Boeing’s Bean Counter Culture and Mass Financialization

“We’re not letting Boeing go out of business.” – Donald Trump, President USA

Something Stinks

On Tuesday, in anticipation of several trillion dollars of Congressional pork, the Dow Jones Industrial Average (DJIA) rallied 11.37 percent.  This marked its best day since 1933.  Some Dow 30 stocks did much better.

For example, Chevron was the top performer; closing up 22.74 percent.  American Express, which increased 21.88 percent, was a close second.  But do you know what company came in third?

None other than the posterchild for corporate financialization and cronyism: Boeing.  The company closed up 20.89 percent.

By all honest metrics, Boeing is circling the toilet bowl.  On Tuesday, for example, Fitch cut Boeing’s credit rating to BBB.  And according to Bill Ackman, head of Pershing Square Capital Management, “Boeing is on the brink [and] will not survive without a government bailout.” Continue reading

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Is the Panic Worse than the Virus?

The Great Panic of 2020 is already one for the history books.  Yet the damage has only just begun.  We suspect the stock market crash, economic destruction, and forfeiture of freedoms will persist long after the coronavirus hobgoblin has been put to bed.

With respect to the stock market, the modus operandi of the last 11 years is being stood on its head.  Rather than ‘buy the dip.’  The new divine mantra is ‘sell the rip.’  Here’s why…

If you recall, the U.S. stock market commenced a multi-year swan dive in autumn of 1929.  About that time, the economy also commenced a decade long Great Depression.  Given the rapid and relentless stock market carnage over the last month, and the prospect of a lengthy depression, a closer look is in order.

From September 3, 1929 to November 13, 1929, the Dow Jones Industrial Average (DJIA) lost 48.9 percent.  Then, as rarely noted, it rallied 48.1 percent through April 17, 1930.  This had the adverse effect of luring the buy the dip crowd back into the stock market just in time for the next massacre.

The 1929 through 1932 bear market, as noted by Pater Tenebrarum, was like a rubber ball bouncing down stairs.  With each bounce, even the most savvy of investors were given another chance to lose their money. Continue reading

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Your 12-Point Great Depression II Survival Guide

“Be anxious for nothing…” – Paul the Apostle, Philippians 4:6

Bull Market RIP

And just like that – after a magnificent 11 year run – the bull market in U.S. stocks is dead.  From its peak close of 29,551 on February 12 through yesterday’s [Thursday] close of 21,200, the Dow Jones Industrial Average (DJIA) has dropped over 28 percent – in just 30 days!  RIP.

Death may mark the end.  The completion of the circle of life.  But it also marks the beginning of something new.

The death of the bull market, for example, marks the birth of a new bear market.  By our estimation, the DJIA must fall an additional 30 percent – approximately – before the bear market dies and a new bull market is born.

Between now and then, the central planners in command at the Federal Reserve and the U.S. Treasury will do anything and everything to jumpstart the old bull market back to life. Continue reading

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Destruction By Definition

Major U.S. stock market indexes yo-yoed about all week.  On Monday, panic selling from last week turned to panic buying.  Decades of Fed intervention have conditioned stock market investors to step in front of semi-trucks to scoop up nickels.

The Dow Jones Industrial Average (DJIA) jumped 1,290 points.  This marked its biggest-ever single day gain in terms of points.  Can the economic destruction wrought by coronavirus containment really be overcome with what former New York Fed President, Benjamin Strong, once called stock market “coup de whiskey?”  We doubt it.

But we are fairly confident Fed stimulus will have the offensive consequence of widening the gap between sky high asset prices and weak economic fundamentals.  Fed Chairman Powell certainly understands this.  Nonetheless, on Tuesday, he went forward with the dirty deed.

After an early morning teleconference with various G7 poohbahs, Powell cut the federal funds rate by 50 basis points.  This took the Fed’s target range to between 1 and 1.25 percent.  As far as we can tell, Powell’s dirty deed achieved the exact opposite of its intent. Continue reading

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