Investments Trade Log

[shemp]

Feb is not that far off. If the Fed lends directly, most publicly traded corporations can be kept alive until then. At that point, I doubt Republicans want a full blown debt deflation, since their corporate backers don't want that, so we'll get enough stimulus to keep the system from collapsing. Betting on total collapse is betting against the desires of the preponderance of powers that be.

I agree that tech is just a long duration bet, and I consider betting on low yields forever a bad bet. Inflation and rising long term yields are eventually inevitable, IMO. The preponderance of powers that be dislike inflation but they dislike debt deflationary depression more.

Note that gold and miners a bet on low real yields, thus another long duration bet. Personally, I think oil/gas is a safer inflation hedge. Energy sector as cheap as its ever been.

[Mister Imperceptible]

The 1970s had high nominal rates and negative real rates. Buying a Treasury yielding 3 or 4% is still foolish if the government is printing $10-20 trillion a year.

I am not bullish on oil yet because of Covid lockdown demand destruction and China has already gone thru their cycle of building ghost cities.

Futures up 3.5%, short squeeze meltup is on. The liquidity in the market is very low. Headlines for next few weeks should be “Market up on Biden win” and “Market up because Trump concedes and election is no longer contested” and “Market up because we have a vaccine to cure our plandemic right after Biden was elected” with another sub-headline “Another 750,000 people laid off this week.”

[IlliniDave]

Looks like a good day to "rebalance". I'm not sure the predicted gridlock over tax hikes will happen.

[Lucky C]

Is today an overreaction or underreaction to the 90% vaccine effectiveness news?

People seemed to be confident in a working vaccine "soon" before today, so the news is 90% effective vs. say 70%, the latter of which would not provide a great level of immunity if you assume that a high proportion of people will be afraid to take the vaccine, at least at first (maybe half of people?)...

The stock market overall was already rallying so people were already bullish, plus prices are already falling relative to the open, which suggests this could be an overreaction. I would think the earnings of companies over the next few years shouldn't really change much with a 90% vaccine in a few months vs. a 70% vaccine in 6 months, for example.

On the other hand, this removes a lot of doubt from people avoiding stocks right now, and the market is making new all time highs, so of course that's bullish.

On the other other hand, it's nothing but good news and optimism now. When it looks like visions of the future can't get any better, that's a good time to be cautious in the market - especially with stock valuations at extreme highs.

Edit: Overreaction it is, I guess! People couldn't even wait til Turnaround Tuesday to sell. But oil held onto its gains an precious metals held on to their losses.

[giskard]

Note that gold and miners a bet on low real yields, thus another long duration bet. Personally, I think oil/gas is a safer inflation hedge. Energy sector as cheap as its ever been.

Well maybe not after today!

I continue to add to the miners and they remain by far my largest position. There is no tolerance for long term deflation. MMT is just QE for the people and is picking up steam (see the board). The alternative is complete collapse of the global financial system. I want the miners to crash 50% with the rest of the market so I can cash my SPY put options and buy even more.

Appreciate you adding a response to my deflationary spiral concerns. I ultimately think I agree with you, I think it's more likely they go too far with the stimulus than the opposite (and we get inflation rather than deflation), it's just that how the last couple of months have played out made me start to question that belief.

[7Wannabe5]

@MI:

Could you explain this in terms of the Ciara “Goodies” video I posted on the “Distinguishing between “the market” and “the economy”” thread? For instance, would the possibility of increased immigration = more background dancers wearing more chains or just more chains on neck of Peter Pablo? Also, who/what would represent the Fed? Thanks.

[Lemur]

Opened position in QCLN.

[Flurry]

Bought these 2 days ago:

213 shares of Bunzl (LSE:BNZL) for 24.4 GBP/share, solid dividend growth stock and the valuation looks good at the moment + I need more European stocks in my portfolio

162 shares of Enbridge (TSE:ENB) for 40.0 CAD/share, I am very sure that they will stay able to comfortably pay the dividend from their DCF and I think the stock is very undervalued at the moment.

Invested 200€ into estateguru.co real estate crowd investing

[ertyu]

What does everyone think about this "rotation" then? Is this the final one that's for real (fintwit seems to behave like it is) or do we have another reversal back into growth as the covid cases in the states are gathering steam?

[Flurry]

I think the vaccine from Biontech (for which Pfizer takes all the credit) is totally overvalued on the stock markets. My Simon's Property Group position went up 30% on a single day, just like everyone is vaccinated immediately, heading to the Mall to go on a shopping spree.

[giskard]

What does everyone think about this "rotation" then? Is this the final one that's for real (fintwit seems to behave like it is) or do we have another reversal back into growth as the covid cases in the states are gathering steam?

I think it's overdone, but I'm talking my book here. We are seeing a very serious surge in virus cases worldwide and the vaccine rollout will be much slower than people expect I think. How will all of these businesses survive another lockdown period without another huge stimulus / PPP / fed liquidity injection?

[2Birds1Stone]

I just made a (likely stupid) move to cash with a large chunk of my domestic and international equities.

[Flurry]

I think it's overdone, but I'm talking my book here. We are seeing a very serious surge in virus cases worldwide and the vaccine rollout will be much slower than people expect I think. How will all of these businesses survive another lockdown period without another huge stimulus / PPP / fed liquidity injection?

I think that will happen, I expect MMT to be widely established this decade.
In Europe many governments simply shut down business and compensate them for the missed revenues what costs trillions of Euros. This can't work without the central bank printing money like crazy and most countries will behave the same because it's stupid to swim against the current.

[ertyu]

Something about everyone talking about how wooooo MMT is coming makes me think that MMT will not be coming. MMT is what you do if you want redistribution without unrest and war. The very rich do not mind unrest and war because they usually have the means to be physically away from it and are able to profit from it. Don't forget the logistics of the nazi camps ran on ibm machines.

[giskard]

Something about everyone talking about how wooooo MMT is coming makes me think that MMT will not be coming.

Why not look at it from a standpoint that we are already doing MMT with more steps? They will never "normalize" the fed balance sheet, so they will be able to issue as many treasuries as they like at low or zero rates. The Trump admin was running huge deficits in boom years. Sounds pretty MMT right?

Its probably more risky to the US if we don't go down this path if everyone else is doing it. Our currency could strengthen too much and kill our exports. Helicopter money and e.g. forgiving student loans will be net beneficial to economic activity - we're at the point where we have so much accumulated debt and it's pushing down with such deflationary force it seems like MMT style policy is the only realistic way out.

But as a risk? Yes I do think the Biden administration will try to be more fiscally conservative than the popular opinion is expecting. At some point though they are just going to have to embrace it out of necessity.

[shemp]

How will all of these businesses survive another lockdown period without another huge stimulus / PPP / fed liquidity injection?

Some won't survive, but most will because allowing too many publicly traded corporations to fail would bring on a debt deflation. Central banks know this, so if elected governments won't act, central banks will start to lend directly to avoid a meltdown. That's worst case. More likely, elected governments will act.

Remember, most newly created money (deficit spending) flows through business profits (including profits of publicly traded corporations) on its way to final resting place in the hands of misers (net savers, typically wealthy old people). This the ultimate explanation of the boom in stock prices. Big deficits mean corporate profits must necessarily explode upwards, regardless of collapsing household economy. This is a simple accounting identity. Only question is which corporations prosper, because some will miss the boom.

[giskard]

Some won't survive, but most will because allowing too many publicly traded corporations to fail would bring on a debt deflation. Central banks know this, so if elected governments won't act, central banks will start to lend directly to avoid a meltdown. That's worst case. More likely, elected governments will act.

Right that's what I was trying to get at - the liquidity injections will have happen as a last resort. And yeah its going to be lending - whether that is in the form of buying corporate bonds or generous lending facilities.

But I think its a real question as whether or not the central banks can do enough on their own to avoid deflationary spirals. People seem to believe they are omnipotent but are they? Creating more debt is ultimately deflationary.

[Alphaville]

i bought $100 worth of paypal bitcoin yesterday “for science”

it immediatly went down like 1.4%. now it’s down 2.18%

yay! tuition

i don’t think it will reach previous heights anytime soon so now i wait 10 years

[shemp]

Creating more debt is ultimately deflationary.

I don't where that slogan comes from, but it makes no sense. Do you really believe giving everyone $1 million of 10 year US government bonds paying 2% would be deflationary?

Note that ordinary fiat money, whether $100 bills or electronic bank reserves on deposit with the Fed, is simply government debt that pays 0% interest and never matures. Do you really believe giving everyone $1 million of $100 bills would be deflationary?

Deflation is caused by low demand relative to supply. High debt levels MIGHT mean effective demand (spending power) is in the hands of wealthy old misers who won't spend (see Marx's theory of fundamental inner contradiction of capitalism), but that is not necessarily the case with high debt levels.

[ertyu]

Depends whose debt. Household and corporate debt is deflationary. Gvt debt doesn't have to be.