MSCI World Stocks collapsed from a record high into ‘correction’ in just five days.
The plunge in global equities has wiped out more than $5 trillion in value, or equivalent to nearly Japan’s annual GDP.
On Thursday afternoon, Guggenheim’s Scott Minerd said, “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.”
Guggenheim's Scott Minerd says the coronavirus crisis is possibly the worst thing he's ever seen in his career: "This has the potential to reel into something extremely serious" pic.twitter.com/xLhhNm3u7t
— Bloomberg TV (@BloombergTV) February 27, 2020
MSCI ACWI is a market capitalization-weighted index with broad equity market exposure across the world, plunged 10% in the last five days, its biggest drop since August 2011…
The Dow Jones just saw its fastest collapse from an all-time peak since 1928, just ahead of The Great Depression.
And the S&P 500 suffered its fastest peak-to-correction plunge ever…
Perhaps record high valuations are unsustainable after all…
As for the Federal Reserve’s ‘Not QE’ last-ditch effort to prop the stock market up last fall, all equity gains have been erased.
As we noted yesterday, the worsening global threat from the virus prompted Goldman Sachs to revise its earnings growth story for 2020:
“US companies will generate no earnings growth in 2020. We have updated our earnings model to incorporate the likelihood that the virus becomes widespread. Our revised baseline EPS estimates are $165 in 2020 (previously $174) and $175 in 2021 (previously $183), representing 0% and 6% growth. Our reduced forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for US exporters, supply chain disruption, a slowdown in US economic activity, and elevated uncertainty. Consensus forecasts imply EPS will climb 7% in 2020 and 11% in 2021.”
The drop in stocks shouldn’t be a total surprised given the plunge in EPS expectations…
But we give the last word to NorthmanTrader.com’s Sven Henrich, who highlights the real tragedy in all this…
…the real message will likely get lost in all this. Most likely the popular narrative will be to blame the coronavirus as the unforeseen event, nobody could have seen this coming, this was not something anyone could have prepared for.
While that’s true on the surface it completely misses the larger point: The Fed, with it liquidity operations masked all the underlying issues in the markets over the past year. We had no earnings growth in 2019, we had multiple expansion. The bond market never confirmed the reflation trade, Gold had been rallying for months signaling something was amiss. And now the Fed left itself vulnerable to not being able to deal with a real crisis and basically openly invited people to TINA chase stocks into high valuations.
The Fed gave no warning to investors, instead it cheerlead investors off the cliff. Even last week Fed officials defended valuations and saw nothing wrong with anything adding to the atmosphere of complacency.
And now everyone will blame the virus, but not the reckless chase into stocks into historic valuations to begin with.
Which is unfortunate, because that’s the real lesson, a lesson that was already learned the hard way in 2000, but many participants are now at risk of learning again…
Global investors aren’t waiting for economic data to hit to see how bad things have gotten since the virus has sent China into economic paralysis. They are selling first and asking questions later.
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Aaaaaannnnnnddd it’s gone.
Just keep in mind that this can happen to any “paper” asset. Even if you win your “bet” in the Stock Market, collecting will be the next challenge.
Just Sayin’
Who rule Bartertown?
So funny I had to watch it twice.
I asked my boss today how much money did his ex-wife lose this week? He said around 40 grand and actually he laughed.
With all the lies and disinformation being dispersed what could possibly go wrong?
We are living in a world that worships lie, cheat and steal. The desire for power and control along with heaven know how many other corrupted thoughts have us on the brink of war and very possibly mass genocide. Old values have been lost to the point where the scales is grossly out of balance. The truly delusional part is most folks don’t want to see it. The 4 horsemen of the apocalypse are saddled and moving. Reality is on its way.
That last sentence gave me a chubby.
Well stated OT.
That giant sucking sound you hear is the odds of Trump’s re-election going down the toilet.
If Trump wants to be elected, 99% he will be. The guy keeps hitting nothing but net. That’s how we know his rubes are fools. Yes, the demographics are terrible, but Trump is brilliant at winning. No one can deny that. As already posted, this pandemic is cover for Trump. He can literally get his knob sucked anywhere not a Dem mcphukolis. He makes Craft look like a piker. People actually think this is a booming economy. I don’t feel it. Shadowstats says no. http://www.shadowstats.com/alternate_data Domesticated dumbphks want narrative. Trump is a beloved drug dealer. He will create the dopamine rushes necessary to win. The best narrative wins. I mean, damn, just look at the fall of Jerusalem to the Babylonians. That’s the work of our omnipotent God doing whatev. Look at the fall in 70. Jews weren’t zealous enough? ‘Tis to laugh. Christians not steadfast enough today? Muh lololzlzulz. I think you hear the Emperor-God’s knob on young lips. Americans have no idea what’s going down the toilet, with all that spinning.
it was just Jinga all along…
well in jenga the pieces are real. this whole thing has been pretty much fake for a long time now.
The Lord’s plan is real!
“21 [n]You may say in your heart, ‘How will we know the word which the Lord has not spoken?’ 22 When a prophet speaks in the name of the Lord, if the thing does not come about or come true, that is the thing which the Lord has not spoken. The prophet has spoken it presumptuously; you shall not be afraid of him.” deuteronomy 18:21-22. kinda hard to lose with that ….
Hindsight >> religion.
“Hindsight >> religion”
there’s an element of that, yeah. but there’s more to it than that too.
Like in 08, others gambling will cause everyone problems.
private gains, socialized losses. play with other people’s money, never your own. god bless us and curse our enemies. us, just us, only us. that’s how it’s done.
“A Bubble looking for a Pin to pop it” absolutely applies.
https://www.zerohedge.com/markets/5-trillion-wiped-out-world-stocks-set-worst-weekly-slump-2008
The question to ask yourself is, where is all the sell money going to go? This virus thing will work itself out in the next couple of weeks, and then it’s foot to the floor again. Wait for the bottom. Buy the dip.
if commodities deflate enough money will go there. scared of intangibles= buy tangibles.
Yes, the one time don’t time the market is wrong. If I had been in the stock market, I would have gotten out 1-2 weeks ago. There will be enough reporting to know that this thing has all but passed if no intervening structural collapse of some sort. I don’t presume the dip will bounce, but if it does, it will be obvious. Great point.
I will make one more. I hope the ranks of high IQ foreigners goes down. That would open up IT in America for Americans. I accept getting sick and hoping for adequate immune response. Looks to me like maybe 1 in 10 dies from this. If I recall correctly, there was a Black Plague in Europe that killed 1 in 3. Wiki says that’s the low end, of 30%-60%. This is normal. Life is cruel. Baby Boomers may retire sooner than expected, etc. I see an upside. Perhaps sell the dip, i.e. perhaps look for a job or better job once it passes. Maybe government will shrink for once.
“Maybe government will shrink for once”
federal government would, sure. but sorry, there’s no escape from government – gang government would explode.
Your tacit assumption is why I don’t like you. You bring me down. What is your tacit assumption?
… that people form organizations to get what they want?
‘Reality’ Doug, gman has a way of going against the grain. I figure he/she simply needs a few more decades under the belt with a chaser of humble.
“gman has a way of going against the grain”
as opposed to all the rugged individualists engaging in group hugs here ….
THAT DOES IT!
“as opposed to all the rugged individualists engaging in group hugs here ….”
Hmmm…I’m opposed to gman’s (talking to you and about you) constant ‘all is lost’ sniping…with an occasional out of context scripture reference…or its no use to be doing what you’re doing…because I won’t do anything but carp about and nitpick what you are doing.
He has pissed off the Atheist and the Christian…finally common ground with ‘Reality’ Doug.
gman is against the grain OT?…How about gman is against individuals taking ‘their choice’ of ‘their stand’ no matter what that stand is.
It’s called DEFEATISM: Defeatism is the acceptance of defeat without struggle, often with negative connotations. It can be linked to pessimism in psychology, masked by picking out a sentence in a host of posts on TBP and dissecting them like he is looking at everyone through a gman microscope no matter what they believe…or are doing…to the point of being a self-satirizing grasshopper fiddle player, and not even realizing that is what he is doing or maybe I should say what he isn’t doing.
Other descriptions:
Pessimist, sceptic, cynic, misery, Pharisee, scoffer, doubter, killjoy, quitter, grasshopper, prophet of doom, yielder…a defeatist might give up at this point from reading any farther…gman may not have gotten this far.
Gosh, dang, I usually don’t like rants (not my own), but with a hint of humility and an actual thesis that was damn funny.
Thanks Doug…I had a feeling you would appreciate it…and I doubt if you are alone…it has been a rant’in kinda day (long story I won’t bore you with).
Getting tired of gman looking down through that gman microscope cutting on every thread with that dull scalpel (shrug – yawn – not again???).
Now, he an’t a bad guy…and I don’t think you are either…and we both have had our disagreements…but I never did like being cut on…sideways.
Regarding “gman”, Illegitimi non carborundum.
That said, if you are suggesting that I am enabling this individual via comments I would have to agree. Therefore, I shall in the future ignore his/her posts. Unless someone can suggest another approach. I do not wish to enable this negative behavior.
Mark, I appreciate your response and opinion. This blog, as I was told, would get rough from time to time. Gman, is IMO, acting infantile. This is his/her opinion and response to posts and nothing more. Besides that I dislike feeding a troll. Once again Mark, thank you for pointing out one of my soft spots. Ot505
OT,
I don’t think gman is troll at all. My comment to you was pointing out his constant carping negativity on some issues. His shot:
“as opposed to all the rugged individualists engaging in group hugs here ….”
After you said:
“gman has a way of going against the grain”
Is what triggered my rant response as we have had constant disagreements on adding precious metals to your Prep, if you have the other basic steps taken care of, and if you can afford Gold. I made those points to him on at least five or six Gold threads. Did it yet again on a recent multi point/counter point post back and forth. Then he threw some scripture at me and the end of his losing aurgement that I felt was Pharisee like, and told him so in no uncertain words.
I dealt with his snide comment above as I am obviously one of the ‘rugged individualists’ he took that shot at…so as is my way I fired back exactly how I felt.
Most of us go at one another all the time for many reasons, but gman is defiantly not a troll…he just can ride a hobby horse sometimes while sniping at a sentence or a thought…rocking back and forth over and over and over.
Doug and I almost are always at odds over the spiritural and his insults of and blaming Christians (although politically we can be close and on other subjuects) so we are opposites ends of the spectrum spiritually, yet gman had pissed us both off…I thought that was worth mentioning…and kinda funny. Obviouisly, Doug liked it as well.
That’s all…I did not intend to infer gman was a troll. He is not. I was trolled once here, and know what a real troll is like.
amen, brother… being trolled here is something those of us who’ve survived it bond over and is probably why the others try to avoid us LOL
Thanks for the clarification on gman not being a troll and total butt head.
I once worked in a family business where the principles did exactly this kind of back and forth. It was one of the most debilitating experiences in my life. I found my employment in this family company to be so negative I left and swore I would never ever engage in such wasteful behavior. I don’t know gman as you folks do, however, it is sad that he/she wastes a perfectly good mind with the use of such negativity.
Even though I may be kicking and screaming a bit, thank you for dragging me back between the black lines.
“gman may not have gotten this far”
I’ve been considerably further.
I prefer realism. fantasy and cosplay are not realistic, but quite a few preppers, christians, athiests, and others indulge fantasy and cosplay as if their wishes and attitudes were sufficient to carry the issue (whatever their issue may be). when their fantasies and cosplays are pointed out they don’t answer with reasons or numbers or alternatives but rather emote the classic responses – “you’re a pharisee!”, ‘you’re a government agent!”, “piss off!”, or the ever-popular go-to answer, “you’re stupid!”. fine. whatever. but don’t say you weren’t told.
This is all a scam, an exercise in accounting. The “value” being “lost” in the prices of financial instruments of equity (stocks) never really existed in the first place. The nominal dollars or yen, or euros, pounds, or remnibi were all conjured up and impressed on the “markets” without regard to any objective value. The currencies have been manipulated for the convenience of the powers-that-be, and now it is convenient for a change in the public perception of the game. Nothing more, and nothing less.
There is no reason related to earned and demonstrated value for Tesla stock to sell for the price it sells for. Tesla is a managed scam. So are most (not all) of the rest of the instruments whose price is followed with such concern. The whole thing is a manged scam, run by and for the benefit of a very few (low thousands) people, and we who read TBP are not among them.
It will all work out eventually. When the “actually” worthless units of currency in your accounts go away, remember that they never really existed in the first place. Be nice.
“The ‘value’ being ‘lost’ in the prices of financial instruments of equity (stocks) never really existed in the first place.”
this.
now everyone consider yourselves. are you worth anything?
Between these two vids every question is answered, all is explained, and at the close of the first vid exactly what you should do, and feel is explained.
https://www.youtube.com/watch?v=KpQK3na5cuA
At the 3 minute point when Greg gets so angry about the whole thing being Fake Fake Fake Fake… the politicians, the lawyers, the doctors all of it is fake fake fake…
WOW
Mark, am not to the end, but have already done what I needed to do. I paused the video, closed my eyes and thanked God Almighty for settling us here. And, then I asked that he spare us from the bad stuff, because I always ask for favors. You just never know when Father’s in the mood to grant them.
Jesus wept; he must have laughed. The one emotion contains the other.
Does the Father ever send vengeance in response to an egoistic or pompous entreaty? Asking for a friend.
I do not know because as I understand it, every bit of Vengeance belongs to the Lord and mankind screws it up every time they try it.
I think this one (Hunter) might get removed or edited, don’t you Mark? Wanted folks to see it.
Maggie,
It is the best vid out at this point in time that I have seen…righteous indignation has its own fuel source that cannot be denied!
Listen, I’m writing an essay now about this whole “deplatforming” stuff and will submit it soon. I know you have educated yourself about the 5G issue and hope when you see my next post, you will help me try to explain the problems with being EMF’D by certain frequencies.
I’m thinking it is time to initiate the debate, if at all possible.
odd. for years I’ve been hearing panic-mongering any time stocks declined – “the stock market is in free-fall!” now it really is and I haven’t heard that phrase yet. it’s like all the panic-mongering was just cos-play, and when faced by the real thing the cos-players are struck dumb.
(checking the chart again) (laugh) geez look at it go!
If a rising stock market isn’t truthful about the economy, how is it indicative of the economy when it’s falling?
” how is it indicative of the economy when it’s falling?”
the present “stock market” isn’t a market and isn’t indicative of any economy up or down, rather it has been indicative of financial manipulation. the rise was a sign of successful manipulation and the decline is a sign of failing manipulation.
In 1987, a friend of mine said his daughter asked why the stock market drop mattered. She said, naively, “what is the difference between yesterday and today?”
He told her that “yesterday,” he was paying for her college, but “today,” SHE would have to pay for it.
And, he meant it.
This is an easy one, Donkey. These viruses don’t have a very long lifespan. It will be easy to see the bottom in stocks here. Virus fades from the news, stocks stage an epic rally. Watch.
Boosted by HUGE rate cuts and HUGE tax cuts, you can tell its almost played out by how shrill the squealing has become.
Current Dow- -824.76
Looks like it could be another -1000 close. HARK! What is that I hear??
I don’t know how the whole pack of your monkeys missed this one. It was brilliant.
one of you smart folks let me know when the bottom hits, K?
who- We bottomed out in 2008.
yeah, but I was building a McMansion, buried in debt, and bleeding cash at that time. Sank 10 years of my life into that house. Dayam, it’s a miracle I survived that. In a whole different place now. 1800’s farmhouse, 65 acres, and no debt now. But, having cash in the bank and watching it just depreciate ain’t good. Rephrase- when the NEXT bottom hits. 🙂
Whee! Watch ’em do it again!
Monday the stock market will have people buying the DIP… and then came Tuesday!
Don’t worry, be happy!
The loss was $5 trillion in funny money created from nothing and backed by nothing. Just a few Zimbabwe $1 trillion paper notes. Nobody has a clue what $1 dollar is really worth because it is a figment of the governments imagination.