Christmas 2020: Sanity, Sanitizer and maybe no Santa. SAD!
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Another Rant
For the moment it appears the market will continue to float around where it is unless there is an agreement on stimulus in the next week, or so in which case there may be another leg up. Just be aware the S&P is at a very high PE and it seems possible that the valuations are so high now that 3700 may be the limit on the S&P for a while. On the other hand, if the vaccines can be widely administered quickly as planned, and things reopen across the country by late spring, then industries like hotels, restaurants, cruise, airlines etc will fully reopen, and that will juice the market. The virus surge seems not to be impacting the forecasts of a strong economic recovery by mid-2021 due to the vaccine. The Dems continue to shut down things again, and FL stays fully open and doing well, with no worse outbreak than shut down states. Biden saying everybody has to wear a mask for 100 days is going nowhere. Every person in the US knows it is best to wear a mask and distance,. But obviously tens of millions don’t care what Biden says, and will not comply. In a week the vaccine will begin to be administered, and if they get to most nursing homes and health workers fast as planned, the cases will decline quickly and deaths even faster. If Fauci is first to get it on camera, then there will be major compliance. Then a bunch of other health officials also need to be shown to receive the shots. If Fauci does not, and delays, it will cause a huge fear. Also by end of next week there should be some resolution to the charges of voter fraud. Unless something comes from DOJ, or another similar credible source, it is unlikely the courts are going to rule for Trump. But this being 2020, you never know. In October, one of my tennis buddies in the Hamptons, who is a very credible senior Wall St guy, was giving lectures to 300 major Wall St execs on the exact scenario we see playing out now. So far it is almost exactly as he laid it out. His end game was it goes to the House for a final vote, and there the Republicans have a majority since each state gets one vote only. I doubt if he will be right about the end game, but it is interesting to observe his predictions play out after we all thought he was a bit nuts. Be aware there is an ability for Pelosi to try to overturn two Republican congressional wins. There is a clause which allows the House to vote on whether a newly elected person should be seated if the race is very close. This is the case in Iowa and upstate NY. The Republican candidate in the NY case says Cuomo signed an executive order before the election that allowed several things to be allowed that decreased the integrity of the vote in NY State. We had a mess in the Carolyn Maloney primary in Manhattan, and now in the upstate congressional election. What happened to election integrity. Is the whole country now Chicago in 1960.
It remains very hard to know where the market will go. On one hand GDP in Q4 may be up as much as 10%, and there are $3.5 trillion in cash sitting on the sidelines while interest rates remain near zero, which means the equity markets are one of the only places to put that money to work and get a good return. That pool of cash is almost an underlying base under the values of stocks. like the Fed being the stop for the debt markets. On the other hand we are about to get an administration that is determined to raise taxes and regulations, and destroy the increases in profits the market has benefited from. If the Dems take both seats on Jan 5, it will wreck the stock market. On the other hand, the vaccines mean we potentially will have beaten the virus, and the latter half of 21 should be an excellent economic growth period for the markets unless the Dems do get to pass the tax and spend programs, and do put in massive new regulations. Lastly, Iran is going to do something to retaliate for killing Soleimani and the nuke scientist, and that could become very messy. We just do not know when and what, nor what that may lead to next. China continues to be an existential threat, and now we have a foreign policy team that has never understood how to deal with Iran or China, and is likely to cut defense spending to use the money for more wasteful welfare spending. They never understood the Regan rule, peace through strength. They are going back to the lead from behind policies of Obama era. That is a major risk for the next 4 years. January 5 remains the key date.
The jobs report was not the disaster Biden claims. In fact there were 468,000 jobs added in November, but a lot of census workers were terminated as the census ended, so the net number looked worse than it is. In addition, new applications for unemployment actually declined by 75,000 last week suggesting things are not so bad as Biden says. The level was just 1000 off of the lowest level since March. The jobs market is recovering, so if we ignore the big shut down states like CA, it is likely that things continue to improve. It has been revealed that the unemployment numbers are not accurate across the country and the methodology is being modified. The problem is reporting by states is not accurate,. and there are apparently a number of fraudulent claims. The actual numbers are not hugely off, but do apparently vary from what is being reported. The lockdowns in CA, NY, and other large states like NJ are clearly causing a loss of jobs along with teachers unions refusing to let schools in LA county, and other places, reopen, making it impossible for many low income women to go back to work. Labor participation is very low now partially due to the schools closed, partly due to large lockdowns, and partly due to people over 65 deciding to just retire and not try to go back to work. Once the vaccines are in full mode in the spring, this should change dramatically, and by June be back to more normal levels. The new lockdowns will kill a lot of small businesses that managed to stay afloat with PPP.
At the same time October retail sales continued to rise, and the housing market continued at near record levels. Spending likely will slow now with new lockdowns, but recovery continues and is way ahead of where most economists and the CBO were predicting. The ISM report on services said services and manufacturing both improved in November for the sixth straight month with the services index now at 58.5. Services is the main driver of jobs in the US. The number for services like restaurants and hotels was slightly lower, but still at 55.5. Over 12 million jobs have been added back since the April bottom. Continuing claims also declined by 568,000 in November. You can count on Biden taking sudden credit for the recovery by March when the vaccine will be administered to many, and things will be getting back to more normal. None of which will be due to anything Biden does. He will claim the dark Trump winter is now the bright Biden spring. It will be complete BS. In the EU the numbers have gotten worse due to much more stringent lockdowns. Asia and India continued to expand and loosen restrictions. One can conclude that the CA and NY lockdowns do much more harm than good. Something a substantial amount of research has now proven.
If you want to know who not to listen to, it is Paul Krugman and the CBO, both of whom were dead wrong about the $600 unemployment supplement. Krugman has been consistently wrong about most things for years. How he won the Nobel has always been a mystery to me, but then they gave Obama the peace prize so maybe it has nothing to do with accomplishing anything. The research and data are no very clear. 75% of those who got the $600 earned more being unemployed than working. Now 50% are earning more getting $300. Krugman and CBO and others claimed went the $600 went away there would be severe consequences. Dead wrong. People went back to work as we might have expected, and spending went UP. The $600 materially slowed the recovery is what the data now prove. So Pelosi now wants to continue the $600. Once again this sort of government largess just proves it is far better to let the private sector figure out the job market than to have government intervene in ways that actually do harm. The PPP program, helping small business retain workers, and stay alive is far more effective than giving the unemployed more subsidy to stay home. If you pay attention to Krugman or CBO, you will be misinformed on most things.
One thing to keep in mind is that Brexit is coming to a conclusion on Dec 31. It is likely the parties will come to an agreement, but that is not yet certain. At the moment neither the UK nor the EU can afford a big fight over trade, so some compromise is likely. Another big problem for the EU is that Merkel is leaving shortly. There is nobody of her stature to replace her. Germany has driven the EU for all these years, but it is now unclear what will happen. I continue to believe investing in the EU Is not where you want to be. Likewise, it is very unclear that the oil industry will be a good place to invest in the near term. While prices are up, and will continue to rise as the vaccines are administered, the industry has many problems and has just taken huge write downs. Maybe from here those stocks recover, but it is seemingly risky given the big push for electric cars worldwide and other measures to reduce fossil fuel use. It seems to me there are better places to invest right now as the world is on the verge of stopping the virus.
Stacy Abrams never did concede, and now she is playing for fame by running a voter registration scenario after getting the GA secy of state to settle a suit against him agreeing to loosen the rules on registration and verification. Now she has been caught soliciting dead and out of state voters. She is should be able to playing to get herself a top role in the future of the Democratic party, and she is a real risk for Republicans on Jan 5 unless the secy of state can prove she has been cheating. I don’t know who this imbecile Lin Wood is running around GA telling Republicans not to vote, but clearly he has an ego issue that overcomes any bit of brain he may have. How stupid can he be.
Nasdaq has gone nuts. They now want to require that all 3300 companies on Nasdaq MUST have a woman plus a black or gay or someone with an undefined sex on their board. If not you get kicked off the Nasdaq.
So let’s see. If you have a small or medium sized business, and you try to have a board of people who you and the shareholders select to help you run the business better for its owners, now you must bring on people you don’t know only because of gender or skin color or sexual persuasion. Not because they know anything about running a company. Since you must have one of each type, that means at least 6600 of these people who likely have no qualifications to be on your board, and know nothing about your business. Call them the token, or quota board members. One might also list them as useless. Where do they find 6600 such people? What are you supposed to do, ask, are you of some strange sexual preference, if so you can be on my board so I meet government quotas. Then I have to publicly inform the world of your sexual preferences so I don’t get sued for not meeting the quota. This is dead against increasing shareholder value, and capitalism. It is no different than China requiring companies of size to have a communist party official on the board. It is diversity and left wing ideology run amok. This is right out of the universities requiring diverse admissions regardless of test scores or ability, and lowering the average level of ability in the school. The SEC has to approve this, but you can be sure that as soon as the Dems control the SEC it will be approved. If I was running one of those companies I would sue the SEC and Nasdaq. They have no authority to order me to have people on mu board who have no use to the shareholders and who the shareholders do not want. The government does not own the company.
For a long time I have said China is an existential threat to the US. Now the DNI, Ratcliffe has said the same only worse. He suggests the Chinese are blackmailing some Congressmen and others in government. They continue to steal intellectual property although Trump has forced an end to a lot of what was happening in academia. 1000 Chinese “student researchers” fled this year. The worry is Biden and his Obama retreads think it better to find ways to cooperate with China, get the WTO court back in action which never was helpful to stopping China, and joining TPP which will subject the US to abide by group think and not in our own best interests. These are the exact same people who allowed China to become so powerful and to steal IP for all those years. China has to be thrilled Biden won. Likely Taiwan will not get any more US arms, making the invasion of Taiwan that much more likely.
Iran will wait for Joe to take office, but there is no way they will not retaliate for the two assassinations. Trump made it clear to them not to try, but Joe wants to do a deal and play nice, so will not take the same position. I am concerned that the markets are ignoring this coming black swan, and when whatever happens, could result in a very ugly war, and a major upset to the markets sometime in the first half of 21.
The press has been playing up the line that climate change has spawned a major uptick in hurricanes. Here is reality. Until the 1970’s there was no way to know about all of the storms in the ocean that never hit land, or just lasted two days, unless a ship spotted it. Now we have satellite coverage of the whole ocean. In addition the former head of hurricane reporting and tracking, who has retired, said there are two day storms that today are labeled as tropical storms, that in the eighties, and prior, they were not even reported because they were classified as just bad storms, or were not even noticed due to no satellite coverage in those days. Since the 1880’s when records began to be kept, there has been no increase in frequency of major storms, just more naming of them and highlighted news about them. In 1950 there were 8 storms labeled as major hurricanes, in 1961 it was 7 and in 2020 it was 6. In summary, there has been no consistent recording of storms over the past 140 years, and no consistent terminology to identify severity of storms, so to try to claim now there are more major storms due to climate change is nonsense, and propaganda by the climate change press and politicians. It is simply that today every big storm is suddenly a name storm and makes the national news. Climate change has spawned a whole industry, and just look at the Biden focus on it. Be careful what you read, and are told about the effects of climate change. Some is true, but some, like hurricanes, is not.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Obama is the first president to spy on his predecessor and he will go down in history as one of the most dangerous, the most incompetent and the most ill prepared and divisive president in history.
General Flynn: “I Must Have Put The Fear Of God Into Barack Obama”
Both Georgia and Michigan judges have allowed inspection of Dominion equipment:
Trump legal team celebrates after Michigan judge allows probe of Dominion voting machines |
Trump campaign attorney Jenna Ellis said results of the investigation could come in 48 hours |
More corruption from the Drip: REPORT: Maxine Waters’ 2020 Campaign Paid Her Daughter A Cool $240K |
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Giuliani: Report he tested positive and is in the hospital.
And:
Elliot does not expect Iran will retaliate:
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
No comments:
Post a Comment