May 9th:

Why can't we all stay at home many unemployed receiving more money then when they were at work with the Fed buying the government debt needed to pay universal bailout and unemployment claims. The answer has something to do with you cant consume what you don't produce it is productivity and things that creates material well being. There is no inequality in a dead economy except for the 20 million gov employees who have permanent jobs. We can have universal equality and misery or incentives to create betterment for the individual and goods (perhaps I could have said this better. Would you help me pleases one thing for sure with universal basic income the dems will have a permanent and insurmountable lock on government.

The foregoing is what Mr. Vince is thinking of as to the economy. But he must realize as I have repeatedly said that the economy rise and fall is quite different from the stock markets. And he must be careful to maintain survivability and not to let one trade destroy the legacy that is his.

From @VicNiederhoffer on twitter



 I'm working on an hypothesis on Sweden and it's economic impact.

The FT has few articles on the way they are treating the covid but given that I do not have an edge on that I m more focused on second level thinking i.e

Sweden is the opposite of Italy from an economic standpoint high private debt (companies and private are highly levered) low country debt.

Riksbank stretched its mandate and there is a parliament earring to try to limit its intervention.

The economy is exporters based and employee costs are elevated (We are talking around 70% tax rate) due to highly "social" economy employees are covered for 6/9 months Va Italy 6 weeks…

They have kept almost 80% of the economy open but if you do not have external demand … who you are going to sell to?

Nevertheless the Omx is one of Europe best performer indexes…supported by a depreciated currency .Theoretically if you plot it against skeusd you will see that the relationship broke down around 2yrs ago according to this metrics it should be trading at half the price.

Add to this the real estate market which is creating a bit of headache on the ground.

All this to layout the conclusion that they could not close the economy without intervening directly on the private debt market.. which given the low level of country debt they could have done… but they preferred no to…

Hope I was able to add few point to your thinking process.



 Has anyone read any good books lately that they can recommend. I reiterate my rec for: The Time it Never Rained by Elmer Kelton and I'd add rec for books by Bernard Cornwell. I just read Waterloo with much learning its a good antidote to chapter on Waterloo in Les Miserables.

Pamela Van Giessen writes: 

Empire of Shadows by George Black about the people who explored the Yellowstone area, all of whom had an impact on the space being made a national park. Some were dark people who ended up doing great things; others were "good" people who did some terrible things, and some were just lame. We are a complex creature. Way too much detail but probably more fascinating American history than you ever got in school.

Indian Creek Chronicles
by Pete Fromm about a young man who takes the craziest job in the world on a lark, living for 7 (winter) months in the Idaho backcountry guarding salmon eggs. Great tale of isolation, resiliency, stamina, and ingenuity. 



Dear Mr. Niederhoffer,

This article alone is a great but sad read: “Bankrupt and Dying from Cancer, Ulysses S. Grant Waged His Greatest Battle





I would be right there with Ralph…

The economic numbers are horrible, beyond belief. I'd rather look at Freddy Kruger than Look at them.

My guess/bet is what matters is what flipped the numbers and can they be flipped back?

This is all about the virus. It caused the numbers, it can change the numbers. So, I don't focus on the numbers. My focus is on history pf virus growth and decline…that is my weak spot….if I misread that I will be wrong.

I don't know of a single economic number that forecasts the end of a recession before it is over. Not a one. I do know that stocks have ALWAYS put in their lows and rallied a certain % before the recession is over. In short, stocks are the best harbinger of the end of the recession

On top of that I got my Panic Bottom buys signal as on Cramer, YouTube etc.

This time is like all times…I still wake up at night.. worried, wondering how wrong I can be with a big position on. I know I have had more disappointing trades than Jenny Craig customers.

The answer to me, if it is to all fall out of bed, is in the performance of the daily advance decline line. That is my main focus….

Happy trails to all

PS I have the perfect hedge here, long myself and an investor in RV fund so, "what me worry?"

Stefan Jovanovich writes: 

It might help to see this episode in American history as the analog to 1941/2. The GDP and employment numbers don't show the comparison because the figures for WE 2 make the assumption that all those pieces of utterly useless machinery and all those wages paid to war plant workers and the 13 million in the armed forces were somehow productive in the sense of adding to people's accumulations of personal wealth. They were not, except for the cash savings from the wages. The post-war boom came from the fact that Americans needed to rebuild their personal physical assets. No one had bought a new car or appliance or even a set of tires in 4 years. Given the marginal tax rates and price increases hidden by price controls and rationing, the Fed's interest rates were equal to and at times lower than they are now. As for job dislocations, what faces our society is on a lesser scale than what happened during mobilization and immobilization. What this historical comparison says about future common stock prices I have no idea, but the premise that this period is unprecedented deserves to be set aside. 



The flip side or cause of an asset shortage was too much money and liquidity. Money is nothing more than confidence and optimism and both have taken a hit from propaganda and governmental mismanagement and uncertainty about what a handful if governing idiots will decide for the rest of the world. Froth, exuberance are the ideas. Money just disappears now and I'm not clear on the mechanism except for asset prices and credit.



May 3rd:

The keys to the game are particularly difficult and diffuse this week.

1. The earnings estimates are more disperse than ever.

2. The companies that reported so far the big five are much more buoyant than the remaining 45% of S&P 500 companies to report.

3. If there is one fly in the ointment. To me it is the fall in real estate prices. To an amazing extent almost all major declines in stocks have been associated with declines in real estate prices since the time of Henry George in the 1880's.

4. With a google of pics of Joe Biden being affectionate with others, it is likely that another victim besides Tara Reade will come forth.

5. Hillary is now 7% like to be the Democratic nominee.

6. With all these cross currents I have looked for one market that will be the canary. I find it in the Japanese Yen.

With every major pharmaceutical company racing to find a treatment or vaccine for the virus, it is likely that there will be other breakthroughs reported in the media. The last one caused the biggest overnight rally ever. Strangely the improvement over the placebo was only 3 days.

More generally many drug therapies provide only a few days or few months improvement over no treatment. Considering the damage to life from side effects of digestion and energy and life style disruption, the cost benefit of many of them has to be negative as is the treatment from Gilead. It is amateurish and typical of Dr. Fauci to say the improvement is statistically significant. And that he always will err on the side of excessive caution.

The pictures of him and the Prez always remind us of Czar Alexander and Rasputin and I still claim he plays the same role as Rasputin in his and his families hoped for demise of the Prez's family.

Others in his peer group are the 95% in the CDC and the swamp that contributed to the Democrats last election. As I asked about the cattle trader what happened to the other $500/ THE OTHER 5%? The news about Peter Strk trying to get Flynn to lie is a terrible example of the battle that the Prez has faced with the samp. What would have happened if during the impeachment trials the Prez had declared a more draconian ban on China? More generally what is the hidden cost of all the productive activities that were lost and not made by the handouts?

I received an urgent method from Mr. Vince. "The worst of the dri is still to come". He looks at volume and pain… I don't agree.

The statistics.

Every gentleman and woman knows that when you kiss someone on the face but not the lips the kiss conveys an invitation for further romance. Presumably that was not unknown to the VP and also that he wasn't always unsuccessful.

A prescient response from a WSJ subscriber: "I suspect that many of the 'reported' Corona Virus deaths in NY Hospitals were really those who died of other major underlying problems, such as obesity, diabetes, heart problems, etc, with CV-19 adding the last straw. A standard autopsy would show this, and the cause of death would not be CV-19. However, in the current panic, the NY Hospitals know they can get $39,000 from Medicare for a CV-19 death, and only $19,000 if the real underlying cause was listed. It's money that is driving the higher CV-19 stats in NYC."

Both Mr. Vince and I were right.

A more traditional version of "I am right and you are right"



From 1951 to 2019, there were 15 6-month periods ending on April 30 in which the S&P 500 index declined. The average net change over the next 6 months was -3.8%, a statistically significant underperformance compared to the 4.2% average 6-month gain during the entire 69-year period.

Date         Index close   net change last 6 months      net change next 6 months
    4/29/1960      54.37                  -5.5%                     -1.8%
    4/30/1962      65.24                  -4.9%                    -13.4%
    4/29/1966      91.06                  -1.5%                    -11.9%
    4/30/1970      81.52                 -16.1%                      2.1%
    4/30/1973     106.97                  -4.1%                      1.2%
    4/30/1974      90.31                 -16.6%                    -18.2%
    4/29/1977      98.44                  -4.3%                     -6.2%
    4/30/1982     116.44                  -4.5%                     14.8%
    4/30/1984     160.05                  -2.1%                      3.8%
    4/30/1990      330.8                  -2.8%                     -8.1%
    4/29/1994     450.91                  -3.6%                      4.8%
    4/30/2001    1249.46                 -12.6%                    -15.2%
    4/30/2008    1385.14                 -10.6%                    -30.1%
    4/30/2009     872.81                  -9.9%                     18.7%
    4/29/2016     2065.3                  -0.7%                      2.9%

                        Average                                     -3.8%
                        Standard deviation                          12.8%
                        N                                              15
                        t                                           -2.42
                        Average of all 6 month periods               4.2%

Hernan Avella writes: 

Thanks Steve. Some notes:

- If you include the monthly data from 1928 (free yahoo finance), you effect disappears the average next 6 month goes from -3.80% to -0.12%
- Since you have such a small sample perhaps better to look at the trimmed mean or the median……the median of your sample is -1.8%
- Another (arguably better) way to check for significance is calculate your own p value with the bootstrap and the empirical distribution of 6 month returns, using the trimmed mean and winsorized variance.
- Related to above, Victor recommended a fine book a while back.
- Whether one can make more money adding this layer of complexity is still to be determined.



Folks here are running out of money for food. Unemployment web site is nonfunctional. They just extended shut down another month. Something is going to blow up soon.

K.K. Law writes: 

I don't have any proof and yet I always wonder whether that is part of CCP's multi-prong game plan that uses the Coronavirus, among other objectives, to create some form of limited-extent slow and steady self-annihilation within the US. While jury is still out whether they released the virus on purpose, and yet certainly they would not let even an accidental crisis go to waste. If this is a provocative speculative allegation, then so be it. 

Ralph Vince writes: 

Now I see the good Governor of MI has extended the lockdown for another month.

I'll stand by me earlier prediction, there will be bloodshed at that Capitol over this, that's but a formality now. The question is how do the governor's of other besieged states react.


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