Nasdaq Hits ATH & Bonds, Dollar Sink
A lot going on behind the scenes
As many of you know the Nasdaq has been the clear cut leader across all equity indexes and today it hit another milestone. The ETF the QQQ hit a new all time high today and as this chart from @charliebilello clearly shows just how steady the climb has been:
By the way if you don’t follow Charlie’s stuff, you should! When we look across the globe and the entire equity spectrum we can see that the entire complex is trading at its highest estimated P/E since 2002:
Yes quantitative easing buys a lot of nominal value and it equally buys a tremendous amount of time, decades in fact. What it also buys is the ability for those well connected inner circle types to make E-Z-P-Z profits.
As this story out of ProPublica highlights the perhaps conflicting interests of our own US Deputy Secretary of Treasury, Justin Muzinich. The article outlines with great detail how Mr. Muzinich’s family firm, Muzinich & Co. has directly benefited from the Federal Reserve’s and governments actions.
We mocked this behavior in our prior update a few days ago, when we mentioned looters in Chicago and touched upon how they have nothing on those in control of our monetary digital 0s and 1s. Well its stories like this that jade our perception, and we highly, highly recommend you read this article here:
https://www.propublica.org/article/this-treasury-official-is-running-the-bailout-its-been-great-for-his-family
We will continue to keep you up to date as to the ongoing developments that are running behind the scenes. This week saw both Hon. Rod Rosenstein answering some questions in front of congress and the other big story is the Judicial Watch lawsuit involving testimony by Hillary Clinton, which was also heard this week. We have a few pics to highlight these very important undertones that you should be well aware of:
The whole Russia Collusion, the whole FISA ordeal, continues to work itself out behind the scenes, well hidden by main stream media’s coverage of Corona and the riots.
A few of the topics have been covered by the White House Press secretary and here is a blip from today, what she states should be front page news, umm but its not:
Senator Cruz was a busy man he also tossed this tweet out referring to Antifa:
Yes this is an economic and financial letter, but long time readers understand, what goes on behind the scenes is the real story and driver of what is to come. We always have to be on the hunt for truth and so we continue to be an advocate for keeping you well ahead of the game and informed upon the information we feel is valuable.
We took a look at the FBI database upon homicides to dig a bit deeper into this #BLM movement and this narrative of black vs white and into the ongoing insinuation injustices that our law enforcement have a rabid propensity for one demographic over another. Anyhow we broke the data down into a nice little visualization:
We hope the data allows you to see the truth, to remove narrative and to make well informed logical conclusions. We won’t opine upon the data as we feel it speaks for itself.
With all the riots and with SARS_CoV2 falling to the wayside, we will continue to bring you the data upon the infection rate for our home state, where after 950k tests, we are seeing the infection rate fall some 40% from its peak, hitting 12.91%
Speaking of Illinois, we will be the very first proud recipient and customer of the newly created Federal Bailout facility known as the Municipal Liquidity Facility, how joyful, more disablement and can kicking:
OK, now on to the markets, don’t hate us for bringing you news you might not like, its our job to force you to think outside the box. Alright, today we saw Nasdaq hit new highs, however it seems a bit heavy versus the SP as this pair trade chart shows:
We also saw the US Dollar and the US bond markets continue to falter as the June Dollar Index future fell another 40 ticks down to 97.259 and yields on the 30 Year Bond rose 7.2 basis points to 1.55%.
This rise in US yields has come with a big dose of yield curve steepening as these next two charts clearly demonstrate. Please note on this next chart the BOB spread (Bonds vs Ultra-Bond Futures) hit resistance once again and has backed away. Will this level hold once again and rotate back down dragging yields in the long end with it?
The FOB (Five Yr vs Thirty Yr) chart hasn’t turned but is clearly at resistance:
We are reaching some very stretched levels as equities continue to rise despite the US interest rate yields rise. We know the FED is cutting back QE just a bit, not by much, it just seems they are hiding it better. We know their M-O, that is the other central banks are going to have to pick up the slack now and what do we see out of the ECB, continued debt buying just a tad over $262 Bln by the end of May:
So when you buy bonds that nobody else will, you monetize an asset and allow for liquidity to free up. This for us is nothing more than the standard status quo kick the can methodology that has been the employment tool of choice for all the central banks. Has it helped the DAX Index, well lets just see:
Finally the Settlements for Wednesday June 3rd 2020:
The Dow Futures were the best performer on the day gaining 527 points, the loser was Gold which shed some $29.20 losing $2,920 per contract.
-Magnelibra Econemotions
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