America is about to undergo a massive psycho-social change. We got at some of the psychological roots of it in Peoplenomics yesterday, but there’s more to come…LOTS more.
For one, there’s an almost daily increase in the odds of a severe economic depression arriving, the result of the disease spread and breakdown of international commerce driving:
As you should be able to make out in the chart above, there is a lower trend line that will likely be challenged over the next several days. That is likely to be a “do or die” for the lifestyle we’ve become comfortable with.
President Trump – belatedly – announced travel restrictions last night, but the problem with these is they will seed a further decline in the market. As you may remember from history, the stock market decline in 1929 continued into November and eventually ended down 48% on November 13th of that year.
Now to a very interesting discussion about how long down waves take to evolve. In a recent Peoplenomics we discussed the matter of time-compression in market declines. The data then was hinting that what took 28 days to occur in 1929 had this year taken but seven days.
The reason this is do bad is that historically, the workout from an all-time high to a serious low had run on the order of 55-56 days.
The technical problem this morning is that we are down this morning on the futures at levels commensurate with the market reading 43 days from the 1929 high. The problem becomes clear when we pencil in that modern era we are only 21-days into the unfolding economic collapse.
My consigliere is a man of no small stature when comes to numbers – a tax attorney, CPA, pilot, extra-class ham, he’s no dummy. He’s at latest check still holding to the 56 day outlook.
And yet, here’s the data: We will be down today on the order of 19% from the all-time high just last month and – if the pattern holds – we could see a market crash as early as next week – if there’s to be one, at all.
His view – the 56-day count anyone can do from Sept 3 of 1929 to Nov. 13 would put the bottom out in the May 7th area.
Where we go round-and-round is over the changes in “signaling speed” in today’s world. Sure, back in the 1920’s the news about the market came out every day, at the close, for people living any further distant than Midtown. Absolutely, we agree on this speeding up. Yet – and his point is valid here, so pay attention – the Mass of Humanity takes a while to grasp and adapt to fundamental changes.
Take, for example, the Atlanta Fed survey out this week. Got little play but if you took the time to dig around in it, you’d discover that there was a special question about COVID and here’s what they found:
You can see the data is beginning to skew to the left – into a more negative mood, but my consigliere’s view is that despite the high-speed market moves which have us close to lock limit down again today, the psychological adjustments can take a while.
Now, here’s the rub: What if we’re BOTH RIGHT?
This prospect should scare the hell out of you because what IF we are going down for 56-days and at the present rate?
That would have the market sliding down through the 18,000 Dow level like it was warm butter with a hot knife. Yet, as my friend Robin Landry has pointed out, depending on the wave structure there’s a good chance we could sink to the 2009 spring lows if support levels keep failing.
Let me toss some numbers out – to put you in the mood: 683 for the S&P and 1,294 for the Nasdaq.
The Dow? (Got your barf bag ready?) 6,627.
Could it Really be THAT Bad?
Well, uh, yeah, it could. So when you look at the short-term target range on the downside today, think about the implications of this:
Note to subscriber Mike: Yep, a click-glitch/OMBF (olde man brayne fart).
We’re not saying it WILL get that bad – by the end of April, but it’s not a totally alien concept now. When in doubt? Let;’s go…
Surely there ought to be some good news, right?
How about Trump on the economy: Can the Fed Print Enough to raise the market? Here’s what the twit-in-chief says:
“Nancy Pelosi all of a sudden doesn’t like the payroll tax cut, but when Obama proposed it she thought it was a brilliant thing that all of the working families would benefit from because if you get a paycheck, you’re going to take home more money.”
Well, no. It won’t play out that way. Not even. Here are some BIG UGLY REASONS WHY: (Pay attention here):
- NBA suspends season after player tests positive for coronavirus.
- Coronavirus: Republic of Ireland to close schools and colleges.
- European airline shares tank after Trump orders new coronavirus travel restrictions.
- EU Leaders Slam Trump’s “Unliteral” Travel Ban, Global Outbreak Death Toll Passes 4,500: Live Updates (We remind you that EU leaders are generally reconstituted elitists who want to rule the world from their invasion-occupied last stand…)
- Shopping centre giant Intu warns it could go bust, says a UK story as I grab my 50:1 to spray down my ‘Zon shipments.
- And the NY Times reports The World Wakes Up to a Pandemic, but since we’ve been all over this like white-on-rice since mid January, how about a more accurate headline for Gothamites? “NY Times Wakes Up to Pandemic” would be closer, right?
- Come to think of it, if the NY Times would read the NY Post, they might have a real story like “Coronavirus in NY: Passenger on JetBlue flight from JFK tests positive.“
- Naw. instead too busy selling The Left Agenda in stories like “Trump’s Re-election Chances Suddenly Look Shakier.” What? Trying to play Pin the Virus on Carrot Top? Lah-lah land of Manhattan, seems to us…save trees, read the Post.
Notice how othing here makes me want to go out and buy stocks? How about you?
The good news, if you’re among the world’s ultra-rich, some are already bugging out for their defensivee super-bunkers. Leaving us peons to…gulp...put up with the shit to come. Dandy, just ‘effin’ dandy.
Box Scores and Outlooks
Our look-ahead of the data continues to deteriorate: Now looking like global cases of 20 million by Fourth of July:
And the death toll by then could be upwards of 750-thousand:
Naturally, we hope this is a case of GIGO (*garbage in, garbage out) but the data has been consistently loading this way. Germany is estimating 70% will be infected over time. Sucks, javohl?
We could go on, but there are only two other items on the agenda here this morning.
One is the Federal Reserve money dump of repo’s trying to talk the markets out of full-on collapse.
They just put in how much? A lousy $95-billion? Never turn any tide on chump change like that…
Circus Breakers! (sic)
And Producer Prices
Like this matters in free-fall, right?
“The Producer Price Index for final demand fell 0.6 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.5 percent in January and 0.2 percent in December. (See table A.) On an unadjusted basis, the final demand
index increased 1.3 percent for the 12 months ended in February.
In February, 60 percent of the decline in the final demand index can be traced to a 0.9-percent decrease in prices for final demand goods. The index for final demand services moved down 0.3 percent.
Prices for final demand less foods, energy, and trade services inched down 0.1 percent in February, the first decline since falling 0.1 percent in June 2019. For the 12 months ended in February, the index for final demand less foods, energy, and trade services rose 1.4 percent.
In the details, this verged on interesting:
Final Demand Final demand goods: The index for final demand goods fell 0.9 percent in February, the largest decline since moving down 1.1 percent in September 2015. Over 60 percent of the broad-based February decrease can be traced to prices for final demand energy, which dropped 3.6 percent. The indexes for final demand foods and for final demand goods less foods and energy declined 1.6 percent and 0.1 percent, respectively.
Product detail: Nearly one-third of the February decrease in the index for final demand goods is attributable to gasoline prices, which dropped 6.5 percent. The indexes for fresh and dry vegetables, diesel fuel, jet fuel, meats, and light motor trucks also moved lower. In contrast, prices for chicken eggs rose 27.8 percent.
Not that it will matter all that much: The end of sports, the end of live entertainment, and end of going out for movies…the end of gatherings…online churches, anyone.
Off to work more on an idea for my son’s fire department up in Washington State. Sent him an email earlier this morning (I ran some case projections for him to noodle on in terms of department response) and I suggested this:
“I think you ought to set up a quick program call “(City Name) Home Safe.” The idea is that if someone is over 50 and they have any kind of symptoms, the cal Fire Department could give them a daily “health and welfare phone call.” Kids don’t call parents enough, as we see it.
That way, if the senior deteriorates, an aid unit could visit to do a pulse-ox and – if needed – be ready to transport. Local radio stations could be involved to give out local numbers and it shouldn’t be too many calls for the on-shift crew – going to be spread out over months. Simple database. Be a great service…wish we had a real staffed department down here in the woods…”
Meantime, Dumb People Abound
Daughter 2 called this morning to report a sighting of one in Seattle:
“So there’s the guy at my gym – sweats like crazy – wipes his sweaty face off and then wipes the equipment with his sweat…. Can you believe that shit?”
Why yes, dear, I can…. In a National where Joe Biden is the best the dems can put up with? Stupidity is the national pastime.
Off to boost my cholesterol levels…Big decisions to make today, Is today’s prepping a trip to the lumber yard or the liquor store. Hmmm…
Write when you get well/rich/sane…