3/30/2020 Market Update – Encouraging signs in the equities and debt markets

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-A discussion of today’s important S&P 500 futures market action; just look at the major monthly moving averages.

The 50-month and 100-month MVA’s seem to be important here. When all things break loose, simple mva’s are important measures.

-The Fed will do the heavy lifting as long as the USDX remains above 96-97. It is currently resting at about 99, despite all the domestic QE.
-MSM and alt-media reporting are encouraging greater Fed QE numbers. These trillions must find a home. It’s just a matter of time until they end up in the asset markets. Imagine the DCF calculations with a 0% risk-free rate (10-year UST).
-The commercial and high yield debt markets show resilience and have come back to life, now that the Fed will backstop the markets. This is perhaps what the equities are keying in on.
-US Treasuries still offer the best relative value with their elevated yields. However, their yield advantages have dropped tremendously vis-a-vis other prime credit nation-state debt, as the Fed is unleashing about $4 trillion in permanent QE, as well as formulating long-term commercial and asset-backed lending programs. This is on top of the $2.2. trillion in fiscal stimulus.
-The system is functioning exactly as we have theorized for years.
-One thought here. The PTB may not wish to see Trump leave office, but used this manufactured crisis to force his hand to unleash this spending during an election year. If Trump were not running for reelection, there would have been a high probability he would have minimized this crisis.
-Mortgage rates keep dropping now that the Fed has already bought over $200 billion in mortgages. QE and fiscal stimulus will further impoverish the 30 million recently unemployed; many who will lose their homes and will become renters, causing rents to rise.

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