4/15/20 Update -The direction of the asset markets analyzed; humanity’s response to the coronavirus crisis was disappointing

To download the podcast – Right mouse click here (3:00PM, 29:30 duration)

-All of today’s economic numbers came in much worse than consensus, which points to a more protracted economic downturn than we previously contemplated. Today’s economic data releases were the first ones published in the wake of the manufactured coronavirus crisis.
-I overestimated humanity’s response and we need to accept that we will be acting differently than all those around us.  We are too few in number to enact any change. The sheep have been properly conditioned.
Grim housing data is bullish for working class housing. Home builders just cannot keep up with demand over the long term. They ran annual deficits since 2008, and will fall further behind.
-The mild reaction of stocks to these grim economic data points shows that stocks should test that 100-week mva soon. That is currently about 2881.
-Gold should be supported with this economic data.
-The banking elites have achieved their goals and powerful central government intervention on all fronts will be the new normal.
-The Fed will have to establish much higher municipal and state lending program levels (many multiples more after the dust settles) as well as multiple times higher levels devoted to their recently announced two corporate lending facilities.
-Real estate could actually do okay in certain sectors. On one hand, we have the elevated risk of foreclosure and loss of homeowner income. On the other, we have government forbearance programs, massive monetary stimulus, lower mortgage rates, lack of alternative investment choices, and a massive supply deficit in working class housing.
-Never underestimate how low mortgage rates could move going forward. Denmark has already offered negative yielding mortgages.
-Commodities are behaving as expected with deteriorating demand. Poor economic number mean low commodity prices.

Related Posts