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For those concerned about the Federal Reserve's violation of FRA 13(3) and CARES 4003(c)(3)(B) protections (which "for the avoidance of doubt" are explicit about collateral and avoidance of taxpayer losses), the Fed answers to your reps in Congress.
hussmanfunds.com/comment/mc2004…
… and here's where we watch a crime unfold in real-time Image
Note this: I care about Fed buying uncollateralized securities because it's an illegal diversion of public money.

But if you imagine a $6.5T Fed BS (85% which is U.S. Treasuries & MBS), is a "put" for $42T of corp equities+$10T nonfin corp debt+$23Tn T-bonds, you're in trouble. Image
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John P. Hussman
@hussmanjp
Understand this NOW. The Fed is buying OUTSTANDING corporate bonds - you know, the ones that financed buybacks to offset stock-based compensation for a decade. It needs a shell (SPV here, Maiden Lane in 08) so it can treat unsecured debt as if it’s legal 13(3) collateral.
Buying outstanding corporate bonds on the secondary market with public money does NOTHING to put money in the hands of employees or even those companies. These are not primary transactions. They’re intended to support Wall Street, not Main Street, using public funds to do it.
Look. It's FINE for Fed to buy loans ORIGINATED by banks to businesses under CARES, in the amount LIMITED by Congress, on terms of forgiveness or repayment specified by CARES. That's the ONLY qualifying private debt under 13(3) & 14 of FRA.

Buying ETFs is illegal f---ing MADNESS
Read 7 tweets
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John P. Hussman
@hussmanjp
On what authority? Neither Section 13-3 nor 14 allow it, and those are the only applicable portions of the Federal Reserve Act involved. There were no provisions in CARES for this. Intentionally. This would be a real-time violation of the law.
@ChrisVanHollen @federalreserve
YES. the Fed is SAYING that 13-3 gives authority, but it DOESN'T. If the Fed buys junk bonds, what POSSIBLY ensures "that the security for emergency loans is sufficient to protect taxpayers from losses"?

JAIL. THEM. ALL.

Help workers. Don't socialize private investment losses.
Part of a memo I just fired off to Congressional contacts.

@FederalReserve
Read 3 tweets
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John P. Hussman
@hussmanjp
"Overbought conditions in unfavorable Market Climates tend to be rare. The steepest bear market losses tend to follow immediately on the heels of such overbought conditions" - Me, December 10, 2007

Market internals still negative. Valuations imply 10-yr SPX returns of just 0.5%.
Pre-loading - first on the importance of market internals
Pre-loading - second on my error in this cycle, which will help to avoid the mistake of assuming that valuations and market internals no longer matter
Read 5 tweets

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