I posted a couple of panic posts back on January 26th and 31st, titled "Potential Pandemic Precautions" and "Act now and sell the market!".
You may be thinking that I was over-reacting, here it is Feb 23rd and all is well in the USA, with market near all time highs. What I keep forgetting in life is the market and public opinion is like changing direction of the worlds largest ship, it takes time.
The main issue with the evolving Novel Coronavirus is the infection rate and death rate is not clear. This is because China hides, imprisons, and lies about what is happening. China's main concern is maintaining the government stability, not helping the world understand better about the virus.
The stock market has been on an epic high, pretending that the second largest economy in the world, China, ordering 780 million citizens to not leave their house, will not impact USA economy negatively. Further, as it spreads other cities and countries shutting down won't hurt the USA economy either.
This is a combination of public euphoria, the media feeding frenzy of 'everything will be fine', and big money needing more time to re-position. Since January 30th Gold/Bitcoin moving higher and US treasury rates hitting all time lows. My assumption is this is diversification of big money out of the market letting reality to hit the US consumer. The Federal Reserve bank has been reacting by directly monetizing debt to prop up values. The US is following in Japan, spending trillions on market welfare to prop up market values, owning 80% of the entire market float. If you aren't rich enough to own a bunch, you not part of the party. So much for capitalism.
The question is will USA Federal Reserve Bank just buy buy buy, and interfere with capital markets. I think before the year is out, resounding yes. I think before the free money machine is turned onto full throttle, we will need a market 'scare' to justify this action. Federal Reserve injected 90 billion dollars this past Tuesday to prop up the markets. Also injected about 75 and 128 Billion in September. Federal Reserve now owns approaching 4.5 Trillion in debt, basically bailing out capital markets for bad loans. ( To give you an idea of what that is, if you earned 250,000 dollars a second since Jesus birth, you still wouldn't have 4.5 Trillion dollars. )
If the printing presses are NOT opened wide by the Fed, the market is looking on shaky ground.
So much so, the Federal Reserve stated Friday "Now is the time to prepare for a recession". That is laughable, the time was the last 5 years. Instead we cut taxes and accelerated debt. There is nothing to prepare with! Obama dug in by adding 66% more debt in a 'recovery', and Trump is on target to hit 20% in his term, with the 'strongest economy ever'.
Some news titles to understand the basis for my view, and good luck!.
The coronavirus could cause supply chain disruptions that are unlike anything we have seen in the past 70 years.
Some of the world's biggest economies are on the brink of recession
Warren Buffett Torches Corporate America, Spells Doom for Stock Market
China Car Sales Plunge 92%
Covid-19 (Novel coronavirus) Triggers Global Luxury Bust
China Faces Financial Armageddon With 85% Of Businesses Set To Run Out Of Cash In 3 Months
Apple warns revenue will be lower than expected because of coronavirus impact
Research from Wuhan hospital concludes 61% of Coronavirus patients with Severe Pneumonia won't survive. (need peer review for accuracy)
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