Liquidity Corona Virus Bitcoin and Solar Cycles
Before we get into the high octane fueled equity rally, we want to touch on the headline of the day, coming out of Hubei.gov and which we can sum up with this graphic right here:
We certainly aren't surprised as our sources have been telling us for weeks to be on the lookout for the second wave and that the veracity by which Covid-19 operates is still yet to be quantified, but we are learning quickly. Our sources have also pointed out to us the "gain of function" attribute that this thing incorporates. If you don't know what gain of function is then you better read up, in fact the US government put a halt on federal funding related to gain of function studies out of concern in 2013. Back in 2013 Francis Collins the NIH director issued a statement sighting "These studies, however, also entail bio-safety and bio-security risks, which need to be understood better.” Mind you this was 7 years ago, how many bio-defense and NGOs around the world took that advice, our guess, not many and today we might just be reaping those unfortunate rewards! Link to this quote and scientific article is Here
So, with this in mind, we also saw this week Miles Kwok the exiled Chinese Billionaire with his usual highly critical demeanor toward his home country: Here
Ok so now that Corona is no longer a black swan and we are certain all the text reading algo bots out there have firmly placed their bets, let's look at our favorite liquidity metric as of today from the NYFED as repo is firmly above $2 Trillion for 2020 and as this graphic shows the FEDs propensity to call quasi permanent operations "temporary" but as all our astute readers know, if you keep rerolling your bets, well then they are only temporary when you cash in the chips and if you never cash in the chips, well then the game still goes on. That is exactly what is going on in Repo land as every 2-week operation is firmly re-rolled for another 2 weeks giving those levered high powered 10x RV funds plenty of ammo to sell index cash and futures and buy the #MAGA stocks. (Microsoft, Apple, Google and Amazon):
What is interesting is that we are starting to see the demand for repo outstrip the FEDs mandated amounts of acceptance, which gives us a little ammo to say, the FED may not be doing enough for these balance sheet starved levered risk players. As this next picture points out, the last 2-week operation was oversubscribed by $23.65 billion:
So when investors ask us how equity markets continue to defy gravity, well we simply say because the FED is adding liquidity, discounting current dollars and thus all the smart players are rushing into real assets like tech, real value like Gold and Bitcoin and will continue to realize the FED can never raise rates and thus long US Treasury Bonds. It is really that simple and when we look at this next pic of the FED balance sheet, the log line tells us the FED is behind the curve and will continue to expand the balance sheet upwards of $5 trillion, sooner rather than later:
HEDGEYE posted this most excellent cartoon and its a must share:
Speaking of Bitcoin here are a few graphics to highlight yet again the power of mathematics and the technology underpinning the power of Bitcoin as well as a few charts from CME Group exhibiting the growth by which its futures contract has grown. All of this is bullish news for Bitcoin HODLers and we continue to like the space and its potential:
These next two charts show the complete drubbing the Russell 2k Index Futures have had vs their Nasdaq and SP500 Index counterparts. We like valuing futures this way and it clearly shows how bad the Russell continues to get pounded:
Finally, we are posting this chart for all our climate worrying friends. We have been listening to this disinformation narrative push for quite some time and the fact that central bankers are also getting involved means this narrative isn't going anywhere. Anyway, we understand climate better than most and we are realists when it comes to what and who actually controls our weather. Hint it’s not man! Rather our realm is subject to an onslaught of cosmic rays and natural cycles by which man has zero input and zero say in. We would also like to point out that none of the climate alarmists ever talk about pollution the real bully on the block of bad human endeavors, but we know why. India and China are the leaders in that pack yet the globalists want us to believe that taxing carbon is going to solve this, going "Green" is going to solve this. What the hell is green anyway? You think that Tesla Lithium batteries are green? You ever extract minerals? You ever mine? You know what kind of resources that takes into account, please spare us the virtue signaling, it’s appalling. Anyway, the world is done with the Hollywood, MSM garbage pitch from the high tower, they know it and we know it and its why Trump will landslide this year. Anyway, that's a topic for another time. Rather we want to focus not on the economic cycle here, but the upcoming Solar Cycle and if any of you think it comes with global warming, then by damned be fooled, but go get your Canada Goose now, for the next 50 years variability and ice are assuredly the rulers of the day and I have to thank NASA for these charts, we are quite critical of them generally, but this data, we actually can confirm from multiple unique sources, so we will give them credit where credit is due:
OK, that does it, be mindful of the liquidity and if you are lazy and don't want to check, or if you don't have the time, then check us out on LinkedIn, I generally post it there and other items of note. Stay humble, stay active and stay in your lane, if things don't make sense, don't worry, they don't it’s an upside-down world and we are here to turn it right side up for you! Cheers
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