Hey Subscriber, 

You know the old saying "Denial is NOT a River in Egypt!" 

Well... regardless of your politics (and yes as a publisher and editor of investment newsletters for 25 years I am massively aware that most of our average beloved subscribers are politically just slightly to the right of Ghengis Khan, ok?), when the White House came out Monday and said "We quit--the Covid-19 virus is like the flu. We followed the scientists and the second wave arrived anyway" the stock market became slightly unglued. 

Now before the nasty emails and texts start flying at ME ladies and gents...to be clear... when White House Chief of Staff Mark Meadows told CNN on Sunday that the White House has given up trying to prevaricate the coronavirus into submission, I and every money manager I know shuddered. 

The effect, with new cases spiking across the country and the 7-day infection data at an ALL-TIME HIGH, to the non-partisan stock market, was the president’s oft-repeated "we are rounding the turn” against the virus was murdered and dumped in an unmarked grave.

“We’re not going to control the pandemic . . . it's a virus like the flu.” Meadows said. “We are going to control the fact that we get vaccines, therapeutics, and other mitigations.”

9% down in three days. Wow--so how is THAT working out for the POTUS who judges his administration by the stock market (which we love of course!)

I guess when the POTUS was asked about the American response to the Covid-19 epidemic and answered "It is what it is" he really meant it.

I know this because in a press release TODAY from the White House . . . on the SAME day the US recorded our HIGHEST ONE DAY infection rate and hospital ICUs reached full capacity in 13 states, the press release claimed "Victory over Covid-19."

Beyond the nuclear powered cognitive dissonance coming out of the White House, here's the wee problem I have from today's data points to, God willing, a final election result next week.

1) We all know what muscle memory about traumatic events in our lives is like--when we see or hear about a traumatic event that we have previously experienced in our lives, we automatically go to that place in our minds and relive it. Watching the stock market react to unambiguous data showing "Third Wave" of COVID-19 infections and hospitalization worldwide was enough to evoke the selling muscle in many investors' memory of early March when it became clear "We have the virus sealed off--nothing to worry about" became the words on my old pal Larry Kudlow's gravestone. 

Yes, the market hates uncertainty blah blah--but this is different--we now HAVE certainty about multiple economically disturbing events to the "macroeconomy" and especially to small consumer business microeconomy here and around the world. 

This chart, created by Time magazine’s Chris Wilson, shows only U.S. cases, and when updated tomorrow will show we have shattered the transmission rate per 100k citizens. The real proxy for the fear factor in this pandemic is, of course, the rate of change of the rate of change in hospitalization cases and fatalities. Thankfully we have learned 10 years of Covid-19 healthcare do's and don'ts that death rates per admission WILL be much lower than March/April. 

The numbers are troubling throughout the Northern Hemisphere, too as the weather grows colder, with new daily records being set in Italy, Spain, and elsewhere. Hospitals are filling up across Europe and we can’t just applaud frontline health workers and send them thoughts and prayers as we did back in the spring.

They need real capacity, reinforcements, and protective equipment this time and in the United States, we still don't have NEAR the capacity we should in light of the $trillions spent from the CARES Act. 

So What's the problem with the stock market this week?

For the first time, I (and everyone else who manages money for a living) can make a case for the ignition of a negative downward spiraling economic feedback loop of self-reinforcing macro and microeconomic contraction IF WE DON'T get to a working relationship with the Third COVID-19 Wave and CARE ACT 3.0 $CASH into the accounts of the bottom 60% of American households ranked by after-tax take-home income NOW (by the end of the year). 

The PROBLEM with owning stocks right now (even with free money from the FED) is we now TOO MANY KNOWN Economy Killers/Self-Inflicted Economic Wounds Plus a BIG UNKNOWN Outcome of the First Federal Election held in the middle of a pandemic. 

It's COVID-19 Third wave, stupid, and how it impacts everything from NFL games to your favorite privately owned restaurant or bar.

It's an impending household spending depression without CARES ACT 3.0 checks in JANUARY not March or April 2020.

It's' about 60 million households facing rent eviction/mortgage forbearance laws expiring Dec 31. According to the Fed 25%+ of households now carrying on average $5200 of unpaid rent or paying rent on credit cards, the US economy would take a massive hit if the wallets of 25% of American households who spend 98% of their take-home income on living expenses snap shut and the bottom 60% of American households who spend 94% of their take-home pay each month and don't earn a living typing into a keyboard or meeting over Zoom start losing more "essential worker" jobs.  

Virtually every "20th Century" industry leader from Boening to Catapillar to Airlines and any company with exposure to travel, hospitality, food service has announced MAJOR new layoffs in the last ten days as earnings season hit full tilt. Banks too...and any professional services company that faces 20th-century industries are laying off higher-cost labor as well. 

Thus the market is pricing in the impending $trillion meltdown in downgraded travel, leisure, hospitality, food service high yield bonds at risk of default. The price of credit default swaps (to protect bondholders from defaults) exploded this week 

Key Point: By Wednesday morning,  anybody who runs OPM (other peoples money) like me . . .

 . . . who listened to the "We tried, but WE JUST HAVE TO GO ON WITH OUR LIVES like there is no pandemic--this pandemic stuff is willy willy hahd" rhetoric of the White House while, at the same time, the US economy not getting a penny of additional fiscal stimulus from Congress like we got in April May (hate that word stimulus--CARE Act is BRIDGE money for the 60% of American households that are struggling to pay the rent/mortgage and put food on the table--it's not economic "stimulus") . . .

. . .  put the dots together and concluded "Hmm...based on the actual data and not magical thinking I am going to PROTECT MY MONGO PROFITS NOW and see how this shit show works out LATER.

Our Short Term Action Plan and Assumptions: 

With 60% of Americans saying  "F^%k no, I'm not taking the first vaccine available!" and 40%+ Americans deciding that it's just too inconvenient to wear a face mask while in public venues, our working assumption today is that nearly 30% of the good ol' USofA economy seems determined to commit economic suicide by just pretending this pandemic will just "go away like a miracle" and/or "I have no civic or societal responsibility to protect myself and my fellow citizens by wearing a face mask! I saw on Facebook a post from my friend from the Daily Caller website that face masks only reduce virus transmission by 1-2% for people under 65--screw that Fauci dude!"

In short, the American tribal partisan polarization over the last 4 years has metastasized into an American Idiocracy contagion. When wearing a face mask turned into a political statement, America's Covid-19 "plan" turned into the American Hunger Games. Every state that has rejected face mask-wearing in public places is leading Wave 3.0, and those states are the same states that polling about taking the now critically important vaccine LEAD the country is people saying "NOT ME--I'm not taking the first vaccine. I'll let the libtards take it and see how it works on them."

Oh boy. 

Thus, our working assumptions over the next 7-10 days

1) Odds are now @90% for a Biden/Harris Win WHICH has 100% Odds of Creating a Real Constitutional Shit Show.
Despite the President's traditional GOP partisan checkbook voters (lower personal and corp. income taxes, less regulation, lower capital gains taxes, carried interest, just leave me the hell alone to run my business) and the folks who self-identify as a "Deplorable" aka traditional conservative value voters who fear the socialist/communist Progressive wing of the Democratic Party "destroying America", with 74 MILLION votes now counted from early voting, about 72% of those 74 million votes (extrapolated from the states that identify party registration of early voters) are registered, Democrats.

By Tuesday, over 100 million votes are likely to be already in via the mail. At 68% registered Democrats, that is the Electoral College ballgame based on MI, PA, WI, polling (states that all together President Trump won by just 77,000 votes). 

Conclusion A: UNLESS there is a landslide concession by either candidate, the legal squabbling and lawsuit delays are going UNNERVE a reasonable amount of investors.

Conclusion B: IF the BLUE WAVE wins the Senate, the market is going to see and hear "Hold On America--Big Government is Coming To Save You" and that opens the flood gates of STIMULUS STIMULUS STIMULUS. And even if the Dems don't get the Senate, the near-death experience of the GOP will get THEM to the CARES ACT 3.0 table to try to save the GOP "brand" if that is at all possible. 

Action-to-Take: With some exceptions, My advice to you is the same I give myself and money management clients: 

1) You and I have made 50-100 YEARS of new wealth in the last 6 months on our positions bought and sold. We have already TAKEN most of those profits so now we OWN that new wealth (and will pay estimated tax on that wealth in Q1).

IF you will be owing short or long term taxes on 2020 income, remember to get your tax person to get you an estimated payment filing if you plan on filing your 2020 taxes later than April 15 (personally I have not filed taxes on any date other than Sept 15 for 20 years--but I pay the estimated tax in January). 

Action to Take: Taxable accounts Tax-loss harvesting. You have up to 3 trading days before the end of the year wash your short term and long term gains with tax losses. We are not your financial planner or tax person--but  

2) We hold HCCO warrants into its conversion tomorrow into SOC Telemed
Action to Take: With ANY POP at the open, SELL THE WARRANTS 

In the last thirty days, as you know we have sold ALL our remaining TTCH/ SPAQ/HCAC shares and warrants. When added to the VTIQ/NKLA grand slam proceeds, we sit on a ton of cash and there is NO REASON YET to deploy that cash before the election shit show.  

3) We are reviewing ALL our Ultra Income investments. With the market pricing in public space closings in Europe and a third wave in the United States with EACH STATE taking its own position on retail/public space closings, OIL PRICES will fall, natural gas prices will rise (into winter price range).

ACTION TO TAKE: We took a LOT of profits in Ultra Income in June as well as selling 8 positions at, on average 2X our cost basis. There is NO REASON YET to deploy that cash before the election shit show.  

$) We are updating ALL Buy Under prices for positions we hold, but it is highly unlikely that we will see forced liquidation selling as we did in March (which, because we went to CASH in late February) gave us 10-20 years of gains in our income investments in 3 months. 

PS: Here is our SuperSPAC SPAC Playbook Just Published!  Click Here!

HERE IS HOW to subscribe to SuperSPAC PRO Trader/All-Access with your preferred email. 

Here is the workaround that WORKS (we tested 3 times) UNTIL Shauna and her team move the SuperSPAC PRO Trader service to a stand-alone website outside the Transformity Research website (which will be before the official launch).

1) Use a PC/Laptop/iPad to register for SuperSPAC PRO Trader with this link https://transformityresearch.com/subscribe

2) Click on Subscribe

3) Assume that your browser automatically logs you into the site, you will see a "LOG OUT" button on the top right of your screen. LOG OUT of the Subscribe page


4) Click back on Subscribe Link to go to https://transformityresearch.com/register

5) Complete the registration page BUT USE ANOTHER EMAIL or FAKE--a made-up @gmail or @yahoo or @AOL email is fine because you are going to CHANGE to your preferred email in a moment.

6) When the transaction goes through, go back to the home page and click on SUBSCRIBE again

7) It will take you to this page--you click on "Manage Memberships" and while your SuperSPAC PRO Trader membership is selected, click on MANAGE PROFILE

8) CHANGE your EMAIL to your preferred email

9) Scroll to the bottom of the page and click on "UPDATE PROFILE"

Apologies---we will get the new website up BEFORE the Official Launch. 

Toby