Posts Categorized: In The News

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Bill Holter’s Commentary

This would truly be hilarious…if it were not true!

“The Most Absurd Moment In The History Of Capital Markets”: Hertz Plans To Sell Up To $1 Billion In New Bankrupt Stock
June 12, 2020

Update (0805ET): Just when you thought the idiocy couldn’t get any worse, it goes to ’11’. After announcing the opportunistic sale of newly bankrupt shares in Hertz, “investors” are bidding the rental car company’s stock up this morning, now back above $3.00 (up 50% this morning) and back above its pre-bankruptcy levels…

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Bill Holter’s Commentary

I have just one question, is abolishing the reserve requirements really only “temporary”?

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Bill Holter’s Commentary

Surely BLS would not resort to statistical chicanery?

Don’t Be Fooled By Official Unemployment Rate Of 14.7%; The Real Figure Is Even Scarier
May 10, 2020

The Bureau of Labor Statistics (BLS) released unemployment data on Friday showing that the U.S. economy lost over 20 million jobs in April with the unemployment rate spiking to 14.7 percent, the worst since the Great Depression. The report reinforces what many have already seen up close, which is the continuing economic carnage on the American economy caused by the coronavirus. Here’s the scary part, as shocking as the data is, reality is much worse because of quirks in the BLS methodology.

If 14.7 percent unemployment is a “portrait of devastation,” as the New York Times referred to it, then the real figure, which is closer to 20%, is a glimpse of economic cataclysm.

14.7 Percent Unemployment Rate Underestimates Economic Reality

The main reason why the 14.7 percent figure is underestimating the true rate of unemployment is a quirk in the BLS methodology. In gathering data for the unemployment survey, interviews are conducted and individuals are classified as either employed, unemployed, or not in the labor force based on their answers to a series of questions. As Betsey Stevenson, who was a member of the Council of Economic Advisers as well as the Chief Economist of the U.S. Department of Labor, highlighted, there was incorrect classification of many individuals in April. “Interviewers were told to classify people who were employed [but] absent from work due to COVID-related reasons as temporarily unemployed. Many did this incorrectly —correcting for this error raises the unemployment rate to nearly 20%,” she explained.

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Bill Holter’s Commentary

“The risk-reward for equity is maybe as bad as I’ve seen it in my career,” Druckemiller said back in May.

So we should ask the obvious question, if equity valuations were as bad as he had seen in his career and equities are now 11% higher …doesn’t that make valuations even mo bad?  In my opinion it will only make the next leg down that much more breathtaking.  Ah the delusions of the masses!

“I’ve Been Far Too Cautious”: Druckenmiller Admits He’s “Humbled” By Fed-Enabled V-Shaped Market Recovery
June 8, 2020

Stanley Druckenmiller took to CNBC Monday morning to admit that he “underestimated” the power of the Federal Reserve and that he had been “humbled” by the market’s V-shaped recovery.

Of course, what he meant is the Federal Reserve’s “power” to completely and totally rig markets, but, nonetheless, the longtime hedge fund manager offered up a mea culpa of sorts – seemingly surrendering any concerns he had about monetary policy as unwarranted.

“Well I’ve been humbled many times in my career, and I’m sure I’ll be many times in the future. And the last three weeks certainly fits that category,” he said.

Druckenmiller continued:

“I had long-term concerns for the last few years that because of easy money, too much debt was being built up in the corporate sector. When Covid hit, I was pretty much of the view that there was a good chance that the credit bubble had finally burst and the unwinding of that leverage would take years.”

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Bill Holter’s Commentary

Getting back to even?  You can be assured if and when we get back to “even”…nothing will seem “normal”!

Chasing The FOMO Titanic Rally
June 4, 2020

FOMO – (Fear Of Missing Out)

Panic buying is a type of behavior marked by a rapid increase in purchase volume, typically causing the price of a good or security to increase. From a macro perspective, panic buying reduces supply and creates higher demand, leading to higher price inflation. On a micro level (e.g. in investment markets), fear of missing out (FOMO) or buying triggered by a short squeeze can exacerbate panic buying, into a so-called melt-up. – Investopedia

This whole FOMO thingy is kind of perplexing to us.

We maintain Issac Newton learned the real lesson of gravity in a FOMO trade gone bad,

Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he ‘could calculate the motions of the heavenly bodies, but not the madness of the people.’ Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price — and lost £20,000 (or more than $3 million in [2002-2003’s] money. For the rest of his life, he forbade anyone to speak the words ‘South Sea’ in his presence. – Open Culture

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Bill Holter’s Commentary

Erik on real money.

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Bill Holter’s Commentary

How big will this leg be?

Golden Bulls: Visualizing the Price of Gold from 1915-2020
May 27, 2020

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Bill Holter’s Commentary

Next time they tell you you have no need for guns…?

Kobach: The Riots Remind Us Why We Need the Second Amendment
June 1, 2020

For years, Philadelphia has been run by liberal progressives who oppose private gun ownership. In Philadelphia, a permit is required to carry a gun or transport one in a vehicle. Although Pennsylvania state law prohibits Philadelphia from enacting all of the gun control measures the city’s leaders wish, the city’s website reads like a gun control propaganda sheet.

The city’s progressive leaders believe that guns should not be widely owned by ordinary citizens. The protection of the city’s residents should be handled exclusively by the police department.

But what happens when the police are unable to protect the city’s residents? The entire theory collapses. That’s exactly what happened over the weekend in Philadelphia.

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Bill Holter’s Commentary

The Atlanta Fed is forecasting -52% GDP growth in the 2nd quarter. Only a flesh wound?

GDPNow – Federal Reserve Bank of Atlanta
The growth rate of real gross domestic product (GDP) is a key indicator of economic activity, but the official estimate is released with a delay. Our GDPNow forecasting model provides a “nowcast” of the official estimate prior to its release by estimating GDP growth using a methodology similar to the one used by the U.S. Bureau of Economic Analysis.

GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 beyond its impact on GDP source data and relevant economic reports that have already been released. It does not anticipate the impact of COVID-19 on forthcoming economic reports beyond the standard internal dynamics of the model.

Recent forecasts for the GDPNow model are available here. More extensive numerical details—including underlying source data, forecasts, and model parameters—are available as a separate spreadsheet. You can also view an archive of recent commentaries from GDPNow estimates.

Please note that as of June 5, we will no longer support the GDPNow app. Download our EconomyNow app to continue to get the latest GDP nowcast and more economic data. .

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Bill Holter’s Commentary

Have we mentioned distribution before?

“It’s Too Dangerous” – Amazon Orders Delivery Drivers To “Turn Back” Amid Riots As Company Prepares To Cut Hazard Pay
May 31, 2020

As Amazon prepares to end hazard pay for workers at its fulfillment centers across the US, the company is scaling back deliveries and recalling drivers in cities impacted by the rioting and violence breaking out across the US. Bloomberg reported that the company is “scaling back deliveries in a small number of cities” including Chicago, Portland and LA.

“We are monitoring the situation closely and in a handful of cities we adjusted routes or scaled back typical operations to ensure the safety of our teams,” a company spokeswoman said.

The company is also reportedly closing some of its hubs near these areas (though, to be sure, most of Amazon’s larger fulfillment centers are in more rural or suburban areas).

Amazon’s decision might be the first – but likely won’t be the last – example of how the violence will further destabilize strained supply chains, cutting off what has been an essential service for millions of Americans marooned inside their homes during the pandemic.

In Chicago and LA, Amazon delivery drivers received messages on Saturday night advising them that “If you are currently out delivering packages, stop immediately and return home. If you have not completed your route, please return undelivered packages to the pick-up location whenever you’re able to do so.”

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Bill Holter’s Commentary

Just as I thought Tucker was venturing off the reservation, he does this monologue almost 100% spot on as I see it. A week ago mothers with little children were being arrested solo on the beach, now the police stand down and basically watch as true crime is committed? And I remind you …they aren’t even hungry yet! Just wait…