WEEKEND WRAP: COVID-19 Crisis Will Peak Within Three Weeks, but the Economic Crisis Will Continue for Years

(Simultaneously published at Downtown Magazine)

OK, this was a long week, and stocks got clobbered again, but it could have been, and should have been, worse. The main indices were down between two percent (S&P 500) and three percent (NYSE Composite). For most citizens of the world who are under forced quarantine, the week was a painful experience. The vast majority of people would just like to be back at work, earning a living to support their families. The partially-manufactured COVID-19 crisis is keeping most of the developed nations' economies and people in lockdowns, on purpose, to impose government will over everyday people.

It's a shame how many will be cowed by government and led to believe the many lies that have been perpetrated during this period.

The beginning effects of the Fed backstopping companies has already been noticed. Some dime-store variety stocks were being bid up as the rest of the market was heading lower through the week. Companies (no names, for now, until more than a few weeks data is collected) evidenced buying at stop loss triggers. Not many were allowed to fall to anywhere near the recent lows.

Stocks should get another taste of selling in the coming week, as most of the news will be about overloaded hospitals, stressed out medial workers, press conferences by the president and his "team." It will be interesting to note how hard the Fed works to stave off a return to 18,212 on the Dow and similar drops on the other indices. They will likely keep losses to a minimum. It would not surprise at all would stocks stage another rally.

The treasury yield curve is about as flat as it can be, signaling nothing good. 115 basis points, or, just more than one percent, covers the entire complex from one-month bills (0.09% yield) to 30-year bonds (1.24%). The 10-year note is flatlining at 0.62%. The Fed, via its SPVs (Special Purpose Vehicles) is desperately buying commercial paper, in addition to treasury bonds, agency mortgage-backed securities, ETF paper, and municipal bonds. They're busy buying up the world's debt with the only currency that matters, the US dollar, conjured up daily out of thin air. The Federal Reserve's balance sheet has ballooned to nearly $6 trillion in their attempt to blow the global credit bubble a lot larger.

Oil caught a huge bid after President Trump supposedly brokered a deal between the Saudis and the Russians, making a record gain on Thursday and another huge leap forward in price on Friday. While there is rampant skepticism over whether there is any kind of deal afoot (the Saudis denied it), the recent price jump - WTI crude went from $21.76 per barrel on Wednesday to a high of $26.35 Thursday, and closed out Friday at $28.34; Brent went from $26.90 to $34.11 over the same span - is unlikely to be long-lasting. Until the Saudis and Russians have eliminated 50-60% of the shale drillers in the US, there aren't going to be any concessions. Additionally, the rampant supply glut and limited demand should keep the price around $20-24 per barrel.

Gold and silver continue to decouple from the fraudulent futures prices. Gold settled out just below $1600 the ounce, silver about $14.00. For real prices on physical silver and gold, one must go to eBay of all places, where there is a wide-open market for coins, bars and assorted bullion. An ounce of gold is ranging between $1800-$2000, while silver cannot be had for under $22 per ounce. These are the real prices, and are heading up quickly because demand is through the roof, many miners are idled, reducing supply, hoarding is rampant, and delivery times from established dealers (30-45 days in some cases) cannot match the one-to-three day deliveries by independent eBay sellers, and those prices have built into them a 10% commission to eBay and do not include shipping, which only adds to the real prices.

There's a definite possibility that the COMEX and LBMA will soon be disregarded completely and a free, open, un-manipulated market will emerge at the world's biggest online bazaar and elsewhere on the internet as fiat currencies are inflated away and real money begins to take root at the consumer level.

Random Notes and Recommendations

JP Morgan put out a study which concluded that the world will be on the downside of the case infection rate curve in two months. Rubbish. Check out this site for the US:

http://covid19.healthdata.org/projections

The United States will be peaking and on the downslope of the curve within 2-3 WEEKS, not 2 months, and European nations are already on the downslope.

All the noise over ventilators, on which two-thirds of the people die anyhow, is just wasted time and money. The small business "loans" are garbage, full of loopholes and boondoggles for small business.

As usual, Wall Street got their trillions in the blink of an eye. American citizens will have to wait until the government gets around to figuring out how to pay them their $1200. Average time, from right now, 3-6 weeks.

Gee, thanks for helping us all out.

Open up MLB. It would be nice to see the some home runs, swings and misses, stolen bases, sign-stealing, and all that good stuff by May 15 at the latest. Even a shortened season would be acceptable. Americans, average Americans are the ones who deserve all the credit. They took social distancing and stay-at-home seriously, which was very helpful in slowing the spread of COVID. We should all get $10K, and Wall Street nothing, because those companies contributed nothing, and most of the companies getting bailout money do nothing. The people should revolt once this is over.

The government, local, state, and federal are the destroyers of liberty. All of them are worthless parasites and when this is all over they'll all pat themselves on the backs for doing such a bang-up job, when, in reality, it was mostly a big hoax.

Here is an exceptional interactive chart which shows the curve (the one we're actively flattening by social distancing and other mediations) in the United States and in every state individually, with figures for numbers of beds, ICU beds, and ventilators needed and available.

It clearly shows the curve peaking between April 15 and 21. The response curve will peak first, followed quickly by the number of COVID-19 cases curve. After that, it's all downhill for the dangerous pathogen that has disrupted lives and economies worldwide.

Brent Johnson's Dollar Milkshake Theory

Brent Johnson is CEO of Santiago Capital. He has been creating and managing comprehensive wealth management strategies for the personal portfolios of high-net-worth individuals and families since the late 1990s.

If you watch no other video on money, gold, or finance, this is the one you definitely should see.



Also, Mike Maloney's GoldSilver.com is an excellent resource. Recently, Mike has been doing pretty much daily videos with consolidated information from a wide variety of sources, funneled through his intuitive, calculating mind. Here is a recent entry with some revealing charts by the incredible analyst John Hussman, another number-crunching maniac who's been studying and disseminating information on the economy in a series of market commentaries at his Hussman Funds website.

Here is Mike Maloney's April 3rd video:



Make sure to get Mike's free e-book, Guide to Investing in Gold & Silver, the #1 All-Time Bestseller On Precious Metals Investing, available at his site.

At the Close, Friday, April 2, 2020:
Dow Jones Industrial Average: 21,052.53, -360.87 (-1.69%)
NASDAQ: 7,373.08, -114.23 (-1.53%)
S&P 500: 2,488.65, -38.25 (-1.51%)
NYSE: 9,880.63, -181.77 (-1.81%)

For the Week:
Dow: -584.25 (-2.70%)
NASDAQ: -114.23 (-2.53%)
S&P 500: -52.82 (-2.08)
NYSE: -306.58 (-3.01%)

When Three Strikes Is a Home Run

In the game of baseball, there are rules, immutable and unchanging. Three outs per inning. A caught fly ball is an out. Three strikes and you're out.

The world of high finance, as demonstrated daily on the trading platforms, carries no such rules, other than simple casino-style paradigms. Make the right bet, at the right time, and you're a winner, after the various parties to the trade take their respective cuts, of course. The broker gets theirs, the government, another. It's more about timing and luck, especially these days, when nothing much matters other than the directionality of the various computer algos plying and playing the indices.

So it is that in stocks, you have situations like today, wherein three strikes equates to hitting a home run. Prior to the opening bell, three different sets of economic data were presented, and, against expectations, all were swings and misses, except maybe the seasonally-adjusted building permits, which could be weighed as a foul tip into the catcher's mitt, a strike by any other name.

First came the May CPI, up 0.1%, on expectation of a rise of 0.2%, well short of the Fed's annualized two percent inflation target. Strike one. Next up, housing starts, which banked 914K, well below expectations of 950K. Strike two. As mentioned above, building permits, which mean nothing other than somebody is planning to do something, like put up a fence or remodel a bathroom, were just under the expected annualized rate of 975K - at 974K. Strike three.

The market response was as expected, with deference and possibly blissful ignorance toward the headline numbers, straight up all day, a veritable home run, even as auto sales in Europe reached 20-year lows and an agent of our very own secret police, the NSA (No Such Agency, to wise guys) testified to congress that the wholly unconstitutional massive spying program that filters every American's phone calls, emails and internet activity, prevented the bombing of the NY Stock Exchange by some nefarious, insidious suspect known only as "the doctor" in 2008. The NSA says more than 50 terrorist plots were uncovered by their spy programs since 9/11/2001. Not even the best Hollywood script writers could have come up with a better narrative to deprive citizens of their fourth amendment rights. Those NSA guys hire only the best, you know.

Thus stocks ended the day close to all-time highs once again. The Dow Industrials are within spitting distance - less than 100 points - of the May 28 closing high of 15,409.39 as the Fed ponders what to do next, wrapping up their two-day FOMC meeting on Wednesday. A policy decision is due out at 2:00 pm EDT, followed by a reading of the statement and press conference, by everybody's favorite "doctor," the dis-honorable Ben Bernanke, balding, bearded, wizened Chairman of the Federal Reserve.

With recent jawboning efforts pointing toward some tightening of Fed policy, the markets seem to be expecting no change in course for the every-easy Fed, and, while there's some nervousness over the wording of the statement, one might suspect that an even more important date - expiry of June options contracts on Friday - may be what's really driving the markets higher this week.

With baited breath we await the words of fearless leader the Chairman. Can't wait.

Dow 15,318.23, +138.38 (0.91%)
NASDAQ 3,482.18, +30.05 (0.87%)
S&P 500 1,651.81, +12.77 (0.78%)
NYSE Composite 9,399.63, +61.74 (0.66%)
NASDAQ Volume 1,593,283,375
NYSE Volume 3,392,735,750
Combined NYSE & NASDAQ Advance - Decline: 4430-2051
Combined NYSE & NASDAQ New highs - New lows: 327-76
WTI crude oil: 98.44, +0.67
Gold: 1,366.90, -16.20
Silver: 21.68, -0.081