You won’t see it in the headlines, most places. But, it lurks. It stalks, and we’re in the process of playing the same modest market bounce that we did in 1929 prior to the markets declining more than 35%.
OK, may sound melodramatic, but thinking people with spreadsheets all over the world are coming to the same conclusions. IMF chief Kristalina Georgieva is among them and she’s calling for a coordinated international financial effort due to the virus saying it’s better now to do too much than too little.
Whee! Let’s all print up money. If cryptos can do it, so can YOU!
The Federal Reserve this week – in addition to the surprise half-point rate cut (a move they completely muffed as I’ll explain) also changed some of the capital rules for Big Banks. Our suspicion is the Fed’s models are pointing where our long-term studies have been warning of for a long time:
That broad swath will include factory closings, collapsing disposable personal incomes, and these will ripple into declining tax returns, which means even more deficit spending and this will fuel a mighty inflation-to-come like the world hasn’t seen since the Weimar Republic failed.
Maybe we should just go gently, on this?
Since we’re largely data-driven, consider a few points we rolled by Peoplenomics subscribers (in chart form) earlier this week.
On 9/3/1929 the Dow stood at 381.17 at the close. That was the high and stood until when? The 1950’s.
As the decline accelerated in ’29, by October 4, the Dow was down 14.69%. Sound familiar? It should: We traded through those percentage levels recently.
An amazing turnaround set in, however: In our data it looks like this:
It didn’t hold though. Because at the bottom? After the Great Crash?
No, we’re NOT saying the market will work out this gently, this time around. We actually expect it to be worse.
Let’s get real:
- The Fed blew the rate cut.
- Globalism is dead or dying
- People are nervous and on the edge of panic
- Yet few have prepared. Despite our writing here since 1997 I “It’s time to leave the cities and disperse.”
That clock has done run-out.
While a bit of incidental good news may cause momentary rallies, and the underside of the ascending trend channel looks “interesting” we make no predictions except that Life is now fundamentally changing.
We will all become more Japanese-like. Shaking hands is out, respectful bowing seems to be a good replacement option.
Hugs are out, too. Save the one or two people you let into your personal space. Oh, and I would expect the Japan Olympics to be something of a disaster this summer, too. I assume you saw the calls for the SXSW gathering to be canceled because of virus fears? Report in Billboard says the big ULTRA festival in Miami is off…
It’s no wonder that banks are readying disaster plans, even now.
My consigliere and I were chatting Wednesday – as our comms here in the outback were attempting a recovery following the big storms through the South this week, and he made an excellent point: (a semi-quote, best I can remember)
“The Fed move just added to the panic and they blew a chance to slow down the decline. If they had been smart, they would have waited for the market rally to complete (remember my trend line mention?) and THEN they would wait until a lot of traders had laid on big market shorting positions. If they had waited until then, a LOT of short-side traders would have been trapped, lost money. And these traders would then be very concerned about laying on short positions for a while – which is exactly what the Fed should have been trying to achieve. They’re effectively out of ammunition now…”
I had to nod in agreement. The Fed move smacked of panic and sure, we got a nice “running of the shorts” yesterday, but that’s no doubt due in part to the Fed rolling over $100-billion worth of repo’s yesterday, too. We wouldn’t be shocked by anything the Fed does now. Paper’s in trouble.
But, like we said in Peoplenomics.com’s report last Saturday, there’s the little matter of “time compression” going on, too.
Gold seems to be holding in the $1,640 area while BTCs are converting around $9,126. Although interestingly, there’s a “rhyme on the previous Depression” which could argue that this time around, instead of calling both Gold and Silver, the Fed Gov might make crypto money illegal. Reason? Let’s too many people “make up their own floating craps game” and the government, as we all know, HATES competition!
Challenger, Gray, and Scary
Challenger, Gray and Christmas is the HR firm that produces the month Job Cuts report. But, before getting into that,, they have a lot of other reports that don’t get as much coverage. Here are a couple of things they’ve put out recently you almost certainly have NOT run across in the MUAPS (Mostly Useless American Propaganda Services):
“Chief Executive Officer turnover surged 37%, from the 160 who left their posts in December to 219 to begin the year. Last month’s total is 27% higher than the previous monthly record of 172 in October 2019, according to a report released Wednesday by global outplacement and business and executive coaching…”
Can you say “Rats fleeing sinking ships?”
And forget Corona for a second: How about plain old flu – what does that cost American business?
“Challenger predicts 23.4 million people between 18 and 75 could become ill with the flu this season, using age data from the 2012-2013 flu season. With the current employment-to-population ratio of 61.2% and average hourly wage of $28.44, according to the Bureau of Labor Statistics, employees taking four eight-hour days away from work due to the flu could cost employers $13,056,764,338. ...”
Yeah…$13-billion just in flu costs. For now, double that for COVID and if this sucker doesn’t slow with warm weather.
There. Now, how about their Job Cut story of today? Remarkably, some really GOOD NEWS for the economy:
Job cuts announced by U.S.-based employers fell 16.4% from January’s total of 67,735 to 56,660 in February. Despite widespread concern, COVID-19 has not yet caused companies to cut positions, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
Well, shoot-damn, how about that?
The NY Fed Repo Depot just popped $107.357 billion in with repo’s and reverses this morning. Yee haw!
Not enough to stop markets from collapsing, though. Dow futures were still down 593 even after the data. Oh, well. Long term there is a future. But some of that depends on what happens back in the swamp.
Market hype aside, one reason for the rally Wednesday was Joe Biden’s big comeback in Super Tuesday. A big win in Michigan and he could knock Bernie and send his Bernistas back to their barricades. The stock market only has a use for lefty’s and “revolutionaries” when they can be financialized, don’tcha know?
What’s laughable is VOX (MediaBiasFactCheck report: Left Bias) is trying to say it ain’t so in “Joni Ernst walked back her call for Joe Biden to be impeached if elected…But the whole saga shows why Biden’s wrong about the GOP coming around post-Trump….”
Yeah, I added the bolding to help you spot the bias-leak. It’s the usual way liberal propaganda rolls: They make a stupid assumption (“post Trump“) and then infer there will be some kind of “…the GOP coming around ...” Am I the only one who read Trumps Super Tuesday results?
Reports like this look to us like a delightful combination of Goebbels and Marx in technique. Journalism? You mean it ain’t? Our own tastes run more to Ries and Trout, but we’re more middle-of-the-road capitalists, I suppose.
Speaking of data filtering: We find it useful rule-set to just shit-can reports when an off-center (either way) source that quote the opinions of it’s own reporters. “My ain’t we special and oh, don’t we matter....” Rampant on TV nut-works, too. That goes for all of ’em.
Joe Friday said it best: “Just the fact, ma’am.” Not enough of them to support the wet-dreams of media empire-builders. So it becomes what in pool is a game of “slop.”
Speaking of the Uprising (& Slop)
Why the Secret Service hasn’t arrested (or at least interviewed) Chuck Schumer and the rest of the left-wing cabal for threatening seated U.S. Supreme Court Judges is beyond me. See “Schumer Claims Conservative Supreme Court Justices Will ‘Pay the Price’ If They Rule against Abortion Advocates” for details.
“Pay the Price?” Schumer’s throwing in – again – with the Digital Mob Rule promoters. (Care to bet me Soros and his ilk aren’t skulking in the background somewhere?)
In Ure Shorts
Just the usual piles of bull-sheep, elsewhere for ewe:
They don’t go there to party: Nursing Homes Are Starkly Vulnerable to Coronavirus, figures the NY Times without help. Amazing.
More useful is their report A Global Outbreak Is Fueling the Backlash to Globalization. But here’s the trouble with this Times story: It ignores globalism was on its last legs, anyway. See Barry Lynn’s defining 2005 book End of the Line: The Rise and Coming Fall of the Global Corporation, if you don’t believe me. Been in the cards for 10-years. COVID is just a cconvenient cover story to fall back to local consumption and production.
What astounds me is that so many “newbie” corporation-hating “minimalist vegans” are all over the place whining day in and out. None of them are out here in the woods, living the low-beam life on solar and really gardening. Guess we just didn’t get enough social-media disease, huh?
Pipe dreams of profits? Health care can still climb back to all-time highs, chart suggests — here are the stocks traders are buying…says CNBC. We think they’re nuts to eye healthcare…what part of CV didn’t they get?
Depression 2.0 markers abound: Why plunging Treasury yields are so alarming.
War among the copy cats? HP rejects Xerox $34 billion takeover bid, saying it ‘meaningfully undervalues’ the company.
Well, copy that…time to print and off to chase the bacon, so ya’ll come back tomorrow, y’ hear?
Write when you get rich,