to cut spending, and raise taxes.
Now that the hard times have hit, governments will take more, and give you less.
Nashville was overspending and racking up debt in the best of times. And now that the economy is locked down, the city expects to miss out on $470 million of tax revenue over the next year or so.
For homeowners, that means a property tax increase of about $625 per year on a $250,000 house.
“In the end, hard, hard decisions have to be made,” the Mayor said. “Everybody is sacrificing in this budget.”
But it’s hard to see where the city is making sacrifices.
The new budget doesn’t lay-off any city employees, and in fact increases spending from last year by $115 million.
Click here to read the full story.


investmentwatchblog--2020-05-09--Governments Are The Real Price Gougers

Governments Are The Real Price Gougers

Ontario Premier Doug Ford said “ he was ready to ‘ throw the book ’ at those who hiked prices on essential goods by five or ten times their usual value.
” He said : Talk about the pot calling the kettle black !
Let ’ s consider the circumstances of Pusateri ’ s price gouging , but let ’ s also consider the circumstances related to the price charged by the government for its so-called universal healthcare system .
This seems appropriate in light of Ford ’ s concern about providing adequate healthcare resources during the COVID-19 pandemic , @ @ @ @ @ @ @ gouging .
Pusateri ’ s charged $ 30 for Lysol disinfecting wipes , which is roughly ten times the prepanic price .
In contrast , as I have written before , the cost of socialized healthcare in Canada in 2018—approximately $ 4,389 per capita—was twenty-three times the cost of private healthcare in the early twentieth century , measured by how long a person must work to pay for healthcare .
And that ’ s a conservative estimate .
At this point , someone might say “ Ah , but the high price of @ @ @ @ @ @ @ government ’ s monopoly .
Rather , it reflects the rising cost of modern medical technology.
” This argument is unconvincing .
There are many complex products—e.g.
, computers—for which competition and technological innovation produce lower prices .
The government ’ s price gouging is more than twice as bad as Pusateri ’ s price gouging .
Unfortunately , government price gouging—through taxation—is hidden from view because healthcare is free to consumers at the point of service , whereas consumers must pay Pusateri ’ s directly for their disinfecting wipes .
Because the @ @ @ @ @ @ @ implications , it should only be used to describe a situation where people are forced to pay a specified price , such as when the government forcibly taxes people for healthcare .
This is not the case with Pusateri ’ s , which can not legally force people to buy disinfecting wipes .
If no one buys disinfecting wipes from Pusateri ’ s , they will eventually lower their price .
On the other hand , if people voluntarily purchase the wipes , Pusateri ’ s higher profits will prompt other retailers and @ @ @ @ @ @ @ to meet the increased demand , which also leads to lower prices .
This is the effect of competition in an unhampered market .
It is equally important to remember that if you pay Pusateri ’ s $ 30 you know for certain that you are getting what you pay for—the disinfecting wipes .
Not so with the government ’ s socialized healthcare , as revealed by the Fraser Institute ’ s 2014 study : As we can see , Canadians have universal access to waiting lists , but not to actual healthcare @ @ @ @ @ @ @ described as a government scheme which forces you to purchase a product which you may not want or need at a price which the government dictates , raises , and confiscates annually .
Then , the government often refuses to deliver the product , without refunding your purchase price , while forbidding you from purchasing a replacement product from competitors elsewhere within its jurisdiction .
Therefore , Ford ’ s holier-than-thou complaint should not be directed toward Pusateri ’ s,1 but toward the government itself : “ It is absolutely disgusting that the @ @ @ @ @ @ @ of highly paid bureaucrats by forcibly price gouging the public on healthcare that is often denied to them when they desperately need it.
” Anyone with a rudimentary understanding of economics can see that Ford ’ s diatribe reveals a political double standard .
Understanding the economics of so-called price gouging in the private sector requires us to turn a deaf ear to politicians .
Instead of complaining about price gouging and empty store shelves , we should learn how market participants filled those shelves in the first place—before the onset of panic @ @ @ @ @ @ @ consider so-called price gouging—and the government ’ s response to it—with the proper context .
I promise you that young teenagers can easily understand these basic economic principles , which is probably why the subject matter is not properly taught in government schools .
After all , we can ’ t have all those graduates questioning government policies .
It is therefore ironic that the government ’ s school closures present a golden opportunity for parents to educate their own children , including in basic economic principles , which is not a difficult @ @ @ @ @ @ @ .
• 1.Pusateri ’ s—perhaps under the threat of punishment from the government ’ s price gougers—issued an apology and promised refunds to customers who voluntarily paid the higher price .

by Lee Friday via Mises
Ontario Premier Doug Ford said “he was ready to ‘throw the book’ at those who hiked prices on essential goods by five or ten times their usual value.” He said:
I’m calling them out: Pusateri’.s I heard that they’re selling hand wipes for $30 a tin? That’s disgusting. Absolutely disgusting that a company like that would be selling hand wipes for that cost….It’s beyond belief….Nothing gets me more furious than someone taking advantage and price gouging the public that are in desperate need of these items.
Talk about the pot calling the kettle black! Let’s consider the circumstances of Pusateri’s price gouging, but let’s also consider the circumstances related to the price charged by the government for its so-called universal healthcare system. This seems appropriate in light of Ford’s concern about providing adequate healthcare resources during the COVID-19 pandemic, which led to Pusateri’s price gouging.
Pusateri’s charged $30 for Lysol disinfecting wipes, which is roughly ten times the prepanic price.
In contrast, as I have written before, the cost of socialized healthcare in Canada in 2018—approximately $4,389 per capita—was twenty-three times the cost of private healthcare in the early twentieth century, measured by how long a person must work to pay for healthcare. And that’s a conservative estimate.
At this point, someone might say “Ah, but the high price of health care is not caused by the government’s monopoly. Rather, it reflects the rising cost of modern medical technology.” This argument is unconvincing. There are many complex products—e.g., computers—for which competition and technological innovation produce lower prices.
The government’s price gouging is more than twice as bad as Pusateri’s price gouging. Unfortunately, government price gouging—through taxation—is hidden from view because healthcare is free to consumers at the point of service, whereas consumers must pay Pusateri’s directly for their disinfecting wipes. Because the phrase “price gouging” has ominous implications, it should only be used to describe a situation where people are forced to pay a specified price, such as when the government forcibly taxes people for healthcare.
We are primarily funded by readers. Please subscribe and donate to support us!
This is not the case with Pusateri’s, which cannot legally force people to buy disinfecting wipes. If no one buys disinfecting wipes from Pusateri’s, they will eventually lower their price. On the other hand, if people voluntarily purchase the wipes, Pusateri’s higher profits will prompt other retailers and manufacturers to increase the supply of wipes to meet the increased demand, which also leads to lower prices. This is the effect of competition in an unhampered market.
It is equally important to remember that if you pay Pusateri’s $30 you know for certain that you are getting what you pay for—the disinfecting wipes. Not so with the government’s socialized healthcare, as revealed by the Fraser Institute’s 2014 study:
Justices of the Supreme Court of Canada have noted that patients in Canada die as a result of waiting lists for universally accessible health care. Our analysis estimates that between 25,456 and 63,090 (with a middle value of 44,273) Canadian women may have died as a result of increased wait times between 1993 and 2009.
As we can see, Canadians have universal access to waiting lists, but not to actual healthcare. Thus, socialized healthcare is best described as a government scheme which forces you to purchase a product which you may not want or need at a price which the government dictates, raises, and confiscates annually. Then, the government often refuses to deliver the product, without refunding your purchase price, while forbidding you from purchasing a replacement product from competitors elsewhere within its jurisdiction.
Therefore, Ford’s holier-than-thou complaint should not be directed toward Pusateri’s,1 but toward the government itself: “It is absolutely disgusting that the government forbids competition and lines the pockets of highly paid bureaucrats by forcibly price gouging the public on healthcare that is often denied to them when they desperately need it.”
Anyone with a rudimentary understanding of economics can see that Ford’s diatribe reveals a political double standard. Understanding the economics of so-called price gouging in the private sector requires us to turn a deaf ear to politicians. Instead of complaining about price gouging and empty store shelves, we should learn how market participants filled those shelves in the first place—before the onset of panic buying. This will enable us to consider so-called price gouging—and the government’s response to it—with the proper context. I promise you that young teenagers can easily understand these basic economic principles, which is probably why the subject matter is not properly taught in government schools. After all, we can’t have all those graduates questioning government policies.
It is therefore ironic that the government’s school closures present a golden opportunity for parents to educate their own children, including in basic economic principles, which is not a difficult task, even for the younger ones.
1.Pusateri’s—perhaps under the threat of punishment from the government’s price gougers—issued an apology and promised refunds to customers who voluntarily paid the higher price.


investmentwatchblog--2020-05-09--Tucker: The unraveling of the Michael Flynn case

VIDEO : “ Tucker : The unraveling of the Michael Flynn case ”

VIDEO: “Tucker: The unraveling of the Michael Flynn case”
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investmentwatchblog--2020-05-10--The bears will get what’s theirs… but not soon

Clearly this rally still has steam , and there aren ’ t any apparent catalysts on the horizon for a return to the downtrend .
Everything that the bears have clung to and hoped for has amounted to a wet fart , leaving them with shitstains in their undies , and worthless puts in their portfolios .
• The market hasn ’ t reacted to employment numbers whatsoever , as they can be explained away as a temporary COVID related blip .
• Earnings season was a shitshow , but Mr. Market didn ’ t care , as all of @ @ @ @ @ @ @ me – priced in .
• The retail mania that was brewing in Jan-Feb has returned , and people have reloaded their powder bags with Trump Buxx .
Being bearish this month is a very bad idea… but eventually the market will have to pay the piper .
Fortunately this summer , there will likely be a great opportunity to reenter puts .
Although optimal timing may be mid-July , a mid-June entry makes it less likely to miss the put train to Tendie-Town .
Over the upcoming 6 weeks , the vast @ @ @ @ @ @ @ “ return to normal ” in daily life and ( at least according to the bull thesis ) , spending habits .
It ’ s doubtful that consumer behavior will return to what it was pre-COVID , however .
These changes in consumption will be reflected in the July earnings season , and also in the BEA ’ s initial Q2 GDP estimate ( released on July 30 ) .
Although Q1 numbers have been explained away as COVID ( despite most of Q1 not being impacted by the lockdown ) , market @ @ @ @ @ @ @ normal ” may not be as tolerant of blood-red Q2 earnings and guidance .
These awful numbers ( from a quarter which was FAR more heavily impacted by lockdown ) may not be “ priced in ” .
Presently , it seems as though most Americans and investors have the impression that job losses are only temporary , and people will be able to simply go back to their previous job after things reopen .
The July and August BLS numbers will likely tell another story .
Any residual unemployment in these months @ @ @ @ @ @ @ .
The August numbers will be particularly telling , as these will capture the people who haven ’ t returned to work even after Trump Buxx have run out .
Right now , options are rather expensive , which makes puts less attractive still .
Although the VIX has had a massive downtrend in the past 6 weeks , it ’ s still quite high historically ( over double the “ normal ” range of 12-15 ) .
This means that a speculator has to pay for a considerable amount of Vega when @ @ @ @ @ @ @ downtrend in VIX ( likely ) continues , we may see this Vega cost reduce significantly , which will result in considerably cheaper OTM options over the coming weeks .
Given the rate of decay from such elevated numbers , it ’ s quite possible that we see a VIX of 17 within 5 weeks .
The real dark horse will be if we have to shut the country back down .
There is no way that this administration will do this unless things have completely gone to hell , similar to what @ @ @ @ @ @ @ their worst .
It ’ s unlikely we see this level of spread anytime soon , as lockdown measures are still fairly firmly in place .
Roughly 4-6 weeks after reopening , though ( aka mid-late June ) , it ’ s possible that things are bad enough that Trump has to double back and close back down .
In the meantime… there really isn ’ t much that bears can look forward to to save them .
Maybe there ’ s some TA bullshit that they can cling to , but from @ @ @ @ @ @ @ how those fundamentals will be spun by the market and interpreted by the retail investor ) , the cavalry is NOT on the horizon anytime soon .
After the middle of next month , though , the bear thesis becomes much stronger , and if one purchases an option that has enough time to truly play out ( Nov 2020 puts ) , the returns may be extreme .
Additionally , if the Summer Bear Party doesn ’ t come to pass , a Nov expiry allows for an early exit , without @ @ @ @ @ @ @ All of the above though would clearly be proven wrong by the end of August , at which time Nov puts would still have a considerable amount of retained Theta value .
TLDR : If we see an ongoing rally in SPY and VIX under 18 before Jun 26 , load up on OTM Nov dated puts .
I ’ m anticipating SPY $ 315 .
Although I ’ m cash-gang right now , I expect to sink $ 100k into 11/20 SPY $ 305p .
For now , bears , it ’ @ @ @ @ @ @ @ puts .
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 .

by psytokine_storm
Clearly this rally still has steam, and there aren’t any apparent catalysts on the horizon for a return to the downtrend. Everything that the bears have clung to and hoped for has amounted to a wet fart, leaving them with shitstains in their undies, and worthless puts in their portfolios.
The market hasn’t reacted to employment numbers whatsoever, as they can be explained away as a temporary COVID related blip.
Earnings season was a shitshow, but Mr. Market didn’t care, as all of the carnage was – say it with me – priced in .
. The retail mania that was brewing in Jan-Feb has returned, and people have reloaded their powder bags with Trump Buxx.
Being bearish this month is a very bad idea… but eventually the market will have to pay the piper. Fortunately this summer, there will likely be a great opportunity to reenter puts. Although optimal timing may be mid-July, a mid-June entry makes it less likely to miss the put train to Tendie-Town.
Over the upcoming 6 weeks, the vast majority of the US will attempt a “return to normal” in daily life and (at least according to the bull thesis), spending habits. It’s doubtful that consumer behavior will return to what it was pre-COVID, however. These changes in consumption will be reflected in the July earnings season, and also in the BEA’s initial Q2 GDP estimate (released on July 30). Although Q1 numbers have been explained away as COVID (despite most of Q1 not being impacted by the lockdown), market psyche after things have “returned to normal” may not be as tolerant of blood-red Q2 earnings and guidance. These awful numbers (from a quarter which was FAR more heavily impacted by lockdown) may not be “priced in”.
Presently, it seems as though most Americans and investors have the impression that job losses are only temporary, and people will be able to simply go back to their previous job after things reopen. The July and August BLS numbers will likely tell another story. Any residual unemployment in these months will be reflective of sustained job losses. The August numbers will be particularly telling, as these will capture the people who haven’t returned to work even after Trump Buxx have run out.
Right now, options are rather expensive, which makes puts less attractive still. Although the VIX has had a massive downtrend in the past 6 weeks, it’s still quite high historically (over double the “normal” range of 12-15). This means that a speculator has to pay for a considerable amount of Vega when an option is purchased. As the downtrend in VIX (likely) continues, we may see this Vega cost reduce significantly, which will result in considerably cheaper OTM options over the coming weeks. Given the rate of decay from such elevated numbers, it’s quite possible that we see a VIX of 17 within 5 weeks.
We are primarily funded by readers. Please subscribe and donate to support us!
The real dark horse will be if we have to shut the country back down. There is no way that this administration will do this unless things have completely gone to hell, similar to what Italy or New York looked like at their worst. It’s unlikely we see this level of spread anytime soon, as lockdown measures are still fairly firmly in place. Roughly 4-6 weeks after reopening, though (aka mid-late June), it’s possible that things are bad enough that Trump has to double back and close back down.
In the meantime… there really isn’t much that bears can look forward to to save them. Maybe there’s some TA bullshit that they can cling to, but from a fundamentals standpoint (or at least how those fundamentals will be spun by the market and interpreted by the retail investor), the cavalry is NOT on the horizon anytime soon. After the middle of next month, though, the bear thesis becomes much stronger, and if one purchases an option that has enough time to truly play out (Nov 2020 puts), the returns may be extreme. Additionally, if the Summer Bear Party doesn’t come to pass, a Nov expiry allows for an early exit, without losing all value in the position. All of the above though would clearly be proven wrong by the end of August, at which time Nov puts would still have a considerable amount of retained Theta value.
TLDR: If we see an ongoing rally in SPY and VIX under 18 before Jun 26, load up on OTM Nov dated puts. I’m anticipating SPY $315. Although I’m cash-gang right now, I expect to sink $100k into 11/20 SPY $305p.
For now, bears, it’s time to abandon ship on your puts.
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.


investmentwatchblog--2020-05-10--Trump made the biggest deal ever with China and they didn’t buy anything from 6 months. Americans ar

Trump made the biggest deal ever with China and they didn’t buy anything from 6 months. Americans are living bailout to bailout in the greatest economy ever

trump made the biggest deal ever with China and they didn ’ t buy anything from 6 months Americans are @ @ @ @ @ the greatest economy ever

trump made the biggest deal ever with China and they didn’t buy anything from 6 months
Americans are living bailout to bailout in the greatest economy ever
— Alessio Urban (@AlessioUrban) May 9, 2020


investmentwatchblog--2020-05-10--When Valuations Actually Matter

When Valuations Actually Matter

TL ; DR – a high correlation between savings/monetary base ratio and 10y US treasury yields imply yields may soon rise , making stocks less attractive .
DISCLAIMER : not a post you want to read if you ’ re looking for a C/P , price , and expiration .
Stock valuations , and their valuations levels , only matter in the context of other alternatives .
I am defining valuation solely by P/E ratio for this post .
When people speak about valuations , it should be relative to other invest-able options , or cash .
The two most @ @ @ @ @ @ @ .
Current and forward P/Es for popular US stock indices are high , relative to their history : That said , relative to US treasury yields , these valuation levels remain attractive .
For UST yields , I am using the 10-year yield , which closed on Thursday at 0.63 % .
Looking at the forward earnings yield less the 10-year treasury , an adjusted yield in the S & P 500 equates to 3.76 % ( 100/22.75 less 0.63 ) .
As a point of recent reference , in December 2018 , @ @ @ @ @ @ @ .
In my mind , the question becomes : are 10-year yields to remain in/around these levels ?
For the record , I do not believe the 10y yield will go negative .
To answer the question posed above , I look to better understand consumer habits .
For this , I simply take Disposable Personal Income , or DPI , and subtract Personal Consumption Expenditures , or PCE ; let ’ s call this the Savings Rate .
I then divide this number by the Monetary Base .
I overlay the 10-year @ @ @ @ @ @ @ high correlation between the two , as shown below : CPI less PCE as a % of Monetary Base | 10-year UST yield Here is another way of looking at the same data : Scatter Chart , of the above chart The red dot is current .
I ’ ve called out additional period which appear to be outliers ( May 1975 , 2008 ) .
What might this mean ?
I do not fully know , but it would appear that if we continue to see the high savings rate relative to @ @ @ @ @ @ @ it would be fair to assume the 10-year yields will rise .
It then is fair to say that if 10y yields rise , given forward P/E levels , stocks are “ overvalued ” .
There is one big factor here : savings must continue to outpace the growth of the monetary base .
A “ V ” shaped recovery implies this won ’ t be the case as spending is to pick back up ( PCE ) .
Additionally , further monetary support could nullify higher yields .
Disclaimer : This information @ @ @ @ @ @ @ not make any investment decisions based on the information in this article .
Do you own due diligence .

by NegativeTangibleBook
TL;DR – a high correlation between savings/monetary base ratio and 10y US treasury yields imply yields may soon rise, making stocks less attractive.
DISCLAIMER: not a post you want to read if you’re looking for a C/P, price, and expiration.

WHEN VALUATIONS MATTER
Stock valuations, and their valuations levels, only matter in the context of other alternatives. I am defining valuation solely by P/E ratio for this post. When people speak about valuations, it should be relative to other invest-able options, or cash.
The two most common financial investments are stocks and bonds. Current and forward P/Es for popular US stock indices are high, relative to their history:

P/E ratios current and forward
That said, relative to US treasury yields, these valuation levels remain attractive. For UST yields, I am using the 10-year yield, which closed on Thursday at 0.63%. Looking at the forward earnings yield less the 10-year treasury, an adjusted yield in the S&P 500 equates to 3.76% (100/22.75 less 0.63). As a point of recent reference, in December 2018, the adjusted earnings yield was 2.32%.
In my mind, the question becomes: are 10-year yields to remain in/around these levels? For the record, I do not believe the 10y yield will go negative.
We are primarily funded by readers. Please subscribe and donate to support us!
To answer the question posed above, I look to better understand consumer habits. For this, I simply take Disposable Personal Income, or DPI, and subtract Personal Consumption Expenditures, or PCE; let’s call this the Savings Rate. I then divide this number by the Monetary Base. I overlay the 10-year yield and find that there is a high correlation between the two, as shown below:

CPI less PCE as a % of Monetary Base | 10-year UST yield

Here is another way of looking at the same data:
Scatter Chart, of the above chart
The red dot is current. I’ve called out additional period which appear to be outliers (May 1975, 2008).
What might this mean? I do not fully know, but it would appear that if we continue to see the high savings rate relative to the growth of the monetary base, it would be fair to assume the 10-year yields will rise.
It then is fair to say that if 10y yields rise, given forward P/E levels, stocks are “overvalued”. There is one big factor here: savings must continue to outpace the growth of the monetary base. A “V” shaped recovery implies this won’t be the case as spending is to pick back up (PCE). Additionally, further monetary support could nullify higher yields.
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.


investmentwatchblog--2020-05-10--Coronavirus: A 10% shift in habits will destroy some companies

It ’ s that the needle is moved 10-15 % this way and that way , causing businesses who relies on high degrees of leverage and economy of scale to eek out a profit due to their thin margins to shutter .
Many of these fixed costs are , well , fixed , so all that lost goes straight into their profits .
Think about how the following sectors will be affected by 10-15 % decrease in traffic : malls , restaurants , bars , airlines , automotive , hospitality , office space and all businesses around offices .
Explicitly @ @ @ @ @ @ @ business travel to make a profit .
Even with cheap oil prices , those business travelers are gone forever .
I know a fair number of executives who vastly prefer teleconferencing – they get to stay at home with their family in their nice houses .
Remember , these are people who are away from home 2 weeks/month .
They hate traveling .
They will literally take a pay cut to not have to travel .
These are the people in business class and first class .
How about cars ?
I was @ @ @ @ @ @ @ but with all of this work from home , I am obviously not going to get a new one for a while , and when I do , I won ’ t get one as pricey or as nice .
Why would I do that when I don ’ t spend anywhere near as much time in it ?
Margins for base models are razor thin .

by buttersquashcorgi
It’s that the needle is moved 10-15% this way and that way, causing businesses who relies on high degrees of leverage and economy of scale to eek out a profit due to their thin margins to shutter. Many of these fixed costs are ,well, fixed, so all that lost goes straight into their profits.
Think about how the following sectors will be affected by 10-15% decrease in traffic: malls, restaurants, bars, airlines, automotive, hospitality, office space and all businesses around offices.
Explicitly, airlines for example relies heavily on business travel to make a profit. Even with cheap oil prices, those business travelers are gone forever. I know a fair number of executives who vastly prefer teleconferencing – they get to stay at home with their family in their nice houses. Remember, these are people who are away from home 2 weeks/month. They hate traveling. They will literally take a pay cut to not have to travel. These are the people in business class and first class.
How about cars? I was thinking of getting a new car, but with all of this work from home, I am obviously not going to get a new one for a while, and when I do, I won’t get one as pricey or as nice. Why would I do that when I don’t spend anywhere near as much time in it? Margins for base models are razor thin.


investmentwatchblog--2020-05-10--Dividend Cuts and Suspensions – Week of May 3, 2020

Scroll Right to see more info see the complete list of dividend cuts and suspensions here www.reddit.com/r/dividends/comments/fhfgsf/coronavirus_dividend_cut_list/

by AlwaysHavingFun2020
Scroll Right to see more info
We are primarily funded by readers. Please subscribe and donate to support us!
DATE ticker name comment 05-08 $CAKE The Cheesecake Factory Incorporated suspend thx u/divtrackerapp 05-08 $KTB Kontoor Brands, Inc. suspend thx u/eragon491 05-08 $CLNY Colony Capital, Inc. suspend thx u/rdking647 05-07 $WYNN Wynn Resorts, Limited suspend thx u/divtrackerapp 05-07 $NMFC New Mountain Finance Corporation reduce $0.34->$0.30 thx u/rdking647 05-07 $WEN The Wendy’s Company reduce $0.10->$0.05 thx u/LCLORD 05-07 $CVI CVR Energy, Inc. reduce $0.80->$0.40 thx u/AvgWeirdo 05-07 $GCI Gannett Co., Inc. suspend 05-06 $SU Suncor Energy Inc. reduce to $0.465->$0.21 05-06 $WELL Welltower Inc. reduce $0.87->$0.61 thx u/lusandar and u/ACsnowflake 05-06 $EPR EPR Properties suspend thx u/AvgWeirdo 05-05 $CRI Carter’s, Inc. suspend thx u/dgmachine 05-05 $MPX Marine Products Corporation reduce $0.12->$0.08 thx u/dgmachine 05-05 $WRK WestRock Company reduce $0.465->$0.20 thx u/N0freelunch1 05-05 $HWM Howmet Aerospace Inc. suspend thx u/PapaCharlie9 05-05 $SBR Sabine Royalty Trust reduce to $0.15171 thx u/todayisagooddayyep 05-05 $CPTA] Capitala Finance Corp. suspend thx u/AvgWeirdo 05-05 $DIS The Walt Disney Company suspend thx u/N0freelunch1 05-03 $MERC Mercer International Inc. reduce $0.1375->$0.065 05-03 $WWD Woodward, Inc. reduce $0.28->$0.08125 05-03 $ROL Rollins, Inc. reduce $0.12->$0.08

see the complete list of dividend cuts and suspensions here www.reddit.com/r/dividends/comments/fhfgsf/coronavirus_dividend_cut_list/


investmentwatchblog--2020-05-10--Deflation is bad for stocks

Deflation is bad for stocks

To fill the hole in GDP and liquidity crunch caused by corona , the Fed and Treasury pumped in several trillion more than the estimated fall in GDP .
Of these trillions , about 2.5 trillion at most was income given to businesses and individual by Treasury .
This is more than 10 % of annual GDP should more than fill the hole in GDP by most estimates .
The rest was in the form of Fed printing and unforgivable loans .
This was to offset the capital flight to safe havens like cash and treasuries and restore liquidity to @ @ @ @ @ @ @ of this government provided income and Fed printing ended up in stocks .
Consensus says that since the amount pumped in as income and loans is greater than the fall in GDP and capital flight to safe havens , the recession is cancelled or there ’ s a Fed put on stocks not specifically doomed or even helped by corona ( FAANG , etc ) .
Note that while stocks have rallied , short term t-bill yields are still falling and long term treasury yields are flat after falling a lot , despite @ @ @ @ @ @ @ flat since stocks bottomed on March 23rd .
Fed futures are expecting negative interest rates .
Investment grade bond yields are much lower .
All of this means that smart investors expect deflation , not inflation , for several years .
This is while the Fed funds rate is already at zero .
Deflation is bad for stocks , good for bonds .
It doesn ’ t matter if you own the stock of a perfect monopoly with zero debt .
If your money can earn a return as cold hard cash , @ @ @ @ @ @ @ business that will have lower earnings due to deflation ?
Yes monopolies have pricing power , but this will diminish if there ’ s deflation and could cause a revenue/income drop .
Also , deflation increases the real yield on treasuries/bonds , so stocks make less sense as an investment .
So why are stocks not pricing in deflation when every other investment asset is ?
Stock investors are stupider and more impulsive than bond investors .
This has never been more true than in the current age of instant gratification ( social @ @ @ @ @ @ @ apps ) , index investing ( blind and constant buying ) , and an 11 year , 500 % stock rally that gave investors confidence in stocks and a FOMO .
The trillion dollar question is , how long can all this keep stocks diverging from reality ?
I think over the next month , as Fed printing slows , government income tapers , and people go back to work , we ’ ll see the top .
What do you think ?

by moazzam0
To fill the hole in GDP and liquidity crunch caused by corona, the Fed and Treasury pumped in several trillion more than the estimated fall in GDP. Of these trillions, about 2.5 trillion at most was income given to businesses and individual by Treasury. This is more than 10% of annual GDP should more than fill the hole in GDP by most estimates. The rest was in the form of Fed printing and unforgivable loans. This was to offset the capital flight to safe havens like cash and treasuries and restore liquidity to bond markets. Inadvertently, a portion of this government provided income and Fed printing ended up in stocks. Consensus says that since the amount pumped in as income and loans is greater than the fall in GDP and capital flight to safe havens, the recession is cancelled or there’s a Fed put on stocks not specifically doomed or even helped by corona (FAANG, etc).
Note that while stocks have rallied, short term t-bill yields are still falling and long term treasury yields are flat after falling a lot, despite record borrowing by Treasury. Gold is flat since stocks bottomed on March 23rd. Fed futures are expecting negative interest rates. Investment grade bond yields are much lower. All of this means that smart investors expect deflation, not inflation, for several years. This is while the Fed funds rate is already at zero.
We are primarily funded by readers. Please subscribe and donate to support us!
Deflation is bad for stocks, good for bonds. It doesn’t matter if you own the stock of a perfect monopoly with zero debt. If your money can earn a return as cold hard cash, why would you buy stock of a business that will have lower earnings due to deflation? Yes monopolies have pricing power, but this will diminish if there’s deflation and could cause a revenue/income drop. Also, deflation increases the real yield on treasuries/bonds, so stocks make less sense as an investment. So why are stocks not pricing in deflation when every other investment asset is?
Stock investors are stupider and more impulsive than bond investors. This has never been more true than in the current age of instant gratification (social media), investment gamification (investing apps), index investing (blind and constant buying), and an 11 year, 500% stock rally that gave investors confidence in stocks and a FOMO. The trillion dollar question is, how long can all this keep stocks diverging from reality? I think over the next month, as Fed printing slows, government income tapers, and people go back to work, we’ll see the top.
What do you think?


investmentwatchblog--2020-05-10--At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times th

Tulip mania ( Dutch : tulpenmanie ) was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637 .
[ 2 ] It is generally considered the first recorded speculative bubble .
[ 3 ] In many ways , the tulip mania was more of a hitherto unknown socio-economic phenomenon than a significant economic crisis .
Historically , it had no critical influence on the prosperity of the Dutch Republic , the world ’ s leading economic and @ @ @ @ @ @ @ [ 4 ] [ 5 ] [ 6 ] Also , from about 1600 to 1720 the Dutch had the highest per capita income in the world .
The term “ tulip mania ” is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values .
[ 7 ] In Europe , formal futures markets appeared in the Dutch Republic during the 17th century .
Among the most notable centered on the tulip market , at the height of tulip mania .
[ 8 ] @ @ @ @ @ @ @ tulip mania , in February 1637 , some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker .
Research is difficult because of the limited economic data from the 1630s , much of which come from biased and speculative sources .
[ 10 ] [ 11 ] Some modern economists have proposed rational explanations , rather than a speculative mania , for the rise and fall in prices .
For example , other flowers , such as the hyacinth , also had high initial prices at @ @ @ @ @ @ @ immediately fell .
The high asset prices may also have been driven by expectations of a parliamentary decree that contracts could be voided for a small cost , thus lowering the risk to buyers .
The 1637 event was popularized in 1841 by the book Extraordinary Popular Delusions and the Madness of Crowds , written by British journalist Charles Mackay .
At one point 12 acres ( 5 ha ) of land were offered for a Semper Augustus bulb .
[ 12 ] Mackay claims that many such investors were ruined by the @ @ @ @ @ @ @ suffered a severe shock .
Although Mackay ’ s book is a classic , his account is contested .
Many modern scholars feel that the mania was not as extraordinary as Mackay described and argue that not enough price data is available to prove that a tulip-bulb bubble actually occurred .
[ 13 ] [ 14 ] [ 15 ] [ 16 ]

via wikipedia:
Tulip mania (Dutch: tulpenmanie) was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637.[2] It is generally considered the first recorded speculative bubble.[3] In many ways, the tulip mania was more of a hitherto unknown socio-economic phenomenon than a significant economic crisis. Historically, it had no critical influence on the prosperity of the Dutch Republic, the world’s leading economic and financial power in the 17th century.[4][5][6] Also, from about 1600 to 1720 the Dutch had the highest per capita income in the world. The term “tulip mania” is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values.[7]
In Europe, formal futures markets appeared in the Dutch Republic during the 17th century. Among the most notable centered on the tulip market, at the height of tulip mania.[8][9] At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker. Research is difficult because of the limited economic data from the 1630s, much of which come from biased and speculative sources.[10][11] Some modern economists have proposed rational explanations, rather than a speculative mania, for the rise and fall in prices. For example, other flowers, such as the hyacinth, also had high initial prices at the time of their introduction, which immediately fell. The high asset prices may also have been driven by expectations of a parliamentary decree that contracts could be voided for a small cost, thus lowering the risk to buyers.
The 1637 event was popularized in 1841 by the book Extraordinary Popular Delusions and the Madness of Crowds, written by British journalist Charles Mackay. At one point 12 acres (5 ha) of land were offered for a Semper Augustus bulb.[12] Mackay claims that many such investors were ruined by the fall in prices, and Dutch commerce suffered a severe shock. Although Mackay’s book is a classic, his account is contested. Many modern scholars feel that the mania was not as extraordinary as Mackay described and argue that not enough price data is available to prove that a tulip-bulb bubble actually occurred.[13][14][15][16]


investmentwatchblog--2020-05-09--The new age of Monetary Policy: an in-depth analysis of Federal Reserve Policy in the 2008 and 2020

The new age of Monetary Policy: an in-depth analysis of Federal Reserve Policy in the 2008 and 2020 financial crises

The Evolution of Monetary Policy : Age of the Bailout In the years leading up to 2008 Wall Street had been celebrating massive gains ; top finance executives were awarded up to $ 53 billion dollars in total compensation in 2007 .
Lloyd Blankfein , former CEO of Goldman Sachs , made $ 68 million himself .
These profits were the result of financial innovations and financial derivatives , specifically mortgage backed securities ( MBS ) .
A mortgage backed security is an asset backed security which is secured by a collection of mortgages .
The mortgages are aggregated and @ @ @ @ @ @ @ and receive periodic payments similar to a bond ’ s coupon payment .
Mortgage backed securities were doing so well in the years leading up to 2008 that lenders were running out of people with good credit to lend to .
Everyone was buying and building houses so much so that the real estate market became a bubble and all the prices inflated .
At first everyone was celebrating the gains in housing prices , since price increases generally meant profits for home investors , mortgage brokers , and even big banks .
@ @ @ @ @ @ @ the real estate bubble burst .
Everyone was immediately impacted ; mortgage giants , Fannie Mae and Freddie Mac , were on the verge of bankruptcy .
Some of the biggest investment banks in the world , each having upwards of $ 10 trillion assets under management , such as Bear Stearns , Lehman Brothers , and Merrill Lynch were about to collapse .
The whole financial sector was in shambles .
“ In a period of 18 months , Wall Street had gone from celebrating its most profitable age to finding itself @ @ @ @ @ @ @ ” Banks were heavily involved with mortgage securities .
Most of these securities were financial derivatives which means they derive their price from an underlying asset .
“ Banks were creating increasingly complex products , many levels removed from the underlying asset.
” The first bank to really be shallow waters was Bear Stearns .
Bear Stearns was a global investment bank whose main area of business was capital markets , wealth management , and investment banking .
In 2008 Bear Stearns had roughly $ 13 trillion in derivative financial instruments , $ @ @ @ @ @ @ @ and futures contracts .
The company had a highly leveraged balance sheet with a lot of illiquid assets that were potentially worthless .
Bear Stearns was the seventh largest securities firm in the world .
Since their business was highly intertwined with other huge financial institutions , their potential collapse would be detrimental for the global economy .
U.S. Treasury secretary Hank Paulson knew that if Bear Stearns and Lehman Brothers collapsed there would be a domino effect across the financial sector and other huge financial institutions such as Citigroup , Merrill Lynch @ @ @ @ @ @ @ would start to lose confidence in the banking sector , more banks would be subject to bank-runs .
In order to prevent the worst from occurring the U.S. Treasury Secretary put together a task force which included Jamie Dimon , CEO of J.P. Morgan Chase , Ben Bernake , Chairmen of the United States Federal Reserve , and Tim Geithner , Head of the New York Fed .
After pondering possible loans and other solutions in order to rescue Bear Stearns , they deemed that there was no way to save Bear Stearns @ @ @ @ @ @ @ capital but because confidence had been lost in Bear Stearns .
J.P. Morgan Chase ended up acquiring Bear Stearns for $ 10 a share , much less than their 52 week high of $ 133 per share .
After Bear Stearns fell the next bank about to collapse was Lehman Brothers .
Lehman Brothers was the fourth largest investment bank in the United States .
Its CEO at the time Richard Fuld blamed the declining stock price on short sellers .
However the short sellers argued that the way Lehman viewed non-liquid assets @ @ @ @ @ @ @ refused to accept that the bank essentially had a bunch of junk mortgage backed securities on their balance sheets and tried to solve Lehman ’ s liquidity problem with more cash .
He reached out to Warren Buffett to try and secure a loan , but Buffett said it was too risky .
Richard even reached out to the U.S. government for a bailout , but Treasury Secretary at the time Henry Paulson refused to bail out Lehman with public tax payer money and instead said that the bank must secure funding from @ @ @ @ @ @ @ the CEO ’ s of major banks and told them to come up with a solution for saving Lehman Brothers .
Likely contenders to buy out Lehman Brothers were Bank of America and British bank , Barclays .
However neither of which were willing to take on the Lehman ’ s real estate assets which were basically worth half of what Lehman was valuing them at .
After failing to secure capital , or merge with another bank Lehman Brothers filed for chapter eleven bankruptcy protection on September 15th , 2008 .
Chapter @ @ @ @ @ @ @ employees .
In the bankruptcy agreement , Lehman Brothers ’ shareholders paid the ultimate price and watched their fortunes from a year prior be worth a fraction of what they were .
At the same time Lehman Brothers was crashing , insurance giant American International Group ( AIG ) and mortgage giants Fannie Mae and Freddie Mac were tumbling down cliffs of their own .
James Lockhart , head of the Federal Housing Finance Agency ( FHFA ) issued a plan to make the two mortgage giants into a conservatorship as government sponsored @ @ @ @ @ @ @ now and still are U.S. government enterprises who facilitate the secondary mortgage market .
The United States Treasury Secretary , Hank Paulson , as well as Federal Reserve Chairman , Ben Bernanke , both agreed with the housing agency ’ s decision .
On the other hand , AIG executives were assuring everyone that the company was in sound financial standing .
At the time , AIG had $ 1 trillion in assets and roughly $ 40 billion in cash .
In addition , executives argued that they had an extremely profitable business @ @ @ @ @ @ @ CDO ) .
A CDO is a financial tool that banks use to package individual homeowners , credit card , and auto loans into securities sold to investors on the market .
CDOs at the time were mainly used to refinance mortgage backed securities..
Most of AIG ’ s business was traditional insurance products such as health , life , and home insurance .
However during the real estate bubble the company began taking a lot of risks in the form of credit default swaps ( CDS ) .
A CDS is a @ @ @ @ @ @ @ the CDS will compensate the buyer if the buyer ’ s asset defaults ( similar to investment insurance ) .
Essentially investors were buying credit default swaps as insurance for their mortgage backed securities .
Once the real estate bubble popped , everyone came to claim insurance for their MBS that just went bankrupt .
AIG had over $ 500 billion in subprime mortgages on their balance sheet .
Its officials were revaluing credit default swaps and losses started to pile up at AIG .
By May of 2008 AIG had suffered a @ @ @ @ @ @ @ billion , their largest loss ever .
Hank Paulson knew that if AIG went bankrupt it would trigger the collapse of financial institutions that bought these credit default swaps .
As the MBS tied to the swaps defaulted , AIG was forced to come up with the capital to repay their investors .
Shareholders started dumping their shares which made it even more difficult for AIG to produce the capital it needed .
Even though they had the assets on their balance sheet to cover the losses , AIG could not liquidate them @ @ @ @ @ @ @ .
It was clear that they were about to go bankrupt .
Hank Paulson and Ben Bernanke did not want AIG ’ s huge influence to hurt lower and middle class families since AIG sold lots bonds , annuities , and insurance products to these people .
An AIG bankruptcy would ’ ve hurt lower and middle class families as well as the whole financial sector which owned credit default swaps issued by AIG .
They were just too big to fail .
So the Federal Reserve along with the U.S. Treasury planned @ @ @ @ @ @ @ loan to AIG .
To put that loan amount into perspective , “ Eighty-five billion dollars was more than the annual budget of Singapore and Taiwan combined ; who could understand a figure that size.
” The loan itself was not enough to calm the markets .
Investors were left puzzled as to why the federal government would bailout one company and not the other .
What were the rules for a bailout ?
Did Hank Paulson ’ s background as a top executive at Goldman Sachs have anything to do with the @ @ @ @ @ @ @ of Goldman , to collapse ?
These questions forced Hank Paulson , Ben Bernanke , and Tim Geithner , president of the New York Federal Reserve Bank , to come up with a solution to calm confusion .
Now with the whole financial sector on the verge of collapsing the Treasury and Federal Reserve came up with a fiscal policy to purchase toxic assets from nine of the largest financial institutions in order to stabilize them .
The institutions include J.P. Morgan , Goldman Sachs , Morgan Stanley , Citigroup , Wells Fargo @ @ @ @ @ @ @ Merrill Lynch , Bank of America , and State Street Corp .
The program to bail them out was known as TARP .
However congress was not too attached to the idea of bailing out Wall Street .
Republicans saw a bailout as socialism creeping into the United States , and Democrats saw it as Paulson bailing out his Wall Street buddies .
Congress voted against TARP and the Dow Jones Industrial Average fell roughly 800 points that day .
Paulson , Bernanke , and Geithner went back to the drawing board .
@ @ @ @ @ @ @ to follow the advice of his assistant Neel Kashkari , which was to purchase equity in the nine largest banks in the United States .
Paulson reached out to Sheila Bair who was the head of the Federal Depositors Insurance Corporation ( FDIC ) and told her about the Treasury Department ’ s new plan .
Sheila agreed to increase the nine bank ’ s coverage limit .
Without wasting any time Hank Paulson , Treasury Secretary of the United States , called all the nine executives together for a meeting at the @ @ @ @ @ @ @ the first time – perhaps the only time – that the nine most powerful CEOs in American Finance and the people who regulate them would be in the same room at the same time.
” Without knowing what the meeting was about , the CEO ’ s of all nine banks had shown up .
To stress the severity and seriousness of the meeting , Paulson had brought along with him the Chairman of the Federal Reserve , the president of the NY Fed , and The head of the FDIC .
Paulson @ @ @ @ @ @ @ $ 250 million in preferred stock in the leading banks in order to stabilize them and restore confidence .
He strong armed all of them into taking the deal even though a few of them claim that they did not need the capital , such as Wells Fargo and J.P. Morgan .
He also informed the banks that the collapse of Lehman Brothers will spillover into other banks , Merrill Lynch was of most concern .
Paulson agreed to let Merrill get bought out by Bank of America in order to save them @ @ @ @ @ @ @ America for $ 29 per share or $ 50 billion far from their 52 week high of $ 88 per share .
The banks had agreed to the deal and so did Congress on October 3rd , 2008 President George Bush signed the TARP program into law .
The program normalized the big banks and brought back investor confidence in Wall Street .
The following year , President Barack Obama introduced legislation that would transform the whole financial regulatory system .
This act was known as the Dodd-Frank Wall Street Reform and Consumer @ @ @ @ @ @ @ as the Volker rule forbids banks from making speculative investments that do not benefit their consumers .
This type of overhaul has not been seen in the U.S. financial system since the Great Depression of 1929 .
In regards to the subprime mortgage crisis , the United States ’ Congress , Treasury , and Federal Reserve acted appropriately however they should have acted more quickly and effectively like Jerome Powell ’ s Federal Reserve has during the COVID-19 crisis .
Some say because of the catastrophe in 2008 and the lessons we have @ @ @ @ @ @ @ Reserve acted the way they did in 2020 .
Thus far , they both have combated the current financial market crisis with immediate action .
If the Federal Reserve and Treasury could ’ ve bailed out Bear Stearns , Lehman , AIG , and Merrill Lynch the way that they bailed out Boeing , that would have been the best case scenario .
In March of 2020 Boeing Co. the airplane manufacturer went to Washington with its hands out begging for a bailout .
The company had spent $ 50 billion on stock @ @ @ @ @ @ @ was asking for a $ 60 billion bailout .
Instead of giving the company a direct handout , the Federal Reserve boosted liquidity in the credit markets by purchasing corporate bonds , thus , Boeing was able to secure $ 25 billion from private investors via the corporate bond market and withdrew its original request for a government bailout .
Despite the 33 million unemployed , many people are applauding Jerome Powell and Steven Mnuchin for quickly passing emergency monetary policy measures .
Like 2008 , these policy measures have insulated the financial @ @ @ @ @ @ @ criticism , feedback , and opinions are greatly appreciated .
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 .

by SwaggyRaggy
The Evolution of Monetary Policy: Age of the Bailout
In the years leading up to 2008 Wall Street had been celebrating massive gains; top finance executives were awarded up to $53 billion dollars in total compensation in 2007. Lloyd Blankfein, former CEO of Goldman Sachs, made $68 million himself. These profits were the result of financial innovations and financial derivatives, specifically mortgage backed securities (MBS). A mortgage backed security is an asset backed security which is secured by a collection of mortgages. The mortgages are aggregated and securitized so that investors can buy them and receive periodic payments similar to a bond’s coupon payment. Mortgage backed securities were doing so well in the years leading up to 2008 that lenders were running out of people with good credit to lend to. Everyone was buying and building houses so much so that the real estate market became a bubble and all the prices inflated.
At first everyone was celebrating the gains in housing prices, since price increases generally meant profits for home investors, mortgage brokers, and even big banks. Not too long after the party, the real estate bubble burst. Everyone was immediately impacted; mortgage giants, Fannie Mae and Freddie Mac, were on the verge of bankruptcy. Some of the biggest investment banks in the world, each having upwards of $10 trillion assets under management, such as Bear Stearns, Lehman Brothers, and Merrill Lynch were about to collapse. The whole financial sector was in shambles. “In a period of 18 months, Wall Street had gone from celebrating its most profitable age to finding itself on the brink of an epochal devastation.” Banks were heavily involved with mortgage securities. Most of these securities were financial derivatives which means they derive their price from an underlying asset. “Banks were creating increasingly complex products, many levels removed from the underlying asset.”
The first bank to really be shallow waters was Bear Stearns. Bear Stearns was a global investment bank whose main area of business was capital markets, wealth management, and investment banking. In 2008 Bear Stearns had roughly $13 trillion in derivative financial instruments, $2 trillion of which were in options and futures contracts. The company had a highly leveraged balance sheet with a lot of illiquid assets that were potentially worthless. Bear Stearns was the seventh largest securities firm in the world. Since their business was highly intertwined with other huge financial institutions, their potential collapse would be detrimental for the global economy.
U.S. Treasury secretary Hank Paulson knew that if Bear Stearns and Lehman Brothers collapsed there would be a domino effect across the financial sector and other huge financial institutions such as Citigroup, Merrill Lynch, and others would fail while consumers would start to lose confidence in the banking sector, more banks would be subject to bank-runs. In order to prevent the worst from occurring the U.S. Treasury Secretary put together a task force which included Jamie Dimon, CEO of J.P. Morgan Chase, Ben Bernake, Chairmen of the United States Federal Reserve, and Tim Geithner, Head of the New York Fed. After pondering possible loans and other solutions in order to rescue Bear Stearns, they deemed that there was no way to save Bear Stearns. This is not because of insufficient capital but because confidence had been lost in Bear Stearns. J.P. Morgan Chase ended up acquiring Bear Stearns for $10 a share, much less than their 52 week high of $133 per share.
After Bear Stearns fell the next bank about to collapse was Lehman Brothers. Lehman Brothers was the fourth largest investment bank in the United States. Its CEO at the time Richard Fuld blamed the declining stock price on short sellers. However the short sellers argued that the way Lehman viewed non-liquid assets such as mortgages was disturbing. Fuld refused to accept that the bank essentially had a bunch of junk mortgage backed securities on their balance sheets and tried to solve Lehman’s liquidity problem with more cash. He reached out to Warren Buffett to try and secure a loan, but Buffett said it was too risky. Richard even reached out to the U.S. government for a bailout, but Treasury Secretary at the time Henry Paulson refused to bail out Lehman with public tax payer money and instead said that the bank must secure funding from the private sector. Paulson gathered all the CEO’s of major banks and told them to come up with a solution for saving Lehman Brothers. Likely contenders to buy out Lehman Brothers were Bank of America and British bank, Barclays. However neither of which were willing to take on the Lehman’s real estate assets which were basically worth half of what Lehman was valuing them at. After failing to secure capital, or merge with another bank Lehman Brothers filed for chapter eleven bankruptcy protection on September 15th, 2008. Chapter eleven bankruptcy protected some creditors and most employees. In the bankruptcy agreement, Lehman Brothers’ shareholders paid the ultimate price and watched their fortunes from a year prior be worth a fraction of what they were.
At the same time Lehman Brothers was crashing, insurance giant American International Group (AIG) and mortgage giants Fannie Mae and Freddie Mac were tumbling down cliffs of their own. James Lockhart, head of the Federal Housing Finance Agency (FHFA) issued a plan to make the two mortgage giants into a conservatorship as government sponsored enterprises. The two mortgage companies were now and still are U.S. government enterprises who facilitate the secondary mortgage market. The United States Treasury Secretary, Hank Paulson, as well as Federal Reserve Chairman, Ben Bernanke, both agreed with the housing agency’s decision.
On the other hand, AIG executives were assuring everyone that the company was in sound financial standing. At the time, AIG had $1 trillion in assets and roughly $40 billion in cash. In addition, executives argued that they had an extremely profitable business supporting insurance on collateral debt obligations (CDO). A CDO is a financial tool that banks use to package individual homeowners, credit card, and auto loans into securities sold to investors on the market. CDOs at the time were mainly used to refinance mortgage backed securities.. Most of AIG’s business was traditional insurance products such as health, life, and home insurance. However during the real estate bubble the company began taking a lot of risks in the form of credit default swaps (CDS). A CDS is a financial exchange agreement where the issuer of the CDS will compensate the buyer if the buyer’s asset defaults (similar to investment insurance). Essentially investors were buying credit default swaps as insurance for their mortgage backed securities. Once the real estate bubble popped, everyone came to claim insurance for their MBS that just went bankrupt. AIG had over $500 billion in subprime mortgages on their balance sheet. Its officials were revaluing credit default swaps and losses started to pile up at AIG. By May of 2008 AIG had suffered a first quarter loss of roughly $8 billion, their largest loss ever. Hank Paulson knew that if AIG went bankrupt it would trigger the collapse of financial institutions that bought these credit default swaps.
As the MBS tied to the swaps defaulted, AIG was forced to come up with the capital to repay their investors. Shareholders started dumping their shares which made it even more difficult for AIG to produce the capital it needed. Even though they had the assets on their balance sheet to cover the losses, AIG could not liquidate them fast enough before the swaps were due. It was clear that they were about to go bankrupt. Hank Paulson and Ben Bernanke did not want AIG’s huge influence to hurt lower and middle class families since AIG sold lots bonds, annuities, and insurance products to these people. An AIG bankruptcy would’ve hurt lower and middle class families as well as the whole financial sector which owned credit default swaps issued by AIG. They were just too big to fail. So the Federal Reserve along with the U.S. Treasury planned a bailout of an $85 billion loan to AIG. To put that loan amount into perspective, “Eighty-five billion dollars was more than the annual budget of Singapore and Taiwan combined; who could understand a figure that size.”
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The loan itself was not enough to calm the markets. Investors were left puzzled as to why the federal government would bailout one company and not the other. What were the rules for a bailout? Did Hank Paulson’s background as a top executive at Goldman Sachs have anything to do with the government allowing Lehman Brothers, a competitor of Goldman, to collapse? These questions forced Hank Paulson, Ben Bernanke, and Tim Geithner, president of the New York Federal Reserve Bank, to come up with a solution to calm confusion. Now with the whole financial sector on the verge of collapsing the Treasury and Federal Reserve came up with a fiscal policy to purchase toxic assets from nine of the largest financial institutions in order to stabilize them. The institutions include J.P. Morgan, Goldman Sachs, Morgan Stanley, Citigroup, Wells Fargo, Bank of New York Mellon, Merrill Lynch, Bank of America, and State Street Corp. The program to bail them out was known as TARP. However congress was not too attached to the idea of bailing out Wall Street. Republicans saw a bailout as socialism creeping into the United States, and Democrats saw it as Paulson bailing out his Wall Street buddies. Congress voted against TARP and the Dow Jones Industrial Average fell roughly 800 points that day.
Paulson, Bernanke, and Geithner went back to the drawing board. Now desperate for a solution Paulson decided to follow the advice of his assistant Neel Kashkari, which was to purchase equity in the nine largest banks in the United States. Paulson reached out to Sheila Bair who was the head of the Federal Depositors Insurance Corporation (FDIC) and told her about the Treasury Department’s new plan. Sheila agreed to increase the nine bank’s coverage limit.
Without wasting any time Hank Paulson, Treasury Secretary of the United States, called all the nine executives together for a meeting at the NY Federal Reserve. “It was the first time – perhaps the only time – that the nine most powerful CEOs in American Finance and the people who regulate them would be in the same room at the same time.” Without knowing what the meeting was about, the CEO’s of all nine banks had shown up. To stress the severity and seriousness of the meeting, Paulson had brought along with him the Chairman of the Federal Reserve, the president of the NY Fed, and The head of the FDIC. Paulson unveiled his plan to purchase up to $250 million in preferred stock in the leading banks in order to stabilize them and restore confidence. He strong armed all of them into taking the deal even though a few of them claim that they did not need the capital, such as Wells Fargo and J.P. Morgan. He also informed the banks that the collapse of Lehman Brothers will spillover into other banks, Merrill Lynch was of most concern. Paulson agreed to let Merrill get bought out by Bank of America in order to save them. They were sold to Bank of America for $29 per share or $50 billion far from their 52 week high of $88 per share. The banks had agreed to the deal and so did Congress on October 3rd, 2008 President George Bush signed the TARP program into law. The program normalized the big banks and brought back investor confidence in Wall Street.
The following year, President Barack Obama introduced legislation that would transform the whole financial regulatory system. This act was known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. One specific provision known as the Volker rule forbids banks from making speculative investments that do not benefit their consumers. This type of overhaul has not been seen in the U.S. financial system since the Great Depression of 1929. In regards to the subprime mortgage crisis, the United States’ Congress, Treasury, and Federal Reserve acted appropriately however they should have acted more quickly and effectively like Jerome Powell’s Federal Reserve has during the COVID-19 crisis.
Some say because of the catastrophe in 2008 and the lessons we have learned, the U.S. Treasury and Federal Reserve acted the way they did in 2020. Thus far, they both have combated the current financial market crisis with immediate action. If the Federal Reserve and Treasury could’ve bailed out Bear Stearns, Lehman, AIG, and Merrill Lynch the way that they bailed out Boeing, that would have been the best case scenario. In March of 2020 Boeing Co. the airplane manufacturer went to Washington with its hands out begging for a bailout. The company had spent $50 billion on stock repurchases within the past year and now was asking for a $60 billion bailout. Instead of giving the company a direct handout, the Federal Reserve boosted liquidity in the credit markets by purchasing corporate bonds, thus, Boeing was able to secure $25 billion from private investors via the corporate bond market and withdrew its original request for a government bailout. Despite the 33 million unemployed, many people are applauding Jerome Powell and Steven Mnuchin for quickly passing emergency monetary policy measures. Like 2008, these policy measures have insulated the financial markets from total ruin.
Author: #$%^#^%, Economist
Editor: @#$%!^&*, J.D General Counsel
Any constructive criticism, feedback, and opinions are greatly appreciated.
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.


investmentwatchblog--2020-05-09--Destroyed by margin call

Destroyed by margin call

To all the retards out there gambling with margin thinking you are Bradley Cooper or something , here is why @ @ @ @ @ it unless you got the cash to cover the call .

by bedofnailz
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To all the retards out there gambling with margin thinking you are Bradley Cooper or something, here is why you don’t do it unless you got the cash to cover the call.


investmentwatchblog--2020-05-09--Danielle DiMartino Booth: “We need some time to tell what is happening with the housing market. We a

Danielle DiMartino Booth: “We need some time to tell what is happening with the housing market. We are not seeing confidence among baby boomers as we are seeing in the FANG stocks. We could see a tremendous amount of supply come to market”

`` We need some time to tell what is happening with the housing market .
We are not seeing confidence @ @ @ @ @ are seeing in the FANG stocks .
We could see a tremendous amount of supply @ @ @ @ @ RT # DimartinoBooth # QuillIntelligence — t.co/FxnpiyoHuW

"We need some time to tell what is happening with the housing market. We are not seeing confidence among baby boomers as we are seeing in the FANG stocks. We could see a tremendous amount of supply come to market"#RT #DimartinoBooth #QuillIntelligence — t.co/FxnpiyoHuW
— Danielle DiMartino Booth (@DiMartinoBooth) May 9, 2020


investmentwatchblog--2020-05-09--40 Years of Risk Appetite data for US Investors. Despite the recent strong rebound Wall Street has n

40 Years of Risk Appetite data for US Investors. Despite the recent strong rebound Wall Street has never been so bearishly positioned

40 Years of Risk Appetite data for US Investors .
Despite the recent strong rebound # WallStreet has never been @ @ @ @ @ forecasts diverge it is a good indicator of deep uncertainty .
So … the dispersion @ @ @ @ @ estimates we are seeing right now , it ain ’ t good news !
@ @ @ @ @ @ The delta in 2-yr yield truly reflects the state of the economy .
An unprecedented @ @ @ @ @ Fed to suppress rates due to extreme debt levels .
Stocks near record valuations are @ @ @ @ @ pic.twitter.com/VYbckFLQFp

40 Years of Risk Appetite data for US Investors. Despite the recent strong rebound #WallStreet has never been so bearishly positioned pic.twitter.com/SjrMbsmNLG
When forecasts diverge it is a good indicator of deep uncertainty. So … the dispersion in S&P500 earnings estimates we are seeing right now, it ain’t good news! @WSJecon via @SoberLook pic.twitter.com/crgoegJ4bJ
Falling again.
The delta in 2-yr yield truly reflects the state of the economy.
An unprecedented dysfunctional macro environment impelling the Fed to suppress rates due to extreme debt levels.
Meanwhile:
Stocks near record valuations are absurdly disconnected from reality. pic.twitter.com/VYbckFLQFp
— Otavio (Tavi) Costa (@TaviCosta) May 7, 2020