On Monday this week they bought 16,244 bitcoins. 18 times the daily mining supply. That’s one fund manager. We have no idea how much Coinbase, PayPal, Square are consuming.
$1.9 trillion of spending to get us started under the banner “The America Rescue Plan”. I have to say, that’s a bit of a negative tagline and a small child could have done better. Perhaps “Money will fall from the sky” or “Get your free stuff here” would have been more enthusing for the populace.
The instructions were clearly to “spend less than $2 trillion”, perhaps because it sounds better. Exactly the same thing happened in December with the $900 billion relief plan. A number very clearly less than $1 billion. The smoke and mirrors of number play works just as well with a record setting stimulus plans as it does with a 99 cent ice cream.
To the detail:
- Topping up December’s $600 giveaway with another $1,400
- Increasing federal unemployment benefit to $400 per week
- Increasing the minimum wage to $15/hour (almost doubling it)
- Extending the eviction moratorium
- $350 billion in state and local government aid
- $10,000 in student debt forgiveness
- Lots of other pet projects.
Biden had this to say, it reads like a joke but he was serious:
In even more exciting news, Biden also announced that his long term stimulus plan would be released in February. That one will deal with infrastructure spending, climate change and racial inequality.
$1.9 trillion and we haven’t even got to the soup course. Stand by.
- We need to “spend big” to get out of recession
- Interest rates will remain low for a “very long time”
- Bitcoin is bad because of terrorist financing (which must make the USD really bad)
I bet questions are being asked at Credit Suisse too, coming in with the highest fee of $292,500 when Citibank got away with $17,100 a few months later.
The bottom line is that Janet Yellen is an absolutely awful public speaker. She is so boring and so heavily politicised she can’t afford to say anything remotely interesting. So why did these firms pay so much money to have her talk for an hour?
- The 2 year US treasury yields 0.14%
- The inflation rate in the is 1.2% (at December 2020)
- Risk Free Rate: 0.14% – 1.2% = –1.06%
That rate, or near derivations of it, are included in nearly every financial model in the world.
If you feel like something is wrong and that valuations of equities are a little bit high. Look no further, the issue is the bond yield. Based on that yield stocks are currently massively undervalued. It is complete nonsense that this is true, even though intuitively we know that it is false.
The stock market is likely telling us that bond prices are wrong, not the other way around.