ChristopherCarrollSmith

ChristopherCarrollSmith Updated 

Bull-market pricing in a bear market The S&P 500 is currently priced like we're still in the 10-year bear market. We're well above the 10-year upward-sloping trend line, and we also ended today right on top of the 50-month moving average. We're also well above the 2019 lows. This probably isn't sustainable, however, because just about all the analysts agree that...

ChristopherCarrollSmith Updated 

An article in The Guardian reveals that the world's oil storage is now at 75% of capacity, and Canada may be just days away from reaching capacity. The rest of the world may still have a couple months. But as oil storage runs out, storing excess crude is going to become less of an option for producers. They will have to either stop production or sell at lower...

ChristopherCarrollSmith Updated 

I've just learned that oil tanker booking fees are near record highs as oil producers scramble to ship their excess product to available storage locations, which are filling up fast. This suggests that the share price reduction in tanker companies like Frontline may be unwarranted, and they may be able to sustain their dividends in a market in which many dividends...

ChristopherCarrollSmith Updated 

Noble Midstream Partners has been finding some support in this area as its dividend yield reached 50%. This morning it also has a tailwind from geopolitical conflict in the Middle East that may pressure oil prices in an upward direction in coming months (although of course coronavirus puts price pressure in the opposite direction). Noble also released a press...

ChristopherCarrollSmith Updated 

The Fed today announced that it will make "unlimited" bond purchases (QE infinity), as well as buying mortgage-backed securities, corporate bonds, and bond ETFs. It's also opening two new credit facilities for businesses and expanded the existing facilities. Basically it's going to print as much money as it takes, and it's going to do it very quickly. This should...

ChristopherCarrollSmith Updated 

The biological crisis has stabilized, but the financial crisis is just beginning. True, the Fed has been injecting huge amounts of money into the financial system via repo and treasury and mortgage bond buying. In just a few weeks we're doing more QE than we did over 8 months back in 2008. That should help prevent outright bank failures, but there's still going to...

ChristopherCarrollSmith Updated 

If you own US dollars, you've already got one of the best-performing investments of the month of March. The big deflationary spike shown in this chart caught a lot of analysts off guard. The Fed cutting interest rates to zero and pumping trillions into the financial system should be inflationary, but it seems the stimulus isn't enough. For reasons tied to the...

ChristopherCarrollSmith Updated 

It's not a good time to own the traditional safe havens of gold and silver amidst deflationary pressure on the dollar from oil's selloff. True, the federal government is injecting a lot of cash into the financial system and has interest rates at zero, which traditionally would be inflationary. But the price drop in oil is just SO big that it offsets those drivers...

ChristopherCarrollSmith

Consumer staples have sold off along with the rest of the market, but if grocery store shelves are any indication, this sector should have a pretty good quarter. With people eating out less and eating at home more, expect several months of strong demand and good free cash flow in this sector. RHS looks to me to be finding support, and the big volume spike today...

ChristopherCarrollSmith

Berkshire Hathaway is famous for sitting on a huge pile of cash. In fact, Morgan Stanley complained just last year that Berkshire hadn't been "aggressive" enough with its cash. Well, now Berkshire's cash pile is looking pretty good as the market heads into a major downturn and buyers have lots of opportunity to snatch up assets on the cheap. In addition to...

ChristopherCarrollSmith

Congress's coronavirus stimulus deal reached Friday night included a provision requiring health insurers to bear the full cost of coronavirus test kits and to waive copays. The federal government will pay the cost for the uninsured. This will probably hurt health insurers Monday, though it might be good for service providers. Here's another piece of bad news:...

ChristopherCarrollSmith Updated 

Oil may rally tomorrow on news that the US is currently conducting operations against Kaitab Hezbollah in Iran.

ChristopherCarrollSmith

The S&P 500 today is testing a trend line that it has held for 10 years. If it closes below this trend line, we will essentially be in official recession territory. It's possible we get a bounce from the trend line, but only if the administration walks back this 30-day European travel ban they announced in a panic yesterday. The travel ban will cause massive...

ChristopherCarrollSmith Updated 

Today Trump and Pence seemed to finally get serious about preventing a coronavirus recession, offering a payroll tax cut, a bailout of the cruise line industry, and a promise that coronavirus patients won't have to pay for testing. Admittedly these things are small potatoes compared to the scale of business disruptions that may be coming, but it was meaningful...

ChristopherCarrollSmith

Trump is meeting with bank CEOs today to discuss how to support small-cap companies with large debt burdens. The high-yield junk bond market has been bleeding lately because many of these bonds are expected to go into default later this year. However, if Trump's meeting produces some kind of stimulus or bailout, we might see this market rally. Cheap March 13 or...

ChristopherCarrollSmith

Interest rate forecasts have been headed toward zero for months, but they've reversed course after the payroll tax cut. Now that the Trump administration has found other tools for stimulus, it's likely that interest rates will hold steady. Time to take profit on gold (XAUUSD), silver(XAGUSD), long-term bonds (VGLT), real estate stocks (EWRE), and short positions...

ChristopherCarrollSmith Updated 

Expect a red week this week as the SPX plunges toward 2700. Odds of a recession by November have climbed to 62% on the PredictIt prediction market as Russia and Saudi Arabia kick off a price war in oil and gas. As oil and gas prices fall, the risk of upcoming defaults on high-yield corporate "junk bonds" increases greatly. That puts the banking sector at risk,...

ChristopherCarrollSmith

OPEC+ failing to cut production Friday was bad, but things are about to get oh so much worse. The Saudis announced today that they are increasing production and entering an all-out price war with Russia. We may soon see US oil prices head toward $20 per barrel. There's broad speculation among analysts that Russia is deliberately trying to collapse oil and gas...