Culturalism · investing · Personal Finance

The Federal PRESERVE of Wall Street

Some people ask me how I’m able to stay sane as an investor during times like these. The answer is quite simple: just pay attention to the federal government.

As most already know, the Congress approved a $2 trillion monstrosity by voice vote yesterday, with the only visible opposition coming in the form of representatives AOC and Thomas Massie. Beyond its inclusion of various stimulus programs, the legislation creates a fat bailout fund for larger companies, and allows the Federal Reserve to leverage up to $4 trillion in support of the economy (Read: Wall Street ).

In the words of Powell the Owl:

“Effectively one dollar of loss absorption of backstop from Treasury is enough to support $10 worth of loans. When it comes to this lending we’re not going to run out of ammunition.”

Some Democrats openly demanded oversight for $500 billion in assistance that corporations will have partial access to through the bill, and succeeded in establishing an inspector general to monitor disbursement of the money. In response, Republicans began to weep miserably.

Just kidding. In reality, El Orangelo was several steps ahead of them, placing his ink on the bill accompanied by a fancy signing statement, which effectively allows him to ignore parts he doesn’t like. According to the man himself:

“I do not understand, and my Administration will not treat, this provision as permitting the [inspector general] to issue reports to the Congress without the presidential supervision required.”

In relation to congressional oversight requirements for specific funds he added:

“These provisions are impermissible forms of congressional aggrandizement with respect to the execution of the laws.”

In other words, the money is already compromised. If that wasn’t enough, the legislation also shrouds Federal Reserve meetings in deeper secrecy, establishing an effective wall against FOIA requests.

So Wall Street will be fine, although your currency is another question. But don’t worry, you can forget all that and just rage against Thomas Massie.

Culturalism · Personal Finance

Paranoia Nation

We have already considered the negative impacts of Corona Derangement Syndrome (CDS) on the economy and the world. But even all that pales in comparison to a new story on the block.

On Hufflepuff.net, an article was published with the title “My Grandma Isn’t Taking Coronavirus Seriously Enough And It’s Terrifying.”

At first glance, the piece might come off as a touching tribute to an elderly relative at risk from the advancing virus. That is, until the reader reaches sentence two:

“In New Jersey, a quick 18 miles and two river crossings from where I am in Brooklyn, my 88-year-old nana is probably sleeping after another long, semi-quarantined day of watching the news, chain-smoking cigarettes and worrying about me.”  

Yes my economic chickens, our author is petrified over an octogenarian who apparently partakes in multiple cigarettes daily. God bless the grandma for her old age, and I wish her 88 more, but doesn’t the granddaughter’s reaction seem a bit odd? Her nana was presumably warned of the risks of smoking at some point, yet continues on regardless. She has lived longer than most people, and still appears tough as a cookie. Coronavirus would probably die trying to make her sneeze even once.

As it has been said, what makes a crisis devastating is less the cause, and more the reaction.  

investing

Don’t Be The “I Should Have” Guy

Humans are not as adaptive as one might think. Right now, the economic herd is stampeding out of investments, many at a loss, because that’s what everyone else appears to be doing. Because Coronavirus is scary.

You can do the same (or not start investing to begin with), and the outcome will almost certainly be a loss, or missed opportunities.

Look at the market right now. We are on a roughly 11 percent decline in the S&P 500 since the end of February, with today’s 7 percent drop overall and the crush of oil bringing it home. At bare minimum, the market is much cheaper than it was a few weeks past.

If you break into individual  funds, the story is more stark. QQQ shares are down by $43.00 since February 19th, or 18 percent. SPLG is off about 7 bucks, or 17 percent.

What about loner stocks? Well, we have AMD down $15.00, or almost 26 percent. CCL, cursed by its exposure to virus-impacted cruises, lost 22 bucks, or 48 percent since February 19th.

And this is just a small sample size. Stocks are on sale. If you have free money, or a retirement plan through work, give strong consideration to buying in now, and certainly if there is a further decline. Drops of this nature don’t come frequently, but once they do, money will be made by the patient and unemotional .

Or, you could be the guy saying, “I should have invested back then.”

Culturalism · investing

How The Spanish Flu Hit Stocks

There’s been a gross deal of speculation about an (even bigger) Coronavirus outbreak, one that could cost countless lives and send the world economy into tailspin. It makes jolly good fodder for the internet activists of our time, but how accurate is the claim?

That depends. The folks over at Global Financial Data put together some nice info looking at the 1918 Spanish Flu pandemic, which killed tens of millions of people. The first graph shows the various peaks of the outbreak those years ago:

Credit: GFD

Next we have a trace of the stock market:

Credit: GFD

As you can see, the market was not visibly impaired by the rise of the flu, although the period also encompassed part of World War I.  After the nominal end of the flu wave, which was relatively close to the finish of the First World War, the market experienced a period of handsome growth.

The applicability of the 1918 situation to today, or vice a versa, remains dubious, and yet it suggests that hysteria may not be the proper answer.

investing · Personal Finance

We Can’t Take Rate Cuts Back

Josh Brown said something on CNBC today that I’ve believed for a long time under the Trump Economy: it’s now impossible to walk-back rate cuts.

We all remember the debacle of December 2018, when the Federal Reserve raised rates by a quarter point, from 2.25 percent to 2.5 percent. The result was a devastating market drop of 20 percent.

After the last seven days of Coronavirus fear and loathing, the Fed made an emergency rate CUT to stave off concerns, and the Dow fell by almost 3 percent. I guess it wasn’t enough, but just imagine if they had attempted to RAISE rates.

Much as Religious Investor thinking may help quench queasy market appetites by feeding the “There’s no limit!” mentality of millennial dreamers, fueled by the likes of Tesla and Virgin Galactic, at a certain point the ties which bind may horribly snap.

In that moment, will rates be cut or raised? Will it even begin to matter?

Culturalism

Does Anyone Bother Reading?

Sure, Breitbart’s comment section is a poor sample size, but let’s humor the gods for a moment. We have a story entitled “Italian Governor Quarantines Himself After Staffer Tests Positive for Coronavirus”.

While the piece doesn’t explicitly name Attilio Fontana’s political affiliation, it helps clue readers in by noting his criticism of the Conte Government’s response to Coronavirus. Additionally, there is mention of  Matteo Salvini’s negative opinion of Conte, suggesting kindred feelings on at least that issue.

Fontana is also regional president of Lombardia, one of the two more reliably right-wing provinces of the Mediterranean country, and  a hotbed of support for Salvini’s Lega.

With all that information available, how does the empowered Breitbart reader respond? By assuming he’s a leftist. Here we go:

“Oh poor baby leftist runs and hides!!! No lossless he does the better off the country will be. Whata bunch of flakes the Italians are.”

The same commenter made this reply to a different article, also on Italy:

“WHY was Salvini voted out?!?!?!!? These people are nutz and get what they deserve!!!!!!”

Folks, with the advent of the Google search, it’s not that hard to square information before making a statement. Just count to ten and breathe.

Culturalism · Personal Finance

The Masks of China

As some of you already know, Xi Jingping was photographed at the Beijing Coronavirus hospital wearing the transmission prevention mask which has become iconic during the crisis. This is while reports suggest he has failed to visit Wuhan, where the outbreak originated.

From what we can see now, there are a few possible takeaways:

1. The virus threat is not serious, and Xi simply has to put up the image of containment, in a (non-malicious) propaganda act.

2. A massive calamity is being covered up in China, but we still need take the Thomas Friedman approach, because their government is honest.

3. It’s the Russians.

Thoughts?