High-level view first today: I’m going to show you a number of charts and make the case that while the COVID-19 virus IS something to be concerned about, there is a much greater threat to humans: The arrival of a Global Depression.
Let’s begin with the present 30-day change-rate of the spread.
(These graphics will be a bit slower than usual because several readers have asked for higher resolution to reduce digital fuzz…)
As you can see, the virus 30-day change rate has not started to decline, yet. In fact, what I expect we’re seeing is something closer to the truth about rate of spread. Likely, this kind of change-rate was happening in China…and for all we know, still may be. As my son-in-law offered “Mighty suspect about the virus ‘hotel’ collapsing…no better way to hide bodies, you think?”
Looking at the change rate picking up in the 30-day outlook, we can also see it swelling the number of cases we would expect to hear about as we get closer to the Fourth of July:
As you can see, we’ve moved the forecast up to where 6-1/2 MILLION cases worldwide is a revised–higher expectation level by Independence Day.
As the case count outlook increases, so does the death toll prospect:
While the death count is high (mentally note a quarter-million dead globally) that’s still less than half of what influenza kills each year), the real focus is on mortality rate which is now bumping up on the 3.5% level.
The good news (such as it is) offers that the data sets are still “noisy” and likely will be for some time into the future because of the lack of kits, the lack of data collection, and so forth.
So far, the main thing to be considering is the story in the NY Post today that says the disease has a “tipping point.” In survivors, the bug stayed in the nose and upper throat. It was when tdhe bug “went deep” and dropped into the lungs, that the cases moved into the critical column with a very much reduced survival rate.
Why to Fear The Second Depression MORE
We have been writing about this outbreak and how you are in a window – even RIGHT NOW – TODAY – where you can still grab hold of your Fate and make important decisions.
Because one of the main problems from this disease is not what it’s doing to people….it’s how it’s LIKELY to BLOW-OVER THE GLOBAL ECONOMY.
People who don’t grok this are likely to not only face disease dangers, but they could be headed into a Mad Max Beyond Thunderdome kind of world on the backside of all this. Yeah, the Biblical 7-years of Tribulation may be more that metaphorical.
As you may have read in our comments section, a lot of readers are reporting that supplies have been disappearing of things like hand sanitizers and toilet paper. Especially on areas where the land is not “self-sufficient” and adequately industrialized. (Sorry Hawaii!)
When (it’s become less a question of “IF” today) the global economy implodes, what will you have access to?
Let’s see what the roll-out of Financial Panic looks, like, shall we?
Top of the page in the NY Times today:
They go on to sub-head it as:
“European shares opened sharply lower. Oil prices and bond yields tumbled. France’s foreign minister called for a stimulus package. Right Now: Some world markets, but not yet the U.S., are flirting with bear market territory.”
Sorry to report, the NY Times has maybe sipped the financial Kool-Aid a bit on this. As shrill as it might seem, the actual picture is far, far worse than they’re letting on:
Let’s begin with our Aggregate Index of the US Market. This one is looking very much like economic collapse:
See the problem???
The New York Times piece doesn’t say whichg bear market. There are MANY and which one really depends on what kind of market player you are.
In our Aggregate markets work, we have been in a bear market now for several weeks, if you consider the all-time high on a daily basis came before this last bounce (last week):
How much worse will it get? Oh…not a long-term reader, eh?
While there will be a lot more in Wednesday’s (rather dark) look-ahead on the Peoplenomics side, let’s just offer than in Elliott wave theory what this looks like is a wave 1 down (from the top) a minor bounced (possibly a wave 2, but we don’t know that yet). So if that was 1 down and 2 up, then the leg we are entering now could be a 3 Down and these are typically 1.5, 1.6, 1.75, 2, 2.5…and sometimes more the size of the Wave 1 down.
At a minimum, therefore, you might be wondering how your porfolio will be if/when the Dow drops to around 21,181 in a couple of weeks.
If this really is THE BIG ONE, then around 21,000 on the Dow, we would get a month, maybe more, of rallies and fails, and then we’d go down for another 6-thought points. Which could hit us into the Dopw 17,500 kind of range.
That’s Where the Danger Is
How so? Well, remember that market wave functions are NESTED.
In other words, we can pretty clearly see how the market clould blow off another 5-thousand Dow points to the downside.
It would be nice if we bounced from there, what what if not?
What IF this whole pending move down to the 17,500 area on the Dow is – itself – an even LARGER Wave 1 Down? The kind that unravels 200 years of trading and globalism. Something bigger than the East India Co.-South Sea Bubble or Tulip Mania collapses?
There are a number of long-wave economic studies – where we go back and look at prices and values over time – and the argue that we have hung as much debt on the US dollar as will ever be possible. That we’re still at the leading edge of utter collapse of the currency, the Internet, the economy, globalism, and oh yeah…the country.
No, it’s not a pretty picture how it can all unravel from here. But the good news is that there’s a lesson in here: It may not come to pass.
At least, not yet.
That is? Well, in classical bubbles, there was seldom such a massive “left field event” as a driver. The markets fell, but there were only internal dynamics failing (called endogenous market drivers) while the present case involved an “exogenous” (not arising within the markets themselves).
What we really see, spread before us like a banquet for breakfast, is the idea that it may well be that there is a declining ability of markets to resist exogenous shocks the closer they get to endogenous (internal) extremes of manipulation.
That, pal, is some really, really, scary shit. Because we have an entire world hanging on the belief of “ink on paper” as a storehouse of value.
Over history, such examples of “fiat money” have worked – and very well, indeed, as long as the signators could stand for Good Delivery .
In other words, when your word is not your bond that’s when things call become a global crisis.
Bank Herstatt Is About to Matter
In 1976, a smallish bank called Herstatt failed in a most spectacular way. Here’s what the Wikipedia article gives and it’s worth the time to study as it’s potentially “useful forward guidance…”
“Herstatt Bank was founded in 1955 by Ivan David Herstatt, with financial assistance from Herbert Quandt, Emil Bührle and Hans Gerling, the head of an insurance company who took a majority share. By 1974 the bank had assets of over DM2 billion, making it the 35th largest bank in Germany. Herstatt Bank became a significant participant in the foreign exchange markets. During 1973 and 1974, the U.S. dollar experienced significant volatility. The bank made wrong bets on the direction of the dollar, and by June 1974 had accumulated DM470 million in losses, compared with capital of only DM44 million.
On 26 June 1974, German regulators forced the troubled Bank Herstatt into liquidation. That day, a number of banks had released payment of Deutsche Marks (DEM) to Herstatt in Frankfurt in exchange for US dollars (USD) that were to be delivered in New York. The bank was closed at 16:30 German time, which was 10:30 New York time. Because of time zone differences, Herstatt ceased operations between the times of the respective payments. The counterparty banks did not receive their USD payments.
Essentially, in the derivatives world, the whole system was subject to global lock-up on the failure of one critical player (Herstatt, in this case).
The crisis was averted and a process called “continuous settlement” seemed to resolve things going forward.
EXCEPT: We have at least one (initials might be DB) which has only a hollowed-out core of a once-vibrant derivatives trading operation. With the arrival of another viscious leg down (come back after today’s trading and call me wrong, please) we are so far outside the normal stastical variances that derivatives can handle (or swaps or…) that ANYTHING CAN LET LOOSE.
“Captain’ I’m giving her all she’s got!” said Mr. Scott famously.
We have gone over the “event horizon” into global pandemic. But our caution is that in Wave terms, that might only be the first leg down.
The hand sanitizers being out of stock matters, but there’s the larger “When the Internet goes down” due to financial panic and then, where will your wealth reside when there’s no web and you cut off those politically incorrect paper bank statement deliveries?
Yes, I get monthly bank statements and yes, there are no credit cards going more than 24-hours before being zero’ed. Because in the world of what’s coming, we have made a serious choice to get to a roll-out zone: Where our consumption will cease and we’ll; be able to run for a couple of years on what hasn’t been used to stock up.
For now, it seems like a nightmare…Ure on a bad trip.
I hope to be wrong, but my track record on “playing the future” hasn’t been bad, so far.
NY Fed just popped $113-billion into repos this morning and the coinsters are still finding buyers for Bitcoin, though they’re now down to $7,840. Remember who told you under $4,000 on BTC’s this year and how certain readers laughed and pointed?
Reminds me of an ad that appeared in Popular Mechanics in the 1950’s. It was an ad selling a self-teaching Piano Course. The headline is what strikes me now:
“They laughed when he sat down to play the piano…”
There’s a reason for the 7.62 x 39 cans and living among good people in the woods, in a double-wide with a tiller and seeds, no less.
“They laughed as he picked up his charts…”
Ask me next year. We’ll do a laugh check.
Write when you get rich,