The late-March rally in the S&P 500 isn't what you think it is

Author: Adam Button | Category: News

This is the super-corporate takeover of America

This is the super-corporate takeover of America
Why did Wal-Mart hit a 52-week high in March? Why is it up in the month despite an implosion in the economy?

It wasn't because consumers are trading down from Target, or because they have improved online.

It's because their Mom & Pop competition is going to get destroyed in the next few months.

Why is McDonald's bouncing back so quickly even though the stores are only open for drive-thru and delivery? It's not because they have a good app. It's because that family sandwich shop you ate at twice a month will be gone by September and McDonald's will still be there.

This is the greatest corporate bailout in world history and it's structured to make sure the super-corporations thrive and put genuine small businesses on life support. McDonald's raised $3.5B in the bond market last week at record-low rates. They will use that money to buy up the real estate of any small business that fails, or simply to lower their cost of capital. They paid +285 for 30-year bonds, which is around 4.18%. Oracle raised $20 billion yesterday at around 3%.

The Fed is out there buying every investment grade corporate bond it can find. The small-and-medium business lending programs aren't even set up. And once they are, they permit lending to companies with 500 employees... per location.

Do you think any of that money is going to flow to Main Street Hardware? Or Mom & Pop's Sandwich Shop?

Last week set the all-time record for investment-grade corporate debt issuance. They're loading up with Federal Reserve money to swoop in and buy up all the companies that suddenly can't get a loan.

That's how the market can rally 20% from the bottom with Q2 GDP estimates as low as -34%.

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