We start the day off with S&P trading down 4-6% pre-market so we can expect a 15 min level 1 circuit breaker to hit this am as the market tells us its gonna be another volatile day of trading. Remember we could see as much as a 50% total drop before this is all done which would match the Great Depression essentially.
Gold is looking like its bottoming and ready for a reversal, from a technical standpoint there seems to be a pretty big gap between the futures market which has been trending down during this whole event and physical spot buying gold which is quickly running out of stock. This proves that for a physical asset like gold, its almost worthless to follow futures price for true demand as in the end owning paper gold isn’t worth anything. There are people are there stocking up in a huge way on ACTUAL gold! That discrepancy will eventually have no choice but to catch up and drive up prices.
Now onto BTC for a quick update, I mentioned in my Ultimate Bitcoin Price Guide that I believed the BTC halving was already priced in and don’t get too upset if you dont’ see your pre-halving pump we have seen with LTC and BTC in the past. Instead we need to look down the road after the halving because this will be the first time a risk asset has a lower inflation rate than the Fed mandated 2%, so that won’t catch on right away I don’t think, it will instead take some time. I am looking at later in 2020 for the fireworks to start. Now all of this was thought of and stated before the Corona came on the scene, there is another situation here where if CV does last till July or August you will see some run away assets and one of those could be BTC.
Lets catch up on some past Fed chair comments that are coming back to once again bit them in the azz. First up we have ex-Fed chair Janet Yellen who just 3 years ago made the following statement.
Will I say there will never, ever be another financial crisis? No, probably that would be going too far. But I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will."
Time has the nasty habit of making a fool of us all, its usually a big warning sign when people speak in such definite’s like this. Ben Bernanke stated back in 2014 during one of his speeches that he gets paid $250k/hour to spew that “rates would not normalize during my lifetime”. Funny enough both of them teamed up for an op-ed piece on now premium FT just 50 mins ago to set up the stage for what comes next. They are all but demanding Jay Powell to revive crisis-era programs to soften the blow, of course the first step of that is buying corporate bonds!
Lets take a step back here for a second and look at what just happened. First off we had ALL the top corporations partaking in aggressive stock buybacks for the last few years (last email I shared showing declining data was on Feb 21st), then this Corona comes along, they of course stop buying, and now are gonna get another bailout with the over $1 trillion already given but by the future measures that are surely to come out soon giving them another TARP fund to play with all while they are enacting capital controls on your withdrawals and banking access.
Does all this sound fckn familiar yet? How is this gonna Make America Great Again? Mnuchin is supposed to be one of the good guys working with Trump, he states he is in daily contact with Jay Powell, yet we just slashed rates to 0 and are gearing up another relief fund which will go directly to the banks and corporations, just like 2009! First though they will send you out a $1k check so you all shut up and look the other way. This ain’t sounding like “part of the plan to save the world” to me. Always look at both sides of the data, right now there are more questions than answers on that front but that is beyond this email or where I want to go with it. Points made.
In case you wondering, yes stories of banks capping ATMS at $250 and cash withdrawals at $2500 are starting to surface, the usual suspects Chase and Wells Fargo.
Quick note on that, here is the story stating that Midtown BOA ran out of $100 bills…
As the stock market was having its worst day in 30 years on Thursday, customers at a Bank of America branch in Midtown Manhattan, the financial heart of New York, were lining up to take cash out of their accounts — sometimes tens of thousands of dollars at a time.
So many people sought huge sums that the bank branch, at 52nd Street and Park Avenue, temporarily ran out of $100 bills to fulfill large withdrawals, according to three people familiar with the branch’s operations. The shortage hit after a rash of requests for as much as $50,000, said two people who witnessed the rush.
And this one…
According to Bloomberg, at least one New Yorker had his $30,000 cash withdrawal request denied at a Chase bank after being told the limit was $10,000. Meanwhile, bank employees said they were waiting on a “shipment of cash” to fulfill other requests that have been made exceeding the $10,000 amount.
Other branches in the area were unable to help in fulfilling the request, with the East Hampton branch reportedly telling the Southampton branch that it had “two massive withdrawal orders” of its own that it was trying to deal with.
Lastly one more comment to cover here from the op-ed…
They must ensure that the economic damage from the pandemic is not long-lasting. Ideally, when the effects of the virus pass, people will go back to work, to school, to the shops, and the economy will return to normal. In that scenario, the recession may be deep, but at least it will have been short.
Long lasting, like the QE program Bernanke started after the GFC? What impact has that had on markets, economy and growth now? What about the repo bailout that started in September? One could argue that 6 months now on repo bailouts isn’t long but 11 years of QE being turned on and off 4 times now? Ya that impacts!
Believe in yourself, and keep building!