President Trump: The NEW one and only politics thread

We have had a massive sell off over the last few weeks that shaved more market cap off of publicly-traded American companies, and faster, than any stock market crash in history. It has mostly fed off of 1) The credit markets, which totally seized up creating panic and signaling massive credit defaults on the horizon, and 2) forced selling / margin calls in equities -- a lot of way overleveraged players got hit hard.

On number 2, there were signs yesterday that the forced liquidations had reached their climax. Anyone seasoned, just had to watch the price action to know we were getting a short-term bottom. And on number 1, central banks around the world have announced asset purchases that equal 9 percent of global GDP and the Federal Reserve yesterday hit markets with "QE Infinity," which means that as a percentage of GDP, they could end up monetizing way more debt than that. That created a small semblance of stability in the credit markets. That isn't a guess. It's what happened. They announced that they will be buying corporate debt for the first time ever, including ETF buying, and. ... the spreads in corporate debt narrowed and found some footing today for the first time in weeks. It's A = B.

1) Things had gotten way oversold on a short-term basis. 2) The first wave of ridiculously overleveraged funds, including a lot of funds that had made the same risk-parity trades, got pushed out. 3) And central banks didn't just come in with bazookas, what they unleashed were howitzers.

4) AND just as that creates a short-term breather. ... Congress is talking about a $2.5 TRILLION spending bill, much of which will come in the form of corporate welfare. Which really is what the trading was all about today.

Those daily wrap up stories sometimes attribute nonsense to the trading action of the day, but if someone wants to say that the stock market ripped higher today on a giant TARP-like spending bill that is going to put the TARP from 2008 to shame, it's not ridiculous. That was definitely the story of the day. If they come out at 11 tonight and say that they hit a snag, you'll see stocks sell off. That is what is controlling the narrative right now.

 

Yesterday, none of the indexes were down 5 percent. The selling was abating quite a bit.

But there were still people being liquidated against their will. You could see it between 1:15ish and the close. Albeit, not at the "puking every salable asset you can unload for whatever you can get for it" levels we had been seeing.

Giant risk-parity funds getting margin calls will always make stocks drop hard. It's why even the Fed announcing a put under stock prices first thing in the morning couldn't even create an up day.

But today? With what was the last of that forced deleveraging out of the way. ... AND stocks maybe the most oversold in history on a relative strength basis. ... traders were primed to be distracted -- at least for the short term -- by more shiny objects like the Fed and a massive spending bill. Today wasn't some random thing. Sometimes things don't play out the way the script has most people guessing, but today? That was the exact script heading into the day.