President Trump is fighting hard for America on two fronts, both against the health pandemic of COVID-19, and against the economic pandemic following in its wake. Donald Devine explains at The American Spectator, writing: The only possible solution is President Trump’s insight that there are two pandemics, one for health and another for the economy, and that “we can do both.” In a recent two-hour press conference, in which he answered every question from the media, the president was repeatedly asked if he would promise to obtain the approval of National Institutes of Health infectious … [Read more...]
Coronavirus “War” Spending Could Spark Higher Inflation
At Barron's, Randall W Forsyth explains that "war" spending in the battle to fight the effects of the coronavirus could spark higher inflation. He writes: Wartime finances that balloon budget deficits and that are covered by money-printing have proved inflationary throughout history. At the same time, globalization—already in retreat in the trade wars—will be curtailed further, as supply chains are relocated to avoid crossing borders, rather than to maximize comparative advantage. That will raise the cost of internationally traded goods at a time when prices of services already are moving … [Read more...]
Easyjet Grounds its Entire Fleet
Graeme Paton reports for The Times that Easyjet has grounded its entire fleet of jets in response to coronavirus. He writes: Easyjet has grounded its entire fleet because of the coronavirus pandemic as speculation mounted that crisis-hit airlines will seek Treasury bailouts to avoid complete collapse. The budget airline, which carried 96 million passengers last year, said that it would park all 344 of its planes and temporarily lay off cabin crew to remove “significant costs”. It said that there was “no certainty” for the date of restarting commercial flights. Easyjet is the first of … [Read more...]
Coronavirus Infects Stock Market: Part XX
Yesterday we entered a bull market with the Dow advancing 20% from it’s most recent low. Big deal. We are certainly seeing price discrepancies, especially in the fixed income market and have tied down some attractive yields for potentially years to come. The key to investing in markets like these is to stay focused, be patient, and always be ready to make a move when the research begins to show some real values. I have no interest in worrying if the coast is clear. That’s not investing. But seeking values certainly is. You have spoken and I have listened. Here’s what you told … [Read more...]
Gold Please
Below is a chart of the Federal Reserve’s balance sheet. The Fed has gone into money-printing overdrive. Over the last month, the central bank has conjured over $1 trillion out of thin air to buy Treasury bonds and mortgage-backed securities. The Fed is printing at a pace of up to $125 billion per day. Once the stimulus passes, the Fed will be given about $500 billion in capital that can be leveraged up to 10X to buy more assets. The source of that leverage is newly printed money. We are talking about an additional $4.5 trillion. Meanwhile, the Federal Government is likely to run a … [Read more...]
Coronavirus Infects Stock Market: Part XIX
You have spoken and I have listened. Here’s what you told me: How much you miss Richard C. Young’s Intelligence Report, especially if you’re not a client. I’m not saying that to rub anything in, this is not the reason for writing this. I just want you to know that you’re not alone and your words are not forgotten. This is my message to you today from one client: “E.J., times like these are why I’m with you guys. I’m good. Thanks for the call.” Originally posted on Your Survival Guy. … [Read more...]
Coronavirus Snapped the Cord on the Market Elevator
For the past ten years, the stock market has been an elevator that has only gone up. Now the cord has snapped. What floor are you falling from? Here’s how I explained what I call “elevator investing” some years back. I wrote: Elevator Investing Where do you want to be when the cord snaps? I often think of risk management with a simple elevator analogy. In the investment process, I quantify risk first. Then I evaluate potential gains. Just envision, if you were in an elevator and the cord snapped, where would you be better off? Dropping from the second floor or the 10th floor? Makes your … [Read more...]
Coronavirus Infects Stock Market: Part XVIII
Before you hear about my conversations with successful Americans like yourself, let's take a quick step back and look at where the market has been over the last 20-years and consider that if you're receiving dividends they help you dollar cost average through thick and thin. Every day during this crisis, I'm hearing about what you're doing to survive and thrive, and thanks to you, I've gained some valuable on the ground intelligence. Here's an email I received after a relaxed morning call with a client who is certainly prepared to live off the grid: One thing I didn't mention... It … [Read more...]
Excessive Buybacks Come Back to Bite
The buyback game may finally be coming to an end. One can hope at least. Over the last decade, many U.S. companies levered up their balance sheets to repurchase shares. Why did they do it? For starters, it drives share prices, and in turn the value of executive stock options, much higher. Why finance the buybacks with debt? Look to Mr. Powell and Mrs. Yellen and Mr. Bernanke at the Fed for keeping interest rates at ultra-low levels for an entire decade. The Fed will, of course, escape any blame for this debacle as it did the Financial Crisis, but the evidence should be clear as day for … [Read more...]
Coronavirus Stats Update: What’s the Latest?
By Jozsef Bagota @ Shutterstock.com Below are updated coronavirus stats through yesterday. The good news is, South Korea has continued to keep new case growth at a manageable level and there are signs Italy’s lockdown has slowed the growth in new cases. There is also reporting that Italy may only be testing the sickest patients which is good and bad. Bad because the growth numbers may be skewed, but good because it means the fatality rate of the virus in Italy would be much, much lower than is being reported. The other potentially good news in Italy is that recovered patients should … [Read more...]
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