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A Two-Week Ordeal, then What?

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Traders looked beyond the two-week national ordeal that officials have diligently tried to prepare us for and evidently saw more ordeal further down the road.  The Dow dropped a thousand points on Wednesday, but there was no fear, just a mood swing back toward darkness. It will surely pass, at least briefly, but don’t take that as a guarantee of a rally by week’s end. I’ve projected much lower prices for stocks and expect the Dow to trade under 10,000 in search of a bear-market bottom perhaps two or three years from now..

We are all hearing so many scary personal stories these days that it’s difficult to judge whether it is anecdotes that are collectively weighing down shares on a given day or more-arcane concerns, such as the central bank’s extraordinary efforts to keep real estate paper from imploding. It is unavoidable that the tangible side of this problem — the impending plunge in commercial and residential property values — will make the Fed’s death-defying paper-shuffling act seem like a relative walk in the park. Jim Grant, the most learned observer of interest rates around,  puts this grave problem in perspective in an interview posted at Dudley’s Reports. Noted Grant, “If you can conjure, without adverse effects, trillions of dollars of new credit and everything is better because of that, net better, you know? Wow, I suppose we wish that had been discovered in the Iron Age. We would be a lot richer by now.”

Please do not ask trading questions!

  • John Jay April 2, 2020, 11:20 am

    It looks to me like we are headed for a bizarre global situation where all the Central Banks are acting in concert to support the status quo where the .01% come out more wealthy than ever, and the rest will be on a perpetual dole, as long as they have an acceptable Social Credit Score.

    The Central Banks of Japan and Switzerland have huge stock positions, and I am sure our Fed has done the same through some shell corporations.

    Almost 50% of the US GDP is from small business entities which are in the process of being destroyed.
    This is a WWI/WWII level of wealth destruction compressed into months instead of years, and like an enhanced radiation device, leaves the buildings intact, and the people financially deceased.

    Once again………

    Cui Bono?

    Follow the Money!


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