Powell Stimulates Nonstop; When Voltron Meets Hoth
The Most Stimulating Man in the World
You want stimulus?
You can’t handle all the stimulus the Federal Reserve is pumping out right now.
In a move that almost lifted the markets into positive territory this morning, Federal Reserve Chairman Jerome Powell announced unlimited stimulus — yes, unlimited.
“Aggressive effort must be taken across the public and private sectors to limit the losses to jobs and income and to promote a swift recovery once the disruptions abate,” the Fed said in a statement.
I think it’s safe to say that Jerome Powell is the most stimulating man in the world right now. I’m glad at least someone in Washington is taking COVID-19 seriously. But what are the details?
As part of its effort to save the U.S. economy, the Fed will purchase an unlimited amount of mortgage-backed securities and Treasurys, offer $300 billion in new lending programs and set up three new emergency lending programs:
- The Primary Market Corporate Credit Facility will issue new bonds and loans.
- The Secondary Market Corporate Credit Facility will keep liquidity in corporate bonds.
- The Term Asset-Backed Securities Loan Facility will allow securities backed by auto loans, credit card loans, student loans and Small Business Administration loans.
The Fed even announced that it would expand its Money Market Mutual Fund Liquidity Facility to aid local governments and municipalities.
That’s a lot to take in, so here’s the short story: Debt and credit, for both the government and businesses, is all a-fluster … and the Fed set up a few groups to handle the $*%# show.
It certainly seems like the Federal Reserve covered all its bases. This level of action is unprecedented — even in the midst of the 2008 financial crisis. I mean, unlimited stimulus? It’s unheard of.
So why, then, did stocks go from green to red once the market officially opened?
Because, while the Fed clearly has its head in the game and understands the severity of the problem, lawmakers do not.
The thing is, you can throw money at Wall Street all day long, but that only treats the problem’s symptoms. And investors know one crucial thing that Washington has yet to grasp: Viruses don’t care about money.
Yes, shoring up businesses is important. However, if consumers can’t leave their homes, go to work or take care of themselves in the midst of this crisis … what good is that money?
Perhaps a better way to put it is this: If the stimulus is to help cover missed rents, late mortgage payments, late bills, et cetera, for how long is this money good?
Easing up on the stay-at-home advice from the Centers for Disease Control and Prevention won’t fix this problem. In fact, it may make things much worse.
We need a solid plan to test, quarantine and treat COVID-19 sufferers. We need solid support for regular Americans … the average Joe, if you will … the people who make the U.S. economy turn.
When Washington finally pulls its head out of the partisan sand pit…
When it finally passes legislation that treats the COVID-19 problem and not the symptoms…
When it reassures people that it has their best interests at heart, and not corporate bailouts…
Only then will the markets finally begin to find a bottom. Until that day, we must take matters into our own hands.
Remember this: It’s you, me and the average Joe next to you keeping America ticking forward to a better future.
If Washington won’t look out for the guy on the street, you can bet that Great Stuff does. We won’t leave you out on your own.
As we speak, the groundwork for America’s future is being laid — petty partisan politics aside. In fact, Banyan Hill expert Paul Mampilly has been screaming about a “rebuilt America” for weeks now, even in the midst of this volatility.
Paul believes America will emerge from the coronavirus stronger than ever … no matter how long it takes. And the mega trends that he follows (such as 5G and precision medicine) won’t die to market panic.
The Good: Testing … 1, 2, 3?
In order to treat COVID-19, you have to know who has it. And that means testing. Lots and lots of testing. But tests can take hours or even days at overworked labs, exacerbating the problem.
The biotechnology company announced this morning that the FDA approved its COVID-19 IgG/IgM Rapid Test. How rapid is this rapid test? Professional care providers can get results in between two and 10 minutes!
That’s faster than the drive-thru at McDonald’s Corp. (NYSE: MCD)!
Aytu said that it expects to deliver its first 100,000-test shipment this week. With the demand for COVID-19 testing skyrocketing as the U.S. deals with continued virus spread, Aytu could be sitting on a gold mine.
The Bad: As Cold as Ice
When I ran across news about Hoth Therapeutics Inc. (Nasdaq: HOTH) and its deal with Voltron Therapeutics Inc., my ’80s pop culture meter went through the roof. I mean, we’re leveraging Star Wars and Voltron here … what ’80s pop geek wouldn’t love this combo?
After reading through the news, however, I’m considerably less jazzed. Hoth entered a joint deal with Voltron to develop a self-assembling vaccine (SAV) to prevent COVID-19. That sounds impressive … most impressive. SAVs sound just as futuristic as Hoth and Voltron.
But … SAV technology is still in the “proof of concept data” phase, according to the report. In other words, if this technology proves viable, it’ll be great … someday. But not today.
As I’ve warned before, it’s all too easy to fool investors with vaccine promises these days. Despite the companies’ longer-term outlook, HOTH shares surged on the news today.
Don’t buy into this hype. Your portfolio will freeze before you reach the first profit.
The Ugly: Unlimited iPhones?
Last week, Apple Inc. (Nasdaq: AAPL) announced that it would limit the number of iPhones consumers could purchase via its online stores. The company was concerned it wouldn’t be able to meet demand due to a slow ramp-up at its Chinese production facilities.
However, those concerns appear to have fallen by the wayside. Today, Apple dropped the two-device limit across the board on iPhones. (Some devices remain limited, however, such as certain MacBook models and iPads.)
The question is this: Are Apple’s Chinese supply lines really near full strength? Or did demand fall off a cliff to where limits don’t matter anymore?
As in all things, its probably a combination of both factors. Supply probably ramped up enough to cover the weak demand that Apple sees for iPhones right now.
Apple has yet to comment on the lifted limit. But let’s be real here: U.S. consumers are far more worried about finding toilet paper and hand sanitizer right now than buying iPhones.
If you’re not familiar with Dr. Fauci yet … what rock have you been living under?
(Seriously, what rock? Because that sounds like a really safe place to ride out the coronavirus … I’ll bring the drinks if you have toilet paper.)
For those who haven’t come out of their safe place, Fauci is the director of the National Institute of Allergy and Infectious Diseases. He’s also a member of the White House Coronavirus Task Force.
Fauci recently interviewed with Science Magazine, where he addressed questions ranging from “How are you managing to not get fired?” to “We’ve had all this pandemic preparedness. Why did this fail? What went wrong?”
If you’d like a better insight into the COVID-19 situation and President Trump’s reaction — as told by the No. 1 virus expert in the country right now — this interview is an excellent read.
Great Stuff: Catchin’ up With Y’all
Last week, I asked you your thoughts on bailouts, buybacks and stimulus — oh my!
I’ll say this: If the Feds can’t deliver in this trying time, you sure do, dear reader. With how many emails flooded the Great Stuff inbox over the weekend, you’d think millions of Americans were stuck at home looking at their screens or something. Wait…
(I know, I know … not all of our readers are stateside — I see you writing in from the great white North, Ashley H.!)
I just wanted to take a second today to thank all of you for writing in to share your thoughts on the U.S. viral reaction. Keep writing in! Great Stuff appreciates every email we read … and yes, we do read every last one of them. That said, our overflowing inbox is sure to make for rip-roaring Reader Feedback later this week. Just you wait!
In the meantime, write in to GreatStuffToday@BanyanHill.com if you haven’t already. We’d love to hear your thoughts on the market volatility, the Fed fun house and the quarantine in your neck of the woods.
And if you need some reassurance or an extra bit of positive oomph, remember to check out Paul Mampilly’s vision for a new, rebuilt America 2.0 — viral markets be damned! (Click here.)
Until next time, good trading!
Editor, Great Stuff