Long Pitchforks And Water Cannons

The juxtaposition of the following two tweets is absolutely stunning and just freaking… WOW!

Potential Major Political Blowback 

Can you imagine the political blowback that is coming if the economy doesn’t snap back soon as the levered bad actor oil companies (just to name one sector)  have been bailed out while the Administration is still trying to kill Obamacare and even tried to cut food stamps to the poor earlier this year?

Nothing partisan here, we are just extrapolating the consequences and political analysis of the GFC to the current crisis.  Think about it, last week Main Street registered another 6 million-plus hit in lost jobs and junk bond investors got bailed out of their risky and dumb-ass bets.

Op-Ed: Get ready for the recovery of the 1%

There were two important economic events on Thursday. The government reported that 6.6 million Americans filed for unemployment, an all-time record. And the Federal Reserve announced a new program to flood the economy and financial markets with $2.3 trillion in liquidity — including buying up junk bonds from debt-laden companies.

Which one moved the market? The Fed move, driving the Dow Jones Industrial Average up 500 points by midday.

The market jump, unemployment surge and Fed rescue efforts all converged to form a new split in the economy, between the asset-rich and the rest of America.  — CNBC

Also, seeing a lot of the privileged Bailout Queens on Twitterati taking victory laps thinking they’re geniuses — and some even grotesquely posting pictures of their steak and lobster dinners like anybody gives a shit — after the Fed has saved their bacon for the umpteenth time.  Yet they have no clue of the consequences of what may be about to come. Must be the ultimate contrarian signal.

For some reason, the Bailout Queens are now mocking the bears saying they are angry about the bailouts and calling them “liquidationists,” probably as a vague reference to Andrew Mellon, President Hoover’s Secretary of Treasury when the Great Depression first broke out,

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” That, according to Herbert Hoover, was the advice he received from Andrew Mellon, the Treasury secretary, as America plunged into depression. — NY Times 

They have no clue of the anger that is about to besiege the political system.  Heads are gonna roll and we doubt it will be the W.H.O. or the Chinese as some are trying to deflect to and scapegoat.


We are bearish, angry and would  like to see the pain more evenly shared this time with many more economic and Chapter 11 restructurings, which are not liquidations x/ shareholders, by the way.  Otherwise, we risk losing an entire generation to stagflation and a highly indebted zombie economy, and that is if we are lucky.

If this is the case, what will really irk us, beside seeing the poor getting poorer, is to watch the Bail Out Queens continue to take their victory laps, still thinking they’re geniuses surfing the Fed liquidity, and still posting their god damn steak and lobster dinners on Instagram.  Yuck, gonna hurl just thinking about it.

Why do think there was such a ginormous political shock in 2016?  Much of it was because none of the banksters, who were a big portion of the nefarious group of actors that caused the Great Financial Crisis (GFC),  were never criminally prosecuted.  No, Virginia, it wasn’t just Lehman Brothers.

Cash And Gold

Even Arnold would love our gold and cash barbell position as we wait patiently on the virtual Venice Beach.  We have zero desire to own the stock market at these astronomical valuations, 130-140 percent of GDP, which probably puts it in the 90th percentile valuation rank (back to you with confirmation) even during talk of another potential Great Depression.

With the unemployment trajectory approaching that of the Great Depression at 25 percent, albeit temporary,  should stocks be trading at such valuations?  Have we slipped into some alternative universe or did we miss something?

Back To The Thirties

It is interesting stocks are experiencing daily moves not seen since 1933, when FDR came to power and the Dow returned its best year ever.  It was a big bounce after an approximately 80 percent flop from the September 1929 high.  President Roosevelt had a lot of runway to work with back then as the national debt was low, the federal government and financial regulations, for that matter, including deposit insurance were virtually nonexistent.

The monetary authorities were also learning some very painful lesson by not providing liquidity to financial institutions during the runs and panics allowing banks, even the strong ones to fail.  Milton Friedman estimated the money supply shrank 25 percent due to the bank failures and was the main cause of the Great Depression (again, we need to confirm the data as we are writing on an iPad and away from the desk).

FDR’s policies were able to bring unemployment down to about 15 percent.  It didn’t eliminate the Depression but moving from 25 percent to 15 percent alleviated a hell of a lot pain and suffering.   Next time you hear an ideologue call FDR a “socialist,” do us a favor and tell them to stick it where the sun don’t shine.   Roosevelt saved capitalism.

Get Shorty?

Not yet.  The temptation to short now is very high but don’t count out a ghoulish rally as the idjits count it a victory if the final death count comes in at, say 70K instead of the 100-240k estimate, which was very likely fake in order to manipulate and lower the bar.

The experts said they don’t challenge the numbers’ validity but that they don’t know how the White House arrived at them.

White House officials have refused to explain how they generated the figure — a death toll bigger than the United States suffered in the Vietnam War or the 9/11 terrorist attacks. They have not provided the underlying data so others can assess its reliability or provided long-term strategies to lower that death count. – WashPost

Think as in “a final China trade deal is within days.”  Pretty frickin’ sick.

Nevertheless, we hope and pray for not one more COVID casualty.

The flattening of the curve or whatever the market deems as turning the corner on the first order existential threat, i.e, death,  is just the end of the beginning of the crisis.

We do give the the Fed credit for not letting the Titanic sink, at least not yet,  but there are so many other dimensions to this crisis, 2nd, 3rd, even 7th order and more effects.  It’s  just mind boggling.  The Fed and Congress is going to have to rethink the central bank’s mandate.

Ex Ante Structural Weakness 

Contrary to the delusions of some,  we would be in a much stronger position to snap back if the economy was structurally sound before the virus took it out.  Take a look at those bread lines if you disagree and think it was the best economy in history pre-COVID.

That’s a red state, folks.

How many people sitting in those cars do you think own stonks?

Hint: Our last analysis estimated 88 percent of public equites are owned by the wealthiest 10 percent of households.

Our bet is they could give a rat’s ass where the Dow closed on Thursday and care about one thing:  how they are going to feed their kids, last night, today, and tomorrow.

‘We just can’t feed this many’

Vehicles start lining up before dawn as locals hit hard by economic effects of coronavirus seek aid from the San Antonio Food Bank.

April 9, 2020

In perhaps the most sobering reminder yet of the economic fallout caused by the coronavirus pandemic, the San Antonio Food Bank aided about 10,000 households Thursday in a record-setting giveaway at a South Side flea market.

“It was a rough one today,” said Food Bank president and CEO Eric Cooper after the largest single-day distribution in the nonprofit’s 40-year history. “We have never executed on as large of a demand as we are now. — San Antonio Express-News

As always, we reserve the right to be wrong.

Happy Easter, folks!

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    Who are the bailout queens?

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