Posts Tagged ‘Coronavirus’

Notes From Underground: We Walked Off to Look For America

March 15, 2020

These are challenging times is the understatement of the decade.

The fear of pandemic has arrived and is causing great distress for families and the nation at large as we are tending to the sick and those forced into a change of everyday patterns. Since the beginning of February, we at NOTES FROM UNDERGROUND have been discussing the onset of the DEMAND SHOCK which would cause problems in the financial system because of the massive build-up of debt on a global scale. If businesses cannot operate as people hunker down in an effort to slow the spread of the virus then it goes without saying that DEMAND would suffer. If demand suffers on a global basis borrowers without cash reserves will struggle to sustain their businesses.

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Notes From Underground: Into the Dark Recesses of My Mind

March 3, 2020

Three weeks ago we at NOTES FROM UNDERGROUND suggested the Fed needed to cut interest rates by 50 basis points in an effort to get ahead of the potential negative economic fallout from a DEMAND SHOCK caused by the Covid-19 virus. But the rate cut was to be presented with the caveat that this was an economic cut and financial considerations were not involved. If the demand shock from the VIRUS never materialized the cut would be RESCINDED. After announcing an emergency cut Tuesday Chairman Jerome Powell took a few questions from the media.

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Notes From Underground: A Microscopic Germ Packs a Wallop

March 2, 2020

There is no doubt little organisms can wreak havoc in ways that blowhards could never imagine. People are trying to assess the financial impact by looking at previous pandemics. This is flawed analysis because each pandemic is different depending on the global circumstances and the morass for incubation. During the Cold War people did not move freely so political containment acted as a drag on the spread of disease.

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Notes From Underground: Amid the Tumult…

March 1, 2020

Before we embark on more pertinent market viewpoints it is my pleasure to offer up two podcasts I recorded last week with the Financial Repression Authority’s Richard Bonugli. The first is with Lacy Hunt of the Hoisington Letter. The second is what I refer to as the four horsemen of the apocalypse: Jim Bianco, Peter Boockvar and David Bernstein. We discuss many areas relevant to the past four weeks.

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Notes From Underground: A New Form of Asian Contagion

February 23, 2020

On July 2, 1997 the Thai baht entered crisis mode, kicking off what become known as 18 months of Asian Contagion. The so-called Asian Tigers experienced massive capital disruptions as the Chinese economic miracle undermined the capital expenditure projects that were creating the manufacturing capacity to lift the TIGERS out of poverty and into significance in the global supply chain. The emerging markets learned that as fast as capital flows in to support foreign direct investment it can hurriedly depart as it seeks alternative venues with a better competitive advantage .

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Notes From Underground: And the Concerns Continue

February 18, 2020

On Tuesday global equities were down a very modest amount. The U.S. DOLLAR continued it move higher as the growth story and positive nominal yields is enough to push global investors into the U.S., the center of complacency. Commodity prices started off  weak but OIL, grains and even COPPER found some buyers.

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Notes From Underground: Do You Hear What I Hear?

February 16, 2020

First, the news on the coronavirus continues to be buffeted by media outlets’ urge to be the first to report. The need for speed creates a rash of questionable stories that later get retracted or certainly get less sensational when context is added. When trading around this, I urge caution as opportunity knocks for those traders who can remain patient. There seems to be scientific interest in the failure of the VIRUS to have impacted children. While it is in the early stages of a potential pandemic, according to my source on all things infectious diseases, it is an outcome to watch in an effort to measure the potential impact.

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Notes From Underground:

February 11, 2020

In the 1960 classic film The Time Machine a traveler visits a future civilization in which a group of people is enslaved as a source of food. The food source are zombie-like and kept in comfortable captivity in an effort to control their protein source. After violence is done a siren sounds. When the time traveler questions the meaning of the siren the answer is it is ALL CLEAR but we never know what is all clear. Well, it seems the Coronavirus has been given the all clear signal based on the value of equity markets.

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Notes From Underground: Coronavirus Trumps Unemployment Data

February 9, 2020

Friday’s unemployment report was firm on job creation but soft on average hourly earnings. The work week remained unchanged. Further north, the Canadian jobs report was very robust as jobs increased by 34,500 versus an expected 16,000. The real strength was that all the jobs growth was full-time with hours worked experiencing a healthy gain of 0.5%. The unemployment rate dropped from 5.6% to 5.5%. And yet the Canadian dollar could not sustain a rally for more than five minutes.

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Notes From Underground: Ho Hum, Time For Another Unemployment Number

February 6, 2020

It has been an interesting first month of trading as markets have gone from searching for inflation fueled by a rise in commodity prices and a weakening dollar, especially in regards to emerging market currencies. The commodity rally coupled with an upward thrust in emerging markets ran into the headwind of the spread of the Coronavirus from Wuhan, China to several other nations. The whiff of inflation was subsumed by the onset of fears of global deflation as investors continue to be concerned about China economic activity grinding to a halt as quarantines are the prescribed remedy for preventing a genuine pandemic.

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