10 Signs The US Is Heading For A Depression

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10 Signs The US Is Heading For A Depression

Authored by Mike Whitney via The Unz Review,

1– Unemployment is off-the-charts

Thursday’s jobless claims leave no doubt that the country is in the grips of another severe recession. More than 6.6 million Americans filed for unemployment insurance in the last week. That number exceeds the gloomiest prediction of more than 40

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economists and pushes the two-week total to an eye-watering 10 million claims.

According to CNBC:

“Those at the lower end of the wage scale have been especially hard-hit during a crisis that has seen businesses either cut staff outright or at best freeze any new hiring until there’s more visibility about how efforts to contain the coronavirus will work.

“We’ve lived through the recession and 9/11. What we’re seeing with this decline is actually worse than both of those events,” said Irina Novoselsky, CEO of online jobs marketplace CareerBuilder.” (CNBC)

According to New York Magazine:

“Economists at the Federal Reserve Bank of St. Louisprojected Monday that job losses from the coronavirus recession would reach 47 million and push America’s unemployment rate to 32.1 percent — more than 7 points higher than its Great Depression–era peak.”

2– Service Sector has been walloped by the virus

Services account for 70% of the US economy, but presently the sector is in meltdown. According to the analysts at Wolf Street: “Employment contracted sharply and hours were reduced for those still employed. “The employment index plunged from +6.1 to -23.8, also the lowest level on record...

Retailers got whacked. The Retail Sales Index of the Texas Retail Outlook Survey collapsed from the already beaten-down level of -2.5 in February to an epic all-time low of -82.6 in March… (Also) the general business activity index collapsed from the beaten down level of -5.0 to a historic low of -84.2...

Comments from retail executives were somber:… “Most of our business has gone to zero except for essential locations such as hospitals, military bases and prisons… We are contemplating at this moment sending most employees home while our owners determine whether they can afford to pay reduced salaries and cover benefits for a short period while we see if things improve or worsen” (Wolf Street)

3– Economic carnage extends across sectors

Business Insider: “Recession risks are rising as coronavirus spreads around the world…The crisis will clobber airlines, shipping, hotels, and restaurants...

“Sectors reliant on trade and the free movement of people are most exposed,” said Benjamin Nelson, a Moody’s vice president and co-author of the report.

Carmakers, gaming, and retail will be hit hard by supply chain disruptions, the analysts said...

“A lengthy outbreak would affect economic activity for longer, leading to heightened recessionary dynamics and a more significant demand shock,” Moody’s said. “A sustained pullback in consumption would hurt corporate earnings, prompt layoffs, and weigh on consumer sentiment.”(Business Insider)

Car sales have also dropped dramatically in the last two weeks. On Wednesday,Hyundai reported that sales had seen a decline of 43 percent for March compared to the same period in 2019. That’s a drop from 61,177 vehicles in March 2019 to just 35,118 during the same month in 2020. All other car manufacturers are experiencing similar weakness in demand.

4– The Bloodbath on Wall Street continues

U.S. shares sold off again on Wednesday for the third time in four days wiping out most of last week’s bear market rally. The SandP 500 dipped 114 points while the Dow Jones lopped-off nearly 973 points by the end of the session. Analysts now believe that last week’s 20% surge was a temporary reaction to Trump’s multi-trillion dollar fiscal plan. By a 9 to 1 margin, investors are now betting that stocks have further to fall.

“Investor pessimism today is as bad as it has been,” said Dennis DeBusschere of Evercore ISI. “All estimates of when this will end are being pushed out…”

Before the outbreak of the virus, traders believed that low rates, liquidity injections and easy credit would keep stocks on a permanent upward trajectory. But the daily deluge of bad news coupled with an economy that is in freefall has undermined confidence in the Central Bank sending stocks into a tailspin. The Dow closed Wednesday at 20,943, which is three times higher than its March 9, 2009 low of 6,547. Stocks still have further to fall.

5– Struggling consumers can no longer carry the US economy

An article at The Medium explains how the composition of the workforce has changed since the 2008 financial crisis. Gig workers make up are a significant part of the workforce, but they do not have the protections or benefits of most wage earners. These independent contractors will impacted the most by the sudden downturn in the economy. Their ability to consume will also weaken the post-crisis recovery and lead to slower growth. Check out this short excerpt from A crippling collapse in consumer spending is coming:

“From restaurant workers, caterers, and Uber drivers to office and hotel cleaning staff to event venue staff to people supplementing earnings with AirBnB revenue, income is cratering across the country for hourly and gig workers. And most have little to no financial cushion...

Thirty-six percent of U.S. workers are now involved in the gig economy…. Most gig and hourly workers are walking a financial tightrope. They will not be able to afford even a short-term hit to their earnings. It will mean a further spike in auto loan and credit-card delinquencies. It will mean a spike in healthcare-driven bankruptcies. It will mean unpaid rent. And it will mean consumer spending will plummet…. A sudden shock to gig and hourly-worker earnings will have seismic implications for the economic and political future of the US...

More than 15.5 million Americans work in restaurants. Of those workers, roughly 3 million live in poverty….Unpaid rent will eventually lead to landlord defaults… Consumer spending now accounts for roughly 70% of the U.S. economy. Reportedly, government stimulus may not reach consumers until the end of April. Gig and hourly workers need help now.” (“A crippling collapse in consumer spending is coming”, The Medium)

How many of these gig workers will fall through the cracks, lose their apartments or rental units, and wind up on the streets, homeless and destitute?

6– Americans continue to stockpile food

According to the Wall Street Journal: “In the past two weeks, Americans have hoarded food as restaurants close their dining rooms and more are told to stay home from work and school. General Mills, which makes Cheerios cereal, Yoplait yogurt and Progresso soup, on Wednesday said retailers in North America and Europe are purchasing more of its products and its factories are running at near capacity to meet the demand...(WSJ)

"Consumers across the globe are still loading their pantries — and the economic fallout from the virus is just starting...

“You could see wartime rationing, price controls and domestic stockpiling,” said Ann Berg, an independent consultant and veteran agricultural trader.” (Bloomberg)

CNBC: “Psychologists ..weigh in on why our brains push us to panic buy — even when authorities are assuring the public there’s no need to. According to Paul Marsden, a consumer psychologist at the University of the Arts London,…

“It’s about ‘taking back control’ in a world where you feel out of control…When people are stressed their reason is hampered, so they look at what other people are doing. If others are stockpiling it leads you to engage in the same behavior. People see photos of empty shelves and regardless of whether it’s rational it sends a signal to them that it’s the thing to do….” (CNBC)

7– Most Americans have no savings

From Yahoo Finance:

Saving money continues to be a challenge for Americans...

Since 2015, GOBankingRates has asked Americans how much they have in savings. Each year, the survey results have shown that a majority of adults don’t even have $1,000 in a savings account...

This year, GOBankingRates asked more than 5,000 adults, “How much money do you have saved in your savings account?” Respondents could choose from one of seven options:

The survey found that 58 percent of respondents had less than $1,000 saved.

“It’s always concerning when a large part of the population is seemingly living paycheck to paycheck because when unexpected personal or financial hardships occur, it can be challenging to recover without adequate savings,” Jason Thacker, head of consumer deposits and payments at TD Bank, said.” (“58% of Americans Have Less Than $1,000 in Savings, Survey Finds”, Yahoo Finance)

8– Household debt is at an all-time high

From CNBC: “Household debt surged in 2019, marking the biggest annual increase since just before the financial crisis, according to the New York Federal Reserve.

Total household debt balances rose by $601 billion last year, topping $14 trillion for the first time, according to a new report by the Fed branch. The last time the growth was that large was 2007, when household debt rose by just over $1 trillion...

“The data also show that transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers,” Wilbert Van Der Klaauw, senior vice president at the New York Fed, said in a statement.” (“Household debt jumps the most in 12 years, Federal Reserve report says”, CNBC)

9 — Many businesses might not survive long enough to get stimulus

Many businesses shut their doors either for a lack of customers or on orders from state or local governments as emergency declarations began rolling across the country in mid-March,. Yet it could be weeks more before the business loans, bigger unemployment checks and direct payments to individuals from the stimulus plan flow into the economy.

Small businesses account for almost half of U.S. private employment. A complete collapse of even some of those enterprises not only would dash the dreams of entrepreneurs and threaten the livelihoods of many, it risks sapping the power of an eventual economic rebound as the financial distress ripples through to landlords, vendors and lenders.

Already, 50,000 retail stores have shut in just over a week across the country, putting more than 600,000 workers on furlough, according to data compiled by Bloomberg.

The National Federation of Independent Business, had a record 13,000 people register for a webinar it hosted Monday on the stimulus plan and financial resources….After the webinar ended, more than 900 emails flooded in, she said, with business owners asking: “Am I going to have anything left? Will I be evicted? Will I have to file for bankruptcy? Will I be able to reopen?”

“The emails almost make me want to cry,” Milito added. “What I’m hearing from members is fear, uncertainty and almost heartbreak.” (“Stimulus May Come Too Late for U.S. Businesses Already Stretched”, Bloomberg)

10– Food banks are seeing a sudden, sharp rise in demand

This is from Newsday:

“Emergency food programs are bracing for a wave of new recipients in the coming weeks as more Long Islanders are expected to lose their jobs, get furloughed or have work hours and wages reduced. At the same time, volunteers — many of them at high risk of contracting the virus — are staying home to protect themselves and needy people from getting sick.

Compounding the problem is a crippled national supply chain that delays food deliveries by weeks.

“It’s a perfect storm of tragedy on top of each other,” said Jean Kelly, executive director of the Interfaith Nutrition Network, a Hempstead soup kitchen. “Everything that could go wrong is going wrong.”

Soup kitchens and pantries in many communities closed temporarily in recent weeks to protect volunteers or because sponsoring agencies, such as houses of worship and nonprofits, also shut their doors.

“The reason they’re closed is they don’t really have an infrastructure of people to work there….The majority of the food pantries are operated by volunteers. The average age is in their 70s. They’re fearful of contracting the coronavirus.” (“Demand at LI food pantries rise as volunteers and food supplies fall”, Newsday)

Final Note from an article titled: “Americans Are Worried About The Coronavirus. They’re Even More Worried About The Economy”

“An overwhelming majority of Americans are really concerned about the economy. … A Morning Consult poll conducted between March 20 and March 22 found that 90 percent of Americans said they were “very” or “somewhat” concerned that the coronavirus would impact the economy…Americans are also worried about job security — 49 percent said they were worried about losing their job, according to an Economist/YouGov survey conducted between March 22 and March 24.” (FiveThirtyEight)

Not surprisingly, some polls suggest that “more Americans are worried about the effect of the coronavirus on the economy than about their own health.”

I would include myself in that group, which is why I hope that President Trump expands his economics team by adding more experienced, top-notch economists who can help him navigate this unprecedented and potentially-catastrophic crisis. This isn’t the time for the B Team (Kudlow, Mnuchin) to making decisions that will impact the entire country.

Tyler Durden

Thu, 04/02/2020 - 18:45

Futures Tumble As Best Rally Since Great Depression Crumbles

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Futures Tumble As Best Rally Since Great Depression Crumbles

The market moves are coming fast and furious now, and after plunging 36% from its all time highs about a month ago, stocks staged a furious rebound, rising 20% in just the past four days and entering a new bull market, with the return in just the past 3 days a stunning 18%. The last time stocks were up so much, so fast? In 1931... the depths of the great depression.

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But the euphoria is fading fast as the US becomes the new epicenter of the coronavirus, surpassing China, and after surging in the last 10 minutes of trading on Tuesday following a near record $7BN MOC amid a flood of pension rebalancing, futures have slumped and are down almost 3%, with Europe's Stoxx 600 down over 3%, and the UK's FTSE 100 down 4.1%, the drop accelerating following news that Boris Johnson tested positive for the coronavirus.

The drop takes place as debate on the fiscal stimulus bill aimed at flooding the country with cash in a bid to counter the economic impact of the intensifying coronavirus outbreak, is scheduled to start in the U.S. House of Representatives later on Friday.

On Thursday, the United States became the country with the most coronavirus cases, surpassing even China, where the flu-like illness first emerged late last year. Policymakers may need to offer more stimulus as the virus slams the brakes on economic activity and increases healthcare spending.

“I’m not sure what measures are left, but the reaction in stocks shows some people hoping for more stimulus thought the market was a little oversold,” said Yukio Ishizuki, FX strategist at Daiwa Securities in Tokyo. “Currencies tell a different story. The dollar is the lead actor. The mad rush to buy dollars due to liquidity concerns is starting to fade.

European stocks also slumped, dropping more than 3% and led lower by banks and real estate shares after the region’s leaders struggled to agree on a concrete strategy to contain the fallout of the pandemic, leaving key details to be ironed out in the coming weeks.

Earlier in the session, Asian stocks gained, led by industrials and utilities, although markets in the region were mixed, with Jakarta Composite and Japan's Topix Index rising, and Australia's S&P/ASX 200 and Taiwan's Taiex Index falling. The Topix gained 4.3%, with Kaneko Seeds and Segue rising the most. The Shanghai Composite Index rose 0.3%, with Guirenniao and Shanghai La Chapelle posting the biggest advances.

The recent surge in risk appetite (which according to Morgan Stanley was just a furious short covering spree) will promptly be tested by the continuing spread of the coronavirus and the crippling effect of business closures. Tokyo is now seeing a surge in cases, while global deaths from the pandemic surpassed 24,000. The Reserve Bank of India on Friday became the latest central bank to step up emergency action to cushion the economic impact.

Meanwhile, traders argue that even with the jump in stocks, sentiment hasn't reversed enough for the rally to be sustainable with the number of companies trading above the 200DMA still at crisis levels.

Leaders of the Group of 20 major economies pledged on Thursday to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus.

In rates, the 10Y yield was about 10bps lower, trading to 0.75%, down from 0.85% overnight: "The market is pricing in a fairly short duration of weakness” for the economy, Priya Misra, global head of rates strategy at TD Securities, said on Bloomberg TV. “A month from now when we realize we are still stuck at home and the data is not looking any better, that is when you can get a further downside move in yields."

In Europe, Italian bonds slid amid German opposition to coronabonds, underperforming euro-area peers which all advanced, as the latest stimulus figures fell short of its peers. BTPs bear-flattened, widening the spread to bunds by 16bps to 174bps; Rome’s latest stimulus figures, which fall short of peers, will have to be self-funded without the backstop of a euro-area bond. Elsewhere, bunds bull-flattened as equities slide, matching Treasury gains. Gilts bull-flatten ahead of next week’s BOE buyback schedule due at 4pm London time. German 10y yield -9bps to -0.45%; bund futures 126 ticks to 172.33; France 10y -8bps to -0.06%; Italy 10y +7bps at 1.30%.

Overnight, India's RBI became the latest bank to slash rates by 75bps to 4.4%; voting 4-2 to cut rates as the reverse repo rate lowered to 4.15%. Governor Das said the move was designed to mitigate effects of the virus, revive growth and preserve financial stability. He added that the RBI's response must involve conventional and unconventional measures. Das noted that inflation was running higher than projections in January and February, and that aggregate demand may weaken, and ease inflation further due to Covid-19. Das also said projections for growth and inflation will be dependent on how Covid progresses; he noted that uncertainties in the outlook and explained that is why the MPC has refrained from providing growth and inflation forecasts. Das also announced targeted long-term repo operations, offering up to INR 1trln.

In FX, the Bloomberg Dollar Spot Index headed for its biggest five-day drop on record, even as the gauge was set to gain for Friday’s session and appeared to be reversing upward, inversely proportional to risk sentiment. Traders pointed to a confluence of reasons, ranging from less stress in funding markets, the repatriation of funds as the quarter ends and the worsening coronavirus outbreak in the U.S. The dollar reversed Asia-session losses and advanced versus most Group-of-10 peers as month- and quarter-end flows came into play; the greenback traded around 1.10 per euro while the Norwegian krone led declines, slipping by almost 1%; 

Elsewhere, Norway’s krone was set for its biggest weekly advance versus the U.S. dollar on record.The Yen rose on strong demand from Japanese exporters ahead of the country’s fiscal year end on March 31. The Aussie was set for the biggest weekly gain since 2011 as U.S. dollar weakness spurred early month-end hedging from exporters and momentum buying from investors.

To the day ahead now, and data releases out include personal income and personal spending data for February, along with that month’s PCE core deflator. The US will also see the final University of Michigan sentiment reading for March, and over in Washington, the House of Representatives are scheduled to vote on the coronavirus rescue package.

Market Snapshot

  • S&P 500 futures down 1.5% to 2,569.75

  • STOXX Europe 600 down 1.9% to 315.34

  • MXAP up 1.7% to 137.67

  • MXAPJ down 0.06% to 432.76

  • Nikkei up 3.9% to 19,389.43

  • Topix up 4.3% to 1,459.49

  • Hang Seng Index up 0.6% to 23,484.28

  • Shanghai Composite up 0.3% to 2,772.20

  • Sensex up 0.3% to 30,040.00

  • Australia S&P/ASX 200 down 5.3% to 4,842.43

  • Kospi up 1.9% to 1,717.73

  • German 10Y yield fell 6.5 bps to -0.426%

  • Euro down 0.09% to $1.1022

  • Italian 10Y yield fell 31.5 bps to 1.057%

  • Spanish 10Y yield fell 4.5 bps to 0.524%

  • Brent futures down 0.3% to $26.25/bbl

  • Gold spot down 0.7% to $1,619.67

  • U.S. Dollar Index up 0.2% to 99.50

Top Overnight News

  • U.S. President Donald Trump and China’s Xi Jinping pledged in a phone call to cooperate in the fight against the coronavirus pandemic, signaling a fresh detente between the two countries after weeks of rising tensions

  • President Donald Trump offered a plan to restore normal business by ranking counties by their virus risk. China seals borders to most foreigners starting Saturday

  • European leaders struggled to agree on a concrete strategy to contain the fallout from the deadly coronavirus, leaving key details to be hammered out in the weeks ahead

  • Treasury Secretary Steven Mnuchin reiterated that he wants U.S. financial markets to remain open even as the coronavirus fuels wild volatility, while adding that he’s focused on helping mortgage firms expected to be hit hard by the pandemic’s spreading economic pain

  • Oil was buoyed by a wider risk rally driven by monetary and fiscal responses to the coronavirus to head for its first weekly gain in five, despite a continued deterioration in demand

  • S&P Global Ratings cut its sovereign credit score for Mexico by one notch to BBB, saying shocks from the spread of coronavirus and an oil price rout will harm the country’s already grim economic outlook

  • The Federal Reserves dollar swap lines were tapped for more than $206 billion by other central banks as of March 25, while Europe and Japan took another $100 billion in three-month operations which settled March 26. This helped to cool cross-currency basis markets, one of the key borrowing channels

Major APAC indices initially took their cues from Wall Street, rising firmly at the open, amid optimism that policymakers will continue to roll-out stimulus measures to guard economies against covid-induced downside. However, as the European day comes into focus, the picture is mixed, as Aussie shares turned negative, and other bourses off highs. US indices finished up around 6%, with the Dow seeing its strongest three day run since 1931 and re-entering a bull-market, while the S&P had its best three-day performance since 1933. Gains were led by defensive sectors (utilities, telecoms, health care). Equities shrugged-off the highest weekly jobless claims print on record. Some desks also noted that month/quarter-end rebalancing will see 850bln of flows into equities. US equity futures opened firmer, though subsequently gave up gains, and are trading lower, albeit off worst levels. ASX 200 (-5.3%) was led lower by its heavyweight financial and mining sectors, while the Nikkei 225 (+3.8%) shrugged off a firmer JPY, with some optimism in the country emanating from Japanese Economy Minister Nishimura who stated that there was no need to declare a state of emergency over the outbreak. Elsewhere, Hang Seng (+0.6%) and Shanghai Comp. (+0.3%) remained in positive territory and were buoyed by increased efforts from Chinese officials to stem a substantial second wave of the virus in the country, with reports yesterday noting that airport tests will be ramped up for people arriving from abroad.

Top Asian News

  • The Second Virus Shockwave Is Hitting China’s Factories Already

  • WeDoctor Mandates Banks for $1b Hong Kong IPO, IFR Reports

  • A Grocery Tycoon Races to Keep India Fed and His Company Afloat

  • India’s RBI Unleashes $50 Billion of Liquidity, Slashes Rate

  • Fearing Next Wave, China Doesn’t Want Its Diaspora Coming Back

A downbeat session thus far for European equities (Euro Stoxx 50 -3.3%) as the bourses look set to snap its three-day rally heading into another risky virus-focused weekend. US equity futures follow suit from Europe with losses currently tallying to around 2% per index – with eyes State-side on the virus bill which is poised to make its passage through the House later today. Back to Europe, UK’s FTSE 100 (-3.9%) underperforms the region with a number of its stocks at the foot of the Stoxx 600 index as caution arises from the prospect of delayed UK/EU FTA negotiations, despite the already-tight schedule – whilst housing and banks names also see headwinds from the UK govt calling for the halt of home purchases/sales.  Meanwhile, Italy’s FTSE MIB (-2.3%) continues to feel some support from the ECB dismissing the 33% issuer limit for its emergency program purchases. European sectors reside largely in the red but reflect risk aversion, whilst underperformance is seen in the Energy sector on account of the downside in Brent prices. The sector breakdown meanwhile sees Travel & Leisure pressured on the ongoing virus-induced demand woes for the sector. Looking at individual movers, ProsiebentSat1 (+7.0%) sees upside amid the immediate resignation of its CEO, and with potential tailwinds from work-from-home flows. LafargeHolcim (-3.5%) and Safran (-2.3%) shares are pressured after the Cos withdrew their respective FY targets.

Top European News

  • Europe Bonds Get $340 Billion Orders as Cheap Prices Allay Virus

  • ProSieben Jumps After Ousting CEO To Restore Focus on German TV

  • Domino’s Pizza to Suspend Final Dividend; Deliveries Accelerate

  • Merkel Pleads With Germans for Patience on Lockdown Measures

  • Housebuilders Slump as U.K. Government Urges Suspending Deals

In FX, the Greenback has regained an element of composure after yesterday’s slide and extended losses across the board, with some analysts suggesting that the DXY eventually found technical respite in the form of Fib support around 98.840 and others noting that the index is correlating quite well with moves in the VIX. Both theories appear credible and are backed up by price developments given the DXY’s subsequent recovery to 99.500+ and the so called fear gauge climbing to 67 from around 61 at settlement on Thursday. Certainly, traditional fundamentals and data do not seem to be driving sentiment or direction as the focus remains firmly on COVID-19 amidst the backdrop of swings in global stock markets and risk assets vs safe-havens.

  • JPY/GBP/AUD - Bucking the overall trend, or resisting the broad Dollar revival to be more precise, as the Yen retains its renowned safe-haven allure above 109.00, while Sterling appears to have formed another higher platform on the 1.2100 handle to probe above 1.2300 and match a key chart resistance level (50% retracement of reversal from 1.3200 to 1.1412), albeit with the aid of Eur/Gbp tailwinds as the cross recoils from almost 0.9100 to sub-0.9000, with month/quarter end positioning cited on top of possible official Pound buying interest. Elsewhere, the Aussie is holding up relatively well and again month-end demand has been touted alongside exporter bids, leverage stops and momentum accounts joining the break of 0.6100 to the overnight highs.

  • CAD/EUR/NZD/CHF - The Loonie is underperforming after failing to sustain momentum through 1.4000 and record low Canadian crude prices may be weighing along with contagion from the coronavirus after the huge spike in US weekly claims that is expected to be evident in domestic data given reports that 500k people applied for benefits last week. Similarly, the Euro topped out ahead of 1.1100 and is waning on the ongoing spread of pandemic cases and fatalities across the common currency community, with particular focus on Italy and Spain. However, decent option expiries at the 1.1000 strike (1 bn) may provide a buffer for Eur/Usd. In contrast, the Franc and Kiwi are both rangebound within 0.9645-0.9587 and 0.6126-0.5921 respective bands.

  • EM - Broad retracements as the Usd consolidates off its lows, but the Zar also conceding ground in the run up to Moody’s SA ratings review that could well see the sovereign lose its last non-junk standing. Note also, the Rand has been ruffled by the first COVID-19 deaths as the country starts a 3 week lockdown.

In commodities, WTI and Brent front-month futures see divergence, with outperformance seen in the former after yesterday’s -7.7% settlement, whilst ICE Brent closed lower by around 4% yesterday. Today’s narrowing in spread seems to be more of a consolidation of the prior session’s widening – which emanated from reports that the US Department of Energy suspended its SPR refill after the DoE failed to secure funding. ING notes that “The US government was keen to fill up the SPR in a bid to help domestic producers, however, news of the suspension has weighed heavily on WT.” Meanwhile, on the OPEC front, the Algerian Oil minister has called for an extraordinary meeting of the OPEC economic panel to assess current conditions and immediate prospects of the oil market, whilst Russia noted that its oil output could decline by 1.5mln BPD this year if prices meander around USD 30-35/bbl – levels above current oil prices, although communication with OPEC+ members remain. Desks note that production cuts needed to counter the sharp decline in demand would be too much for OPEC+ producers to cope with. WTI futures pulled back from ~USD 23/bbl whilst its Brent counterpart treads water just under USD 26/bbl. Elsewhere, spot gold remains lacklustre above USD 1600/oz as the Dollar recoups some of yesterday’s losses. Copper meanwhile remained largely uneventful around USD 2.2/lb following a mixed APAC session.

US Event Calendar

  • 8:30am: Personal Spending, est. 0.2%, prior 0.2%

  • 8:30am: Personal Income, est. 0.4%, prior 0.6%

  • 8:30am: Real Personal Spending, est. 0.2%, prior 0.1%

  • 8:30am: PCE Deflator MoM, est. 0.1%, prior 0.1%; PCE Deflator YoY, est. 1.7%, prior 1.7%

  • 10am: U. of Mich. Sentiment, est. 90, prior 95.9; Current Conditions, est. 106, prior 112.5; Expectations, est. 77, prior 85.3

  • 10am: U. of Mich. 1 Yr Inflation, prior 2.3%; 5-10 Yr Inflation, prior 2.3%

DB's Jim Reid concludes the overnight wrap

So the second week of working from home comes to an end, and to be honest it’s flown by and I haven’t noticed that I’ve hardly left the perimeter of my house. We’ve been on self-isolation for a week as all three children now have coughs and a slight fever. As a result of the isolation, my wife, who is far more sociable than me, is struggling as she is only interacting with a 4 year old, two terrible two-year old twins and a dog! At least I have numerous conference calls. I pop down for food and drink occasionally and she usually appears frazzled. Thankfully the new trampoline arrived yesterday and my job is to erect it tomorrow. I think this might be even more stressful than the last two weeks as it’s in lots of boxes and when built extends to 16 foot. I’m not sure what’s more likely by Monday, an injury from erecting it or from bouncing on it.

Staying with the remarkable times we operate in, at the start of 2020 if you’d had pulled up a chart of US weekly jobless claims through history (data back to 1967) and seen that we were at around 200k with the highest ever being 695k back in 1982, I wonder what event you would have thought had to happen for there to be a weekly print of 3.28 million less than three months later. All answers welcome! This number yesterday was a more than ten-fold increase on the previous week’s revised 282k reading. We cannot stress enough how unprecedented numbers like this in a single week are. Even in the financial crisis, the peak week in March 2009 was at 665k.

Looking at the state-by-state data, the 2 states that saw the biggest increase in claims were Pennsylvania and Ohio, with a surge of 363k and 181k respectively compared with the prior week. Both are states in the US rust belt and are traditionally swing states in presidential campaigns. Indeed Pennsylvania, where there was the biggest increase in claims, was won by President Trump in 2016 by a margin of less than 1 percentage point. So the fact that they’re seeing the biggest increases in the country is certainly not something that’ll be welcomed by his campaign. Our economist’s previous work has found that jobless claims are the single best real-time indicator of recession (see "Jobless claims claim title for best recession indicator"), so this rise leaves no doubt that the US economy is currently in the midst of a recession. Consistent with the sharp rise in claims, their summary index of these high-frequency indicators has essentially gone into free fall indicating data which is about twelve standard deviations worse than average and consistent with -4% year-over-year GDP growth. This is worse than any readings during the financial crisis.

Given yesterday’s numbers, it was no surprise that Fed Chair Powell said in an interview on NBC’s Today show (a non-business channel) that the US “may well be in a recession”. His address was aimed at Main Street and he added that “When it comes to this lending we’re not going to run out of ammunition.”

Speaking of economic support, the House of Representatives are scheduled to vote on the $2 trillion coronavirus rescue plan today. In a Bloomberg TV interview yesterday, Speaker Nancy Pelosi said that she had “no doubts whatsoever” the package would pass today, which would set up the bill to go to President Trump’s desk for signature. However, overnight, House leader Hoyer has suggested that the legislature may not pass today by voice vote and instead the house could pass the bill by a Roll Call vote but will need quorum for that of typically 218 members. This is a potential thorn which we highlighted yesterday that can result in delaying the passage of bill. Futures on the S&P 500 are trading down -1.69% this morning.

With financial markets hopeful on the prospects for stimulus, global equities moved higher for a third straight day, a phrase that we haven’t said for a while (since February 12th in fact, according to the MSCI all-world index), with the S&P 500 up a further +6.24%. The index’s latest advance means it’s up over 17% from its closing low on Monday. The large gain adds to the run where 16 out of the 19 sessions so far this month have seen the S&P move by at least 2% in either direction. The Dow Jones hit a remarkable milestone of its own yesterday, after its +6.38% advance left the index +21.30% above its Monday low and in technical “bull market” territory!!! European equities also advanced on the day, with the STOXX 600 up +2.55% and nearly +15% since Monday, with every sector gaining on the day led by the most beaten up sector of late namely Travel and Leisure – up +7.47% on the day.

This morning Asian markets are a mixed bag with the Nikkei (+1.95%), Hang Seng (+1.21%) and Shanghai Comp (+1.41%) up while the Kospi is little changed and ASX (-5.30%) is down. In FX, the US dollar index (-0.36%) is on course for its fifth daily decline while in commodities, Brent crude oil is up +0.84%. As for overnight data releases China’s Jan-Feb industrial profits came in at -38.3% yoy, the lowest on record.

In other news, The Reserve Bank of India became the latest central bank overnight to cut rates as it lowered the key lending rate by 75bps to 4.40% from 5.15%. The central bank also reduced the reverse repo rate, the rate at which banks park funds with the RBI, by 90bps to 4% in order to incentivize lending by the banks. Elsewhere, S&P cut Mexico’s credit rating by one notch to BBB, saying shocks from the spread of coronavirus and an oil price rout will harm the country’s already grim economic outlook. The Mexican peso is down -1.23% this morning to 23.2305.

Back yesterday where sovereign debt also rallied strongly, with European sovereign bonds in particular gaining as a result of the ECB news that the limits on buying more than a third of a country’s bonds would not apply to their pandemic emergency purchase programme in certain conditions. For more details on this news see our rates team’s publication from last night here. Spreads narrowed in response, with the Italian 10yr spread over bunds down by -21.8bps to a 3-week low, while Spanish (-20.5bps) and Portuguese (-23.9bps) spreads also saw significant reductions. The biggest outperformer was Greece however, with the spread there falling by a massive -61.4bps. US Treasuries advanced as well, with 10yr yields down by -2.3bps (and a further -4.8bps this morning). Credit continued to rally with US HY cash spreads tightening -82bps, while IG tightened -21bps and Europe HY cash tightened -31bps although IG was flat.

Staying with credit, with all the big announcements of central bank support and fiscal stimulus packages over the last couple of weeks, all eyes in the credit world have been on corporate bond funds, hoping that their recent heavy outflows would finally stop. After the latest weekly fund flow data release overnight, we have published the report “Corporate Bond Fund Outflows Go On But More Slowly” which provide an update and commentary on the latest flows. It also attempts to explain some vastly different headline numbers on US IG corporate bond fund outflows based on data from different providers. You can download the report here.

Moving on. Although the ECB news was a positive, the EU leaders‘ summit late last night didn’t appear to be. A 2-hour scheduled meeting lasted 6 hours with no clear plan for a joint EU response to the crisis. There was no mention of the ESM in the communique which hints at Italy refusing to accept the conditionality this would bring. Italy believes that the virus is a common problem and can’t accept conditionality - which is a legal necessity. In addition “Coronabonds” seem to have hit an early dead end even as nine EU member states (including France, Italy and Spain) had earlier jointly written to the head of the EC requesting for it to be considered. The Eurogroup now has two weeks to come up with alternative proposals. It seems the age old problem for Europe has struck again. The more the ECB do, the less pressure there is on Governments to burden share. In fact the emergency ECB bazooka deployed last week probably helped cause the impasse.

Earlier and across the Channel, the Bank of England also announced their latest rate decision yesterday, voting unanimously to keep rates on hold at 0.1%, in line with expectations. To be honest though, the main BoE action already happened earlier in the month after the two emergency rate cuts saw rates lowered by 65bps in total, as well as the announcement of a further £200bn in QE. A notable line from the monetary policy summary released by the BoE was that “there is a risk of longer-term damage to the economy, especially if there are business failures on a large scale or significant increases in unemployment.” In terms of policy looking forward, there was also the line in the minutes that “If needed, the MPC could expand asset purchases further”, as well as the fact that the MPC “stood ready to respond further as necessary to guard against an unwarranted tightening in financial conditions, and support the economy.”

Turning to yesterday’s other data releases, in France the INSEE’s business confidence measure fell to by 10 points to 95 in March (vs. 97 expected), which was a 5-year low for the reading and the largest monthly decline since the series began. Meanwhile the Kansas City Fed’s manufacturing index in March fell to -17 (vs. -10 expected), which was the lowest reading since April 2009. Other data was more backward looking, with UK retail sales falling by -0.3% mom in February (vs. +0.2% expected). The effect of the coronavirus wasn’t generally visible at that point, though the ONS did remark that “a small number of retailers suggested that online orders shipped from China were reduced because of the impact of COVID-19.” The third reading of Q4 2019’s GDP growth in the US was also confirmed at an annualised 2.1%, unchanged from the second estimate.

To the day ahead now, and data releases out include French and Italian consumer confidence for March, while from the US there’s personal income and personal spending data for February, along with that month’s PCE core deflator. The US will also see the final University of Michigan sentiment reading for March, and over in Washington, the House of Representatives are scheduled to vote on the coronavirus rescue package.

Tyler Durden

Fri, 03/27/2020 - 08:09

Trump Warns Suicides From The Coming Economic Depression Will Far Surpass Those From The Virus

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Trump Warns Suicides From The Coming Economic Depression Will Far Surpass Those From The Virus

Authored by Mac Slavo via SHTFplan.com,

Social distancing rules may be relaxed sometime soon to prevent “tremendous death” from the economic depression that could end up worse than the coronavirus itself, President Donald Trump said.  But even a few more weeks of closures will almost certainly usher in an economic depression a

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nd the suicides that come with it.

The 2008 Great Recession resulted in more than 10,000 suicides.  If the economy is “closed for business” much longer, that number could be dwarfed by the number of people who can no longer survive without a livelihood.

People get tremendous anxiety and depression and you have suicide over things like this, when you have a terrible economy, you have death,” President Donald Trump said Monday at the White House daily press briefing according to a report by RT. 

Trump added that those suicides would “definitely be in far greater numbers than we’re talking about with regard to the virus.”

At this point, we are simply swapping some deaths or others.  The bottom line is that people don’t have lives if they don’t have livelihoods and the chance to live out their dreams in freedom. Trump did say that all of the lockdowns will “end very soon.”  Some reports show, however, that it could be Easter before the government allows us to have our illusion of freedom back.

Meanwhile, a record 3.3 million people filed for initial jobless claims last week...

“This was a medical problem, we’re not going to let it turn into a long-lasting financial problem,” he added, urging Congress to pass the $2 trillion stimulus bill urgently and without partisan politicking, as workers and employees across the U.S. were hurting from lockdowns and quarantines.  Although this is already a financial problem for many, as many of the businesses that closed during the lockdown will never reopen, their owners and employees losing their livelihoods for the foreseeable future.  That’s hardly a solution. The U.S. economy was not meant to shut down, and the longer it is, the greater the impact will be.

Trump said the administration’s thinking had evolved due to receiving better numbers on the mortality rate from COVID-19, which was initially thought to be at five percent, but now seems to be much lower, below one percent.

Trump added that he was not considering further travel bans, whether on entry into the U.S. or on moving between the states. He also noted that even when things get back to a semblance of normalcy, there would be tradeoffs in behavior after “the invisible scourge of the virus is gone.

Tyler Durden

Thu, 03/26/2020 - 08:55

"Greatest Depression Has Already Started", Celente Warns

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"Greatest Depression Has Already Started", Celente Warns

Via Greg Hunter’s USAWatchdog.com,

Gerald Celente, a top trends researcher and Publisher of The Trends Journal, says the world is already in an economic depression.

Celente explains, “Never in the history of the world has the whole world, or most of the world, been shut down by politicians destroying people’s lives and thei

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r businesses..."

"People are going to go bankrupt. You are going to see suicide rates increase. You are going to see crime escalate and people OD’ing on drugs because of depression...

Our leaders are totally closing down the economy. Again, this has never been done before. It’s not only Wall Street going down, Main Street went down simultaneously. That is unprecedented. Usually, the markets go down and then the ripple effects start hitting Main Street. This time–boom, they are both down...

It’s going to be worse than the Great Depression. It’s going to be the Greatest Depression.”

What’s the biggest problem the economy faces? Celente says,

The debt levels are phenomenal. We have more than $250 trillion of global debt and all the personal debt. How are you going to pay the credit card debt? How about paying the student debt, car loans and the mortgages? What about the electric bill, phone bill and people are out of work because my governor said I should stay home?”

The next play by global governments is to get rid of cash because it carries germs like the coronavirus. Celente says,

“We are going to go from ‘Dirty Cash to Digital Trash,’ which is also the title of the current Trends Journal. They’ve got people freaked out. They are going to give us digital trash. That’s what they are doing. They are going to get rid of the currencies that you have.”

After talk of trillions of dollars in new stimulus from Congress this week, what about gold prices? Celente says,

“You saw how much the markets went up. How about gold prices? It bounced back $200 per ounce since Friday... The smart money is seeing the fake money being printed, and they are going into gold.

Now hear this. Just like the crummy, slimy politicians going after your Constitutional rights and Bill of Rights, they are going to go after your gold. They did it in the last Great Depression, and they are going to do it in the Greatest Depression. You mark my words.”

In closing, Celente says, “I agree with Trump 100% because I have been saying this since the beginning that the cure is going to be worse than the disease..."

"They are destroying the global economy. They are destroying people’s lives. We are going to see crime levels that are unimaginable. Why do you think people are going out and getting guns? Then you are going to see these liberals talking about gun confiscation. Crime is going to escalate, and deaths are going to go through the roof. When people lose everything and have nothing left to lose, they lose it. You are going to see gangs like never before. On the other end, the open borders issue, that is a closed story. They are closing borders all over the world. So, you are not going to hear people say let them in, let them in–that’s over. I agree with Trump. We should go back to business as usual.”

On Trump winning a second term this November, Celente, who calls himself a “political atheist,” says, “It’s a wild card, but I would still go with Trump at this point.”

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Gerald Celente, Publisher of The Trends Journal, as he gives his top trends and predictions for the virus crisis, the Greatest Depression, gold and silver prices and his pick to win the White House in November.

*  *  *

To Donate to USAWatchdog.com Click Here

Tyler Durden

Wed, 03/25/2020 - 14:05

"Rolling Natural Disaster" – COVID-19 Supply Chain Shock Could Trigger Global Depression 

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"Rolling Natural Disaster" – COVID-19 Supply Chain Shock Could Trigger Global Depression 

Evidence of creaking global supply chains is fast emerging, at risk of triggering the next global depression amid the COVID-19 pandemic. 

A supply chain crisis that began earlier this year, one that we warned from the very start, has now spread across Asia to the Middle East to Europe, and now to the Americas.

"This is ki

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nd of a rolling natural disaster," said Ethan Harris, head of global economic research at Bank of America. "In terms of the impact on global production, the shutdown outside of China will likely become bigger than the impact from China."

Harris warned that the shock to global supply chains is deep and broad and could easily last through the next quarter. He estimates that factory shutdowns in many regions could last until May.

He describes a twin shock, one where a supply chain shock has been combined with a demand shock, culminating into a perfect storm, will likely tip many countries into recession, if not depression during the second quarter. 

Bloomberg piecemeals current supply chain disruptions seen across the world: 

Apple has had the most exposure to a China shutdown, with manufacturing plants in the country still operating well below full capacity in late March. Virus-related closings have hammered several of the company's key suppliers operating in South Korea, Italy, Germany, and Malaysia. 

In late January, Freeport-McMoRan's CEO Richard Adkerson warned that the virus outbreak in China is a "real black swan event" for the global economy. The company's mining operations in Peru have recently been halted. Other mining facilities in Chile, Canada, and Mongolia have also been shuttered. 

Across Europe, Airbus and Volkswagen AG have closed production plants amid severe virus outbreaks in Italy, Spain, Germany, France, Switzerland, and the UK. Major transportation networks on the continent have come to a standstill as nonessential travel has been banned in many regions. 

Europe's car industry has been absolutely devastated by virus disruptions in China and elsewhere. 

Germany's Schaeffler Group, a major supplier for European carmakers, announced this week that it would reduce hours for thousands of employees and slash production. 

"As we have to reduce production in our plants in the light of the crisis, it was important to us that flexible solutions be quickly established," said Juergen Wechsler, who represents Schaeffler workers for union IG Metall.

Across the Atlantic, we noted as early as the start of March, that China's supply chain meltdown reached US West Coast ports and was about to unleash economic doom on "the greatest economy ever." Several weeks later, GDP estimates for the second quarter are apocalyptic via JPM's chief economist Michael Feroli, expecting an unprecedented -14%, a drop the kinds of which have never before been seen.

As the US economy grinds to a halt, General Motors Co., Ford Motor Co., and Fiat Chrysler Automobiles NV are shutting down plants, resulting in steel and aluminum manufacturers to reduce capacity as well. 

"We have ships loading steel in Europe next week headed for the US, but will there be shipments beyond that with industry shutting down?" Anton Posner, CEO of supply-chain management and consulting company Mercury Resources, asked. "Who's going to hold inventory if there's no consumption?"

As creaking supply chains are seen across the world, the second quarter will most likely be one of the biggest crashes in economic data the world has ever seen. 

Tyler Durden

Sat, 03/21/2020 - 18:00

The Crash Of 2020 Is Now Worse Than The Great Depression

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The Crash Of 2020 Is Now Worse Than The Great Depression

Back in December, someone in China made bat soup (at least according to the officially accepted narrative that doesn't get you banned on Facebook, Twitter, etc), and the rest is history: in the next three months, the global equity market has lost $24 trillion in value, more than the $22 trillion in US GDP. And here is a staggering chart from BofA putting the crash of 2020 in its historic context: in the pas

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t month, the US stock market has crashed faster than both the Great Depression and Black Monday, and in terms of the total drawdown, the crash of 2020 is now worse than 1929 and is fast approaching 1987.

Below, courtesy of BofA CIO Michael Hartnett, are several other stunning observations on the Crash of 2020:

  • Calls for Fed corporate bond buying, New Deal fiscal policies, new Plaza Accord to stabilize US$, closure of stock exchange coincide with week of Wall St devastation.

  • Peak-to-trough crash in global equity market cap = $24tn (c/o US GDP = $22tn).

  • Monday's 12.0% drop Dow Jones = 3rd largest crash all-time (c/o -20.5% Oct 19th 1987, -12.9% Oct 28th 1929 - Chart 2).

  • Liquidation of "safe havens" e.g. gold & US Treasuries (TLT ETF sank 20% after oil shock); epic US$ surge reflects funding pressure of excess US$-denominated debt & zero liquidity.

  • Leverage in bond & stocks savaged (see REM, PFF, EMB, homebuilders like TOL - Chart 3); bond yields rise + bank stocks fall = classic sign of deflationary bear market.

  • Feral Wall St means vicious bear market rallies...WTI oil surged 24% today.

  • Stock exchange has closed just 4 occasions: 1914 & WW1, 1933 bank holiday, 1963 Kennedy assassination, 2001 9/11.

  • Global "lockdown" on movement people, goods, services unprecedented but note June 1930 passage of protectionist Smoot-Hawley bill saw US stocks -16.5% in one month.

And some additional views:

  • Policy panic: 42 rate cuts since Feb 1st (note was 36 cuts in 2 months following Lehman); average COVID-19 rate cut has been 70bps; massive global central bank liquidity promised with no upper bound; $2.4tn in global fiscal stimulus (2.7% of GDP) in public aid, loan & income commitments (rises to $3.7tn with US Treasury/Senate proposals = 4.2% global GDP); acceleration toward yield curve control, UBI, MMT, industrial intervention...utterly unprecedented stimulus & intervention that will ultimately cause higher inflation expectations.

  • Macro: BofA economists & strategists slash GDP & EPS forecasts (Chart 11).

  • Note US GDP = $22tn, consumption $15tn so 20% drop in income & spending in 2-month period means GDP -$750bn, US consumption -$500bn.

  • Big pressure on corporate sector not to raise prices, cut employment…EPS takes Q2/Q3 strain.

  • 2020 SPX EPS of $140 (-20%) generates SPX 2100 on historic mean 15X multiple, SPX 1700 on 12X policy-failure multiple, 2400 on 17X "some policy success" multiple (see Chart 12).

  • The "big stuff" will signal virus/recession/default fully-priced...volatility, Treasury yield, credit spreads, oil key.

  • The Reckoning: big shocks, big tops, many big political & social changes ahead...localization of supply, relationship with China, new inflationary era, using technology to "live" without human interaction, geopolitical instability of Middle East/Africa, end of era of PE, buybacks, financial engineering, comeback of active vs passive investing.

  • Q2 Strategy: aftershocks likely but assets with growth (tech), quality (best of breed stocks), yield (credits with fortress balance sheets) favored.

  • Q2 Tactics: policy makers winning "Intervention vs. Deleveraging" war; small cap, cyclicals, oil, banks...bear market rally plays.

Good luck to everyone.

Tyler Durden

Fri, 03/20/2020 - 16:00

"The 'D' Word": El-Erian Warns 'Twin Deleveraging' Could Spark A Global Depression

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"The 'D' Word": El-Erian Warns 'Twin Deleveraging' Could Spark A Global Depression

Some readers might accuse us of being alarmist and rattling the cages unnecessarily at a time of public panic, but we've always felt that investors should hear a range of perspectives, especially if some of it is uncomfortable. Those who don't like having their assumptions questions - like, for example the 'assumption' that economic growth will come 'roaring back' after this is all

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over, like Mnuchin promised on Wednesday - should probably turn back now.

As many analysts have argued, a recession is looking virtually inevitable at this point as the global economy shuts down to fight the novel coronavirus.

Only a handful have dared to invoke "the 'D' word" in their projections. But their ranks include Allianz Chief Economist Mohammad El-Erian, who has warned that a depression could swiftly ensue due to the twin "economic deleveraging" and "financial deleveraging" caused by the crisis.

That is, not only is economic activity falling off a cliff, forcing many businesses around the world to temporarily close or dramatically cut back their hours, risking a string of destabilizing main street bankruptcies. But the pressure on financial markets risks creating a 'cascading' selloff in the corporate debt market as America's seriously overlevered companies finally face their reckoning.

During an interview on CNBC early Wednesday morning, El-Erian - who has correctly called the moves in the market so far - said that "when economic deleveraging and financial delveraging" happen in unison, the possibilities are endless, and almost hopelessly dire.

For more on what a financial deleveraging might look like, read this.

"It makes its own dynamics," he said.

Looking ahead, El-Erian believes the market will lead the real economy (as zero interest rates appear to be a permanent fixture of monetary policy now) down, but he predicted that stocks would likely bounce back before the market does.

"Once again, financial markets will turn before the real economy...when that turn happens, it will be very sharp...you will get a 'v' like tendencies in stocks...while the economy will be a 'u' that feels more like an 'l'."

"Yes the financial markets will turn first, but will do so in a violent

Watch the clip below:

As El-Erian has been saying for weeks, "investors should be careful what happens when you get a global economic sudden stop." Looking ahead, El-Erian said, not only might be face a "very sharp" recession, but things could get so bad that a full-blown depression might ensue.

"Not only are we looking at a very sharp recession...we may have a depression...it's very important to understand what happens when economic and financial deleveraging come together," El-Erian said.

Of course, El-Erian isn't alone in cautioning about the risk of a depression the likes of which haven't been in nearly a century. He's joined by Joachim Fels, PIMCO's global economic advisor (PIMCO is majority owned by Allianz).

And even more notoriously, hedge fund investor Bill Ackman warned about 'hell to come' (also during a conversation with CNBC) that the risk of a depression, adding that "the US Treasury doesn't have enough money to bailout every company...you can't borrow your way out of this...you have to kill the virus."

Circling back to Fels, PIMCO’s global economic advisor, said in a written commentary that central banks and governments must step up to the task of making sure this recession “stays relatively short-lived and doesn’t morph into an economic depression."

Fels loosely defined a depression as “a combination of a prolonged slump of activity that last longer than just a few quarters, a very significantly rise in unemployment, and mass business bankruptcies and bank failures."

How would we define a 'Depression'? Well, Mnuchin's description was clearly enough to light a fire under the asses of intransigent GOP senators.

If Mnuchin's warnings eventually do come to pass, here's a glimpse of what we suspect a full-blown recession would look like in the US.

First, without government action, the unemployment rate would likely soar above 20%.

As history shows, things can get pretty scary during a depression.

Tyler Durden

Thu, 03/19/2020 - 07:11

Your 12-Point 'Great Depression II' Survival Guide

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Your 12-Point 'Great Depression II' Survival Guide

Authored by MN Gordon via EconomicPrism.com,

Bull Market RIP

And just like that – after a magnificent 11 year run – the bull market in U.S. stocks is dead.  From its peak close of 29,551 on February 12 through yesterday’s [Thursday] close of 21,200, the Dow Jones Industrial Average (DJIA) has dropped over 28 percent – in just 30 da

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ys!  RIP.

Death may mark the end.  The completion of the circle of life.  But it also marks the beginning of something new.

The death of the bull market, for example, marks the birth of a new bear market.  By our estimation, the DJIA must fall an additional 30 percent – approximately – before the bear market dies and a new bull market is born.

Between now and then, the central planners in command at the Federal Reserve and the U.S. Treasury will do anything and everything to jumpstart the old bull market back to life.  On Thursday, Fed Chair Powell grabbed Hank Paulson’s bazooka and fired off a cumulative $4 trillion repo bailout.  But, alas, Powell’s bazooka was loaded with blanks.

After a brief paring back of losses, the DJIA resumed its downward trajectory, closing the day down 2,353 – or nearly 10 percent.  The stock market, you see, knows something that Powell doesn’t know.  That is, the damage being done to businesses, in an effort to control the spread of coronavirus, is destroying the economy.

Layoffs.  Shuttered doors.  Empty ports.  Quiet railroads.  Suspended sports and entertainment venues.  No Disneyland.  Oil price collapse.  No March Madness.  More layoffs.  Tom Hanks.  Bankruptcies.  Empty shelves.  Panic.  Sovereign debt crisis.  And soon to be empty bellies…

The ultimate impact, in terms of GDP contraction, will tailspin the economy into a depression…perhaps, The Great Depression II.  The stock market, regardless of what Powell wants, is pricing this reality accordingly.

There’s no escaping it…

Can’t Run, Can’t Hide

You can’t run.  You can’t hide.  Remember, no one here gets out alive.  Though you aren’t totally helpless…

You can tempt fate.  You can rage against the forces of destiny.  By this, you can place bets that are at odds with the madness of crowds.  Of course, this must be done before the inflection point; before the herd runs off the cliff…not after.

For example, during periods of economic chaos, physical gold and silver and arable land are proven vehicles for wealth preservation.  No doubt, those with the means and fortitude to do so have already diversified some of their savings into these established crisis hedges.

Those who haven’t can only blame themselves.  There have been ample warning signs over the last year – or more – that financial markets were ripe for a crisis.  It didn’t take half a brain to clue in on this.

And it didn’t take much in the way of resources to place a bet or two that something ‘might could’ go wrong.  Even the lowly working stiff, with a small inkling of what was coming, could have taken a pass on shares of Apple and traded a small wad of paper bucks for a junk silver bag or two.

With a little luck, these proven wealth preservation vehicles will safely traverse the valley of the shadow of death to whatever economic order emerges when the crisis abates.  At that point, we suspect paper dollars will trade at par with fire kindling, whereas silver and gold will retain their stored value.

Indeed, gold and silver have gotten shellacked this week.  But, as night follows day, once this panic liquidation episode subsides, and the implications of fiscal and monetary currency debasement are realized, gold and silver will take off.  You can count on it.

In the interim, escaping to a country house or a mountain cabin is an appealing option to ride out the depression – assuming you have one to escape to.  If not, the months ahead may validate the wisdom of having freeze dried food storage and a productive vegetable garden.  Assuming you’re prepared with a little food storage and gold, you can calmly hunker down and avoid large crowds.

Other than that, the best thing to do is to try and stay out of the way as the traveling circus blows through town.  Hence, what follows are several proven, practical ideas, including a 12-Point Great Depression II Survival Guide, that anyone can follow to avoid taking this crisis square on the chin…

Your 12-Point Great Depression II Survival Guide

On November 21, 2008, when the sky was falling, and following many reader inquiries, we attempted to offer – from the heart – practical, discretionary advice on what to do to survive the economic crisis.  At the time, it served our readers well.

For your benefit today, and by reader request, we’ll revisit it…with some minor touch ups.  We recommend printing this out, and tacking it to your office corkboard, so you can refer to it during the darkest of days, which are headed our way.

Your 12-Point Great Depression II Survival Guide:

  1. Always take what’s yours…plus a little bit more.  You’ll undoubtedly need it with Donald J. Trump running riot during an election year.

  2. Never shake hands with your right hand, without first crossing the fingers of your left hand securely behind your back. You never know when you’ll need a do-over.

  3. Always look out for No. 1, save stepping in No. 2.

  4. Never give a beggar your pocket change, except when to do so is to buy them a drink.

  5. Know the difference between honesty with yourself and honesty with others.  The former must be rigorous; the later must be flexible…especially when applying for insurance.

  6. Never kick a man when he is down; so too, never hasten to help him up.

  7. Never stiff your barber. He’ll be your last resort for relief via bloodletting and fire cupping, should things get bad enough.

  8. Never con widows and orphans; all others are fair game.

  9. Do not worry about money; what you don’t have should be of little concern.

  10. Never forget that there’s a fool on every corner and a sucker born every minute.  Avoid being one of them when at all possible; for it is both demoralizing and expensive.

  11. Do not take it personal when you lose your job. This economy’s circling the toilet bowl; before this is over a lot of other good people will lose their job too.

  12. Remember, always, that this too shall pass; though never fast enough.  So keep your head up. For even during a depression the birds still sing, the flowers still bloom, and those of sound mind and body get through it a little wiser…if not a lot slimmer.

Tyler Durden

Fri, 03/13/2020 - 21:25

"Worst Thing In My Career" - US Stocks Suffer Fastest Collapse From Record Highs Since Great Depression

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"Worst Thing In My Career" - US Stocks Suffer Fastest Collapse From Record Highs Since Great Depression

This didn't age well...

A sea of red...

The Dow has collapsed from a record high into 'correct

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ion' in the space of just six days. As we detailed earlier, this is the fastest collapse from an all-time peak since 1928, just ahead of The Great Depression:

Source: Bloomberg

As Guggenheim's Scott Minerd exclaimed on Bloomberg TV:

"...this is possibly the worst thing I have seen in my career... it's hard to imagine a scenario in which you can contain the virus threat," adding that "Europe and China are probably already in recession and US GDP will take a 1.5-2.0% hit."

"The stock market could be down 15-20%... and would likely force The Fed's hand."

Investors are piling into safe-havens (bonds and bullion) as they dump stocks...

Source: Bloomberg

Still, could be worse...

The market is already demanding 3 rate-cuts this year...

Source: Bloomberg

With the odds of an emergency cut in March soaring...

Source: Bloomberg

And, stocks have erased most of the 'NotQE'/Repo liquidty bailout gains...

Source: Bloomberg

From the turn down last Wednesday, all the major stock indices are in correction territory, down over 10%...

The Dow was down over 12% from its highs at the lows of the day today...

Source: Bloomberg

Today was the biggest single-day point drop in Dow history...

Source: Bloomberg

Today's price action was stunning. Weakness overnight extended lower after the open, then a massive ramp higher (pushing Trannies and Small Caps briefly green), before it all fell apart again...

Dow futures show the action best - Futures were down almost 1000 points, extending the overnight losses through the open, that was followed by a quick 800 point ramp - which failed to take out overnight highs - and then faded back towards the lows into the close...Dow 26k seemed the Maginot Line...

S&P closed below 3,000...

Source: Bloomberg

...and broke below its 200DMA (as did the Dow and Russell 2000), Nasdaq closed below its 100DMA...

FANG Stocks have lost $350 billion in market cap in the last 6 days...

Source: Bloomberg

Bank stocks continue to bloodbath...

Source: Bloomberg

Airlines staged an epic comeback today after crashing at the open, but faded lower into the close to end red...

Source: Bloomberg

Why is everyone so surprised at the drop in the Dow, when earnings expectations have already plummeted...

Source: Bloomberg

VIX topped 36 intraday, dipped a little, then ramped back to 34 in the last hour...

VIX is also catching up to the outlook suggested by the collapsing yield curve...

Source: Bloomberg

Credit markets are crashing wider in cash and derivatives...

Source: Bloomberg

And rather stunningly, XOM's dividend yield has exploded to its highest since Feb 1986 (as the stock price crashes)...

Source: Bloomberg

Before we move on to bonds, this is utterly insane!!! China is now dramatically outperforming US and EU stocks since the start of the virus headlines...

Source: Bloomberg

Today's two hour panic-buying stocks, panic-selling bonds effort looked a lot like pension-rebalancing...

Source: Bloomberg

Lots of volatility in bond land today with yields crashing overnight to fresh lows, ramping back to unch after the US cash equity open, then falling back towards the record lows (down 4-5bps across the curve on the day)...

Source: Bloomberg

30Y Yields fell to a 1.74% handle!

Source: Bloomberg

The dollar tumbled today to one-week lows...

Source: Bloomberg

Cryptos bounced back today after an ugly week...

Source: Bloomberg

Gold and copper were flat today as silver and crude tumbled...

Source: Bloomberg

WTI collapsed today to a $45 handle, down a stunning 30% from the early January spike highs on Iran missile strikes...

Source: Bloomberg

And as oil prices crash, Energy credit markets are collapsing - HY Energy OAS at widest since April 2016...

Source: Bloomberg

Finally, gold was flat today as the odds of a Bernie nomination slipped modestly... but that correlation is quite stunning...

Source: Bloomberg

Partying like its the end of 1999...

Source: Bloomberg

We're gonna need more liquidity...

Source: Bloomberg

Somebody's got to get their boot back on the throat of global financial market volatility...

Source: Bloomberg

Seemed like the right time to bring out the deer!!

Tyler Durden

Thu, 02/27/2020 - 16:01

What A Trip: Magic Mushrooms One Step Closer To Becoming Legal Depression Treatment

zerohedge News what trip magic mushrooms step closer becoming legal depression treatment All https://www.zerohedge.com   Discuss    Share
What A Trip: Magic Mushrooms One Step Closer To Becoming Legal Depression Treatment

What a trip. With marijuana now basically legal across the U.S. in various forms, it's on to the next party drug: magic mushrooms.

Psilocybin mushrooms have passed the first hurdle of steps to become a legal treatment for depression, according to a new Bloomberg article. The mushrooms were found to be safe and well tolerated in a study of volunteers cond

Read More
ucted at King's College London. "Unsurprisingly, the subjects got high," Bloomberg writes.

The potential for these types of recreational drugs to treat depression has certainly caught the medical world's attention. The school of medicine at Johns Hopkins University in September started a research center to study psychedelic drugs and their effects on behavior and brain function.

Psilocybin is the key drug being tested, as its potential has drawn researchers to studies that go beyond depression. Scientists are also looking to test psilocybin for Alzheimer's, anorexia, OCD and migraines.

Compass Pathways is working to bring to market a version of psilocybin that it has manufactured to treat depression that has resisted other treatments. Compass sponsored the trial, which has been the largest controlled study of psilocybin to date. 

The study looked at the effect of two doses of psilocybin, with the high one twice as much as the lower, and a placebo. The study involved 89 volunteers and the company says the next step is a study on 216 patients with depression in Europe and North America. 

The most frequent reactions from the study, according to Compass, were: “Changes in sensory perception and positive mood alteration.”

Tyler Durden

Fri, 12/13/2019 - 21:45


Health Medical Pharma


Depression Myths and Facts Explored

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There are a quantity of myths related with depression. This post attempts to dispel common myths and provide factual information about depression to assist in reducing the stigma related with depressive illnesses.

Depression is frequently misunderstood by the broader neighborhood and is one of the most typical of all mental illnesses. It impacts much more than 19 million Americans annua

Social Media, Not Video Games, Linked To Teen Depression

zerohedge News social media video games linked teen depression All https://www.zerohedge.com   Discuss    Share

The use of social media has been linked to an increase in depressive symptoms in teenagers, according to researchers at Montreal's Sainte-Justine Hospital, according to the CBC

In a new study led by University of Montreal psychiatry professor Patricia Conrod, adolescents were studied over a four-year period to investigate the relationship between depression and various forms of screen time. 

Patricia Conrod, left, is a professor of psychiatry at Université de Montréal. She worked on the study with Elroy Boers, a postdoctoral research fellow at the S
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ainte-Justine Hospital in Montreal. (Kate McKenna/CBC)

"What we found over and over was that the effects of social media were much larger than any of the other effects for the other types of digital screen time," said Conrod. 

The researchers studied the behaviour of over 3,800 young people from 2012 until 2018. They recruited adolescents from 31 Montreal schools and followed their behaviour from Grade 7 until Grade 11.

The teenagers self-reported the number of hours per week that they consumed social media (such as Facebook and Instagram), video games and television.

Conrod and her team found an increase in depressive symptoms when the adolescents were consuming social media and television. -CBC

The study was published in the JAMA Pediatrics journal on Monday. 

Unsurprising to some, the study found that all forms of screen time are bad, but that consuming social media was the most harmful. Conrod and her colleague, Elroy Boers, found that being active on platforms like Instagram - where teens can compare their dismal, boring lives to those of glitzy 'influencers,' cause the most depression. 

"It exposes young people to images that promote upward social comparison and makes them feel bad about themselves," said Conrod. "These sort of echo chambers — these reinforcing spirals — also continually expose them to things that promote or reinforce their depression, and that's why it's particularly toxic for depression." 

The researchers also observed whether the additional screen time was taking away from things generally known to reduce depression, such as exercise and fun interacting with other human beings, but found no link. 

'A good pastime'

The study suggests that the average gamer is not socially isolated, as over 70% of gamers play with other people online or in person. 

"The findings surprised us," said Boers. "Video gaming makes one more happy. It's a good pastime." 

Dr. Martin Gignac, chief of child and adolescent psychiatry at the Montreal Children's Hospital, said there has been an increase in the number of emergency-room visits at the hospital related to teens having suicidal thoughts and behaviour in recent years.

"I don't think that [social media] is the only reason, but it's one of the risk factors we should monitor," said Gignac, who was not involved with the study.

As online relationships supplant in-person communication, Gignac said it's important that young people learn when posting about their lives online is healthy, and when it can hurt.

He's hoping that schools expand programs teaching kids about healthy online activity, and that learning how to practise good "digital citizenship" eventually becomes a universal part of school curriculum. -CBC

Depression in adolescents is linked to substance abuse, lower self-esteem and poor interpersonal skills. According to Boers, teens are spending six-to-seven hours in front of a digital screen per day

"What we found is quite worrisome and needs further investigation," he said. 


Low Cost Ayurvedic Medicine Programs

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The Ayurvedic Postpartum Caregiver (APC) Diploma Program is for everyone passionate about new motherhood. It is designed for trained doulas to expand their perspective and range of services to families, for Ayurvedic professionals to understand the specifics of the postpartum window, for Yoga professionals to enhance their guidance of pregnant and postpartum women, for expecting mothers and grand

Low Cost Ayurvedic Medicine Programs

change7coast Arts ayurvedic medicine programs postpartum ayurvedic medicine ayurveda postpartum care depression weight loss massage doula hair loss postpartum recovery ayurveda postpartum care according ayurveda postpartum treatment in ayurveda All https://sacredwindowstudies.com   Discuss    Share
The Ayurvedic Postpartum Caregiver (APC) Diploma Program is for everyone passionate about new motherhood. It is designed for trained doulas to expand their perspective and range of services to families, for Ayurvedic professionals to understand the specifics of the postpartum window, for Yoga professionals to enhance their guidance of pregnant and postpartum women, for expecting mothers and grand

Fight Your Depression With The Following Advice

green0sheep Arts depress depression health All http://mythailand.ru   Discuss    Share
Depression afflicts millions around the globe, leaving them in pain and unable to cope with life. Depression leads to feelings of hopelessness and loneliness. Folks with depression need to learn all they can about effective treatments. The article below has several depression tips.

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