Stock Market Bulls Delusional in Face of Great Depression

by David Haggith

TAFTA [CC BY-SA 3.0 (], from Wikimedia Commons

Monday was nothing but a dead-bull bounce on top of a dead-cat bounce, which means there is plenty of punishment to come. Pure testosterone drove the market’s rise fed by nothing but the weak premise that New York’s drop in the coronavirus death rate for a single night meant the worst is behind us. To prove how meaningless that was New York posted its highest daily increase in deaths on Tuesday.

The bulls’ rampage uphill for a 1600-point gain came inspite of the President of the United States, who loves this stock market like it is his own child, warning the whole nation that the next two weeks will be hell weeks for the US because the number of new cases and deaths will accelerate upward hand-in-hand. The market bulls chose to listen to a glint of relief from New York’s one-time drop in deaths over the president’s alert that the entire nation over the next two weeks would see higher death counts.

That’s absurd. It’s irrational. It’s denial. It’s unbridled greed.

Monday’s stampede proved how utterly disconnected from reality the market’s bulls remain, and that means they’re going to get their heads pounded from ceiling to floor until they are rendered unconscious for their retardation. Reality is going to win because its always does, and the longer you put off reconciling with it, the worse things become for you. Monday’s claims by the marketeers that we’re on a coronavirus upswing is not likely to prove out.

This time is different!

I agree with the rant of a fellow writer at Seeking Alpha:

I Really Don’t Understand You People! Seriously, I’m looking at many articles that keep getting published on this platform and 90%+ keep telling you what to buy, more or less in-line with the average percentage that we see here in good/normal times…. This is neither a good nor a normal time…. Therefore, acting as if this is similar to February 2018 or December 2018 is, in our opinion, both foolish and frankly, irresponsible. This time is different!

As regular readers here know, February 2018 (starting in January) and December 2018 were times I stated repeatedly I was certain the market was going to fall hard … and it did, and I said it would rally in the spring of 2018; but this time is different. Entirely different.

So often people say that as a slogan to taunt the bulls into ignoring all evidence and charging higher. Brokers have used it to mean, “Extenuating circumstances make this time less bad than other times like it.” The writer above, however, uses it to mean, “Extenuating circumstances make this worse than anything you’ve seen in your lifetime!”

I agree. The virus resulted in an entirely voluntary global economic shutdown such as has never been experienced in world history! That sounds like one of those circus-carnie boasts (“biggest” or “best in the world”); but, if you think about it, you’ll see it’s factually accurate. Never have nearly all of the nations of the world locked down internally and this widely for any war or any plague. So, this time is entirely different!

Moreover, this recession is starting when the global economy was barely standing in the first place. It existed jacked up on central-bank steroids for years, which were already fading toward zero effectiveness. The market developed such a tolerance to Fed meds and was so in shock over the viral assault that for two weeks, the bull lay like splat on a rock and did not raise its head or even twitch a nostril to the normally pungent odor of Fed stimulus. Yet, Fed stimulus was greater in scale and quicker in timing than anything the Fed has ever done. I described how extreme and ineffective the Fed’s moves were in “How Dead is the Fed?

This time is different on an apocalyptic scale. I see that word being used everywhere. (Now, I’m not saying that means the disease is going to wipe out 25% of humanity; but I’m saying it is ludicrous — clownish even — for the bull to take off on another run as if the good times are right ahead now, Baby!

The bull is a phantom

This is a dancing bull that’s dead. All its nerves are firing because, and its dancing around like a chicken with its head cut off; but it’s dead. Because it’s dead, it doesn’t know it’s dead. It obviously doesn’t know anything. It’s like some insane phantom creature that needs to be exorcised.

I find it hard not to get angry with the talking bull heads because they give the same buy-the-market-up-forever like a delirium you can’t escape. It is pure bull testosterone, causing delusions of grandeur when the economy clearly has months of downtime ahead of it.

Even if the virus died off this month, there will be a lot of jobs that stay lost because the economy was already wobbly and looking ready to start leaking off jobs. Now that profitless corporations have made the decision to cut people, those employers will leave them cut for good.

A huge numbers of retail stores that were struggling to stay open during the two years of the Retail Apocalypse will now say, “Why bother. We were barely surviving over the last two years anyway. Let’s just shut her down and blame the virus.”

Some people, after the crisis will remain afraid to go into restaurants. Many restaurants were also already marginal due to the Retail Apocalypse taking away their traffic, and restaurants operate on slim margins in the best of times. So, it is likely a number of restaurants won’t re-open if this goes on fro two months or more.

Because the lost jobs are not all coming back, we’re not going to see a v-shaped recovery. Someone said it will be square-root-shaped recovery. That may be true. If the virus ends quickly, there may be a rapid bounce upward, but the world will not bounce back up to where it was. (Stocks might, but it will be absurd if they do because they will be farther out of step with reality than ever; but I doubt they will.)

The deviant bull feeds on horrifying unemployment numbers

On each of the days when “new jobs” came out negative and unemployment soared, we saw the worst statistics in the history of the nation, but the stock market responded both times by trying to jump over the moon.

When this headline came out (an hundreds of others like it), the stock market leaped up about 700 points on the Dow:

Unemployment Nightmare Lurches Economy into Depression-Era Scenario

Nightmarish unemployment data fuels speculation that recovering from the coronavirus-induced recession will take longer than expected…. U.S. jobless claims doubled this week, with 6.6 million people filing for unemployment benefits amid coronavirus shutdowns. That’s 1,000% as high as the peak of the Great Recession. Over the past two weeks, about 10 million people lost their jobs.

What could be better news to stock investors than that, right? The bulls must have thought so because they leapt for the presumptive and preposterous moonbeam dream that their troubles will all go away as soon as the virus is put to rest in a month or so.

Not the slightest chance of that happening:

Unemployment levels could surpass those seen during the Great Depression…. Unemployment estimates of 32% sound very realistic. To put that into perspective, unemployment reached 24.9% during the Great Depression in 1933…. This week, JP Morgan reduced its second-quarter GDP estimate to -25% from -14%. The bank warned that a v-shaped recovery was unlikely. The U.S. will probably see a recovery that looks similar to that of the 2008 financial crisis…. Federal Reserve Bank of St. Louis President James Bullard is even more pessimistic, saying the U.S. GDP could fall by as much as 50% in the second quarter.

The besotted bull snorted away all that news as mere trifles. All they had to do to reach their moon was pretend those lost jobs will snap back in a month before people start missing their mortgage payments. Pretend the president will take care of all who don’t snap back. Pretend the government has all of those lost paychecks covered in the meantime. Pretend banks can handle a one-month missed payment, even though 10-20% of there customers might all be missing in the same month. Pretend the Federal Reserve can keep all these plates spinning with no chance of dropping any of them.

The market makers are confounded

The day after one of the market’s lunar lunges, nothing had changed, but Fitch said to expect a “deep global recession.” So, the market was soaring into the sky at a time when other professionals could easily see the sky, itself, was falling!

We are primarily funded by readers. Please subscribe and donate to support us!

In a chilling reminder of how fast the coronavirus epidemic has spread around the world, Fitch Ratings changed its 2020 view on the global economy to “deep global recession” from slow growth in just 10 days.


And why did it take Fitch that long to get to “deep recession?” Because they’re in denial, too, admitting only as much as circumstances force them to. It was obvious a month ago that this was going to become a deep recession in about a month’s time.

Fitch’s projection of a 7-9% reduction in GDP in the second quarter is optimistic compared to JPMorgan’s -25%, which I find far more realistic. (They’re both looking at the second quarter because the first quarter, to be reported later this month, will have happened halfway out of the coronacrisis.)

Morgan Stanley also said the “world is facing a deep global recession,” stating that global economic growth will slow to “the lowest since the global financial crisis.”

And then … out of the blue that SAME Morgan Stanley said this past Sunday,

‘The worst is behind us’ — the most attractive risk-reward in years means it is time to buy stocks

Tentative signs that the coronavirus spread may be slowing, despite the U.S. being set for its worst week so far, have encouraged investors, sending stocks surging higher — the Dow … closed 1,627 points — 7.7% — higher.


New York reported a drop in new infections and deaths on Sunday and President Donald Trump said there was “light at the end of the tunnel.”

A one-day drop in new coronavirus cases and some bright spin from the same president who said a day or two before to get ready for two weeks of hell, gave glee to the bulls. The market heard the words it wanted. Truth meant nothing at all.

But how did Morgan Stanley get from “a deep global recession” that will be “the lowest since the global financial crisis” to sunshine and daisies in a matter of days?

Denial. Delusion.

Or as Morgan Stanley put it,

“With the forced liquidation of assets in the past month largely behind us, unprecedented and unbridled monetary and fiscal intervention led by the U.S. and the most attractive valuation we have seen since 2011, we stick to our recent view that the worst is behind us for this cyclical bear market that began two years ago, not last month,” Wilson said in a note.

You’re most recent view? But I thought you said … Oh well, never mind. It doesn’t matter because …

Bank of America topped Morgan Stanley’s original gloom (before MS went all daisy-faced) by saying to brace for the “deepest recession on record.” Whoa! Not just a deep recession, but the worst ever, which would be worse than the Great Depression!

Wall Street heard that, too, because that report was dated April 2, before the stock market surged like a Titan rocket. Wall Street listens to BofA almost as much as to Sacks of Goldman, and BofA said the unemployment rate was about to hit 15.6% in a recession “deeper and more prolonged than we were led to believe?” In fact, the “deepest recession on record!” The bull snorted it off and flew on toward the moon on April 3.

Truly delusional!

Yet, that wasn’t a one-off. The bulls did the exact same thing on the following Monday, but they had also done it on the previous week’s deeply negative jobs report. As Zero Hedge exclaimed,

Insanity: Stocks Enter New Bull Market On Day Initial Claims Hit 3.3 Million

One would think that on the day the US reported 3.3 million (!) initial jobless claims, more than 5 times the weekly peak hit during the financial crisis, and a 30-sigma event… one which presages not a recession but an economic depression, stocks would be lower.

One would think, but they took off like the rocket of all rockets on that day, too, for a nice 1200-point gain.

So, here’s to the endless running of the bulls

Pardon me for a moment as I bastardize one of Edgar Allen’s haunting poems (“The Bells”) by rewriting one verse to salute the bulls in our present times:

Hear the loud and Brazen bulls!
What tales of terror, now, their turbulency tells!
In the startled ear of night
How they bellow out their fright!
In a clamorous appealing to the mercy of the fire,
In a mad expostulation with the deaf and frantic fire,
Leaping higher, higher, higher,
With a desperate desire,
And a resolute endeavor
By the side of the pale-faced moon.
Oh, the bulls, bulls, bulls!
What a terror their tails tell
Of Despair!
How they clash, and roar!

As through the air they soar
What a horror they outpour
On the bosom of the palpitating air!
Yet the ear it fully knows,
How the danger ebbs and flows
As the market sinks and swells,
By the sinking or the swelling in the anger of the bulls—
Of the bulls—
Of the bulls, bulls, bulls, bulls,
Bulls, bulls, bulls—
In the clamor and the clangor of the bulls!

 To the moaning and the groaning of the bulls.

Since these raging bulls (and cows) like running off of cliffs, I also have the following video to share in their mad, delusional, thundering, tumbling honor. (I think I’ll just sit back and watch. And thanks for the entertainment, girls and bulls. Break a leg!)

Anyone wonder if the following is what earnings season will look like?




Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.