I, Who Hates Shorting, Just Shorted the Entire Stock Market. Here’s Why

I’m sharing this trade for your future entertainment so you can hail me as the obliterating moron that infamously shorted the greatest rally floating weightlessly ever higher above the worst economic and corporate crisis imaginable.

By Wolf Richter for WOLF STREET.

I hate shorting. The risk-reward relationship is out of whack. It feels crappy. I lost a ton of money shorting the worst highfliers a little too early in late 1999. It’s just nuts to short this market that is even crazier than in late 1999. But this morning, I shared in a comment in our illustrious comment section that I’d just shorted the SPDR S&P 500 ETF [SPY]. My time frame is several months.

I’m sharing this trade so that everyone gets to ridicule me and hail me as a moron and have fun at my expense in the comments for weeks and months every time the market goes up. And I do not recommend shorting this market; it’s nuts. But here’s why I did.

The stock market had just gone through what was termed the “greatest 50-day rally in history.” The S&P 500 index had skyrocketed 47% from the intraday low on March 23 (2,192) to the close on June 8 (3,232). It was a blistering phenomenal rally. Since June 8, the market has gotten off track but not by much. It’s still a phenomenal rally. And it came during the worst economy in my lifetime.

There are now 29.2 million people on state and federal unemployment insurance. There are many more who’ve lost their work who are either ineligible for unemployment insurance or whose state hasn’t processed the claim yet, and when they’re all added up, they amount to over 20% of the labor force. This is horrible.

But stocks just kept surging even as millions of people lost their jobs each week. The more gut-wrenching the unemployment-insurance data, the more stocks soared.

Then there is the desperate plight many companies find themselves in, and not just the airlines – Delta warned of a host of existential issues including that revenues collapsed by 90% in the second quarter – or cruise lines – Carnival just reported a revenue collapse of 85% in Q2, generating a $4.4 billion loss, and it is selling some of its ships to shed the expense of keeping them.

These companies are in sheer survival mode, and they’re raising enormous amounts of money by selling junk bonds and shares so that they have enough cash to burn to get through this crisis.

This crisis hit manufacturers whose plants were shut down. It hit retailers and sent a number of them into bankruptcy court. It crushed clinics and hospitals that specialize in elective procedures. It shut down dental offices. It sent two rental car companies into bankruptcy court – Hertz and Advantage. It has wreaked untold havoc among hotels and restaurants, from large chains to small operations. And yet, stocks kept surging.

The situation has gotten so silly in the stock market that the shares of bankrupt Hertz [HTZ] – which will likely become worthless in the restructuring as creditors will end up getting the company – were skyrocketing from something like $0.40 a share on May 26 to $6.28 intraday on June 8, which may well go down in history as the craziest moment of the crazy rally.

There were stories of a new generation of stuck-at-home day-traders driving up the shares looking for their instant get-rich-quick scheme. And those that could get out at the top made a bundle (but HTZ closed at $1.73 today).

The smart folks at Hertz and their underwriters, Jefferies LLC, saw all these sitting ducks ripe for the taking, and they came up with a heroic plan to sell up to $1 billion in new shares into this crazy market, while informing investors that those new shares would likely become worthless in the bankruptcy proceedings.

The bankruptcy judge – likely shaking head in despair – approved it. As HTZ began plunging, the size of the offering was reduced to $500 million. This would have been like a donation to the company’s creditors, who now run the show.

Hertz would have likely been able to pull off this stunt in this crazy market, but then someone at the SEC woke up and asked some questions, which put the whole escapade on hold. But you can’t blame Hertz. They need money badly, and they’re just going where the easy money is.

Even during the crazy dotcom bubble in late 1999 and early 2000, the day-trader frenzy hadn’t reached these levels. But back in 1999, the economy was strong. Now this is the worst economy of my lifetime.

This kind of frenzy has been everywhere in recent weeks. They bid up nearly everything unless it filed for bankruptcy – and even then, they bid it up, as Hertz has shown. This would have been an inexplicable rally in normal times. But these are not normal times.

These are the times of record Federal Reserve money printing. Between March 11 and June 17, the Fed printed $2.8 trillion and threw them at the markets – frontloading the whole thing by printing $2.3 trillion in the first month.

And in this manner, the otherwise inexplicable frenzy became explicable: The Fed did it. And everyone was going along for the ride. Don’t fight the Fed. Spreading $2.3 trillion around in one month and $2.8 trillion in three months – in addition to whatever other central banks globally were spreading around – was an unprecedented event. And the fireworks probably surprised even the Fed.

Credit markets that had been freezing up for junk-rated companies suddenly turned red-hot, and speculators started chasing everything, including junk bonds sold by cruise lines and airlines though their revenues had plunged 80% or 90% and though they were burning cash at a stunning rate. The Fed’s newly created money went to work, driving up stock prices.

But over the past six weeks something new was developing: While the Fed was talking about all the asset purchase programs it would establish via its new alphabet-soup of SPVs, it actually curtailed the overall level of its purchases.

Then in the week ended June 10, the Fed’s total assets of $7.1 trillion increased by less than $4 billion. And in the week ended June 17, its total assets actually fell by $74 billion (you can read my analysis of the Fed’s balance sheet here). This chart of the week-over-week change in total assets shows how the Fed frontloaded its QE in March and April, and how it then systematically backed off:

And there is another big shift in how the Fed is now approaching the crisis. It’s shifting its lending and asset purchases away from propping up financial markets toward propping up consumption by states and businesses, and ultimately spending by workers/consumers via its municipal lending facility, its PPP loan facility, and its main-street lending facility. These funds are finally flowing into consumption and not asset prices.

So the superpower that created $2.8 trillion and threw it at this market, and that everyone was riding along with, has stopped propping up asset prices.

And now the market, immensely bloated and overweight after its greatest 50-day rally ever, has to stand on its own feet, during the worst economy in my lifetime, amid some of the worst corporate earnings approaching the light of the day, while over 30 million people lost their jobs. It’s a terrible gut-wrenching scenario all around.

And so I stuck my neck out, and I’m sharing this trade for your future entertainment when it goes awry, and you get to have fun at my expense and hail me as the obliterating moron that infamously shorted the greatest stock market rally of all times as it was floating weightlessly ever higher above the worst economic and corporate crisis imaginable.

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  429 comments for “I, Who Hates Shorting, Just Shorted the Entire Stock Market. Here’s Why

  1. MonkeyBusiness
    Jun 19, 2020 at 6:45 pm

    Don’t worry Wolf. I am joining you. We’ll be idiots together if this thing goes to infinity and beyond.

    • Gary Fernandes
      Jun 19, 2020 at 8:54 pm

      Already there. 3x Bear S&P 500 for a couple weeks. All in no holds barred. I’m not going to waver as I lose money in short term upticks. This market will die at the hands of the money printing Fed. They will run out of ink. Stay firm. Stock prices can only be manipulated for so long. Sorry millennials but you will learn about the very real bubble of Irrational Exuberance. Take care and be safe.

      • Fernando
        Jun 20, 2020 at 1:27 am

        That is the worst way to short. It is ok to hold for few days, but stay for weeks and the up and downs will erase your capital. The power of percentages being more destructive on down rather than up.

        I dont short, I am too scared. But also i missed the greatest bull market, so I am a fool

        • JBird4049
          Jun 20, 2020 at 3:54 am

          You’re not a fool. Just how does one make predictions about the actions of the insanity that is the market? It is not really tied to Main Street.

        • Jun 20, 2020 at 10:40 am

          You can buy put options on most leveraged products. While volatility is low premium is low. They don’t ring a bell at the top. You hold these things because selloffs are sudden and deep. You can own both bull and bear leveraged simultaneously. This works when prices of the shares change, and one bull share is equal to two or three bear shares, that bull share becomes a hedge. When the market turns you sell one side and hold the other. You own these things, rain or shine, when things go completely off the rails they may not allow you to buy. Leveraged ETFs become a closed end fund. The myth of (Central bank) monetary inflationary bias in stocks, ends when the market functions more like a futures market, one buyer, one seller. The only fundamental in a futures market is economic growth, earnings and revenue, and the currency in which it is denominated. The commoditization of stocks (through ETFs, and Federal Reserve policy which lifts all boats, bad credit or good) demands a futures market determined outcome. (when futures contracts expires and there is no storage,(pension funds, investment banks) and no market, futures prices will go negative, just like oil. You don’t short stocks, you short the market. Stocks are a commodity, and they are destroying the value of the underlying currency and inflating asset prices. Eventually the monetary base shrinks and prices come back down.

        • Jason Middleweek
          Jun 21, 2020 at 4:58 am

          Wolf needs to disclose how much he has shorted by. Is it $1 of wealth, or his entire wealth?

          I think previous pandemics didn’t affect the stock market hugely so it may be a fast W. It is so hard to time things. As one reader pointed out, shorting too late is costly.

        • Bharat damani
          Jun 21, 2020 at 7:43 am

          Short intelligently!
          Watch three day chart down spike touch lower Bolinger band and wait daily chart move to 9 day sma and short upon reversal till it makes lower low for 3 days. Take profits and follow the process

        • Zantetsu
          Jun 21, 2020 at 9:50 am

          Bharat I think you may have just explained why the market doesn’t make sense any more. People are trading based on analysis of tea leaves discerned from various shapes of different graphs and names for common shapes within the graphs. They aren’t even looking at any kind of fundamentals, just strange voodoo logic about graph shapes.

          It feeds into itself and the market no longer makes any sense when analyzed for economic fundamentals. It just makes sense if you follow voodoo graph logic.

        • Flyguy
          Jun 21, 2020 at 12:33 pm

          Me too. I pulled my money and keeping on the sidelines for now and I now sleep well.

        • Brett
          Jun 23, 2020 at 11:32 am

          Agreed! Gary, do not hold leveraged (any inverse/leveraged etf’s) long term. They are inherently a decaying asset by the way they are structured (they lose on the roll). They are ok for short term hedges/trades and/or throw in a small % allocation as hedges and/or use leaps and manage the position (trade around it). You cannot time these things, especially with the worlds central banks massively printing on any healthy market correction.

      • andy
        Jun 20, 2020 at 10:21 am

        What if they delist 3x short ETFs for greater good?
        They will change rules on you before you know it. And you’re planning to stay in?

        Diversify, even on the short side.

      • Fonzi
        Jun 20, 2020 at 7:23 pm

        You’re going to lose all your money in those 3x ETFs. They are a day-trading vehicle and should never be held when the trend is going against you – like it is now.

        You will lose 80% of your money. Cut your loses and sell now, and promise yourself NEVER to buy those ‘widow-makers’ again.

      • Greg
        Jun 20, 2020 at 7:33 pm

        I’m with you. Diversified shorts between Russell, S&P, QQQ and DOW in non-margin callable positions. If the market goes against me 50% I lose half my money (temporaily) . If it drops, I double my money. 2:1 Asymmetry in my favor even it there is equal likelihood of up/down movement, which history suggests isn’t the case.

        I can afford to wait as long as necessary…

        • Zantetsu
          Jun 21, 2020 at 9:53 am

          Are you really implying that losing 50% not exactly the inverse of gaining 100%?

        • war games
          Jun 22, 2020 at 7:46 am

          Let’s remember on the upside there is no limit in profits, on the down-side all you can lose is all you money.

          Also these ‘calls’ or ‘puts’ all lose much more than a simple linear relation, when you have say your 50% down-day.

          The majority opinion here seems to be a down market, but then this tells us the market will rise, as majority is always wrong.

          Some people back in the day, did get rich on ‘shorting’, but those are exemptions, like Jim Rogers, you made it a life of shorting in the 1970’s. I think that people who ‘dabble’ in shorting, lose 99% of the time their funds, and of course those who play options and/or ETF’s lose their funds 100% of the time.

          Like some body above said, Wolf probably put $1 of his net-worth in this bet, long ago he told his he played a similar move.

          Lastly, even the great RE drop in 2007, everybody knew the market was going to collapse, but only a few guys had the right timing, for every 100 early, there was only 1 that got the timing right.

          The real big money is/was made on derivative, but then you really need to think of it as insurance, and you $1M USD just a non-refundable premium, to cover your +100M net worth.

          Lastly, as was said in the open, shorting has a limited upside, and unlimited downside. It’s like why would any one play that game?

      • Andrew Miller
        Jun 20, 2020 at 8:38 pm

        How much longer til it collapses is the question

      • Robert
        Jun 21, 2020 at 4:55 pm

        Be careful, Gary. Google the Caracas stock exchange- it has outpaced all others the past few years. It only goes up. Venezuela. What does that tell you?

      • K Hood Delaney
        Jun 21, 2020 at 4:56 pm

        Hi all, I am not a finance person so most if these comments don’t make sense to me. I came across this article & have to ask, how does one short with the money they already have invested? Should I transfer $ to bonds instead? I am looking to maintain my retirement account and know this high market can’t sustain, but don’t know how to do save the bottom line.

        • Noelck
          Jun 22, 2020 at 3:43 pm

          K Hood – This is a really dangerous environment and shorting is not for amateurs or for people trying to preserve their retirement account.

          Speaking to a financial advisor would be the best.

          I personally have 60% stocks and 40% gold/cash. I hate it but see very few opportunities right now.

      • Josh
        Jun 22, 2020 at 1:18 pm

        I rarely defend my generation, but the level of enthusiasm for the irrational millennial trope is truly irritating. I have not reviewed any data on this yet, but I have no doubt that we are less confident in the market than our parents. In fact, I moved my entire 401k into “safe” low yield fund possible (treasuries, short term bonds, etc) in late April at a loss. My only regret is that I did not do it in late February, when my warnings to my parents and gen X brother were being mocked. Specifically, I warned them that at best, there would be only 200k-300k deaths from COVID19 in 2020 (I know the data well and it is clear we got there weeks ago) and experience a recession beyond anything in their lifetime.

      • Penny
        Jun 22, 2020 at 9:37 pm

        Millennials already know about it. We remember the debacle in 2008/9 and the effect it had on our job prospects coming out of college.

        Millennials don’t have much money in the markets. We don’t have much money period. That said its interesting to watch when you don’t have any skin in the game.

        • Joshua
          Jun 24, 2020 at 2:29 am

          Speak for yourself

      • Roger Salyer
        Jun 24, 2020 at 8:05 am

        On 6/23/20, the rsi of qqq was over 70. The rsi on sqqq was 29.

    • HAWKSTER
      Jun 19, 2020 at 10:06 pm

      Way to take the Put Plunge!! I took it way too early, but am still at it. Here is my list of Puts as of today June 19. FYI: I didn’t bet the bank, but enough to sting a bit if it doesn’t work out, but party if it does. There were no shortage of companies with truly awful finances… and those were financials in the best of times. I think the market has not seen its lows yet for this recession.

      AMC Dec 18 2020 9 Put
      BC Dec 18 2020 80 Put
      BG Jan 21 2022 50 Put
      BYD Jan 21 2022 32 Put
      CBRL Jan 21 2022 150 Put
      CCL Jan 15 2021 15 Put
      DFS Jan 15 2021 40 Put
      MRNA Jan 21 2022 80 Put
      NBL Jan 15 2021 15 Put
      PPL Jan 21 2022 40 Put
      PUT (AGNC) AGNC INVT CORP COM JAN 15 21 $8 (100 SHS)
      PUT (AGNC) AGNC INVT CORP COM JAN 21 22 $20 (100 SHS)
      PUT (ARES) ARES MANAGEMENT SEP 18 20 $40 (100 SHS)
      PUT (ARI) APOLLO COML REAL NOV 20 20 $12.5 (100 SHS)
      PUT (ARR) ARMOUR RESIDENTIAL JUL 17 20 $2.5 (100 SHS)
      PUT (BA) BOEING CO COM JUN 17 22 $165 (100 SHS)
      PUT (BCS) BARCLAYS PLC JAN 21 22 $10 (100 SHS)
      PUT (BFAM) BRIGHT HORIZONS FAM SEP 18 20 $70 (100 SHS)
      PUT (BOX) BOX INC CL A SEP 18 20 $10 (100 SHS)
      PUT (BXMT) BLACKSTONE MORTGAGE JAN 15 21 $30 (100 SHS)
      PUT (BYND) BEYOND MEAT INC COM JAN 15 21 $145 (100 SHS)
      PUT (CHDN) CHURCHILL DOWNS INC SEP 18 20 $45 (100 SHS)
      PUT (CS) CREDIT SUISSE GROUP JAN 21 22 $10 (100 SHS)
      PUT (DB) DEUTSCHE BANK AG ORD JAN 21 22 $10 (100 SHS)
      PUT (DX) DYNEX CAP INC COM DEC 18 20 $10 (100 SHS)
      PUT (DX) DYNEX CAP INC COM JUN 19 20 $12.5 (100 SHS)
      PUT (DX) DYNEX CAP INC COM JUN 19 20 $7.5 (100 SHS)
      PUT (ENB) ENBRIDGE INC COM AUG 21 20 $15 (100 SHS)
      PUT (HESM) HESS MIDSTREAM LP CL AUG 21 20 $2.5 (100 SHS)
      PUT (HYG) ISHARES TR IBOXX HI SEP 18 20 $73 (100 SHS)
      PUT (INDL) DIREXION SHS ETF TR JUL 17 20 $15 (100 SHS)
      PUT (IT) GARTNER INC COM SEP 18 20 $85 (100 SHS)
      PUT (IVR) INVESCO MORTGAGE JAN 15 21 $4 (100 SHS)
      PUT (IVR) INVESCO MORTGAGE OCT 16 20 $6 (100 SHS)
      PUT (KKR) KKR &CO INC CL A JAN 15 21 $35 (100 SHS)
      PUT (LYFT) LYFT INC CL A COM JAN 21 22 $40 (100 SHS)
      PUT (MAIN) MAIN STREET CAPITAL SEP 18 20 $30 (100 SHS)
      PUT (MT) ARCELORMITTAL NY JAN 15 21 $20 (100 SHS)
      PUT (MTN) VAIL RESORTS INC COM JUL 17 20 $90 (100 SHS)
      PUT (NCLH) NORWEGIAN CRUISE JAN 15 21 $22.5 (100 SHS)
      PUT (RCL) ROYAL CARIBBEAN JAN 15 21 $65 (100 SHS)
      PUT (SIRI) SIRIUS XM HLDGS INC JUN 19 20 $5 (100 SHS)
      PUT (SIRI) SIRIUS XM HLDGS INC SEP 18 20 $4 (100 SHS)
      PUT (SWCH) SWITCH INC CL A AUG 21 20 $14 (100 SHS)
      PUT (SWCH) SWITCH INC CL A NOV 20 20 $12 (100 SHS)
      PUT (SWCH) SWITCH INC CL A NOV 20 20 $18 (100 SHS)
      PUT (TJX) TJX COS INC NEW COM JUL 17 20 $30 (100 SHS)
      PUT (TQQQ) PROSHARES ULTRAPRO SEP 18 20 $72 (100 SHS)
      PUT (TWO) TWO HBRS INVT CORP SEP 18 20 $7 (100 SHS)
      PUT (UBER) UBER TECHNOLOGIES JAN 15 21 $33 (100 SHS)
      PUT (WORK) SLACK TECHNOLOGIES JAN 15 21 $35 (100 SHS)
      PUT (XLC) SELECT SECTOR SPDR SEP 18 20 $51 (100 SHS)
      PUT (XLK) SELECT SECTOR SPDR SEP 18 20 $90 (100 SHS)
      PUT (XLY) SELECT SECTOR SPDR SEP 18 20 $120 (100 SHS)
      PUT (YUM) YUM BRANDS INC OCT 16 20 $100 (100 SHS)
      PUT (YUM) YUM BRANDS INC OCT 16 20 $40 (100 SHS)
      PUT (ZM) ZOOM VIDEO JAN 21 22 $250 (100 SHS)
      QQQ Jan 21 2022 280 Put
      RAD Jan 15 2021 17 Put
      REV Nov 20 2020 20 Put
      SPCE Jan 15 2021 5 Put
      X Jan 15 2021 10 Put
      XLRE Nov 20 2020 37 Put

      • andy
        Jun 20, 2020 at 10:17 am

        Please, You are picking puts where downside is priced in and then some. You may get lucky and break even.

        • andy
          Jun 20, 2020 at 10:18 am

          I mean X 10 put? Come on.

        • Lasse
          Jun 22, 2020 at 9:29 am

          Shorting in this situation was a good bet, I believe. You were just couple weeks too early….

      • sunny129
        Jun 20, 2020 at 12:32 pm

        Questions:

        1. In the money or outside?
        2. # of interest and open positions – liquidity!?
        3. No calls or hedges in case of unexpected whiplash, like Powell throwing 3 Trillions into the mkt, just like he did in March!?

        BTW: All my puts have a few calls as hedges.
        (Been in the mkt since ’82)

        This is the most sURREAL bull mkt of my life time! Lost NOTHING during GFC – made profits. Afterwards a different story b/c death of true free mkt in America – since ’09!

      • john tucker
        Jun 20, 2020 at 6:03 pm

        Wolf ….long time no chat ….
        You cant short this market … they will rip you to shreds ….
        but there is another way to play it ….
        just sell theta, because the VIX is insanely high these days …
        Sell the SPY short if you must, then sell covered puts against it … so many Robinhooders are buying puts that the pricing is crazy ….

        • Jun 20, 2020 at 8:55 pm

          Sell theta? How does that work?

        • gordon n.
          Jun 21, 2020 at 3:58 pm

          END OF QUARTER MARKUP BY THE BANKSTER BOYZ! = Worst fking time to short! Then MnueSCUM will rig markets for 4th of July . They will hold this fraud up thru the 4th of July, MnewSCUM can declare it a nat’l emergency without a new high by the 4th. WATCH! There is no limit to this FRAUD.

      • Jun 21, 2020 at 1:09 am

        I’ve been doing a strategy of long precious metals and short IWM.

        I’ve gotten creamed on my puts since April, but my long gold miners positions have made up for it, kept me a bit above even.

        In my opinion, Wolff is being a bit conservative… he’s early in his call. It’s the end of Q2 and institutional investors have 1.6 trillion in cash that they’re being pressured to invest to show some gains.

        In the 3rd quarter we’re very likely to see a drop like we saw in March – with an equally big fed reaction like we saw in March. My plan is to balance long gold miner positions with IWM puts so that I’m covered either way when the fed reacts.

        Also, I’ve been burned too much on shorter term puts … I’m thinking long and in the money is the safest way to go. It won’t get you those 10x gains, but it won’t go to zero either.

        • Clay
          Jun 21, 2020 at 4:05 am

          Agree with that sentiment. Burned on shorter term puts and would only do them for quick scalping now (even with longer duration ones).

      • Nathan
        Jun 21, 2020 at 8:05 pm

        What link or how can I follow yi want to thank you guys.

    • Sven
      Jun 20, 2020 at 3:58 am

      Yeah, I’m in too. The lunacy just ended.

      • sunny129
        Jun 20, 2020 at 12:34 pm

        I won’t count on that!

        Mkts can remain more irrational, and longer than you being solvent!

        • Fat Chewer.
          Jun 20, 2020 at 7:01 pm

          Abso-fucking-lutely! But…if you understand surreallo-complex financial fantasy engineering and hypercalifragilistic equations, it is a perfectly cromulent time to invest.

        • clayton Bullock
          Jun 21, 2020 at 8:58 am

          I agree… nothing but puts at this time. This week will tell us alot as S&P is struggling at Hull 20 day moving average.

        • William Wightman
          Jun 22, 2020 at 2:18 pm

          Exactly. If you think you have just found a short or medium term pattern in the market then hide your wallet. Their is a pickpocket nearby about to rob you blind.

    • M
      Jun 20, 2020 at 4:18 am

      Call me a cynic, but I predict the “Federal” privately owned, bankster cartel called the “Federal Reserve” is keeping the market inflated until it’s cronies bail out of bad positions. If they can, they will also try to keep the market or parts of it inflated until November.

      Ultimately, the market prices will collapse but when? That is the problem. In a manipulated market the stock prices (or most of them) can stay high enough for long enough that you will lose your shirt. It depends on how attached the banksters are to this administration.

      • M
        Jun 20, 2020 at 4:22 am

        Darn tablet changed its to the wrong word. Is there any way to short the market for December 2020 or April 2021 as of now?

        By that date, the market will surely collapse.

      • Jun 20, 2020 at 9:29 am

        M.,

        “…the “Federal” privately owned, bankster cartel called the “Federal Reserve” …”

        You need to keep this straight: The Fed is a hybrid organization. What is privately owned are the 12 regional Federal Reserve Banks (NY Fed, Dallas Fed, St. Louis Fed, etc.). The Federal Reserve Board of Governors is a federal agency, and its employees and the members of the board, including Powell, are employees of the federal government.

        • IronForge
          Jun 20, 2020 at 10:46 am

          But the USD Printed by the FEDRESV are Loaned Out to the GOVT_USA at (IIRC,) 06.0% APR.

          Hybrid in Actuality; but Privately Owned and Operated De Facto. Governors are mostly Revolving Door Rentier-Banker Muppets.

          That being mentioned, I recommend reviewing Prof Steve Keen’s (his main beef is with the Private Debt Burden) Minsky System Simulations Models on this Present Economic System. Forgot the Link; but it’s on YouTube posted years ago.

          Sim Depicts Econ System Failures that start with Labor, followed by Industrialists as Banks Own Everything.

          Hybrid Economies like CHN and RUS looked more promising to me ever since.

        • sunny129
          Jun 20, 2020 at 12:41 pm

          FED can NEVER GO bankrupt!

          Never been audited. No accountability or real challenges by the majority of Lawmakers!
          It has become central Bank for the rest of the global banking system. I think there are additional 3 International Banks’ rep on the board.

          Can do anything under the excuse of
          – financial stability
          -to keep the markets working smoothly (Powell’s words)
          Cannot tolerate more than 5-10% correction of the indexes.

          FED is the mkt, now!

        • gordon n.
          Jun 21, 2020 at 4:01 pm

          END OF QUARTER ! It’s a dumbass short, Wolf. Then, the 4th of July WILL BE RIGGED HIGHER. WATCH! ( via MneuSCUM) The 4th is always rigged higher.

        • gordon n.
          Jun 21, 2020 at 4:02 pm

          Fed is ABOVE THE LAW. Like Trump. You are about to lose money.

        • 153iq
          Jun 25, 2020 at 10:52 am

          But since the whole government is nothing but a revolving door between the public and private sector. That statement don’t hold water. It’s a private entity controlled by commercial banks. Got news for your there is no Santa Clause either lol.

      • Jun 20, 2020 at 9:01 pm

        That’s right. It’s a global market. The fed can’t let. Any bank fail. Deutsche Bank. Chinese banks. If one goes they all go. The problem is with rapidly deteriorating asset bases, they are all going to fail.

        • DR DOOM
          Jun 21, 2020 at 11:12 am

          “the Fed can never go bankrupt”.Correct , the Fed will bankrupt us all instead by de-basement.

        • gordon n.
          Jun 21, 2020 at 4:04 pm

          My guess the (Marketonparade) the banksters buy their own stocks to achieve a new high by the 4th of July. ===
          buy FAS (don’t short into end of quarter, that is suicide.

      • intosh
        Jun 20, 2020 at 10:34 pm

        Completely agree.

        Who will blink first? The Fed, its cronies, the banksters or the Trump administration? If Trump’s chance of re-election becomes practically nil, the cockroaches will all run for the exit and the con job will collapse.

    • Dawood
      Jun 20, 2020 at 5:21 am

      All true what you have said except you haven’t factored in the election. Trump cannot allow stock prices to fall significantly before the election. So I expect the fed and the plunge protection team to step in and prevent a major sell off until after the election.

    • George Campbell
      Jun 20, 2020 at 7:58 am

      The Fed wants Trump gone. They will lower the market substantially by October to assist in that goal. Don’t fight the Fed.

      • DR DOOM
        Jun 20, 2020 at 3:58 pm

        I fight the fed sucessfully 24 /7 and 365 days a year by being Debt Free. Even while I am sleeping.

        • rhodium
          Jun 22, 2020 at 9:58 am

          Isn’t the fed helping those who are in debt by keeping interest rates low? If they do actually successfully spur inflation then doesn’t that help holders of debt who get to pay it back in devalued dollars? Do you even know what the fed does?

        • rhodium
          Jun 22, 2020 at 10:07 am

          I guess if you mean by losing to the fed that you’re fighting the fed that may well be the case. What are you in? Cash or overvalued stocks? Bonds that will barely break even? What are you defining as success here? Spending 100% of paycheck on beer brewing equipment? That’s probably the best option for beating the fed.

      • gordon n.
        Jun 21, 2020 at 4:05 pm

        wrong

    • Patrick Harrald
      Jun 20, 2020 at 9:58 am

      It’s frustrating when you have a company sponsored retirement plan and your options are very limited. I have no choices to short the market only to move my money into a safe fund that makes no interest. So my money is tucked away semi safe but not making me anything.

      • Matt
        Jun 21, 2020 at 1:59 pm

        I have the same problem in my company 401-k, just mutual fund options available. About a month ago I sold $100,000 even in my 2030 target date fund (VTHRX), while holds about 30% bonds and lots of large cap growth exposure, & simultaneously bought $100,000 of pure small cap exposure (VSMAX). That trade is currently up an incremental $4,500 vs if it was all still in VTHRX.

        Based on Wolf’s article maybe this coming week I will rebalance another large chunk (almost 80% of this 401K balance is still sitting in VTHRX)….

        • gordon n.
          Jun 21, 2020 at 4:09 pm

          The fact that you took control of you 401K and went into SMALL CAPS does not make you a fking genius, but admirable… TAKE FKING PROFITS IF YOU ARE NOW A ” SELF-DIRECTED IRA/401K) “Don’t be a greedy schmuck!

        • gordon n.
          Jun 21, 2020 at 4:13 pm

          Let me get this straight. You think you are a genius b/c you switched into small caps when 30-50% of small biz PROBABLY IS GOING OUT OF BUSINESS! And here you are boasting about it instead of looking at the whole picture and locking-in profit?

        • Zantetsu
          Jun 21, 2020 at 9:43 pm

          gordon n the market is not about reading fundamentals. It’s about reading sentiment. Who cares about bankruptcies in small businesses, most of them not even public. You have to play the sentiment game, with all of the casino style gambling that entails.

          I’ll probably move all of my 401k into treasuries soon like I did at the start of the recent crash. I followed Wolf before and it worked out well for me. Not so far as to short the market, but when he shorts, I get out. My big mistake last time was not getting back into the market when he closed his short position last time.

    • Christoph Weise
      Jun 20, 2020 at 12:13 pm

      I join. It is the second best thing to establishing a party to bring down the central banks and it is less laborious.

    • stockkid81
      Jun 20, 2020 at 12:43 pm

      put options or call options just too hard to make money after factoring the time decay where no one knows how to calculate. Just buy gold if you are bearish much simpler.

      • Satya Mardelli
        Jun 21, 2020 at 11:00 am

        You don’t have to calculate Theta. Just select it as a column in your option chain. The value displayed is the daily decay of the premium – ceteris paribus. Smart option traders sell puts/calls with a short duration to expiration. If you’ve correctly predicted the direction of the underlying the option expires worthless. You keep the premium. Or you can take 25-50% gain while the option is still active and exit.

    • Elijah
      Jun 20, 2020 at 1:21 pm

      Definitely on board with this “Big short move” but i think the time line will be longer. The fed will be buying all these shity worthless bonds pumping $80mil per month to prop up markets for two years at most. (If they don’t “F” it up first in which case we get an earlier win.)

    • Fortune
      Jun 20, 2020 at 7:12 pm

      The trade idea is good – but timing is important – things will change after Independence Day and worse in August

    • Mike
      Jun 21, 2020 at 8:23 am

      Jpow is gonna wreck you guys

    • gordon n.
      Jun 21, 2020 at 9:48 am

      Did you forget that it’s near end of quarter markup by the Bankster Boyz?

    • RDE
      Jun 25, 2020 at 4:12 pm

      I agree, short selling stocks is a fool’s game even when the stock is as lame as a Hertz. Now selling options in a market where margin calls are running loose like lame chickens is a whole different situation.

  2. Jun 19, 2020 at 6:50 pm

    Good move, Wolf.

    In 1971, after “drug riots” in Seattle,
    it was “lights out”; the city nearly shutdown.

    Our “Woodstock”, 1969, at Alki Beach,
    was a drug riot.

    When kids have no future, they drug riot.

    If you check the history of “drug riots”,
    and compare them to the stock market,
    you’ll see that it’s a leading indicator.

    • MarMar
      Jun 19, 2020 at 8:10 pm

      There’s no indication that protests and riots of late are “drug riots”, though.

      • Jessy James
        Jun 19, 2020 at 8:49 pm

        Uhh Ya. That’s because drugs are legal in half the states…

        I went all in on $290 puts. Hell, there wasn’t even any interest. It’s like a cheap suit you buy for your mother-in-laws funeral–you’ll never wear it again.

        • Jdog
          Jun 20, 2020 at 1:22 am

          I don’t know about the “drug riot” thing, but I do remember the late 60’s and early 70’s. The overall sense was one of societal upheaval and I have to admit it was similar to what is happening today. It divided the country and created an atmosphere of hate between the opposing groups. It was not a good environment for business, and stock’s went through a multi year bear market. I think a lot of the enthusiasm we are seeing is naive, and investors are indulging in the kind of optimism I have not seen since the dotcoms, and we all know how that ended…

        • Lisa_Hooker
          Jun 20, 2020 at 10:41 am

          @Jdog – the 60’s and early 70’s was also when the government was forcing young men to put their lives on hold and go to the other side of the world and risk dying. A bit more of an incentive to protest than we have now. I do agree that with current circumstances we will see some sorts of protest until conditions improve for the common folk.

      • Petunia
        Jun 20, 2020 at 9:29 am

        They weren’t drug riots, they were riots because “urban renewal” (the projects) displaced thousands of people living in rent controlled apts.

        In those days the projects were middle income housing, you needed to be employed in a good job to rent. Most of the initial residents were city and state employees, post office, and hospital workers. Eventually the cities had to rent to welfare and low income residents and the middle class residents moved to the suburbs, leaving the projects we know today.

        • Lisa_Hooker
          Jun 20, 2020 at 10:48 am

          @Petunia – that was the time period when the US government sent 2,700,000 people to Vietnam. A lot of them were poor. A lot of the young felt they weren’t represented in government. A lot didn’t want to go.

    • intosh
      Jun 20, 2020 at 10:05 pm

      Good move indeed. The risk/reward ratio makes the move almost a no-brainer.

  3. Lisa J Murphy
    Jun 19, 2020 at 6:51 pm

    I really hope you both make a ton of money, but wow, that’s risky. We know the Fed has no standards and Powell wants desperately to stay in Trump’s good graces. So not sure if this will pay off for you. I’d wait till after the election to short.

    • MCH
      Jun 20, 2020 at 12:35 am

      If I had to guess, the real reason here is to tank the stock market in addition to the economy right around October. Then let’s the fireworks happen, because that’s going to put paid to the current resident at 1600 Pennsylvania Ave. You notice all of a sudden, there is talk of a second wave on C19. In reality, this is just prep work for the fireworks that is going to happen in the fall, when the real second wave will start. It’s prepping the battle field if you will.

      Well, for all the political games that is going to go on, none of it will matter, certainly not the resident in that particular house. The economy is going down the toilet, and no amount of JP is going to save it.

      • Happy1
        Jun 20, 2020 at 8:16 am

        The idea that a second wave will be larger than the first is a fallacy. The first time around, we had no idea that tens of thousands in NYC were infected, no ability to test on a large scale, no one wearing masks, and people packing bars, subways, and business travelers flying all over the world. People are starting to get back to normal, but none of this crowding stuff will be at even half the level it was before, so please hold off on the fear mongering, we will never see a nationwide daily peak larger than we saw in April, and there is zero chance of ICU overfilling, which is the real danger with this pandemic.

        Are people going to continue to die? Yes, and 80% of them will be 70+ and half nursing home residents. That’s tragic but it’s not the apocalypse.

        • Dave
          Jun 20, 2020 at 9:21 am

          I would suggest that if schools open back up this fall social distancing and masks won’t matter much.

        • Lisa_Hooker
          Jun 20, 2020 at 10:57 am

          Happy1 – in the beginning of the first wave there were very, very few infected, mainly in cities with extensive air travel. Now the virus is establishing itself almost everywhere. As we relax controls the second wave can be much bigger. E.G go to a bar without a mask and rub shoulders with strangers for a few hours.

        • MCH
          Jun 20, 2020 at 1:21 pm

          The real question is how deadly the virus to young people. So far, it doesn’t seem too bad. We’ll see.

          No, it’s not apocalypse, let’s be real, even if 100 million people died from this, it wouldn’t even be 1.5% of the world population.

          Spanish fever knocked off about 2.5% of the world population. So, it would take a seriously bad turn to make this thing approaching anything like the Spanish flu.

          The world didn’t end.

          But right now, the economic effect is magnified because of the velocity of news, real or fake. So, in the fall, there could be another 10K death or 100K death, and it’ll be the end of the world if you listen to the news. Never mind that proportionately the hit will be quite small compared to the Spanish flu.

        • Jun 20, 2020 at 3:12 pm

          NCH and Happy1,

          You guys talk about lives as if they were pieces of lumber that you can just dispose of once they’re damaged, and no big deal if it costs a little extra. If you don’t value a human life, including the lives of other humans, not just your own, what do you value? This whole discussion is nuts.

        • A
          Jun 20, 2020 at 5:41 pm

          Do you have any background in epidemiology or public health?

          It seems like you don’t because your conjectures stand in stark contrast to the facts, models, and critical analysis provided by a basic epidemiological framework.

          I genuinely want to know your honest answer, though.

        • Thomas Roberts
          Jun 20, 2020 at 6:49 pm

          Wolf Richter,

          This is America. The baby boomers and the silent generation have grown too accustomed to their lifestyle and think that as long as they vote to keep the status quo, at the expense of the younger generations, everything will be fine for them. America will hold together enough to keep them satisfied for their lifespan. A few lives here there, no big deal. The younger generations have picked up on this mentality, and will put their own spin on it. This mentality exists to a varying extent across the world.

          The CCP19 saga is just another struggle in the intergenerational fight. The baby boomers and the silent generation are responsible for China growing out of control, the tolerance for corruption that allowed the WHO to act as it did, and Americas (and the rest of the West’s) pathetic response to the entire situation.

        • MCH
          Jun 20, 2020 at 7:05 pm

          Wolf,

          One human life matters as much as the next. The point here is just that statistically we’re much better off than when the Spanish flu hit at this point. Yet the economy has pretty much tanked as if it was the end, a good part of that has been induced.

          The contextual point is that if it did manage to get to that level of the flue, what would be the effect on the rest of the world at that point. One would shudder to think.

        • Rcohn
          Jun 20, 2020 at 10:07 pm

          I suggest that you read the history of the 1918 flu. The second wave was much more virulent than the first.

        • Erich Riesenberg
          Jun 21, 2020 at 7:46 am

          The fallacy is that the first wave ended that never happened it is spreading thank goodness Trump’s rally was vacant.

        • Michael Bohinc
          Jun 21, 2020 at 8:38 am

          Get your facts rights.
          50% dead are nursing home residents Age 70 Plus.
          20% in hospital are UNDER 40.
          The doctor who discovered COVID in China was 31 and he got it and died in a ventilator tent.
          And even if you survive, because under 60, do you want to go to the hospital for a week? Or spread it to your Mother who dies from it? Not too much of a guilt trip in that, huh?

          COVID is 1000X more contagious than other corona-virus. including The Flu, Ebola, SARS, etc, because it has 3 different receptors to invade the human cell, not just one ACE receptor.
          If you want to scare yourself, read Thailand Medical News.com All the first research reports out of PhD China, confirmed by PhD Europe, and now PhD US weighing in as well. Ugly.

          Come on guys. Wolf is 100% right. I agree short entire MKT. It’s just timing as to when.

          The US and World economy is in for a tremendous shock for the rest of 2020 and deep into 2021…even if a ‘great vaccine’ is actually discovered that works well…and how long to make 8 billion doses for world distribution? Huh? Years. Just to vaccinate US EU Asia to keep the world going will take months, after the months to MFG. Vaccines are MFG in China, so who get it first? Not the USA.

        • MissingGeorgeCarlin
          Jun 21, 2020 at 9:47 pm

          What are your epidemiology credentials?

          In the 1918-19 Spanish Flu pandemic, October was the deadliest month.

          Noticed cases skyrocketing in FL, Arizona, Texas, etc.?
          Noticed all the buffoons who refuse to take the basic precautions?

          You are vastly understating a situation not the experts or you understand.

          We are in uncharted waters with a sociopathic “leader” who disbanded the Cabinet-level Pandemic Response team, ignored the Pandemic Playbook left for him by the previous administration and who ignorantly bragged yesterday he asked his people to NOT test.

          The lack of testing means the real #s are unknown and under-reported. “Zero chance”….please, please don’t pretend you know how this ends.

        • Jun 22, 2020 at 1:33 pm

          Wait ’till all the kids go back to elementary school in September and the virtually everyone has Covid-19 thanks to these kids. If Brampton is any indication in Canada everyone will end up with Covid-19 in America.

    • Hgfj
      Jun 20, 2020 at 9:33 pm

      Question is: how much money you put on the table?
      Are willing to bet the farm ?
      At the end of the day you gonna be right, but there are two more months of the this craziness to come.
      Would you stock up on your shorts ?

  4. JZ
    Jun 19, 2020 at 6:52 pm

    I am on Russell 2000 short. I think they will do the 1T/1.5T/2T infrastructure spending soon. Yes, Ctrl-P GDP. If you think recession can happen? GDP dip -7%? WE CAN PRINT 2T/20T=10% GDP! Who gets those .gov contracts and revenue? I think it is those S&P/Dow companies. I am more comfortable with Russell. But I am with you Wolf. Together, we will be ridiculed. Stocks ONLY go UP on a rocket!

    • Jun 20, 2020 at 9:19 am

      Nut case Powell is pulling up on the Printed Money because he knows that the Dollar is on shaky ground even more so than before the Bat Flu struck. U.S. the largest debtor nation in the history of the universe, so too many Dollars makes Yen, Euros, and Yuan look better all the time. The U.S. will default on its debt in some fashion, and loss of reserve status will accompany a collapse of the Dollar accompanied by hyperinflation. Sound far fetched?? No country has ever printed its way to prosperity.

      The second quarter earnings, or more correctly, the lack of earnings, will put author solidly in the pink. Stay safe, stay short, and most of all, stay patient. Every dog has his or her day.

      • Old-School
        Jun 20, 2020 at 12:21 pm

        One thing to remember is whenever the next big recession comes both the P and the E are going to get marked down. It is not unreasonable that both could get chopped in half which would give a sub 800 SP500 bottom. Think it’s one reason the Fed is doing everything to keep it all going

    • Nizzle
      Jun 20, 2020 at 9:28 am

      TIL: “Ctrl-P GDP” 😂

  5. VintageVNvet
    Jun 19, 2020 at 6:53 pm

    A bit too early IMHO, but, as was the clear instruction from JPM, not the recent JP, ”buy on the way down knowing you can hold through the bottom” is still, as far as I can tell the best buying advice for any market. With shorts of course you have to be able and have the fortitude to hold not only on the way down, but also on the bounces up on the way…
    Going to be a while due to all the very extensive malarky(s) of the corrupt crony markets, but, again IMHO, we won’t be done with this crash until dow about 12K, the SNP about 1800, and I almost think the new one similar.
    Good luck WR, and may the Great Spirits bless us all this weekend and always going forward in good faith

    • Henry Ford
      Jun 19, 2020 at 7:18 pm

      May be a little early, yes, but if so, very little.

    • Jun 20, 2020 at 9:24 am

      I think the SP 500 goes all the way back to the 2009 low of 666, the mark of the Devil since the Devil is in the details of NO EARNINGS FOR 25% OF AMERICAN COMPANIES. We are now in the Greatest Depression of all time that likely will be made worse by a Second Bat Flu attack in the Fall. Once the lemmings get hit over the head with reality, its every person for themselves trying to get out of a shrinking exit door.

  6. Cobalt Progrmmer
    Jun 19, 2020 at 6:55 pm

    Last time you told us about the shorts, stocks indeed fell down. The real reason could be corono, end of bull market, panic, lockdown or something else. Now, you are shorting again. The reasons i believe market is going down again this time
    1. second wave or news/rumor of a possible second wave not only in the US, even in Russia, China, India and Latin America
    2. “peaceful” protests (cough..cough…)
    3. end of the bull markets and a correction is needed to clean up the markets
    4. Record unemployment. no sigh of a ‘v’ shaped recovery. Just \________/ shaped recovery.
    5. Closed stores, self-emptied stores are not opening soon
    6. Even the shops/malls/restaurants who got a green-light for 50% opening are not opening because they might not be profitable
    7. The foot traffic, vehicle traffic suggest a smaller than anticipated recovery.
    8. Reality of the recession
    9. Shoeshine boys in the streets are warning about the Robinhood traders (Kids in mom’s basement gambling on stimulus money).
    10. Jupiter is doing its retrogression for one year.
    One thing I notice on the streets is “Hope and confidence” is low/absent. People lost their “trust” in government, companies (your HTZ example), media and future in general. Even the FEDs attempts to give hope by economic means failed. I expect the bad times between approximately Jul 4 2020 to Jul 4 2021 (Jupiter Jupiter…)

    • sunny129
      Jun 19, 2020 at 9:00 pm

      Mkts can remain irrational longer and more than one, can remain solvent!

      Fed can produce digital $ out of thin air – unlimited! He said it without batting an eye – scary!!
      Watch Mr. Powell ‘s interview 50 minutes – CBS, recently.

      • Jun 20, 2020 at 9:32 am

        The Fed is not omnipotent!!! We are already at the point of maximum balance sheet expansion of the Fed due to a shaky Dollar and strained U.S. bond market. Treasuries do not go to the moon without a default risk premium on captured rates, and Uncle Sam does not get to borrow without limit as Powell tries to buy 65% of all new issuance to keep the Banana Republic of America afloat. Hertz may have better numbers than the U.S. of A. Already the sea of U.S. bonds is starting to stink up the global bond markets.

        • sunny129
          Jun 20, 2020 at 12:48 pm

          Watch for JAPANIFICATION of America!
          America’s DEBT to GDP is a lot better compared to Japan
          120-130% vs 300%

          Cannot afford to let the hot air leak from the 3rd largest ‘Everything’ bubble of the 21st century!

          No one is raising hell re increasing deficit or DEBT in the Congress. Debt can easily exceed 10 T or even 20T – ALL in the name of financial stability and allow mkts to function smoothly, at any cost. View the Powell’s interview at CBS – 60 minutes

          Same with other Countries! DEBT has become the panacea for all our private and public sectors world wide. This is the most SURREAL bull mkt of my life time! (been in the mkt since ’82)

        • Taking the Knee
          Jun 20, 2020 at 6:07 pm

          The Fed is omnipotent. The Fed stops the worthless currency printing, watch the market reverse.

    • Stephen
      Jun 19, 2020 at 9:13 pm

      I like the astrology angle. Btw, as you may know, this weekend is a hell of a time if you are an astrologer – New Moon, Summer Solstice, Solar Eclipse and other astrological arrangements. Tons of energy coming in. Best to be quiet and meditate. Yes, the next year could be challenging, but remember Charles Dickens in the novel ‘A Tale of Two Cities’: First sentence reads – ‘It was the best of times, it was the worst of times.’ Choose the side of the ‘reality divide’ you want to live on!

    • p coyle
      Jun 20, 2020 at 12:07 am

      i am looking for some way to short the future. wolf picked the SnP, i would prefer a broader based ETF, something that tracks western civilization as we (think) we know it.

  7. GSW
    Jun 19, 2020 at 7:01 pm

    Do you think the market has even gotten to price in a possible (possible) blue wave in November yet?

    I know early polls are suspect, and we all saw 2016, but if these are even in the right zip code, not only is Trump/Kudlow/Mnuchin and others gone, but the Senate could go blue too. Again, very early.

    You have to think that means undoing TCJA (a 12-20% hit on corporate earnings), among other changes. It seems like we’re so focused on case numbers and the Fed that we haven’t even gotten to that yet.

    (Well this also assumes that stocks have been trading based on earnings, which they haven’t lately anyway).

    • Tim Koch
      Jun 19, 2020 at 9:06 pm

      I think Trump loses in Nov and the stock market folds faster than Superman on laundry day signaling a new Great Depression. After the crash gold goes to $10,000 and silver to $200. It’s the Republicans that are in the stock market and have confidence in the economy. That goes away when Trump loses and they start buying gold by the truck loads.

      • cd
        Jun 19, 2020 at 11:06 pm

        definitely could be in play….their will have to be a disruption in the comex, china treasury move…..

        Wolf was right in the end, patience tied to risk is helpful to rest easier

      • plumasone
        Jun 20, 2020 at 12:20 am

        If Trump loses, what’s left of stocks will tank. The Repubs
        will try to blame Biden, Covid 19, lack of a reliable vaccine,
        protests, ad nauseum. Wolf, you might be a tad early, but
        I agree with your analysis.

      • Thomas Wolfe
        Jun 20, 2020 at 4:51 am

        I’m not that enthusiastic in my trading strategy. Of the many times where the present caught up with future, the moves were never as dramatic and desperate as I envisioned. I have a hefty position in a well known large cap gold mining ETF with a 30% gain here but will begin selling once Gold see’s between $2100 and $2200/oz.

        Why there? Well let’s start with Gold here in the doldrums around $1725/oz. Unless everyone’s blind to what the Fed’s doing, Gold has to eventually peak above $1850. Once that happens I tend to belive Longs will become entranced by the siren’s call of Gold’s all-time record high of $1961/oz. And like eating potato chips, once you’re that close to $2K/oz, might as well go there. But here’s where I believe the ‘Market Troll Effect’ go into play. You know that tendency for an asset to go much higher and then much lower with what looks like a deliberate intent to wipe out both Longs and Shorts. About 5% to 10% above $2000 Gold looks like the perfect place for market makers to create the most pain at peak euphoria. And face it, Gold above $2k will not only be technically overvalued but will be splashed all over MSM news and inadvertently make the Fed’s inflation model look like a clown show act. What are they going to do, raise rates? Not in this universe, but something ‘will’ need to be done about it. So the early morning LBMA-Comex monkey hammer will come out and futures traders will be all too happy to take their gains and go home until more bargains appear.

        So my strategy is to hold my mining ETF until Gold see’s $2100 to $2200/oz but sell all of it there. If Gold rises significantly higher after I’ve sold then it means Silver is even more voraciously overbought, so I take a small amount of my profits and short it with leverage. But what happens if I’m wrong and Gold see’s $2700 to $3000/oz? Well if you’ve traded miners as long as I have, you know that if Gold see’s $3000/oz and falls to $2500 then those miners will be at the same price they started from when Gold was $2000K/oz. So in that case I ease back in at the same price I got out at, but only with my original principle.

        If my strategy works and I get out in time, then I wait for Gold to dip to $1850 (with miners having panic sold and down 30% to 40% from their $2100/oz highs) and use both principle and profit to start easing back in Martingale style {doubling my position for every $100/oz Gold falls} all the way down to $1550 if it gets there. And that is where my real Gold trade begins…with the $2000/oz barrier having been thoroughly trolled and the debris cleared away for institutional hedging to come in for what looks like a long haul towards unprecedented Dollar inflation or a hot war with China.

        But what if Gold instead falls back to say $1550 or $1450 from here in another sell every thing to round up Dollars panic? Then in the words of Steve Martin in LA Story, “Wonderful, Wonderful, Wonderful, Wonderful” I get a second chance at loading up on Gold mining ETFs ahead of what will be the biggest inflationary event in the USD since August 15, 1971. BTW if you have seen Steve Martin’s LA Story check it out, it holds up.

        • Petunia
          Jun 20, 2020 at 9:48 am

          But I thought gold was a store of value, how can it ever go down like any other commodity?

        • GolferDave
          Jun 20, 2020 at 10:38 am

          Petunia: Gold is not like other commodities like oil, wheat, pork bellies etc. It is held by central banks as capital and is classified as a Tier one asset. It is traded on the FX desk of major banks and is held by the IMF as reserves. It does not go down in its own terms and cannot be printed by governments to fund deficits… thats why the USD price of gold has increased 50 fold since 1972… reflecting the devaluation of the alleged money of the realm.

        • Lisa_Hooker
          Jun 20, 2020 at 11:39 am

          But what if gold goes to a hundred million bazillion dollars as expected? What then?

        • bungee
          Jun 20, 2020 at 2:16 pm

          Petunia, Lisa_Hooker,
          remember that Thomas Wolfe is not buying gold. he is buying ETFs. miners no less. he is buying paper. the very thing gold hedges against.

          “…ahead of what will be the biggest inflationary event in the USD since August 15, 1971”

          that right there is the problem. ’71 was the break of the then paper-market for gold (dollars defined as a weight of gold). the paper became worth much less relative to the gold it once represented. it happened overnight and it gapped. same thing playing out here. you can’t hedge against paper with paper. true gold advocates buy in the expectation of paper and physical separating. thank you

        • Voltamom
          Jun 20, 2020 at 4:14 pm

          “Thomas Wolfe” is why I love reading these comments.

      • VAPatriot
        Jun 20, 2020 at 4:44 pm

        Sorry Tim, but Trump will be easily re-elected. Historic landslide in the making.

        • David Primrose
          Jun 21, 2020 at 8:38 am

          It doesn’t matter which side of the coin is up in November we are hooped. Don’t care much for Trump though…

        • MissingGeorgeCarlin
          Jun 22, 2020 at 1:30 am

          Thanks for the laughs! But seriously, who would have thought a mentally unbalanced charlatan would make such a traitorous, crappy “leader”?! Such a surprise….I’m just shocked….wow….

    • cd
      Jun 19, 2020 at 11:02 pm

      I agree….wall street and bankers got what they wanted and this is reward….August should be telling….Snp might get to 1800 if democrats win….load up on lead…..winters coming

    • MarMar
      Jun 20, 2020 at 1:58 am

      The premiums for November puts are quite a bit expensive than those for October puts.

    • Happy1
      Jun 20, 2020 at 8:19 am

      Sell in May and walk away has never looked more prescient to me.

    • Petunia
      Jun 20, 2020 at 9:42 am

      Hahahahaha…..Florida had 32 red counties in 2016, now they have 42 and climbing.

  8. BuySome
    Jun 19, 2020 at 7:05 pm

    Was is just the Fed stats, or was their something in particular that hit you in the head this morning?

    • Ed
      Jun 19, 2020 at 7:22 pm

      One other good reason, I think, is that the consensus about Covid-19 is looking worse. It’s looking like (1) the vaccine won’t show up until next year and (2) the economy will be suffering all through next year, potentially.

      I notice stocks like Six Flags and Cedar Point are looking like they may have started back down. Those stocks and the cruise stocks had been going back up purely on virus optimism.

      • c_heale
        Jun 19, 2020 at 8:18 pm

        There has never been any realistic option of a vaccine until late next year, unless they release one which isn’t properly tested (which is not impossible). I think there is a good chance there won’t be an effective vaccine, or one which only has short term effectiveness.

        • 728huey
          Jun 20, 2020 at 12:34 pm

          I believe that is what Trump is planning for his October surprise. There will be a much ballyhooed announcement of a vaccine, which either won’t exist or be so ineffective that it will not protect against the virus, but he couldn’t care less if his supporters dropped dead as long as they don’t do it before election day.

    • Marz
      Jun 19, 2020 at 9:28 pm

      I’m with you but I’m using puts instead of shorting so I can limit my losses also get more bang for my buck. Mostly 3rd qtr puts.

      • FluffyGato
        Jun 20, 2020 at 5:59 pm

        Wise.

        Puts = risk-defined.
        Shorts = theoretically infinite losses.

  9. christiangustafson
    Jun 19, 2020 at 7:07 pm

    Cover @ 2350 SPX next Friday. See you then.

  10. Tony
    Jun 19, 2020 at 7:11 pm

    Yes, I shorted last week. Im with ya. A lot of Ca Options expired today, and there’s a lot of Puts on the books.

    • Jun 19, 2020 at 8:11 pm

      I looked at the premiums of SPY put options… they’re really fat.

      • MonkeyBusiness
        Jun 19, 2020 at 8:38 pm

        It’s not strange. VIX is still up for the year at around 35. If I am not mistaken premiums are related to the level of the VIX.

      • sunny129
        Jun 19, 2020 at 8:56 pm

        I prefer ‘ out of the money’ positions. Very rarely in the money.
        Enough # in ‘interest and open positions’ for liquidity.
        Begin with less than $500. Double it if I am convinced in my analysis.
        Sell at 25%+ profit and sell at 50%+ LOSS.
        Discipline is the one of the key factors in option trading.

      • 911Truther
        Jun 20, 2020 at 7:14 am

        Wolf, I remember when you covered your shorts in March and I posted you were wrong, the devastation was just getting started. I lost a lot of my profits.

        The put options market never really disconnected from reality the way the stock prices did. AAL went from $9 to $19 and a bet on AAL being $0 by Jan-22 stayed pretty constant. With AAL at $16/share, you have to pay $4 for a $10 put… risking 4 to win 6. Winning dollars by the time they’re zeroed out may not be worth much. I’m betting with Peter Schiff, even moved to Puerto Rico for the tax haven and I’m buying call options on gold miners now.

        • sunny129
          Jun 20, 2020 at 12:57 pm

          You cannot buy puts without some protection with (far out) outside money calls!

          I learned my lesson long time ago. Same with inverse Etfs or Bear MFunds.
          Been in the mkt since ’82. Option trading since 2003.

          This is the most surreal bull mkt of my life time. Price discovery is actively suppressed by Fed’s actions since ’09.

  11. 2banana
    Jun 19, 2020 at 7:11 pm

    You are braver than me to short this market.

    Fundamentals don’t matter anymore…until they do.

    I am selling a bunch of winners and will hide in cash.

  12. RickV
    Jun 19, 2020 at 7:14 pm

    Wolf, You are very brave, fighting the Fed when they have endless fire power and will use it upon the slightest market dip. Good Luck!

    • Jun 19, 2020 at 7:56 pm

      But that’s the point: I’m NOT fighting the Fed. I’m with the Fed. The Fed has stopped propping up asset prices.

      • Gonzales
        Jun 19, 2020 at 8:43 pm

        But how do you know they won’t start again as soon as the market goes south?

        I think you are doing the right thing but there is so much craziness…

        • Jun 19, 2020 at 10:25 pm

          They can, and they did last time I shorted, and I clicked the “cover” button in time.

      • Memento mori
        Jun 19, 2020 at 8:47 pm

        You got lucky on your first short Wolf because of the Covid, don’t forget that otherwise the Dow will be above 30k. You are misguided on the thinking the Fed is giving up on supporting asset prices. Just like you when you were forecasting the 10 year yield above 4%.
        Fed is operating in illegal territory and will not go down without a fight.
        But I salute your courage to short this market and go public about it. Respect.

        • 911Truther
          Jun 20, 2020 at 7:19 am

          Wolf’s bet against the market earlier this year was solid. There were plenty of problems before the plandemic came stateside. Just betting on the supply chain disruptions out of China was solid reasoning. I went with him and made a TON of money but gave back a lot because I didn’t cover when he did.

          Remember, there was no worldwide economic shutdown in ‘08 but that market tanked. Bubbles pop.

        • Dave
          Jun 21, 2020 at 9:51 pm

          Have you ever considered that the people the Fed wanted to bail out have been made whole. Perhaps those same people are going short now? A lot of people have been complacent because they believe the Fed will always bail them out. It’s worked for a decade. What if the Fed now leaves the market to its own devices?

          We will see. I’m not shorting now. I am waiting for a signal. I don’t have to be early. I will let the charts tell me what to do.

      • DawnsEarlyLight
        Jun 19, 2020 at 8:53 pm


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        • DawnsEarlyLight
          Jun 19, 2020 at 8:54 pm

          Guess too big for the window. It’s your Mug saying

          “Wolf Goes to HECK”!

        • Jun 19, 2020 at 10:56 pm

          WOLF GOES TO HECK?
          🤣🤣🤣🤣

          Secret was to take off my reading glasses and step back six feet, and it’s clear as daylight.

      • sunny129
        Jun 19, 2020 at 9:12 pm

        May be for now but if the mkts tanks 5% or more, Fed to the rescue immediately! That has been the pattern so far. Can It afford that before Nov? I think NOT!

        • Jun 19, 2020 at 10:59 pm

          20% I think is the line before this Fed gets nervous (2018 and 2020).

        • Cas127
          Jun 19, 2020 at 11:20 pm

          Wolf,

          Why not short the QQQ or other specialized index *most* over weight in the basic handful of FANGs and adjacent idiocies that are the true keystones holding this sucker (mkt) up.

          A Q2 GDP hit of 20% to 25% will take everything down, so the SPY will take a mjr hit…but that’s the sort of hit that will get the Fed printing again.

          But the FANGs have the most to fall and are so narrowly focused that the Fed will be ok with them taking much more massive hits before printing.

        • Jun 19, 2020 at 11:55 pm

          The QQQ is too focused on the big tech stocks, and they have enormous staying power. I shorted it last time, and it under-performed my SPY short.

      • MarcD
        Jun 20, 2020 at 12:19 am

        But wouldn’t you expect the Fed to restart propping up markets when they start to tumble?

        • Jun 20, 2020 at 8:27 am

          MarcD,

          Yes, when it gets bad enough, when the credit market starts freezing up again. Just like last time. That will be the time to cover the short, as it was last time (I got out too early though). However, I don’t expect that kind of crash.

        • sunny129
          Jun 20, 2020 at 12:59 pm

          They are NOT letting even 5 or 10% correction since March 23rd!
          Mr. Powell can throw many Trillions and no will complain or object!

          Fed is the mkt, now!

      • MCH
        Jun 20, 2020 at 12:39 am

        Tongue in cheek time again….

        Which is why this particular Wolf-o-lution has been approved. In fact, you should be hearing from Marketwatch, Business Insider, and CNBC shortly.

        Congratulations, now you will be famous, because you are getting on with the right narrative. A little too early perhaps, but that’s ok.

      • Steppenwolf
        Jun 20, 2020 at 1:38 am

        Hallelujah!

        Until our dear leader tweets again and Jerome heeds.

        So for this to work Trump needs to have palpably lost authority. In other words, never mind the economic absurdity, behold a position laden with political risk!

        • Dave
          Jun 20, 2020 at 9:34 am

          Don’t underestimate these democrats. The left is in large part, financially illiterate, and from their perspective, if the bailouts to big business are intended to flow “keep people on payroll” or “prevent job losses” then they will not only allow, but encourage the Newly merged Fed/treasury to ramp up Stimulus.

          Look at the amount of money and authority these 2020 Dems gave to Trump/Mnuchin/Powell only 6 months before the election. I’m not sayin to ply politics while Americans are suffering, but these democrats agreed to give Mnuchin a lot of firepower to blast into the markets on the eve of the election.

          I expect Trump to use the $500B plus 10x leverage to be used by a Mnuchin/Powell to target industries with huge union and/or swing states votes. Trump will take the money Democrat’s gave to him and force people in swing states to vote against their financial interests. Dems
          Will be in a tough spot railing against big business, given the distressed industries in swing states looking for a lifeline from the two Candidates.

        • Dave
          Jun 20, 2020 at 9:38 am

          Think about how Democrats restructured PPP to allow recipients more time to put workers back on payroll in order to become eligible to get free money.

          The result? A flood of fake hiring in October and November to beat the new deadline(s). Dems don’t think things lie this through, and the result could be losing this election.

          Trump lays to win and Dems need to remember this and beat him at his own game.

      • RickV
        Jun 20, 2020 at 11:53 am

        Yes, they have throttled back in propping up prices, but only for a couple of days. We will see how long it lasts. I would recommend a short term trade. They also tried to throttle back QE in 2019 and how long did that go on? I’m afraid the Fed is in it for the long haul until hyper inflation stops their game, when they will repeat history and destroy the printing presses. How long that will take I do not know.

      • Samurai
        Jun 20, 2020 at 7:21 pm

        Hi Wolf –
        I followed you in the first time, and made a fair amount of money. Unfortunately I then lost most of it on the way back up. I should have listened to you both ways!
        I’m hopping in again :)

      • Jun 21, 2020 at 12:36 pm

        It’s not war all the time. Fed has done what was needed and more. The money in the system is sufficient. You are shorting corporate credit, and Fed efforts are 100% in that direction. The virus couldn’t knock out CC, it is bulletproof. Loss of earnings is offset by new loss cost borrowing. Devaluing the dollar feeds asset inflation. Virus restructures the economy, and excess monetary stimulus flows into a smaller number of stocks. To be short something you need to be long something else.

      • Paul
        Jun 22, 2020 at 9:51 am

        Wolf- I like the trade given correlation between Quad Witching and major market turns, but I think you may be a bit early. I’d say watch out around the week of 9/18, possibly as late as December. All of the federal programs that have bailed out businesses and consumers are ending this summer. That means that all of the loans made to main street will begin to default. All these loans are rolled into CDOs and then trillions in side bets are made on them. Major financial firms (looking at you Deutsche bank) will start failing in Sept. when they need to pay these bets and voila, 2008 all over again. That is why Powell is begging Congress for more stimulus, he sees it coming. Only wild card is that Trump will announce a vaccine around Sept/Oct no matter what the actual effectiveness is so that could make markets rocket higher right before election.

  13. Art
    Jun 19, 2020 at 7:16 pm

    Wolf

    Instead of shorting the “SPDR S&P 500 ETF”, why didn’t you just buy the SPXU? The SPXU is a EFT that does the shorting of the S&P500. There is are no margin calls to you when the SPXU purchase goes against you if the market goes up?

    • Coldeyes
      Jun 19, 2020 at 8:12 pm

      Or the Bear Russell Small Cap 3X

    • sunny129
      Jun 19, 2020 at 8:42 pm

      It is 3x leveraged inverse ETS against S&P 500. deadly. for very short time -24-48 hrs only. after that there is decay.
      I use mostly SH 1x and some times SDS 2x. I prefer PUT options with hedges.

      Spxu and spxs are good in a ‘decidedly’ secular bear mkt but not in this surreal mkt managed directly bt Fed. ( been in the mkt since ’82)

      • Thomas Wolfe
        Jun 20, 2020 at 5:23 am

        When you measure beta decay on 3X ETN’s (unless there’s a liquidation event), it’s around 1% to 2% month depending on volatility of the underlying asset. There’s no shortage of unsubstantiated ghost stories surrounding overnite decay used to scare folks out of their positions.

        Let’s take JDST for example during an 8 month period
        Went from $42 share (Gold $1330)
        To $9 (Gold $1650)
        Back up to $42 (Gold $1450)
        And there were no reverse splits during that period.

        But of course there’s the liquidation horror stories like DWT and XIV. But those were not due to run of the mill beta decay but instead major dislocations due to panic selling of the underlying asset.

        Not saying these financial WMD’s are safe but they can be held for weeks to even months at a time if you’re in that top 97% of ninja level traders with an ability to suppress all emotion and monitor them minute by minute.

        • sunny129
          Jun 20, 2020 at 1:10 pm

          Been in the mkt since ’82. Retired 20 yrs ago. Investing is my hobby since late 70s.

          Manage more than a couple of millions ( including my family)
          During GFC, I was one of the very few who made profits in thousands+ I used a lot of 3x inverse Ets. Even calls on them!
          But that was when true ‘American Free Mkt capitalism existed. NOT any more.

          I stayed away from 3x over a year or 2 ago. All inverse ETFs have to be matched with long ETFs as a hedge, to reduce the loss, when Fed’s put became permanent! Same with options.

          50% cash. Rest with diversified portfolio ( mostly Div paying ETFs of all sorts, world wide) with uncorrelated assets. With hedges I sleep better and also enjoy my retirement. Experience is a good teacher but tuition fee is high!

          Again- TO EACH HIS?HER OWN!
          Good Luck

  14. Henry Ford
    Jun 19, 2020 at 7:16 pm

    You are not alone in the conclusion reached. I am there as well.

    The author of the Great Recession Blog points out that the Fed had done a fine job enriching his pals. He just may be done…

    My comment on that site:

    “For those willing to see, the Fed has now told us the markets will now be heading down, since all the dimwits they need are already in (Hertz, anyone?). They always tell us in advance. From Shawshank, “Get busy living or get busy dying” now means “get out / get short or get killed. Powell will do just enough to keep us thinking we are safe, but not enough to keep things afloat. But that’s OK, their friends are already flush. Look out below as we bounce headlong down the staircase.”

  15. RD Blakeslee
    Jun 19, 2020 at 7:17 pm

    Wolf compiles the record of what is actually happening in the financial world. He’s reality personified, knows the market is irrational, but he places a bet which depends on a rational market for its payoff.

    Doesn’t make sense to me.

    • Tony in Aus
      Jun 19, 2020 at 7:32 pm

      It makes sense to me. Perceptions move the market, so the moment everyday traders realise the money printer isn’t brrrrring it will turn (especially among the professionals who were chasing retail investors while knowing the market is overvalued).

      Gravity will take over, and shorting ahead of July earnings and the $600 pw Fed stimulus ending is as good a time as any.

    • sunny129
      Jun 19, 2020 at 8:48 pm

      This is a mkt fluttering between FEAR vs FOMO. Complicated with Fed interference constantly. Now the Covid 19 , re-spiking!

      Perception with positive(hopium) narrative from the Financial industry/Wall St vs the REALITY on the ground, kept at bay with insane credit infusion to keep the asset bubble up and floating as long as they can by Fed/Cbers!

      With continuing volatility, this could be rolling coaster mkt with trading importunately only and NOT for the long term investing!

  16. Short_Seller_Blake
    Jun 19, 2020 at 7:18 pm

    I shorted today as well. Shorted RCL $57 again today, KMX last night at $98, and bought some SPY puts that are now up 40%!! There is a supposed 1.3-1.5 TRILLION in pension funds dumping over the next two markets. If that’s true that will certainly exacerbate the downside. It would be nice if the FED stepped away from the markets for a couple weeks but i know they won’t… this market would probably crash 90% without FED intervention more than a week…… This whole thing has been fluffed up since march 09 and since then, stocks are so full of QE that they can never survive without it.

    • sunny129
      Jun 19, 2020 at 8:49 pm

      fyi

      FED is the mkt!

  17. MarketCycle Wealth Management
    Jun 19, 2020 at 7:20 pm

    Old Wall Street advice:. “Never position against the Primary Trend.”

    • Jun 19, 2020 at 8:14 pm

      This is the primary trend:

      • p coyle
        Jun 20, 2020 at 12:31 am

        you are a brave man thinking that trend will continue. i wish you well. and, hopefully, being long mining stocks will work out for me, too.

        • Jun 20, 2020 at 8:58 am

          The trend will not continue into the negative straight down. That’s not what I meant. What I describe as the trend is that the Fed has stopped QE. I expect its balance sheet to remain roughly flat, wobbling up and down on a weekly basis, as it did from Jan 1 through March 4.

    • Steppenwolf
      Jun 20, 2020 at 2:28 am

      Trend is in the eyes of the beholder.

    • sunny129
      Jun 20, 2020 at 1:16 pm

      ‘Primary trend’ ends when the FED allows the our good ole, genuine, American Free Mkt Capitalism to function. Until then FED is the mkt!
      They can keep throwing Trillions to protect the top 1-10%. All in the name of ‘financial stability’ and smooth functioning of the mkts’
      Who is going to object? Congress? MSM? WALL ST?

      We are on our way to ‘Japanification’ of America.
      Japan’s Debt to GDP is around 300% or more. USA is around 120-130%
      US $ will remain the global trading currency. And every one in the World wants US $ – the least dirty shirt out there!

  18. Paulo
    Jun 19, 2020 at 7:20 pm

    Good luck, W, I think these climbing cases of Covid, which is extraordinary in some states like Florida and Arizona, is in the process of creating a perfect storm of failure for You-know-who. Plus, North Korea and the collapse of the China trade deal. When this perks into the investor hopium, kaboom, imho.

    I will be astounded if you do not do well.

    We have our eye on a prospective rental which will be coming up in the next year or so. The RE market will be down by then imho, and if it isn’t financed any rent is positive cash flow and better than 0% in the bank. Plus, I can do all required maintenance and live in the area to head off any surprises. Now that pot is legal in Canada, the risk of a grow op is very small, and like I said, it is a neighbourhood property and I will know the tenant.

    Good luck!!!!

    • 2banana
      Jun 19, 2020 at 7:33 pm

      All depends where the RE is.

      Major cities are going to lose population from those escaping the virus and unrest. And will be dumping their housing.

      Outer burbs and small to middle towns will see an influx of these “refugees.”

      • Wendula
        Jun 20, 2020 at 10:41 am

        Ha! We finally sold our place in the inner Sunset and moved across the bridge to Marvelous Marin. We’ve been hanging out there and enjoying America As It Used To Be in the 1960s-1970s, every weekend for decades. For family minded, ecological and economic pragmatists, it’s the best place in the Bay Area–more like a citadel, with only two bridges and one freeway in, plus a couple sideroads. “Defensible space,” and in spite of the woo-woo hypocritical blather, it’s very conservative.

    • Happy1
      Jun 20, 2020 at 12:34 am

      The increase in cases in several states (FL, AZ, CA, etc) is interesting but it’s a fraction of what happened in NYC and not remotely a risk to the overall economy of those states. People are done with isolation, particularly young people. There will be a certain level of transmission for the foreseeable future and as long as we don’t run out of ICU beds, I’m not sure there is much to do about it.

      • Jdog
        Jun 20, 2020 at 1:41 am

        It is not ICU beds you need to worry about, it is the overall capacity of the hospitals. People are becoming much too complacent about this virus, especially in areas that have not been badly impacted. Where I live you only see about 10% of people wearing masks in public, and the infection numbers are starting to ramp up at a fairly alarming rate. If this thing really takes off, as second waves sometimes do, and it overwhelms the hospitals, then people will begin dying of all kinds of causes because they cannot get adequate care. When the hospital is overwhelmed and you have even a minor heart attack they will not be able to give proper care…

        • Happy1
          Jun 20, 2020 at 8:24 am

          This is not even a remote possibility on a national basis. The increase in cases in the states you cite is alarming, but is a fraction of what happened in NYC. And in my state, CO, which had a sizable problem, things are far better, as they are in most states that had a problem early. There is zero chance in the”late states” that hospitals will fill, this didn’t even happen completely in NYC, and hospitals are far more prepared now than they were then.

        • Tinky
          Jun 20, 2020 at 11:15 am

          “There is zero chance in the”late states” that hospitals will fill…”

          It would arguably be naïve to suggest that such a thing couldn’t happen in Florida, and for obvious reasons.

          From a 6/18 NBC News article, but note that additional capacity is reportedly being added:

          “Less than a quarter of hospital beds for intensive care patients are now available in Florida as the state grapples with a spike in coronavirus cases, data provided by the state revealed on Thursday.

          There were 1,371 adult ICU spots available out of 6,064 statewide, which is about 22.6 percent, the Agency for Health Care Administration showed in an update posted at 3:32 p.m. ET.

          That troublingly low figure includes data from Broward County, Florida’s second largest, which had just 20.9 percent of ICU beds ready at that time.

          Hillsborough County, the state’s fourth most populous county, had only 19.0 percent available.

          According to the same data, 26 hospitals throughout Florida had no available ICU capacity. Miami-Dade, the state’s most populous county, had three hospitals with no ICU beds available.”

  19. raxadian
    Jun 19, 2020 at 7:20 pm

    Well, the crash is gonna be historical.

    • 2banana
      Jun 19, 2020 at 7:24 pm

      We just had a pretty historical crash about two months ago.

      And then a pretty historical rally.

      • wkevinw
        Jun 22, 2020 at 11:25 am

        Correct- that was a real crash. The only “real crashes” I think of are ’29, ’82 and ’20. The rest were brutal bear markets. The last two were actually pretty textbook/orderly on their way down (2000, 2008).

        Every odd intervention (like QE, etc.) in markets “breaks something”. The last two I am thinking of were related to gold-’34 confiscation, and ’71 (France wanted a bunch of gold, and the US figured out it couldn’t survive that, so: fiat!).

        Something will break: inflation? (bonds and currency problems?) I don’t know.

  20. Tom
    Jun 19, 2020 at 7:23 pm

    I understand what you are doing, Wolf, and I am oh so close to following suit after being an orthodox market-matching index investor for decades. Sorry to ask a basic question, but once you get your money out of the S&P 500, where do you put it? If you hold it as cash in Treasuries or a money market, do you not worry about inflation while the Fed is printing money like there’s no tomorrow? I guess it’s better to lose a few percentage points to inflation than to lose half of your value to a massive market correction. Am I thinking clearly? Help!

    • Jun 19, 2020 at 7:52 pm

      Tom,

      “Am I thinking clearly?”

      Yes. Very.

      But everyone has their own strategy to deal with this environment. And there are many valid strategies.

      There are inflation protected Treasury securities out there, if that’s what you’re asking… for big investors, TIPS, and for small investors I Savings Bonds (they pay a variable yield that is adjusted to CPI). You can google them. You can buy them directly from treasurydirect.gov

      • mtnwoman
        Jun 19, 2020 at 8:05 pm

        Thank you for this. (and thank you Tom for asking)

        I’m a near financial illiterate lurking here, trying to learn. Feel free to dumb-down your posts anytime :-)

        Good luck!

        • p coyle
          Jun 20, 2020 at 12:45 am

          a good way to learn is by doing. i know people who have spent more on lottery tickets in the time frame i have been speculating in the “markets.” much like going to vegas, don’t bet what you can’t afford to lose. having skin in the game focuses your attention to a degree, you just might get lucky.

          prudence is obviously being discouraged, so you might as well live on the wild side, as long as you remain, to a certain degree, prudent.

        • VintageVNvet
          Jun 20, 2020 at 11:42 am

          mtnwmn,
          I am pretty close to your stated level of financial economy knowledge and lack thereof, esp all these new fangled devices that appear to me so far just another mechanism that has been ”cooked up” to take the wealth from any of us Peedons that manage somehow to get any savings and realize we are actually losing money with it in the bank.
          What I am doing is looking up every term that comes us from Wolf and the very knowledgeable folks commenting on here that I don’t know or understand or remember from many years ago when my investing was guided by an uncle who worked five years out of college, then made a living in the stock market of the late 1940-1960 era.
          I got out of the SM in early 80s, when I realized I had never made any ”real money” except with what is now called insider trading for all but the congress and other federal employees who can apparently do it without concern of the laws they have made.
          Still thinking of tax free municipal bonds, but still waiting to learn if they are subject to being wiped out by the BKs that certainly seem to be on the horizon.
          And a big thanks to Wolf and others here for your very valued inputs.

      • sunny129
        Jun 19, 2020 at 8:36 pm

        Mr. Powell has already declared the ZRP to stay until 2022!

        For those with an eye to keep on Blackrock, the agent for the Govt for investing is HYT. Check it out. Yes, there is risk but Fed cannot afford, NOT support the credit mkt if it wants the EQUITY portion of the mkt ‘function smoothly’
        There are numerous div paying ETFs in various sectors. All will flutter with volatility. So nibble them slowly.

      • dr_doomz
        Jun 20, 2020 at 2:59 am

        “There are inflation protected Treasury securities out there”

        But TIPS are mark-to-market. In a hyperinflation scenario you might have to liquidate your TIPS bonds to pay the income taxes on gains.

    • Rand Passmore
      Jun 19, 2020 at 8:20 pm

      Gut instinct and logic say we are propping up a house of cards that maybe will fall sooner or later. Have several contingency plans….and one that can be implemented fast if worse comes to worse. Maybe we will be lucky and muddle through but maybe buy some adult diapers.

  21. leanfire_Queen
    Jun 19, 2020 at 7:25 pm

    I’m looking forward to an equity and real estate crashes. The more permanent the drop in consumption of the American household becomes, the better for the environment.

    • 2banana
      Jun 19, 2020 at 7:29 pm

      So mud huts and wood fire?

      • polecat
        Jun 19, 2020 at 7:53 pm

        Cob. It’s called cob construction. Get it right, dude!
        ‘;]

        • c_heale
          Jun 19, 2020 at 8:21 pm

          I grew up in a house made of stone and cob. If it’s done right it’s fine to live in.

      • leanfire_Queen
        Jun 19, 2020 at 7:55 pm

        I’m saving above 70% of income, worst possible outcome in my case is dropping savings rate to about 40%.

        Once you remove NIMBYs from your environment, living costs become surprisingly manageable.

  22. Tony
    Jun 19, 2020 at 7:26 pm

    I also shorted. I shorted last week though. Today is actually a record number of Options Call contracts expired. There’s also a record number of Put contracts on the books.

    • sunny129
      Jun 19, 2020 at 8:27 pm

      Shorting without hedges is dangerous in this surreal mkt, completely supported by Fed and Nothing else.

  23. Faymony
    Jun 19, 2020 at 7:28 pm

    Love your content. But asset prices are not going down until interest rates rise or the USD fails as WRC. You better hope the Fed, ECB, BOJ, PBOC, and BOE go into hibernation for “several months”. Too much money in the system and no where for it to go….

    • WES
      Jun 19, 2020 at 10:13 pm

      Fay:

      All dressed up and nowhere to go!

    • DeerInHeadlights
      Jun 20, 2020 at 2:33 am

      Yep, it’s called TINA. But who said the Fed will come in right away, at the first sign of trouble? That’s the gambit here…short and cover right before they come in…risky!

      • sunny129
        Jun 20, 2020 at 1:21 pm

        CRASH – will it be a sudden car wreck ( unlikely) or CANCER withering slowly in multiple waves?
        I bet on the later.
        Fed is the mkt. No more free mkt capitalism. just CRONY kind.
        No earnings necessary, just buy-back shares!

  24. Brian White
    Jun 19, 2020 at 7:31 pm

    I’ve been buying options against the S&P500 since early-May ala “The DAO of Capital” strategy. I’ve got a mix of puts against SPY and, lately, RSP — equal-weight seems likely to go down the most since the big boys of the market are actually reasonably well positioned — some for 2 months and some for EOY.

    And against TSLA. Love the company but shake my head in disbelief at it’s traders.

    I feel bad betting against the economy but I don’t feel bad betting against the “stocks only go up” crowd.

    • Jun 19, 2020 at 8:17 pm

      Brian White,

      You’re not “betting against the economy,” you’re betting against the nuttiness in the market.

      • sunny129
        Jun 19, 2020 at 9:16 pm

        Agree
        B/c the mkt is disconnected with the Economy on the ground, since Covid-19 started!

  25. Jun 19, 2020 at 7:32 pm

    Good luck Wolf!!!

    It definitely feels like wave 3 of 3 down is coming, regardless of whatever FED is or will be doing.

    And if you went in too early, we’ll cut you “stimulus checks” :-)

    [I’m running late with my donation this year – but once Paypal unblocks my account, will immediately send.]

  26. Wisoot
    Jun 19, 2020 at 7:34 pm

    Hot points : end of June – stay home. 3rd week in August. Not a gentle week. Will Be interesting Wolf.

    Hertz: ‘Please, sir, I want some more.’

    The master was a fat, healthy man; but he turned very pale. He gazed in stupified astonishment on the small rebel for some seconds, and then clung for support to the copper. The assistants were paralysed with wonder; the boys with fear.

    ‘What!’ said the master at length, in a faint voice.

  27. Gandalf
    Jun 19, 2020 at 7:37 pm

    Also, the COVID pandemic is accelerating again. This is still the FIRST WAVE, not the dreaded second wave, which never really was completely suppressed, but eager politicians re-opened too soon, with too few restrictions on mass congregations of people eager to get out and have fun and socialize again.

    I’m seeing waves of people coming in to get chest x-rays for all sorts of symptoms, and daily rising numbers of COVID like lung infiltrates (patchy fluffy rounded peripheral opacities). This time, it’s mostly people under 40 years old, with lots of 20 and 30 year olds. The oldsters and really sick people are doing the right thing and staying home and taking all precautions.

    Many of the chest x-rays are normal, but a few return two weeks later, and voila, COVID lung infiltrates on the next chest x-ray! Yep, we know that’s what happens. You get infected, get a few minor symptoms, get a clear chest x-ray, but your lungs don’t blow up with pneumonia right away, so you keep partying and vocalizing at the local bars and spreading all that finely aerosolized COVID virus to others, and so goes the pandemic.

    Expect the Tulsa rally to be the next super spreader COVID event. Expect Florida to be the next New York with overflowing COVID patients at the hospitals.

    Yah yah, the youngsters don’t get as sick and die at the same rate as the oldsters and preexisting conditions people who get COVID, but seriously folks, this virus is a really NASTY bug that can attack EVERY. ORGAN. IN. YOUR. BODY, because every cell in your body has the ACE2 receptors that the virus attaches to. The long term damage to young people who have recovered from COVID is yet to be determined, but yes, there will be long term permanent damage to many young people, and a certain percentage of people with chronic post COVID abnormalities. It’s early still in this pandemic, but the medical literature already shows this to be true.

    So Wolf, I think it’s a good bet that this insane market ain’t going to keep levitating for the rest of this year. Sooner or later Mr. Wile E. Coyote is going to discover that he’s run out of cliff and gravity will do the rest.

    • 2banana
      Jun 19, 2020 at 8:07 pm

      What if they call it a protest but don’t loot or burn anything?

      Should be OK then…

      “Expect the Tulsa rally to be the next super spreader COVID event.”

      • Anthony A.
        Jun 19, 2020 at 8:46 pm

        I think the Big Funeral we had in Houston a couple of weeks ago should be the “petri dish” around here. Oh wait, most of those folks in the group of 100,000 were not from Houston! Oh wait,I thought funerals were “off limits” during the lockdown.

        Oh wait, what the hell do I know anyway?

        • Gandalf
          Jun 19, 2020 at 9:26 pm

          The vast majority of the people who attended the George Floyd funeral were wearing masks, both outside and inside the church. You can Google the photos of the funeral and see for yourself. We now know that wearing masks is hugely important to limiting the spread of COVID. Mayor Turner of Houston has really helped set the standard in the city by wearing a mask at every one of his news conferences.

          The Tulsa rally is totally “mask optional”, and since that particular segment of Americans thinks COVID is just a Fake News Media Lib Conspiracy anyway, it will be interesting to see how many people do wear masks inside the convention hall. My prediction is that very few will, due to the peer pressure, since anybody who does wear a mask will be treated like a Lib Dem spy.

        • Happy1
          Jun 20, 2020 at 12:49 am

          @Gandalf

          We heard people calling small groups of right wing protesters “covidiots” but tens of thousands packed in the streets of NYC weeks after the largest pandemic in 100 years get no comment? Way more risk in the latter setting, not even close. And yes, the Tulsa thing of Trump’s is even stupider, but please be consistent, the big BLM crowds are also a major health risk.

        • Gandalf
          Jun 20, 2020 at 10:54 am

          Happy1,
          I didn’t even mention the BLM protests. You merely conflated my comment about the George Floyd funeral with the BLM protests. Funerals and protests are not the same thing.

          The George Floyd funeral was a controlled, dignified proceeding with the vast majority of people wearing masks. Lots of people were there, but it wasn’t a protest with everybody screaming and shouting, vocalizing (see my other comments regarding virus spread via vocalization).

          The only thing that makes any outdoor protest less likely to be a super spreader event is that it is … outdoors. The open air is more likely to disperse and dilute the viral load shed by vocalizing infected people. And if the sun is shining, that kills the virus fairly quickly.

          Recent studies have all shown that the biggest locations for COVID transmission are in enclosed spaces – multigenerational family homes, offices with closely spaced workstations, meat packing plants where the workers are working right next to each other, tightly packed restaurants and bars.

          Opening up beaches shouldn’t be the big worry. It’s the enclosed bars and restaurants next to the beaches that will be the big super spreaders.

      • Petunia
        Jun 20, 2020 at 10:21 am

        2b,

        Yes, I noticed that bit of news coverage as well. Almost like they already know it’s going to be the case.

      • MissingGeorgeCarlin
        Jun 22, 2020 at 1:50 am

        There was only 6K fools there and they showed zero intelligence re: Covid-19 as expected. Traitor red don the con even stated he wanted less testing! #familyvalues

    • leanfire_Queen
      Jun 19, 2020 at 8:18 pm

      > The long term damage to young people who have recovered from COVID is yet to be determined

      Exactly. As a parent who had worked from home for the last 3 years, my willingness to take any risk is zero. I don’t feel the need to go out, aside from Trader Joe’s and Whole Foods, anyway.

      I let the extroverts be the guinea pigs with covid-19.

    • Happy1
      Jun 20, 2020 at 12:44 am

      Tulsa will be a super spreader event.

      But the bottom line is that young people are not going to isolate longer. This is regardless of political persuasion. It is a fantasy to suggest this is even possible. So there will be ongoing transmission. It will be worse in states that locked down before they had much C19. It probably wasn’t really wise for some of those states to have locked down early because they shot their was so to speak before they had a problem.

      Here in CO, we had a terrible problem, and it is drastically better now. But new cases are starting to increase slightly again. Most people are wearing masks but young people are done with it. There will be a low level of community transmission, there is literally nothing to do to stop it. But at least here, it is 10 times better than it was at peak.

      • Dave
        Jun 20, 2020 at 9:51 am

        My thought watching markets durian protests was that the confirmation that young people were done with the pandemic is really why lit a fire under the market. Whether this is misguided is TBD, but the protests also coincided with friends and family aggressively suggesting to ease up as well. I think the site of those mass gatherings really had a psychological impact on people, and in turn markets.

      • Gandalf
        Jun 20, 2020 at 10:21 am

        It’s not correct to blame the new outbreaks on “young people” generically. Young people can follow laws, learn how to drive and follow the rules of the road like everyone else. They just need the proper rules of the road.

        The problem has been the utterly false messaging that has flooded out there about the COVID pandemic, the massive politicization of the pandemic, and the drawing of sharp tribal lines in the sand about what works and what doesn’t to control the pandemic.

        As a result, lots of Americans of ALL AGES are confused, misinformed, or twisted by their political beliefs into doing things that only make it more likely that they will either get COVID and/or help spread it further.

        Here’s a sampling

        1. Masks – wow, what a political sh–storm this turned into. The CDC first said they didn’t work, then said they sort of did, and their guidelines still don’t make it mandatory. The Denier-In-Chief (DIC) and his Lapdog-In-Waiting continue to refuse to wear one, setting huge examples for their followers. As a result, NOT wearing a mask has become an emblem of Personal Freedom and Liberty for Americans of this political persuasion.

        For well over a hundred years, the sanitary requirements of the operating room has meant that everybody inside except the patient absolutely wears a mask. Doesn’t that tell you something? Recent studies have confirmed that masks help a lot. Masks can even help you avoid getting COVID, not just prevent an infected person from spreading it, depending on how good of mask you’re wearing. So yeah, you don’t need to self-isolate, go ahead and go out there and mingle with people, but WEAR A MASK!

        2. Young healthy people don’t get COVID, or, if they do, it’s a minor illness and goes away quickly. Ugh. What sheer stupidity. Young people get COVID just as easily as old people and people with pre-existing illnesses. Statistically, they are more likely to have no symptoms or very minor symptoms, and fewer get the severe disease version. But fewer does not mean ZERO, and that message needs to get out there strongly. A severe infection can mean permanent lung damage, brain damage, heart damage, kidney damage, or even loss of a limb. All of that has happened, to young COVID patients.

        3. If you screen out the people with fevers and who are coughing and sneezing, that’s good enough. No, that’s not good enough. We know now that people infected with COVID and have only minimum symptoms can transmit the disease. We know now that vocalizing – speaking, chatting with friends, singing in a choir, is a GREAT WAY to aerosolize virus particles into the air and transmit COVID.

        Saw a couple of recent news stories – one about a group of 17 young people who went out to a bar and had a great time socializing and talking, and ALL of them came down with COVID and nobody knows who gave it to them.
        Another news story, about one of the DIC supporters waiting to attend the Tulsa rally – he said he had a mask in his pocket ready, and would wear if somebody near him was coughing or sneezing, cuz he ain’t stoopid, but otherwise he wasn’t planning on wearing it. Right, that means he won’t be wearing it when that minimally symptomatic COVID infected person near him breaks out in a full throated roaring cheer for the DIC along with everybody else and aerosolizes all those virus particles into that convention center. And after that cheer, everybody has to take in a few breaths and there go those virus particles.

        3. We need to re-open the economy, we can’t let COVID defeat the mighty American economy. Er, well just look what happened with the meat packing industry. When a third or more of your entire workforce comes down with COVID, and the plant has to shut down completely, that is a defeat for the American economy also.
        Re-opening the economy makes sense if it is done correctly. Workers need to wear masks, good ones, and need to be regularly screened.
        Some businesses are just NOT going to work well with the requirements of preventing COVID spread. Bars, for example. People go to drink and chat with friends in an enclosed space. That means wearing face masks is impossible, and virus aerosolization and spread in bars is inevitable.
        Beaches and outdoor activities are probably OK. Especially in sunny areas. The sun kills the virus, the open air disperses and dilutes any virus particles in the air, and reduces the viral load that people might inhale. The data isn’t all in about this, but everything we know about other infections says that getting a few bugs usually doesn’t result in a significant infection.

        So yeah, go out there from your cave and live your life. Exercise outdoors. Wear a face mask. Just don’t stay too long in an enclosed space chatting with people not wearing face masks.

        • OutWest
          Jun 20, 2020 at 12:03 pm

          Mask fatigue? The virus is likely to be around for years in the US and in most other countries. It won’t be long, I predict, that the vast majority of people decide that their quality of life is significantly reduced while wearing a mask and that the risk/reward just isn’t worth it. Right or wrong, that is what will play out. Like the cabbage patch doll and the rubik cube, people can’t live without them until they can’t live with them…

        • Gandalf
          Jun 20, 2020 at 4:35 pm

          OutWest,

          Mask fatigue is a BS excuse. For medical people, wearing surgical masks is a way of life and will always be from the time of entering the field. For over a hundred years, if anybody was going to enter an operating room, they were going to first put on a mask.

          Current guidelines at my hospital, and most others around the country has extended that to EVERYBODY who enters the entire hospital and outpatient clinics. You want to enter the hospital or outpatient clinic, you put on a mask. Or, you can go home and stew about your personal liberties being taken away.

          I myself have been stuck in the operating room wearing not just a mask but the full gown, gloves, etc. for hours, for very long operations.

          If you’re old enough, you’ll remember the excuses people had for not buckling up their seatbelts. “Wrinkles my dress”, “it’s too constricting”, “I don’t like it”. There were protests in the 1970s when Congress passed a law that required cars to have an interlocking device preventing the car from starting if your seatbelt was not buckled up. That law was repealed, but later, almost all states passed mandatory seatbelt/shoulder belt laws that fined drivers for not wearing them.

          The result, together with airbags and better car safety design – a drastic drop in the number of deaths per person mile driven in this country. That’s real science based life improving social progress.

          Wearing a shoulder belt comes pretty naturally to everybody these days. Kids learn that if they want to drive a car, they buckle their shoulder belt.

          In Asia, which is way ahead on this issue, wearing masks to go about town has been a way of life for decades already.

          I think once people start seeing others getting COVID up close and personal, and realize that it can be a pretty nasty infection with quality of life degrading possibilities if not death, that’s when things get serious.

        • DanR
          Jun 20, 2020 at 8:45 pm

          I am sorry but people going about their daily lives do not have the dedication, calling, high pay, sense of urgency, drive etc. of medical professionals in an operating room.

        • 91B20 1stCav (AUS)
          Jun 24, 2020 at 1:35 am

          Ref: ‘mask fatigue’. As I recall from my parents and grandparents, Americans not only put up with nighttime ‘blackout’ aerial-bombing policies for over four years, but were all-in. They, compared to today’s ‘liberty-loving’ American ‘exceptionalists’?…never mind.

          Thank you as always, Gandalf, for the word from the REAL front.

          May you, and all of us, stay well and…find a better day.

    • Lisa_Hooker
      Jun 20, 2020 at 6:43 pm

      @Gandalf – I’m curious if you are hearing of any subsequent diagnoses of Virchow’s triad or thrombosis in hospitalized younger patients. Please take care and stay healthy.

      • Gandalf
        Jun 20, 2020 at 8:40 pm

        Lisa,

        Being somewhat subspecialized into Neuroradiology, have seen some weird looking strokes and encephalitis cases recently that I keep wondering if they were COVID related. So far I am unable to find out if any of them were COVID related. None of them had the clear cut classic COVID lung infiltrates, but I’m pretty sure it will eventually turn out that the virus can go straight from your nose to the brain without hitting the lungs with pneumonia first. After all, herpes does exactly that.

        No COVID PCR testing for CSF locally available yet. We need that.

        And it turns out that nasal swabs are not very sensitive for diagnosing COVID, with maybe a 30% false negative rate.

        Reports are that a good number of really sick ICU COVID patients are turning up with brain abnormalities on MRI. Haven’t seen this correlation yet.

        This is still an evolving story.

        Anybody who thinks COVID is no worse than a mild flu is drinking lots of the crazy bad Kool-Aid.

        • VintageVNvet
          Jun 21, 2020 at 9:16 am

          Gandalf,
          First and foremost, thank you for getting back on Wolf’s Wonderful site, full of financial info, as well as ”boots on the ground” information from people such as yourself telling it as it is.
          Secondly, Kool-Aid Konvictions are exactly where we appear to be at for at least a very significant segment of the population as demonstrated last night in Tulsa. I have also been seeing similarly ignorant behaviours all over the tpa bay area, and even more stunningly stupid is that SO many elders are equally bad offenders of common courtesy,, almost as though they are ”asking for it.”
          With Trump showing similar arrogance/stupidity at his age, I suppose its not exactly just stupidity, eh?
          Mayors of Tpa and StPt have already issued preliminary mandatory mask orders for all store staff, and the counties are getting close for all folks in any public setting, but its kinda like shutting the barn door after the horses have already gone loose IMO.
          The only hope that I see at this point is that although the new cases in FL and this area have ”gone to the moon”,,, the new deaths per day have gone down recently, and we can have at least a small dose of hopium that will continue.

    • Lisa_Hooker
      Jun 20, 2020 at 7:10 pm

      People don’t understand that the spread of COVID is simply statistical. An N95 mask filters a lot of particles, even particles smaller than the pores. A simple cloth mask will filter at least some particles.

      And a simple example from Russian roulette.
      With one cartridge in a six shot revolver: If the cylinder is re-spun after each trigger pull, the probability of firing remains 1 in 6 on each occasion, and the probability of it having fired after 6 pulls is 1 − (5/6)^6 , or about 66.5%.

      The more times you join a crowd without masks, the better your opportunity to win the COVID lottery.

  28. polecat
    Jun 19, 2020 at 7:50 pm

    Trade .. or ‘tirade’ ??

    Please note Wolf, that I grok the ridiculousnes of it all. Ah, what a time to be truly woke, with regard to the financial hinkyness that only our federal gov. .. in an unholy alliance with the likes of those sithlike FedBanksters, can get way with! ‘;]

    I’m doing my own to short them, by engaging in as little as possible in, well, Anything promoted by the status quo. #walkaway from it all!

    • leanfire_Queen
      Jun 19, 2020 at 8:26 pm

      > I’m doing my own to short them, by engaging in as little as possible in, well, Anything promoted by the status quo. #walkaway from it all!

      Doing what? Share the tips please, ready to exit the system.

      • polecat
        Jun 19, 2020 at 9:00 pm

        Not playing the game of ‘investment’ in the ‘markets’. For most, it’s a rigged shell-game .. or should I say, Shill-game!! I do what I can, such as grow some food, raise some bees, make, create, produce what little I can, for home consumption, to friends, and .. when the occasion arises, to the local food bank. Use, reuse, and use some more. Repair what one can, rather then toss it in a landfill .. Basically, the control of things close at hand, and within one’s means. Everything else is extraneous bullshit! Does it mean doing without, or less?? .. hell yes! But in the end, it’s worth the piece of mind of not being in the rat race put forth by our supposed betters, who only gain by our loss!

    • OSP
      Jun 19, 2020 at 8:54 pm

      That’ll show ’em…

  29. DR DOOM
    Jun 19, 2020 at 7:53 pm

    I have been back on the SQQQ insanity ,nibbling and biting and churning it for two weeks. I got them Nas-nasty jones crawling all over me.

    • sunny129
      Jun 19, 2020 at 8:22 pm

      Always hedge with TQQQ. I favor tech as a long play especially security robotics, internet-infra structure, e commerce and cloud.

      Cannot afford to SHORT in this surreal mkt with hedges!

  30. MiTurn
    Jun 19, 2020 at 8:04 pm

    Wolf, you definitely keep your blog compelling! I think you’re going to rock it and do so well, that you can send us free beer mugs!

  31. Portia
    Jun 19, 2020 at 8:06 pm

    “And now the market, immensely bloated and overweight after its greatest 50-day rally ever, has to stand on its own feet,”

    You still believe after all this.

  32. sunny129
    Jun 19, 2020 at 8:17 pm

    Wolf
    I have been in the mkt since ’82. I shorted the mkt during GFC made nice profits but I lost it all after ’09. Just John Hussman I mis read the significance of QEs and ZRP. It took a long time to realize my folly. Why? B/c I have never under gone any thing like this before. Fed had NEVER bought MBSs before. There was NEVER been suspension of Mkt to Mkt accounting standard. Price discovery NEVER got suppressed, Our good ole, genuine American Free mkt capitalism died in the March of ’09!

    Now I do short but with hedges using options, ETFs (long & short) + MFunds. But dominantly Div paying ETFs of all any sort, with reasonable exp ratios.
    I am already retired. I am 50% Cash. rest in widely diversified+ UNCORRELATED assets including small fraction against the mkt

    This is a surreal mkt built on insane credit infusion. Now Fed is the mkt and it is trapped by design of it’s own! Like the previous 2 bubbles this one also pop, eventually! But Fed will fight it all the way. Hence shorting is NOT easy but possible with hedges. Reversion to the mean, cannot be banned for ever.
    In the end it is ‘to each his/her own.

    • Lisa_Hooker
      Jun 20, 2020 at 7:19 pm

      It is possible to fail to revert to the mean if the system defining the mean is destroyed. Probably not likely, but definitely not a zero probability.

  33. Matthew Brandley
    Jun 19, 2020 at 8:18 pm

    Corporate debt at record highs. Big banks along with small no longer lending. Rail traffic is nose diving still . Health care workers being laid off by the thousands every week. Auto makers on the verge of bankruptcy. The fed has juiced a market into oblivion while pulling the floor out from under it . No way any of this ends good.

  34. Jason
    Jun 19, 2020 at 8:21 pm

    I actually did the same thing. Have been dollar cost averaging deep out of the money puts ona lot of dow companies like Nike, Apple, Disney expiring July through next january. Finally went all in with the last of it today – market can no longer ignore Covid – 181,000 new cases (previous high 2 days ago 147,000) – back to above 30K new U.S. cases for first time since May 1st, with Florida, Texas. and CA around 4K each and Arizona over 3K (per capita Florida and Arizona are around where New York was near its peak in new cases). Pension fund rebalancing next couple weeks certainly won’t hurt to take some liquidity out. Good luck to you!

  35. Martok
    Jun 19, 2020 at 8:22 pm

    Wolf,

    You aren’t a obliterating moron at all and I’m going to short the market as well.

    I have been involved in the market since ’82 and have never seen such a mess as the markets are today, and also believe the “perfect storm” is upon us.

    How can the markets be valued this way when there are 29+ million unemployed, 25k small businesses expected to go bankrupt, 24+ Trillion and going to probably 30 Trillion natl debt, and the Fed continuing to buy debt, ETFs, corporate bonds, etc, etc, and continue to, PLUS the most likely resurgence of a 2nd wave of COVID-19?

    Some (Cramer) says this rally is being fueled by millions of new investors who are laid off, and because of zero commissions rates, and probably algos’s too.

    The political unrest will continue and our nation will face crisis after crisis in the coming months, and I haven’t even addressed if a foreign entity crashes like Lehman and sends other markets to crash into ours.

    You are standing on solid ground with your statements, markets are going to take a dive, my best guess is Aug 2020, but it’s important to be positioned ahead of time like you did.

    Regards – Martok

  36. Pedro
    Jun 19, 2020 at 8:27 pm

    Hmm… balance sheet almost doubled. Stocks might go down but not for long.

    Commodities will be the tell.. watch gold and silver as money flows out of stocks looking for a safe haven. Certainly not the dollar

    • Cicero
      Jun 20, 2020 at 2:27 am

      “Certainly not the dollar”

      well as EU based investor I am betting on USD/EUR to reach parity somewhere between 2023 and 2025. Bought a mix of 2Y, 10Y and 30Y TSYs. That’s my way to be short EU in general (Italeave, Spain, no coherence in problem solving)

      “Times are bad. Children no longer obey their parents, and everyone is writing a book.” ― Cicero. M Tullius
      Feels like a majority of gen z’ders are also short classic skills and hard work.

    • Petunia
      Jun 20, 2020 at 10:30 am

      Money is already flowing out of stocks. I saw a chart which claimed 18% of all investors are in cash, and 30% of folks over age 60 are also all in cash. Smart bunch, smart money, IMHO.

      • Lisa_Hooker
        Jun 21, 2020 at 11:44 am

        Pretty much all assets have to go through cash to provide the wherewithal to purchase other assets. But money velocity keeps ratcheting downwards. Money goes into cash and stays parked.

  37. Tex Johnson
    Jun 19, 2020 at 8:28 pm

    Better hedge your play with a bit of leveraged QQQ (maybe TQQQ)
    You do know that you are playing against the Fed, right?

  38. paul easton
    Jun 19, 2020 at 8:29 pm

    wolf so you think you are dumb? you are nothing. i blew all my funds already long ago. now i am in limbo. I can’t lose but i can’t win. It’s not that bad. I still eat ice cream sometimes. There is life after money. Don’t forget.

    • BuySome
      Jun 19, 2020 at 9:56 pm

      You might just qualify as a good write-in candidate this year! Heck, Truman was a bankrupt and Ronnie rode the rails out to get his start. Maybe the voice of the “everyman” is due back.

    • Lisa_Hooker
      Jun 21, 2020 at 11:46 am

      Quality ice cream has gotten too expensive, now a luxury.

      • VintageVNvet
        Jun 21, 2020 at 2:00 pm

        GOOD ic can be made at home for approx $4-7/qt, including amortizing the manually cranked machine, by which ya get the best ice cream and can work off at least some of the calories in advance!!
        Julia had it right when she said to Jacques, “We don’t care if it’s nutritious, all we care about is that it tastes good.”
        Judging by her long life and productivity on many fronts, we can certainly think she was joking once again.
        OTOH, YOU get to decide EVERYTHING in the home made ice cream, and make your own choice as to what tastes good to you…
        And BTW, we were a little poisoned by some hd ic a couple of days ago, then saw they had ”sold out” in more ways than one to a really care less corp, and the listed ingredients included corn syrup, never seen in hd ever before, and used to eat a pint of it every day!!! …

  39. OSP
    Jun 19, 2020 at 8:48 pm

    I get it, you’re making a point, Wolf.

    But I doubt it’s a very large play or you would have covered in AH trading this evening.

  40. Anton G
    Jun 19, 2020 at 8:56 pm

    I have gone long on volatility with VIXY and expect a drop. While Wolf focuses (correctly) on the financial developments, I think it is worth noting that covid 19 cases are rising very sharply in the biggest states (Florida, Texas and California). If the openings are curtailed or even reversed as is already happening in California in some jurisdictions, it will cause a panic as traders realize that coronavirus is in fact not done with us.

    • Petunia
      Jun 20, 2020 at 10:40 am

      I live in the south and the buzz here is that nobody is going to be closing again, ever. Small businesses have taken a terrible blow and many will never recover. The one thing consistent is the level of anger at local authorities for shutting them down in the first place.

  41. Bull&Bear
    Jun 19, 2020 at 9:02 pm

    Please diversify with
    Cash SHY
    Gold GLD
    Bond TLT
    Stock RSP
    Don’t lose money

    • Jeremy
      Jun 20, 2020 at 1:21 pm

      GLD is not gold. It’s fool’s gold.
      Only gold is gold.

      • sunny129
        Jun 20, 2020 at 6:14 pm

        I have made $ by trading options on GLD both short & long. I can buy food with US $ but NOT with physical gold.

        GOLD is NOT a religion for me. Just a trade like OIL

  42. Up North
    Jun 19, 2020 at 9:21 pm

    Wolf, I think you are ballsy to do this…but this could work out well. The trick is getting out at the right time. Short term I dig your thinking, but at some point the world is going to realize that global government debt is worthless and they’ll flee to US equities; not because of fundamentals but only because the US has never cancelled it’s currency. The flight will likely bring the whole monetary system crashing down. My opinion is heavily influenced by reading Martin Armstrongs blog. I read you, Armstrong and Zerohedge (selectively) you’re the only three that make any sense. Thank you for all that you do and congrats on having gargantuan balls. I’m not so brave, but did sell my S&P 3xBull ETF at the peak not that long ago, I agree that it’s going to get a whole lot worse before it gets better. Keep up the good work.

  43. Tim
    Jun 19, 2020 at 9:22 pm

    Wolf

    You know that neither frustration nor fury are good points to start an endeavour from.

    Moving beyond positive alternative positions to whatever madness prevails, as you know, never ends well.

    Shame on you!!

  44. Bob
    Jun 19, 2020 at 9:30 pm

    This is what I’ve been telling my friends. It’s all a bunch of little pieces of paper and they keep printing more. The asset hasn’t changed, just how many little pieces of paper backing it has. Hard assets with low to no debt is where folks probably ought to be.

    • Sandy Toes
      Jun 20, 2020 at 7:51 am

      Pls clarify exactly what are the hard assets with low or no debts for the rest of us that are not as knowledgeable.
      Thx

      • Fat Chewer
        Jun 21, 2020 at 4:20 am

        Hmm, what are hard assets? They are real tangible things with real value such as real estate, gold and other precious metals and gems (if you can keep it secure). Essentially, anything that holds it’s value in a crisis. What he means by low or no debts is that you should have already purchased these hard assets and paid them off or soon will.

        I don’t think he is really talking to everyday Joes. For most of us, these things are out of reach by design, because this ultra low interest rate environment has allowed people who are already rich to buy assets to their heart’s content. This has pushed prices up into the stratosphere as you are probably painfully aware. Taking out a mortgage that will still be unpaid when you die is the definition of intergenerational serfdom. That’s why they are out of reach or you sell yourself to your Master forever. The rich don’t want you to have any assets in order to keep you dependant on them in a new form of modern fuedalism.

  45. Michael Gorback
    Jun 19, 2020 at 9:31 pm

    Shorting the US market might replace Japan as the new widowmaker trade.

    • OSP
      Jun 19, 2020 at 11:47 pm

      Or natural gas 3X ETFs

  46. Bill
    Jun 19, 2020 at 9:34 pm

    Best of luck Wolf. I’ve been Charlie Brown trying to kick the “honest markets” football held by Lucy — the Fed and other CBs — far too many times. Every time they pull it away at the last moment and I end up on my back. They pivot on a dime. Maybe they won’t this time…but that’s what I say to myself every single time, and every single time they grin as they yank football away — again. I wouldn’t bet a nickel that the CBs suddenly go all tough love.

    Now, if you can show me markets will drop EVEN IF the CBs pivot, pry their jaws open, and shove another $3-$5 trillion down their gullets, well then let’s talk!

    • OSP
      Jun 19, 2020 at 11:49 pm

      You’ll may see that very situation before the end of the year.

  47. Dave
    Jun 19, 2020 at 9:36 pm

    It’s great having company Wolf. I too got short. I did it the day the the employment report came out. Couldn’t resist shorting the “it’s a rocket ship” comment. I learned a long time ago that shorting individual companies sucks. Whether it’s Wayfair or Tesla it just doesn’t pay. I’m pretty sure the bear market has not gone into hibernation. Sure enough that I’m willing to bet on it. If anything, we can have a few laughs about it. Your insight is always some of my favorites.

  48. Millennial
    Jun 19, 2020 at 9:36 pm

    Well, you were right first time, Wolf, so I’m not going to make fun of you. Learned my lesson.
    Let’s see, if you are right again.
    Good luck!

  49. Tim
    Jun 19, 2020 at 9:38 pm

    and….. FFS you tit:

    The point to short the market will be psychological watershed when ‘Keep safe with Joe’ salves their pain more than ‘Be free with Donald’.

    I mean, for whatever is up there’s sake, do you seriously believe the credit flooding (bar token slowings in the mainstream) is going to stop before that point?!!

    I really do respect you, honestly I do, but pull it together again…

    • Zantetsu
      Jun 20, 2020 at 11:31 am

      This is how you talk to people you respect? Wow I’d hate to see how you talk to people you don’t respect.

  50. Albert
    Jun 19, 2020 at 9:46 pm

    I’m a real capitalist market Wolf…I would wholeheartedly agree to short. But..the FED has put training wheels on the stock and bond markets and therefore there will be no massive sell off….just dips and fart that will give the appearance of real market price discovery…but nothing more. I hope you have risked very little of that toilet paper that the FED calls money…

    • thechaser
      Jun 20, 2020 at 2:13 am

      right on; no way this administration let’s anything get south of the 3000 line in the sand if they can help it; the other day when it hit 2999.95 the ticks lit up across a wide band; the stalwarts of PPT or primary dealers said no; this whole cabal is out with a blue win, so they will go down kicking; also the coming multi trillion MMT helicopter giveaway that makes the first one look tame is coming; good luck on short

  51. SocalJim
    Jun 19, 2020 at 9:50 pm

    Naked shorts are stupid. You might get lucky, or you could get wiped out. The easy money was going long in March. High end suburban housing is still easy money. Safer to just lever those up.

    • Jun 19, 2020 at 11:08 pm

      SocalJim,

      I shorted a broad ETF that doesn’t move that much. This is not a “naked short” since I’m not selling options. The risks are not huge. For me to lose 100%, the S&P 500 would have to double, which is not likely over the next few months, and I can cover anytime before that happens. I might cover if I’m 10%-20% in the hole. So that’s my exposure. it’s not going to wipe me out. (I’m a risk averse guy).

      And I agree with you, the easy money was in March, but March is gone. Now it’s June, so what do you do now?

      • Yancey Ward
        Jun 19, 2020 at 11:38 pm

        “Now its June, so what do you do now”

        Horse. 100 internet points for anyone who gets the reference.

      • SocalJim
        Jun 20, 2020 at 8:08 am

        High end suburban housing has decent upside. It must be close enough to the city. Small caps also have some upside left ONLY IF the virus does not make a comeback.

        • SocalJim
          Jun 20, 2020 at 8:08 am

          Also, expect an election shake in the market … always happens. usually starts in August, but this year, it will start sooner.

        • Happy1
          Jun 20, 2020 at 8:30 am

          I think this rally is played out, the market had priced in apocalypse in March, when apocalypse didn’t arrive and Fed swooped in it rallied, now Fed is backing off and it’s clear economy will be less than 100% for a year or more. On what basis can the market move up big?

      • sunny129
        Jun 20, 2020 at 1:32 pm

        On January 24 th the blogger Charles H. Smith in his blog -oftwominds
        put out a posting titled – DON”T BE TOO SURE. which indicated CORONA epidemic is a big game changer for the global commerce.( he is predicting D-2!)

        I was well prepared for the March rout out with options-puts against airlines. hotels cruise lines++ But part of the profit got wiped with resurge of indexes by 30% or more!

        Now Fed is the mkt. As long as they don’t allow price discovery, nothing matters.

    • MCH
      Jun 20, 2020 at 7:13 pm

      We have no idea what is the size of the position Wolf has put on.

      So, getting wiped out would have to assume that he put a very sizable amount into this bet. I seriously doubt that. In that event, I would guess Wolf has put in nice stop losses in place to be triggered if it got to that level.

      And heck, he could’ve shorted a single share of SPY, and he’d still be shorting the entire market. And in that situation, if the market doubled, he’d be out a whooping $300. Hardly anything that’ll break the bank. So, it all depends on context.

      • Jun 20, 2020 at 7:24 pm

        I cannot get wiped out. I’ve been around too long to do hail-Mary trades — or bet the farm trades. As I said elsewhere here, at my age, it’s just prudent and common sense that no single trade is more than a single-digit percentage of my financial assets. When I was in my early 30s, I might have done it differently.

  52. Eastwind
    Jun 19, 2020 at 9:59 pm

    Well your best argument for shorting was the article previous to this – the fed has gone negative on QE.

    But I am a hedgehog investor, so I refuse to use margin in any way. I don’t even buy options. For me it’s go long or stay home.

    The thing I hate about shorting is you can be absolutely right and still lose everything because of irrational actors with more margin than you have.

    And you could get screwed here by professional money managers who have sat out this rally and are now staring down the end of the quarter. A lot of them are going to try to make the best of a bad quarter by buying into the quarter’s biggest gainers next week just to dress their books.

    Will there be more of those buyers than there are pension funds selling stock to rebalance? Will the market ‘notice’ that the fed has stopped QE? Who knows.

    But why didn’t you just buy a market put instead if you don’t like shorting?

    • Jun 19, 2020 at 10:21 pm

      “But why didn’t you just buy a market put instead if you don’t like shorting?”

      Three reasons: fat premium, strike price, and expiration date.

      To lose 100% when you short the SPY, the S&P 500 would have to double, which is not likely over the next few months. But I can take a profit of 12% or 15% or 19% when it gets there.

      With a put I can’t do that. The market HAS to fall below a certain point by a certain date for me to even make a dime, plus there’s the premium (and they’re very fat right now). If the market gets within a hair of the strike price, I don’t make 19% but I lose 100%.

      However, I would never short TSLA, I would only buy puts to protect myself because that stock can go anywhere.

      With a broad index ETF, like the SPY, that doesn’t move that much, shorting is the better and cheaper option.

      Also I have the cash in my account, so there is no margin interest. And the fees are essentially nil.

      • Martok
        Jun 20, 2020 at 1:20 am

        Wolf,

        I think some people are thinking you are going 100% short with puts and or ETF’s, and I’m sure your not doing it that way.

        I won’t “betting the ranch” either, maybe 10% short, with stops, the rest cash, metals, TLT.

        Regards – Martok

      • Cicero
        Jun 20, 2020 at 2:35 am

        True. Didn’t WIRECARD just loose his balance sheet magician to TSLA?

      • Cas127
        Jun 21, 2020 at 9:48 pm

        Wolf,

        Not 100% on topic but close enough…

        A good idea for a future post might be a discussion of diversification, how it works and why it works when investing.

        There are some semi-pros on your boards but a lot of relative newbies too…they would really benefit from learning the value of diversification.

        Also, the topic would provide an entre into one major reason why the Fed’s multi decade ZIRP has become so toxic…

        many/most/all asset classes have become highly correlated to ZIRP…

        And therefore to one another

        …undercutting the primary advantage of diversification (offsetting of risk across asset classes).

  53. Scott Selstad
    Jun 19, 2020 at 10:00 pm

    I shorted the SPY from this level a couple of weeks ago. I see 2300-2400 in the weeks ahead. Good luck Wolf!

  54. timbers
    Jun 19, 2020 at 10:09 pm

    W shorts the entire market, Meanwhile:

    “Daytrading Icon Portnoy Now Using Random Scrabble Letters To Pick A Stock”

    I don’t play Scrabble but I have a very nice wooden chess board.

  55. Old-School
    Jun 19, 2020 at 10:11 pm

    I can’t bring myself to short the market, but I am 90% sitting in short term treasuries waiting for a price that future long term sp500 returns look like it’s worth taking the risk.

    I keep 10% in stocks for Fed printing insurance in case they just keep getting more extreme in policy actions.

  56. Fred Flintstone
    Jun 19, 2020 at 10:32 pm

    How sad……..the fed may fail…….for the first time. Foreign central banks and others, in a time of crisis, are actually selling Treasuries.
    Unfortunately if it does fail we’ll all be in it and experiencing it.
    As for Wolf……he is part of what makes a market. I wish the fed understood that……..the fed thinks everyone is special and deserves to make money. They would fit right in at a current elementary or secondary school. The nonsense they teach our children has finally arrived at the adult level.
    I’ll stick with…….Physical Gold…….or any hard asset.

  57. Chauncey Gardiner
    Jun 19, 2020 at 11:09 pm

    Good Luck with da Boyz who own the Casinos, the central banks, the brokers, the regulators, the politicians, key media, tools of the state, HFT computers, 401K and pension plans, and advanced IT systems. Perhaps after elevating markets into the ether on the backs of the shorts and naive in the remarkable ramp since March 23rd, there’s a possibility the trade is aligned with a move that they now perceive to be in their own self interest. Then again, summer solstice is tomorrow… it’s summertime now. And in the words of the greatest camp counselor in the greatest summer camp movie ever, “Meatballs”, maybe all this “Just doesn’t matter!”… Whether you choose to participate, or not, your savings and capital will be transferred into their hands. For that’s the essential nature of QE and real NIRP.

    Hope you win, Wolf. Reading this today in Forbes made me nauseous:

    20-Year old Robinhood customer commits suicide after seeing a $730,000 negative balance

  58. Yancey Ward
    Jun 19, 2020 at 11:51 pm

    I don’t short the market. Like a commenter above, I am either long or out.

    I think this short will pay off, and in a much shorter time frame than even August or September. The market, in my humble opinion, is literally insane right now, and it can’t continue at this level, and I don’t think it even matters what the Fed does with QE.

    I will just point out that the SPY September 18 2020 puts striking at 160 were selling for $59 dollars today. That is a fat premium, but I actually think it is the right way to play this short. If you think the move down is coming almost immediately, the June 30 SPY puts at 274 were selling for the same $59 today.

  59. RJ Palada
    Jun 20, 2020 at 12:25 am

    Everyone wants to short. This remains the most hated bull market in history. When the last amateur bear is taken out and shot dead that will be the time to sell this market….One more thing…This market is nothing like 1999….Not even close…Were you even trading at that time???

    • Jun 20, 2020 at 8:36 am

      RJ Palada,

      “Were you even trading at that time???”

      Yes, I was a middle-aged guy in 1999. I cut my trading teeth during the 1987 crash, when I was in my early 30s, two years after getting my MBA in finance.

      So here are the crashes that I traded through: 1987, 2000-2002, 2008-2009, and 2020. They were all different, but there is a pattern in this stuff.

      Also note, I shorted the market and published that short at the end of December 2019. And I covered that short on March 12 and published it too. This is not a perma-short. This is a trade.

      • sunny129
        Jun 20, 2020 at 1:40 pm

        So here are the crashes that I traded through: 1987, 2000-2002, 2008-2009, and 2020. They were all different, but there is a pattern in this stuff.”

        Before 2009, Fed had never bought MBSs in it’s history. QE was employed as an experiment without any research or prior record. There was no suspension of Mkt to mkt accounting standard.
        Debtors favored and savers got shafted. Price discovery got actively suppressed. Price of capital became utra cheap unlike any time before. Never ending party started at Wall St!

        Now we are in 2020 with Covid-19. Annual deficits of a Trillion(s) or more National debt 26 T and growing! No one challenging or demanding accountability. DEBT became the panacea in the new normal!

        Welcome to Japanification of America!

  60. Jun 20, 2020 at 12:31 am

    I might be there with you soon. It’s gotten ridiculous I agree.

  61. Willy Winky
    Jun 20, 2020 at 1:15 am

    My strategy is to not to invest in anything these days…. what’s the point (unless you blow the winnings fast…) because we all have a fairly good idea where this ends.

    (Tears…)

  62. CRV
    Jun 20, 2020 at 1:21 am

    Isn’t it all smoke and mirrors?
    The FED loaded up these SPV’s to do the dirty work for them, so the public will not notice it’s actually the FED behind it. Like Blackrock buying their own and others Junk, subsidized by the FED.
    Looking only at the FED sheet is dangerous. These trillions are parked somewhere to be deployd (spawned in gamers terms) when needed.
    In contrast to Wolf, i closed most of the few Short positions i had, yesterday, because i believe the stock markets will be helped up until the currency dies. And i don’t dare to time that moment.
    I’m long PM’s and mining stocks.

  63. Jun 20, 2020 at 1:48 am

    Wolf. While I certainly agree with the sentiment, one thing to keep in mind is that the Fed still bought about $100 billion in treasuries and MBS this past week. The balance sheet shrunk because they shedded even more repos and liquidity swaps, but those assets are the ones where the day to day level is largely determined by the Fed’s counterpart, not a Fed purchase plan. There arent that many repos left on the balance sheet (<100 billion). More swaps, but not that much (350 billion). Once those wind down, the balance sheet will start growing again.

    Nonetheless, these markets are ridiculous, Fed or no Fed.

    • Jun 20, 2020 at 8:52 am

      Taps Coogan,

      The Fed has a $7 trillion portfolio with securities that are constantly maturing and rolling off. This includes $60 billion in short-term T-bills that constantly have to be replaced. To keep those balances level, the Fed has to constantly buy new securities. And it does. But that’s not adding QE, it’s maintaining the balances.

      In addition, in terms of MBS, the Fed is getting the pass-through principal payments when the underlying mortgages are paid off. Given the refinancing boom, these pass-through principal payments have turned into a tsunami, and the Fed needs to buy a lot of MBS just to keep its balance level.

      So you cannot only look at what the Fed buys, but you have to look at the balance of its securities which net out the effects of maturing securities and new purchases.

      • Jun 20, 2020 at 9:30 am

        Wolf,

        Thanks for the detailed response.

        Why would refinancing increase the pass-through principal payments? I have to admit that I have never really thought about that.

        For what little it’s worth, my understanding was that the Fed’s net treasury and MBS holdings went up roughly $100 billion the week of June 17th, while its repo and swaps balance fell about $180 billion.

        Thanks again. You do a stellar job.

        • Jun 20, 2020 at 9:59 am

          This is from an article of early May about the Fed’s balance sheet where I describe the issues of MBS (since this is from May, the numbers are different):

          There are two complicating factors with MBS:

          MBS trades take a long time to settle, and the Fed books MBS only after they settled. The $18 billion in purchases in the current week will settle in June and July, which is when they will appear on the balance sheet. The current activity in the MBS balances stems from purchases that were made weeks ago.

          Pass-through principal payments. All holders of MBS receive principal payments as the underlying mortgages are paid down or are paid off. The current boom in mortgage refinancing due to low mortgage rates is creating a torrent of pass-through principal payments – which has the effect of reducing the Fed’s holdings of MBS.

          To compensate for the pass-through principal payments and keep its MBS balance flat, the Fed would need to purchase a significant amount of MBS. If the Fed buys no MBS, the balance of MBS on its balance sheet would fall sharply.

          So there are two opposite forces at work: The Fed’s purchases of MBS increase balances; and pass-through principal payments decrease balances.

          The combination of much reduced purchases, the erratic settlement dates, and the torrent of pass-through principal payments caused the MBS balance to decline by $28 billion during the week, to $1.84 trillion…

        • RedRaider
          Jun 22, 2020 at 2:30 pm

          What happens to the pass thru money? Is it inflationary/deflationary?

  64. thechaser
    Jun 20, 2020 at 2:00 am

    i SOLD a couple of hundred long dates in 21-22 in april/may and have been closing at the 40% mark; also i tag my puts at prices i am happy to eat them at because the tsunami of liquidity coupled with the torrid dollar devaluation to come makes them easy to bail;

    also, i am rolling my gld and slv puts up; precious metals are due for two giddy-ups and that will be transferred into the etfs which are only useful for trading and not reality; you cannot pass paper to your kids;

    giddy-up #1 on gold is $2000; second it hits that runs to $2200; giddy-up #1 on silver is the ratio of price between gold and silver drops to 80 in a flash as gold giddy up #1 kicks in;

    this will occur either this year if election goes blue or early next year things stay the same;

    then giddy-up #2 for gold and silver both occur in late 2021 or 22; similar to 2011; gold runs to 3000 and the SGR (silvergold ratio) drops to 50 or even 40 putting silver at 60-70;

    rolling the GLD and SLV puts is a kind of a yeoman’s futures play with a lot less on the line

  65. Macro Investor
    Jun 20, 2020 at 2:54 am

    It’s too early. The fed will drop the market closer to the election to “get” Trump.

    The markets can remain irrational longer than you can remain solvent. Livermore said never short until the market clearly breaks down.

  66. DeerInHeadlights
    Jun 20, 2020 at 3:05 am

    How much you do at any given time depends on your ambition and greed. There’s always plays to make at almost every point in the market: at the bottom, at the top and in the middle.

    No risk, no gain.

  67. Thomas Wolfe
    Jun 20, 2020 at 3:18 am

    So the ole’ Cognitive Dissonance Put.

    That said, today I entered a small trade of my own to go short the Dow and long Nasdaq with leverage; mostly for entertainment purposes. I call it the ‘COVID Arbitrage’. Here’s my reasoning.

    ○ The Good: If markets go down then Dow losses (my gain) should out pace the Nasdaq losses

    ○ The Bad: If markets rise then Nasdaq gains either offset or minimize Dow gains (my loss).

    ○ The Ugly: If a loss in one position outpaces the gain in the other then the backup plan is to sell profits off the Up position to add more to the Down one to balance them out until there’s a reversal.

    Lastly (due to beta decay) if I see a marginal profit between them, I sell both and look for a new entry point. I recognize that this strategy works best when the Dow and Nasdaq are overvalued so is not a trade to put on after markets have sold off in a big way. And that this only works in a tax deferred account without wash sale penalties.

    In the event that the Dow falls back to say 22K then I instead go back to my time tested Martingale strategy and start picking up small amounts of my favorite buy-n-hold dividend ETFs to double buy as they get cheaper.

    For example, if I have a total of $15K investable income, I buy $1k worth and double that for every 10% my ETF share price falls to allow for a 40% sell-off (this in addition to a Dow already being down 26% off it’s highs). I only keep the biggest / cheapest positions while selling the higher / smaller ones at break-even once markets rebound. If I’m wrong and the price falls more than the anticipated 40% + 26% discount then I simply hold and collect quarterly dividends on the ETFs at major bargain prices.

    Through the years I’ve done this trade and each time lowered my cost basis and increased yield to the point where I require a bear market in stocks just to add the tiniest of positions to average down. The biggest risk is that (due to inflation) markets just keep going higher irregardless of the economy; at which point I’ll start reinvesting the dividends.

    • Clayton Mckenzie
      Jun 20, 2020 at 8:02 am

      Simple yet hard to grasp. Rule #1 do not fight Fed. Rule #2 do not fight Fed. Rule #3 do not fight Fed

  68. Jun 20, 2020 at 3:25 am

    I think cautiously selling out of the money calls, especially for the crazy Robin Hood favourites ($UONE, anybody? although I’m not sure this one has puts) has a good risk-reward balance.

    Timing shorting is so difficult, because clear basket cases keep going up until suddenly they collapse. I follow Bill Fleckenstein, who thinks this market is a joke but thinks it’s still too early to short.

    At some point, the Fed is going to lose control of the long end of the yield curve. Once that happens, we’ll see some action in all markets.

  69. Say It Ain't
    Jun 20, 2020 at 4:57 am

    Very hard to make logic out of today’s market…there is a large battle going on right now in the Dark Pools between Hedge’s trying to cause harm to other Hedge’s who are short the market. The algorithms are trying to destroy each other and none of us will ever know until it is too late. Similar in scope to when Icahn busted Ackerman out of Herbalife…

  70. Martin Fields
    Jun 20, 2020 at 5:39 am

    I am buying silver . If pumping the stock market is stupid, pumping consumption is 100 times stupider. Its the fastest track to hyperinflation on the planet. That planet is earth but I am convinced the Fed does not live on that planet. Its like giving all your money to bums on skid row. What do you think they will do with it? I would suggest buying Budweiser stock.

  71. historicus
    Jun 20, 2020 at 6:06 am

    Continued unrest in this country is in your favor…
    here’s hoping you don’t get the overnight “vaccine” announcement

    I still think we are set up for a “one two” punch…
    Punch one = virus
    Punch two = international incident, too many potentials to list

  72. George_Cloonotney
    Jun 20, 2020 at 6:23 am

    Relative strength of DOW:SP500 ratio.

    Sorry Wolf, I’m long SP500 and short DOW.

    Strategy: Buy equal equity amounts of DOW puts and SP500 calls, 1 or 2 strikes OTM, same expiry, at least 3 months out.

    NB: If you can’t make sense of the above you do not know enough about option investing to construct the trade competently. Also the DOW:SP500 relationship can, and does, change over time.

    Options: Do not die of ignorance.

  73. Jun 20, 2020 at 6:49 am

    There’s five months between June 10 and November 3, election day. It looks to me like the Fed is allowing for the lag between its actions and the market response. It’s the minimum time they need to maintain an appearance of normalcy in the asset markets.

  74. Bellinghouse
    Jun 20, 2020 at 7:59 am

    “I might cover if I’m 10%-20% in the hole. So that’s my exposure. it’s not going to wipe me out. (I’m a risk averse guy).”

    What percentage of your net worth does this short position represent? 1%, 5%, 20%, 50%? Without your readers knowing this, it is hard to tell how much conviction you have in your market call, and readers that follow your advice could be tempted to make a very risky move with their assets.

    • Upside down
      Jun 20, 2020 at 9:02 am

      I concur. I agree with Wolf’s positioning. Would be nice to know % of portfolio though. Its one thing to throw 5% at a short position and its another at 20-40%.

      • Jun 20, 2020 at 9:53 am

        At my age, no trade/position is larger than a single-digit percent of my financial assets. This is just prudent. Putting 40% of your financial assets into one hail-Mary trade might be OK when you’re 30 and you have a great and secure job and you don’t mind starting over again. But it would be nuts for me.

        • Upside down
          Jun 20, 2020 at 10:58 am

          I hear you Wolf. Im in the same boat. Thanks for sharing. I lost some money shorting about a month ago. But i may join you soon.

    • RoseN
      Jun 20, 2020 at 10:27 am

      +1

  75. gorbachev
    Jun 20, 2020 at 9:35 am

    The key for me is those that are unemployed.If the

    gov’t begins writing meaninful ongoing checks to them

    then there is no downturn.The opposite is true.

    For now I’ll watch the show and collect my div’s.

  76. Anthony
    Jun 20, 2020 at 9:40 am

    I decided to short the world stock markets, not just the DOW….I bought gold..

    • andy
      Jun 20, 2020 at 10:47 am

      Well, did you make 10 times your money in March shorting?

  77. NoFreeLunch
    Jun 20, 2020 at 9:42 am

    Pick and choose your battles carefully. I am sure most are familiar with the is value investing dead question? I wouldn’t short stocks that many consider dead, since sometimes they spring back to life, for a long time. For example, small cap value is at the same level some 2014. Would you short that. I was the winning category after the tech crash. The bottom line is that shorting categories of stocks that have been behind in recent history is like a late momentum play.

  78. Jun 20, 2020 at 10:02 am

    I’m with you. Lately I’ve just been just hedging some longs, but now I’m net short in a big way, probably like you.

    I’m short SPY, IWM, DIA, RH, SIVB, AAPL but also long some of those Buy-Write closed end funds that pay tax-advantaged dividends. I sold my utility and REIT funds Friday morning and still have some healthcare funds like BME and THQ, BCE, T, CTL, BCE, Gold shares like GDX, ASA, NEM, AGI, FNV, big positions in short-term bond funds like BKT and VCSH. But I’m net short. When the market dives, I’ll cover and instantly be somewhat long. When the market rebounds for a couple of days, then I’ll add back shorts, rinse and repeat. TVIX is a very interesting trading vehicle, but you have to be attentive..it moves like crazy. You can put in limit orders hugely below current price, then once filled, you can set a sell limit hugely above the current price. It’s amazing the swings.

    Keep up the great work. You’re a must read.

    The nightmare scenario is that you wake up one morning and the futures are locked limit-down and stay locked down for days or weeks. Once they re-open, the mega uni-bubble of corporate credit, Munis, ETFs, high yield, ordinary stocks, funds —is completely decimated with everything down 80%. Poof goes the fake money!!

    Excess liquidity via fiat currencies can be (will be) wiped-out very quickly.

    Gee, I think I just scared myself. I’m going to sell a few more longs on Monday morning!

  79. viperbear
    Jun 20, 2020 at 10:17 am

    My Elliott Wave analysis strongly suggests that we may trade up and down, up and down between the 3000 area and the 2300-2400 area from now until around the election.

    After up and downs are complete (I think we are forming a triangle) I am expecting a 70% drop, regardless of who wins in November.

    I see Trump winning by a landslide and liberal’s heads exploding.

  80. joe2
    Jun 20, 2020 at 10:28 am

    Congratulations Wolf. It’s called being a free individual and it’s rare as you seem to perceive. Scary and exhilarating at the same time, i.e., life. Like buying gold, it makes no sense to the herd — until it does.
    And if it goes bad, you don’t cry for mama, blame people you don’t know, or lobby the Fed.
    And finance is a thin shadow of life. You are going to die. How are you going to die? Nothing wrong with calling for your mother, but I’ll be damned if I call for the Fed.

  81. Thethirdgate
    Jun 20, 2020 at 10:55 am

    Wolf,

    in an article in Marketwatch from June, 19, Nigam Arora argued that there are limits to what the Fed can do in order to prop up the stock market. He thinks that „the Fed […] may have difficulty expanding its balance sheet beyond $10 trillion. In plain English, unlimited money printing is highly unlikely.“ Do you agree?

    Thanks

    https://www.marketwatch.com/story/the-first-crack-appears-in-bulls-thesis-that-the-stock-market-will-rise-no-matter-what-2020-06-17?mod=nigam-arora

    • Jun 20, 2020 at 1:18 pm

      The Fed can do pretty much whatever it wants to, as we have seen. But it looks to me like it doesn’t WANT to go to $10 trillion or even $8 trillion since it’s already leveling off at $7 trillion.

      • sunny129
        Jun 20, 2020 at 1:50 pm

        WHY NOT?

        View the Mr. Powell’s interview on ’60 minutes’ at CBS, again!

        He never put any limitation on the balance sheet. He said it can taken care of, in later years. Also admitted he can create unlimited digital $ out of thin air, WITHOUT any hesitation

        He can DO ANYTHING in the name of
        1. Financial stability in USA or the Global banking system
        2. To keep the mkts functioning smoothly
        3. Once there is cracks in the Corp credit mkt, he will employ one of his SPV sources to keep it down, just he did for the repo mkt!

        Time will tell

        • Jun 20, 2020 at 3:16 pm

          Agree. Re-read my comment.

      • Cas127
        Jun 21, 2020 at 10:01 pm

        One thought to keep everyone up at night…

        What if market pros (who know just how terribly out of the ordinary this all is), essentially panic/bail/dump at *any* shrinking of the Fed balance sheet…regardless of the true state of economy/Covid/individual companies…which might all slowly improve.

        The downside of Fed playing tin plated God is that everybody starts reading chicken entrails…and *only* chicken entrails…because all other signs have been swept into insignificance.

  82. Jeff
    Jun 20, 2020 at 11:09 am

    Not very smart here. Have a good 401k, Roths, and individual holdings. I’m been screwed so many times I’m scarred to death. Don’t understand shorting and not sure if I can. My wife has just walked out on me and really worried about my life any future that’s left. Could someone very kindly let me know if this sounds too risky? Thank You.

    • sunny129
      Jun 20, 2020 at 1:54 pm

      Majority of investors are NOT educated, trained or informed enough to go against the mkt. They know how to position during secular bull but not during secular bear ;like in 2000 or 2008. they lose their capital and profits during bear. Read mkt history!
      (been in the mkt since ’82 and has gone thru more than one bear!)

      • jeff
        Jun 20, 2020 at 2:40 pm

        Thank you very much. I’ve been in since 84′ and did the same as you gave. Haven’t sold anything in years.

        • sunny129
          Jun 20, 2020 at 7:40 pm

          I trade in two of 4 portfolio and long term investment strategies in the other 2. Tactical trading using options in aggressive portfolios.

          Didn;t do any thing during 1987 or go defensive during 2000 – ride with the mkt but bought EU stocks when the EU was 90Cents against US $!. Recovered my losses. Went against the mkt during GFC and nice profits but lost most of it once the Fed came in and killed the free mkt capitalism. Now it is more trading and some long term with 50% cash ( retired about 20 yrs ago) This is the most surreal bullmmkt of my life time with absolutely NO fundamentals but built on debt on debt with leverage.

          The same team which brought us the previous 2 boom-bust cycles are managing this 3rd largest bubble. It will meet the same fate. A lot more people than in 2008 will lose big! Just a karmic backlash for reckless spending.

    • NoFreeLunch
      Jun 20, 2020 at 5:32 pm

      Be extra careful trading options in an IRA. You can’t just add money if a short goes really wrong, since there are annual contribution limits with 50% taxes on over contributions. Usually, people only sell covered calls in IRAs.

      • sunny 129
        Jun 20, 2020 at 7:49 pm

        One has to be well educated, informed about the risks involved. Options are tools to reduce the risk in a portfolio by focusing on ‘risk adjusted’ return. I trade all options in my IRA with hedges. Big jump and partly recovered my previous losses, just before and after March 23rd dive.
        Read the blog of Jan 24th by Charles Hugo Smith -free online way ahead re the virus – ‘Don’t be too sure’ prophetic!

        Main thing is crazy volatility is here in both up and down directions. One can make $$ using options. Long term investing is history. The next decade will be of subpar return since all future growth has been brought forward!

  83. DR DOOM
    Jun 20, 2020 at 11:28 am

    I am a perpetual Doomer an Cynic and therefore the best time to short is when everybody is playing the game the other way telling you shorting is a fools game. Ditto for selling. As a fact the vast majority bail out at the bottom,and buy at the top. This is why the House is always rich and you ain’t. When the time is right the House will bring the FEAR and then start talking about “fundamentals” after they bail. And no,it’s never different this time . There is always a Robin Hood equivalent or a Tulip Bubble or the FOMO so on and so forth. Whether it’s in Fashion and Style, Pop Culture or the Stock Market it doesn’t matter. The narrative comes first,sentiment follows with the bobbing talking heads showing how smart they are parroting the narrative. Some have Clever Charts that are always 100% in hindsight showing its time time to go long due to an Upside Down Double V with a Sideways Bull Trap move with Smokin’ Candles Pattern . Then comes the money collection,then fleece em’. A very wealthy gambler and Stock Broker told me that the Stock Market makes it moves when it can hurt the maximum number of investors.

    • DeerInHeadlights
      Jun 20, 2020 at 11:53 am

      Lol, good one. The faith in technical analysis I just can’t comprehend. It’s something that’s completely unfalsifiable since they can explain away *any* and I mean absolutely any movement in the price. Granted falsifiability is not the only criteria for a theory to be scientific but it sure helps add greatly to credibility. TA to me is like the biggest scam in the investing world and it’s allowed to proliferate and become accepted because the smart and institutional money doesn’t follow it and it doesn’t affect them. It’s the retail suckers I hear and see all the time looking to it for guidance. Maybe there’s a simpler explanation and it has to do with human psychology and the desire to get rich quick…

    • sunny129
      Jun 20, 2020 at 2:24 pm

      Shorting fellows are the ‘minority’ now

      Besides the majority are psychologically NOT inclined to short the mkt when the Fed is openly supporting the mkts! also they are not educated, informed and trained enough to do that.

  84. Jun 20, 2020 at 11:31 am

    The market is as simple as the US monetary base. Prior to the crisis the base was shrinking, and the Fed had already lowered rates and provided REPO funds. The virus came later. The stimulus has lifted the MB to new highs, while money flows into the stock market have not returned to their previous levels. All this points to Fed policy losing efficacy. When Fed prints money, most of it goes to wealthy corporate interests who are hoarding cash, while consumers pay down debt. The more debt is retired the more pressure on the MB. YCC policy is a cover for unlimited buying and orphaning of new debt to create the illusion of more debt demand being created. While government offers zero interest paper they must complete the circle by artificially stimulating demand, or selectively withholding supply. The end game arrives when every commodity is cheap and there isn’t any of it, including money. For years buying the market was a hedge against inflation, now shorting the market is a way to hedge deflation.

  85. DeerInHeadlights
    Jun 20, 2020 at 11:39 am

    To those long gold, have you seen what gold does during market crashes? In the beginning of bear markets when the sell off starts, it rallies a little but when the sell off gains momentum (-5% let’s say), it is ALWAYS sold off along with everything else. When most portfolios keep gold as a hedge against a downturn and inflation, that’s expected. You sell what’s profitable to make up for broad losses elsewhere.

    Go take a look at 2000, 2008 and 2020, sells off every single time. If you got a very good entry point for your position, like 1400-1600/oz, I think that’s good. Anything higher, watch out.

    Past performance is not an indication of future results, I get that. But gold doesn’t exist as a hypothetical, mathematical construct where its price is affected only by economic and monetary inputs like the interest rate and inflation. It’s a traded commodity that exists in portfolios and whose price is directly affected by the trade of it’s paper equivalent (futures). And that trade happens like any other equity from what I’ve seen and sells off like it too.

    Now when the sell off’s done, it can definitely reach new highs because of the economic and monetary conditions which are completely unprecedented. But I’m not touching it before then, before somewhat of a bottom.

    Just by two cents. Don’t mean to offend any gold bugs. Happy to hear from you if you disagree.

    • Jun 20, 2020 at 12:11 pm

      Gold is priced in dollars, or any sovereign currency. The outcome of falling dollar asset prices and falling gold prices, could be altered by Bitcoin. Should the price of gold in dollars fall, but not the price of gold to Bitcoin, that would be an alternate outcome. Gold has monetary stability, in a time of instability, we should ask, what is that premium worth? One tenant of my gold manifesto is that the poor love gold most of all, and we are all going to be a lot poorer.

      • Petunia
        Jun 20, 2020 at 12:31 pm

        The poor love cash the most because it buys everything.

        • Jun 20, 2020 at 1:07 pm

          + N :-)

        • Anthony A.
          Jun 20, 2020 at 5:13 pm

          Exactly, the poor around here like cash or at least something that can be pawned for it.

        • Jun 21, 2020 at 10:01 am

          and you trust fiat more than you trust gold: rhetorical question

      • sunny129
        Jun 20, 2020 at 2:16 pm

        BITCOIN is illegal in RUSSIA, now.
        It will be declared illegal once it threatens fiat currency like US $!
        Besides there is so much FRAUD in Bitcoin industry!

        Good Luck

      • DeerInHeadlights
        Jun 20, 2020 at 2:55 pm

        Well, what good is BTC if it’s banned? BTC’s value for most “non-believers” is as an investment. If you can’t convert it to USD or your currency of choice….where does that leave you?

  86. Jun 20, 2020 at 11:58 am

    In the future will Wolf Richter be recorded in history books as the ‘Babson’ of this crisis, albeit from a position of far greater technical ability?

    Entirely possible.

    NB: For what it is worth, I believe a good call from WR.

  87. Mike
    Jun 20, 2020 at 12:50 pm

    Any news on CLO’s? Surely there must be serious concerns there now.

    • Jun 20, 2020 at 1:14 pm

      Yes, there are serious concerns now.

      • sunny129
        Jun 20, 2020 at 2:20 pm

        Surprise!
        You posted a day or two before that saying the article on the Atlantic is mistitled and misinformed!

        There was a confusion CDS and CLOsand. A lot of discussion on this issue at nakedcapitalism!

        Why the change, now?

        • Jun 20, 2020 at 3:45 pm

          sunny129,

          That’s BS. You’re fabricating what I said. What I said about the article you linked was this, verbatim: “The article has a click-bait title and misses the most important factors in the US banking system.”

          I didn’t say anything about CLOs.

          But now I will: US CLOs are spread all over the world, with a bunch of them in Japan and in Europe, they’re at pension funds, insurance companies, sovereign wealth funds, bond funds…. and some are in the US banking system.

          US Commercial banks have $20 trillion with a T in assets and about $2 trillion in equity capital. And CLOs are only a small slice of US banking assets.

          US banks mostly hold the top senior tranches of CLOs, and those tranches will be mostly OK because the lower tranches absorb the losses. That’s how CLOs work.

          Also, CLOs contain slices of loans that are secured by collateral, and that collateral has some value. So the recovery for the loan might 50%, or 30% if the collateral is in terrible shape. The loans rarely go to zero.

          There may be some losses at the top senior tranches, after the lower tranches get wiped out, but they will be relatively small. So people who think that CLOs are going to collapse the US banking system are braindead. The US banking system has other problems, not CLOs.

          CLOs will cause losses globally for investors, including foreign banks, hedge funds, PF firms, pension funds, insurance companies, sovereign wealth funds, bond funds… you name it.

        • sunny129
          Jun 20, 2020 at 8:14 pm

          Your stance changed drastically. You said The author missed some facts about the banks. There is very good detailed discussion ( back and forth emails)on nakedcapitalism on the same very issue between Yves Smith and the author of the article Frank Portnoy (More on Frank Partnoy’s Misguided Take on Collateralized Loan Obligations)

          The gist is that CLOs are not like CDOs and hence his conclusion is wrong per Ms. Smith.
          Per Atlantic:
          The Looming Bank Collapse
          The U.S. financial system could be on the cusp of calamity. This time, we might not be able to save it.
          [..}the CLO market is bigger than the subprime-mortgage CDO market was in its heyday. The Bank for International Settlements, which helps central banks pursue financial stability, has estimated the overall size of the CDO market in 2007 at $640 billion; it estimated the overall size of the CLO market in 2018 at $750 billion. More than $130 billion worth of CLOs have been created since then, some even in recent months. Just as easy mortgages fueled economic growth in the 2000s, cheap corporate debt has done so in the past decade, and many companies have binged on it.[..]
          Fed’s Powell – CLOs are 1/10th of 1% of bank assets, hence no risk!!!
          [..]The danger is that the loans or the risk sold off will come back to haunt the banks. Says Charles Peabody, a banking analyst at Mitchell Securities in New York: “CLOs are just financial engineering that hide most of the risk that banks are taking. I call them CLOWNs – collateralized loan obligations worth nothing. US and European banks’ increased use of CLOs represent a definite danger to banks. They’re a risk that the system cannot afford to take now.”

          One of the dangers of CLOs is that banks are not necessarily delinked from their securitized loans because there is still the risk of the issuer ruining its reputation if its CLOs default[..]

          Apparently CLOs cannot withstand and DIDN”T expected the downward revision by rating agencies!
          They said the same thing about sub-prime mortags being just under 2% of mortgages!

          I am NOT picking on you. Just stating that this is a controversial issue by the experts themselves!

  88. DR DOOM
    Jun 20, 2020 at 1:10 pm

    Gold good,Silver good, Cash is quick good, Land,tricky good,Timber on land,good . Being Debt Free,real gooooooooood!

    • RD Blakeslee
      Jun 20, 2020 at 3:13 pm

      Agree with you on all counts.

    • 91B20 1stCav (AUS)
      Jun 24, 2020 at 1:58 am

      Dr.D-concur with you and RD, #3, 4, 5 and especially #6 have worked for me…

      Again, a better day to all.

  89. David Hall
    Jun 20, 2020 at 1:26 pm

    Treasury yields are poor. In 1999 they were much richer. Switching from a zombie company to a 5% treasury yield was totally logical in March of 2000.

  90. Jim
    Jun 20, 2020 at 1:55 pm

    Wolf He who lives by crystal ball will be forced to eat broken glass. Turn off all the news and take a look at ZM,TWLO or NET etc one of many leaders in this market. Does that look like selling?

  91. Nate
    Jun 20, 2020 at 2:37 pm

    I am pretty sure the market can remain insane longer than I can stay solvent, to paraphrase somebody’s quote. :)

    Best of Luck tho!

    • MonkeyBusiness
      Jun 20, 2020 at 3:07 pm

      Trust me, you don’t actually understand that quote as much as you think you do.

      You can only become insolvent if:
      1. You don’t have tight stops. Say within 10 to 20%
      2. You are playing with money you can’t afford to lose.
      3. You have no way to replenish the money that you’ve lost through other means.

      • Lisa_Hooker
        Jun 21, 2020 at 12:44 pm

        4. The market gaps over your stops and you scramble to place new stops and wait for the orders to fill.

        • Nate
          Jun 22, 2020 at 5:58 am

          Yeah I love those giant overnight gaps… My previous comment is tongue in cheek of course. I am aware of various strategies to avoid financial doom, thanks. Would rather stay sane than worrying about it all night tho. :)

  92. Jun 20, 2020 at 2:56 pm

    Good luck with your short position.

    • DR DOOM
      Jun 20, 2020 at 4:13 pm

      Dave Mac : Sounds like you are waving at Wolf and a boat load of fellow “shorters” for the last time after you just kicked their boat across the River Styx.

  93. Mortadell
    Jun 20, 2020 at 3:09 pm

    Hello Wolf

    I like you had the previous shorting scenario back in March.
    I’ve played the UPRO and SPXU all the way through.
    Let it go the last couple of weeks because its just too exhausting.
    I’m with you though in this new short.
    By the way, I think these were some of the most brilliant comments read here today. Thank you all for the enlightening commentary.

    Keep one thing in mind as you go forward; The speed which the FED can
    change directions up or down is frightening, thats why Wolfs trade will work, just requires patience and big brass balls.
    As Dr Doom said, the market will move when it can take the maximum amount of people with it, up or down, they don’t care.
    It will just take one comment to start the flow.
    Remember as we sit here and read there’s a guy in the middle of nowhere living in a mud hut and he has a cell phone.
    He thinks he can play too. It’s all just a game, nothing more.

    By the way, here in Toronto, the hospitals are being inundated with very sick people all of a sudden. They tried to hang on at home but couldn’t wait it out. Now the the hospitals are jammed with oldsters who can’t go to nursing homes because they are slammed.
    There is no second or further waves, it’s all just degrees of sickness.
    It won’t ‘go away’.
    I’ll leave you with this, Asians still paying over list for expensive town homes on my street, lady who works at TD bank told me seniors are coming in at a steady pace liquidating their bank accounts.
    Put that in your pipe and smoke it.
    Gotta love this short….

  94. RD Blakeslee
    Jun 20, 2020 at 3:10 pm

    If stock prices drop Monday, I will conclude that Wolf has arrived – he’s now a martket-mover!

    • Jun 20, 2020 at 3:51 pm

      🤣🤣🤣🤣

      My little-bitty site cannot move the largest stock market in the world. It cannot even move an individual stock.

      • RD Blakeslee
        Jun 20, 2020 at 7:44 pm

        But I believe you have the faith of a mustard seed and will move the mountain!

  95. Jim
    Jun 20, 2020 at 3:19 pm

    Quote of the week month Wolf….The market was speaking to us with the sharp V bottom; screaming that we/U.S. will figure this out. Those who listened are legends.

  96. Jun 20, 2020 at 3:20 pm

    Anyone see the huge open interest on the Oct SPY Puts? I took a little nibble but in general I expect summer to be uneventful and then all heck break loose in the Fall (1) COVID resurge during flu season (2) unemployment bonus ending = HARD TIMES are coming

  97. JR
    Jun 20, 2020 at 5:42 pm

    Wolf you are probably a week or two from being profitable on that trade. Then you’ll make a little. Then you’ll lose a bunch. Then you’ll make a Lot. Then you’ll really lose for the next 5 years.

    The bottom is in – at least for the next 10 years. Why?

    Because crashes are very very rare. They happen once every 10 years, maybe 20. We’ve now had 4 since the mid 80s. The idea that we’re gonna crash again from here, only 3 months after the last one is statistically extremely unlikely.

    Crashes come from the unexpected event that nobody knows how to price. Covid, like it or not, is not unexpected anymore. So we aren’t going to crash to a new bottom.

    Also remember the market isn’t rational, nor is it a reflection of the economy of today. It’s more a gauge of the mood of where the economy will be in the future.

    So what will the market do? 3230 again by next weekend. Then 3000 within a week after that. Then 3350 a few weeks later. Then about 2600-2800 by late Sept. at that point we’ll begin a minimum 3 or 4 year bull run that will take us to 5000-6000. Yes, it’s going to double – again.

    Then hold on to your seats because the mother of all crashes will hit and we finally will go into a tailspin that will take 15 years to hit bottom, where the market is back at 1000.

    • MonkeyBusiness
      Jun 20, 2020 at 6:44 pm

      I really like your optimism i.e. unexpected events only happen every 10/20 years. Thank God for arranging things that way!!!! It’s obvious our Lord and Savior are also invested in the stock market!!!!

      I am not saying you are wrong, but remember the old adage. Past performance is not indicative of future results. History rhymes but they don’t quite repeat. If tomorrow a huge earthquake happens in California and wipes off all those tech companies, are we still going to argue that the current stock market is already discounting that?

      Anyway, it does NOT matter what the stock market value is at any specific time. What’s important is what it is when you NEED the money.

    • Jun 20, 2020 at 7:06 pm

      JR,

      This is a trade, not a long-term position. “My time frame is several months,” I said in the first paragraph. I will be out of it — with a gain or a loss — well before the year is up. I’ll announce the results when I cover the short.

  98. Short_Seller_Blake
    Jun 20, 2020 at 6:08 pm

    You just made the ONLY credible news source out there that’s not propaganda…. ZEROHEDGE!!!! Congrats Wolf!!! I’ve posted a few of your articles on there so i’ll take the credit for the exposure lol

    https://www.zerohedge.com/markets/i-who-hates-shorting-just-shorted-entire-stock-market-heres-why

  99. Maximus Minimus
    Jun 20, 2020 at 7:28 pm

    I read it on another site, and just came to say: I hope you hedged it in Las Vegas, the rational casino. Good luck.

  100. Leo
    Jun 20, 2020 at 7:39 pm

    Do we know where all the bailout money is going? I think an article on this would be very useful. Also, what do we know about possible additional stimulus bills and future fed plans? What was the fed trying to achieve in the first place? Prevent large companies from going bust? Bail out over-leveraged hedge funds? Something more?
    The market is really crazy and shorting is difficult now. Puts are very expensive. Selling naked calls maybe? I feel apprehensive about going full short S&P 500 without fully understanding what is going on. I am also looking at individual stocks and I finding hard time to figure out what to short.

Comments are closed.