We bears all want to see that epic crash.
There are so many things working against that happening.
A quick 🧵
How did this go from 1T to 8T?
Its nearly the size of the feds balance sheet.
Its not a coincidence - corps took on debt and bought back stonk, executives paid in options got rich.
Even in stagflation, corps will do well - they are sitting on mountains of debt - those that globalized will benefit from incredible triage in labor rates around the world.
Habeeb in india is now nearly 20% cheaper to employ...
Stagflation makes US employees even MORE expensive - corps cant (or wont) afford; so more work will be shipped overseas, more ppl in america will fall behind.
US becomes more of an empty shell, 2 societies - one at the top making all the important decisions where labor will be employed and factories will be built and the other barely holding on
What is the counter argument?
And as you consider all this - consider this as well - thats 7T in injected capital.
Where will it go?
Say there is a crash - will ppl pull all their equity out of the market?
Will they buy commodities? Bonds? or just hoard cash?
Really think this one thru...
Here is Druk talking about the dollar.
US has a mountain of debt and its nearly impossible to impose new taxes without bringing the entire house of cards down.
So the fed will have to monetize.
This would weaken the dollar, stonks moon.
Anti-milkshake?
Nearly every corporation is doing same thing - taking on debt, buying back stonk- here is $UNH
$LOW
$AAPL
$GE is an interesting study - they are paying DOWN debt AND retiring shares....this might be set to explode higher next earnings....
$WMT is doing it
$TGT is doing it
But heres the problem - Trump had the best intentions when he cut corporate taxes; He then imposed HI import tarrifs on china - the idea - coerce corporations to invest domestically.
Make imports EXPENSIVE
Instead?
Corporations took the money and ran...
So now re-consider the "dollar will weaken" - ok - all these corps took on trillions in debt combined to buy back stonk.
They have to pay that back.
With what......rubles? yen? yuan?
#milkshake
@SantiagoAuFund
@SantiagoAuFund And when u rich the LAST thing you want is a tax event - aka selling shares.
Its MUCH better to just borrow against them.
Stonk buybacks make what you hold "more marginable" - aka - you can write ++loan against them.
This works so long as stonk goes up.
seekingalpha.com/news/3890287-p…
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