President Trump: The NEW one and only politics thread

The Fed is buying corporate bonds (illegally, how is this possible?) for all intents and purposes. Here is the term sheet: https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200323b2.pdf

It says, they can now go all-out Japan and buy ETFs: "Eligible ETFs. The Facility also may purchase U.S.-listed ETFs whose investment objective is to provide broad exposure to the market for U.S. investment grade corporate bonds."

And LQD, the largest corporate bond ETF, surged on the news. It also is coming back now.

I know this is meaningless to most people on here, but 6 years ago, this kind of news would have sent traders in trying to front run their buying. That was the result of their bond buying in treasuries and mortgage-backed securitie. Those same traders then took that "carry trade" money and ran up the prices of riskier assets -- stocks, high-yield bonds, etc. That has been the story of the last 7, 8 years.

Now, unless something changes. ... The Fed isn't getting that monkey behavior the way they want. They tried to backstop commercial paper, money markets, short-term muni bonds, and it hasn't stopped the panic. Now they think they can create stability in corporate debt. If that doesn't work, what is next? Are they going to give themselves authority to buy stocks and junk bonds directly to prop up prices of all the overpriced assets they have created over the last 10 years with freshly-created money? And what do they think that accomplishes?

It looks like it is going to be up to Congress to reflate the bubble. Assuming the Democrats and Republicans agree on something, and they announce $2 trillion (or whatever ridiculous number they come up with) of handouts and bailouts and Santa Claus money, what if risk assets don't reflate on that either anymore?

Until the Fed did yet another "whatever it takes," this morning reminded me of the day in October 2008, when TARP failed the first time and the stock market tanked. It then recovered when they finally passed the bill. That is what they are hoping for now.

The problem is that the underlying debt and leverage that created an "everything bubble" this time, is way bigger than it was in 2008. There may not be a way to create that fantasy anymore and kick the can down the road, in which case, the deleveraging is going to happen anyhow, while they flail away looking powerless.

 

I don't need, or want, a video with Michelle Obama or Ellen DeGeneres or Kelly Clarkson.

But I wouldn't mind a president who is honest about what is going on, then got out of the way. ... oh, and had a straight-shooter type come out every day and give all of the best-available information to people. If the president was charismatic enough to do some reassurance and inspiration, great, but that isn't Donald Trump -- he's going to look like a douche, because he is a douche. So just be honest and step aside and you have done your job. It doesn't need to be produced like a reality TV show or something for social media. That doesn't help anyone. It actually makes you suspect for a lot of people in a time like this, because it comes across like you are trying to sell bullshit.