Stocks are up today. There’s a reason somewhere. As I was pondering why — a normal behavior recently — Joel Ross’s latest Ross Rant newsletter dropped into my inbox. He’s always more certain than I am. Here are some of his words:
It continues to appear that the China deal will happen, and probably by Christmas. Xi knows Trump needs it to be able to tout in his campaign. Trump continues his standard NY approach- It is OK if there is no deal and I can walk away from the table and just raise tariffs. Translation -they are both still playing, I don’t need to do a deal, games to see who blinks first. Reality is they both need the deal, but for now they are seeing how far they can push each other. …
The Fed is buying $60 billion of treasuries monthly which is putting a lot of new liquidity back into the capital markets. This has more impact than another 25 BP drop in the Fed rate. It provides banks with a lot of lendable funds. The Fed balance sheet has grown at a 31% annualized rate over the past 3 months. Other central banks are doing similar monetary growth strategies. Money market funds are up 22% from a year ago, providing a lot of dry powder. The NY Fed has also set up a large REPO facility so liquidity is now not an issue, and it has added much needed stimulus. There is really not much more the Fed can, or should do for now. …
The risk now is in fixed income. Bonds had a very good year due to the substantial decreases in rates by the Fed and the slowing economy over the summer and fall, but that seems to be over, and losses in fixed income are much more likely next year as the economy continues to grow, and the ten year possibly rises to over 2%. If there is a China deal and USMCA, rate rises, and bond losses are more likely. There is no recession on the near term horizon. Impeachment is just DC noise now as the polls turned against it, and the holidays are here. …
Going short, as Dialo has bet $1 billion on, seems to be a losing strategy as the Fed continues to pump the economy, and to push up risk assets with low rates and the new QE bond buys. Powell is actually doing what Trump wants, but in a more subtle way. Just as a reminder of rate history, the ten year averaged 4.17% from 2001-2010. From 1990-2007 it averaged 5.8%. It is now running around 1.75%. That is a lot of monetary stimulus and support for risk assets and housing. There is a lot of both monetary and fiscal stimulus now going into 2020. Despite all the attacks from Trump, the Fed is doing a lot to pump the economy now.
There is now around $5 Trillion of idle cash sitting on the side. That is a lot of buying power for any dip in the market. Hard to say when this cash might get invested, but it is a nice cushion underpinning the market, and a lot of liquidity. …
I pray his optimism is justified. I have not sold any stock.
You can subscribe to Ross Rant here.
Stuff today
+ Bitcoin hit a 6-month low after extending its fall for an 8th straight day. The cryptocurrency fell below the key $7,000 threshold – the first time it’s done so since May. My motto stands: When in doubt, stay out.
+ Elizabeth Warren blasted Adam Neumann’s $1.7 billion golden parachute after WeWork announced job cuts. She said it was ‘Rigged and corrupt.’ It was neither. It was high and unusual. But WeWork, the company, and its primary owner, Softbank, agreed to it. Neumann had signed and sealed legal docs that forced their hand. That’s how capitalism works, Ms. Warren. It’s called the rule of law.
+ Several friends have fallen down stairs in recent days. Are my warnings jinxing everyone? Please be careful. We’re out west with the kids. This is what the kids did to the steps in our rented house. Thank you 3M.
The flu season is on us.
This is from my favorite hospital NYU Langone — as in Ken Langone of HD.
Water
Bottled water is another one of those things that you don’t know what’s in it.
Fiji and Volvic water have silicon (sand) in their water. You don’t need it.
They also come in plastic bottles which leach.
Best: Pour NYC tap water into a reusable insulated bottle. Cheaper. Safer.
Wonderful video
Prince Andrew is an idiot
The Economist summed it up beautifully. Love these words.
The queen’s most important quality is her ability to keep her mouth shut, a skill which neither Andrew nor his elder brother Charles has mastered. By sounding off about a wide range of subjects about which he has more opinions than knowledge, the heir to the throne has annoyed many.
The queen’s willingness to keep her counsel has allowed her to remain a symbol rather than a person, and thus a focus, as the royal website puts it, for “national identity, unity and pride”. Prince Andrew has certainly united the nation in the past few days, but not in the way that his mother would have wished. ■
For the full, wonderful piece, click here.
Out west with the kids
This one is Eleanor. She got up early and insisted on being amused. Bingo: a spare laptop and Paw Patrol episodes, courtesy YouTube and the 100 meg Internet in our Airbnb house.
Eleanor doesn’t look anything like me. What a blessing! Australians are weaned on Vegemite. Americans hate it, with justification. I still like it. Go figure.
You need high-speed Internet so your grandkids can watch Paw Patrol, while I upload today’s blog and search for tasteless cartoons, like these two:
