Sunday, June 21, 2020

👉We are in a Venezuela-Shaped Recovery !!

👉We are in a Venezuela-Shaped Recovery !!

This is a classic bear market rally. Nothing is normal in these markets; Despite the market's impressive performance since the March lows. Something has to give. Most people don’t know this. From November 1929 to April 1930, the stock market ripped 50 percent after that initial plunge, and it lured so many people into thinking that, you know, we’re going to be having stimulus, and we’re past the worst part of the shock, but people didn’t factor into the fact that the shock produced a fundamental change in behavior, and the economy actually went in for another two years of distress. That’s not what’s priced in right now. I think that once we realize that the economy is not going to embark on some V-shaped. The only V in this recovery will be as in "V is for Venezuela." A Venezuela-shaped recovery. I think we’re going to give up a lot of these gains. We’re actually trading at a multiple that represents market peaks. This is not the sort of multiple you get coming into a new bull market. What we have now is nothing short of market manipulation. Reducing the cost of overnight funds is one thing. Extending the intervention to Treasuries or high-quality securities is something we became accustomed to in the aftermath of the last Great Recession. That’s when the Fed became a duration bond manager. In a normal rally, you have flows you can identify, but this is a short-covering rally, and on top of that, there are no sellers. There are no sellers. People are just too scared to sell stocks. When you hear over and over again, “Don’t fight the fed, don’t fight the fed,” when people see, oh, well, the Fed has actually went in and said they’re going to buy high-yield bonds, well, high-yield bonds reside right next to the equity market of the capital structure. We learned that, for example, households were not prepared for this. I was actually stunned to find out that over 50 percent of American households did not have enough cash on hand to even withstand three months of a lockdown. A lot of people out there are yearning for everything to return back to the pre-pandemic normal, and my typical response is, be careful what you wish for because we knew already before the pandemic that the economy was cooling off. First-quarter GDP, just as an example, contracted at a five percent annual rate, and productivity was down 0.9 percent. So, we already had an economy that was cooling down. Productivity was in a recession. Capital spending had been in a recession. Commercial construction had been in a recession, and for most of last year, we were in a recession in corporate profits. What kept the glue together, of course, was the fact that the consumer kept chugging along, but the pre-pandemic norm was actually quite abnormal, and, in fact, we have to just look at everything in the context of the entire cycle. I mean here we had the weakest economic growth cycle of all time, barely more than two percent at an annual rate in terms of real GDP, and of course, we had a phenomenal stock market that was built on a lot of financial engineering; in the sense that it was the biggest debt-for-equity swap of all time. Instead of the debt being issued to finance capital expenditure for productivity purposes, it went to buy back stock. So that’s the real world that we had. Yes, unemployment was at a 50-year low. That much is true, and we got as low as three and a half percent but took a look at the quality of the jobs that were created. Most of the jobs that were created this cycle were not in physics or in engineering or in the sciences. It was entertainment. It was leisure. It was in hotels. It was in theme parks. So, it’s basically what we just found out. We found out that the nonessential part of the economy had to shut down, but who knew until we shut it down that the nonessential part of the U.S. economy was 80 percent of GDP. Now we have people who are unemployed but making more money, not working than when they had a job. The incentive system has been destroyed, not by the pandemic, but by the pathetic government response, every step of the way. This economy was destroyed by the great job outsourcing starting with Reagan. Restaurants Dry cleaners and Delivery service and uber jobs are useless. We need shipbuilding, commercial shipbuilding, and the US needs to export products to the world using US shipping, not foreign flag renegade operators. The fed and government are just putting off the inevitable. Take your pick . 1. The clock runs out on stimulus, and the bottom falls out. 2. More MMT and eventually total collapse as debt continues to explode and crowds out the real economy with stagflation resulting. All previous pandemics plateaued before a cure was found. Covid-19 is a perfect example where the curve has already been flattened almost everywhere. Reality is that Covid-19 is just used as a cover for fundamental problems. There’s a famous saying on Wall Street. Do not fight the Fed, and the trend is your friend. With interest rates at zero and perhaps turning negative, all this new printed liquidity will flow into equities to catch yields. But once interest rates ever start to rise again..even modestly. Watch out. The stock market is running on pure speculation. It's certainly not based on any sort of data (momentum-based algorithms that appear to have overshot). Earnings reports are generally down, and stocks were pricey at this point even before. We're in big trouble, but not just because the economy is shrinking. What's far, scarier is the exorbitant national debt that we have added. The CEOs of the worst actors got paid off! They participated in stock buybacks, inflated their own stocks, sold them for huge personal gain, and then got bailed out! Why would anything change? Meanwhile, well-behaved companies suffer a bad economy and get taxed to cover the government's costs. Corporate boards only looking after their own interests, not the shareholders! Why is it called stimulus when it is free money to the CEOs and C suiters who bankrupted their companies, but a 'handout' when it is a couple of hundred bucks to the people. The corruption the federal reserve and the central banks are enabling for the billionaire hedge fund, private equity 'philanthropists' with their secret books and need for absolute power over every human because we have no rule of law at the top anymore is stunningly in our face. And you all keep pretending there is some intelligence behind it - there is none. It is only evil. The money is going to stock buy-backs because it's a short term quick fix. Corporate executives calculate that this is the best way to keep major shareholders happy with rising prices and dividends, thus ensuring their own ridiculously inflated compensation packages. So unless their major shareholders are pension funds, they couldn't give a damn about pensioners, whose long term interests would be best served if the earnings were reinvested to improve productivity. And even if they have considerable investment from pension funds, that hardly means they give any consideration to individual pensioners. Passing on the bad news is what pension boards are for. Higher inflation and lower interest rates do not lead to people saving more. Cash goes into the stock market bubble or creates greater inflation with increased purchasing of hard assets. Depression would not be because of the Wuhan Flu. It would be the overreaction of politicians who jettisoned any semblance of critical thinking a long time ago. A lot of businesses were barely surviving before this started. They've been helped along by PPP and other government bailouts, but unless the .government keeps throwing money at them, they will start and continue to fail over time. The U.S. economic crisis is even worse than it appears. Over the last few months, we have seen interest rates plunging to zero; trillions of dollars have been printed into our economy to help lift it back to life; toilet paper is now the hottest commodity of all time. The Fed is making sure the Stock Market can’t lose. They have messed up the stock market by artificially inflating it. Jobs reports fill in a picture of devastating unemployment nationwide not seen since the Great Depression. A hundred million people are out of the labor force. The official unemployment rate is about 14.7 percent, but if you dig below the numbers, It's really around 22 percent, when you consider the tens of millions who have lost their jobs. And by the way, that data is now a couple of weeks old. It's probably even higher than that. Unemployment stimulus runs out in July. Chaos will begin. There will be no normal. By Fall/Winter, we are going to see some real anger and fear from people who can't find jobs and have no...really no...income coming in. When people lose everything, they lose it. There will be collapse and looting, WAR, and starvation is what there will be. What is going to happen when 100 million people stop paying their rents, their mortgages, their car loans, their iPhone loans. I guess we'll have to bail the banks out again. Mustn't it be nice to be a banker? Do a really, really bad job, and you get bailed out by the taxpayer and given a HUGE big bonus. When I come back after death, I am going to be a banker. "Good times" for the general public have been erased. "Good times" for the bank cartel, selected corporations, and the US Psychopaths In Charge go on undiminished, as was the plan. Why else would the economy that feeds us be destroyed to keep us from getting sick? Why else would a "race war" be instigated at the very moment the general public was prepared to ignore corona flu tyrannical edicts! Civil unrest in North America will be ugly and dangerous. The rest of the world is waiting for this civil war. The thing is, we as a nation have allowed it to happen. It's the price we pay for being asleep at the wheel, living in delusion, and not seeing the revolving door between the corporate sector and the government administration. Believing we live in democracy just because we can vote. The choice is one of 2 parties, both with largely the same agenda - self-interest and screwing other countries. ZERO accountability, no respect for the law. The economic crisis also means that the demand for food stamps will swell. Tens of millions of Americans are food-insecure right now. And all of their numbers are growing. Mile-long lines at food banks. Forty million Americans live on food stamps, as so-called SNAP benefits. They're rationing food. If this goes on much, much longer, then we could start to see actual starvation in America. We're doing far much worse than any developed Western nation. Prior to the crisis, about 11 percent of Americans suffered from food insecurity. And we have every reason to believe that those statistics are increasing dramatically in the current time period. Even when the economy reopens, people don't have money to spend because so many jobs are gone. Most Americans are out of work and out of money. So they will not be eating out, shopping for new clothes or cars, buying houses or boats or even TV sets. Our economy is spiraling downward, and no one can say how or when it will recover. A lot of businesses will be closed down after the lock-down. The real crash has not happened yet. The market crashed, but we need to see Foreclosures, people will be jumping out of the windows. Stuff like this was weird, people sitting home watching TV like nothing happening, that’s the problem. Wait till you have to start paying bills, and you go back to your job, and they say hit the road we do not need you. The "honeymoon " has yet to end. That will happen in August when stimulus payments end, and the moratorium on evictions is lifted. We will see 35 million new homeless by the end of the year. Jobs and businesses are not coming back. And a war with China is coming. I give it 18 months. The geopolitical tensions are already precipitating rapid exit from U.S. denominated debt instruments and the US dollar. The closing down of national economies applied Worldwide will inevitably result in poverty, mass unemployment, and an increase in mortality. It’s an act of economic warfare. It’s an unspoken crime against humanity. This diabolical process is not limited to wiping out small and medium-sized enterprises. Big Money is also the creditor of large corporations (including airlines, hotel chains, hi-tech labs, retailers, import-export firms, etc.), which are now on the verge of bankruptcy. The global financial establishment is not monolithic. It is marked by divisions and rivalry. The dominant Big Money faction seeks to destabilize its competitors from within. The results of which would be a string of bankruptcies of regional and national banking institutions as well as a process of global financial consolidation. In the US, numerous retailers, airlines, restaurants, and hotel chains filed for Chapter 11 bankruptcy. But this is just the beginning. The big gush of bankruptcies will occur in the wake of the lockdown (“The New Normal”). Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. Recessions are not equal opportunity events. Those folks employed, still bringing home a paycheck, experience little recessionary effects other than some grocery items tend to sell out quickly while others are not available. There really is little difference to their day to day life (sans COVID). For those who are not being called back or have learned their employer has closed the business, not to mention all those folks who are still standing in line for UI applications, the recession, and its impacts are very real. There are safety nets like state welfare, SNAP, WIC, but those programs aren't intended to be recessionary relief and largely serve the very low income. It's the average American who sits square in the middle of America - they are the hardest hit. They can't cash in on social programs because they are means-tested and sometimes take a while to get approved. They primarily live beyond their means and increasingly relied on credit cards to make up the difference. They have little or no savings. No real assets owned outright. There's no way out for them other than recovery/job. What's different about this recession is it hasn't actually hit, and we're way ahead of that ball game. When the real impact hits, millions of Americans already behind the eight balls will again be slammed this time into poverty and homelessness. This is all happening when America is the most divisive in history. The community spirit is fast eroding to every man for himself. We are in for a slow, long recovery, rather than an immediate bounce-back. There will be no V Shape recovery. The GDP for this year will contract anywhere from 10% to 14%. We are going to have the worst recession since the Great Depression. It will make 2008 look like a flesh wound. And yet the bounce in the S&P500 looks rather V-shaped at the moment. Is it worth throwing good money after bad on this 'collapse'? Or is there nothing the Fed (and its friends from Blackrock Inc) can't 'fix' with a few extra trillion dollars (and counting). Let's see what follows this 50% retracement. I will give you THE ONE reason this will not be a "V" recovery. Not going to guarantee stocks won't "V" here and there as Venezuela did. The reason is DEBT. Debt killed the economy, killed the country, and killed any semblance of capitalism long ago. The debt was THE problem in '08-'09, and what did they do! Printed up a whole load and handed it out. Debt is the problem now, and what have they done? Made LOANS available to anyone and everyone. Debt is like putting lead weights on a runner. Sooner or later, he falls over from exhaustion and is no longer able to run. Debt is like a parasite sucking the blood out of you. Once the parasite becomes too big, and you can't produce enough blood to overcome its consumption, you die. All they have done is to increase the size of the debt exponentially. Many of you still don't understand that MONEY is DEBT in our system. If you have not watched my videos where I explain how money is debt, please do so. And watch it over and over until you understand exactly what is happening. Printing and loaning will not bring back any economy, but you can bet it will kill it. In 2008 the problem was peak debt. And it's only gotten worse by orders of magnitude. Governments have learned nothing. Let's be honest here. All debt-backed fiat monetary systems rely totally on trust and optimism. Once the FED was established in 1913, we were "on the road to serfdom." Hopefully, you've read it (and Brave New World too). The only question is: have we reached our Minski moment? Not, if we're optimistic, work hard, take personal responsibility, establish sound money, say based upon real things like gold or other commodities. Will this happen? Are you rolling around on the ground laughing? There is another way we could have taken: that of Sweden. That is our control case in this giant economic experiment of shutting down the economy for the flu. The country that didn't do that. Sweden, unlike most Western countries, is not doing a lockdown. They have banned gatherings of more than 50 people and gave Swedes some basic instructions for flu avoidance, but restaurants, shops, schools, and pretty much everything remains open. Experts don’t like that. Experts want everyone locked up in their homes and the economy burning. The only V in this recovery will be as in "V is for Venezuela." This Economic Collapse began BEFORE the pandemic!! The Fed began to drop interest rates back to 0% from only 2.5% during January of 2019, BEFORE the virus. The Fed began Not QE4 during the Repo market freeze up during September of 2019, BEFORE the virus!! The Fed is going to blame the virus for this Economic Collapse. The Fed, ECB, IMF, BIS, and other Central Banks ARE THE VIRUS!!!!! After 2008, The Fed just dropped interest rates down to 0% for ten years, and printed TRILLIONS in QE to Infinity!!! The Fed is manipulating all markets and destroying our monetary system!! It's not V-shaped. It's two-fingers-shaped. V shape only for the rich. The Poor: Will become dirt poor. The middle class: Will become poor. The Upper middle class: Will become middle class. Rich would like to be called Master from now on. It's going to be an M shaped recovery. Right now, we're at the top of the first leg. Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. Even before Coronavirus, the economy was doomed to fail. Job growth that was limited to low paying part-time service industry jobs, taxes cut for the rich, CEOs, giving themselves record bonuses, more money spent on tax buybacks than hiring workers, no investment in smaller communities, etc. This is What do you get when you put the central banking cabal in a blender with the CIA. GLOBAL DIABOLICAL DYSTOPIA. In which there's absolutely ZERO need for functioning markets. In fact, this is just the start. This push for "GLOBAL DIABOLICAL DYSTOPIA" is exactly what is happening. America, Land of the Brave Home of the Free, mist be shown as a Police State then the others will fall in line when this is finished, if those who are orchestrating this Dystopia are successful, we will have the same freedom a Chicken in his cage or a Pig in his pen has! They use this virus to coverup a 50-year Ponzi scheme that was about to collapse in the peak of the baby boomer retirement, that happens to be right now. Make sure the baby boomers can't get the wealth out of their houses because it was the Ponzi scheme money that they stole from their children anyway. Then hyperinflate the currency to get the rest of the fake money back from anyone that had savings or investments. Only the cash-rich will qualify to buy homes, scoop the defaulted assets up and rent them out to collect the UBI that is going around. Taxes, food, rent, and gas will skyrocket. Nobody is safe. This is economic Darwinism; anyone that was paying attention could see this coming a mile away. It’s designers to fail! It not about recovery. It’s about transferring wealth and profiting off of default swaps and hedge funds! The great economy that never was. We are already in The Great Depression 2.0. ALL the numbers have been fudged, and if Americans knew the real numbers, they'd "faint out of fear." All the health crisis did was to bring it in the spring instead of the fall. Look at the millions who were behind on their credit card, mortgage, and car loan payments. A "V-shaped" economy will not be possible until the country shifts from a house of cards service-based economy to a manufacturing one. That will require people willing to pay MORE for products made in the USA and for companies to be willing to gamble that they will. That will take years. Or a major war. A month or so, I was ridiculed for saying there would be food shortages this summer. I hope that people who live in houses are turning their backyards and front yards into mini-farms. And I hope, instead of buying x-box games, gadgets and sending strangers online money for posing in their undies, use that money to stock and re-stock your pantry and get some home gym equipment. The main thing is not to be duped into believing things will return to "normal" in 2020 or 2021 or 2022. There is nothing, absolutely nothing supporting a return to the old normal. Deficit spending has never been sustainable. There can be no recovery until the debt is either paid off or forgiven. I'm not very hopeful about the second part happening for most folks. Debt is slavery, and that is exactly where the elites want the rest of us to be. People forget there are TWO economies. One for the rich 1% and the other for everyone else. The rich will get a V-shaped recovery paid for by taxpayers. The probable scenario is that we hump along in lockdown for a couple of months, open up for a few weeks until rates start to show a modest increase in a few densely-packed urban areas, then get locked down again, for years. Of course, the ongoing global depression will be steadily worsening in the background, and we'll probably be dealing with widespread civil unrest and hunger within a year or so, if not mass deaths and Mad Max anarchy. . The economy isn't going to come back. The casino of bankster-gambling capitalism is dead. This isn't a bear: it's a tiger. And the FED's getting eaten. Let the FED and the zombi corps and the banksters go bankrupt. We need a new system and, anyway, we're getting it, whether you like it or not. I guarantee you, most of those people who were laid off will not be coming back to work. People who weather the onslaught will be rewarded with higher compensation (as they should be if they can pick up the slack for 35 extraneous people), but by in large, tectonic shifts are already underway in how we work, consume and socialize. And god forbid Americans actually learn to start living within their means. Round the clock footage of food disturbances and other socio-economic ills manifesting in the streets should suffice in convincing SOME of these somnolent idiots to wake up and start saving more—Ruh-roh re consumption. New cars and phones are going to be luxuries for many going forward. Then there's debt service on this catastrophe, but that's a whole other story. END the FED!!! This was The Atlantis Report. Please Like. Share. Leave me a comment. Subscribe. And please take some time to subscribe to my back up channels, I do upload videos there too. You'll find the links in the description box. You will also find a PayPal link if you want to make a donation. Thank you wholeheartedly to all those of you who have already donated. Stay safe and healthy, friends!

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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