I don't know anything new or interesting about this Coronavirus, I just know that I'm not worried about getting it. My belief is that the panic over the spread of the virus is going to cause far more economic dislocation and global distress than the sickness itself.
The global economy was already extremely weak going into this event and can ill afford a massive supply shock centered in China of all places. The central supply hub for the entire planet. Critical shortages of food and supplies are already evident in China and will be spreading worldwide during the coming week. The global supply chain is complex and fragile.
Ironically, most of us market bears - what few remain - have been far less alarmist about this illness than today's policy-makers shutting down borders over what could turn out to be nothing worse than the seasonal flu. They have no idea what domino effect of supply disruption could ensue. In other words, their panicked response is likely to be far worse for markets and human health than the virus itself. And is this our future? A virus kills a few hundred people out of 7.5 billion - a nominal event - and the world shits a brick?
On average 7,500 people die every day in the United States of various causes. Mostly from McDonald's and related addictions. Coca Cola probably one of the most lethal enterprises in human history. And yet, we've become a fragile society incapable of reality, truth, adversity and now minor flu events.
Global central banks have happily sponsored this bubble in complacency by systematically euthanizing the populace in the face of any and all economic risk. So far, it has worked. This is the first endless economic cycle in world history. However in doing so they have lethally inverted the positive correlation between GDP and asset prices. Per Hendry's iron law of Disney markets:
"The worse the reality of the economy becomes, the more we take on the reflexive belief in further and dramatic monetary expansion and the more attractive the stock market looks."
Nowhere do we see this more clearly than in Australia. The Aussie dollar is a bellwether for global economic activity. Highly correlated to real economic output via the commodity markets. This week we see it breaking down to new cycle lows. And yet, at the same time, Aussie stocks hit a new melt-up high.
The age of central bank alchemy literally inverted the correlation between asset prices and global output. Can you imagine how high stock prices will be when the global economy grinds to a halt?
The locus of implosion is the oil market which was already under duress from over-supply and weakening global demand:
There have been three major coordinated central bank bailouts in the past decade. As we see via the crude oil market, each one has had less impact on global economic output:
Central banks' only capability right now is to inflate asset prices in the face of declining economic output. In the process, creating an unprecedented divergence between fantasy and reality. While at the same time euthanizing the populace from risk.
The Minsky Moment arrives when global gamblers believe that global economic shutdown is an ALL IN buying opportunity.
"Looking into 2020, Ford said it sees 2020 earnings in the region of $5.6 billion to $6 billion, well shy of the Street consensus of between $7.3 billion and $7.6 billion, and cautioned that it was too early to quantify the impact of the spreading coronavirus on its worldwide operations."
"Looking into 2020, Ford said it sees 2020 earnings in the region of $5.6 billion to $6 billion, well shy of the Street consensus of between $7.3 billion and $7.6 billion, and cautioned that it was too early to quantify the impact of the spreading coronavirus on its worldwide operations."
In summary, the U.S. is now run by total idiots. Who have embraced global collapse with 100% enthusiasm.
Enjoy the end of the show.
"Stuart Varney said stocks "moved down this morning because with such a strong report on jobs, the Federal Reserve is not likely to cut rates, and I think a lot of investors were hoping for a rate cut"
