Hey, you can’t expect me to be depressed about the market every day, I had far more important things to be depressed about.
But that doesn’t mean the fundamentals have changed. Futures indicate a 600 point loss from the bell and we’re just not very far at all from a definitional (Valuations 20% down from recent highs) Bear Market which is not at all the same as a Recession because that’s a measure of current Domestic Product and has it’s own special raft of flaws among them that it’s a lagging indicator.
Update: Make that 700.
As of 2:09 a.m. ET Wednesday, Dow Jones Industrial Average futures were down 620 points, indicating a loss of 762.16 points at the open. S&P 500 and Nasdaq 100 futures also pointed to losses.
Monday they halted trading 729 down after 7 and a half minutes. Over? Under? You want to play in this Casino? My Uncle did 4X for Chase and was bald as a billiard by 36.
Nah, if you really want to get paranoid you’ve got to look at the gibberish spouted at the 5:30 presser. I’ll spare you an embed but neither Kudlow or his boss looked well at all and their proposed program of Economic amelioration of the effects of Coronavirus (note they don’t care if you live or die as long as you do it quickly and cheaply) is not just cruel in being an open attack on Social Security, Medicare, and Medicaid (Who is the exposed population at most risk? Old Republican White Guys? Silver Lining!) but is utterly ineffective. Payroll Taxes? People got no jobs. That $7.25 at MickyDs looking really attractive now. You know, I’ve always wanted to be a WalMart Greeter, I’m friendly, I’m a nice guy.
There are worse jobs.
Even Laffer couldn’t make sense of it, well, unless your goal is to take large chunks of money and throw them at Oil companies (whom, not for nothing, we already subsidize to the tune of Trillions).
Which brings us to the other indicator, Oil Futures.
The House of Saud is already kicking back $6 on every $32 Barrel for April delivery which makes the effective price of Light and Sweet $26. Russia says it is prepared to pump indefinitely at prices below $20. The truth is neither one of them can actually do that. House Aramco is trading below IPO and Russia…
Russia has a GDP $400 Billion smaller than Texas and they’re not even a particularly large State compared to California. Now if you were competing on the basis of square miles of empty wasteland then Rodina would have the inside track for sure.
But the point is that they both want to make Fracking unprofitable and if it were Huawei offering Solar Powered Commie Spy Machines that would handle your House, and the Grow Lights and Well for your CDB Personal Use Only Hemp Farm, and all your portable crap, and your Tesla, I would be so down with that even though I think Elon Musk is an idiot.
Sadly no. They want you to keep consuming at Planet dooming rates (I mean, if Corona don’t kill you first) particularly Russia which has long term contracts with China pushing exactly the same kind of sticky toxin barely suitable for paving roads that make a house in Medicine Hat, Alberta such an unattractive prospect even if it’s free.
Both see a declining share of a dwindling pool and their solution (and I’m not implying some kind of urine soaked tinfoil collusion because we know Statesmen never behave that way) is to drive U.S. Frackers out of business.
Truth is they’re not in a good position and they have only themselves to blame, most are leveraged up the wazoo and the operating costs of selling at a loss are going to have them looking at debt service sooner than later.
Thing is, money is free. 30 Year Ts at .5%. So you re-fi and cap and hope when the Market comes back the skilled workers you fired didn’t forget or find better jobs. Oil in the ground is an asset, you can trade it for other stuff at a discount if you have to.
But the likelihood is WalMart Nation for the foreseeable future and how much of that? It’s now high risk in addition to low pay and no Health Insurance. Forget Tailgating, games on TV. GrubHub and Amazon. You’ll be forced to deal with those annoying replacement humans. I predict a rise in Witch Burnings and Blue Green Riots (Constantinople during the Julian Plague).
Late stage Neo Liberal Capitalism has collapsed. I suggest Wienies and S’mores.