Weekend May 23 2020
Texas Re Opens
Never Fight the FED
Dr. Marty Zweig, Former Elf on Wall Street Week
I generally think that government interventions are futile, the money never goes where it is needed nor to the people in need of help.
But the FED is spending billions every day. I suspect that was the source of the 900 point DJIA rally last Monday, with zero follow through the rest of the week. But the FED is not going to run out of money. If the FED is buying Junk Bonds, I suspect they bought a few shares of Apple along the way.
The FANG stocks have all completed five Elliott Waves up. And most momentum indicators suggest stocks are fully priced and due for a pullback. This morning stocks are quiet prior to the three-day weekend.
Texas along with the rest of the nation is re-opening. Apple has run back to its early February high around $320. Most stocks are still well below those highs, the rally has been concentrated in either FANG stocks or quarantine favorables. Those include Carvana and Peloton, as well as others none of which are making any money.
The Democrat rescue plan has instituted the $15 hourly wage which they have wanted, with the bonus that one gets the money without working! This expires at the end of July but the bill up for vote today would extend to January 31, 2021.
Bien is wooed to offer free college, the green new deal, and a guaranteed income. The next in line for largesse would be entire states of CA, IL, NY, and NJ. All have underfunded pensions and ever expanding budgets. Will the rest of America want to bail out those states? Oh, liquor stores are open in blue states but not the Churches. Will voters approve that social order?
Continental Resources cuts production 70%.
West Texas Intermediate closed at $33.92, up sharply from negative territory a month ago. Like stocks, momentum is peaking. And this price is still too low for real profits. The fear of lack of storage has been overcome with lower production. Refiner prices have recovered in surprising fashion.
Meanwhile the markets have over looked the 38 million on unemployment payments. That is 14.5% of the work force, a Great Depression number though then we lacked unemployment payments. And it seems unlikely all of them will be re-hired, especially given an in home wage of $15 an hour while watching television.
In a normal environment, stocks would need a pull back from these momentum peaks.
Given the closures in blue states and resulting protests, this might be a good time to locate Thoreau’s essay Civil Disobedience, written in the late 1840s. People are still disobeying government orders they dislike.
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