So we continue to see a sell-off in global equities, which begs the question, is the bubble bursting or is this simply a standard pull-back? A couple things are certain, 1) the recent melt-up in equity prices over the last several months was getting long-in-the-tooth, and 2) the global supply and demand shock of COVID19 is real. It’s one thing for the typical run-of-the-mill correction, especially after such a run up, but it’s another if this is becoming something more structural where COVID19 becomes the pin that finally pricks the everything bubble.
Regardless of which turns out to be the case, understand that this is a process that takes time. It will not be resolved in a day, a week, or even a month, these processes and potential full-reversal(s) into a bear market can take months if not years to complete. All we know is that the world has been awash in easy money and credit for over a decade; that central banks come running to the “rescue” every time there’s some kind of hiccup with global equities; that federal governments have thrown a lot of fiscal stimulus into the pot as well; and now with the shock of COVID19, how will this all play out? These debts need to be paid and if you have your supply-chain shuttered and your customers shuttered, then we expect hours worked to be cut and then layoffs to tick up. And if this occurs, then we’re likely to find ourselves in a downward spiral loop as a lack of demand fuels a further lack of demand until it bottoms out. And oh, lastly, the CDC has come out and stated that it’s not a question of IF, but WHEN, COVID19 turns into an outbreak here in the USA. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Coronavirus #Recession #Gold #Silver #Oil #Politics #DemsDebate #EndTheFed