Dow Jones Cashed in Today

[ewmayer]

Another day, another "Dow Jones Surges 600 Points On Coronavirus Vaccine Hopes" headline. But today the above was followed by a - scary! - "...But Cuts Gains", it seems there was a teensy bit of profit-taking into the close, leaving the Holy DJIA30 up a mere 500 point and change for the day. I'm sure the folks at the Fed are busily considering whether more $trillions in liquidity should be firehosed in the direction of Wall Street, as 1000-point-plus rallies on the latest "vaccine hope!" rumors or PR from Big Pharma firms looking to boost their share price so the insiders can cash out their shares before it becomes clear that their trial vaccine is not up to snuff or will in fact be years away from possible use have become shockingly scarce in recent weeks.

[garo]

Is this it? Good chance we saw the top on Wednesday.

[ewmayer]

Originally Posted by garo

Is this it? Good chance we saw the top on Wednesday.

Nah - Thursday's selloff was just an unfortunate 1-day "alright, who let reality intrude on our casino?" event - already recouped a decent chunk Friday. Couple more days of corporate-PR-pumped "markets soar on vaccine hopes"-ness and "better than expected hiring numbers reduce Covid-19-unemployed ranks from 30 million to 29.9 million" the Holy DJIA will blow right past 30,000, and Nasdaq past 10,000. Thanks to the FedHeads treating the economy like a giant Hedge Fund, the "the only market risk is that of missing out" mentality overrides all else.

In fact I'm probably not cynical enough - what the Fed has in fact engineered is the persistent expectation among market parcticipants that the worse things look for the real economy, the more new-printed-$ the Fed will firehose at the casino gamblers in order to make their bad bets good. Wolf Richter's latest on the bad-bet-bailout-a-ganza:

America Convulses in Pain, Fed Bails Out the Wealthy | Wolf Street: What’s so insidious about the Fed’s bailouts of investors in hedge funds, mortgage-REITS, stocks, bonds, leveraged loans, and other often risky assets? The destruction of capitalism.

[ewmayer]

All you need to know about today's miracle-rally - nope, no corporate-stock-pumping "vaccine hopes!" headlines, rather it's the above-mentioned Uncle Feddie deciding that markets need goosing with moar asset purchases, this time the Fed is getting into corporate-bond-buying in a big way:

A primer on the Fed's corporate bond-buying program | Yahoo Finance

The Federal Reserve on Monday fired up its facility to directly purchase corporate bonds from the companies themselves, rounding out its bond-buying program as the central bank continues to combat the economic fallout from the COVID-19 crisis.

Since May, the Fed has already had a hand in the corporate debt market, snatching up billions in corporate bond ETFs and, as of late, purchasing individual bonds in the secondary market as well. On Sunday, the Fed announced the “broad market index” that will guide its individual purchases, including familiar names like Apple, General Electric, and Comcast.

As of June 24, the Fed’s purchases had only totaled $8.7 billion, a drop in the bucket when considering the Fed could lever its purchasing power to take on as much as $750 billion in assets. Upon launching its facility to directly buy debt from issuers, Fed officials said they expect limited usage of the facility, adding that corporate credit markets appear to be past the illiquidity from mid-March that manifested itself in the form of blown-out spreads.

Still, the Fed’s corporate bond intervention raises questions about how the Fed will go about the purchases and why it needs to backstop the corporate credit market at all.

LOL, "Fed officials said they expect limited usage of the facility" - as in, limited only by the ctrl-p keys on our fait-creating computer terminals not wearing out. As to "why it needs to backstop the corporate credit market at all" -- why, to continually boost financial-asset prices and thus further enrich the Fed's core constituency. Silly question.

Prediction: before end of the year, the Fed will have begun direct purchases of corporate equity. The ultimate stock-price-goosing corporate-share-buyback program, if you will.

[Uncwilly]

Have to adjust the portfolio before the end of the quarter.

[kladner]

Prediction: before end of the year, the Fed will have begun direct purchases of corporate equity. The ultimate stock-price-goosing corporate-share-buyback program, if you will.

Bu-bu-but Mitch McTurtle says there's no hurry and little need for wasteful 'stimulus' payments to non-corporate 'persons'.

[Dr Sardonicus]

On March 23, 2020, the DJIA closed at 18,591.93, the lowest closing value this year to date.

On that day, as

Originally Posted by Ernst the Infallible

My sister e-mailed me earlier today re. when might be an opportune time to start bargain-hunting in the markets - my reply:

Of course, I don't know how much Ernst's sister relies on his financial advice, or what form such reliance might take.

There are stories about people whose forecasts of, say, the weather, are so reliably wrong that if they predict fair weather, you immediately decide to take an umbrella.

It is possible that if the "everything bubble" bursts at this point, the whole financial system will collapse. In that case, the notion of bargains in the stock market would be otiose.

[VBCurtis]

Originally Posted by Dr Sardonicus

There are stories about people whose forecasts of, say, the weather, are so reliably wrong that if they predict fair weather, you immediately decide to take an umbrella.

I had a couple friends in college who learned / got approval to short stocks, solely to short the companies I picked for my own portfolio. #Iknowthefeeling

[kriesel]

Originally Posted by VBCurtis

I had a couple friends in college who learned / got approval to short stocks, solely to short the companies I picked for my own portfolio. #Iknowthefeeling

How could you afford to invest while in college? Such affluence as to afford college and other investments too was unimaginable to me then. Paying for college solo required almost all my resources, extra time to finish, and some loans to get out quicker than otherwise.

[chalsall]

Originally Posted by VBCurtis

I had a couple friends in college who learned / got approval to short stocks, solely to short the companies I picked for my own portfolio. #Iknowthefeeling

Interestingly, those who invest in stocks have a maximum loss of what they invested.

Those who short, on the other hand, have a potential for infinite loss (ignoring stop orders, of course).

Not for the faint of heart, nor hairless of chest...

[Uncwilly]

Originally Posted by chalsall

Not for the faint of heart, nor hairless of chest...

I would think that some female investors might take umbrage to that statement.