Yesterday, in one of the worst-ever days on Wall Street, we halted one and nearly HALTED, due to the 2nd circuit-breaker, which only triggers at -13%. It was THAT CLOSE!
Then, the FED deployed the torpedo of QE5, promising to purchase $500B in bonds and an additional minimum of $200B in MBS (Mortgage-Backed Securities).
This, to investors, was like a speck of dust, compared with the type, size and focus of the stimulus they believed was necessary to REACH OPTIMIZATION of the response.
In the public markets, one votes with his wallet. Investors sent stocks down by DOUBLE-DIGITS, with banks and credit card companies, as well entertainment, heavy machinery, oil and restaurant stocks TANKING like there’s no tomorrow.
You can’t DISREGARD the fact that dividend-yielding stocks offer EXTREME VALUE, compared with government bonds right now. But, you also CANNOT discount the fact that mining stocks look even more AMAZING, compared with both of these other options. Like I warned you on Sunday, don’t get duped into buying dips, until we begin to form a clear uptrend.
While the rest of the economy is forced to SHUT DOWN, mining goes on 24/7. As it stands, it is the only industry that will NOT suffer from an earnings recession.
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In the next 2-3 days, the IMF and the Bank of International Settlements (the central bank of the world) will both announce global-sized lines of credit, in my opinion.
Still, the markets will be virtually UNTRADEABLE.
What the body of investors wants to see are two things:
- Washington working in unison: Democrats and Republicans working together to DETERMINE what can be salvaged and repaired.
Markets want to be inspired by COORDINATED action.
- Numbers of cases slowing and flattening: The public will only begin loosening up when the medical community gives us the GREEN LIGHT to do so.
This is, by far, a once-in-a-century event.
China’s numbers are an INDICATION of what to expect from the U.S., once the dust settles.
It looks surreal and it’s so UNFORTUNATE that we have to go through this.
In times like these, each of us must tighten the belt and be ready to be agile and flexible with anything.
It’s also a great time to renegotiate fees and expenses in your life.
All businesses are struggling, cash is KING and that presents a great opportunity to lower costs, from rents, to mortgages, insurance, education and the rest of it.
The first step of managing this nightmare, in my opinion, has been done. We had to sacrifice the pawn in order to save the queen.
The Federal Reserve showed its true face and just acted with urgency to provide all the tools it can implement.
Washington needs to stay up all day and night, and by tomorrow morning, offer a TREMENDOUS fiscal outline of how to assist the whole of industry, trade and commerce.
No more half-ass plans; UNLEASH the heavy artillery and the FULL FORCE of the government, as promised.
As I see it, the government will do the following: BAILOUT the airlines, hotels and cruise ship operators. It will then insure the income stream of anyone who has been unjustly fired. On top of that, it will suspend property taxes, offset other fees and offer DIRECT INJECTIONS of capital.
This is a DIRE situation; this is like a WAR.
You’re seeing what’s happening out there; our global village does not know how to manage a crisis of this magnitude. China was SIX WEEKS late in containing the coronavirus and now this has become a TRAUMATIC battle for the survival of our way of life.
Extremely sad to witness, but there is much that can be LEARNED, implemented and concluded by what we’re seeing.
Research Partner, PortfolioWealthGlobal.com
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