Last week JP Morgan announced they were borrowing from the Federal Reserve’s Emergency Lending Window to “break the stigma”. Here we go again.
A market rally built on unsustainable market inflows is always unsustainable.
… last September when the repo market failed (overnight repo rates jumped to 10%), our fearless money-printing Federal Reserve stepped in and loaned the repo borrowers whatever they wanted. And they kept on. And they STILL are.
The five top mega-caps which I am renaming the “monopoly-caps” have accounted for 67% of the SP500’s gains so far this year while reaching a record 20% of the SP500’s market value. Five companies (1% of the SP500) accounts for 1/5 of the entire value of the SP500 index today – otherwise know at the TSP C fund.
Now with a market value like that, some are asking surely they will include Tesla in the SP500 now. It sits in the non-sp500 companies (TSP S fund) as the largest company. But the managers of the SP500 have a little rule that has and will keep it out.
The entire world inflated into the proverbial Bubble in Search of a Pin. At the epicenter of the global Bubble, trouble in China has been headlining my list of potential catalysts. The coronavirus outbreak poses a clear and present danger of pushing China into a dangerous predicament.
Update: The post below was written on 27 January 2020 while the mainstream media was ignoring the issue. I still standby my early assessment below on the virus and told you here to exit equities on the 27th. Because I… Read More ›
TSP & Vanguard Smart Investor’s guest writer Doug Noland writes on Issues for 2020
This is not rocket science. It just takes time to do the research which is not something most investors have. This 15 minute guide will save you a lot of time and hopefully increase your future returns starting today by changing some assumptions about the TSP funds you can invest in.
My assessment remains that we are witnessing a colossal tug-o-war between free market price discovery and central bank interventions. The central banks are winning but each round requires much greater effort – meaning purchases of financial assets with money created out of thin air.