So far this winter, some 20,000 people have died of the flu in North America alone.
Had investors priced that in, there would be no stock market, if the recent carnage is based on the death toll of Coronavirus.
Markets were euphoric and due for a massive collapse – that’s the truth. Corona virus was the catalyst and the results have been HISTORIC.
The S&P 500 is down 7 days straight, as is the Dow Jones, which traded RECORD volume. Cumulatively, the world has lost over $5 trillion, out of which Microsoft, Apple, Amazon and Google are responsible for nearly $800 billion.
The fear that investors have is that because the market is dropping, the probability that Bernie Sanders will become popular is growing, so they’re pricing in a socialist candidate as a serious threat.
This current administration doesn’t plan on overreacting and also knows that what’s BAD for China is awesome for the United States.
The coronavirus is frightening, and it is not a mere case of the flu. It does impact China, which is GUARANTEED to undergo a recession. It is causing supply chain disruptions, cancellations of events and vacations, closures in thousands of factories, a lot of frustration, and human tragedy, but the answer to your problems is not to PANIC along with the masses.
Trump might get what he has wanted all along – RATES close to zero.
The market is crying, begging Powell and the rest of them to slash interest rates to a minimum.
It wants a 65bps cut by June, so let’s see what the bank decides to do, with this happening so close to elections.
On Friday, Jerome tried to deliver confidence, but the market was listening.
Tomorrow, things might go either way.
Check this out – the crash is already UNPRECEDENTED:
Trump will do anything he can to push his new tax cuts ahead of time. Americans are not only still confident, but believe that the future is bright. Data is indicating that consumers have plenty of torque in the engine.
Besides this insane market crash – the fastest in history – gold and silver also plummeted like a meteor.
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It was hard to watch, but extremely predictable. Gold was the most overbought, since the ETF was launched.
These aren’t hoarders who are liquidating, but day-traders who were loaded-up on leveraged bets of central-bank stimulus, which hasn’t come yet.
This type of VIX reading is abnormal. It’s the stuff of real panics. In fact, the Toronto Stock Exchange halted trading midday on Friday and the New York Stock Exchange has announced that it will simulate a market closure scenario next week.
The memories of 2008 are definitely reappearing for the baby boomers; I wonder how a retired person, sitting on $500K in his brokerage account, is feeling after watching $60K vanish in a split second.
The good news is that in 2008, the sell-off in gold marked the end of the bear market.
Right now, we’re still 8% away from a definitive bear market and the fundamentals of the economy are STRONG.
Even though the underlying unemployment numbers are solid, demand for housing is huge, savings rates are healthy and companies are hiring, bond investors, who are rarely wrong on big moves, are TRADING as if a RECESSION is imminent.
From here, Corona is going in one of two ways: pandemic with a massive economic nightmare, or towards being contained with a forceful relief rally arriving.
Be ready for both, by staying level-headed.
Research Partner, PortfolioWealthGlobal.com
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