Gold Miner Concerns

During the possible rally ahead, there is a decent shot the Gold Miners will be left out of the initial rally.  There are many reasons.

First, as 'risk on' comes back, gold is a 'risk off' play.  Money has greater potential for gains out of the sector.   Second with all the backing from the Fed and Federal Government, the money isn't going to help this sector.  Plainly put, even with low oil prices and high gold price, and probably great earnings ahead reported, it doesn't mean the stocks must price this in.   It's simple supply and demand, and the demand is going to be less.  Also, one of my paid services generated a NEW sell of miners Monday, https://www.technicalindicatorindex.com/ .  They aren't fully bearish yet on the sector but combined with other reasons mentioned, I am acting.

The crisis point for etf, GDX, is about 20 bucks.  So unless it breaks below that in the weeks ahead, all is fine for the long term still.

But for now, I may lighten some positions in this sector, as i expect it to chop around while other stocks soar.  The trade will come back on, and I will remain partially vested.
When the stochastic oscillator (the bottom graph) hits a low, I'll look to add back.

The short blue trend line is about to be broken (failed recovery), and the long blue line is the long term trend. (broken briefly in the market dump)

NET Long

As of two weeks ago, I scaled out of shorts, and I am NET long.
Top picks.
ZM - Zoom - bought in last week.
AMAT / NXTG - stocks I like
MJ / CGC / CBDS / other small companies - Hope is Marijuana still has a good year, after beat down.
Gold/GLD/SLV/GDX/GDXJ - longer term play of all the free money, as well as low oil costs, good gold prices.
Calls - SPX strike 310 - June 2020  - high risk play, but low 'max loss'

COVID-19 Help

If you are have concerns about having COVID-19, the following is a guide on options.
PLEASE click through links to get latest information.

What are the symptoms? (Click for CDC)

These symptoms may appear 2-14 days after exposure (click for video):

• Fever
• Cough
• Shortness of breath
• Losing Smell and/orTaste (unofficial symptom, but there are reports here )

Emergency warning signs:

• Trouble breathing
• Persistent pain or pressure in the chest
• New confusion or inability to arouse
• Bluish lips or face

If you live in NJ, you can call a Dr right from your phone!  Just click link below and use code: HMH20   Check your local hospital home page for additional convenient options.

https://convenientcarenow.com/landing.htm

What to do if you have Covid-19? (click for CDC)

The sort answer is stay home.  But if any of the "Emergency warning signs" develop, you are to seek medical attention immediately.

According to CDC, if you are sick You should wear a face mask, if available, when you are around other people, at home or when you leave the home.  To make your own face mask, click here.

Disinfect all high touch surfaces, especially bathroom and food prep areas.
If using alcohol based disinfectants, it must be 70% or higher Alcohol content.
COVID-19 can live on surfaces for upwards of 9 days.  For more information on cleaning and surface risk, click here.  EPA complete list of approved cleaners click here.

Accepting Food or packages into your home.

What we do is place all mail and packages in our garage, into one of 4 large boxes market Monday/Friday, Tuesday/Saturday, Wednesday/Sunday and Thursday.  We empty the box after 3 days and process it. 

To process food or items, a great video is available HERE:

Learn more

How to properly wash your hands

Great videos to learn about COVID-19 

Articles

I'll write a one sentence take and I encourage you to read by clicking the hyperlink text.  This will give you a flavor of my reading.


The bailout will bail out the must reckless in financial industry, and give pennies to tax payers.
This will of course, set us up for the next crisis as I previously covered in Market - Whats Next?

Once America can manage to have a 15 minute test like the UK will have shortly,I predict USA will peak within two weeks of shipment. Until this or a vaccine is available, we will keep accelerating.

As it stands, we will keep spiking, as I posted a week ago, 18,000 cases in a day!

Click to read a GREAT article laying out the case follow the data, rather than the denier repeating its hyped by the media.

Fitch warns of US AAA rating at risk  (who is big enough to be the defacto AAA replacement?)

The Market is surging for its best day ever since 1932.  (Its a snap back on emotion!)

The cruise ship industry has been extremely profitable, in part by dodging taxes for decades as a 'boat' in international waters.  NOW they want a bail out.  I say, let them stand on their own two feet!  NO HANDOUTS to 'illegals' who don't pay taxes. (to borrow from the right)

Going Long ZOOM today

I'll write more later, buying Stock ticker, ZM.  ZOOM, an app that has gained HUGE usage recently

What will the market do now?

With the government passing the budget, some may think the market will roar back to new highs.
Actually, all it guards against is record lows.  Meaning with the support it is now extremely unlikely we can hit 2008 low of SPX 666 (recent low was 2009).   I think the very bottom with support is around 1600.  Doesn't mean the market will go that low, but that is the effect of economic support.

To get to new highs, we need an economy as profitable as it was before.  Further, we need corporations to not save, and take all savings to buy back stock as they did the last two years.  I think both of these items are off the table for 2020.  Therefore unless the government just buys up stock until we hit new highs, the market will not get there.

In the weeks ahead, if SPX hits 3090, consider to start to selling.  To me a 50% retrace back to old highs will be a gift, and purely a result of temporary optimism and goosing the economy with free money.

For Wednesday I doubt we will see a rally that compares to yesterday, best we can hope for is a gain of 1-5%, but time will tell.  We could easily see a decline , as the bill being passed doesnt equal the money is being spent today.  The money will take time to push into the market place.

I sold my 3x longs, lightened up a little on other longs, but I am net long, with heavy emphasis on GDX, GXJ, and GOLD.

Good luck!

And there she blows

UPDATE: I dumped almost all of my 3x longs. That was a big jump for a night, and some of the non 3x.
UPDATE 12:40: Purchased NUGT 3x miners at $8.25 in anticipation of market going up overall.

Sunday I posted Market - What's Next? about positioning for the next wave, the consequences of free money.
Apparently, I am not the only person in the world thinking this way.

Monday Gold exploded higher, as well as Bitcoin started to move.
All this free money will have consequence, unless you bought into these sectors yesterday it will be hard to commit to stay in.  Nothing goes in a straight line, so I expect a news noteworthy advance today that gets some of the public to take notice.

It should pop higher, but then I expect the big boys start pushing it down to shake out weak hands before advancing again. Churn creates profit for day-traders but not for nervous long term holders.

For the record items I purchased yesterday and prices.

GOLD - $17.25 - A well run gold company, told to me by a friend who is NOT a gold bug.
GDX - $22             - Gold miner ETF
GDXJ - $26.5         - Small Gold miner ETF
GLD - $143.5         - Mirrors price of Gold
UGLD - $136          - 3x of price of gold change
SLV    - 12               -  Mirrors price of Silver
USLV  - $29            - 3x long silver

I am sure there are other ETF's in this sector worth looking at, but these are the ones I bought into.

As of this morning UGLD is already at 170, up 16% from yesterdays price.
Remember, as the market rises, EVERYTHING rises.
A quick hit on long market is
SPXL - 17.55 as of yesterday

Good luck!

In honor of 2008, at that bottom I went long gold miners through bottom of 2009.   In honor of the 2009 Man of the Year, who enables free money for this new debacle, Ben Bernanke.

Market - Whats Next?

Wow, that has been some crazy last 4 weeks!   I had *hoped* to find a short term bottom around SPX 2450-2600, and we did stay there for a bit, but we blew through it.  I dumped my speculative longs.

Next stop is SPX 1800-2200 range.  I am guessing if we get footing it will be around 1900.  I'll try again to go long then.  But tomorrow could be the short term bottom as we break through 2200.

Short Take Summary

Guess is 10-15 trillion dollars injected into the public sector from the government/Fed in very short period of time over-reacting to the pandemic.  (50 trillion global?)When the worst is over, there will be the largest movement of money from bonds to risk-on stocks and/or commodities.    Stocks will be embolden that the government won't let anything bad happen, so full risk train is on!    Problem will be governments will enter into crisis to roll over debt, and interest rates rise.   Rather than see governments fail, the federal reserve will up its game by buying debt in "Quantitative Easing" making the Fed the largest asset owner in the world by far.   At some point, we will have a global currency crisis.

I put a list together of stock names and price points I think are good, just put buy orders in at that price.  Of course feel free to wait and buy when you think a bottom is in.

GDX - Gold Miners  ETF -  NOW and anything below $17
                                           - This thing should hit its all time high $65 in the next 2 years.
                                           - In March 2009, $35 vs $17 bottom of 2008.
GOLD - A well run gold company - NOW or as low as $10
IXN - World Technology ETF - 120
Amazon -  $1,500, and a steal at $1,000
Microsoft - $100
Facebook -   NOW @ $149 (but stock is too new for other levels), $80 a good price.
QQQ - Nasdaq (tech) ETF - $135
IBB - Biotech ETF - $75
APPL - I am concerned over their supply lines - $145, steal at $95
Gld - etn of gold price , buy at anytime
Slv - etn of silver price, buy at anytime

The idea is not to go 100% in at levels above, but gain confidence to START to go in, and scale in based on the environment.  Consider putting in bids on these very good long term bets at sale prices.  No matter what happens, they should have value in the long run.

Below are four bonus 'speculation' higher risk, but higher reward.

MJ - Marijuana ETF - Now ($9) If skeptical a steal at $5
USO - Oil , it is risky, but at all time lows - $4 is good price (normally >10).

BitCoin - Buy cryptos at CoinBase to diversify.
Get an account at InteractiveBrokers , able to shoot money to any currency, stock, bond, or futures around the world instantly.

A professional that is worth reading,  is fund manager, Hussman.

I ranted below as to why, read on if you want

We are going to run into new market risks that may distort the market.  The stock market could close.  Yes you read that right.  It should never close beyond 1 day, but at the stage of panic it could close for weeks.  If it does, make sure your positions are something you want for a few weeks, for you can't sell it until the market reopens.

Further, we could get direct buying of the market by the fed.  If this happens prior to falling to SPX 1500, as a country, we have lost our mind.  Capitalism is king, we HATE socialism, for the rich or the poor.  Once we cross this line, the government will be expected to buy directly into the market at any correction until the currency system collapses.

At SPX 1500 if this happens and there is direct purchasing, I still think we lost our minds, but I can understand, we'll be in 2008 collapse territory.

I do also think sometime in a week or three, we will have cases slowing since we are FINALLY taking the proper precautions in the USA.    My hope is by week of April 6th we will see 'good news' for our actions.   Maybe this bottom isn't a number but a change in the news that is needed.

At the bottom is a graph showing our current position, we have lost only 3 years of gains, not too bad out of an 11 year bull run.  Heck if we go up from here, the worst world disaster in our lifetime would cost us only 1-2 years of market losses!  Somehow I am uneasy claiming this is what to expect.

For those who did listen to my post "ACT NOW! Sell the market!", I'd like to propose some next steps.

What the biggest challenge now ISN'T the financial system risk, but what governments will do.  Meaning, they are likely to shift the risk from the public sector to the government.  The Federal Reserve had 4.5 Trillion in bad debt, up from zero in 2008.   At the PEAK of the US economy we had a run rate of 1 TRILLION new debt per year, and that's at the very best economy of all times?

So lets get to it, what is likely to happen. 

I believe the US government is going to over react, as will the fed and world banks, AND too soon.  What may happen then is while free money starts to flow, we may not see a stock market recovery, but a free-fall stop, potentially a short term bounce.

At some point, we will see infection rates drop, because of keeping everyone home.  Then we may start to lighten restrictions.  Eventually go too far in giving people confidence.  Then we'll have more infections, and this winter should be quite bad.  If medical treatments come to the forefront, then the winter wont be bad.  So lets look at both shall we?

BAD winter

A bad winter means we can NOT inoculate or cure people, so draconian efforts must be in place during flu season.  Therefore the economy cannot recover during peak shopping 'year over year', but may do better than expected using home shopping.   By March 2021 things may look up, as we have had enough time to find better treatments, staff up, deploy treatments, and a percent of society has had it.   Basically we are past the 60% mark in infections and we are seeing the end. 
See section market rebound below.

Good winter

A good winter means we can inoculate or cure people, so draconian efforts do NOT have to be in place.   In effect we enter flu season with optimism, and the infection rate and death rate is lower than projected.   We are seeing the end of this.  See section Market Rebound below.

Market Rebound

Assuming we get the government to over-react, as well as the fed, and world banks, trillions of money will be injected into the system in a VERY short time with 'low cost' of debt.   The governments stop companies who did very bad things (like have no savings, counting on a bail out, and it was delivered!)  The message to the world is the companies that where doing good things, like being able to weather a financial disaster should not be positioned to take over bad companies.  Bad companies make more money for investors and executives, and the risk train is back on full steam, all aboard!!

With risk ON, we will have US Treasury rates at near zero rates to start to go up.  People will move away for no-interest bonds to the high potential of the market, all aboard!

With such large amount of money in government debt, the migration will be MORE distorting than the money into government debt.  When money moved into 'safe debt' vs 'risk' of the market, the market deleveraged and tanked hard core.  This "justified' the transfer of risk to government debt.

Once government debt falls out of favor, and the exodus has begun, who will save our government debt machine?  After all in January 2020 in the state of the union speech , the USA was declared at its peak financially even though to operate at such an awesome economy needs 1 trillion of new debt per year on top of the existing 23 trillion of debt.

With an economy routed in 2020 due to the pandemic, fantastical debt run up, and money injected everywhere to reward companies not prepared and punish those who where, what will be the choices?

Can the government THEN increase taxes , jeopardizing the companies it just bailed out?  How about only tax the good companies, and don't tax the weak ones?   Government cut spending across the board, like social security, medicaid?  Or defense with a really unstable and pissed off China?

If people in power buckled to save weak companies and new debt is the answer, why would the answer change in the next crisis?  Assuming USA spends 4 trillion as being discussed, and we have net 5 trillion of government NEW debt in 2020, and the fed pumps another 10 trillion, thats 15 trillion new debt in 2020 for USA alone!   There are 130 million people working, so that's  115K new debt for every working person, on top of the existing 176K per working person, for 200K per person debt!

This may bring on new challenges, how to float this debt instead of paying it.  This has worked since interest rates have declined since 1982.   You can kick the can with lower rates.  But finally, FINALLY, the debt monster will awaken, and we'll have the final bubble popping start.

To prepare for the NEXT bubble is the key to navigating the next few years, and time to get items on sale for that long term.  Back to the top of this post for some ideas, and good luck!

COVID-19 updated statistics

I looked at latest COVID-19 statistics to understand our current trends.

The good news is, USA to Death ratio is currently lower than the world.
The bad news is, the number of infected has accelerated dramatically.
But this is to be expected.  In January when President Trump was very gracious in supporting China's efforts, we in the USA didn't act quickly.  Now with tests finally deploying late in the game, we are seeing numbers rise.

I adjusted the death rate to match the stats, but I think this rate is very optimistic.
I also think the infection rate will slow down dramatically in three weeks, when USA 'stay at home' efforts help and large scale testing identifies the sick.

The new expected death rate this season is extremely rosy optimistic at 100,000 cases
What I am expecting now is 1-3 million in 2020.  If the death rate hits 3.4%, we are targeting upwards of 8 million.

If we hit 3 million, 1 out of every 100 people you know will pass. If 8 million 1 out of 38.  Staggering.
I am getting pessimistic on the market.

Good video
https://www.youtube.com/watch?time_continue=791&v=On1hWBn3Ofg&feature=emb_logo

Play of the decade missed

On Monday GDX hit about 16 dollars, that would have a been the best buy ever for the next crisis.   I expect the market to be all over, potentially closing the market, or some other crazy action.  Banning shorts is any day now.

What I am now focused on is the crisis that may happen as soon as 2021.  With the world issuing free money, and trillions driven into fixed funds (bonds), then this unwinds, you better be ready.

What I expect is interest rates will be near zero for 1, 5, and 10 year bonds.   When money moves out, we will have record debt in companies and countries that need to be rolled over.  To attract funds, rates will rise.  With so much debt, any rising of rates will trigger a new crisis.

This may be mitigated by the FED who will likely have 10 trillion or more debt 'monetized' to add another 10 trillion to their balance sheet.   Then, as we abandon all capitalism for socialism economics at the government and company level, is when it will get very interesting.

What will remain to be seen is will the system destabilize again, but at a currency level.  If the USD ever comes into question, ANY appeasement by the FED or the US Government would jeopardize the entire fiat currency system.   That is when the debt will be paid for all the free money from 2008 to then.

I don't have any answers for you on what to do.  I do think buying cheaply into solid companies, perhaps some fear plays (bitcoin, gold) will ensure you do fine through the final crisis.

What I do truely believe on the other side of the US Dollar crisis and global fiat currency crisis will be a rebirth that will benefit the young, and punish the old.

Unfortunately, I am not old enough to be near the end and not care, and not young enough to get the big benefit.  I am part of the pinched generation.  Best I can do is come out OK.


For now, I need to pull back from playing the markets and position for 2021.  The crazy is so insane anything I do is wrong.

Stocks to consider, GDX, MJ, SLV, and watch for deals on Amazon, Microsoft, Biotech ETFs, and funds that invest at a global level.  I expect Tesla to have its doomsday,  if it survives a great buy at the crisis point.  If it fails, a great company that should survive is Volkswagen.  They are positioning to be ready if Tesla should fail.

Short selling

Spain just made short selling illegal.  There is no WAY Trump can resist then following suite.


Short selling is quite misunderstood, it enables everyone to bet in either direction up or down.
If you ban short selling, the money 'lost' is a pure gain for the market makers.  Meaning wallstreet and banks get all the profits of the stock loss.

All you will do is prevent any citizen to profit from a fall in the markets.  The net will continue to push wealth to the top 0.01% as the rest lose.

China has never allowed short selling, yet their market has quite dramatic drops.  Without short selling bullish hype goes less unchecked, and could even be encouraged as the market makers will win big on a drop.

Back in 2008 they banned shorting, but only if your not a bank or market maker.  I had shorts, and held on as I lost 6 digits in a second.   Then what happened? Market fell worse, and even more to March 2009.  All the way down the market makers profited, and if you didnt have a position, all you could do is watch.


So looking ahead, plan for shorts to be banned, and we'll be going much lower.  Not immediately but eventually, since the 'easy money' will be on the downside for the insiders.

Good luck, and see you at the bottom.

America lacking stable leadership is going to fail

UPDATE: 12 noon Monday:  Funny how emotions drive the market.  I ended up adding MORE to my longs this morning. lol  I still am jittery on multi-month recovery.  TBD.

This article is NOT NOT NOT about bashing Trump, it is bashing where we are in the American government system.


The Federal Reserve Bank is an institution that has been treated with 'authority' to give confidence to the world it is not a puppet of the politicians.   This is critical, governments that have complete unchecked authority over it's own currency always end in failure.   Simply read up on any failed currency, such as Zimbabwe, once the politicians have direct control, the currency eventually fails.

The monetary system is also a confidence game, meaning everyone knows there is nothing backing currency but faith.  It has been a critical mission to try to keep balance between investments of bonds, stocks, and cash.   The issue is when too much money runs for one or two of them, the imbalance distorts the market.

The combination of co-ordinated messaging between the Federal Reserve Bank, the world bank, other countries national banking system, world leaders, and the President of the USA helps 'nudge' the world opinion to shift running away or two an asset can be mitigated.

We find ourselves in a political environment that USA prides itself on not co-ordinating with anyone, or even within itself.   In effect everyone is on their own.......until that isn't liked.   Over the weekend President Trump threatened to remove the FED chairman.  The stock market on Friday EOD was valued as of JUNE 2019!  OMG the crisis?!? This has thrown the entire western model of separation from currency into question instantly.    Immediately I thought how will Fed Chairman respond?   There is no right answer, the only answer was to NOT create this scenario, but here it is.

If the Fed snubbed the president, and the market tanked Monday, the President may follow through on the threat thinking that the entire market rests on the Fed pressing the easy button to resume the glorious 10 year bull run.   But do you the reader believe the Fed truly has the power to push the economy to another 10 year bull run, or new highs, with a policy change?

I do not, and if you agree this is the quandary, the reputation of the Fed would be plunged into the spotlight, like a child pushed into the center of a courtyard being mocked by a bully and the masses loving a show.  The damage to the child's reputation would be fatal.

So the Fed decided to unleash maximum response, as a child doesn't want to endure that ridicule.   Drop interest rates to zero for lending (to banks, not you!) and unleash 700 billion dollars in direct propping up of assets.  (good old TARP circa 2008).

Now that they have, all fixed right?   Time to party like we did in January?  The president should be pleased, he demanded and got what he wanted, I am sure he will thank the Fed for acting so well and give them full credit for the glorious return to the market.  But I think things won't go this way.

The best analogy I can give you what REALLY just happened is an angry parent stormed into the school and demanded the school district principle about his kids grade.   The parent or teacher didn't engage to ensure the child's learning is maximized, the shortcut is give the child an A and all will be well.  A STRONG district principle with strong support from his/her superiors would rebuke such a request.  A weak one issues an edict and the grade is changed.  All solved.  Does this lead to good things?

What the real message was to the world is the President, and the government apparatus will not act or lead in this time of crisis, or address through leadership.  It will scream to the Fed to make it all go away, which it can't.   All it can do is destroy its reputation that it has any independence, and the markets cannot count on even a weekend for stability.  The president through the bully pulpit can at anytime throw a bomb into the room, and destroy any confidence building in a second.

I am hoping the markets recover today, but my thoughts of a multi-week or month recovery I think are gone.  We are going down, hard to SPX 1900, and depending on ACTIONS or INACTION to SPX 1600 for the final 'judgement'.   We may get a week here, or two of upside starting today, but I question months.

I may bail on longs and stay out for a week or until the elections.  This isn't trading or investment, its rolling dice.

On the cusp of a break down to another 20 percent

Isn't this exciting?!?  Unless the market holds the line by close of business tomorrow, we are going lower.    The critical levels are NOW, 2480, 2250-1900, then 1600.

We close materially through 1600, you better be prepared for some crazy we never could have imagined even in 2008.

But to keep perspective, we aren't as low as the end of 2018.  So we lost only about 15 months of gains.  Still, it seems much worse even to me.

Picture for your consumption.  Look at earlier post today for views of 2250-1900 and 1600 why so critical.

Update 3/13/20 - Futures are positive, I am almost 100% long (got stopped out partially on one position).   Target over next few weeks is 50% retrace, which will be near SPX 3,000.

Targeting SPX 3,000 before going lower, target 2,250-1,900.

Short term bottom targets

UPDATE: Covered shorts, going long

Back on March 1st, in post "Whats next in the markets" I asserted we have a target of SPX 2590-2500 range as shown on the graph below.  The futures show SPX 2600.  We may be finally near a short term bottom.  The bounce once started and will be broken (week, month, quarter?)  I expect the market to cut through the downtrend and find stronger footing XPS 2250-1900 range.  Timelines are subject to FED, government, and bank actions.  A TERMINATING bottom, meaning if we hit this, I'll start to freak out, is materially through SPX 1600.  If that breaks in the next year materially, I will need to reassess.  I do think the 'absolute bottom' is now SPX 1600, as posted in 'how do you know there is a trend change?'

Good luck!

Next Phase of Covid-19, what about mosquitoes?

I expect cases in USA going from 1,000 to 20,000 in next two weeks.
Not because it is spreading that fast, its because USA wasn't testing 2 weeks ago.
The CDC stopped reporting on number tested in USA, because it was embarrassing, under 500 out of 300,000,000 Americans.  The testing is ramping up, so will the number of infected.

I still am hoping with warmer weather this slows and in 4-6 weeks we return to semi-normal.  I say semi-normal since this thing is here to stay, with outbursts in pockets in America through the summer.

Then in late fall, early winter will be the time of real concern, unless we have vaccinations or treatment by then.

Looking ahead, I decided today to purchase mosquito repellent.
I could not find any proof this is transmittable via mosquitoes, but I also could not find anything stating it is not.   If you can find credible material stating mosquitoes are not an issue with COVID-10, please put in comments!

Just like toilet paper, masks, etc, I think maybe the next firestorm leaving store shelves.
Get yours now.

For me, I am not screwing around, DEET for me!
I am buying what my family needs, I am NOT stocking up or hording.
Just pre-buying, some suggestions;

Repel Insect Repellent Sportsmen Max Formula Spray Pump 40% DEET
OFF! Deep Woods Insect Repellent VIII Dry, 4 oz. (2 ct)
Summit Mosquito Dunks, 20 Dunks

I'd like a very good electric one, put in comment if you can recommend.

It’s only when the tide goes out that you learn who’s been swimming naked.

It’s only when the tide goes out that you learn who’s been swimming naked.  - Warren Buffett

The concerns I have since 2006 have changed over the years, but the underlying root cause is the same.  The US Financial system morphed into a 'report card' on the economic health and corporate prosperity to a 'thing' that must be managed.  In effect, the underlying health of our society isn't the goal, getting  grade A is everything.

This started back under Reagan, with choosing China over democratic values and the US middle class.  The greed is good era.  President Clinton in his final year signed into law the safeguards in our financial system that would lead to our 2008 crash.  President George W Bush de-funded the FBI when it started to look at subprime fraudulent loans all the way back into 2003.    The Fed in 2009 decided it was OK to start buying 'stressed' assets.  Since then the Fed has gone from zero to owning 4.5 trillion in assets, effectively erasing those assets as a negative on anyone's balance sheets.

The corporate debt monster has never been bigger.  Quality of loans are back to 2007 standards.  Pension funds for baby boomers that have ZERO chance of paying what they are promised are poised for failure. 

The US Government has decided that debt has no consequence and is offering to spend and not collect taxes.  The Federal Reserve bank may increase spending on buying assets another 2, 5, or 20 trillion dollars, and lower cost to borrow to zero, or even negative.

Do you notice a pattern? US has structural financial issues and the solution is the same, easier credit, bury bad loans, transfer risk from private to the public debt, repeat.

I think it will take years, but the debt machine is starting to show strains, each time kicking the can.  I question how effective the can kicking will be once the zombie companies kept alive on low cost debt fail.

As Warren Buffett says, as the tide goes out, we will see who is swimming naked.
I really hope I am dead wrong for the next 40 years.

Too much, too fast

The drop speed in the market the last 4 weeks was too fast, I think we are about to hit a short term bottom, as early as tomorrow.

The bounce the first day maybe decent, but then some wiggle. I do think before March 17th, the market will be lower than it is today, around SPX 2450-2650 range. Then the FED will launch another volley. This will dovetail nicely into the ridiculous number of COVID-19 infections will be found in the next two weeks. The number will be high, not that it exploded recently, simply because testing will be moved from 400 to 2 million.

I covered most of my shorts, and started going long today. GUSH, bitcoin miners, some really beaten up gold miners, are all benefactors of my donation to their stock price today. GUSH will be a short term trade, it sits at .95 cents, I hope to get 5 bucks before the week is out for it. small numbers placed on that bet. Its tough to catch falling knives. We are close to the bottom I called on March 1st, so I don't want to get too greedy and get out of the shorting game for now.

You want to see who did great? Anyone who owned DRIP, wow.  Gains of almost 500% in 13 days.
I think Russia is figuring out how to extract money from America's 401k's, by spiking the news at a weak moment.  I am sure they profited nicely today.  If I am right, we will never know since our President has stated Russia can be trusted and this wouldn't fit that narrative.  Check back on this post in a decade.

In any event, I am hoping GUSH benefits as DRIP falls.

good luck!

Who is to judge Covid-19 Risk?

I encourage you to watch both of these videos, decide who you believe.  The president of the US comparing COVID-19 to the flu or a life long specialist in the industry of infectious disease.  Once you choose today who to believe, and please follow through to April 2021.    I choose people with depth of knowledge in the field.

Trump claims "natural ability" when it comes to the coronavirus. He also says he could be a research scientist.  He also says anyone who wants a test can get a test. a week ago less than 500 people in the USA have been tested.  What is odd is CDC stopped reporting the total of who was tested a week ago also.  I welcome public totals of tested being communicated in full transparency so we can give full credit to the great efforts of the administration.  Without transparency we must have faith everyone is getting tested who asks.  That is impressive to go to under 500 to million plus in a week! Congrats! I just would like to see reported number, I look forward to the transparency!

Good luck!

How to know if this is a trend change?

I trade actively, too actively for my own good.
It is also not good to never trading in and out of the market is to secure returns that are purely subject to when you need to cash out.

The best is to trade in on a trend change up, and to trade out when the trend changes to down.

The problem is, how to know?   There are many different potential indicators, one I really like is 20 and 50 weekly simple moving averages.  When the 20 is above the 50, we are in an upswing.  When it changes, we are in a downswing.  Often the direction is for years, so this can be material.


Watch this video to get a walk through of time how this worked before 2008.  Below that is a recent chart, and pontifications of possible bottoms if we do trend down. 

Good Luck!

For latest chart, click here!

Humans don't know exponentials Covid-19

In my blog post "Covid-19 What is next?" I posted that I don't think the worst of this pandemic will be first half of 2020, but the second half.  It doesn't mean that it won't get worse in the near term.

Using latest statistics, I compiled what this may potentially play out if environment or action doesn't change the trajectory.

The key take away is people can't appreciate exponential numbers.  Look how quickly things can get out of control.  I still hope the curve goes down materially in APRIL, and if it does the worst case count depicted below on May 4th may be by end of June as the infection rate slows.
Keep in mind, there are less than 1 million hospital beds in USA, and a fraction of that is available, and a fraction of them have devices to help keep you breathing.

Not advocating panic, but do recommend reading "Covid-19 What is next?".  Also I can't imagine this is good for the stock market.  Good luck!

Whats next in the market

NOTE: Also READ COVID-19 thoughts.

Today I am just going to post my thoughts, I won't spend the extra time to put in links.
I really like to put links, to enable you the reader to read my source and help you challenge me or yourself on conclusions.

The market fell HARD this past week,  who could have possibly seen it was time to sell the market? (Click)
Back in 2008, who could have seen that coming?    If you pay attention, its possible to see.

So here we are, whats next?

Anything is possible, the run up for the last 3 years was built on 'free money' through tax breaks, very low interest rates, and a Federal Reserve Bank that has purchased 4.5 Trillion dollars in debt to basically make it 'go away'. 

Now that we are seeing a crack in the market, slashing 1% really is not that much, with rates so low.  More tax breaks?    We could make it free for anyone with over 100 million dollars, but I doubt that is enough.  Cut all taxes for the country to zero?  There is the problem of who then finances USA lifestyle.

So only thing left is for the Fed to just buy buy buy.    The Japanese banks now own 80% of their equities.  So why not have the USA take our capitalist society and instead of giving services to the poor, just spend capital buying securities for the top percentages of society?

So the fed can announce anything, at anytime to help get a shock to stop the drop.
This WILL happen.  Only if you are in the top 0.01% will you know when.  Rest of us is waiting to hear.

My bet is the FED will launch when the SPX passes below 2600, but before cutting through 2490.  See graph below.

We may counter rally this week without the FED doing a major offense.  I just don't think it will last if it does counter rally.   Because of the 10 year run up, there is very low number of shorts out there to buy to take profits to help sustain a buy back.

Then once the Fed launches, we counter rally (again?), we'll get to about 3,000, probably crack it above it a little.
Then some zig-zag, then we go down again, terminating at SPX 1600-ish.   I think then the final missile fires from the FED and the US government, and we'll bottom out.
This will take year or two to play out.  Once the bottom hits with FED and US government launching something extreme, then we are onto the next phase.

All of this will be blamed on COVID-19 and "Feel the Burn" sanders.  But these are just scapegoats for fiscal insanity since 2009.  Granted, COVID-19 has real economic impact, but this event is an accelerator for a fragile global economy build on free money.

The gyrations will continue for years with the central bank giving up all sense of fiscal sanity, with a termination of a global currency crisis.  Gold will be the rocket of all rockets and then I have no idea whats next.  Probably making gold illegal to own, or some other restriction, then turning the reigns over to Bitcoin or other crypto currencies.  Maybe Facebook, USA, Google, Amazon, or bitcoin with the decentralized currency play.

Anyway you slice this, not a great place for a 401k.   Good luck!

Update 3/2/20
Global Recession now baked in the cake

Covid-19 What is next?

I  tend to obsess and go over the top reading/learning on topics that interest me.

On the plus side, I feel confident to speak reasonably on topics, like Covid-19 now.
This post if for me, not you, to ensure I did what I can to help the people help themselves.

This will be my LAST post on this topic, until a full blown pandemic breaks out. 

Whats Next?

I am starting to believe Covid-19 will NOT hit pandemic levels until winter of 2020-21 in mainland USA.     It's and educated guess,  but this isn't the end of this story!

The Spanish Flu in 1918 evolved the same way, smaller outbreak in early 1918, and full pandemic in winter of 1918-1919.   I am believe this is the route the world will take.

There are two events that can change this outcome.  If we develop a vaccine that is proven safe and effective for US citizens to take in the 200 million+ volume, before the winter.

Second, if we develop a drug that is mass manufactured, safe, to curb the people who get hit hard.  This would turn the mass sickness into a scary, but treatable disease.

I really doubt the vaccine route, and hope for the miracle drug route.  But keep in mind, historically science hasn't produced volumes of medicines for existing viruses in short periods of time.

I put links that helped me shape my reasoning, feel free to provided your own to me in the comments! Cite your source that you base your opinion please!

The next 6 months

We will continue to have huge fear due to the explosive nature of the virus.  While hospitals in USA are not saturated, the death rate maybe lower than 2.5% expectation.  In China, the whisper number for untreated is 18% mortality rate.

What is important is if this does fizzle out to NOT get complacent!  This winter I expect the worst case scenario to be on the table.  That gives you time to get ready.

Just like in early January how every pundit said the market is going up 20-30% this year, so will pundits say it Covid-19 was overblown by June.  Don't get fooled.

Why Prepare?

COVID-19 if it becomes a pandemic in the next 12 months will take out 3 million people in the USA, and that stat could go much higher.  This isn't fantasy, its based on all the facts known today about the mortality rate and infection rate.  As I stated, I think this is more likely in winter 2020 than now.  But no one really knows.  The only good news is kids under age 17 seem to have a higher resistance and are not catching it .

I have had some friends say that suggesting preparation is equivalent to selling your house, moving to the woods, and getting guns.   Far from it!  All I am suggesting is you take moderate steps to be prepared for whatever the next 12 months brings.   If we do lock-down in the USA, supplies and safety will change.   Think of your family.  What will you say to loved ones? You are hoping for the best?  My question is, why not prepare?  What is there to lose?   My suggestions are minimal additional cost to your normal spend.

Preparation outline.

Preparation is pretty simple really.  Breaks down to these four high level topics.

• Learn preparedness, listen to events, take ownership.
• Cleanliness - Start today and keep up a habit of cleanliness.  Keep hands away from your face, wash hands and use 70%+ Alcohol to sterilize your hands.
• Supplies - Buy food, medicine, and supplies that you will consume over the next 6-12 months anyway.
• Extra precautions - Buy a few items you typically don't need, NIOSH rated protective gear, and plan to treat a sick family member.

That's it.  The first 3 items are minimal additional money out of pocket.  95% of your spend will be used.  And being mindful of your hands will increase success of catching any sickness, not just Covid-19.  I have taken the time to elaborate on each of these  for your benefit.

Learn

Books recommended in a podcast, I ordered but haven't read yet.
Alton's Antibiotics and Infectious Disease: The Layman's Guide to Available Antibacterials in Austere Settings
The Survival Medicine Handbook: A Guide for When Help is Not on the Way
AudioBook - The Prepper's Guide

Podcast links below are specific episodes that I found good. Browse for new material on these channels.
The Coronavirus goes Global (NYT)  (2/27/20)
COVID Super-Spreader Stealth Pandemic? (2/24/20)

Economic Outlook (Covid-19 is just accelerating)
All-Stars #94 Jeff Snider: The slowdown started before the Coronavirus hit the tape! (2/25/20)
What they are doing is not investment (Written before market crash 2/20)
Quote: Expect the S&P 500 to lose about two-thirds of its value over the coming years

Cleanliness

After MUCH reading, the best protection is keeping your hands away from your eyes/nose/mouth, and sterilizing your hands frequently.   If you are not around someone you know has a virus, any mask is good.  The purpose of the mask isn't to clean the air, but to stop YOU from touching your eyes/nose/mouth.  So anything is good, such as a disposable surgical mask.   Buy base on looks, convenience, but no need to ensure it is NIOSH certified N95 or N100.

Good hand cleaners:  Portable and refill/home

Masks on Amazon

Supplies

Simply buy non-perishable food you will use over the year ahead.  Some ideas are wide variety of canned items, pasta, flour, sugar, condensed milk, condiments, spices, rice, beans, cereals, bottled water, and fill your freezer with protein. (chicken/pork/meat).    Don't forget your animals!

Only thing to consider buying you may not eat is plant protein (beans) and fruit in a can, if you don't normally eat them.

Same with medicine, vitamins, Elderberry, and if you need medication try to have 3 month supply.  

Basically pre-buy all supplies to last a few months, and buy what you normally use.

Extra precautions

If any Pandemic hits the USA in the decade ahead, chances are the treatment needed will not scale to treat everyone.  For the unlucky persons who catch Covid-19 and it turns int pneumonia , it requires ventilators that need 2-3 people staffed on the machine around the clock to keep the person alive.  It is quite possible that if someone catches it your family and is not 'critical condition' the hospital won't take them.

So having masks, gloves, plastic, duct tape, etc does help.

For close contact, N95, R95, P95, N100, R100, or P100 masks would help.

The 100 rating are more effective than 95 rating.

Disposable masks are not available anymore, as the total supply has been consumed in the USA and the world.   Disposable masks cannot be effected for weeks or months. (hence disposable).
So if you want to be extra cautious, you can buy more expensive masks that provide longer protection.

One example is this mask:

https://www.grainger.com/product/3M-3M-Low-Maintenance-Half-Mask-6AP71

And you can get N100 cartridges:

https://www.staples.com/3M-OHESD-Particulate-Filters-P100-Nuisance-Level-Organic-Vapor-2-Pack/product_1550001

https://www.staples.com/3M-OHESD-Half-and-Full-Facepiece-Cartridges-Filters-P100-Multi-Gas-Vapor-2-Pack/product_1549795?cid=EM:shipped::sku&&data-cta-category=[PRODUCT]&akamai-feo=off

Other options here

Also consider getting bleach, painters plastic, duct tape, eye coverage, etc.  This will give you options to create a treatment rook and/or safe spaces.

 Closing

By no means do I think above is complete and/or accurate.  Purpose is to simply consider trying to be prepared.  When China locked down 780 million people it was sudden and enforced by military.  Other countries like Italy are following suite.    There will not be a window to act, you have to be prepared ahead of time.

No need to freak out, or stop living life, just take reasonable low-cost and effective preparedness measures.

Good luck!