Opportunity From Regime Change

May 3, 2020

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https://twitter.com/epomboy/status/1255520425595088901 

In my view, this is a picture of a failing financial system. What little growth there has been since 2008 has been driven increasingly by debt. However, monetary velocity continues to plummet.

The Fed is having to make up the difference with ever more aggressive policy measures, but will the Fed ever be able to stop? At what extremes does confidence in the system begin to fall?

The US stock market peaked last week with liquidity pulling back. I don’t believe that is a coincidence.

https://wolfstreet.com/2020/04/30/fed-drastically-slashed-helicopter-money-for-wall-street-wealthy-qe-down-86-from-peak-week-in-march/

Warren Buffett this weekend tried to explain why Berkshire Hathaway now has more net cash even than Apple. The chart below shows that Buffet’s cash increase, since 2008, correlates well with the chart above.

He surely understands the pressure on the Fed, but does not sound very convinced they can do enough.

“We do know the consequences of doing nothing,” Warren Buffett says. “That would’ve been the tendency of the Fed many years past… We do never wanna be dependent on not only the kindness of strangers but the kindness of friends.”  

https://www.zerohedge.com/markets/brace-monday-massacre-buffett-liquidates-all-airline-holdings-hints-berkshire-remains 

Buffett must be acutely aware about the fragility of the banking system.

Richard Duncan, in a subscription video, goes into deep analysis of the balance sheet of JPM. Here are his conclusions:

https://richardduncaneconomics.com/us-banks-on-life-support/  

Take a step back and look at the bigger picture. Gordon Long explains:

https://www.youtube.com/watch?v=TmyVlOEyVT8&feature=em-uploademail

Crescat Capital last week provided an update on their viewpoint:

https://www.youtube.com/watch?v=qfisLXIoi8M&t=356s

Also, here’s the latest from Sven Henrich, his last free video, “Smackdown”:

https://northmantrader.com/2020/05/03/smackdown/

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