Oct 21, 2019

Market Update, Wealth Tax & Bitcoin

Market Update: US Dollar Index, US Stocks & Gold 

The U.S. Dollar Index closed a down week on the lows, while 30-year Treasury yields closed an up week near their highs. The dollar and bonds falling in tandem is a good sign that the bubble has popped! This is bearish for stocks and very bullish for gold.

Bitcoin: Bearish Chart 

The Bitcoin chart looks horrible. Not only does the flag that followed the recent breakdown project a move to $6K, but we are close to completing the right shoulder of a head and shoulders top, with a $14K head, and neck line just below $8K, that projects a collapse to below $2K!

Wealth Tax: Impact On Startup Capital 

If an unconstitutional wealth tax is passed, startup capital will be extremely hard to come by. What wealthy investor would want to put money into an illiquid private investment that is subject to annual appraisal and taxation, even if the investment itself never produces a gain? 

AOC Endorses Sanders 

AOC has endorsed Sanders for President. I guess Warren pretending to be a "capitalist to her bones" was too much for the unabashed socialist. If this propels Sanders to win the nomination, this is bad news for America, as he is left of Warren and even more likely to beat Trump!

Oct 18, 2019

The Federal Reserve Resumed QE

Don’t confuse this with quantitative easing (QE) when the Federal Reserve was buying $85 billion a month of Treasuries, because this is no way quantitative easing (QE) except, of course, that’s exactly what it is.

Oct 11, 2019

A Huge Bell Ringing On Wall Street

If investors are no longer willing to finance money-losing companies, if that type of speculative fervor has come to an end, this is a huge bell ringing on Wall Street.

Further reading: The Plight of the Unicorn: The Bubble Bursts 

"WeWork’s aborted IPO may come to mark the end of the current “unicorn” bubble the way the scuttled merger between Yahoo and eBay signaled the start of the dotcom crash in 2000. Having become CEO of Nasdaq in 2003, I saw up close the damage caused by the growth-over-profits philosophy in that earlier era, and WeWork’s spectacular fall – from the year’s most anticipated IPO to a company with a speculative-level credit rating that may run out of funds within a year – rings many bells.”

Oct 9, 2019

Stocks: Debacle Du Jour (Smile Direct SDC)

The money losing stocks, the recent IPO's continue to get beat up. The real debacle du jour was Smile Direct. That one was down another 15% today: down $2 - it closed at $11.34 right off the new low of $11.20. Remember, this stock came public less than 2 weeks ago and it was $23 a share.

The Federal Reserve Does Not Have Enough Ammunition

I don't really think there's enough ammunition left in the Fed's chamber to have a meaningful impact on the markets, and I think traders are overestimating the ability of the Federal Reserve to rescue the market the way it has rescued it in the past.

Related trading instruments: SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ)

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