TDLR; Oil is going to lead our decline and accelerate it. Other signs are showing a push to increase consumer and commercial debt loads as a way to weather this situation.
The only new addition to oil discussions is that oil seems to have a 1/3rd relation to stock value in a normal market.
If the 34% gained until friday is all given up, and assuming only 50% of the normal effect, that alone could count for a 6% drop in the S&P
With auto loans now 0% for 84 months we have officially kicked the entire economy 3 years down the road.
Now people end up with massive 401k taxes, a repossessed vehicle, and no equity in their house.
We should see the effects sooner, but 2023-2024 are going to be very very bad years. People will either go bankrupt or lose everything, perhaps both.
Normally an individual could use home equity to offset debts and the market wouldn’t have to eat 100% of the cost.
This additional loss should compound already discussed issues with the debt bubble.
Under-reporting is likely continuing to occur in the unemployment segment, due to a continued inability to get through and breakdown of government websites. This backlog may mean we continue seeing millions+ numbers through the peak of the virus. Laid-off employees can back-date their application, so many will sometimes wait weeks before applying.
SBA business loans continue to be problematic for clients and banks. This whole system is riding on an association that is ill equipped to make it work. Additionally, entire business segments are being left out of the pool due to size, structure, or industry.
Cummins is reducing hours and salaries.
I can not overemphasize the importance of this, as it means that construction is grinding to a halt. Cummins and Caterpillar are used as bellweathers of coming problems with the construction industry in general. – an industry that tends to fold hard and fast when business stops. – Think current construction jobs ending and then the entire company being laid off and going bankrupt.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.