Stock Market Collapse

Here Are 18 Breathtaking Facts About The Stock Market Crash Of 2020, And Experts Are Warning This Is Far From Over

March 9, 2020 by Michael

We haven’t seen anything like this since the last financial crisis erupted in 2008. Wall Street has been gripped by a tremendous amount of fear, and the volatility that we are witnessing would have been unimaginable just a couple of months ago. On Monday, the Dow Jones Industrial Average fell 2,013 points. To put that in perspective, the largest single day decline that we witnessed in 2008 was just 777 points. A disagreement between Saudi Arabia and Russia about oil prices coupled with increasing concern about the coronavirus pushed many traders into panic mode, and the result was absolutely stunning. Hopefully stock prices will bounce back throughout the rest of this week, but many experts are warning that this is just the beginning of the carnage. The stock market crash of 2020 is here, and the losses are already staggering. Just consider these facts…

#1 We just watched the largest single day point decline in stock market history. The old record of 1,190 points was just set on February 27th, and the drop on Monday smashed it by more than 800 points.

#2 The 7.79% decline for the Dow was the largest single day percentage drop since October 15th, 2008.

#3 Stocks plummeted so rapidly Monday morning that a key market circuit breaker was triggered just minutes after the opening bell.

#4 It was the very first time since 1997 that a market circuit breaker has been triggered.

#5 Overall, the Dow Jones Industrial Average is now down 19 percent from the all-time high that we witnessed just three weeks ago.

#6 The S&P 500 is also down 19 percent from the peak of the market.

#7 The Russell 2000 has plummeted 23.5 percent, and it is now firmly in bear market territory.

#8 On Monday, tech’s “big five” lost more than 320 billion dollars in market value.

#9 According to Zero Hedge, total U.S. trading volume “on a 10-day moving average basis, is now higher than during the meltdown in 2008.” In other words, stocks are being dumped at a pace that is absolutely mind blowing.

#10 The yield on 10 year Treasury notes dipped below 0.5 percent on Monday for the first time ever.

#11 The price of oil fell more than 24 percent during Monday’s trading session.

#12 That represented the second largest single day oil price decline ever recorded.

#13 The S&P 500 Energy Sector dropped 20 percent on Monday, and that was the worst day for that index that we have ever seen.

#14 All major U.S. banking stocks fell by double-digit percentages during Monday’s session.

#15 European stocks are now down a total of 22.5 percent from the peak of the market.

#16 The Bloomberg U.S. Financial Conditions Index is now the “tightest” it has been since the last financial crisis. That has very serious implications for “the real economy”.

#17 Since the end of World War II, there have been 12 official recessions in the United States. 8 of them were preceded by bear markets, and 3 of them were preceded by a market correction.

#18 All it is going to take is one more fairly bad day, and all of the major U.S. stock indexes will be in bear market territory.

In the short-term, we should hopefully see at least somewhat of a bounce. President Trump is promising emergency tax relief, and the Fed has responded to all of this carnage by doing what it does best…

As part of its continuing efforts to make sure the funding, or repo, markets are working properly, the central bank said it will up the amount it offers in overnight operations from $100 billion to $150 billion through Thursday.

Every time we see a surge of panic in the marketplace, the Fed is either going to cut interest rates or flood the system with more money.

And since there isn’t much room left to cut rates, the Fed will increasingly be forced to use option number two.

But if this coronavirus continues to spread all over the globe, no amount of Fed manipulation is going to fix things. The following is how one analyst described how many investors are feeling at this moment…

“They want out. Big time. The sky is falling. Get out, get out while you can. Wall Street’s woes have to eventually hit Main Street’s economy hard.”

Economic activity all over the globe is grinding to a standstill, and the economic impact of this virus will just continue to get worse until this outbreak has finally peaked.

We don’t know if that will be next week, next month or next year.

But until then, many investors “aren’t going to come back into the stock market”…

“We’re seeing borderline panic because of fear,” says R.J. Grant, director of equity trading at investment bank KBW. “Uncertainty is what’s causing all of this. We know there’s going to be an economic impact, but we just don’t know how big. Until we get clarity, people aren’t going to come back into the stock market, that’s for sure.”

In other words, things may not return to normal for the stock market for an extended period of time.

Earlier this year, an epic “melt up” pushed stock prices to the most overvalued levels that we have ever seen in U.S. history. It was inevitable that they would fall dramatically at some point, and it appears that fear of this coronavirus outbreak is the straw that finally burst the bubble.

But even after the immense carnage that we have already witnessed, stocks are still tremendously overvalued. In order for price-to-sales and price-to-earnings ratios to return to their long-term averages, we would probably need stock prices to fall another 30 to 40 percent.

Of course our system is not in any condition to handle a decline of that magnitude. Keep watching for a derivatives crisis if stocks continue to fall, because it is likely that we will see some big problems there. Our system is designed to operate during very stable times, and the sort of volatility that we are now witnessing can cause catastrophic losses very rapidly just like we saw in 2008.

We still don’t know if this coronavirus outbreak will be a minor pandemic that will only kill thousands of people or if it will be a truly historic pandemic that will kill millions.

We shall hope for the best, but we will also continue to prepare for the worst.

Meanwhile, say a prayer for the poor souls that still have money in the stock market, because the days ahead are likely to be very stressful for them.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

Will This Coronavirus Outbreak Cause A New Financial Crisis And A Horrifying Economic Collapse?

March 5, 2020March 5, 2020 by Michael

The term “black swan event” is increasingly being used to describe this coronavirus outbreak, and many are concerned that what we are headed for will be much worse than what we experienced in 2008 and 2009. Already, we have witnessed a staggering drop in global demand, Wall Street has had to deal with the wildest week in eight years, and people all over the globe are hoarding toilet paper, face masks and hand sanitizer. That may sound like a plot from one of my books, but it is not. This is actually happening, and it appears that we are still only in the very early chapters of this crisis.

It seems like just yesterday that everyone was freaking out because there were a few dozen confirmed cases here in the United States. Now there are 70 in the state of Washington alone…

A cruise ship remains at arms length from San Francisco and the number of confirmed cases of coronavirus in Washington state ballooned to 70 on Thursday – pushing the U.S. total above 220 – as the global struggle against the outbreak intensified.

The nation’s death toll rose to 12, 11 of them in Washington. Fifty-one of the confirmed cases are in King County, home to Seattle, where ten of the deaths have occurred, state health officials said.

As I write this article, the total number of confirmed cases in the U.S. has now risen to 233, but of course that number is going to go much higher now that the U.S. has finally decided to ramp up testing for the virus.

If you live in the Seattle area, you are going to want to avoid public places for the foreseeable future. In fact, officials in King County are already recommending that all businesses “allow their employees to telecommute throughout March”…

A Washington state county, where 31 coronavirus cases and 9 deaths have been reported, has recommended to its 2.2 million residents that they should work from home to help slow the spread of the infectious disease, and further urged everyone over 60 to stay indoors.

Public Health officials in King County on Wednesday recommended that businesses allow their employees to telecommute throughout March in an effort to reduce the amount of face-to-face contact between large numbers of people during this “critical period” in the COVID-19 outbreak.

Unfortunately, other hotspots are starting to emerge as well. The total number of cases in California is up to 53, and the number of cases in New York just doubled…

California declared a state of emergency after a coronavirus-related death and 53 confirmed cases in the state. The number of infections in New York also doubled overnight to 22 as the state ramps up its testing.

Predictably, U.S. stocks plunged on Thursday as the bad news came rolling in. By the end of the trading session, the Dow Jones Industrial Average was down 969 points…

Stocks plunged on Thursday, erasing most of the steep gains in the previous session, as markets remained highly volatile in the face of the fast-spreading coronavirus.

The Dow Jones Industrial Average ended the day 969.58 points, or 3.5%, lower at 26,121.28 after tanking nearly 1,150 at its session low. The S&P 500 dropped 3.3%, or 106.18, to 3,023.94 and the Nasdaq Composite fell 3.1%, or 279.49, to 8,738.60. All 11 S&P sectors finished the day in the red. Stocks turned sharply lower as the 10-year Treasury yield fell to an all-time low below 0.9%.

This is precisely the sort of wild market behavior that we witnessed during the financial crisis of 2008. One day stocks would be way down, and the next day they would be way up. When we see extreme volatility such as this, it is a clear indication that investors are very nervous.

After watching what transpired on Thursday, one trader described the market’s current behavior as “a super-puke”…

Watching the markets today – as The Dow plunged 1000 points, Treasury yields collapsed to record lows, credit markets imploded, and demands for more Fed intervention exploded – has one veteran trader remarking, “this is becoming a super-puke.”

Of course if this coronavirus outbreak starts to fade, it is entirely possible that the markets could settle back down.

But that hasn’t happened so far, and experts are warning that we should expect to see more market volatility ahead. Here is one example…

“We expect markets to remain volatile,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note. “The unfolding nature of the coronavirus threat—both real and perceived—is not yet quantifiable, and, as such, the current global policy response can’t immediately be judged as sufficient or insufficient for restoring investor confidence in the short term.”

Meanwhile, the fear that this coronavirus outbreak has created is hitting the real economy exceedingly hard.

In fact, the CEO of Southwest Airlines says that his company “lost several hundred million dollars in a week’s time” because people are so afraid to travel right now…

Southwest Airlines CEO Gary Kelly told CNBC on Thursday that the company has lost several hundred million dollars in a week’s time thanks to a decline in bookings amid increasing fears over COVID-19. Kelly added that the drop-off was “noticeable” and “precipitous” and has continued declining on a daily basis.

We are seeing similar things happen in industry after industry.

So what is going to happen if this outbreak continues to intensify in the months ahead?

Needless to say, we could soon be facing a worst case scenario for the global economy. According to Egon von Greyerz, the party is indeed “over” and we are headed for the worst economic crisis that any of us have ever experienced…

This is it! The party is over. The world is now facing the gravest economic and social downturn in Modern Times (18th century). We are now entering a period of global crisis that will change the world for a very long time to come. This should come as no surprise to the people who have studied history and also read my articles for the last few years. Many others have also warned about the same thing. But since MSM never talks about the excesses in the world or the risks, 99.9% of people are totally unprepared for what is coming next.

Will he be correct?

We shall see.

It would be wonderful if this virus would just go away and life could get back to normal. Unfortunately, this crisis just seems to escalate with each passing day.

On Thursday morning, police were actually called out to a Costco in southern California because “toilet paper, paper towels, and bottled water were out of stock”…

Deputies responded to the Chino Hills Costco at 10.15am on Thursday morning after receiving a report of a disturbance, a San Bernadino County Sheriff’s Department spokeswoman told DailyMaill.com.

On the scene, deputies learned that ‘a large group of customers were upset’ that items such as toilet paper, paper towels, and bottled water were out of stock, said Public Information Officer Cindy Bachman.

All over America, people have been hoarding essential supplies like crazy. If people are this delirious already, how are they going to act once things start getting really bad?

It was inevitable that stock prices would crash from the ridiculously elevated levels that we witnessed earlier this year.

And the next economic downturn has been building for a really long time.

But now events are starting to move at a pace that is absolutely breathtaking, and it looks like all of our lives are about to change in a major way.

The Unstoppable Coronavirus vs. The “All-Powerful” Federal Reserve

March 3, 2020 by Michael

Has the Federal Reserve finally met an opponent that it won’t be able to defeat? Ever since the last financial crisis, unprecedented intervention by the Fed at key moments has kept the economy and the financial system relatively stable. No matter what has come along, it has seemed like the Federal Reserve has always had an answer, and this has created an environment that has enabled the most ridiculous stock market bubble in U.S. history to grow to epic proportions. But now COVID-19 is perhaps the greatest challenge that the Fed has faced in modern times. No matter how low interest rates are pushed, and no matter how much helicopter money the Fed drops from the sky, it isn’t going to cause fearful Americans to go shopping, take trips or start businesses. And nothing that the Fed can do will be able to mitigate the severe disruptions to global supply chains that we are currently witnessing.

But that doesn’t mean that the Fed isn’t going to go back to the same old playbook that has worked so well in the past.

On Tuesday the Fed announced an emergency rate cut, and instead of soaring, stock prices absolutely tanked. In fact, the Dow Jones Industrial Average ended the day down 785 points…

The decision to cut rates by half a percentage point came two weeks before the Fed’s scheduled meeting as the central bank felt it was necessary to act quickly to combat the effect of the virus spreading worldwide. It’s the first such emergency action coming in between scheduled meetings since the financial crisis.

The Dow Jones Industrial Average closed 785.91 points lower, or nearly 3%, to 25,917.41; it rose more than 300 points earlier in the day. The 30-stock average gyrated between sharp gains and solid losses after the decision was announced. The S&P 500 fell 2.8% to 3,003.37 while the Nasdaq Composite pulled back 3% to 8,684.09.

At this point, the Federal Reserve doesn’t have much room to reduce interest rates. But of course President Trump was disappointed in the Fed’s decision because he wanted an even bigger rate cut…

Trump tweeted following the Fed’s move – keeping up his longstanding practice of demanding lower rates.

‘The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors,’ Trump wrote. ‘We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!’

Meanwhile, just about everyone else is using the word “panic” to describe this move by the Fed. The following example comes from Zero Hedge…

Instead, as it stands “it smells like panic” as more than one Wall Street veteran put it.

Worse, as BMO’s Ian Lyngen puts it, what happened after the Fed’s emergency 50bps rate cut, the biggest since Jerome Kerviel blew up SocGen, “the situation didn’t play out exactly as Powell might have envisioned.”

So just how bad is it? Well, as plunging stocks demonstrate, the Fed is this close from losing all credibility…. and since the market has been held up for the past 11 years on nothing but Fed faith – and trillions in Fed liquidity – this could be a very, very big problem.

If you can believe it, even CNBC’s Jim Cramer is saying that this move by the Fed has made him “nervous”…

Cramer went on to say that he’d previously been optimistic, despite the recent Dow freefall. But the Fed’s move has caused him to adopt a more cautious posture.

“It makes me feel, wow, the weakness must be much more than I thought,” Cramer said. “And I’ve been trying to be bullish, but I can’t.”

He added, “I’m now nervous. I’m more nervous than I was before.”

The Federal Reserve has almost entirely run out of interest rate ammunition already, and we aren’t even officially in a recession yet.

So what are they going to do once things get really bad?

A reduction in interest rates usually spurs the U.S. economy, but these are not normal times.

Even if interest rates were pushed all the way to the floor, it isn’t going to change the fact that global supply chains are collapsing and a large portion of the population is scared to death of this virus…

Lower borrowing costs typically spur more consumers to buy houses, cars and other products, and encourage businesses to purchase more equipment such as factory machines, computers.

But historically low rates can’t address delayed deliveries from China that leave store shelves half-filled and auto manufacturers short of imported parts. They can’t prod shoppers fearful of contracting the virus to visit malls and restaurants. And they can’t bring back throngs of foreign tourists to U.S. hotels and shopping centers, including many from China and other countries now subject to travel bans.

And the problems that we are seeing with global supply chains are expected to continue to get worse in the weeks ahead. In fact, Harvard Business Review is anticipating that the impact of this virus could peak “in mid-March”…

Reports on how the Covid-19 outbreak is affecting supply chains and disrupting manufacturing operations around the world are increasing daily. But the worst is yet to come. We predict that the peak of the impact of Covid-19 on global supply chains will occur in mid-March, forcing thousands of companies to throttle down or temporarily shut assembly and manufacturing plants in the U.S. and Europe. The most vulnerable companies are those which rely heavily or solely on factories in China for parts and materials. The activity of Chinese manufacturing plants has fallen in the past month and is expected to remain depressed for months.

But what if this virus just continues to explode all over the planet?

When I posted my last article yesterday, the number of confirmed cases outside of China had just surpassed the 10,000 mark.

As I write this, that number is just shy of the 13,000 mark, and by the time most of you read this article it will be even higher.

After interest rates are pushed all the way to the floor, “helicopter money” will be about the only weapon the Fed has left.

Normally, “helicopter money” pushes up stock prices, but in the middle of a horrifying global pandemic people are not going to want stocks.

Instead, there is going to be tremendous demand for food and other essential supplies, and “helicopter money” will just escalate prices to absolutely absurd levels.

Sadly, fear of this virus is already starting to cause this to happen…

Would you pay $149 for a two-pack of 12-ounce bottles of Purell? How about a single container of Clorox wipes for $44.25, plus $14.59 shipping?

As the coronavirus spreads and people rush to protect themselves and their families from getting sick, the U.S. is seeing heavy demand for everything from masks to hand sanitizer.

If you use Purell, I hope that you stocked up ahead of time.

There has never been a time like this before in all of American history, and what we have seen so far is just the beginning.

Now that the U.S. is planning to start testing more people, we are being warned that we could see an explosion in the number of confirmed cases in the weeks ahead.

If that happens, there is going to be a tremendous amount of fear.

But now is not a time for fear. Now is a time to be calm, to think rationally, and to act resolutely.

It is during moments of crisis that we find out who we really are, and hopefully this challenge will bring out the best in all of us.

We Are Watching The Stock Market Do Things That It Has Never Done Before

February 27, 2020February 27, 2020 by Michael

Stock prices are falling faster and harder than they ever have before. If the financial markets are in this much chaos even though not a single American has died from the coronavirus yet, what are things going to look like if this outbreak starts sweeping across America like wildfire? The number of confirmed cases continues to explode all over the world, and the discovery of a case of “unknown origin” in northern California has really shaken up global financial markets. It has become clear that efforts to contain this virus have failed, and investors are now coming to grips with the fact that this crisis is just getting started. We haven’t seen this much panic on Wall Street in a very long time, and on Thursday we actually witnessed the largest single day point decline in all of U.S. history…

Rising anxiety over the global coronavirus outbreak pushed the stock market into a new zone of fear Thursday.

After falling sharply all week, the Dow Jones industrial average tumbled 1,190.95 points to close at 25,766.64 – its worst one-day point drop in history.

Overall, this is turning out to be an absolutely disastrous week for stocks.

The Dow fell more than 1,000 points on Monday, it fell another 879 points on Tuesday, and stock prices continued to drop on Wednesday.

But hardly anyone expected a brand new all-time record to be set on Thursday, and now we will wait to see what happens on Friday.

Incredibly, the S&P 500 has already plunged into correction territory. It only took six trading sessions for that to happen, and that is also a brand new record…

Six days. That’s all the time it took for the S&P 500 to fall more than 10% from a record into a correction.

That’s the quickest turnaround of the sort ever, according to data from Deutsche Bank Global Research.

We have never seen anything like this, and many are now wondering what is going to happen if this outbreak gets much, much worse.

Without a doubt, stocks could potentially fall a long, long way. Thanks to a tremendous rally earlier this year, stock prices were pushed to the most overvalued levels that we have ever seen. It was inevitable that prices would fall, and this coronavirus outbreak looks like it could greatly accelerate that process.

Meanwhile, analysts are increasingly coming to the realization that this virus is going to have very serious implications for the entire global economy.

For example, on Thursday David Kostin of Goldman Sachs warned that American companies “will generate no earnings growth in 2020”…

“US companies will generate no earnings growth in 2020,” Goldman’s chief U.S. equity strategist, David Kostin, said in a note to clients Thursday. “We have updated our earnings model to incorporate the likelihood that the virus becomes widespread.”

And Guggenheim’s Scott Minerd is even more pessimistic…

Guggenheim’s Scott Minerd says the coronavirus crisis is possibly the worst thing he’s ever seen in his career: “This has the potential to reel into something extremely serious”

This virus is spreading great fear all over the planet, and it is going to be exceedingly difficult for the world economy to function normally when people are afraid to even leave their own homes.

At this point, the travel industry is being hit particularly hard…

“We don’t even need to wait for economic data to see how badly the economy is being hit. You can tell that the sales of airlines and hotels are already falling by a half or something like that,” said Tomoaki Shishido, senior economist at Nomura Securities.

Up until recently, Wall Street had been acting as if this was a temporary problem that would soon fade.

But now it has become clear that we will be battling this virus for many months to come.

And what happens if this crisis is like the Spanish Flu pandemic which lasted for three years?

By the way, tens of millions of people died during the Spanish Flu pandemic. Let us pray that the death toll will not be anything like that this time around.

Unfortunately, with each passing hour this virus makes even more headlines. The Vice-President of Iran has become a confirmed case, and the Iranian Ambassador to the Vatican has actually died after catching the virus.

Speaking of the Vatican, the Pope just cancelled a service “after he was struck down with illness”…

Pope Francis cancelled a church service today after he was struck down with illness.

The 83-year-year-old pontiff was not well enough to attend the mass, although there is no suggestion at this stage he has coronavirus as the outbreak in Italy topped 500 cases.

I should be clear that so far there is absolutely no indication that Pope Francis has been infected by the coronavirus.

But hopefully he is getting tested for it.

In Italy this virus is now officially completely out of control. On Thursday, we learned that it has now spread to ten different regions…

Ten of Italy’s twenty regions are infected with coronavirus as of Wednesday, with Lombardy and Veneto the two most heavily affected regions in the nation.

So far, 400 people have been confirmed to be infected with the virus, which has resulted in 12 deaths as of Wednesday, according to a report by La Repubblica.

Many communities are already in a near total state of shutdown, but that has not stopped the virus from spreading.

Meanwhile, the number of confirmed cases in France actually doubled in just 24 hours…

The number of confirmed cases of coronavirus in France has more than doubled in 24 hours, the French Health minister said on Thursday, with the tally now at 38 from 18 on Wednesday.

During a press conference, Olivier Veran said this “sharp increase” was due to the identification of so-called “contact persons” linked to previously known cases, adding France was “ready” for an epidemic.

In my entire lifetime, I have never seen anything like this.

And if the number of cases continues to rise at an exponential rate it is going to be absolutely devastating for the world economy and for global financial markets.

For a long time many have been watching for the “trigger event” that would burst the biggest financial bubble in the history of the planet.

That “trigger event” appears to have arrived, and nothing is ever going to be the same from this point forward.

Ominous Warnings About The Very Rapid Spread Of The Coronavirus

February 25, 2020 by Michael

Is a widespread coronavirus outbreak inside the United States inevitable? After weeks of generally optimistic statements, officials are now warning us to prepare for the worst. Over the past several days we have seen the number of confirmed cases outside of China escalate dramatically, and this has really rattled global financial markets. After being down more than 1,000 points on Monday, the Dow Jones Industrial Average fell another 879 points on Tuesday. U.S. stocks have lost more than 1.7 trillion dollars in value in just two days. Much more importantly, a wave of tremendous panic is starting to sweep across America, and it looks like this crisis is just getting started.

Usually officials at the CDC choose their words very carefully so that they do not needlessly alarm the public. With that in mind, I would like for you to consider three statements that the CDC’s Dr. Nancy Messonnier made about a potential outbreak inside the United States during a press conference on Tuesday…

#1 “It’s not so much of a question of if this will happen in this country anymore but a question of when this will happen.”

#2 “Disruption to everyday life may be severe.”

#3 “We are asking the American public to prepare for the expectation that this might be bad.”

Can you ever recall a top CDC official ever making statements this ominous?

I certainly can’t.

In addition, Messonnier warned that it may soon become necessary for schools and businesses to greatly restrict person to person contact…

The CDC outlined what schools and businesses will likely need to do if the COVID-19 virus becomes an epidemic outbreak in the U.S. Schools should consider dividing students into smaller groups or close and use “internet-based tele-schooling,” Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, told reporters on a conference call. “For adults, businesses can replace in-person meetings with video or telephone conferences and increase teleworking options,” Messonnier said.

On a temporary basis such measures would not be too disruptive, but what if this virus just keeps spreading month after month?

We are potentially facing a scenario that is truly unprecedented, and it is becoming increasingly clear that officials have lost confidence that they will be able to contain this virus. In fact, one former U.S. official told USA Today that “the horse is out of the barn”…

Dennis Carroll, former director of the U.S. Agency for International Development’s Global Health Security and Development Unit, credited China’s “extraordinary control measures” with delaying the spread of the virus. But he said avoiding a pandemic is “very unlikely.”

“The dramatic uptick of cases in South Korea, Iran and Italy are reflective of a self-sustaining spreading of the virus,” Carroll, who now leads the Global Virome Project science cooperative, told USA TODAY. “And a clear message that the horse is out of the barn.”

At this point there are still only a few dozen confirmed cases in the United States, but authorities are bracing for the worst. If you can believe it, San Francisco Mayor London Breed just declared a state of emergency because of this virus…

Mayor London Breed declared a local emergency in San Francisco Tuesday amid the coronavirus outbreak, despite there being no confirmed cases among the city’s residents.

“Although there are still zero confirmed cases in San Francisco residents, the global picture is changing rapidly, and we need to step-up preparedness,” Breed said in a statement. “We see the virus spreading in new parts of the world every day, and we are taking the necessary steps to protect San Franciscans from harm.”

And after being quite apathetic about this outbreak at first, people all over America are suddenly realizing that they should be preparing for a potential pandemic.

In fact, Silicon Valley investor Geoff Lewis created quite a stir when he asked for advice on stockpiling food. The following is the question that he posted on Twitter that caused so much of an uproar…

If one were hypothetically stockpiling four months of shelf stable food, what would folks recommend (optimizing for keto friendly)?

We haven’t seen anything like this in the United States in a very long time.

But we haven’t even had a single death from this virus in our country yet. How crazed will people get when victims start dropping dead in the streets like they have been in Wuhan?

There is now talk that the IOC could potentially cancel or postpone the Olympic Games in Tokyo. At one time such talk would have seemed crazy, but this is how serious this outbreak has become.

In Iran, the number of confirmed cases has now jumped to 95, although many people believe that the true number is far, far higher.

During a press conference on Monday, Iran’s deputy health minister attempted to downplay the seriousness of this outbreak, but on Tuesday we learned that he has been infected too…

Iran’s deputy health minister said he has tested positive for the novel coronavirus and is in self-quarantine at his home just a day after he appeared at a news conference in Tehran where he sought to quell fears about the outbreak. Iraj Harirchi, the head of Iran’s counter-coronavirus task force, announced the illness in a video online while vowing that authorities would continue working to control the spread.

Apparently not wanting to be outdone, one of the officials in South Korea that was overseeing the response to this outbreak decided to jump off a bridge…

But in Seoul took on a more morbid tone Tuesday following reports in the local press that a civil servant from the Ministry of Justice’s Emergency Safety Planning Office jumped off a bridge in Seoul at around 5 am local time Tuesday.

The official was one of several individuals charged with overseeing the government’s response to the virus. As cases soar and hysteria mounts, we suspect this news won’t exactly help quiet the public’s nerves.

Suicide is never the answer to anything, and we should all be praying for that man’s family.

In Italy, the number of confirmed cases has grown by more than 15 times since Friday…

Over in Italy, the number of confirmed cases has surpassed 300 to 322, while the number of dead climbed to 10, according to Italian emergency chief Angelo Borrelli, who said the newly deceased were over the age of 80. That’s up from just 20 confirmed cases on Friday.

Newly deceased were over 80 years old, says at press conference in Rome Tuesday. The new infections include three cases in southern Sicily region, Italian Civil Protection official Borrelli said.

All of a sudden, people all over Europe are wanting to avoid Italians because of the potential of catching the virus. In most cases that fear is irrational, but we do know that an Italian just spread the virus to a hotel in Spain’s Canary Islands…

Hundreds of staff and tourists staying at a hotel in Spain’s Canary Islands were put under lockdown on Tuesday, El Pais newspaper reported. One person who had stayed at the establishment was later found to have tested positive for the coronavirus.

I lived in Italy for a few years as a child, and I have a great love for the country.

It is so sad to watch what is happening over there, but the same things are going to start happening here. In fact, Dr. Messonnier has told the public that now is the time “to begin preparing” for a massive outbreak…

“People are concerned about this situation – I would say rightfully so,” Messonnier said. “But we are putting our concerns to work preparing. Now is the time for businesses, hospitals, communities, schools and everyday people to begin preparing as well.”

If you do prepare and all of this turns out to be a false alarm, at least you will be ready for the next crisis that is coming.

But if you don’t do anything to prepare and things get really, really bad, it could end up costing you dearly.

If this virus starts spreading across the United States like wildfire, you and your family will want to minimize contact with the public as much as possible. So stock up on the things you will need now, because when things start getting really crazy the stores will be cleaned out very quickly.

The “Unsinkable” Financial Markets Just Slammed Into A Massive “Iceberg” Called The Coronavirus

February 24, 2020 by Michael

We just witnessed the third largest single day point drop in U.S. stock market history, and experts are warning that things will only get worse if this coronavirus pandemic continues to escalate. On Monday, the Dow Jones Industrial Average was down a whopping 1,031 points, and it looks like there could be more volatility on Tuesday. In fact, the Nikkei is already down 787 points as I write this article. Of course this sudden decline is being mostly driven by fear of the coronavirus. The rapid spread of the virus in South Korea, Italy and Iran over the weekend really rattled investors, and there was a rush to sell stocks when the markets opened on Monday morning. And the worse this pandemic becomes, the lower stock prices are going to go.

You see, the truth is that stock prices are primarily based on what investors believe the future is going to look like.

For a long time, investors have assumed that the future would be exceedingly bright, and stock prices have steadily trended upwards.

But a coronavirus pandemic changes everything. If worldwide economic activity comes to a standstill like we are already seeing happen in China, it is inevitable that there will be a very serious global economic downturn.

And this outbreak comes at a time when stock prices have been more overvalued than they have ever been before in American history. Most stocks have been priced “beyond perfection”, and so it was just a matter of time before those prices started to fall.

As I have explained many times before, stock prices tend to fall much faster than they rise, and the rapid decline on Monday was quite breathtaking…

The Dow Jones Industrial Average closed 1,031.61 points lower, or 3.56%, at 27,960.80. The S&P 500 slid 3.35% to 3,225.89 while the Nasdaq Composite closed 3.71% lower at 9,221.28. It was the Dow’s biggest point and percentage-point drop since February 2018. The Dow also gave up its gain for 2020 and is now down 2% for the year. The S&P 500 also had its worst day in two years and wiped out its year-to-date gain as well.

Tech stocks got hit particularly hard.

If you can believe it, the stocks of the big tech companies “lost more than $250 billion in value” on Monday…

Apple, Facebook, Amazon, Microsoft and Google-parent Alphabet collectively lost more than $250 billion in value as part of a broader market plunge. The tech companies make up nearly one-fifth of the value of the S&P 500, which itself is down more than 3.6%. Apple has the largest exposure to China, as it relies heavily on Chinese manufacturing plants for its top products and on Chinese consumers to buy iPhones.

And overall, global stocks lost more than a trillion dollars in value to start the week.

Of course stock prices were so ridiculously inflated that the markets can easily absorb what happened on Monday.

What really matters is what happens next.

If U.S. authorities can keep this virus from spreading widely here in the United States, the impact on our economy won’t be that dramatic.

But if there is a widespread outbreak, all bets are off. More than a decade ago, the CBO conducted a study which examined this sort of a scenario, and what they discovered is definitely alarming…

CBO did a study in 2005 and 2006, modeling the impact of a 1918-sized flu pandemic on the economy. They found that a pandemic “could produce a short-run impact on the worldwide economy similar in depth and duration to that of an average postwar recession in the United States.” Specifically, a severe pandemic could reduce U.S. gross domestic product by about 4.5%, followed by a sharp rebound.

The CBO assumed that 90 million people in the U.S. would get sick, and 2 million would die. There would also be demand-side effects, with an 80% decline in the arts and entertainment industries and a 67% decline in transportation. Retail and manufacturing would drop 10%.

Personally, I think that those numbers are probably too optimistic.

In China, people are deathly afraid to leave their homes right now, and that has caused economic activity to come to a crashing halt.

In fact, during the first portion of this month vehicle sales in China were down 92 percent…

As The Epoch Times reported late last week, for example, sales of Chinese passenger vehicles has tanked a whopping 92 percent “on an annual basis the first 16 days of February,” according to the China Passenger Car Association.

Sales of passenger vehicles only amounted to 4,909 units during the first 16 days of the month, the organization reported, which fell from 59,930 vehicles sold over the same period a year ago. These are the first figures to demonstrate just how hard the Wuhan coronavirus is hitting the world’s largest auto market.

And at this point even Chinese President Xi Jinping is admitting that this outbreak will “have a relatively big impact on the economy and society”.

Up until now, the financial markets have been mostly overlooking the fact that the second biggest economy on the entire planet has been imploding because of this virus.

I think that many investors were assuming that this outbreak was just a temporary phenomenon, but now reality is starting to set in…

“The second-largest economy in the world is completely shut down. People aren’t totally pricing that in,” said Larry Benedict, CEO of The Opportunistic Trader, adding a 10% to 15% correction in stocks may be starting. He also said some parts of the market, particularly large-cap tech stocks, appear to be over-owned. “It seems like there’s much more to come.”

Hopefully U.S. stocks will bounce back on Tuesday. Following a decline of the magnitude that we just witnessed, that is often what happens.

And President Trump is certainly doing his best to keep everyone feeling optimistic. The following is what he tweeted on Monday…

The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!

Hopefully President Trump is correct.

And hopefully he is also correct when he claims that this pandemic will start to subside once warmer weather arrives.

But so far this mysterious new coronavirus is winning the battle, and investors all over the globe are really starting to freak out.

Will The Coronavirus Outbreak Cause A Massive Stock Market Crash?

January 31, 2020 by Michael

Could it be possible that this coronavirus outbreak will be the trigger that finally bursts the biggest stock market bubble in U.S. history? As I have discussed previously, stock prices in the United States were the most overvalued that they have ever been during the month of January, and our stock market has never been more perfectly primed for a huge meltdown. But stock prices are all about what investors believe will happen in the future, and if they remain convinced that the future is bright then perhaps this stock market bubble could persist for a while longer. Unfortunately for Wall Street, this coronavirus outbreak is starting to create a wave of fear in the financial community. In fact, concern about the coronavirus pushed the Dow Jones Industrial Average down more than 600 points on Friday, and that represented the worst day for the Dow since last August…

Stocks fell sharply on Friday, wiping out the Dow Jones Industrial Average’s gain for January, as investors grew increasingly worried about the potential economic impact of China’s fast-spreading coronavirus.

The Dow dropped 603.41 points, or 2.1%, to 28,256.03 in the 30-stock average’s worst day since August. The S&P 500 had its worst day since October, falling 1.8% to 3,225.52. The Nasdaq Composite dropped 1.6% to 9,150.94.

Up until now, investors were very confident that the Fed and the Trump administration could keep the party rolling, but now that is changing. Just consider what Ilya Feygin just told CNBC…

“The theme coming into this year was the Fed and Trump are going to bail us out of any problems, but the virus is something neither one can do anything about. That’s a reason to become more fearful.”

A reason “to become more fearful”?

That certainly doesn’t sound good for stocks.

And this coronavirus outbreak has also been pushing down the price of oil…

Oil prices have also suffered from the virus outbreak, because China is a big consumer of the commodity.

US oil prices are on track for their worst month since May last year, when the US-China trade war and high inventory levels weighed on prices.

Ultimately, the economic impact of this crisis will be determined by how bad this outbreak eventually becomes, and that is very uncertain at this point.

But without a doubt the coronavirus is already having a substantial impact on the Chinese economy. The following comes from CNN…

The economic impact of the virus is still impossible to determine, but one state media outlet and some economists have said that China’s growth rate could drop two percentage points this quarter because of the outbreak, which has brought large parts of the country to a standstill. A decline on that scale could mean $62 billion in lost growth.

Goldman Sachs is warning that this outbreak will also cause the U.S. economy to slow down this quarter, but the bank is still convinced that next quarter will be better…

The fast-spreading coronavirus could slow first quarter growth of the United States economy, according to a new report from Goldman Sachs.

Analysts at the firm forecast a 0.4 percentage point decline on US annualized growth through March. But it’s not all doom and gloom: Goldman Sachs (GS) also predicts that growth will rebound in the second quarter by roughly the same amount.

Of course the analysts over at Goldman Sachs are assuming that this coronavirus outbreak is not going to turn into a horrifying global pandemic.

But what if they are wrong?

During the last two weeks of January the number of confirmed cases got 236 times larger, and if this outbreak continues to grow at an exponential rate it is going to be absolutely catastrophic for the entire global economy.

Quite a few experts are now recognizing this reality, and that includes Tuomas Malinen…

Global recession, a European banking crisis and a crash in the U.S. capital markets will produce a global economic collapse which will almost certainly overwhelm any attempts—massive and coordinated as they may be—to turn the tide by over-stretched central banks and over-indebted governments.

This is, why the coronavirus outbreak should be treated for what it is: a potential harbinger of human and economic calamity.

Whether such a scenario materializes in the weeks ahead all depends on how widely this virus spreads.

Personally, I am hoping that this outbreak fizzles out as rapidly as possible. This virus has an incubation period of up to 14 days, and wondering who might have the virus is going to drive a lot of people completely nuts.

Unfortunately, it looks like things are only going to get worse. According to a study that was just released, we could soon have “independent self-sustaining outbreaks in major cities globally”. The following comes from Natural News…

A new, urgent study just published in The Lancet warns that “independent self-sustaining outbreaks in major cities globally” may be “inevitable” due to the “substantial exportation” of symptomless carriers of coronavirus. That same study also calculates that 75,815 individuals are infected right now in mainland China, where the official government numbers are currently under 10,000.

Titled, “Nowcasting and forecasting the potential domestic and international spread of the 2019-nCoV outbreak originating in Wuhan, China: a modelling study,” the study is authored by Professor Gabriel M. Leung, MD and Kathy Leung, PhD.

Coming into this year, so many of us felt such a sense of urgency, but I don’t know anyone that thought we would potentially be facing a horrific global pandemic by the end of January.

The worse this outbreak becomes, the more pain the global economy is going to feel.

And there is no way that this stock market bubble is going to survive a severe global economic downturn.

The only way anyone ever makes money in the stock market is if they get out in time. And unfortunately the ridiculously elevated prices that we have been witnessing may not last too much longer if this outbreak continues to spiral out of control.

The Biggest Stock Market “Melt Up” In U.S. History Has Pushed Stock Prices To The More Overvalued Levels Ever

January 19, 2020 by Michael

Over the past several months, we have witnessed one of the greatest stock market rallies in American history. The S&P 500 has gone 70 days in a row without a 1 percent loss, and most weeks we have seen one daily surge after another. If stock prices were exploding because the underlying U.S. economy was performing extremely well, we would have reason to celebrate. Unfortunately, that is not the case at all. In fact, last week I shared 12 signs that the economy is actually slowing down substantially. Instead, this stock market “melt up” is being largely fueled by reckless intervention by the Federal Reserve. The Fed’s balance sheet has been ballooning once again, and investors know that stock prices tend to go up significantly when that is happening. So right now Wall Street is in the midst of a raucous party, and everything will be wonderful as long as stock prices continue to move in the right direction.

Unfortunately, no stock market rally lasts forever, and a day of reckoning is coming. At this point, stock prices have become so absurd that even the New York Times is saying that we should “worry” about what is ahead.

We also witnessed dramatic stock market “melt ups” prior to the stock market crash of 1929, prior to the bursting of the dotcom bubble, and prior to the financial crisis of 2008.

If you are not familiar with the term “melt up”, here is a pretty good definition from Investopedia…

A melt up is a dramatic and unexpected improvement in the investment performance of an asset class, driven partly by a stampede of investors who don’t want to miss out on its rise, rather than by fundamental improvements in the economy. Gains that a melt up creates are considered to be unreliable indications of the direction the market is ultimately headed. Melt ups often precede melt downs.

That definition accurately describes what we are witnessing on Wall Street right now. There has been so much euphoria, and of course many of the wild-eyed optimists seem to think that it can last indefinitely.

But how much higher can stock prices possibly go? After all, they are already the most overvalued that they have ever been in all of U.S. history.

A very simple way to judge whether stock prices are overvalued or undervalued is to look at the price-to-sales ratio for the S&P 500 as a whole. During the best of times, it should be somewhere between 1.0 and 1.5, but thanks to the absurd rally that Wall Street has been enjoying the price-to-sales ratio for the S&P 500 has now been pushed above 2.4. If you would like to see what this looks like for yourself, just check out this chart from Zero Hedge.

Stock prices should have never, ever gotten to this point without sufficient underlying sales to justify such high valuations. If the S&P 500 were to fall 50 percent from the current level, that would put us at a point that is relatively “normal” for good economic times.

But of course our financial markets would not be able to handle a 50 percent decline in stock prices because the system is so highly leveraged. It would be a disaster unlike anything we have seen before, and so the Federal Reserve feels as though there is no other alternative other than to continue to pump up this absolutely absurd bubble.

Another very simple indicator that shows that stocks are now more overvalued than ever before is “the Buffett Indicator”. As Harry Dent has pointed out, the ratio of total market capitalization to U.S. GDP has never been higher than it is currently. You can see this for yourself by looking at this chart. The stock market would have to fall by a third just to get back to the ridiculous level we witnessed just prior to the financial crisis of 2008. We truly are in unprecedented territory, and every other stock market bubble of this nature in our entire history has ended very, very badly.

If you want to blame someone for getting us into such a precarious position, you should blame the Federal Reserve. And at this point, even Fed officials are acknowledging what is going on. For example, just check out what Dallas Fed President Robert Kaplan recently said…

It was at the very least, a little refreshing to hear Dallas Fed President Robert Kaplan openly talked about this in an interview Wednesday. Although he did couch it in terms that implied it was a matter of some concern to him. But, of course, he went on to say, “we’ve done what we need to do up until now.”

“My own view is it’s having some effect on risk assets,” Kaplan said. “It’s a derivative of QE when we buy bills and we inject more liquidity; it affects risk assets. This is why I say growth in the balance sheet is not free. There is a cost to it.”

The Fed is desperately trying to keep control of interest rates, but in the process they are creating ideal conditions for a stock market crash.

As 2019 rolled to an end, even Wolf Richter admitted that “there has never been a better setup” for a major market meltdown…

In my decades of looking at the stock market, there has never been a better setup. Exuberance is pandemic and sky-high. And even after today’s dip, the S&P 500 is up nearly 29% for the year, and the Nasdaq 35%, despite lackluster growth in the global economy, where many of the S&P 500 companies are getting the majority of their revenues.

Mega-weight in the indices, Apple, is a good example: shares soared 84% in the year, though its revenues ticked up only 2%. This is not a growth story. This is an exuberance story where nothing that happens in reality – such as lacking revenue growth – matters, as we’re now told by enthusiastic crowds everywhere.

Meanwhile, the real economy has just continued to deteriorate.

While stock prices were soaring in December, U.S. freight volume was actually plummeting…

Shipment volume in the US by truck, rail, air, and barge plunged 7.9% in December 2019 compared to a year earlier, according to the Cass Freight Index for Shipments. It was the 13th month in a row of year-over-year declines, and the steepest year-over-year decline since November 2009, during the Financial Crisis

As I have warned so many times, stock prices have become completely divorced from economic reality, and this is setting us up for a major financial crisis.

But for the moment, the party continues to roll on and the wild-eyes optimists are telling us that this is just the beginning of a golden new age of prosperity.

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