Dow Jones Cashed in Today

[ewmayer]

Originally Posted by rogue

Wall Street is waiting for the US Congress to bail them out.

Ha! No need to wait for a snail-like Congress if you're the Big Finance mafia - the Fed got your back. See subdiscussion starting with post #37 here.

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

Patience, my impetuous young Jedi - this pandemic is going to cause a Great-Depression-level hit to GDP, and markets have barely begun to price in that level of badness. I would wait for at least a 50% haircut in the DJIA (that means Dow under 15,000) before even considering dipping a toe into some broad index or beaten-down sector-ETFs.

Me, I'm waiting for Dow 10,000. That would represent an even bigger drop than during 2008-9, but the thing is, the bubble the Fed blew since then has been even bigger. Wolf Richter calls it the Everything Bubble.

Right now, cash is king.

[Dr Sardonicus]

Originally Posted by ewmayer

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

03/24/20 close 20,704.91 +2,112.98 (+11.37%)

[kriesel]

Tune in again tomorrow, for another episode of, "As the Market Turns".

[Uncwilly]

Originally Posted by kriesel

Tune in again tomorrow, for another episode of, "As the Stomach Turns".

Fixed that for you

[Dr Sardonicus]

Originally Posted by Uncwilly

Fixed that for you

Those charts of the day-to-day percentage shifts began looking like the graph of a periodic function multiplied by something of increasing amplitude, like



with a, b > 0.

Every day, the stock market seems to turn on a dime and give nine cents change.

With the Fed offering unlimited buying of Treasuries and mortgage-backed securities, and an economic stimulus package working its way through Congress, where it's more than doubled in size before even being passed, what could possibly spook investors?

Oh, I dunno. Maybe certain names filled in for "_________ has tested positive for the Coronavirus."

[ewmayer]

Originally Posted by Dr Sardonicus

With the Fed offering unlimited buying of Treasuries and mortgage-backed securities, and an economic stimulus package working its way through Congress, where it's more than doubled in size before even being passed, what could possibly spook investors?

Oh, I dunno. Maybe certain names filled in for "_________ has tested positive for the Coronavirus."

_________ = Lloyd Blankfein? Bernie Madoff? Jerome Powell? Charles Ponzi? Oh wait, scratch that latter one.

Classic furious bear market rally today - love how all the yesterday-was-the-bottom-callers were out shouting from the rooftops. One would think we'd vanquished the pandemic and folks were out in force using those not-yet-existent-and-who-knows-how-long-it-will-be-before-they-arrive-en-masse checks from the government to buy stocks and new Teslas.

But the market reaction to "hope of stimulus bill" kinda tells you where most of the money is aimed - the Wall Street speculator class. And Wolf R's latest describes all the various 2008-9-initiated cash-for-trash programs the Fed has restarted in the past week.

[Dr Sardonicus]

Originally Posted by ewmayer

_________ = Lloyd Blankfein? Bernie Madoff? Jerome Powell? Charles Ponzi? Oh wait, scratch that latter one.
<snip>

"Jerome Powell has tested positive for the Coronavirus" might cause a few sphincters to quiver.

How about Jeffrey Sprecher? Xi Jinping? Vladimir Putin?

[kladner]

Originally Posted by Dr Sardonicus

"Jerome Powell has tested positive for the Coronavirus" might cause a few sphincters to quiver.

How about Jeffrey Sprecher? Xi Jinping? Vladimir Putin?

Do you really think that Vlad the Impaler or President Xi, and their minders, would be so careless?

[ewmayer]

Matt Stoller weighs in on the vast and underreported subsurface mass of the 'bailout iceberg', a.k.a. the real reason the markets have been rallying:

Stop the $6 Trillion Coronavirus Corporate Coup! - BIG by Matt Stoller

Since Saturday, I’ve seen an emerging right-left argument about what we need to do to address the pandemic.

The American Economic Liberties Project (my org) put out a statement against the bill, AFL-CIO official Damon Silvers, who oversaw the 2008 bailout, put out an article against the bill, as did dozens of economics and finance professors. Congresswoman Alexandria Ocasio-Cortez warned of the risks of a bill tilted to big business, as did libertarian member Justin Amash. John Cassidy wrote in the New Yorker how to do a bailout without corruption. And Georgetown law professor Adam Levitin pointed out that the bill is “robbing taxpayers to bail out the rich.”

But then these two Senators, Chuck Schumer and Mitch McConnell, cut a deal last night. And from what I can tell, it’s really really bad, and much of the bad stuff is not being included in the sleazy marketing materials from Schumer and McConnell, or in the reporting about the bill. There’s a reason for that. Sunlight would kill this thing.

That means there is a narrow way to stop it.

What Is In This Bill?

Congress is going to pass a bill with a lot of important stuff for workers, hospitals, cities and small business, and to address the pandemic. That's inevitable. And the bill on the table includes some of this. The question though is what else the bill includes, and that’s where we get into trouble. Because while we have to deal with the pandemic and crisis, we do not have to fundamentally eliminate the economic rights of all of us in the process.

Now, first I should say I don’t have the final deal in hand because it’s not public. I have only seen versions of the negotiating text. But I’m fairly sure most of these provisions haven’t changed, because the final sticking points were over various direct pandemic spending pieces. If I get that wrong, I’ll tell you in an update.

On Saturday, I went over the Christmas wish list of corporate lobbyists in this process, everything from Adidas letting people deduct gym costs to candymakers seeking a $500 million loan to Jeff Bezos and Elon Musk seeking $5B in loans for their space corporations. Of course what Wall Street sought, and got, dwarfed all of these requests.

Here’s how you can tell. A lot of reporters have been talking about how this is a $2 trillion deal, with a bunch of spending for hospitals and whatnot. But last night White House advisor Larry Kudlow announced it is actually a $6 trillion deal. And business reporter Charlie Gasparino said he’s hearing chatter that the total will be $10 trillion! Say what?!?

How does this work? How can Wall Street have one impression of the amount of money, and everyone else have a different impression? Easy. Confusion, lying and bad reporting. If important people don’t talk about the boring sounding big stuff, then us non-important people sound crazy or nerdy mentioning it. It’s a giant game of social climbing, and the goal is to make all of us afraid to point out what’s going on. (Incidentally I hope Rep. Brad Sherman, who is an accountant and a key anti-bailout leader, really delves into this.)

So let’s talk about the big stuff that McConnell, Schumer and Pelosi are hiding.

The bill establishes a series of boring-sounding slush funds, and these will be given strange alphabet soup names by the Federal Reserve and Treasury, names like ‘special purpose vehicle’ and ‘ABS’ and ‘TALF’ and FDIC bank guarantees. That’s where the real money is. Here are some of these slush funds, starting with the ones that are more understandable:

o $50 billion in loans and loan guarantees to airlines

o $8 billion in loans and loan guarantees to air cargo carriers

o $17 billion in loans and loan guarantees to “businesses critical to national security”

o A $425 billion fund for loans and investments to be used at the discretion of the Secretary of the Treasury, Steve Mnuchin. He can use it to loan money, buy stock, buy bonds, whatever.

Obviously helping certain enterprises is important, so I’m not opposed to industry aid. But the terms and conditions matter, and based on what I’m seeing, I don’t believe there will be meaningful restrictions on this aid. Executives and financiers are going to profit off of taxpayer money.

So that’s the stuff that’s been reported. Here’s what hasn’t, and why the bill goes up in value to $6-10 trillion.

o An additional $4 trillion from the Federal Reserve in lending power to be lent to big corporations and banks.

o Authorization to bail out money market funds, multi-trillion dollar unregulated bank-like deposits for the superrich.

o Authorization for the the government through the Federal Deposit Insurance Corporation to guarantee trillions of dollars of risky bank debt.

There’s more. This is a long bill, but to give you one simple data point, here’s what happened to Citibank’s bonds over the last few days.

That big spike shows the bonds getting much riskier, and the collapse shows the result of Wall Street being convinced this bill will pass and the bonds will be guaranteed by the government. Hedge fund guys knew this move would happen, and speculated around this move before it did. Front-running the Fed for easy profits wasn’t even hidden; David Tepper, among other money managers, was on CNBC talking about how he’s investing in bank debt.

While there isn’t a direct statement ‘we are handing a gift out to XYZ,’ legislative graft doesn’t work that way. The bill is authorization to restructure the economy according to the preferences of a very small group of people. Or to make it simpler, here’s what happened to Boeing’s stock price yesterday.
[Image]

Now again, Boeing is an important enterprise, and we should save it. (Here’s a plan to do just that, and if you are interested, a web event tomorrow to discuss how to do so.) But saving Boeing is different from saving Boeing’s shareholders and CEO. Guess which one this bill does?

The marketing pitch from Chuck Schumer on why a Wall Street bailout isn’t that bad is there’s disclosure, some oversight, and reporting requirements. Aside from the fact that none of this worked in the first set of bailouts, this stuff probably only applies to one slush fund in the bill. More to the point, financiers are already stealing, as I showed with the Citibank bond spreads. It’s hard to convey just how ugly this program is, already the Federal Reserve hired the largest asset manager in the world [Blackrock] to run its multi-trillion dollar bailout. The bailout is already privatized with a conflicted operator, before it has even started!

And remember, this bailout isn’t necessary. Hospitals need money, patients need ventilators, and people need to pay rent, but Wall Street is going to be fine regardless.

[Dr Sardonicus]

Originally Posted by kladner

Do you really think that Vlad the Impaler or President Xi, and their minders, would be so careless?

Of course not.

Putin has even postponed the Duma's vote to coronate him Tsar of All the Russias amend the Russian Constitution to allow him to run for another term.

EDIT:

03/25/20 close 21,200.55 +495.64 (+2.39%)

[ewmayer]

Originally Posted by Dr Sardonicus

Of course not.

Putin has even postponed the Duma's vote to coronate him Tsar of All the Russias amend the Russian Constitution to allow him to run for another term.

By way of contrast, in that US "special friend" and model democracy that is Israel, Netanyahu has been quite busy not letting the pandemic crisis go to waste.

Re. today's DJIA close, it's interesting to note that the Dow was up as much as 1,300 points (~6%) going into the final hour of trading. Lack of conviction among the Monday-was-the-bottom callers? But given the breathtaking speed with which the Fed restarted its Alphabet soup of 2008-9-inaugurated bailout vehicles, it's clear they want to nip the existential threat that is "price discovery" in the bud by any means necessary. So da peeps get a measly $500 Bln - and who knows how much of that will end up getting disbursed, and how long it will take - while the casino gamblers and billionaire class get effectively unlimited largesse.

And in LOL-news, while digging out the Dow intraday numbers just now, spotted this "Yahho Finance Video" headline: "Sen. Grassley: the whole point of this bill is the recovery of the economy." Whose 'economy' might that be, senator?