Whatever Fed put or PPT (Plunge Protection Team) we believed existed in the past is a ghost, a memory compared to what we have under the markets currently. While many argued the Fed was out of bullets when they dropped interest rates to zero, it should now be clear the Fed isn't out of bullets until it is no longer able to print dollars of value.
Note the phrase "of value." We're printing and leveraging (more leverage than actual print) a lot of money.
The Fed has no concern for inflation currently. None of the previous stimulus caused inflation, even when the Fed went looking for it despite the historical context inflation will eventually rear its head.
I do think that's emboldened the Fed here with the idea the economy still needs to see some inflation. The problem with this approach is once we see it, it may be too late because of the all the fuel being poured on the fire.
The second concern I have is whether the current approaches will trickle down. If only the strongest businesses receive loans, then we're still going to see a wave of unemployment and personal bankruptcies.
With so many applications coming into banks for small business loans, an amount requested far exceeded by the early allocatable amounts, banks will be able to cherry-pick the strongest small businesses or those will the absolute lowest risk. Ironically, these are likely the ones that would have been able to survive.
As I saw in discussions among local business owners, virtually everyone is applying for something because "why not?" The view is becoming the Fed is handing out free money, so folks would be stupid not to try and grab some of it.
The way I see it: the strongest businesses are going to squeeze out of the picture many businesses that actually need the money. It's speeding up the Darwinism of business. I'm not sure I'd label that capitalism, but I suppose some might argue it.
While I've not been a huge precious metals person, they are bound to get a lot of attention. The trading in the gold miners should be ripe for swings and scalps along with plenty of volatility over the next 12 to 18 months. Granted, this is a volatile sector to begin with but if you are looking for some new scalping and trading names to add to your list, I would get the miners there in a hurry.
We're heading into a three-day weekend, so be cautious.
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