Q2 Update from the Desk of Jerome Powell

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by mytendies

TL;DR: I told you so, we’re going up more, then down – here is how to play it.

Its me JPOW again, maybe you missed my last post – or maybe it was too long for the average autist. If you would have made these trades, and rolled like I said, you wouldn’t be broke. Get it?

Everything I said in my previous post, came to pass economically, but I must admit I was wrong about Trump. He chopped and screwed it up bigly, but all good, we can pivot right quick.

The left is going to make sure we keep these wheels turning – it doesn’t make a difference who is in the White House.

WE’RE GOING UP

Second Wave. I don’t care about waves, I control the tide. Remember how everyone was scared about the first wave? Notice how they aren’t about the second?

Uncertainty. Not knowing “what will happen with COVID” is so much worse for equities than not knowing. The market hates uncertainty. We have already seen what COVID can do economically – countries have made their plans and accepted their fate. Will more COVID damage the economy? Yes, but the uncertainty of how and how much have been drastically reduced.

Trump is Done. You should be able to see it on his face, but the guy is honestly pretty stupid and is a bit tired. It was fine to be stupid and confident, but now he is stupid and weak – and America can smell it. Remember in 2016 when a bunch of people said they were voting for Hillary but obviously switched to Trump when they were in the booth? Watch the opposite happen this time with Trump supporters who can’t admit publicly they turned on him – but will vote for Biden in the booth. He ded.

Biden is Whatever. Don’t think Biden is going to slow this train down at all. Biden is just the manifestation of the moderate left establishment – Biden is a Clinton/Obama mashup that is more than willing to play ball. Biden poses no economic threat and I don’t think he has the balls to try and replace me.

Pelosi Will Chill. Biden and Pelosi will finally start being able to execute on what I have been saying – keep printing. Congress did their thing, but if we are going to keep going up they need to do more. Pelosi has been fighting the conservatives to keep the stimulus out of corporate hands – once she can print the way she wants the working class will get what they need for perpetuity.

Printer Prints. Remember how Obama/Biden pushed the FED to print? Then Trump pushed the FED to print? You better believe Biden, Pelosi and I will make it rain. The economy is fucked, but we can roll out socialism and prop up asset prices at the same time – easy peasy.

The Dollar is Changing. I printed a lot – more than usual. It is going to take some time to work through, but buying power of the dollar is going down. We are pretty front loaded on fresh dollars, and I am down to print more, but eventually this dilutes those dollars in all the middle/lower class people’s savings accounts. I just can’t print too much more than other countries – if the US prints an outsized proportion of currency the dollar will fall bigly.

More Cases = More Printing. Haven’t you guys noticed how everything has been a bit backwards since the March lows? That is when bad news became good news and good news became bad news – remember? Record unemployment and stocks go up right? That is because when bad shit happens, I can act unilaterally to just print it away. Guess what happens if more bad shit happens?

Wealth Transfer. Every time this happens, the retail investor, the 401k, and uninformed invest at the last minute. We need all that money on the sidelines to come in first, before the collapse in asset values happens. If they don’t get their money in, we can’t transfer the wealth. If we can’t transfer the wealth, what are we doing here? Wait for a greater retail wave of “reinvestment” before thinking the crash is here.

No Defaults. Defaults are only going to happen when people can’t service those debts. As long as people pay, the wheels keep turning. Congress gave the poor people money to pay the rich people, I cut debt costs for the rich people, we should be good for a while (notice, for a while).

Take From the Bottom. The lower and middle class can take it. We just need to roll this out at the expense of the lower classes. Remember, as long as we keep them working a W2 and paying their mortgage they stay the “working class” and we get to stay the “investing class.” The government will keep stealing from the working class future, to prop up the investing class’s present wealth.

Market Collapse Delayed. We have corrections, recessions, depressions when there is a “de-everaging.” This means, debts are forgiven, restructured, losses are realized. That won’t happen for a bit because we are going to keep dripping dollars and relief to the middle class and poor to keep the wheels turning.

TINA. There Is No Alternative to US Equities. Underpinning this whole landscape is the fact that all other economies, and their respective currencies, and their central governments, are all equally fucked. So if everyone is fucked, were the least fucked and our debt and equities are still “safe havens”

Imports/Exports. The future decline in the dollar is going to help companies which export and hurt those which import. Don’t sleep on this concept – it will impact the next 3-4 years.

More Debt the Better. Everyone gets scared of being over leveraged, but I will just buy it out. Take on the debt, and lets juice earnings. Don’t forget that even if sales go down because of a recession, profits can go up if I single handedly cut debt service of every company in the US.

Companies: Look for individual companies well positioned for a world of remote work, AI, robotics, internet of things, space, e-commerce, domestic manufacturing. Avoid importers, healthcare, travel, banking. When boomers die, their heirs will divest from boomer companies. Invest in the future.

We’re Fine. America will be fine, but things will be permanently different. I just printed bigly, and will likely print more. Someone has to pay for it (old shit companies, young people, middle class, the future) but there are going to be major short term winners.

Melt Up. Every big economic contraction is preceded by exuberance. Are we feeling exuberant yet? Not really, people are still scared. Stock prices are back up, but no one is confident. We need to get confident first, then start melting up. There are not enough pigs in the market yet, the slaughter can not yet start.

SPY $375-$400 November.

WE’RE GOING DOWN

Market Collapse Realized. Take note, the market collapse is coming when the medical solution is realized. This will signal new monetary policy, decrease in stimulus and an expectation that we “Actually get back to work and fix the economy.” As soon as this process starts, consumer spending will go down, borrowing will go down, people will sell financial assets to cover debt obligations, investors will rotate into bonds as rates eventually get increased.

Vaccine = Party is Over. This is a big one guys, when “the real solution” to COVID is medically available my financial solution is going to “peak.” I might be able to do a little more, but when the vaccine is available I have to ratchet this shit back slowly but surely. I can’t drive this thing off the cliff, just need to steal from the poor and future generations as needed to make sure today is still good to go.

The Crash: Yes, it is coming, but we need to melt up bigly first, then crash slowly from there. The FED has the markets propped up, but the American consumer and global economy won’t be able to support it at these levels – there simply won’t be enough money transacting and GDP will decline.

Stocks Will Go Down When:

  • Things go back to normal. Thats when we have to start paying for this damage.
  • Stimulus ends. We will go straight down.
  • Me saying anything other than “full speed ahead” at press conferences.
  • Tech stocks showing weakness.
  • If I let a medium company go bankrupt. This means some capitalism rules apply.
  • The investing class stops investing. Unemployment isn’t a big deal, be worried when executives start getting pinched.
  • Corporate taxes are increased.
  • Capital gains taxes are increased.

The Big Short: I would wait, but I think this one is pretty obvious guys. There are a ton of growth stocks, mainly in tech, with impossible valuations – these will get hit the hardest. Look for this charts that go straight up starting March 23rd. Take your pick:

Buy puts after q2 earnings are released:

  • PDD
  • TSLA
  • SFIX
  • XP
  • WIX
  • SHOP
  • ZM
  • NVDA
  • UBER
  • QQQ
  • CRM
  • ROKU
  • WDFC
  • ETSY
  • LYFT
  • NOW
  • LULU
  • NFLX
  • PTON
  • SNAP
  • SQ
  • SMK
  • NKLA
  • BABA
  • DOCU
  • SPOT
  • TTD
  • W

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.

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