Alongside the president's tweeting, the Federal Reserve began purchasing corporate debt ETFs, beginning with investment grade bonds but eventually swinging down the ladder to high yield, among the most dodgy and riskiest of fixed income products. The intent was announced on March 23, as a response to the coronavirus epidemic, and put into practice during Tuesday's session, with investment firm, BlackRock, as the intermediary, using funds from the Fed and US Treasury.
Seen as the ultimate backstop for stocks and the debt market, the scheme is one of nine separate facilities the Fed is employing to help stabilize - or in most cases, pump higher - markets.
The various backstops being deployed by the Fed, in conjunction with the currency-killing qualities of negative interest rates should eventually result in a gigantic bubble in the Fed's balance sheet, holding investment vehicles that are headed straight to the fiat scrapyard, another sign that the world is heading toward a currency crisis and a new monetary regime.
The attempt to vault beyond the 50% retrace of the March collapse was the third in the past month. The Dow peaked on April 17 when it closed at 24,633.86. After Tuesday's selloff, the head-and-shoulders chart pattern is clearly defined, a strong signal that a major decline is likely.
In recent days, and just prior to its halving, Paul Tudor Jones has bought into Bitcoin, expressing his view that the cryptocurrency will act as a hedge against the inflation he sees coming from central bank money-printing, telling clients it reminds him of the role gold played in the 1970s.
In a quote that is certain to become his trademark, Jones, founder and CEO of Tudor Investment Corp., said:
“The best profit-maximizing strategy is to own the fastest horse.”
Unabashedly, Jones believes Bitcoin will win the investment race over the coming years, along with gold, silver and other hard assets.
Jones' entry into the crypto-market stands in stark contrast to famed investor Warren Buffet and his holding company Berkshire Hathaway. Buffet has openly stated that he would never invest in gold or Bitcoin. After selling off his positions in the airlines at a sizable loss, Buffet's Berkshire Hathaway is sitting on some $150 billion in cash, loathing the concept that he finds nothing of compelling value to purchase presently.
Obviously, one of these investing titans is going to be proven wrong. It appears that at the present time, Jones may be holding the winning hand, or, in racing parlance, the live long shot.
At the Close, Tuesday, May 12, 2020:
Dow: 23,764.78, -457.21 (-1.89%)
NASDAQ: 9,002.55, -189.79 (-2.06%)
S&P 500: 2,870.12, -60.20 (-2.05%)
NYSE: 11,055.58, -225.78 (-2.00%)
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