We Bring You This Critical Alert, Contributed By WealthResearchGroup.com and Their Founder, Lior Gantz, Who Our Staff Looks At For Accurate Economic Forecasting.
Trump Just Blew The Whistle
Yesterday, the coronavirus task force conducted a press conference. After Trump’s tweets and words of calm were worse than worthless during the earlier part of the week, causing the U.S. markets to suffer through their most tumultuous week in history, The Donald did some housekeeping and damage control, and realized that America wanted actions, not soothing speeches.
His advisors begged him to stop comparing Covid-19 with the common flu and to cease telling Americans that most wouldn’t die from it. What Wall Street wanted was to see that Washington is taking this dead-seriously.
On Friday, one hour before market close, when the indices were already up by 4% in anticipation that Trump would declare a National Emergency, he took the stage in the Rose Garden. Initially, it looked like just more words, but then he started firing the real ammunition and markets stabilized, after dipping in the first few minutes of his prepared speech.
The vibe and the energy began to turn positive and to inspire confidence in government, when Trump cleared the way and handed the mic over to Dr. Deborah Birx to give her account. Her diplomatic demeanor sparked trust; markets started going vertical. Next, top executives from CVS, Walmart, Target, Walgreens and other companies, which will be involved with the testing, added to the fueled-up rally and the indices closed up in record fashion.
This is by no means over, but it does appear that when it comes to the behavior of investors, this sprint to cash, dumping stocks, bonds, precious metals, Bitcoin and anything of value that could be found, might be largely behind us.
This doesn’t mandate that a swift and strong rebound is assured on the other side, but I don’t think anyone doubts that there’s a plan in motion.
Before Friday, though, investors’ blood was running all over the streets of America and Europe; losses were some of the worst in over a century.
The S&P 500’s Volatility Index for short periods, known as $VIX9D, surpassed 100, which is the highest it’s ever been!
The speed and strength of this whacking and pounding of stock prices was like watching a dam bursting. We went from 6th gear and bullish to 1st gear, then to neutral and to reverse, in no-time.
Now, we’re playing in a different game. The two most important indices on the planet, the Dow Jones Industrial Average (comprised of 30 companies) and the S&P 500, are both in bear markets. Additionally, the market’s most iconic buyers, the companies themselves (through share buybacks), cannot be depended upon. Europe’s indices and the small-cap indices have also entered bear markets.
CEOs must conserve their cash hoards, not worrying over earnings growth, but on surviving the upcoming period of a paralyzed and idle economy. I expect many companies to freeze their buyback programs and to shelf them altogether.
The past week showed everyone how much of a super-bubble government bonds truly are. They’re in such a delusional trading range, with many of them being in negative territory, that on Saturday, President Trump used the press conference to spill the beans and reveal that his plan is to refinance America’s national debt, if Jerome Powell would hurry up and cut interest rates with a machete.
For both Trump and Powell, the upcoming meeting is a monumental and non-recurring chance to do this and actually please the market, which is the reason I believe it will most likely get done.
The only open question is whether we will see it lowered by 1.00% or by 0.75%.
There’s no reason for American taxpayers to cough up the cash and pay $500 billion annually to creditors, when every other country, which are also deeply in debt and have far smaller and less robust economies, do it interest-free.
As you can see, the appetite of investors for it exists; they will accept their fate and lend the Treasury their savings, without expecting a positive yield. If that’s the case, Trump will pursue it all day long. His whole life, he has borrowed from banks. He can’t help it.
The Federal Reserve is already operating under extreme conditions. Jerome Powell has been quietly running QE4 and QE5 programs and has been injecting obscene amounts of credit to the Repo overnight markets.
And even though gold has suffered from a bloody week, the mining shares now look better to investors than tech stocks or traditional businesses. Unlike casino operators, airlines, credit card servicers, oil giants, clothing manufacturers, banking and other sectors, mining is not stopping for coronavirus.
These stocks could move higher immediately.
If we get a big comeback here, Trump will have so much momentum going into the elections. The potential for resumed buying is there. Company insiders are buying again.
This week, we will monitor (1) interest rates, (2) casualty bell curves, (3) stock market volatility and (4) panicked sentiment closely, and see if the panic begins to ease.
I’ve never seen anything like this.
ActivistPost.com absolutely loves the articles, contributed by WealthResearchGroup.com
Of all the investment and economic commentators we're tracking, this one is, by far, part of the top echelon.
We read his free newsletter daily
In fact, he's opened-up registration to our readers, so you can subscribe to his award-winning free letter right here!