Me again from Ireland. Overnight, 100,000+ jobs have been, at least temporarily, lost SOLELY because of the pub closures. We are only at 223 cases. Or 0.0046% of the population.
Look at ISEQ, DAX, FTSE, FTSE MIB, CAC. They’re at their five, in some cases TEN year lows. These can serve as leading indicators for the USA.
The S&P, DOW are at two year lows and the NASDAQ 100 at only a one year low. People are going to start losing jobs and are going to start drawing down their equities.
Now look at concrete domestic macro indicators. TED spread, bond credit spreads, the yield curve. They’re the real leading indicators for further out in time. Not daily percentage drops and gains in big indices or futures markets.
These indicators are ALL signaling worse to come. fred.stlouisfed.org/
The US is so far behind the shit happening in Europe. I really believe this will the purest realisation of a Black Swan. Unlike in 2008, when we had gigantic banks doing retarded shit, this is not a liquidity and credit crisis in the financial system.
This is an event that will cause, first and foremost, damage to the real economy. As we have seen, ridiculous monetary intervention has done absolutely fuck all to stave off that damage. Contrast that to 2008. The TED Spread collapsed when the Fed announced major intervention.
It will require, as is happening in Europe, FISCAL stimulus. Until the Don does that you’re fucked.
What’s worse, is the Fed has exhausted all of its resources. IF this crisis develops into a crisis of credit, which is likely if even just a few major businesses go bankrupt or default on their debt (as you all know, there’s an insane amount of junk/near junk bonds outstanding atm), then the Fed will have nothing left.
I’m drunk but I’d be happy to expand on this thesis when I’m sober in a few days.
Stay safe burgers, celebrate Paddy’s day for us (we can’t because lockdown n shit) and spread that shit further so puts print harder.
Disclaimer: This is a guest post and it doesn’t represent the views of IWB.