The FOMC rate cut decision was scheduled Wednesday March 18.
Instead, the Fed made this emergency Monetary Policy Statement today.
The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee’s symmetric 2 percent objective.
The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals. To support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion. The Committee will also reinvest all principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Open Market Desk has recently expanded its overnight and term repurchase agreement operations. The Committee will continue to closely monitor market conditions and is prepared to adjust its plans as appropriate.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Randal K. Quarles. Voting against this action was Loretta J. Mester, who was fully supportive of all of the actions taken to promote the smooth functioning of markets and the flow of credit to households and businesses but preferred to reduce the target range for the federal funds rate to 1/2 to 3/4 percent at this meeting.
$700 Billion in QE
That’s another $700 billion in QE, in addition to the $1.5 trillion in QE (but let’s not call it that) announced last week.
On Thursday March 12, I reported Fed to Inject $1.5 Trillion in Liquidity But Markets Plunge Again.
Futures Limit Down
It appears we are going to have a repeat performance on Monday as futures are limit down.
Fed back to zero bound. Launches new QE ($700 bil). And this response. Futures down 5%. When confidence is lost… look out. It appears to be lost. pic.twitter.com/iUINB2Rk9K
— Stephen Blumenthal (@SBlumenthalCMG) March 15, 2020
Gold is up $56 to $1572.
Illinois Mandates Closure of All Bars and Restaurants Until March 30
Earlier today I noted Illinois Mandates Closure of All Bars and Restaurants Until March 30
Ohio has done the same and New York is likely as the NYC Comptroller Wants to Shut All Restaurants and Bars.
Massachusetts Orders Closures
https://twitter.com/kr3at/status/1239318546221580293
The NBA, NHL, NCAA March Madness, and countless schools are closed.
Italy and Spain have nationwide lockdowns, and all air traffic into the US from the EU is closed down.
Understanding Trump’s Management Process
There is no risk management process, there are just tweets
— Keith McCullough (@KeithMcCullough) March 15, 2020
The economic impact will be staggering.
Out of Bullets
The Fed is out of bullets. But don’t expect the Fed to ever admit that.
Mike “Mish” Shedlock
Now Kudlow says the federal government is ready to pur $400 billion more into the economy, almost half a trillion that would not have been necessary had they just done the right things regarding the virus early on instead of telling people it was just a cold, or buy the dips. Stick a fork in this country, it is done.
Arizona Governor orders all schools in the state closed until March 27
Breaking news at CNBC:
Fed says it will offer an additional $500 billion in overnight repo funding markets
ANOTHER half trillion. Total now announced $2.7 trillion.
Wow, being rich is nice work if you can get it.
It was on the Fed’s schedule announced last week. (EDIT: Actually, the SECOND $500B offering in the afternoon was NOT on the schedule. Seems I had that wrong).
CO; maybe Powell just got tired of Trump nagging for ever larger moves into negative rates and decided to give him what he wants, along with the blame that will come after when it all falls down. A) Powell is not running for office and B) if Powell wants Trump out of office that can be neatly arranged with a depression or deep and lasting recession, and that is exactly where we are right now. By November the democrat will be a walk in for the Oval Office. There just is no way a guy like Trump can deliver both a depression and mishandle an epidemic like CV so that it turns into a full blown global pandemic and still get elected.
Here is a nightmare scenario for you, Biden names Harris, the socialist black woman, as VP and gets elected only to stroke out on inaguration day. Trump has to be hauled out of the White House refusing to leave, Harris declares a socialist revolution, with trillions in slave reparations forevermore to every African American born or to be born. The USA collapses ala the old Soviet Union.
Not going to happen. SARS-CoV-2 provides good political cover for a recession / depression, so neither Trump nor the Fed will get blamed (although the Fed definitely is guilty of having set us up for this).
Because of Biden’s age and health, he will need a younger centrist VP to win.
For Heaven’s sake, stawks are still over-valued. People shouldn’t be surprised that they are still going down. I think the Fed’s problem is that the guys who control them are neck deep in derivatives and either wanting to be paid in full or needing some big handouts in order to pay out on their derivatives gone bad. The guys that control the Fed are surely profiting during this chaos.
I decided to sell some volatility today, and added some SVXY. I’m thinking we may settle into a bear market, but we should hit some support at 16-18,000 on the Dow, and volatility will decline.
Been noticing many ETFs halt trading for the day after being open for a brief period in the morning, even though the underlying issues still trade. SVXY is one of those that shows halted right now. Do you know what is causing this?
No, sorry. This is my first time dealing with SVXY. It shows as open for me, though, and I see what appears to be continuous trading all morning. It is currently around $30.85. I bought at about $30.64. I bought because I think that the panic state is high now, and that the markets will become calmer in days ahead. It may go up or down (and I think it will go further down), but the extreme daily changes will be less frequent.
Obviously that wasn’t one of my better ideas. 😉
At this point I think the market goes down big tomorrow.
Based on history, the stock market is pricing in a recession and maybe something more ‘onerous’
It remains to be seen if they fired all their bullets or if they blew up the breach of their gun.
Just woke up and all I can say is HOLY SHIT!
Gasoline down to 69 cents per gallon, oil at $29, gold down almost $58 bucks.
EVERYTHING is going to open lower.
Why are you surprised ? There is going to be a mandatory lockdown. States are going to use hotels as hospitals.
CO, I saw last night that it would be blood in the streets this morning, but the speed and scope are at least an order of magnitude beyond even the 2008 crisis. I am looking at every single commodity down. I am looking at dollar currency pairs like Australia, it was at $0.66 Friday and now at $0.6119 and not only that but here is the conversion rate, the poor Aussies cannot keep up:
1 AUD = 0.611864 USD
1 USD = 1.63435 AUD
Look at that spread, normally it would be one hundredth of a cent. It is now over 2 cents. There will be carnage in that market as well.
The market is the least of the world’s problems. We know that the governments of the world effectively back the banking system through the central bank and treasury. 50% of people in the US don’t own stocks or bonds or anything in the market. They could give a rat’s ass about those that do. Those that use the market to make a living are going be brought back to the reality of needing a better skill to make a living.
By the way, I am starting to regret not hoarding everything I could get my hands on like those that emptied stores of everything but the shelves and light fixtures:
For those that did not panic and did not stock up and behaved as we were asked to, NOW WHAT! And Walmart says it is slashing hours so they have less time to be bought out and more time to restock. See the problem there right? It means people will be congregating in front of the stores waiting for them to open and generally acting like Black Friday assholes and conveniently sharing germs. Every single step of the way those making decisions are making the wrong ones.
Portugal has ordered restricting customers to surface area. Take a ticket and wait in vehicle ? Later stores might allocate shopping time online, with others waiting on site for if there is a space. Home delivery is saturated in some countries…Uber meet [enter retailer of choice] …eventually they will organise their fleets. Problem is wider supply restrictions for whatever reason, for essentials would mean rationing.
In Spain they are saying emergency will surely be extended (beyond initial 2 week limit), anyone who has stock of masks including private must declare (assume not individuals).
The restocking will happen as China comes out the crisis first. This is the upside of globalization. Once the manufacturers get up and running we will have the supplies we need. Stuff is going to have to get rationed. Target is already limiting purchase quantities of critical supplies to consumers.
Think for yourself, listen to others for info to digest and come to your own conclusions.
It’s been completely obvious we have been heading into a global pandemic for several weeks if not months.
You’ve got no one to blame but yourself..stop blaming others.
Take control of your own situation.
You should be packing for Fl or shopping for supplies not watching the markets or blogging.
Not a good time for shopping if it can be helped, IMO .
Agreed but if you have nothing you should at least try to get something. relying on the government or generosity of others is not a good plan.
I agree to that also. This is what causes a lot of difficulty, and we are in unknown territory, so I cannot give secure advice wrt. For example, does some order return to food purchases in one week or one month ? You should stock according to what you estimate and then some. So if you have a weeks stock, do you buy more now ? I could not say, but if there are stores around with reasonable conditions (quiet) then I would say yes with precautions. Look at home delivery times available now, as there are delays ordering in advance is nescessary. A lot of difficult individual choices that are only able to be taken by any person themselves for obviously being closest to their own circumstance.
This means the Fed has talked to the major banks and one or more are going to collapse shortly if the Fed doesn’t step in and cover them. The Fed is getting ahead of the curve, unlike 2008. But don’t be confused, this is the financial system panicking. If they are, you might want to consider it too.
Yes.
Watch Deutsche Bank. Down 13% (to $5.22) in pre market.
My guess to be first domino to fall.
Banks are the least of the Fed’s problems. The economic collapse at hand is unprecedented. There is going to be 30-40 % unemployment in 3 months if the worst happens.
Futures still looking rough and the Nikkei just fell 700 points in the last hour or so.
Since the Fed just missed badly with Ben’s bazooka, will they fire up his helicopter and start raining money on anybody other than bankers?
No more Federal Reserve could do to prop equities.
Keep an eye on bank lending and treasury market. If those markets can still function, I would rate their actions as best you could reasonably expect.
If no miracle covid-19 cure is found and distributed right now, prepare yourself for a doubling of the FED balance sheet and wide use of negative interest rates like in Europe.
In less than two year or so, another 5 trillions of treasury assets will probably appear on the FED balance sheet in order to keep treasury bond and bills interest rate around zero, but as they explain so well that it is temporary, that is not debt monetization….
The Fed is in panic mode. Luckily, money is largely neutral says the evidence (Google this, Bernanke et al’s FAVAR paper) so the Fed, aside from influencing day traders, has no real effect on the economy (sorry Austrians). The only effect of the Fed is to rob Peter (taxpayer who has to assume more govt debt long term) to pay Paul (zombie creditors), but that can is kicked down the road.
Money is anything but neutral and Bernanke is a monetary crank.
I am going to drive up to the SF Fed on Monday and see if I can borrow $1,000,000, now that interest rates have dropped so much!
Otherwise, whether the interest rates are 0, 1, 2, 3, or 4% makes little difference to me or most consumers.
Just waiting for the tsunami followed by deluge of cases. The only thing that has worked is a full quarantine in China, South Korea, Singapore and Hong Kong. Italy and Iran didnt quarantine quickly enough and other parts of Europe are making the same mistake. We will know in 2 weeks how bad this will get. It feels like waiting for a tsunami.
The Fed is essentially a two-trick pony (interest rate, printing press). With this they acted like gods. This is their comeuppance.
This is kind of sad to watch. Sort of like firing all the bullets in the gun, seeing no effect, and then throwing the gun at them.
Hmmmm… we shall need a bigger Fed…
Shortly after rising to $1572, gold sold off to $1527. It’s now at $1548 and showing little signs of life. Anyone who thought it would explode higher under these conditions is sadly mistaken.
The Fed can accept collateral and can do massive QE.
It cannot give money to consumers who are living paycheck to paycheck and are now out of a job.
The Fed has no power
Buy securities directly. Buyer of last resort. Vladimir Lenin is probably smiling in his grave. Gorbachev and Putin are probably doing a toast right now ….. “USSA, comrade”
Gasoline futures also down, to 81 cents per gallon. Anyone who went long on the dip will be getting margin calls in the morning, in fact I should think there will be quite a lot of margin calls in the morning and not just some commodities.
I am not usually at a loss for words Mish you know that. But this time I am. I am watching my life coming to an end and just HOPE somehow it is not true, but with today’s measures and the governor of NY demanding Trump call out the military (to do what exactly?) I am getting really depressed. As most of you know I made an offere on a house in Florida 3,000 miles away and it was accepted, so I am in a contract, and have funded the escrow account, as well as signed a binder for homeowner’s insurance, paid for inspections, flew to Tampa to walk through the house, paid for a moving truck from Penske, and gave notice to my landlord in Oregon, I have to be out in two weeks no matter what else happens. I even paid water and electric and cable deposits at the new house, have an appointment for installation on the 6th.
If I am not there on the 6th I lose all of that, and it is all I have. I am a disabled vet, enough income to live but not enough for months of emergency fund.
And what about the ability to even sign that contract if I can get there? What is happening to interest rates and mortgages? You would think that they would drop but last week when the Fed cut rates by 50 basis points the average new mortgage interest spiked by 54 basis points.
Not to mention the longer term problems with inflation that have got to happen with this sudden jolt of cash flooding the economy. All I get for raises is the CPI and we all know how grossly under real inflation that is.
Then there are little things like my airline ticket to Oregon to get my car. American has already announced a 75% reduction in flights, United cannot be far behind. I can’t live in the new house without private transportation, it is miles to any store even if there is anything in that store to buy, at a price I can afford.
This is in my mind what it must have been like when the Great Depression started in October 1929, only with aq deadly pandemic thrown on top for good measure.
[EDIT] By the way, I meant to mention that a house listed at $279k in Wiki Watchee over by the Gulf was sold a few days ago for $135,000 cash. They took a more than 50% hit to make a quick cash sale.
Herkie, can you sell your car or ask someone to sell it for you, and instead buy something cheap when you get to Florida? You won’t be able to sell for much during all this, but flying back to Oregon for a car to then drive back to Florida sounds like a lot of work and stress even in normal times.
Brad, not only do I owe too much especially when considering what is about to happen to the used car market, but also I love my car, got a pretty good deal on it, it is low mileage and well maintained, it represents a lot of value to me, but not to others.
Mish: I have a feeling a lot of people are going to need a lot of lawyers. The movers I am not that worried about, I can probably do most of the unloading myself given enough time, it is the fact that I have till COB on the 6th to sign that closing or I lose the house. The owner has already said he has had two cash offers since he agreed to sell to me. One closed road at one state line with national guard keeping people out is all it will take for me to be a homeless disabled vet that spent everything to buy a house he can no longer get.
Russel, I have no choice, I have to be out of this place on the 29/30th with keys turned in, and must close on the new house by the end of the 6th in Florida. There simply is nothing in any of the contracts I have signed that allow for a virus and government travel bans and etc. to use as an “excuse.” NOT doing it would bankrupt me, just when my life was finally coming together and getting good for the end years. I am way too old to start over from scratch years down the road, I do not have that much time left. So if I die from CV then so be it, it would be better than being bankrupt and homeless at my age.
Herkie – Please consult an attorney. Possibly you need one in Florida. I am quite sure you can get someone to close for you.
If you have hired movers I suspect they will show up.
Did you not lock interest rates?
you can definitely sign over the internet, I think its called docusign. I used it when I sold my great aunts house in San Diego. I did it on my iPhone. call your agent there are solutions to this problem.
Russel, I already anticipated that possibility and asked the mortgage broker. He said it COULD be done by mail but not docusign. For it to be done by mail I would have to recieve the paperwork by the time I have to leave this house anyway, and they would have to get it back in perfect order by the 6th. If there is anything out of place even a comma, they deal is void. I cannot sign before the 6th either because my certificate of eligibility from the VA for a mortgage is not effective till then, I have to close ON THE 6TH! I can get the car later if I absolutely have to, but not months and that is what they are talking about, at least 8 weeks of total travel ban. Even at that I would be limited to catching rides to the grocery store from god knows who, I don’t know anyone there yet. There is one lady that has a key to my house and goes in every other day or so to make sure the pool pump is not burned out or such things, she would probably give me occassional lifts to the market. I mean, I will do this somehow, but, if they close roads I am going to be royally screwed. I just will not be able to get there in time. By the way, the guy who is allowing me to park my car at his house while I am gone is a decent guy, he would understand if I can’t fly back right away, but, he is also planning to move to the Jacksonville St. Augustine area as soon as his house sells, in this market I am surprised he has not had a cash offer already.
Herkie, this is a “shelter in place” situation now and that’s what you need to be considering..nothing else. If your best chance of sheltering in place is Fl go if its Or. stay. You literally have a few days to get there before it becomes impractical if not impossible. Their getting ready to shut down NY dude!! I’m in Ca and the governor is on the tv today telling old people to stay home they’ll get food to them. This isn’t “buss as usual” time its “shelter in place” time.
By the way, Russel, Brad, Mish, thank you for the kind words and concern. I will do the best I can of course, but, take my situation as just one of the millions of stories that are going to echo that level of ruin or worse if they do these things. Clearly CV is just the pin that popped an existing bubble, a lot of people are going to lose a lot more than I will. But, the really hard part is how the top 1% will lose nothing but instead get even flithier rich. This time the blowback though will assure us of a socialist that finishes off the USA. The crony capitalist greed has finally gone just too far.
I am 7 miles from PDX airport, let me know if I can help logistically at some point.
Thank you Brad, I am in Medford, my flight connects via SF but United has announced a 50% cut in flights, at this point I do not know where I will end up when. You don’t need to adoped a used veteran, but that is a kind offer that is really rare these days. Thanks. Mind you, this city will be all but cut off from the outside world if they slash flights that deeply.
Well I hope you make it to Fl Herkie.
Wow, these idiots certainly know how to change the narrative. In the morning, we were calmly talking about the corona virus, and by the end of the day, we are talking about biblical calamity.
Mish better have a dozen hands to type, just to keep up!
And just when Powell started to see the effects of their 2008 actions reaching the lower and middle class!
Guess they’re waiting another 12-20 years
The effects of Fed policy on the middle class have been amply obvious from The Fed’s inception. Doubly so since 1971.
Look on the bright side John/Stuki; hyperinflation can only last so long right? I mean as soon as all of us are broke and lining up for government soup they will restore real money right? We can start the whole hamster wheel all over again.
I miss government cheese
Think that central banks and politicians worldwide will be absolutely shitting themselves at today’s market reaction. Think therefore that fiscal measures will be utterly gargantuan. Assuming the market roars north as a result, then will be the mother of all shorting opportunities.
(BTW, this stated from the perspective of one who bought ultra long dated gold calls long ago and reinforced recently in expectation of unprecedented monetary and fiscal largesse)
“all air traffic into the US from the EU is closed down.”
That’s not correct. US Citizens will continue to be allowed to fly from Europe to a designated US airport.
Technically true Shamrock, but, the cost! Normally a plane is full of paying passengers both directions, now they are taking Americans back to the states and flying back empty, or actually they are flying back with cargo holds filled with pallets of US currency, but few if any paying passengers.
So, negative rates coming?
Do they ban cash withdrawals to avoid bank runs? They can also claim that the virus circulates with cash.
Use the crisis to get something people would otherwise not tolerate.
negative interest rates have been operative for years: interest payout below real inflation rate. The Rothschild Third National Bank, alias “Federal Reserve” is just now making it official.
Kudo on your crypto-Jew hate. You have a very poetic way of hiding it in plain sight.
“The Fed has thrown everything at this. If we are now facing the end of central bank action, it means we are on our own,” said Seema Shah, chief strategist at Principal Global Investors. “There is a fear settling in the market, investors are terrified that this was all that was left.”
There’s always nationalization of citizen assets to make the banks whole. They’ll figure out something else to call it though. Stagflation would be my guess.
They will buy ETFs soon. Like the Japanese Central Bank.
The Fed is also washing their hands
Why Banning International Travel has Little Effect on Coronavirus Spread link to wdearden.com
He assumes that there are already 20,000 cases in the US. If true, he’s right that banning travel will have minimal impact. The smaller the number of existing infections, the more useful the travel ban is. Note that I expect the travel bans to be reversed. I expect, in particular, China to ban travel to the US, until we get it under control
A couple of links on HEPA for you, was just reading up:
Books by Zhonglin Xu are very complete on the topic.
The Fed has plenty of bullets. A commercial paper facility could provide limitless dollars directly into the economy. They can buy limitless government paper. They can make the Fed funds rate negative.
Will all that work? Of course it will. It will inflate all the debts away, along with most of the perceived wealth.
Plenty of bullets that will be used. Better have some gold in hand is all I can tell you.
No they can’t just do limitless commercial paper without having every sort of commerical paper market participant possible requesting unlimited amounts. Which quickly would become untenable as CFOs just keep adding extra zeros. The Fed obviously having no real ability to assess their credit-worthiness.
Only revaluation of gold gives the Fed/Treasury a chance of hanging on, as at least they have 8000 tons of the stuff that would be of value, and could then be used as collateral accordingly.
there’s less gold in Fort Knox than you got in your teeth. That 8,000 T made aliyah to a small country at the east end of the Mediterranean some years ago. When the dollar dies, there is nothing to back a new currency with….other than confiscating privately held metals @ gunpoint. That will mean hot internal war.
Well if that’s the case, then the various branches of the US military have some work to do pronto… :(.
In theory you are right, that was just what Zimbabwe did though eh? The are already past the limits of what they can do without negative consequences being worse than what they are trying to repair.
Remnant of Ben (I’m the Smartest Guy in the Room) Bernanke.
Quarter point interest RANGE.
Just say the FED RATE is 0%.
Clown. Lol.
“All major US banks which are ending stock buybacks”. Awwww… that was really nice of them. Betcha they will not announce when they resume stock buybacks… maybe later this week.
They gotta put it somewhere… where else is it gonna go. Print money for wall paper, it saves the effort into cutting it up into individual pieces.
“When sorrows come, they come not single spies. But in battalions.”
CDC now recommends no gatherings of more than 50 people.
Isn’t the next step banning all flights?
Smaller aircraft.
The Fed is loaded to the gills with bullets, and they’re all aimed at the responsible citizen who works hard and saves. Helicopter money here we come.
YES, I agree. I’m looking for gold to bottom below $1000/oz. Then I’ll pick up ~100 gold coins. Housing prices will crash too, so I want some cash available to buy a nice house in full.
I like your optimism about gold crashing below 1000. I can see it reaching perhaps 1200. The Fed will be backing the truck at that point using their freshly minted dollars.
I agree with you that gold is headed down quite a lot. Maybe not $1000 but definitely around $1200.
The next “tool” to be used will be banning short selling. It is perceived as a 0 cost option fiscally and politically; however, a ban removes those who are required to buy shares in the future.
The tool after that would be to shut down markets so portfolio values don’t fall anymore. Depositors would then face haircuts until FDIC limits are reached or banks books are out of the red.
Lurking in the background would be for the FED to break the buck by declaring the last market value of US government bonds the same as cash. Once the bonds become the official metric for value of savings accounts, the bond market could re-open. Banks would remain solvent and depositors would take yet another loss.
FED action confiscating printed dollars is futile since the amount of debt dwarfs the amount of cash in circulation.
Wouldn’t surprise if both #1 and #2 happen this week, if not tomorrow.
Regardless of whether you are wrong or not, it is extremely nice for someone to finally follow up a doomsday prediction with a clearly laid out hypothesis of what they think could happen NEXT.
Preparing golden parachutes for the 0.01% while rest gets a towel to defend against Covid.
GOLD PRICES??
Temporarily, gold prices will sell off as it is liquidated to cover various positions.
This may be the LAST and BEST time to buy GOLD….
I’ve jus read that:
“the Fed has thrown the kitchen sink of policy measures that should weaken the dollar but because of the virus it isn’t conducive to putting money in other county’s fx.”
The author’s obviously forgotten the oldest and safest currency in the World, Gold.
everything will be liquidated
They kept string it out, waiting for a black swan. Couldn’t have happened to a nicer bunch of clowns.
What do you mean? This is a dream come true for the elites. Remember, all the REAL elites cashed out and stepped down in the last months of 2019, or just a while ago like Jamie Dimon. So now every insane bailout that one can imagine will be doled out with a handshake on live TV, to loud applause, because NONE of this downturn was their fault, you see, it was all the fault of this unfortunate once-in-a-lifetime microbe that just happened to float by and wreck everything the bankers spent so much time and effort building for all of us.
Can’t blame him. If I had been run down by two thousand pound grizzlies, wouldn’t want them to find my gun with unfired rounds in the magazine.
If you push on a string, and nothing happens, push harder.
Bazooka or Towel..???
Prices of consumables – ready for lift-off!
Prices of assets – elevator down, please!
Serious leadership is needed and backstop small enterprises and their employees. When the SME element of the economy collapses so will everything else and real depression ensue.
Very serious leadership is needed. I reckon the oil price cut was to support the global economy, not to take down shale Russia. Now extra measures needed to backstop the backbone of employment.
Even those predicting a reckoning will soon be crapping themselves.
SMEs – ya nailed it. This is ground zero. These Fed actions are meaningless to the SMEs in a pandemic. I was predicting a reckoning but I never imagined it would happen like this. We are up to our necks here with no obvious answers.
This is going to be a depression…. 25% plus unemployment.
“Commodity/Consumer” prices will explode to the upside (demand shock)
“Risk Assets/Liquid Asset” prices will TOTALLY COLLAPSE (supply shock)
The inflation measures are not geared to ‘real’ inflation as Mish has articulated for many, many, many years.
Bad policy = Bad results….
Sell into any strength and get liquid ASAP…
Respectfully, I wonder why you think commodity prices will explode from a demand shock. I rather think they will sink like a rock because of declines in demand because of lack of resources for consumers to spend. The money the FED put into the economy went into the securities values not the pockets of consumers, who after all account for 70% of the GDP.
I would amend my remarks to “consumer goods” – not commodities.
I agree that commodities are likely to tank as many are tied to the dollar, which should skyrocket.
Thanks for your RESPECTFUL comment… much appreciated…
Freebee you are SUCH an optimist. Only 25%? I rmember higher unemployment rates in my county in California when I went into the service in 1975, and higher yet when I got out in 1979. Was over 33%.
Unemployment was measured more honestly “back then”. It isn’t measured honestly today.
The 2020 investment motto: If you can’t eat it or burn it, sell it….
I think you are all panicking unnecessarily. I had a conversation with a broker in a bar last week in London’s financial district. His analysts issued a note estimating a worst case impact of 6% contraction in GDP.
Those analysts are very clearly right.
It was a very nice day in London, actually. It was very noticeable how few people there were. My usually standing room only train was half empty, i didn’t have to stand in a long queue in Starbucks (i was the only one in there) and the shopping centres were empty, with bored looking shop assistants filing their nails.
Not so nice when i got home. It was raining, and my wife was talking to her friend, whose airline pilot husband just got fired. She is ok though, works for an estate agent, they are estimating 10% growth this year. Her daughter works with mine, at a small estate agent (realtor) owned mortgage broker that deal with new home finance. Her daughter is about to buy a house with her partner, who is the manager of a Starbucks outlet. They are mortgaging to the hilt on mother’s advice, and mother is planning to withdraw some equity (what we used to call getting in more debt) to support them, which she is now worried if they will able to do because the main earner (husband) is out of work. She doesn’t want them to miss out on this new build though, as the developer says they are selling fast and for full asking price.
So yeah, 6% reduction in GDP, that’s it. And house prices unaffected.
On a serious note….
UK airlines are asking for a £7.5 bn bailout from the government
The UK hospitality industry wants the right to fire people without severance
The rail industry is also calling for help.
Steve Keen’s “debt jubilee” might be the only magic bullet left.
Fed is determined to hold the line at dow 20k even if it means printing a trillion dollars (QE5) everyday,or roughly half a quadrillion dollars this year in a desperate (suicidal)attempt to keep the dow from collapsing on it’s ass…Can the dollar survive????
Maybe not the first domino to fall, but it will.
They’ll let the Dow die before the dollar. Besides the Dow can’t tolerate higher long-term interest rates that all the dollar printing will cause. The Dow is clearly correlated with long-term bond prices.
No they won’t. Rich people everywhere would be wiped out along with banks.
Inflation or death.
Banks being wiped out is a foregone conclusion.
That “Nestle $100,000 Bar” will eventually cost you $100,000.
Deflation/Liquidation panic first, though.
About 35 ounces of Gold then.
I hold gold, don’t want to see gold there. No fun to have to claim on portfolio insurance.
All this extra liquidity has got to go somewhere. To be honest I don’t know what will happen but I’d rather have a valuable asset with no counter-party risk. Gold can’t go bust.
Agreed, but it wont be a pleasant world for lots of folk. Prefer not to end up there.
I don’t think so.
More like .0000035 ounces.
You need to start thinking more clearly, son.
I’m all ears, always interested in differing views, especially in such turmoil?
Can you eat gold?
looks like you’re right!