Markets Hope Stimulus Christmas Gift
Now that everyone is comfortably settling in on the “assuming” Joe Biden presidential victory, it seems that all the focus is now placed upon both the Covid vaccine rollout as well and more obvious the upcoming stimulus package.
With the Democrats urging for the blue states to receive aid (wait didn’t IL just get $2bln from the FED?) this seems to be what’s holding things up. On the docket is a $748Bln compromised deal, so let’s see what transpires here. No doubt the equity markets are looking for and primed for a pre Christmas little bonus!
Let’s take a look at how things settled today:
As you can see the equity complex was in full bull mode and why not? Who care’s about the shutdowns when you have this kind of cake coming in day after day, this chart is China’s recent action:
Speaking of foreign flows into equities and backstopping all of this how about this doozy of a chart:
Any more questions on why asset prices are rising and Main Street is getting crushed?
Speaking of Main Street here is a sad chart from Statista:
Let’s just try to break into this data, if we take $130bln and tag a 20% tip average, then a back of the napkin calc means the shutdown took out some $26 Billion from hard working Americans. Taking this kind of direct income away and then taking away their prospect for employment, then toss in the emotional toll as families get decimated. Well you get the picture. So why the Aholes in Congress and the over lords in Silicon Valley play games with their rockets and everyday American lives, know this, real people are getting wiped out and it pisses us off, it should piss you off and America (the world) will never be the same after all of this.
While we are on this subject of human emotional toll, Zhedge put this out and what is frustrating to all those far out screamers that mandate full masks and shutdowns indefinitely, well here is an eye opening article and just one tidbit from it:
A quarter of all Americans aged 18 to 24 had “seriously considered suicide” in the last 30 days.
So tell us again, shutting this demographic out from the learning and their social life blood makes sense when Covid has a statistically near ZERO effect???
Anyway here is the Zhedge article, Zhedge on Lockdowns/suicide
Who cares as long as the equity markets rise, right?
Ok back to the charts, our prop data is telling us that the Long NQ, Long R2K and Short SP500 butterfly may be the trade du jour, here are a few charts we are looking at:
This one showing the 2xR2K (QR) breaking to the upside from the 200dMA:
Finally the SP500 vs the R2K continues to break down from the long term up trend channel:
So the 2021 them many not be about the techs, we will see. Alright onto the Fixed Income side of things where we are seeing the steepening of the US Yield Curve continue to progress:
Here is how today’s action in the curves settled up:
Speaking of US Treasuries, let’s just say with this much supply coming due to be rolled, can we blame the long end from faltering, just look at this Crescat chart?
For those that think QE is going anywhere…well don’t be foolish, you are a Magnelibra Econemotions reader, you know better!
With all this QE we can’t help but wonder why our fine state of Illinois continues to hire managers that clearly do not understand the system nor do they understand that you will never match long term liabilities by consistently underperforming:
What many will fail to realize that continue use and expectation of a +6.5% discount rate is well, futile given a long term 30yr rate of 1.75%. It is our belief that many of these big time managers are just reaping heavy fees and aren’t paid by performance so who cares…yea we get it, make half a million a year and no matter how bad or how wrong you were, well chalk it up to market forces…nice and we thought weathermen had it easy!
Finally for those interested in the continued advancement of blockchain technology, the recent Laura Shin Unchained is a mustwatch podcast for our readers. This story is fascinating, it features the founder of Blockade Games Marguerite deCourcelle. When you have time watch it, this is how you merge creativity and technological prowess! Here is the link, Unchained Podcast
That’s all folks, we can’t help but think that equity markets will continue to drift higher and that a stimulus is forthcoming, so I guess the future will prove the past!
We hope you support our work by subscribing and sharing, Cheers.
-Magnelibra Econemotions
DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options on neither commodity futures. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of, or from the author Michael Agne owner of Magnelibra Capital Advisors. All rights are reserved. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed.