With much of the news focus on the results from Super Tuesday's Democrat primaries and the Fed's 50 basis point cut to the federal funds rate, for a day, market participants had their heads turned toward something other than the evolving coronavirus crisis.
That little bit of relief allowed stocks to rise by roughly four percent across the major indices. The gains were not record-breaking, but they were close. The NASDAQ's 334-point rise was the third-best on record; the Dow's gain exceeded only by the 1,293.96 rip on Monday. The S&P's number was also the second-best day ever.
These kinds of wild swings, to both the upside and down, have become a trademark for not just US markets but many international stock indices since the outbreak of COVID-19 in China, but especially so since the virus has spread beyond the borders of the world's most populous nation. Most developed nations are currently flirting with 10 percent drops off recent highs, crossing the point of correction level at various times, above and below it.
Following Wednesday's romp, news on the coronavirus front just got worse and worse as the day turned to night and night to Thursday morning. A health screener at LA-X in Los Angeles tested positive for the virus; in New York, six more cases emerged. Seattle is quickly becoming an epicenter for an outbreak, and by morning, California had declared an emergency due to the treat from the spreading infection. 1000 people in New York are being screened for possible infection.
Schools are closing in various places across the country, Amazon and Microsoft employees are being advised to work from home, soccer games in Europe are being played in stadia devoid of fans, Italy has urged anyone over the age of 60 to stay home as much as possible to avoid contracting the virus. Despite the WHO's failure to officially declare a pandemic, COVID-19 has swept around the planet and is showing no signs of abating.
As for the World Health Organization failing to label the current condition a pandemic (it is, even according to their own standards), the reason may lie more in the ghastly world of finance rather than health. Unconfirmed reports say there are "pandemic bonds," which are bets against a pandemic outbreak declaration. If the WHO declares COVID-19 a pandemic, it will trigger bets made on a pandemic, as credit default swaps (CDS), along the lines of those which paid off magnificently when the sub-prime crisis blew up, will explode, blowing up the underpinnings of global finance.
If true, it would prove not only that bankers and financiers on Wall Street and elsewhere learned nothing from prior default events, but that they continue to make sickening, revolting wagers on extreme events. When coronavirus destroys the economy, the usual suspects will be found in lower Manhattan, probably toasting their bonuses, as they have in previous episodes of moral bankruptcy.
That said, anybody who has not taken action to remove their investments from the stock market casino over the past few weeks (if not sooner) is likely to suffer in the most severe economic manner possible over the next six to 12 months. There is no evidence of containing the virus and only the hope that its viability will be reduced with the advent of warmer and more humid weather. Unfortunately, it's only March. Warm mid-Spring weather is still months away in much of the developed world.
According to the painfully-slow-to-react CDC, there are 13 states that have identified persons infected. Those are New York, Vermont, Massachusetts, Wisconsin, Illinois, North Carolina, Georgia, Florida, Texas, Arizona, California, Oregon, and Washington. Add Rhode Island, New Jersey and Utah as of today, making it 16 with more to come. Already an even 1/3 of mainland states, there are no physical barriers to where the virus can spread. Eventually, it's likely that there will be high incidence of the virus in every state, with the exception of Hawaii and Alaska, due to their unique locations, far from mainland populations.
News on COVID-19 is developing quickly and reported cases are mounting now nearly by the hour. According to John Hopkins, there are 159 cases in the United States. A week ago there were fewer than 25. The same pattern of doubling every two to three days - as was the case in China early on - is becoming evident in European countries, especially Italy, followed by France, Germany, Spain, Switzerland, the UK, and Norway. South Korea and Iran have become epicenter outbreak areas with the number of cases exploding higher every day.
As the disease progresses, the news is likely to be substantially worse before it gets even slightly better. While it is possible that the health outcomes may not be as severe as predicted, the economic pain is almost certain to be severe.
It was more than a week ago that Money Daily advised to Sell. Everything. Now. Wednesday's upswing provided a late get-out-of-jail-free card for procrastinators or non-believers. After Thursday, it may be too late. A 2000-point decline Thursday is more than a passing possibility.
Late edit: With so much happening, let's not forget that gold is rising, silver also, but not to any great degree, oil demand has plunged and will slide further. WTI crude oil prices are at $46 and change per barrel. Treasury yields were stable on long-dated maturities with yields on the 2-year through 30-year issues all rising or falling four basis points or fewer. The 10-year note stabilized at 1.02%, but is again below 1.00% (0.95%) prior to the opening bell (1/2 hour). The short end of the curve, 1, 2, 3, 6-month and one-year bills cratered, the one-year sporting the lowest yield on the entire complex, dropping for 0.73 to 0.59 on Thursday.
Initial claims for state unemployment benefits slipped 3,000 to a seasonally adjusted 216,000 for the week ended Feb. 29, the Labor Department said on Thursday. Data for the prior week was unrevised.
At the Close, Wednesday, March 4, 2020:
Dow Jones Industrial Average: 27,090.86, +1,173.45 (+4.53%)
NASDAQ: 9,018.09, +334.00 (+3.85%)
S&P 500: 3,130.12, +126.75 (+4.22%)
NYSE: 13,009.96, +467.22 (+3.73%)
Showing posts with label USA. Show all posts
Showing posts with label USA. Show all posts
Thursday, March 5, 2020
Wednesday, February 26, 2020
Bloodbath Continues As Stocks Respond To Coronavirus Fears; Bond Yields Achieve Fresh Lows; A Black Swan Moment?
So, is this "the big one?"
Is this the beginning of the inevitable late-stage bull market crash?
It very well could be, with the coronavirus taking up residence in market perceptions as the black swan, the mythical entity so eloquently devised and demonstrably argued in Nassim Nicholas Taleb's book by the same name in 2007.
To those unfamiliar with the concept, black swans are rare, some say even non-existent, and Talib posits that rare, unpredictable events do happen, and their appearance can manifest itself in positive or negative ways.
Thus, the coronavirus (COVID-19) qualifies as a black swan event, as it appeared almost from nowhere, without warning, without announcement, and without restraint. It could be said that the virus itself is not the black swan, but what turned it into a major event for markets and economies was the fumbled handling of it and attempts to contain it in its early days of spread in China.
Had the virus been less contagious, less virulent, better contained, it might have had little to no effect on markets, but, as has been seen over the past two months, it managed to spread across almost all of mainland China, escaped its borders and eventually has been contracted in now forty countries, as far-flung as Sri Lanka, Bahrain, Finland, and the United States.
It is out there, it is virulent, it is deadly in some cases. Invisible, untouchable, it is an ideal psy-op by which the mainstream and financial media can whip up fear into a tornado of emotion, to whirl about Wall Street and global financial centers and create a panic.
The truth - and there have been more than enough variants of that to render objective opinion nearly moot - is that the virus is apparently not as deadly as other natural disasters might be. It is not even keeping pace with deaths by accident or from the more common flu, but the media coverage and government response to it has been nothing short of ghastly and draconian. Mass quarantines are not something most people alive today have ever experienced, but the world is getting a first-hand view - albeit somewhat clouded by China's command - of entire cities and provinces on lockdown, now followed by similar experience in South Korea and Italy and elsewhere, and possibly, we have been warned, coming to a neighborhood near you.
So, while fear is stoked in the general populace over the chance of catching the disease, possibly dying from it and possibly having to live isolated for weeks, the financial world sees disruption to the normal conduct of business, anathema of the first order.
Starting with the supply lines for parts to finished products out of China and ending with entire huge swaths of populations unable to transact in an orderly manner, the spread of the virus has the potential of putting the entire planet on hold, unable to work, pay bills, advance production, build, grow. COVID-19 is the potion, media and government the ice and the straw that sirs the drink (hat tip to Mr. October, Reggie Jackson for the apropos analogy), and it is all connected.
Whether or not the spread of the virus, its immediate health effects and reaction to it will be enough to send economies into reverse is still unknown, though it's looking more and more likely that whatever carnage it is producing is not about to stop soon and will continue until either it mutates itself out of existence or is contained to a level at which people can work, travel, and interact freely without fear.
So far, it has not been contained to any satisfactory level and appears to be spreading further into the general population in many countries.
With what we know, and the reaction thus far - by China first and the rest of the world after that - COVID-19 may not decimate the world's population, but the fear of it, the media coverage of it, and various government responses to it have the potential to crash markets around the world.
The financial environment has quickly shifted from greed over to fear and fear is not backing down. Investors are seeking safety rather than profit. Companies are reviewing disaster plans and procedures rather than seeking expansion and growth. These conditions will likely prevail for months, long enough to send stocks spiraling into a death trap, bonds soaring, and eventually gold and silver to unforeseen levels (though precious metals took a thumping on Tuesday thanks to the unseen hands of interlopers in the paper markets).
On Tuesday, the Dow took another huge step down, as did the NASDAQ, S&P, and other indices around the world, especially in Europe, which after China, looms the most precarious. Europe was already been on edge, close to recession, prior to the emergence of the coronavirus threat and they may be reeling uncontrollable into an abyss should the population experience widespread or even minor contraction.
In the United States, the slowdown has begun, with automakers concerned about parts en route from China and whether such essential production parts will arrive in an orderly manner. It's probable that they will not. Other industries have a similar connection to China and elsewhere, and anecdotal evidence suggests that slowdowns and possible layoffs lie straight ahead.
Bond yields have cratered like a failed bundt cake. Yield on the 10-year note crashed through its all-time low, stopping finally at 1.33%, two basis points below the prior low from July 5th and 8th of 2016 (1.37%). The 30-year bond dipped to 1.80%. The three and five-year notes mark the bottom of the treasury curve at 1.16, dangerous levels for capital markets.
In conclusion, unless events somehow take a radical turn for the better, conditions exist in spades for massive market turmoil to the downside. Beyond the idea that most liquid equity markets and individual securities have been extremely overbought and propped up by Fed injections and corporate buybacks, the effect from coronavirus and reaction to it should continue to offer nothing good in terms of upside impetus for the foreseeable future, though the first quarter and well into the second.
Global recession or worse is a viable consideration.
At the Close, Tuesday, February 25, 2020:
Dow Jones Industrial Average: 27,081.36, -879.44 (-3.15%)
NASDAQ: 8,965.61, -255.67 (-2.77%)
S&P 500: 3,128.21, -97.68 (-3.03%)
NYSE: 13,143.73, -390.37 (-2.88%)
If all this is too much for you to bear, then sit back, relax, and enjoy music from a better time, the Beatles' Revolver album.
Is this the beginning of the inevitable late-stage bull market crash?
It very well could be, with the coronavirus taking up residence in market perceptions as the black swan, the mythical entity so eloquently devised and demonstrably argued in Nassim Nicholas Taleb's book by the same name in 2007.
 |
| Talib's tome is on the mark. |
To those unfamiliar with the concept, black swans are rare, some say even non-existent, and Talib posits that rare, unpredictable events do happen, and their appearance can manifest itself in positive or negative ways.
Thus, the coronavirus (COVID-19) qualifies as a black swan event, as it appeared almost from nowhere, without warning, without announcement, and without restraint. It could be said that the virus itself is not the black swan, but what turned it into a major event for markets and economies was the fumbled handling of it and attempts to contain it in its early days of spread in China.
Had the virus been less contagious, less virulent, better contained, it might have had little to no effect on markets, but, as has been seen over the past two months, it managed to spread across almost all of mainland China, escaped its borders and eventually has been contracted in now forty countries, as far-flung as Sri Lanka, Bahrain, Finland, and the United States.
It is out there, it is virulent, it is deadly in some cases. Invisible, untouchable, it is an ideal psy-op by which the mainstream and financial media can whip up fear into a tornado of emotion, to whirl about Wall Street and global financial centers and create a panic.
The truth - and there have been more than enough variants of that to render objective opinion nearly moot - is that the virus is apparently not as deadly as other natural disasters might be. It is not even keeping pace with deaths by accident or from the more common flu, but the media coverage and government response to it has been nothing short of ghastly and draconian. Mass quarantines are not something most people alive today have ever experienced, but the world is getting a first-hand view - albeit somewhat clouded by China's command - of entire cities and provinces on lockdown, now followed by similar experience in South Korea and Italy and elsewhere, and possibly, we have been warned, coming to a neighborhood near you.
So, while fear is stoked in the general populace over the chance of catching the disease, possibly dying from it and possibly having to live isolated for weeks, the financial world sees disruption to the normal conduct of business, anathema of the first order.
Starting with the supply lines for parts to finished products out of China and ending with entire huge swaths of populations unable to transact in an orderly manner, the spread of the virus has the potential of putting the entire planet on hold, unable to work, pay bills, advance production, build, grow. COVID-19 is the potion, media and government the ice and the straw that sirs the drink (hat tip to Mr. October, Reggie Jackson for the apropos analogy), and it is all connected.
Whether or not the spread of the virus, its immediate health effects and reaction to it will be enough to send economies into reverse is still unknown, though it's looking more and more likely that whatever carnage it is producing is not about to stop soon and will continue until either it mutates itself out of existence or is contained to a level at which people can work, travel, and interact freely without fear.
So far, it has not been contained to any satisfactory level and appears to be spreading further into the general population in many countries.
With what we know, and the reaction thus far - by China first and the rest of the world after that - COVID-19 may not decimate the world's population, but the fear of it, the media coverage of it, and various government responses to it have the potential to crash markets around the world.
 |
| Note the variance between the rise in price (up) and the bottom panel. That is the correlation with the S&P 500, which the Dow underperformed all through 2019 and into 2020. |
On Tuesday, the Dow took another huge step down, as did the NASDAQ, S&P, and other indices around the world, especially in Europe, which after China, looms the most precarious. Europe was already been on edge, close to recession, prior to the emergence of the coronavirus threat and they may be reeling uncontrollable into an abyss should the population experience widespread or even minor contraction.
In the United States, the slowdown has begun, with automakers concerned about parts en route from China and whether such essential production parts will arrive in an orderly manner. It's probable that they will not. Other industries have a similar connection to China and elsewhere, and anecdotal evidence suggests that slowdowns and possible layoffs lie straight ahead.
Bond yields have cratered like a failed bundt cake. Yield on the 10-year note crashed through its all-time low, stopping finally at 1.33%, two basis points below the prior low from July 5th and 8th of 2016 (1.37%). The 30-year bond dipped to 1.80%. The three and five-year notes mark the bottom of the treasury curve at 1.16, dangerous levels for capital markets.
In conclusion, unless events somehow take a radical turn for the better, conditions exist in spades for massive market turmoil to the downside. Beyond the idea that most liquid equity markets and individual securities have been extremely overbought and propped up by Fed injections and corporate buybacks, the effect from coronavirus and reaction to it should continue to offer nothing good in terms of upside impetus for the foreseeable future, though the first quarter and well into the second.
Global recession or worse is a viable consideration.
At the Close, Tuesday, February 25, 2020:
Dow Jones Industrial Average: 27,081.36, -879.44 (-3.15%)
NASDAQ: 8,965.61, -255.67 (-2.77%)
S&P 500: 3,128.21, -97.68 (-3.03%)
NYSE: 13,143.73, -390.37 (-2.88%)
If all this is too much for you to bear, then sit back, relax, and enjoy music from a better time, the Beatles' Revolver album.
Thursday, November 10, 2016
Go Figure: Trump Is A Winner And So Are Stocks
Editor's Note: I've been itching to write a post-mortem on the election for the past two days, but Wednesday was spent mostly recovering from the victory celebration which went late into Tuesday night and today the weather here in upstate New York is a breathtaking thing of beauty for mid-November with temperatures in the low 60s. Thus, I'm itching to get outside and enjoy the fresh air my little slice of America. I'll take my bows and victory lap for a month ago having predicted Trump's victory another time, likely at some point over the weekend.
There are more than a few points I wish to make and I am not yet over the elation of having gotten my country back to focus on penning a reasonably good essay, though I intend to in due time.
--Fearless Rick
Being just two days hence, the historic win in the presidential election by Donald J. Trump is still fresh in the mind, but already there are signs that the script has not yet been written for this chapter in American history.
Stocks, especially the Dow Jones Industrial Average, will close at record highs today should current prices be maintained or closely held.
The public had been led to believe that a victory for the Donald (can we still call him that once he's sworn in?) would be a death knell for stocks, but apparently, wall Street types see it somewhat differently, especially since not only did a Republican take control of the presidency, but the house and senate remained firmly in control of the GOP.
As strange as it may seem, Wall Street could actually believe in what Mr. Trump has been preaching and the last two days of trading may well be proof of that. Stranger yet is gold being down and silver up. Could the historic deviation from the gold/silver ratio we've witnessed over the past 30 years be starting to unwind? The best advice offered is one made a few months ago in Money Daily: buy solar panels (preferably American made).
There are more than a few points I wish to make and I am not yet over the elation of having gotten my country back to focus on penning a reasonably good essay, though I intend to in due time.
--Fearless Rick
Being just two days hence, the historic win in the presidential election by Donald J. Trump is still fresh in the mind, but already there are signs that the script has not yet been written for this chapter in American history.
Stocks, especially the Dow Jones Industrial Average, will close at record highs today should current prices be maintained or closely held.
The public had been led to believe that a victory for the Donald (can we still call him that once he's sworn in?) would be a death knell for stocks, but apparently, wall Street types see it somewhat differently, especially since not only did a Republican take control of the presidency, but the house and senate remained firmly in control of the GOP.
As strange as it may seem, Wall Street could actually believe in what Mr. Trump has been preaching and the last two days of trading may well be proof of that. Stranger yet is gold being down and silver up. Could the historic deviation from the gold/silver ratio we've witnessed over the past 30 years be starting to unwind? The best advice offered is one made a few months ago in Money Daily: buy solar panels (preferably American made).
Wednesday, March 30, 2016
Millenials May Be The Last Free Americans
On this day, a conversation was had with a couple of millennials, roughly in their mid-20s, working (or acting like they were working) in a smoke shop.
The conversation - following them chiding a senior citizen for talking about rolling your own and growing your own tobacco while he was buying rolling papers - was inferior, not even worth mentioning, which is why it is being mentioned.
At issue is the future, and the current youth... or, at least a sizable portion of them, want to vote for Bernie Sanders, who promises a $15/hour minimum wage, free college for everybody, and a host of other liberal-ideological non sequiturs that would essentially turn a once-prosperous free-market country (USA) into another stinking hell-hole like much of Europe, or the Middle East, or perhaps, Japan.
The problem lies not with the millennials. They don't know any better. Most of them haven't been around for more than 25 years, meaning that scads of them were in high school during 9-11, and those images are burnt into their psyches, as too the neo-liberal education they've been given, in which they know little about history, economics, language, culture or just about anything that would promote a thriving, free nation.
No, to blame are largely baby boomers, who foisted upon their youth such undistinguished values as participation trophies, non-judgemental attitudes, video games, addiction to cell phones, social media and other claptrap that promotes laziness, sloth, stupidity, class hatred, and decline.
Between the educational system run from afar in Washington, D.C., the Federal Reserve (also a D.C. inhabitant), and a mainstream media intent on propaganda du jour rather than objective journalism, the millennials may just be the last generation of Americans who can claim any level of freedom.
Americans are being taxed, silenced, tabooed, and numbed into a state of slavish devotion to media and government.
As a nation, America is pretty much doomed unless radical changes in the culture are made, and soon. Traditional values would be a welcome relief, but, whenever they are proposed, millennials scoff and pay, and continue down the path to self-destruction.
Thank you, Janet:
S&P 500: 2,068.46, +13.45 (0.65%)
Dow: 17,748.61, +115.50 (0.66%)
NASDAQ: 4,881.76, +35.14 (0.73%)
Crude Oil 38.38 +0.26% Gold 1,229.00 -0.69% EUR/USD 1.1335 +0.36% 10-Yr Bond 1.83 +0.88% Corn 369.25 -1.01% Copper 2.19 -1.02% Silver 15.25 +0.11% Natural Gas 1.99 +0.66% Russell 2000 1,113.52 +0.40% VIX 13.40 -3.04% BATS 1000 20,682.61 0.00% GBP/USD 1.4378 -0.06% USD/JPY 112.4500 -0.22%
The conversation - following them chiding a senior citizen for talking about rolling your own and growing your own tobacco while he was buying rolling papers - was inferior, not even worth mentioning, which is why it is being mentioned.
At issue is the future, and the current youth... or, at least a sizable portion of them, want to vote for Bernie Sanders, who promises a $15/hour minimum wage, free college for everybody, and a host of other liberal-ideological non sequiturs that would essentially turn a once-prosperous free-market country (USA) into another stinking hell-hole like much of Europe, or the Middle East, or perhaps, Japan.
The problem lies not with the millennials. They don't know any better. Most of them haven't been around for more than 25 years, meaning that scads of them were in high school during 9-11, and those images are burnt into their psyches, as too the neo-liberal education they've been given, in which they know little about history, economics, language, culture or just about anything that would promote a thriving, free nation.
No, to blame are largely baby boomers, who foisted upon their youth such undistinguished values as participation trophies, non-judgemental attitudes, video games, addiction to cell phones, social media and other claptrap that promotes laziness, sloth, stupidity, class hatred, and decline.
Between the educational system run from afar in Washington, D.C., the Federal Reserve (also a D.C. inhabitant), and a mainstream media intent on propaganda du jour rather than objective journalism, the millennials may just be the last generation of Americans who can claim any level of freedom.
Americans are being taxed, silenced, tabooed, and numbed into a state of slavish devotion to media and government.
As a nation, America is pretty much doomed unless radical changes in the culture are made, and soon. Traditional values would be a welcome relief, but, whenever they are proposed, millennials scoff and pay, and continue down the path to self-destruction.
Thank you, Janet:
S&P 500: 2,068.46, +13.45 (0.65%)
Dow: 17,748.61, +115.50 (0.66%)
NASDAQ: 4,881.76, +35.14 (0.73%)
Crude Oil 38.38 +0.26% Gold 1,229.00 -0.69% EUR/USD 1.1335 +0.36% 10-Yr Bond 1.83 +0.88% Corn 369.25 -1.01% Copper 2.19 -1.02% Silver 15.25 +0.11% Natural Gas 1.99 +0.66% Russell 2000 1,113.52 +0.40% VIX 13.40 -3.04% BATS 1000 20,682.61 0.00% GBP/USD 1.4378 -0.06% USD/JPY 112.4500 -0.22%
Tuesday, March 24, 2015
What China is Making, the World Isn't Taking
With not much in the way of company news or economic data to spur stocks in any particular direction, stocks - if you believe there is still a viable market out there - may have taken their queues today from China, where manufacturing slipped to its lowest level in nearly a year.
HSBC's purchasing manager's initial survey for March fell to 49.2, signaling contraction, from January's reading of 50.7, the worst reading in 11 months. The survey is designed so that numbers above 50 indicate expansion, under 50, contraction.
This should not have been a surprise to anyone on Wall Street, because they know how China's dumplings are boiled. They're reliant on exports of manufactured goods, primarily to the United States and Europe.
Therefore, if those two consumer groups are not buying, China isn't selling. And that's exactly what has been going on for months now, if not years. Economic numbers in all areas of the world are slightly skewed by regional and political preference, but when China, widely regarded as the world's engine of growth in the 21st century, actually shows manufacturing in decline, it's likely much worse than reported.
There isn't much about boosting manufacturing that the central banks of the world haven't already tried and found to not work, so it's likely, at this point, up to individuals to get out and spend.
Not. Gonna. Happen.
Europe is bankrupt. The USA has gone, in sixty short years, from being a creditor nation, to debtor nation, to where we are today, on the cusp of becoming a deadbeat nation.
In popular parlance, a deadbeat is somebody who borrows and doesn't pay back its debts. Well, the good, old USA can do attitude hasn't been getting it done for a long, long time. Which is why we have a federal debt of over $16 Trillion. The government doesn't pay off its debts; it rolls them over into new debt, something that, if you or I or your neighbor tried to do, we'd be laughed all the way to the nearest courthouse.
The US government has seemingly been intent upon destroying the country, the currency, and the popular notion of being the "land of the free." The failure of politicians to even attempt to fix the various parts of our fiscal condition that are broken is at the bottom of not only the Fed's Zero Interest Rate Policy (ZIRP) but also is tearing away at the fabric of the nation, and people are beginning, at last, to notice, and worse, they're doing something about it.
They're not buying. They're not buying Chinese products. They're not buying politicians' promises. They're not buying Wall Street's scams. They're not buying government statistics because people in America don't consider themselves statistics. They consider themselves people.
People matter. Governments come and go. It may be getting close to the time that some of the bigger ones get up and leave.
But, they'll probably need a little push... over the cliff.
Dow 18,011.14, -104.90 (-0.58%)
S&P 500 2,091.50, -12.92 (-0.61%)
NASDAQ 4,994.73, -16.25 (-0.32%)
HSBC's purchasing manager's initial survey for March fell to 49.2, signaling contraction, from January's reading of 50.7, the worst reading in 11 months. The survey is designed so that numbers above 50 indicate expansion, under 50, contraction.
This should not have been a surprise to anyone on Wall Street, because they know how China's dumplings are boiled. They're reliant on exports of manufactured goods, primarily to the United States and Europe.
Therefore, if those two consumer groups are not buying, China isn't selling. And that's exactly what has been going on for months now, if not years. Economic numbers in all areas of the world are slightly skewed by regional and political preference, but when China, widely regarded as the world's engine of growth in the 21st century, actually shows manufacturing in decline, it's likely much worse than reported.
There isn't much about boosting manufacturing that the central banks of the world haven't already tried and found to not work, so it's likely, at this point, up to individuals to get out and spend.
Not. Gonna. Happen.
Europe is bankrupt. The USA has gone, in sixty short years, from being a creditor nation, to debtor nation, to where we are today, on the cusp of becoming a deadbeat nation.
In popular parlance, a deadbeat is somebody who borrows and doesn't pay back its debts. Well, the good, old USA can do attitude hasn't been getting it done for a long, long time. Which is why we have a federal debt of over $16 Trillion. The government doesn't pay off its debts; it rolls them over into new debt, something that, if you or I or your neighbor tried to do, we'd be laughed all the way to the nearest courthouse.
The US government has seemingly been intent upon destroying the country, the currency, and the popular notion of being the "land of the free." The failure of politicians to even attempt to fix the various parts of our fiscal condition that are broken is at the bottom of not only the Fed's Zero Interest Rate Policy (ZIRP) but also is tearing away at the fabric of the nation, and people are beginning, at last, to notice, and worse, they're doing something about it.
They're not buying. They're not buying Chinese products. They're not buying politicians' promises. They're not buying Wall Street's scams. They're not buying government statistics because people in America don't consider themselves statistics. They consider themselves people.
People matter. Governments come and go. It may be getting close to the time that some of the bigger ones get up and leave.
But, they'll probably need a little push... over the cliff.
Dow 18,011.14, -104.90 (-0.58%)
S&P 500 2,091.50, -12.92 (-0.61%)
NASDAQ 4,994.73, -16.25 (-0.32%)
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