Fed To Keep Rates At ZERO Through 2022; Are Gold and Silver Investors Batty?; Implications of Global Madness

If Forex is in your wheelhouse, you've no doubt noticed the recent decline in the US dollar against other major currencies. The Dollar Index has been pretty shaky as of late, but the current trend in the aftermath of the worst of the coronavirus pandemic is lower, with no bottom in sight.

After sinking to 94.89 on the 3rd of March, the dollar leapt back to an interim high of 102.82 on March 20th. Wednesday's quote was 95.96, a decline of nearly seven precent, most of that happening within the last three weeks.

That's not surprising, given that American cities have been beset upon by hordes of protesters, complete with rioters, looters, cop killings, tear gassings, rubber bullet maimings, autonomous zones (Seattle's Capitol Hill is one, recently claimed and occupied by protesters as police vacated the 3rd Precinct) and general lawlessness, making dollar holdings somewhat of a risky bet in the near term and, as dollar dominance recedes, maybe for much longer.

At the conclusion of the Fed's Tuesday and Wednesday's FOMC policy meeting, Chairman Jerome Powell made a definitive statement on interest rates, saying that the overnight federal funds rate would remain at the zero-bound at least until 2022. That kind of central bank sentiment doesn't exactly inspire confidence in the world's reserve currency. It indicates nothing less than a failure of financial system underpinning, a condition that first appeared in 2007, was not adequately addressed and has now become a systemic crisis without hope of positive resolution.

While the Fed still has the monetary muscle to backstop financial assets it does so with counterfeit, a fictional fiat currency without backing that eventually will be worthless. History has shown this to always be the case. Fiat currencies die and a new financial system is erected. Normally, the new system is backed by gold or silver, or a combination of the two. This time is no different than any other. The Federal Reserve and other central banks can continue their charade for only so long. Eventually, income disparity results in runaway inflation and widespread poverty, prompting clamor from the masses, which we are witnessing on a global scale today as an epochal societal revolution.

Such incalculable convulsions encourage escape from the clutches of unfair finances promulgated by central banks. People seek refuge from currencies that are losing value rapidly. Housing, health care, and eventually, food become unaffordable to the vast swath of middle and lower classes. Alternatives are sought. Gold and silver are the most readily available to the public. Silver becomes particularly of interest due to its lower price points. The availability of metallic money becomes a point of contention as people with limited means crowd into the space, which is exactly what's happened since the onset of the coronavirus.

A 10 troy ounce gold bar at Apmex.com is offered for $18,255.90. At Scottsdale Mint, the popular one ounce silver bar dubbed "The One" starts at $25.05 and goes down in price to $23.42 depending on quantity and method of payment. Of course, given that one would be willing to pay a price that carries a premium of seven dollars over spot, one would be out of luck, as "The One" is currently out of stock.

These are just a few examples of what happens when a confluence of events (pandemic, endless fiat currency creation, summer-long protests, high unemployment, rampant inflation) strikes the minds of people with money and assets. They either go with the flow and stay in stocks or look to gold and/or silver for some safety. With bonds yielding little to nothing - sometimes less than that via negative rates - and default risk rising (hello, Argentina!), precious metals offer a reasonable alternative.

Futures and spot prices for the precious metals might as well be cast upon stones for what they fail to deliver in terms of price discovery. Being holdovers from the failing fiat regime, they are being left behind as physical holdings dominate the marketplace. Prices are exploding on eBay and at dealers, as shown in the examples above. Money Daily tracks prices on eBay for one ounce gold and silver coins and bars weekly in it's Weekend Wrap every Sunday.

Other ways to deploy currency are in art, collectibles (comic book prices are through the roof), vintage automobiles, commodity futures, real estate, ad other asset classes, but none of those share the characteristics of precious metals as real money, except possibly cryptocurrencies like Bitcoin.

Wall Street, the Federal Reserve, and the federal government are hanging onto their prized positions of monetary and political authority by their teeth. It's only a matter of time before all of it fails. The nationwide protests are proof that the federal government is losing control of the country in manifest ways. Unrelenting gains in precious metal prices - and the attendant, repeated attempts to contain those gains in the futures markets - is evidence of the Fed's desperation, just as Wall Street's recent snapback rally is a mirage based on easily available fiat currency and nothing else.

It's all tumbling down and there's nothing that can stop it. The demise of the dollar has been an ongoing orgy of dislocation for decades. Trillions of dollars added to the Fed's balance sheet, euros at the ECB, yen at the Bank of Japan, yuan at at PBOC are mere stop-gap measures which do not address the underlying solvency issues. If the stock market crash in March wasn't enough to scare people out of stocks and fiat, the coming wave will surely devastate those who failed to heed the warning. Via the Fed's emergency measures, Wall Street has given investors a golden opportunity to diversify out of stocks. Those who fail to take the opportunity will suffer a heavy economic blow.

At the Close, Wednesday, June 10, 2020:
Dow: 26,989.99, -282.31 (-1.04%)
NASDAQ: 10,020.35, +66.59 (+0.67%)
S&P 500: 3,190.14, -17.04 (-0.53%)
NYSE: 12,449.22, -170.30 (-1.35%)

Nothing Can Stop The Mighty Fed Printing Press And Back Room Bookkeepers

The protesting, rioting, and looting was noticeably on the downswing Tuesday night. It could be seen as a sign that cities and states have things under control or just a lull in the overall action. Depending on location, it's likely a little bit of each.

Before the curfews took effect, the Masters of the Universe on Wall Street managed to enrich themselves and shareholders just a little bit more, sending stocks through the proverbial roof, with most of the gains happening in the final half-hour of trading. The Dow, for instance, was up about 100 points at 3:30 pm ET. By the closing bell, it had gained 267 points.

Apparently, there's little to no downside for corporations no matter what happens in the real world. Pandemic? No problem. Print more. Widespread civil unrest? Meh. Print more. Supposedly, a nuclear holocaust would send the major indices to record highs.

What's amazing about the rally since late March is not that it has come with a background of lockdowns, over 100,000 deaths, street protests, rioting, looting, and assorted public dislocation, but that stocks were overvalued even at the low point. First quarter earnings reports were dismal, yet stocks continued their ascent to nosebleed levels that are now more overvalued than almost any time before.

The current CAPE ratio (Robert Shiller's 10-year P/E ratio) stands at 28.96. For purposes of comparison, the same ratio just prior to the 1929 crash was about 30. The figure before the panic of 2008 was around 27.50. Only the dotcom era produced a record high higher than Black Tuesday and the most recent levels, when it peaked at 44.19. For reference, the median CAPE is 15.78.

What we have is a market of zombie corporations controlled by financial manipulators, expert at buying back shares with borrowed money at near-zero interest, limiting the number of shares outstanding to goose the price of the stock higher. Many companies don't really make money anymore. They just play games with the books to make it look like they do.

In the background, other elements of the price-fixing regime that has become Wall Street back rooms, the NY Fed and controllers at Treasury and monolithic banking operations (primary dealers, but mostly JP Morgan Chase) keep gold and silver under wraps on the COMEX, as they did on Tuesday, slapping down the recent runaway rally in precious metals. That's a necessary evil under the control economy because the Fed doesn't like competition for their Federal Reserve (debt) Notes and gold and silver are real money, rather than just currency, like every other sovereign fiat.

Also well under the control mechanism is the price of oil, which is forbidden to fall to prices that comport to affordability for drivers of gas-powered vehicles. There was a brief opportunity to save a little at the pump, but that's now over, with oil pushing toward $40 a barrel. Truth be told, oil is old news. Renewables have taken a serious bite into the overall market share, especially solar, as advancement in solar panels have made self-generated electricity as cheap as what's supplied by fossil fuel plants and in some instances, cheaper.

The price of oil can go to $200, but people with solar installations and hybrid or EVs (electronic vehicles) will barely notice. What they will notice is the slowdown of the outlying economy, which would be crushed under regular unleaded at $6 or $7 a gallon.

There's no stopping this juggernaut monstrosity of a stock market nor the destructive money printing of the Federal Reserve. If and when stocks nosedive again, the Fed will just increase its balance sheet another for or five trillion, loan out money at negative rates and call it a day. By then, there will be no economy, just some cheap, fake import from China masquerading as a market.

Later this morning, ADP will release May private payroll numbers, which will be a disaster and a presage of Friday's non-farm payroll report for May. None of it will matter. Even with unemployment at 20%, stocks will still stroke higher. Welcome to the new world of finance, where nothing matters other than questionable or fraudulent bookkeeping and willful ignorance.

At the close, Tuesday, June 2, 2020:
Dow: 25,742.65, +267.63 (+1.05%)
NASDAQ: 9,608.38, +56.33 (+0.59%)
S&P 500: 3,080.82, +25.09 (+0.82%)
NYSE: 12,046.41, +146.17 (+1.23%)

Coronavirus Will Kill Many, but Government Response Has Killed the Economy

Theories have been floated about the coronavirus, or COVID-19, pandemic, suggesting (or outright claiming) that the infectious virus is variously a Chinese communist plot, an American false flag, a scheme by central banks or other nefarious, elitist secret society types, a message from God, an outer space concoction that has something to do with planet X, or that it's just the flu and the media, in cahoots with the governments of the world, is hyping it to the maximum degree as a cover story for the second Great Depression that was about to unfold, anyway.

At least for a change, nobody is blaming Vladimir Putin, the Russians or the Ukraine. They seemed to have worn out their scapegoat status.

Whatever and wherever the truth may lay, it's becoming apparent that the cure may be worse than the disease.

If a business were to shut down for a month or six weeks or maybe two months, the chances of it coming back to life in a healthy manner would be slim. Employees may have found new positions at other companies, customers would have had the time to find alternative sources for the product or service the shut-down business provided, bills, such as rent, utilities, and loans may or may not have been paid in a timely manner, and most of all, there would have been zero income for said business.

Now, multiply that case by thousands in one area, then expand the condition to all areas of the country and you've got a real mess, or, the current state of the global economy. Hundreds of thousands of businesses are temporarily closed and have been shuttered for as long as six weeks in some countries. Many of these operations are small businesses with a handful of employees, but the afflicted include major corporations with thousands of employees as well.

Adding to the nightmarish scenario are government orders or advisories at national or local levels telling people to stay home, to not go to work, to shelter in place, and otherwise avoid all unnecessary travel and contact with other people.

This is madness.

There is precisely zero possibility that the global economy will return to any place similar to what it was six months ago. And while that may be a good thing in the long run, in the short term it will almost completely destroy most of the economy, and rip to shreds any of the tattered fabric that remained of societies at local or national levels.

We have all of this for the sake of people getting sick, some dying, others experiencing nothing more than a minor cold, even more not contracting the virus at all. The latest figures from reliable sources put the number of confirmed cases of COVID-19 worldwide at around 750,000. The number of deaths has surpassed 34,000. In the United States, there are now 143,000 confirmed cases and just over 2,500 deaths.

These numbers may sound frightening or staggering, but knowing how many people die every day may put them into a less-panicky perspective. Globally, about 153,000 people die every day. That's 1,071,000 every week and more than 380 million annually. In the United States, about 7500 people die daily, or about 2,750,000 each year.

Sure, the COVID-19 cases and death toll are mounting, but just taking the number of deaths already presented - 34,000 - and, for the sake of argument, assume they all died within the last month, that number is minuscule compared to the 4.6 million that normally die every month. It works out to 0.75%, or less than one percent worldwide.

So why are government officials making such a big deal out of COVID-19 when 80% of cases are resolved with little to no medical attention necessary and less than two percent eventually die from it?

Good question. People die in car accidents every day and we don't ban cars. There are murders and suicides every day and people have debated how to prevent them for decades. The normal flu variant - another virus - kills 290,000 to 650,000 people every year. Coronavirus has a lot of catching up to do, yet governments insist that we must destroy our economy in order to keep it in check. And guess what? It's not working. The caseloads and deaths pile up every day regardless of whether people stay home, avoid contact, wash their hands or (and, if the CDC were serious, they would require this of all Americans) wear face masks.

The goal is supposedly to slow the progress of this highly infectious pathogen. OK, fine, let's save some lives while killing our economy. Has anybody considered the number of lives that will be damaged or ruined, or the number of people that will die or have their lives shortened because of how this is being handled?

Face the facts. Many jobs are not going to be there if and when this virus panic is concluded. Over the weekend, President Trump extended the social distancing, avoid social contact, and stay at home guidelines though April 30. That's 4 1/2 more weeks. By that time, many people will have to stay at home - if they have one - because they'll have no job and no money, and ironically, even if they do have enough dough on hand to put gas in their cars at massively reduced prices, other than the grocery store, pharmacy, or bank, there's nowhere for them to go. Everything else is closed.

So, our so-called leaders (Chris Martenson of Peak Prosperity calls them "managers," because they aren't really leading anybody) have made the decision to save some number of lives (10,000? 4 million? Who knows?)by effectively shutting down the economy, crashing the stock market, then fixing it all with a $2.2 trillion rescue attempt which includes sending checks to most people who make less than $75,000 a year. Those checks or direct deposits, when and if they do arrive, will amount to $1200 for most adults and $500 for each dependent child. If they wanted to be fair about it, they could take that $2.2 trillion and just doe out $6,666 to every man, woman and child in the country. If they took the entire amount and send money to just people who earn less than $75,000 a year - roughly 200 million - everyone would get $11,000.

However, since those roughly 200 million are going to get $1200, that's only $240 billion. The rest of that money - roughly $2 trillion, is largely going to corporations, which are going to lay people off in droves, and states, to cover extra expenses incurred in dealing with the crisis and for additional unemployment insurance. It's a rather large boondoggle, which will explode the federal budget, but who cares, since we're destroying the economy anyhow? The US is already $23 trillion in debt, what's another $2 trillion? The rest of the developed nations are in equally bad conditions, so they're planning on doing some similar bailout.

When this is all over, maybe by September, your local restauranteur will be out of business, but the McDonalds, Applebees, Pizza Huts, and Taco Bells of the world will be there to please your palette. The government's solution to COVID-19 will manage to crush small businesses and reduce the middle class to rubble.

Stock market declines will wipe out pensions.

Banks and large corporations will get loans or grants, aka, bailouts, again.

In the face of all of this, stocks went on a tear last week, having the best week since 1932, supposedly, which is ironic, because 1932 was in the midst of the Great Depression. All of the top five or seven best daily or weekly gains for stocks have come during bear markets, just as last week's did.

While some people were claiming that the bear market was vanquished last week, there's absolutely no truth to that. All major indices are at least 20% lower from the all-time highs made in February. Stocks are in a bear market and they'll stay in one no matter how much money the government and Federal Reserve throws at them. Stocks may go up for a while, but they're destined to go right back down. There's no escaping the fact that the global economy is broken, banks are largely insolvent and at some point will likely be shut down, unemployment is headed north of 20% and bankruptcy attorneys are set to make fortunes.

Gas at the pump is the lowest it's been in decades. Gold and silver cannot be purchased and delivered at current quoted prices. Most dealers are sold out. Wait times for what may be available are as long as 45 days. While gold popped back over $1600 an ounce last week, nobody can touch an ounce for less than $1800. Pricing for physical has decoupled from the fake, manipulated futures con game price at the COMEX.

The same is true for silver. It's current price is floating somewhere around $14.50 per ounce. Sales on eBay, where delivery can be as quick as two day because private individuals are selling there, have the price for an ounce of silver anywhere from $20 to $25. That market is broken. More markets will break down in coming days, weeks, and months. It might be instructive to consider the equity markets broken since the Federal Reserve can prop up the banks and other companies at will, even though their mandate allows them to buy just about everything but stocks, though that will likely change. Imagine playing poker with a guy who has $20 trillion and you have $200. That's what trading stocks is going to be like soon.

Bond prices are the lowest in history. The short-dated maturities briefly went negative last week. Expect that to be the rule rather than the standard going forward.

It's an absolute mess, a complete shame. Already, the banks are in trouble, as CapitalOne (COF) received a back-handed bailout last week, getting a waiver from the CFTC when they were caught with their pants down playing derivatives in the oil market (yes, the oil market that crashed last month). There's more to come from your friendly banking community, which gets money for nothing and loans it to the public at 20%, 25%, 29% or more.

Everything is just peachy.

Here are some recent numbers for the major indices, noting the recent all-time highs (February, 2020) and interim lows (March, 2020):

Dow High: 29568.57, Low: 18213.65
NASDAQ High: 9838.37, Low: 6631.42
S&P High: 3393.52, Low: 2192.86
NYSE High: 14183.26, Low: 8664.94
Dow Transports: High: 11359.49, Low: 6481.20

At the Close, Friday, March 27, 2020:
Dow Jones Industrial Average: 21,636.78, -915.39 (-4.06%)
NASDAQ: 7,502.38, -295.16 (-3.79%)
S&P 500: 2,541.47, -88.60 (-3.37%)
NYSE: 10,187.21, -349.07 (-3.31%)

For the Week:
Dow: +2462.80 (+12.84%)
NASDAQ: +622.86 (+9.05%)
S&P 500: +236.55 (+10.26)
NYSE: +1054.05 (+11.54)
Dow Transports: +861.46 (+12.60%)

A Day Without Coronavirus Headlines Produces Massive Rally, But It's Probably False Hope

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%)

Stocks Continue to Soar as Threat of Global Pandemic from Coronavirus Fades

US stocks are so hot right now it's difficult to keep up with all the records and new all-time highs. Suffice to say that the Fed continues to pump billions of dollars into the hands of primary dealers, hedge funds, used car dealers, slot machines, you name it.

This market, because of the continuous flow of funny money from the central bank, is as phony as an Iowa caucus, but, if you're long, it's infinitely more enjoyable.

With the Dow up more than 1000 points in three days, most analysts and reporters have run out of superlatives.

Apparently, the threat of a global pandemic from the novel coronavirus has been discounted. Almost all of the reported infections and deaths have been centered in China. Only two deaths outside of China have been reported as having been due to the virus.

On Wednesday, President Trump was acquitted on both impeachment charges. Next time (probably in a few months or so) the Democrats might want to try accusing him of something more concrete than Abuse of Power or Obstruction of Congress, neither of which are crimes, much less high crimes. The only things high were the Democrat deep operatives who dreamt up their poor attempt at a coup d'etat.

In what has to be one of the more amusing stories of the past few days is the unprecedented rise and fall of Elon Musk's Tesla (TSLA) stock, which ran up from a close of 650.57 per share on Friday, January 30, to 887.06 at the close on Tuesday, February 4, and finished the session at 734.70 on Wednesday, the 5th, a loss of 152.36 points (-17.18%), and continues to fall in pre-market trading. One of the most widely-held and most-shorted stocks listed, everybody's a winner with the exploding electric car company.

Just in case there isn't enough juice in the markets to keep the rally alive, China announced overnight that it will cut by half tariffs on 1,717 goods imported from the United States beginning February 14 as part of its agreement to Phase 1 of the US-China trade deal.

Oil continues to hold steady near $50 per barrel of WTI crude, having fallen into a bear market from $64 just a month ago. The US national average for a gallon of regular unleaded gas is $2.47 a gallon, according to GasBuddy.com.

At the Close, Wednesday, February 5, 2020:
Dow Jones Industrial Average: 29,290.85, +483.22 (+1.68%)
NASDAQ: 9,508.68, +40.71 (+0.43%)
S&P 500: 3,334.69, +37.10 (+1.13%)
NYSE: 14,024.86, +162.02 (+1.17%)

WEEKEND WRAP: Coronavirus Affecting Markets; Turbulent Week Ahead; Oil Already Whacked

Last week, as the the wealthy and infamous gathered for the annual World Economic Forum (WEF) in Davos, Switzerland, markets were focusing on more compelling domestic and international issues, primarily, the impeachment trial of President Donald J. Trump and the outbreak of the deadly coronavirus which has spread outward from its source in mainland China, now reaching around the world, particularly in the Northern Hemisphere, where nearly all the developed nations are anchored.

While the impeachment hearings were less impactful, being that the first few days of the trial consisted of one session for rule-making and three days of Democrat managers from the House of Representatives reiterating their tired claims from months of investigations stemming from a single phone call, the spread of a killer virus caught everybody's attention.

The number of deaths officially reported by the Chinese government grew from 16 on Wednesday to 23 to 41 to 56 by Sunday. As the week progressed, the number of reported cases grew considerably - by Sunday, nearly 2,000 in China alone - along with the number of countries discovering outbreaks. By Sunday morning, instances of reported cases had been registered in France, South Korea, Japan, Nepal, Thailand, Singapore, Vietnam, Taiwan, Australia, and the United States.

Similar to the SARS (severe acute respiratory syndrome) outbreak, which killed more than 750 people in 2002-2003, the threat is that this particular virus is spreading at a much faster rate as transmissibility is increasing.

By Monday morning, the toll will likely exceed 90, but there's widespread speculation that China has been and continues to understate not only the number of cases reported, but also the death toll.

This is the kind of thing some students of the dark science of economics might consider a "black swan," an unusual event or occurrence with a low probability that nobody sees coming. Already, the coronavirus outbreak has affected markets, but none more profoundly than oil. With travel bans in effect already in some Chinese cities and many presumably taking precautions to avoid crowds and people who may be infected, the world's second-largest user of oil and distillates is bound to experience a sharp demand decline that will affect prices globally.

WTI crude fell, over the course of the week, from $58.58 per barrel to $54.19, a decline of 7.5%. Brent dropped from an opening at $65.65 on Monday to $59.85 by week's end, losing nearly nine percent.

Stocks were also hit, as increasingly dire stories continued to mount over the course of the week, limiting upside on all exchanges, and squelching rallies on Tuesday, and especially in the US on Friday, when the Chinese government announced the rising death toll and cancellation of many Lunar New Year festivities, the biggest holiday in the country.

China, already on the brink of an extended financial downturn, saw severe damage to equity markets.

If the coronavirus continues to spread to other countries and becomes a pandemic, declines on the major indices (the Dow was down for the fourth straight day as of Friday) could turn what appeared as a minor fluctuation into an avalanche. Limiting movement, be it out of fear or by government dictates, would seriously hamper economic activity anyway, and, if the contagion becomes global in nature, which it appears to be doing, the effect may be long-lasting.

So, that's how normal operating markets turn into dungeons of doom. There is no silver lining, other than, you guessed it, silver and gold, both of which turned in the opposite direction from stocks, both tumbling on Tuesday but gaining the remainder of the week. Gold finished at $1571.60 per ounce; silver closed out the week at $18.10 per ounce. There is likely to be a further, faster advance in precious metals should the virus continue to spread.

With an FOMC meeting up next week (January 28-29) bonds saw high demand, moving interest rates on treasuries to their lowest levels since October, 2019. The 10-year-note closed out the week at 1.70% yield, with the 30-year bond closing at 2.14%.

Also upcoming in the week ahead, a slew of earnings reports, many of them notable as most will be for the fourth quarter of 2019 and the full year.

On Monday, homebuilder D.R. Horton (DHI) and telecom Sprint (S) get the earnings parade started. A loaded Tuesday has Lockheed Martin (LMT), 3M (MMM), Phizer (PFE), United Technologies (UTX), Nucor (NUE), and PulteGroup (PHM). Apple (APPL) and eBay (EBAY) report after the close.

On Wednesday, Dow components Boeing (BA), AT&T (T), and McDonald's (MCD) present, along with Mastercard (MA), General Electric (GE), and Dow Chemical (DOW). Tesla (TSLA), Microsoft (MSFT), Facebook (F), and PayPal (PYPL) report after the close. Thursday's offerings include some titans. Coca-Cola (K), UPS (UPS), and Verizon (VZ) report prior to the opening bell. Amazon (AMZN) and Visa (V) are up after the close.

Prior to Friday's market open, ExxonMobil (XOM), Chevron (CVX), and Caterpillar (CAT) close out the earnings deluge.

It's going to be a busy week with plenty of engaging, diverging stories. In case that's not enough, the impeachment trial could conceivably wrap up by Friday, possibly sooner, the Super Bowl is Sunday, February 2nd, and the first presidential primary, the Iowa caucus, convenes on Monday, February 3rd.

If the coronavirus continues to spread, it's not likely to slow down, so this coming week could be an opportunity to take profits and/or shed losers before markets get any ideas about tanking. Depending on how severe the virus becomes, how quickly and how far it spreads, appropriate defensive actions may be entertained.

With stocks close to all-time highs, there's hardly a case to be made for buying at this point, which, in itself may provide good enough reason for some spirited selling.

At the Close, Friday, January 24, 2020:
Dow Jones Industrial Average: 28,989.73, -170.36 (-0.58%)
NASDAQ: 9,314.91, -87.57 (-0.93%)
S&P 500: 3,295.47, -30.07 (-0.90%)
NYSE: 13,978.47, -123.57 (-0.88%)

For the Week:
Dow: -358.37 (-1.12%)
NASDAQ: -74.03 (-0.79%)
S&P 500: -343.15 (-1.03%)
NYSE: -123.57 (-0.8*%)