Thursday, December 26, 2019

The Pozsar Prophecy did not come to pass

Our Dec. 10 post citing a prediction by a market pundit from the ZeroHedge site....

  • "It's About To Get Very Bad" - Repo Market Legend Predicts Market Crash In Days .....

.....and ensuing market chaos in the days surrounding Christmas did not come to pass.  Perhaps too many were expecting it.  Perhaps the Fed is stronger than market forces left alone, once more.  Meanwhile, the Fed shovels dollars into the market to keep things afloat.

Instead, as we advance into the new year 2020, the new decade, we read predictions that the SP500 will continue its march, and not rest until 4000.  Will this prediction come true? We suspect this is the real "Fed policy."

Will the Fed remain in control of market forces .... forever?

Monday, December 2, 2019

250 trillion and memories of Columbia House

These interesting words today from Tom Sosnoff, Options Guru, founder of TastyTrade:

Monday, December 2, 2019
I hope everyone had a great holiday weekend.

I hope everyone had a great holiday weekend. Now it’s back to business. One of my original Columbia House picks when I was 12 years old was a Sly and the Family Stone album called Stand. It included many hits but one of the tracks that I still love today is ‘I Want to Take You Higher.’ Little did I realize that some 50 years later that tune would be the unintentional theme song of the Fed. I think I just saw Jerome Powell’s eyes roll back in his head. Still, like every other kid in 1969, my biggest financial worry was figuring out how I was going to get out of my newfound debt and retrieve my soul from Columbia House Records. I think every record playing kid in America owed between $199 and $299 to this company and getting the money to pay back the debt wasn’t easy. Most of us just closed our eyes, ignored the notices and moved on with our lives (Hey, don’t judge. We were 12!). It took about a decade or so but eventually the company folded and its assets were acquired. I guess we skated but common sense suggested there was no way for the model to succeed. Free records are like free money, nobody ever intends to pay it back. So, let’s fast forward 50 years to 2019. Like many tastytraders, my biggest market concern is that somehow, someway, somebody is going to eventually have to pay it forward for all the free money being used to take the markets higher. There is now something like $250 trillion (yes, that number is correct, $250 trillion!) in global debt which equates to somewhere between $30K and $40K per every person in the world. Trump is 73, Putin is 67, Powell is 66, Xi is 66. It looks like today’s debts are going to be someone else’s problem. To put $250T in perspective, the total approximate GDP of China, Russia and the US combined is only $35 Trillion. You have to believe Powell and others at the Fed were part of that small percentage of kids who didn’t order 12 albums for $.01. They were way too smart to fall for that free money stuff….