Risk Appetite Dried Up Like a Desert –
Dow Down THOUSANDS Of Points
In less than a week, the global economy went from calling newsletters like mine fearmongers for stating that portfolio managers have no clue what’s really happening in China and that this is worse than SARS to proclaiming that we were absolutely right to diversify into cash and into gold before ALL HELL BROKE LOOSE starting on Tuesday.
The indices have officially entered a correction, which is defined as a retreat of over 10%. Not only that, but forecasts now predict no growth for 2020 and, on top of that, companies are issuing lower guidance than they did just a few weeks ago.
The volatility is increasing and there’s no end in sight for Covid-19 spreading to new regions daily.
Goldman Sachs, for example, is now advising clients to stay in cash until the S&P 500 goes all the way back to 2,900 points.
Investors are terrified, and it feels a lot like it did in 2008. Just a week ago, even millennial-focused trading app Robinhood Markets was reporting that the appetite for Tesla and tech companies is ENORMOUS.
They got slapped hard, and the MSCI, which is basically the index of the global economy, went down by nearly 8% in 10 sessions.
That’s essentially like saying that the collective equities of everyone have lost 8% of their value – we’re talking about trillions in paper losses.
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The questions that are still open are creating uncertainty: (1) Is this a pandemic that is going to have a 2nd and 3rd wave? (2) How fast can the economy rebound? (3) Is this causing a permanent shift in supply chains out of China? (4) Does this hurt President Trump’s chances? (5) Will Europe fall into recession as a continent?
These are big, open issues that make me believe that we’re about to get one HECK OF A STIMULUS plan.
This is the WORST start of a calendar year since 2009, a year that will live in infamy for introducing QE programs, the first of many experimental tools that central banks decided to dump on us.
The bottom line is that bonds are now the most expensive they’ve ever been (the lower the yields, the more the price of the bond rises).
In contrast, real estate, stocks, REITs, and MLPs are actually cheap.
This doesn’t mean that Covid-19 won’t continue wreaking havoc, but it does mean that markets are ADDICTED to these centralized bailout bombs and Jerome Powell will hand us one soon.
If you have more than ten years before you need to liquidate your stocks for retirement or major expenses, this is a bleep on your radar. If, on the other hand, you’re investing funds that you have an immediate use for, you’re PLAYING WITH FIRE!
This weekend, I’m compiling my Victims List of blue-chip companies that I’ll be purchasing DESPITE this trauma.
The world will move on. Meanwhile, gold has more than compensated for the rest of what’s transpired. Let others go psycho while we stay cool, informative, factual, and DRIVEN.
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
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