Category: Bear Market News

The German economy fell into recession after recording the sharpest quarterly contraction since the 2009 financial crisis as coronavirus-related shutdowns decimated the end of the first quarter, data showed on Friday.Read More.

Just moments after equities closed near the highs on Friday after yet another retail-driven rush into the stock market, the Federal Reserve poured cold water over all the bulls when the central bank unexpectedly issued a stark warning that stock and other asset prices could suffer “significant declines” should the coronavirus pandemic deepen – which we hope is not a shock to anyone – while highlighting that commercial real estate, which as we showed just yesterday just won’t stop collapsing, will be the hardest-hit industries. Read More.

Speaking in a video conference organized by the Peterson Institute, turbo money printer Jerome Powell today reassured the market that negative rates are not something the Fed – which expanded its balance sheet by $2.6 trillion in the past two months – is contemplating now. Read More.

US stocks zigged and zagged all day to a widely divergent close. The DJIA dropped 218 points (0.9%) but the NASDAQ outperformed once again, gaining 45 points (0.5%).

Stay tuned as the battle 0of the SkyNet StockBots continues.

Investing legend Stan Druckenmiller unleashed a firehose of cold water on market bulls today during an interview with the Economic Club of NY (the same venue that will interview Jerome Powell tomorrow on the topic of negative interest rates), when he said the “The risk-reward for equity is maybe as bad as I’ve seen it in my career,” (although “the wild card here is the Fed can always step up their purchases”) , Read More.

Thirty years of progressively higher consumer spending and debt have coincided with rising corporate profits, low savings rates, gambling preoccupation and boom-bust asset cycles. All were deleterious to present resilience as we encounter the first economic depression since the 1930s. Read More.

How bad is it? That is the question on everyone’s mind as we come to grips with the economic carnage caused by global economic shutdowns, supply chain disruptions, and ongoing quarantines of million of people. Do we face another Great Depression, or simply a deep recession more like 2008? And equally important, are soft Americans prepared for either?Read More.

David Rosenberg bluntly told attendees Monday at John Mauldin’s Virtual Strategic Investment Conference 2020 that the stock rallies in recent weeks ignore reality and don’t recognize that the United States is likely entering a depression, facing double-digit unemployment for at least three years, secular changes in consumer spending and saving, and deflation followed by stagflation. Read More.

After eleven years of nearly uninterrupted advancement, the record-long, QE-spawned bull market is on life support, facing the effects of pandemic lockdown and a massively leveraged global financial system. Read More.

The one lesson that we have clearly learned since the 2008 “Great Financial Crisis,” is that monetary and fiscal policy interventions do not lead to increased levels of economic wealth or prosperity. What these programs have done, is act as a wealth transfer system from the bottom 90% to the top 10%. Read More..

The Atlanta Fed’s GDP Now is estimating a -34.9 percent Q2 GDP print, which is 3.5x the largest quarterly decline in the post-WWII economy. Read More.

While the Federal Reserve has all but ruled it out, the sweeping economic and financial-markets impact of the pandemic has forced investors to give serious thought to the implications of such a drastic policy shift. Read More.

Friday’s job report – according to which a record 20.5 million jobs were lost in April, some 10x more than the depths of the Great Depression, resulting in a 14.7% unemployment rate – was ugly enough as is, the NYT summarizing the catastrophic nature of the economic collapse with the following creative front page. Read More.

The recent jobless claims figures show how difficult it will be for the U.S. recovery to be as quick and strong as initially expected.

The nation’s labor force participation rate reached a 47-year low of 60.2 percent in April, according to the Bureau of Labor Statistics, as the number of people not in the labor force jumped by 6,570,000 to a record 103,415,000. Read More.

By now everyone has seen some version of this chart which we first presented a month ago and updated yesterday, demonstrating just how disconnected stocks are from reality. Read More.

Money-market mutual funds, the ultimate havens for investors looking to preserve capital, once again are trying to maneuver in a zero interest-rate environment. The problem this time? They’re sitting on twice as much cash. Read More.

As the world economy is about to implode, very few investors realise what will hit them. The dip buyers of stocks don’t understand that it really is different this time as the world is now facing the biggest destruction of wealth in history. Stocks, bonds, and property are likely to decline by at least 95% in real terms in the next few years. With both sovereign and private defaults, many bonds will go to zero and interest rates to infinity. Read More.

The U.S. economy, already headed for a “brutally painful” second quarter but likely a return to growth in the second half of the year, could dive right back into recession next year if businesses reopen without proper measures to stop a resurgence of the coronavirus, a U.S. central banker said on Thursday. Read More.

An unexpected destruction of fiat currency has been advanced by the monetary and fiscal response to the coronavirus. Financial markets have yet to discount the possibility of such an outcome, but in the coming months they are likely to awaken to this danger. Read More.

On April 29, 2020, Jerome Powell said: “both the depth and duration of the economic downturn are extraordinarily uncertain.”

We are often critical of Federal Reserve policy and contradictory economic jargon coming from Fed presidents and governors. However, to our amazement, Fed Chairman Jerome Powell surprised us with a moment of clarity. No truer words were ever spoken. Read More.

One of the silver linings of the coronacrisis to date is that despite the unprecedented collapse in the broader economy and the 30 or so million unemployed, the pace of bankruptcy filings has been relatively steady compared to the pre-covid levels, as the following Goldman chart shows. Read More.

Are we still in a Bear Market or has the Bull returned? The S&P rallied 35% a near perfect retracement. It’s not unusual to have 3 during a Bear Market. You can celebrate making back your losses, or try to figure out what’s going to happen next and avoid the next leg down. Read More.