by John Walters
The Market Doesn’t Care
Three stocks in just the past month:
- Boeing (BA): The Seattle-based manufacturer that specializes in planes that don’t fly saw its stock soar from $118 on May 15 to $215 this morning. What particular good news has there been to explain this? And does this mean that for all the “I’ll huff, and I’ll puff, and I’ll blow-dry my hair down” talk from Trump, that Boeing and China are about to resume a beautiful friendship? That’s a 40-ish% rise in three weeks for a major Dow component minus any explicitly good news.
- American Airlines (AAL): Remember me telling you about the conversation I had with an AA pilot last summer who said, “You know why American is the 12th-rated domestic carrier? Because there aren’t 13 domestic airlines.” Well, AA stock has ascended from $9 on May 15 to $19 this morning. That’s a more than 100% pop. Again, are more people already flying? No. Are fewer people dying from Covid-19? No. Is the unemployment rate anywhere close to what it was in January? No.
- TVIX . An index fund that measures market volatility. In other words, when sh*t gets cray cray, TVIX soars. This little fund went from $44 on January 10 to $1,000 on March 18. I mean, if you had strapped on in the early part of the year you already own your own island somewhere. In the past two weeks, though, it has gone from $237 to $109. Which would indicate all’s quiet on the western front. But it isn’t. So what gives?
Here’s a little article from The New York Times that explains it partially. But let me dumb it down so that folk like me can understand it better:
A) The stock market isn’t a reflection of the economy; it’s a reflection of how the top 1 to 10% are doing. And, oh by the way, America’s billionaires have seen their own portfolios jump 19% since mid-March.
B) The Fed has made borrowing money so cheap —they could have used that stimulus money to help Average Joe and Jane but this is what they used if for—that companies can afford to do things like take extremely low interest loans or even buy back their stock, creating artificial scarcity. It’s like when you ask how come your neighbors are unemployed and always drunk but have an in-ground pool and then you come to find out one of their parents invented Liquid Paper.
One imagines a back-channel conversation between Steven Mnuchin and/or Larry Kudlow with the titans of banking and manufacturing in which he says, “Do you see what we’re doing with these trillion-dollar stimulus packages? They’re for you, not for Joe Q. Public. Dig it: we will NOT let you fail.”
Remember when only last September the Orange One scribbled, “No quid pro quo,” which was proof that there was one? Well, here it is all over again. We’ll scratch your back and come this fall, you scratch ours.
C) It’s the uber-wealthy who determine the direction of the stock market, not us home gamers who DVR “Mad Money.” And it is OVERWHELMINGLY in their financial interest for Orange Buffoon to remain president. And there’s no indicator that will better offset his unpardonable speech and behavior than a healthy stock market. They can sell that to red baseball cap MAGA even if those folks are too stupid to understand they’re not actually the beneficiaries.
D) To the ultra-rich, the virus is not a plague but a boon. Older people and black folk dying? This is like a Hail Mary pass to their own portfolios (easing up on SS money and Medi-Care, even if it’s just a state of mind, plus it allows them to drop size of work force under guise of virus-related reasons). So the four-digit daily mortality numbers don’t scare them one bit. As long as these two demos dominate the morgue lists, they’re actually in favor of it. Remember, “There are more important things than life.”
It’s a Tall World, After All
The NBA will return at the end of July, exclusively at the Disney World sports complex in Orlando, Florida. Giving entirely new meaning to Epcot Center. Only the top 22 teams are invited. Sorry, Knicks. They’re planning on having playoffs after that and then maybe two days off before next season begins?
Anatomy Of A Murder
If you’re sheltering in place at all tomorrow (Saturday), TCM has a hidden classic on at 3 p.m. EDT. Anatomy Of A Murder, from 1959, starring Jimmy Stewart, George C. Scott and Lee Remick, is fantastic. I’d never even heard of it two years ago when I happened upon it one afternoon (as I’m wont to do with TCM) an it was gripping and pretty racy for the Eisenhower era.
Remick is a dish and Trouble with a capital “T,” Stewart is excellent as the defense attorney who begins to wonder if he’s actually arguing on the side of justice, and Scott is formidable and that jet-black hair is awesome. Long before Patton, Scott established himself in both this and The Hustler. He’s never going to be the guy you root for, but he’s always charismatic.
Trust us. You’ll love this one. It was nominated for SEVEN Academy Awards, but earned zilch. Kind of mirrors the way one character felt at the end of the film.
I heard Michael Lewis on a podcast the other day, and when asked why the stock market was flourishing despite the recession, his answer (paraphrased) was “Where else are they going to put their money?” He meant that the bond market was so low, as well as interest rates in general, that, for the investor class, stocks were the best option.
The American economy has faced two catastrophic events in the last 15 years — the 2008 financial crisis and covid-19 — and in both cases the government spent trillions to save and prop up the largest corporations. As long as U.S. policy is permit shareholders to keep and re-invest ever-larger shares of profits, while socializing the risk of failure, it’s understandable why investors see little downside to putting their money into the stock market.
What is this podcast thing of which you speak?
The Wells Fargo across the street from my apartment had broken windows and multiple “F*$k you” along its exterior. I was a little upset I never received an invite to the party.
Re: American Airlines. Bought a 1-way ticket Spokane – Phoenix in February $119. That same seat, same flight on June 1: $489. . Maybe I buy. A few shares to make that back
If the portfolios of America’s billionaires have ONLY jumped 19% since 3/23, this means at least half of their portfolio is in cash or bonds/bond funds or in value stocks, REITS, & Emerging Markets.