investmentwatchblog--2020-06-08--DDDD – Equity Valuations and Why They No Longer Matter

In this week ’ s edition of DDDD ( Data-Driven DD ) , we ’ ll be exploring the most common way that investors calculate what a stock ’ s actually worth , and then why this valuation method no longer anymore .
Also , apparently mods disabled image uploads , so this post is going to be a bit hard to read since I rely a lot on visuals in them ; please direct all your complaints to them .
Disclaimer – This is not financial advice , and a lot of the content below is my personal opinion @ @ @ @ @ @ @ facts , or explanations presented below could be wrong and be made up .
Don ’ t buy random options because some person on the internet says so ; look at what happened to all the SPY 220p 4/17 bag holders .
Do your own research and come to your own conclusions on what you should do with your own money , and how levered you want to be based on your personal risk tolerance .
The DCF model is the most common model for valuing companies in finance , and hence the @ @ @ @ @ @ @ ’ s based on one simple principle : the value of a company is based on the ability of that company to generate cash flows in the future .
This principle is used in virtually every other financial instruments , like bonds , and is also used to help aid capital expenditure decisions .
This method of valuing a company became popular after the 1929 stock market crash , once the “ stonks only go up ” mentality broke and investors started investing in equities based on value and returns rather than speculation @ @ @ @ @ @ @ market in the 1920s , but this idea has been used as far back as ancient Egypt .
Before looking into the math behind the DCF model , another principle needs to be understood – Time Value of Money .
This is the principle that money today , or the Present Value , is worth more than money in the future , or Future Value .
The difference in worth can be caused by many things , such as inflation , the interest rate of Treasuries ( i.e .
risk free rate ) @ @ @ @ @ @ @ difference of worth is calculated to some interest rate , r , which is then used to calculate the Present Value of some future cash flow .
In the case of valuing a company , what would this rate be ?
Typically , the Weighted Average Cost of Capital , or WACC is used for this percentage .
WACC in simple terms is the rate of return typically required to be paid by the company to shareholders and bondholders to raise capital from them .
In this formula , E is the market @ @ @ @ @ @ @ D is the value of all debt in the company Tc is the tax rate paid by the company Rd is the cost of debt , for simplicity let ’ s say this is the average interest rate paid by the company for its outstanding debts Re is the cost of equity .
The most common way of calculating this is the Capital Asset Pricing Model ( CAPM ) , with the formula below Rf is the risk free rate , which is the interest rate an investor can receive when investing in @ @ @ @ @ @ @ US treasury β represents the volatility of a company ’ s stock on the stock market ; this value has its own complicated formula but this value can be usually found in most stock trading platforms Rm is the long-term return of equity markets .
Hence ( Rm – Rf ) is typically seen as the equity risk premium , which is the excess returns given by the stock market for taking on the risk of investing in equities rather than treasuries Free cash flow is typically reported as part of a public @ @ @ @ @ @ @ can easily be discovered .
Intuitively , it ’ s the company ’ s ability to generate cash from operations to pay back stock and bond holders , and is calculated by adding non-cash expenses ( i.e .
depreciation , amortization ) , subtracting capital expenditures , and adding increases in current assets – liabilities to the post-tax EBIT , or Earnings before Interest and Taxes .
Putting it all together With all of these in mind , let ’ s use them to calculate the Enterprise Value of a company .
This @ @ @ @ @ @ @ all future cash flows generated by the company , and discounting it by the weighted average cost of capital .
Since a company can have a potentially perpetual stream of cash flows , and future cash flows beyond a few years becomes very unpredictable , we would instead only do this calculation for the first five years , and then add some “ Terminal Value ” of the company to represent how much the company would be worth by the end of that period , and discount that as well .
To calculate @ @ @ @ @ @ @ need to have some rate , g , which represents the “ growth rate ” of the company once it ’ s mature and no longer growing rapidly ( i.e .
taking market share ) .
Once you add all of the discounted near-term cash flows and discounted Terminal Value , you now have the Enterprise Value .
Once you have that , figuring out the fair value of all the equity in a company , or the market cap , is easy .
Where we are right now Let ’ s see @ @ @ @ @ @ @ for equity valuations today compared to in January for the stock market overall .
Risk Free Rate – Looking at US Treasuries , this is this most obvious and well-known change in this equation , with yields plummeting from 1.5 % from the start of the year to near 0 % today .
Market Risk Premium – This one is a bit complicated because it can ’ t really be immediately calculated and is based largely on investor sentiment .
Historically , market risk premium has been between 5 % to 6 % @ @ @ @ @ @ @ can easily change , however , based on economic and financial conditions .
Right now , let ’ s assume this has remained unchanged , but we ’ ll get back to this later .
Debt – Corporate debt this year has exploded , with an additional $ 1 Trillion raised by companies so far , more than double from last year at the same time of the year Equity – SPY started at this year at $ 325 ; As of time of writing , it ’ s within 2 % of @ @ @ @ @ @ @ skyrocketing bond yields in March as the economy experienced a liquidity crisis , bond yields have since stabilized , aided by the Fed backstop , and bonds yields are now at about the same levels as it was at the start of the year .
So assuming the risk premium being the same , compared to the start of the year , we have a slightly lower cost of equity from a lower risk free rate , roughly the same cost of debt , and having increased corporate debt , making the debt @ @ @ @ @ @ @ WACC .
Since the cost of debt is usually slightly lower than the cost of equity , this provides a slight downwards pressure towards WACC as well .
Thus , WACC has decreased by a small amount since January , due to increased debt levels and decreased risk free rates .
For most non-tech companies , the lockdown has severely hurt their cash flows , with many industries such as airlines burning billions of dollars per month .
It ’ s pretty hard to find up-to-date metrics of what free cash flow is @ @ @ @ @ @ @ instead , I ’ ll just use earnings as a proxy to make a very rough estimate of what it might look like .
According to one source I found , Q1 saw the YoY decline of 14.6 % , with an estimated 36 % decline in earnings for Q2 .
What free cash flow looks like for the remainder of the year , and future years depends on two very fundamental questions .
First , will there be a second wave of lockdowns later in the year ?
On one side of @ @ @ @ @ @ @ similar pandemics and what most medical experts are saying , a second spike of cases is extremely likely to occur in the fall .
On the other hand , the US population seemed to have stopped caring about the virus , and is currently distracted by other problems .
It ’ s unclear whether or not the US population will care enough to lock down the country once again when the second wave hits after being desensitized with the first wave .
In fact the first wave never really stopped ; the US @ @ @ @ @ @ @ over and it ’ s time to go back to business as usual .
Daily Cases for Italy ; What “ flatten the curve ” actually looks like The second question , assuming the answer to the first question is “ No ” , is what kind of recovery the US economy will see .
According to one source , “ V ” -shaped recovery will see earnings going back to normal as early as 2021 .
A “ U ” -shaped recovery , which will represent a recession , could see it @ @ @ @ @ @ @ to pre-COVID output levels .
If we do see a second wave of lockdowns , then what might be seen is a “ W ” -shaped recovery , where we ’ ll see a second steep decline in GDP , and prolong the recession and make it tougher to get towards a recovery as more businesses go bankrupt .
Missing from this model is an “ L ” -shaped recovery , similar to what happened in Japan in the 1990s , and the US in the 1930s , which would represent a decade-long @ @ @ @ @ @ @ believe would look like in my long-term thesis , along with some of the most famous investors in the financial world , like Ray Dalio .
Back to the DCF Model ; we have an additional $ 1 Trillion of corporate debt .
With a total market cap of $ 32 Trillion , the effect of this on the fair value of equities are negligible .
With nearly the same market cap as in the beginning of the year , this would mean the market is pricing in the same Enterprise Value for @ @ @ @ @ @ @ year .
This implies either one of two things , based on the factors explained about • The stock market has priced in a “ V ” -shaped recovery for earnings , with earnings and free cash flow beyond 2020 to remain unimpaired .
• The stock market has priced in a “ U ” -shaped recovery , but this is offset by a lower WACC as the market risk premium has significantly lowered .
This can be caused by a few things , such as decreased perceived risk by investors of companies @ @ @ @ @ @ @ and inflows of cash that was previously waiting in the sidelines ( eg .
retail investors ) , large international funds ( eg .
Saudi and Norway ’ s sovereign wealth funds ) , and yield-seeking institutions as Treasury yields drop to 0 % , with no prospect of a rate increase anytime soon .
Why Fundamentals Might Not Matter Anymore There ’ s another thing that can explain the recent stock market movements other the reasons explained above of what the stock market was pricing in – a stock market bubble .
@ @ @ @ @ @ @ overpowers fundamentals , and the money in the market is no longer investing for long-term , earnings-based gains , but rather trying to get short-term gains through speculation .
In other words people throwing their money in the stock market aren ’ t investing because they legitimately think the company has good fundamentals and will give a good return on their investment through earnings in the long term , but because they believe that stocks only go up , and hence they can make a quick buck by throwing some money in it @ @ @ @ @ @ @ through capital gains .
This is how every asset bubble starts , from the Dutch tulip-mania bubble , the English South Sea bubble , the 1920s stock market bubble , the dot com stock market bubble , and the real estate bubble in the 2000s .
To give an example to illustrate what ’ s happening , let ’ s look at one of the first major bankruptcies to have happened during the stock market crash – Whiting Petroleum ( WLL ) .
I ’ ve previously covered WLL , but the most @ @ @ @ @ @ @ of the valuation of its stock and bonds .
WLL reached a bankruptcy agreement with some of its key creditors on April 23 .
To be clear , this agreement has not been agreed upon with all its creditors and has yet to be approved by the court , and represents the best-case outcome for existing WLL shareholders ; the court or creditors and reject this and demand better terms , or even worse , request to change the bankruptcy to a Chapter 7 and liquidate all the assets .
The agreement was @ @ @ @ @ @ @ bondholder will receive 97 % of the restructured company ’ s equity , and the remaining 3 % will be given to existing shareholders and management .
As of this writing , the price for WLL bonds were all between $ 15 – $ 16.50 .
Using this , we can calculate what the bond market is pricing the restructured WLL at ; multiplying the market value of all the outstanding bonds by 97 % would give you the implied price of it .
From the most recent 10-Q , the face value @ @ @ @ @ @ @ agreement is $ 2.4B .
Using the highest bond price of $ 16.5 , or 0.165 % of face value , the implied market cap of the restructured WLL would be $ 2.4B * 0.165 % * 97 % = $ 384M .
With 91M shares outstanding , this would mean the fair value of the old WLL shares would be $ 384M * 3 % / 91M = $ 0.13 .
As of writing , the current share price is more than 10 times higher than this , at $ 1.38 .
@ @ @ @ @ @ @ ’ s because absolutely no one speculates with bonds , and bond prices are usually entirely grounded in fundamentals ; people buying bonds buy it to hold onto it and not to sell it later at a higher price .
The opposite is clearly happening with WLL stocks .
Noone is buying WLL to receive a small stake in the reorganized corporation once the bankruptcy agreement clears in the best case ; if an institution really wanted it , they would have just bought the bonds .
Instead , people are buying these @ @ @ @ @ @ @ it shortly after for a higher price .
This is what ’ s going on in the stock market right now , which is how bubbles form .
Okay , so you now believe , like me , that the stock market is now in a bubble , and has been in a longer-term bubble for the last decade .
Does this mean that I should sell all my long positions , buy puts , and short the market ?
Absolutely not .
Never short a bubble .
The whole idea of a @ @ @ @ @ @ @ reflect its intrinsic value , but is based on sentiment and speculation .
Just because it ’ s overvalued now doesn ’ t mean it will immediately crash , and there ’ s nothing stopping it from being even more overvalued in the near future ; fundamentals aren ’ t stopping it anymore .
This has been the most clear the past week , with the first wave of COVID-19 cases never actually ending , bad vaccine news , and most US cities literally on fire , yet the stock market is skyrocketing @ @ @ @ @ @ @ my personal strategy is to play into this bubble , while holding a substantial amount of VIX calls as a hedge for when the stock market bubble eventually pops .
I ’ m holding VIX calls of multiple strike prices and expiry dates , mostly in Fall , since I personally believe the stock market will go back towards reality once more companies become insolvent ( i.e .
Fed can no longer help them ) , and a second spike in cases forces countries around the world to a second wave of lockdowns @ @ @ @ @ @ @ .
In the meanwhile , I ’ ll be using Technical Analysis , which is most useful for markets on assets with no fundamentals and driven by pure sentiment , to drive my short-term and medium-term strategies .
Some of you who have been following me for the past few weeks may know that my previous thesis revolved around SPY never breaking above 293 ( +2 % ) , which looked like it was going to happen until it didn ’ t .
This is because according to historical precedents , breaking above @ @ @ @ @ @ @ 62 % retracement , and 200D EMA , and cause a 1W MACD crossover , which always resulted in a V-shaped recovery and new ATHs soon after .
Of course , back then I believed fundamentals still mattered a bit and that this would not happen , but I was clearly wrong and it became clear we ’ re in a short-term super-bubble within the longer-term bubble ; SPY will be hitting new ATHs within the next few weeks .
My personal strategy for playing the bubble is the same as previous weeks @ @ @ @ @ @ @ me – if the market is pricing in a V-shaped recovery , go long on the weakest and most beaten-down stocks that are not currently in bankruptcy , since those will be skyrocketing within the next few weeks as we see a rotation of capital from strong stocks like FAANG that have retraced back to their ATHs towards weak stocks , such as airlines , cruises , and banks .
In other words , I ’ m literally inversing my strategy from a few months ago .
Two weeks ago , some of @ @ @ @ @ @ @ and BA , which I entered into as soon as I saw their 1W MACD crossover , and have been doing phenomenally well last week .
However , I have since exited BA and JPM and taken profit and rolled them into M , GE , WFC , and DAL , among other positions .
My strategy for these tickers are simple – enter long positions ( i.e .
calls ) as soon as they break the 24 % retracement , which acted as a resistance for these industries until recently , and @ @ @ @ @ @ @ skyrocket once it breaks it , and exit at the 50 % retracements .
BA and JPM have since hit these marks , so I exited .
This week , I ’ m holding calls from CCL , DAL , WFC , and GE , which has yet to have broken these levels .
The market will probably need to consolidate next week because we ’ ve had a lot of green days in a row , and it ’ s getting pretty overbought , so I ’ m not expecting these to @ @ @ @ @ @ @ of these positions and take profit , I ’ ll be rolling half of the profits over towards more VIX calls for more hedging .
As always , I ’ ll be posting some thoughts throughout the next few days in this thread below for people interested .
6/7 8PM – Futures very green , especially /RTY , maybe the market is just gon na go for a 5th green day in a row with strong bullish momentum Disclaimer : This information is only for educational purposes .
Do not make any investment @ @ @ @ @ @ @ article .
Do you own due diligence .

by ASoftEngStudent
In this week’s edition of DDDD (Data-Driven DD), we’ll be exploring the most common way that investors calculate what a stock’s actually worth, and then why this valuation method no longer anymore. Also, apparently mods disabled image uploads, so this post is going to be a bit hard to read since I rely a lot on visuals in them; please direct all your complaints to them.
Disclaimer – This is not financial advice, and a lot of the content below is my personal opinion. In fact, the numbers, facts, or explanations presented below could be wrong and be made up. Don’t buy random options because some person on the internet says so; look at what happened to all the SPY 220p 4/17 bag holders. Do your own research and come to your own conclusions on what you should do with your own money, and how levered you want to be based on your personal risk tolerance.
The Discounted Cash Flow Model
The DCF model is the most common model for valuing companies in finance, and hence the fair value of a stock. It’s based on one simple principle: the value of a company is based on the ability of that company to generate cash flows in the future. This principle is used in virtually every other financial instruments, like bonds, and is also used to help aid capital expenditure decisions. This method of valuing a company became popular after the 1929 stock market crash, once the “stonks only go up” mentality broke and investors started investing in equities based on value and returns rather than speculation, which drove much of the stock market in the 1920s, but this idea has been used as far back as ancient Egypt.
Time Value of Money
Before looking into the math behind the DCF model, another principle needs to be understood – Time Value of Money. This is the principle that money today, or the Present Value, is worth more than money in the future, or Future Value. The difference in worth can be caused by many things, such as inflation, the interest rate of Treasuries (i.e. risk free rate), and risk of default. This difference of worth is calculated to some interest rate, r, which is then used to calculate the Present Value of some future cash flow.
Time Value of Money Formula
Cost of Capital
In the case of valuing a company, what would this rate be? Typically, the Weighted Average Cost of Capital, or WACC is used for this percentage.
WACC Formula
WACC in simple terms is the rate of return typically required to be paid by the company to shareholders and bondholders to raise capital from them. In this formula,
E is the market capitalization of all equity in the company
D is the value of all debt in the company
V = E+D
Tc is the tax rate paid by the company
Rd is the cost of debt, for simplicity let’s say this is the average interest rate paid by the company for its outstanding debts
Re is the cost of equity. The most common way of calculating this is the Capital Asset Pricing Model (CAPM), with the formula below
Cost of Equity Formula
In this formula,
Rf is the risk free rate, which is the interest rate an investor can receive when investing in some risk free asset, like a US treasury
β represents the volatility of a company’s stock on the stock market; this value has its own complicated formula but this value can be usually found in most stock trading platforms
Rm is the long-term return of equity markets. Hence (Rm – Rf) is typically seen as the equity risk premium, which is the excess returns given by the stock market for taking on the risk of investing in equities rather than treasuries
Free Cash Flow
Free cash flow is typically reported as part of a public company’s financial statements and hence can easily be discovered. Intuitively, it’s the company’s ability to generate cash from operations to pay back stock and bond holders, and is calculated by adding non-cash expenses (i.e. depreciation, amortization), subtracting capital expenditures, and adding increases in current assets – liabilities to the post-tax EBIT, or Earnings before Interest and Taxes.
Putting it all together
Enterprise Value Formula
With all of these in mind, let’s use them to calculate the Enterprise Value of a company. This is done by adding the sums of all future cash flows generated by the company, and discounting it by the weighted average cost of capital. Since a company can have a potentially perpetual stream of cash flows, and future cash flows beyond a few years becomes very unpredictable, we would instead only do this calculation for the first five years, and then add some “Terminal Value” of the company to represent how much the company would be worth by the end of that period, and discount that as well.
Terminal Value Formula
To calculate this Terminal Value, we’ll need to have some rate, g, which represents the “growth rate” of the company once it’s mature and no longer growing rapidly (i.e. taking market share).
Once you add all of the discounted near-term cash flows and discounted Terminal Value, you now have the Enterprise Value. Once you have that, figuring out the fair value of all the equity in a company, or the market cap, is easy.
Fair Market Cap = Enterprise Value – Total Debt + Cash
Where we are right now
Let’s see how recent events have changed the equation for equity valuations today compared to in January for the stock market overall.
Cost of Equity
Risk Free Rate – Looking at US Treasuries, this is this most obvious and well-known change in this equation, with yields plummeting from 1.5% from the start of the year to near 0% today.
Risk Free Rate Graph
Market Risk Premium – This one is a bit complicated because it can’t really be immediately calculated and is based largely on investor sentiment. Historically, market risk premium has been between 5% to 6% for the US stock market. This can easily change, however, based on economic and financial conditions. Right now, let’s assume this has remained unchanged, but we’ll get back to this later.
Cost of Capital
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Debt – Corporate debt this year has exploded, with an additional $1 Trillion raised by companies so far, more than double from last year at the same time of the year
Equity – SPY started at this year at $325; As of time of writing, it’s within 2% of this number
Cost of Debt – Despite skyrocketing bond yields in March as the economy experienced a liquidity crisis, bond yields have since stabilized, aided by the Fed backstop, and bonds yields are now at about the same levels as it was at the start of the year.
Bond Yields
So assuming the risk premium being the same, compared to the start of the year, we have a slightly lower cost of equity from a lower risk free rate, roughly the same cost of debt, and having increased corporate debt, making the debt weigh more proportionally than before in our WACC. Since the cost of debt is usually slightly lower than the cost of equity, this provides a slight downwards pressure towards WACC as well. Thus, WACC has decreased by a small amount since January, due to increased debt levels and decreased risk free rates.
Free Cash Flow
For most non-tech companies, the lockdown has severely hurt their cash flows, with many industries such as airlines burning billions of dollars per month. It’s pretty hard to find up-to-date metrics of what free cash flow is for the S&P500, so instead, I’ll just use earnings as a proxy to make a very rough estimate of what it might look like. According to one source I found, Q1 saw the YoY decline of 14.6%, with an estimated 36% decline in earnings for Q2.
What free cash flow looks like for the remainder of the year, and future years depends on two very fundamental questions.
First, will there be a second wave of lockdowns later in the year? On one side of this, based on the history of similar pandemics and what most medical experts are saying, a second spike of cases is extremely likely to occur in the fall. On the other hand, the US population seemed to have stopped caring about the virus, and is currently distracted by other problems. It’s unclear whether or not the US population will care enough to lock down the country once again when the second wave hits after being desensitized with the first wave. In fact the first wave never really stopped; the US just started pretending that the pandemic is over and it’s time to go back to business as usual.
US Daily Cases
Daily Cases for Italy; What “flatten the curve” actually looks like
The second question, assuming the answer to the first question is “No”, is what kind of recovery the US economy will see. According to one source, “V”-shaped recovery will see earnings going back to normal as early as 2021. A “U”-shaped recovery, which will represent a recession, could see it take up until 2022 to return back to pre-COVID output levels. If we do see a second wave of lockdowns, then what might be seen is a “W”-shaped recovery, where we’ll see a second steep decline in GDP, and prolong the recession and make it tougher to get towards a recovery as more businesses go bankrupt.
GDP Projections
Missing from this model is an “L”-shaped recovery, similar to what happened in Japan in the 1990s, and the US in the 1930s, which would represent a decade-long depression. This is what I personally believe would look like in my long-term thesis, along with some of the most famous investors in the financial world, like Ray Dalio.
Back to the DCF Model; we have an additional $1 Trillion of corporate debt. With a total market cap of $32 Trillion, the effect of this on the fair value of equities are negligible. With nearly the same market cap as in the beginning of the year, this would mean the market is pricing in the same Enterprise Value for the market as the start of the year. This implies either one of two things, based on the factors explained about
The stock market has priced in a “V”-shaped recovery for earnings, with earnings and free cash flow beyond 2020 to remain unimpaired. The stock market has priced in a “U”-shaped recovery, but this is offset by a lower WACC as the market risk premium has significantly lowered. This can be caused by a few things, such as decreased perceived risk by investors of companies due to fiscal and monetary stimulus, and inflows of cash that was previously waiting in the sidelines (eg. retail investors), large international funds (eg. Saudi and Norway’s sovereign wealth funds), and yield-seeking institutions as Treasury yields drop to 0%, with no prospect of a rate increase anytime soon.
Why Fundamentals Might Not Matter Anymore
There’s another thing that can explain the recent stock market movements other the reasons explained above of what the stock market was pricing in – a stock market bubble. This happens when speculation in the market overpowers fundamentals, and the money in the market is no longer investing for long-term, earnings-based gains, but rather trying to get short-term gains through speculation. In other words people throwing their money in the stock market aren’t investing because they legitimately think the company has good fundamentals and will give a good return on their investment through earnings in the long term, but because they believe that stocks only go up, and hence they can make a quick buck by throwing some money in it and cashing out later and making money through capital gains. This is how every asset bubble starts, from the Dutch tulip-mania bubble, the English South Sea bubble, the 1920s stock market bubble, the dot com stock market bubble, and the real estate bubble in the 2000s.
To give an example to illustrate what’s happening, let’s look at one of the first major bankruptcies to have happened during the stock market crash – Whiting Petroleum (WLL). I’ve previously covered WLL, but the most interesting part of it is the dislocation of the valuation of its stock and bonds.
WLL reached a bankruptcy agreement with some of its key creditors on April 23. To be clear, this agreement has not been agreed upon with all its creditors and has yet to be approved by the court, and represents the best-case outcome for existing WLL shareholders; the court or creditors and reject this and demand better terms, or even worse, request to change the bankruptcy to a Chapter 7 and liquidate all the assets. The agreement was to restructure the corporation such that the bondholder will receive 97% of the restructured company’s equity, and the remaining 3% will be given to existing shareholders and management.
As of this writing, the price for WLL bonds were all between $15 – $16.50.
Example WLL Bond Pricing
Using this, we can calculate what the bond market is pricing the restructured WLL at; multiplying the market value of all the outstanding bonds by 97% would give you the implied price of it. From the most recent 10-Q, the face value of all notes involved in the bankruptcy agreement is $2.4B. Using the highest bond price of $16.5, or 0.165% of face value, the implied market cap of the restructured WLL would be $2.4B * 0.165% * 97% = $384M.
With 91M shares outstanding, this would mean the fair value of the old WLL shares would be $384M * 3% / 91M = $0.13. As of writing, the current share price is more than 10 times higher than this, at $1.38.
How could this be possible? It’s because absolutely no one speculates with bonds, and bond prices are usually entirely grounded in fundamentals; people buying bonds buy it to hold onto it and not to sell it later at a higher price. The opposite is clearly happening with WLL stocks. Noone is buying WLL to receive a small stake in the reorganized corporation once the bankruptcy agreement clears in the best case; if an institution really wanted it, they would have just bought the bonds. Instead, people are buying these shares because they believe they can sell it shortly after for a higher price. This is what’s going on in the stock market right now, which is how bubbles form.
Making Tendies in a Bubble
Okay, so you now believe, like me, that the stock market is now in a bubble, and has been in a longer-term bubble for the last decade. Does this mean that I should sell all my long positions, buy puts, and short the market? Absolutely not. Never short a bubble. The whole idea of a bubble is that asset prices no longer reflect its intrinsic value, but is based on sentiment and speculation. Just because it’s overvalued now doesn’t mean it will immediately crash, and there’s nothing stopping it from being even more overvalued in the near future; fundamentals aren’t stopping it anymore. This has been the most clear the past week, with the first wave of COVID-19 cases never actually ending, bad vaccine news, and most US cities literally on fire, yet the stock market is skyrocketing for no apparent reason.
Instead, my personal strategy is to play into this bubble, while holding a substantial amount of VIX calls as a hedge for when the stock market bubble eventually pops. I’m holding VIX calls of multiple strike prices and expiry dates, mostly in Fall, since I personally believe the stock market will go back towards reality once more companies become insolvent (i.e. Fed can no longer help them), and a second spike in cases forces countries around the world to a second wave of lockdowns, as warned by most medical experts.
In the meanwhile, I’ll be using Technical Analysis, which is most useful for markets on assets with no fundamentals and driven by pure sentiment, to drive my short-term and medium-term strategies. Some of you who have been following me for the past few weeks may know that my previous thesis revolved around SPY never breaking above 293 (+2%), which looked like it was going to happen until it didn’t. This is because according to historical precedents, breaking above this level will bring SPY above the 62% retracement, and 200D EMA, and cause a 1W MACD crossover, which always resulted in a V-shaped recovery and new ATHs soon after. Of course, back then I believed fundamentals still mattered a bit and that this would not happen, but I was clearly wrong and it became clear we’re in a short-term super-bubble within the longer-term bubble; SPY will be hitting new ATHs within the next few weeks.
My personal strategy for playing the bubble is the same as previous weeks, for those that have been following me – if the market is pricing in a V-shaped recovery, go long on the weakest and most beaten-down stocks that are not currently in bankruptcy, since those will be skyrocketing within the next few weeks as we see a rotation of capital from strong stocks like FAANG that have retraced back to their ATHs towards weak stocks, such as airlines, cruises, and banks. In other words, I’m literally inversing my strategy from a few months ago. Two weeks ago, some of these positions included CCL, JPM, and BA, which I entered into as soon as I saw their 1W MACD crossover, and have been doing phenomenally well last week. However, I have since exited BA and JPM and taken profit and rolled them into M, GE, WFC, and DAL, among other positions.
CCL, Daily
BA, Daily
GE, Daily
DAL, Daily
My strategy for these tickers are simple – enter long positions (i.e. calls) as soon as they break the 24% retracement, which acted as a resistance for these industries until recently, and hence means that their stock price will skyrocket once it breaks it, and exit at the 50% retracements. BA and JPM have since hit these marks, so I exited. This week, I’m holding calls from CCL, DAL, WFC, and GE, which has yet to have broken these levels. The market will probably need to consolidate next week because we’ve had a lot of green days in a row, and it’s getting pretty overbought, so I’m not expecting these to print immediately. As I exit all of these positions and take profit, I’ll be rolling half of the profits over towards more VIX calls for more hedging.
Live Updates
As always, I’ll be posting some thoughts throughout the next few days in this thread below for people interested.
6/7 8PM – Futures very green, especially /RTY, maybe the market is just gonna go for a 5th green day in a row with strong bullish momentum
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--2020-06-08--Friendly Alert: Greed Index Now: 69 Very GREEDY (was 59 this morning) !

Greed overtakes fear in the stock market , but don ’ t be lured into this short-lived rally www.marketwatch.com/story/greed-takes-over-fear-in-the-stock-market-but-dont-be-lured-into-this-short-lived-rally-2020-04-07 Disclaimer @ @ @ @ @ for educational purposes .
Do not make any investment decisions based on the information in @ @ @ @ @ own due diligence .

by BuzzLima
Be Careful
Greed Index Now: 69 Very GREEDY money.cnn.com/data/fear-and-greed/
Greed returns to Wall Street as stock market rebounds www.cnn.com/2020/06/01/investing/fear-greed-index/index.html
Greed overtakes fear in the stock market, but don’t be lured into this short-lived rally www.marketwatch.com/story/greed-takes-over-fear-in-the-stock-market-but-dont-be-lured-into-this-short-lived-rally-2020-04-07
We are primarily funded by readers. Please subscribe and donate to support us!
Buy Fear, Sell Greed: A Simple Phrase to Make Money www.thebalance.com/how-fear-and-greed-make-money-4118989
Remember,
Fools Buy when Cabal Sells… See chart
i.pinimg.com/564x/60/a3/90/60a390ae9ba44ccab4638bc3318b55f0.jpg
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--2020-06-08--FYI, this doesn’t happen at the beginning of bull markets.

The biggest US junk-bond ETF saw its largest-ever inflow last week , of $ 3.5 billion .
“ There is @ @ @ @ @ never fight the Fed .
But what the market has learned is that you do @ @ @ @ @ pic.twitter.com/huNw82aPBK

The biggest US junk-bond ETF saw its largest-ever inflow last week, of $3.5 billion. “There is an expression that you should never fight the Fed. But what the market has learned is that you do front run them.” t.co/yokXmwIRsc pic.twitter.com/huNw82aPBK
— Lisa Abramowicz (@lisaabramowicz1) June 8, 2020


investmentwatchblog--2020-06-08--“Don’t forget. The Fed can’t print jobs and the Fed can’t print cash flows.”

"Don't forget. The Fed can't print jobs and the Fed can't print cash flows." @KeithMcCullough @Hedgeye — Ken McCarthy (@KenMcCarthy) June 8, 2020
U.S. will see 'meaningful recessionary impulse' if more than 40% of jobs are permanently lost, strategist says t.co/9EX2n5JbB0 V-shaped bullshit @StockBoardAsset — Alessio Urban (@AlessioUrban) June 8, 2020
Nasdaq at all time highs with people lining up at food banks. What a country.t.co/HQWZVvJBma — Sven Henrich (@NorthmanTrader) June 8, 2020
Thank goodness we can put another of these historical analogies back in the drawer. pic.twitter.com/hSZlKViujc — Lance Roberts (@LanceRoberts) June 8, 2020
Take the time to read every word. ht @jessefelder t.co/xLSd1SRDdF — Danielle DiMartino Booth (@DiMartinoBooth) June 8, 2020
Just to put things into perspective. Combined balance sheets of Top4 Central banks (Fed, Bank of Japan, ECB, Bank of England) have jumped to 47% of GDP, almost a five-fold increase since 2007. pic.twitter.com/UUN4sZXovu — Holger Zschaepitz (@Schuldensuehner) June 8, 2020


investmentwatchblog--2020-06-08--I’m sure it’s NOTHING.

I’m sure it’s NOTHING.

What happens if/when a second wave occurs ?
Watch Arizona , cases are surging now and their hospitals are now @ @ @ @ @ will they flatten the curve ?
Another shutdown ?
Or , will they go the @ @ @ @ @ ?
t.co/30Ob6wnWRF pic.twitter.com/3V7wDjDqKT

What happens if/when a second wave occurs?
Watch Arizona, cases are surging now and their hospitals are now at their limit.
How will they flatten the curve? Another shutdown? Or, will they go the Sweden route and do nothing? t.co/30Ob6wnWRF pic.twitter.com/3V7wDjDqKT
— Jim Bianco (@biancoresearch) June 8, 2020


investmentwatchblog--2020-06-08--Law forbade more than 10 people at my brothers funeral. George Floyd’s funeral was a slap in the fac

Law forbade more than 10 people at my brothers funeral. George Floyd’s funeral was a slap in the face. I’m done being a puppet.

A few weeks ago , I unexpectedly lost my older brother to a massive heart attack from an undiagnosed heart condition .
He was a handsome 38 year old man that took really good care of himself .
He had a loving wife and two adorable children under the age of 6 .
So many people loved him and we were all absolutely crushed by the news .
When the media made it apparent that Covid-19 was dangerous , I took all the precautions .
I remained in my small apartment by myself for months with no contact .
I @ @ @ @ @ @ @ through Zoom when my parents ( who live 20 mins away from me ) were about to take him to the vet to be put down .
It soon became apparent that Covid-19 numbers were not as bad as they projected .
What once was a justifiable act of flattening the curve and keeping our hospitals manageable turned into “ you are an evil and selfish person if you do not social distance yourself and wear a mask until we find a cure.
” Societal pressure made me eat this bullshit .
Although @ @ @ @ @ @ @ , I did not want to inadvertently kill an old lady somewhere .
It was my duty as a human to quarantine .
Once my older brother died , my family needed each other more than ever .
Social distancing away from each was no longer an option .
My immediate family grieved together , but all others had to awkwardly pay their respects from a distance .
So many people my brother impacted in his life were conflicted on how to reach out .
It was painful to watch .
We were @ @ @ @ @ @ @ , I would have expected hundreds of friends and family at his funeral .
He was the most charismatic and genuinely loving person in my life .
But he died in the year 2020 , and the law forbade anyone to exceed the limit of 10 people at his outdoor funeral .
Out of the 10 people allowed to attend , one was the priest and TWO were appointed funeral directors .
No matter how much we begged and pleaded , their policy was unwavering .
They would not drop ONE funeral director @ @ @ @ @ @ @ could be by her side as she buried her husband ’ s ashes .
As we were still in the process of mourning my brother , that cop disgustingly murdered George Floyd in Minnesota .
And thousands of people attended his indoor funeral service led by Al Sharpton .
Thousands of people who never met George Floyd were there holding hands and many of them were not even wearing masks .
It was a slap in the face .
From that moment , millions of people gathered the streets in protests with politicians @ @ @ @ @ @ @ The mass media had a new agenda : “ Riots are out of control !
Cops are beating the shit out of everyone !
” They found a new way of implementing curfews with a new woke message : “ if you ain ’ t with us , you are against us.
” A message that represented the complete opposite of what they condemned just a week ago .
I believe that our black culture is treated unfairly , but this oppression is far beyond any police brutality .
But…with a blink of @ @ @ @ @ @ @ was a social activist with the answer .
If you are a cop , you have no race , you are a racist , and you are the enemy .
Defund and dismantle the police .

by jdb5588
A few weeks ago, I unexpectedly lost my older brother to a massive heart attack from an undiagnosed heart condition. He was a handsome 38 year old man that took really good care of himself. He had a loving wife and two adorable children under the age of 6. So many people loved him and we were all absolutely crushed by the news.
When the media made it apparent that Covid-19 was dangerous, I took all the precautions. I remained in my small apartment by myself for months with no contact. I even said goodbye to my childhood dog through Zoom when my parents (who live 20 mins away from me) were about to take him to the vet to be put down.
It soon became apparent that Covid-19 numbers were not as bad as they projected. What once was a justifiable act of flattening the curve and keeping our hospitals manageable turned into “you are an evil and selfish person if you do not social distance yourself and wear a mask until we find a cure.” Societal pressure made me eat this bullshit. Although I no longer feared my own life, I did not want to inadvertently kill an old lady somewhere. It was my duty as a human to quarantine.
We are primarily funded by readers. Please subscribe and donate to support us!
Once my older brother died, my family needed each other more than ever. Social distancing away from each was no longer an option. My immediate family grieved together, but all others had to awkwardly pay their respects from a distance. So many people my brother impacted in his life were conflicted on how to reach out. It was painful to watch. We were all so isolated.
Any other year, I would have expected hundreds of friends and family at his funeral. He was the most charismatic and genuinely loving person in my life. But he died in the year 2020, and the law forbade anyone to exceed the limit of 10 people at his outdoor funeral. Out of the 10 people allowed to attend, one was the priest and TWO were appointed funeral directors. No matter how much we begged and pleaded, their policy was unwavering. They would not drop ONE funeral director so that my sister-in-law’s mother could be by her side as she buried her husband’s ashes.
As we were still in the process of mourning my brother, that cop disgustingly murdered George Floyd in Minnesota. And thousands of people attended his indoor funeral service led by Al Sharpton. Thousands of people who never met George Floyd were there holding hands and many of them were not even wearing masks. It was a slap in the face.
From that moment, millions of people gathered the streets in protests with politicians. Covid-19 was suddenly an afterthought. The mass media had a new agenda: “Riots are out of control! Cops are beating the shit out of everyone!” They found a new way of implementing curfews with a new woke message: “if you ain’t with us, you are against us.” A message that represented the complete opposite of what they condemned just a week ago. I believe that our black culture is treated unfairly, but this oppression is far beyond any police brutality. But…with a blink of an eye, everyone on social media was a social activist with the answer. If you are a cop, you have no race, you are a racist, and you are the enemy. Defund and dismantle the police.


investmentwatchblog--2020-06-08--NY Times has a message for the kids. Not brainwashing at all.

This is the propaganda arm of the Communist Party .

by Venus230
That’s not fit to print.
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This is the propaganda arm of the Communist Party.


investmentwatchblog--2020-06-08--Fed Bailout Then Mass Layoffs. Hyper Bubble Risk In the 2020 Markets Worse Than Dot Com

Take a look at the markets .
They ’ re doing fantastic .
Nothing can bring them down thanks to @ @ @ @ @ .
They have our best interests in mind because they care .
They ’ re @ @ @ @ @ to companies in need and that will help out individuals because they can keep their @ @ @ @ @ happens when the Fed bails out companies and they just fire people anyway ?
All @ @ @ @ @ are talking about a V-shaped recovery again : ‘ The stock market had it right @ @ @ @ @ Forecast Miss Could Have Policy Ramifications – Bloomberg ( 18 ) Sven Henrich on Twitter @ @ @ @ @ in context t.co/iZIZjlewZR ” / Twitter Citi Says Wealthy Clients Are Holding Too Much Cash @ @ @ @ @ Bloomberg

Take a look at the markets. They’re doing fantastic. Nothing can bring them down thanks to Jay Powell and the crew. They have our best interests in mind because they care. They’re working hard to give money to companies in need and that will help out individuals because they can keep their jobs. Except, what happens when the Fed bails out companies and they just fire people anyway?
All of a sudden, people are talking about a V-shaped recovery again: ‘The stock market had it right’
www.cnbc.com/2020/06/06/all-of-a-sudden-people-are-talking-about-a-v-shaped-recovery-again-the-stock-market-had-it-right.html
Assets: Total Assets: Total Assets (Less Eliminations From Consolidation): Wednesday Level (WALCL) | FRED | St. Louis Fed
fred.stlouisfed.org/series/WALCL
Central Bank Assets for Euro Area (11-19 Countries) (ECBASSETSW) | FRED | St. Louis Fed
fred.stlouisfed.org/series/ECBASSETSW
Bank of Japan: Total Assets for Japan (JPNASSETS) | FRED | St. Louis Fed
fred.stlouisfed.org/series/JPNASSETS
May Jobs Report: Forecast Miss Could Have Policy Ramifications – Bloomberg
www.bloomberg.com/opinion/articles/2020-06-06/may-jobs-report-forecast-miss-could-have-policy-ramifications
(15) Sven Henrich (@NorthmanTrader) / Twitter
We are primarily funded by readers. Please subscribe and donate to support us!
twitter.com/NorthmanTrader
(18) Sven Henrich on Twitter: “Now try it in context t.co/iZIZjlewZR” / Twitter
twitter.com/NorthmanTrader/status/1269294827952373765
Fed Vow Boosts Debt Binge as Borrowers Cut Thousands of Jobs – Bloomberg
www.bloomberg.com/news/articles/2020-06-05/fed-vow-boosts-debt-binge-while-borrowers-cut-thousands-of-jobs?sref=V47xycDY
Citi Says Wealthy Clients Are Holding Too Much Cash, Time to Buy – Bloomberg
www.bloomberg.com/news/articles/2020-06-04/citi-says-wealthy-clients-are-holding-too-much-cash-time-to-buy
workers part time econ reasons.jpg (1208×884)
www.zerohedge.com/s3/files/inline-images/workers%20part%20time%20econ%20reasons.jpg?itok=HEAfstda
Canada Trade Plummets Amid Global Shutdowns, Deficit Widens – Bloomberg
www.bloomberg.com/news/articles/2020-06-04/canadian-trade-plummets-amid-global-shutdowns-deficit-widens?srnd=premium-canada


investmentwatchblog--2020-06-08--Police went on strike in 1919 and mass violence and looting took over Boston for 9 days. Governor Ca

Police went on strike in 1919 and mass violence and looting took over Boston for 9 days. Governor Calvin Coolidge’s response propelled him to the White House. “There is no right to strike against the public safety, anywhere, anytime,”

Nothing better reveals the depth of the madness afoot in the land than the demands to defund or completely abolish the police .
It ’ s bad enough for airhead celebrities , something worse for the formerly prestigious New York Times , and downright alarming for office-holders state and federal to indulge the fantasy that the thin blue line is all the separates us from anarchy , mob rule , and ultimately a dictatorship spawned by the need to restore order .
The experience of Baltimore following the Freddie Gray riots , when the police there stopped aggressively engaging in @ @ @ @ @ @ @ to close the case .
Even progressive thought leaders at the New York Times and Pro Publica called the results a “ tragedy.
” [ I ] n the years that followed , Baltimore , by most standards , became a worse place .
In 2017 , it recorded 342 murders — its highest per-capita rate ever , more than double Chicago ’ s , far higher than any other city of 500,000 or more residents and , astonishingly , a larger absolute number of killings than in New York , a city @ @ @ @ @ @ @ officials , from the governor to the mayor to the state ’ s attorney , struggled to respond to the rise in disorder , leaving residents with the unsettling feeling that there was no one in charge .
With every passing year , it was getting harder to see what gains , exactly , were delivered by the uprising .
Mind you , the police were not abolished or even defunded .
They were simply chastened and behaved as the demonstrators demanded — with a light hand and withdrawing at times from neighborhoods @ @ @ @ @ @ @ Fortunately , there is a real-life experiment in complete withdrawal of police protection that occurred a century ago that is available to learn from .
The Boston Police Strike that began September 9 , 1919 led to immediate looting and chaos as soon as the sun went down .
In August , Boston police had voted to form a union affiliated with the American Federation of Labor but ran up against opposition from Boston police commissioner Edwin Curtis , backed by Massachusetts governor Calvin Coolidge .
After attempts at compromise failed , the @ @ @ @ @ @ @ PM .
In the language of the day , “ hooliganism ” broke out , with widespread looting .
The following day , the mayor of Boston asked Governor Coolidge to supply the force of the state militia , and he agreed .
But in the time it took to raise a force that eventually numbered 5,000 , about three times the size of the Boston Police , looting increased on September 10 , and continued for 9 days until the militia was able to quell it .
Coolidge took a hard line @ @ @ @ @ @ @ words , “ There is no right to strike against the public safety , anywhere , anytime , ” propelled him to the vice presidential nomination of the Republicans in 1920 and eventually to the White House .
I suggest that progressive had better be careful what they wish for .
These facts are well documented .
See A City in Terror : Calvin Coolidge and the 1919 Boston Police Strike and A City in Terror : The 1919 Boston Police Strike .

via americanthinker
Nothing better reveals the depth of the madness afoot in the land than the demands to defund or completely abolish the police. It’s bad enough for airhead celebrities, something worse for the formerly prestigious New York Times, and downright alarming for office-holders state and federal to indulge the fantasy that the thin blue line is all the separates us from anarchy, mob rule, and ultimately a dictatorship spawned by the need to restore order.
Photo credits: YouTube screen grabs (cropped).
The experience of Baltimore following the Freddie Gray riots, when the police there stopped aggressively engaging in minority neighborhoods, ought to be enough to close the case. Even progressive thought leaders at the New York Times and Pro Publica called the results a “tragedy.”
[I]n the years that followed, Baltimore, by most standards, became a worse place. In 2017, it recorded 342 murders — its highest per-capita rate ever, more than double Chicago’s, far higher than any other city of 500,000 or more residents and, astonishingly, a larger absolute number of killings than in New York, a city 14 times as populous. Other elected officials, from the governor to the mayor to the state’s attorney, struggled to respond to the rise in disorder, leaving residents with the unsettling feeling that there was no one in charge. With every passing year, it was getting harder to see what gains, exactly, were delivered by the uprising.
Mind you, the police were not abolished or even defunded. They were simply chastened and behaved as the demonstrators demanded — with a light hand and withdrawing at times from neighborhoods where they were denounced as racists.
We are primarily funded by readers. Please subscribe and donate to support us!
Fortunately, there is a real-life experiment in complete withdrawal of police protection that occurred a century ago that is available to learn from. The Boston Police Strike that began September 9, 1919 led to immediate looting and chaos as soon as the sun went down. In August, Boston police had voted to form a union affiliated with the American Federation of Labor but ran up against opposition from Boston police commissioner Edwin Curtis, backed by Massachusetts governor Calvin Coolidge. After attempts at compromise failed, the cops walked off the job at 5:45 PM.
In the language of the day, “hooliganism” broke out, with widespread looting. The following day, the mayor of Boston asked Governor Coolidge to supply the force of the state militia, and he agreed. But in the time it took to raise a force that eventually numbered 5,000, about three times the size of the Boston Police, looting increased on September 10, and continued for 9 days until the militia was able to quell it.
Coolidge took a hard line and built a national reputation. His words, “There is no right to strike against the public safety, anywhere, anytime,” propelled him to the vice presidential nomination of the Republicans in 1920 and eventually to the White House.
I suggest that progressive had better be careful what they wish for.
Massachusetts state militia awaiting assignment to police duties (source).
These facts are well documented. See A City in Terror: Calvin Coolidge and the 1919 Boston Police Strike and A City in Terror: The 1919 Boston Police Strike.


investmentwatchblog--2020-06-08--Do Black Lives Matter to BLM? Their track record suggests NO!

Look at this completely disgusting display .
These BLM members beat a young black man unconscious .
BLM are animals @ @ @ @ @ matter what color your skin is , should support this horrific Satanic group .
The @ @ @ @ @ .

Look at this completely disgusting display.
These BLM members beat a young black man unconscious. BLM are animals. No American, no matter what color your skin is, should support this horrific Satanic group.
This is disgusting. This violent mob viciously beat a black boy unconscious in Euclid, Ohio. Does his life matter too? pic.twitter.com/11TiRXndNi — Justin Moldow (@JustinMoldow) June 7, 2020
The young man might have died.
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It looks pretty bad.
h/t SS


investmentwatchblog--2020-06-10--NO PLAN B—JUST A CONTINUED DISCONNECT BETWEEN RISING MARKETS AND HARD FACTS

Please join MAM Advisor Grant Williams and Egon von Greyerz , in the first MAMinar .
Egon and Grant address global market risks , the now total disconnect between the recent price rise of risk assets and the current collapse in economic and social signals .
They obviously also cover the role of gold as a historically consistent solution to both inevitable market volatility and the declining purchasing power of fiat currencies around the globe .
Egon touches upon the staggering rise in global debt from approximately $ 80 trillion at the turn of the century to over $ 260 @ @ @ @ @ @ @ : How long can this last ?
As Grant expounds , foretelling the spread between the “ inevitable and the imminent ” is less important than accepting ( and preparing for ) the obvious , namely gold as one the sole remaining assets which has held , and will continue to hold , its relative value through time .
Price , in short , is not the primary driver of gold investing , protecting purchasing power is .
Egon and Grant also discuss topics of interest-rate levels , a “ debt jubilee , @ @ @ @ @ @ @ abstractly massive derivatives market , and the implications these themes pose .
Finally , they deliberate if the Fed and other Central Banks have a Plan B. P.S .
For technical reasons Ronni Stoeferle could not join the discussion but he will be back soon .

Please join MAM Advisor Grant Williams and Egon von Greyerz, in the first MAMinar.
Egon and Grant address global market risks, the now total disconnect between the recent price rise of risk assets and the current collapse in economic and social signals. They obviously also cover the role of gold as a historically consistent solution to both inevitable market volatility and the declining purchasing power of fiat currencies around the globe.
Egon touches upon the staggering rise in global debt from approximately $80 trillion at the turn of the century to over $260 trillion today, asking the blunt question: How long can this last? As Grant expounds, foretelling the spread between the “inevitable and the imminent” is less important than accepting (and preparing for) the obvious, namely gold as one the sole remaining assets which has held, and will continue to hold, its relative value through time. Price, in short, is not the primary driver of gold investing, protecting purchasing power is.
We are primarily funded by readers. Please subscribe and donate to support us!
Egon and Grant also discuss topics of interest-rate levels, a “debt jubilee,” irrational stock valuations, the now abstractly massive derivatives market, and the implications these themes pose.
Finally, they deliberate if the Fed and other Central Banks have a Plan B.
P.S. For technical reasons Ronni Stoeferle could not join the discussion but he will be back soon.


investmentwatchblog--2020-06-09--They’ve Already Stolen $100 TRILLION And Their Plan Is To LEAVE You With NOTHING!!

Attorney Wes Christian joins me to reveal the horrifying truth about Wall Street , the DTCC and your stocks : @ @ @ @ @ $ 100 TRILLION and when the music stops , the plan is to leave you @ @ @

Wes Christian interviewed by Sean on SGTreport
We are primarily funded by readers. Please subscribe and donate to support us!
Attorney Wes Christian joins me to reveal the horrifying truth about Wall Street, the DTCC and your stocks: They’ve already stolen $100 TRILLION and when the music stops, the plan is to leave you with NOTHING.


investmentwatchblog--2020-06-09--What Are the Unintended Consequences of the Stimulus/ Fed Money Printing?

The # 1 thing investors need to be thinking about today are “ unintended consequences.
” Everyone knows that the Fed has flooded the financial system with liquidity .
This liquidity , combines with what appears to be a “ V ” shaped recovery in the economy , is what propelled stocks to go straight up from the March lows .
As I write this Tuesday morning , the S & P 500 has broken out of a rising wedge formation ( blue lines in the chart below ) to the upside .
It is now slamming into overhead resistance @ @ @ @ @ @ @ ) .
It is unlikely we break this on the first try .
And a drop to retest the breakout would be perfectly normal .
I ’ ve drawn what this would look like with a red arrow in the chart above .
So… stocks rally on liquidity as the Fed reflates the system .
That ’ s the obvious consequence of the Fed printed $ 1 trillion a month .
But what is the unintended consequence of this money printing ?
The market is suggesting it could be a crash in bonds @ @ @ @ @ @ @ to run a $ 3- $ 4 trillion deficit this year based on the March-May economic shutdown .
However , it is growing clearer that the real number is going to be even higher than that .
Multiple states ( NY , CA , IL ) are on the brink of insolvency and will need bailouts soon .
And the President has suggested he ’ d like a massive infrastructure bill ( $ 1+ trillion ) passed this year as well .
Either of those could mean the US needing to issue $ @ @ @ @ @ @ @ this year on top of rolling over old debts .
The bond market is signaling this might be too much for it to absorb at current levels .
The long-term Treasury has rolled over badly .
We are now at support ( green line in the chart below ) and STILL a long ways from a mean-reversion drop to test the bull market trendline ( blue line in the chart below ) .
A bond crash would mean the bond market revolting against the US ’ s fiscal stimulus .
And it would @ @ @ @ @ @ @ assets , including stocks .

The #1 thing investors need to be thinking about today are “unintended consequences.”
Everyone knows that the Fed has flooded the financial system with liquidity. This liquidity, combines with what appears to be a “V” shaped recovery in the economy, is what propelled stocks to go straight up from the March lows.
As I write this Tuesday morning, the S&P 500 has broken out of a rising wedge formation (blue lines in the chart below) to the upside. It is now slamming into overhead resistance (red line in the chart below).
It is unlikely we break this on the first try. And a drop to retest the breakout would be perfectly normal. I’ve drawn what this would look like with a red arrow in the chart above.
So… stocks rally on liquidity as the Fed reflates the system. That’s the obvious consequence of the Fed printed $1 trillion a month. But what is the unintended consequence of this money printing?
The market is suggesting it could be a crash in bonds.
The US was already on schedule to run a $3-$4 trillion deficit this year based on the March-May economic shutdown. However, it is growing clearer that the real number is going to be even higher than that.
Multiple states (NY, CA, IL) are on the brink of insolvency and will need bailouts soon. And the President has suggested he’d like a massive infrastructure bill ($1+ trillion) passed this year as well.
Either of those could mean the US needing to issue $5-$6 trillion in NEW debt this year on top of rolling over old debts. The bond market is signaling this might be too much for it to absorb at current levels.
We are primarily funded by readers. Please subscribe and donate to support us!
The long-term Treasury has rolled over badly. We are now at support (green line in the chart below) and STILL a long ways from a mean-reversion drop to test the bull market trendline (blue line in the chart below).
A bond crash would mean the bond market revolting against the US’s fiscal stimulus. And it would have a profound impact on ALL risk assets, including stocks.


Defund the BBC:

James Yucel , Director of the Defund the BBC Campaign speaks to talkRADIO ’ s Dan Wootton about his newly @ @ @ @ @ Dan the campaign was started out of frustration and “ completely on a whim ” @ @ @ @ @ of the campaign is to “ ultimately scrap the BBC licence fee ” .
He @ @ @ @ @ ve got many kinds of messages from strangers , telling me to keep up the @ @ @ @ @ added that he had received a number of nasty messages as well , however “ @ @ @ @ @ ridiculously amusing.
” Another of his concerns about the occasions where the BBC has reportedly @ @ @ @ @ and nurses ” whilst failing to declare affiliations to groups such as Momentum .
With @ @ @ @ @ already , the young campaigner who is a university student in Glasgow has already made @ @ @ @ @ .

James Yucel, Director of the Defund the BBC Campaign speaks to talkRADIO’s Dan Wootton about his newly launched campaign. He told Dan the campaign was started out of frustration and “completely on a whim”, saying the sole aim of the campaign is to “ultimately scrap the BBC licence fee”.
He told Dan “I’ve got many kinds of messages from strangers, telling me to keep up the good work” but he added that he had received a number of nasty messages as well, however “most of which were actually ridiculously amusing.”
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Another of his concerns about the occasions where the BBC has reportedly introduced “doctors, teachers and nurses” whilst failing to declare affiliations to groups such as Momentum.
With nearly 50,000 supporters signed up already, the young campaigner who is a university student in Glasgow has already made waves in the media landscape.


investmentwatchblog--2020-06-09--The video all HS & College graduates should be required to watch. 13:39. Compares/Contrasts red vs b

The video all HS & College graduates should be required to watch. 13:39. Compares/Contrasts red vs blue

Dr. Cornell West calls America “ a failed social experiment ” in the wake of the George Floyd ’ s @ @ @ @ @ a police officer .
Bill Whittle agrees.
, and illustrates the stark difference between the @ @ @ @ @ the other America .
Are you on Team Red or Team Blue ?

Dr. Cornell West calls America “a failed social experiment” in the wake of the George Floyd’s death under the knee of a police officer. Bill Whittle agrees., and illustrates the stark difference between the failed social experiment, and the other America. Are you on Team Red or Team Blue?
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investmentwatchblog--2020-06-09--ASS KISSING DEMS CAN’T WIN: Democrats criticized for wearing Kente cloth stoles in honor of George F

ASS KISSING DEMS CAN’T WIN: Democrats criticized for wearing Kente cloth stoles in honor of George Floyd

Congressional Democrats wore stoles made of Kente cloth during a moment of silence for George Floyd , drawing criticism from @ @ @ @ @ the traditional African textile into a political prop .
About two dozen Democratic lawmakers , @ @ @ @ @ and Senate Minority Leader Chuck Schumer , knelt for eight minutes and 46 seconds at @ @ @ @ @ Hall as a tribute to Floyd on Monday .
Most of them were seen wearing @ @ @ @ @ of silence as well as during a subsequent news conference .
The wearing of the @ @ @ @ @ a University of Oxford researcher who saw the move as performative .
“ My ancestors @ @ @ @ @ for them to be worn by publicity ( obsessed ) politicians as ‘ activism ’ @ @ @ @ @ Bentil , a Ghanaian-Nigerian researcher at University of Oxford , tweeted .

Congressional Democrats wore stoles made of Kente cloth during a moment of silence for George Floyd, drawing criticism from observers who felt they made the traditional African textile into a political prop.
About two dozen Democratic lawmakers, including House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, knelt for eight minutes and 46 seconds at the Capitol’s Emancipation Hall as a tribute to Floyd on Monday. Most of them were seen wearing Kente cloths during the moment of silence as well as during a subsequent news conference.
The wearing of the Kente cloths drew criticism from a University of Oxford researcher who saw the move as performative.
“My ancestors did not invent Kente cloth for them to be worn by publicity (obsessed) politicians as ‘activism’ in 2020,” Jade Bentil, a Ghanaian-Nigerian researcher at University of Oxford, tweeted.
chicagocrusader.com/congressional-democrats-criticized-for-wearing-kente-cloth-at-event-honoring-george-floyd/
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www.today.com/style/democrats-criticized-wearing-kente-cloth-stoles-honor-george-floyd-t183681
www.aol.com/article/news/2020/06/09/democrats-criticized-for-wearing-kente-cloth-stoles-in-honor-of-george-floyd/24517184/
www.cnn.com/2020/06/08/politics/democrats-criticized-kente-cloth-trnd/index.html
h/t Always


investmentwatchblog--2020-06-09--We’re watching the disintegration of America

It ’ s too late to pull back from this insanity and go back to any semblance of normal – the inmates have take over the asylum and no-one is stepping up to stop them .
I never thought we would ever have a legitimate scenario for a modern day civil war , but the writing is now all over the wall – it ’ s leftist anarchists hell-bent on destroying America versus the rest of us .
There is no way this will end well for the nation as a whole .
Change my mind – how to recover @ @ @ @ @ @ @ LIVED IN DC , MY NEIGHBORHOOD WAS STILL SCARRED FROM THE 1968 RIOTS : A Few Days of Riots Can Echo for Many Years .
And , of course , it was poor people who suffered .
Researchers in a 2004 National Bureau of Economic Research paper found that “ riots depressed the median value of black-owned property between 1960 and 1970 , with little or no rebound in the 1970s , ” and “ that the racial gap in the value of property widened in riot-afflicted cities during the 1970s….Using both city-level @ @ @ @ @ @ @ , persistent , and economically significant correlations between riot severity and black-owned property values.
” But the people promoting the riots aren ’ t the ones who suffer , and have their own agendas .
THEY DON ’ T WANT TO ABOLISH THE POLICE .
THEY WANT TO REPLACE THEM WITH STATE-SANCTIONED MOB VIOLENCE : New Video Exposes the Armed Antifa ‘ Militia ’ Who Want to Abolish the Police .

by ScoobySleuth
It’s too late to pull back from this insanity and go back to any semblance of normal – the inmates have take over the asylum and no-one is stepping up to stop them. I never thought we would ever have a legitimate scenario for a modern day civil war, but the writing is now all over the wall – it’s leftist anarchists hell-bent on destroying America versus the rest of us. There is no way this will end well for the nation as a whole.
Change my mind – how to recover from this?
TRUE. WHEN I LIVED IN DC, MY NEIGHBORHOOD WAS STILL SCARRED FROM THE 1968 RIOTS: A Few Days of Riots Can Echo for Many Years. And, of course, it was poor people who suffered.
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Researchers in a 2004 National Bureau of Economic Research paper found that “riots depressed the median value of black-owned property between 1960 and 1970, with little or no rebound in the 1970s,” and “that the racial gap in the value of property widened in riot-afflicted cities during the 1970s….Using both city-level and household-level data, we find negative, persistent, and economically significant correlations between riot severity and black-owned property values.”
But the people promoting the riots aren’t the ones who suffer, and have their own agendas.
INSURRECTION: Antifa Militants Seize Seattle Police HQ, Set Up ‘Autonomous Zone.’
THEY DON’T WANT TO ABOLISH THE POLICE. THEY WANT TO REPLACE THEM WITH STATE-SANCTIONED MOB VIOLENCE: New Video Exposes the Armed Antifa ‘Militia’ Who Want to Abolish the Police.


investmentwatchblog--2020-06-09--AUDIO: Chicago Mayor’s SHOCKING Private Call LEAKED (GRAPHIC/NSFW)

I ’ m sorry , Chicago .
You ’ re screwed .
This is your Mayor .
You have to @ @ @ @ @ conference .
Aldermen were crying , begging for national guard BUT one thing they all @ @ @ @ @ was too organized to be random '' It is about 3/4 thru the conferencet.co/p45dvxmYEN

I’m sorry, Chicago. You’re screwed. This is your Mayor.
You have to listen to the whole online conference. Aldermen were crying, begging for national guard BUT one thing they all agreed upon is "this was too organized to be random" It is about 3/4 thru the conferencet.co/p45dvxmYEN
— ladyd (@cuddlycrow) June 9, 2020


investmentwatchblog--2020-06-09--Democrats in a panic trying to stop calls for defunding police.

Presumptive Democratic presidential nominee Joe Biden and Democratic leaders on Capitol Hill are quickly shutting down calls to defund police @ @ @ @ @ with how to respond to demands for reforms in the wake of George Floyd ’ @ @ @ @ @ is splintering black activists and some prominent progressive lawmakers from Biden and top congressional Democrats @ @ @ @ @ Republicans , who are quickly mobilizing to use it as the latest example of Democrats @ @ @ @ @ the lead up to November .
A spokesman for Biden ’ s campaign said Monday @ @ @ @ @ “ hears and shares the deep grief and frustration ” of those calling for reform @ @ @ @ @ does not believe that police should be defunded.
” Later , Biden made his position @ @ @ @ @ CBS .
“ No , I don ’ t support defunding the police .
I @ @ @ @ @ police based on whether or not they meet certain basic standards of decency and honorableness @ @ @ @ @

Presumptive Democratic presidential nominee Joe Biden and Democratic leaders on Capitol Hill are quickly shutting down calls to defund police departments as the party grapples with how to respond to demands for reforms in the wake of George Floyd’s death.
The idea is splintering black activists and some prominent progressive lawmakers from Biden and top congressional Democrats while providing fodder for national Republicans, who are quickly mobilizing to use it as the latest example of Democrats moving to the left in the lead up to November.
A spokesman for Biden’s campaign said Monday that the former vice president “hears and shares the deep grief and frustration” of those calling for reform, but that he “does not believe that police should be defunded.”
Later, Biden made his position clear in an interview with CBS.
“No, I don’t support defunding the police. I support conditioning federal aid to police based on whether or not they meet certain basic standards of decency and honorableness,” he said.
Democratic leaders on Capitol Hill were adopting a similar position.


investmentwatchblog--2020-06-09--NY Police Union Boss Mike O’Meara: “Stop treating us like animals and thugs, and start treating us w

NY Police Union Boss Mike O’Meara: “Stop treating us like animals and thugs, and start treating us with some respect! — We’ve been vilified. It’s disgusting.”… “Our legislators abandoned us. The press is vilifying us. It’s disgusting.”

“ Stop treating us like animals and thugs , and start treating us with some respect !
— We ’ @ @ @ @ @ ’ s disgusting.
” “ Our legislators abandoned us .
The press is vilifying us @ @ @ @ @ ''

NY Police Union Boss Mike O’Meara:
“Stop treating us like animals and thugs, and start treating us with some respect! — We’ve been vilified. It’s disgusting.”
“Our legislators abandoned us. The press is vilifying us. It's disgusting."
pic.twitter.com/snJBH6i3Lz
— Breaking911 (@Breaking911) June 9, 2020


investmentwatchblog--2020-06-09--Protests Be Damned, Tennessee To Approve A State Police Highway Surveillance Program

This story proves just how little police care about protests taking place across the country .
What started out as the “ Electronic Monitoring Indigency Fund ” ( EMIF ) or “ DUI Monitoring Fund ” has been transformed into a Kafkaesque , Tennessee state police highway surveillance program .
Originally the EMIF provided financial reimbursement to installers to cover the costs by indigent participants required by a judge to have an electronic monitoring device installed in a vehicle .
So , basically , the state is paying local governments 50 % to encourage them to install alcohol monitoring devices @ @ @ @ @ @ @ financial incentives to put corporate monitoring devices in people ’ s cars is horrible but things are about to get a whole lot worse for Tennesseans .
If incentivizing installing monitoring devices in people ’ s cars is not enough to turn your stomach , I give you the latest version of Tennessee ’ s House Bill 2110 or EMIF .
The latest version of EMIF has been transformed into an exclusive state police highway surveillance program .
This bill would transform the State Police into an exclusive taxpayer funded surveillance entity .
@ @ @ @ @ @ @ claims only state police can use Smart Way cameras to enforce or monitor traffic violations within work zones .
“ No unmanned traffic enforcement cameras shall be permitted on federal interstate highways except for Smart Way cameras , other intelligent transportation system cameras or , when employees of the Department of Safety or construction workers are present , unmanned traffic enforcement cameras used to enforce or monitor traffic violations within work zones designated by the Department of Transportation , provided , that the cameras shall be operated only by a state entity.
” @ @ @ @ @ @ @ clause , “ it is assumed that the current Smart Way and intelligent transportation system cameras will be utilized to aid in criminal investigations.
” As the Tennessee Star revealed , the EMIF bill was sent to the House Judiciary Committee to be reviewed yesterday which does not mean it will not be passed in its current form .
Rep. Andy Holt has major concerns that state police highway surveillance cameras would be used to spy on everyone .
Holt cautioned these cameras could be used in the future for purposes the legislation @ @ @ @ @ @ @ side , at least politicians are giving the appearance that they care about mass surveillance .
On the negative side , one has to ask , how did a bill meant to reimburse local governments for installing DUI monitoring devices become so perverted ?
Turning the state police into highway surveillance agents sends the wrong message to Americans .

by mapi
This story proves just how little police care about protests taking place across the country.
What started out as the “Electronic Monitoring Indigency Fund” (EMIF) or “DUI Monitoring Fund” has been transformed into a Kafkaesque, Tennessee state police highway surveillance program.
Originally the EMIF provided financial reimbursement to installers to cover the costs by indigent participants required by a judge to have an electronic monitoring device installed in a vehicle.
“The EMIF provides reimbursement to individuals or entities engaged in the business of manufacturing, selling, leasing, servicing or monitoring alcohol or drug monitoring devices (“Provider”). All Providers submitting interlock claims for reimbursement must be listed on the Department of Safety’s approved Provider list.”
So, basically, the state is paying local governments 50% to encourage them to install alcohol monitoring devices in people’s vehicles.
“The implementation of the local government matching grant program will require local governments that wish to utilize electronic monitoring devices other than ignition interlock devices to opt-in and cover 50% of claim expenses. This new process for payments will apply to any new claims submitted as a result of a court order issued on or after July 1, 2019.”
Providing financial incentives to put corporate monitoring devices in people’s cars is horrible but things are about to get a whole lot worse for Tennesseans.
If incentivizing installing monitoring devices in people’s cars is not enough to turn your stomach, I give you the latest version of Tennessee’s House Bill 2110 or EMIF.
The latest version of EMIF has been transformed into an exclusive state police highway surveillance program.
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“No surveillance cameras shall be permitted on federal interstate highways except for Smart Way cameras, other intelligent transportation system cameras, or, when employees of the department or construction workers are present, surveillance cameras used to enforce or monitor traffic violations within work zones designated by the department of transportation; provided, that the cameras are operated only by a state entity.”
This bill would transform the State Police into an exclusive taxpayer funded surveillance entity.
A February 2020 amendment to the bill claims only state police can use Smart Way cameras to enforce or monitor traffic violations within work zones.
“No unmanned traffic enforcement cameras shall be permitted on federal interstate highways except for Smart Way cameras, other intelligent transportation system cameras or, when employees of the Department of Safety or construction workers are present, unmanned traffic enforcement cameras used to enforce or monitor traffic violations within work zones designated by the Department of Transportation, provided, that the cameras shall be operated only by a state entity.”
But they conveniently left in an escape clause, “it is assumed that the current Smart Way and intelligent transportation system cameras will be utilized to aid in criminal investigations.”
As the Tennessee Star revealed, the EMIF bill was sent to the House Judiciary Committee to be reviewed yesterday which does not mean it will not be passed in its current form.
Rep. Andy Holt has major concerns that state police highway surveillance cameras would be used to spy on everyone.
“However, the idea of surveillance cameras being utilized throughout the state bothered some lawmakers, including Rep. Andy Holt, who said the legislation reminded him of the dystopian novel, 1984, in which the government closely monitors its citizens to keep control of them.”
Holt cautioned these cameras could be used in the future for purposes the legislation does not intend.
“I will not be a party to unnecessary surveillance to the people of Tennessee, the people of the United States,” Holt said. “… Please let’s not tread down this path
On the positive side, at least politicians are giving the appearance that they care about mass surveillance. On the negative side, one has to ask, how did a bill meant to reimburse local governments for installing DUI monitoring devices become so perverted?
Turning the state police into highway surveillance agents sends the wrong message to Americans.


investmentwatchblog--2020-06-09--An Ex-Cop’s View On The Arrest And Death Of George Floyd

( Silver Doctors Editors ) A reader of Silver Doctors shared this video with us , and said it may @ @ @ @ @ Molyneux has done some great work on a lot of different topics before , and @ @ @ @ @ do with the arrest and death of George Floyd .
Check-out the video in its @ @ @ @ @ “ Lateral Vascular Neck Restraints are a non-lethal hold when properly applied .
They are @ @ @ @ @ combative individuals without inflicting injuries on suspects , while preventing injuries of officers .
”

(Silver Doctors Editors) A reader of Silver Doctors shared this video with us, and said it may be of interest.
Stefan Molyneux has done some great work on a lot of different topics before, and his latest content has to do with the arrest and death of George Floyd.
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Check-out the video in its entirety, embedded below:
“Lateral Vascular Neck Restraints are a non-lethal hold when properly applied. They are an effective way to control combative individuals without inflicting injuries on suspects, while preventing injuries of officers.”