WASHINGTON – The relentless stock and bond market pounding continued Friday as yet another relentless wave of selling obliterated those investments still left standing by Thursday’s slaughterhouse trading action. Caught between the very real personal and financial threat posed by the fast-spreading coronavirus around the globe, 24/7 mass media-led alarmist coverage is intensifying unnecessary fear and panic on both a personal and financial level. As in this week’s ongoing coronavirus massacre on Wall Street. Terrified sellers (and systematic sellers) are trashing battered stocks yet again.
The ultimate result?
Average citizens are becoming nervous wrecks. And once happy investment portfolios are getting decimated, courtesy of the relentless, ongoing coronavirus massacre, which is being hyped by gleeful media types who never met a disaster they couldn’t make worse.
Machine-driven sellers and short-sellers are doing just fine, however. They can sell and short with abandon, given the government’s foolish abandonment of the old uptick rule some years back. (We complained about this then, and we’re bitching about it again today.) Now these massive short-selling programs can drive stocks rapidly downhill at will, since no effective circuit breaker remains to slow their damaging, algorithm-driven hijinks.
Prelude to another disaster: Thursday market recap
Before we look at what’s going on behind the curtain of the ongoing coronavirus massacre, here’s a succinct recap of Thursday’s market disaster as reported by CNBC earlier this morning.
“With yesterday’s steep slide, 78% of the S&P 500 is now in correction territory, or more than 10% below recent highs. 41% of the index, or 207 stocks, are currently trading in bear market territory, or more than 20% below recent highs.”
What got hit, besides everything? Unsurprisingly, travel-oriented companies, particularly banks and airlines, hit new lows Thursday. Worse, the flight to safety continues, which means panic buying of bonds, US treasury issues and, of course, gold and gold ETFs. And that flight to safety also means that individuals, corporations, funds, and, of course, those high-speed trading computers, are puking out stocks by the container-ship load to buy those “safer” issues.
Also hard hit in this mass de-risking panic: financial issues (i.e., banks, etc.), energy (down roughly $20 per barrel now from highs seen only a couple of months ago), and cyclicals (consumer discretionary purchases, etc.) From there, the beating has spread considerably, engulfing most other investment sectors, including travel-related stocks, which are being take out back and shot as we write this, circa the noon hour today ET.
Besides terrified sellers what makes this week’s bonecrusher of a market even worse?
The alarming thing is that this ongoing market crash could initially have been viewed as a long-needed correction to an overbought stock market. Irrational exuberance had begun to take hold, as stocks reached historic high after historic high, seemingly every other day.
But such frothy markets generally ignore the potential black swan events that currently stalk such irrational exuberance. And Beijing’s Chi-coms had been hiding that black swan since at least the year-end holiday season of 2019. Now we all now know, belatedly, about COVID-19, aka, the “novel” coronavirus that hitchhiked a ride from somewhere in Wuhan and traveled around the world in much less than 80 days. Friday’s edition of the Wall Street coronavirus massacre is one of the more obvious results. After a rising death toll, of course. But even that can be misleading.
What makes the current worldwide coronavirus panic keep building?
- China’s purposeful information mismanagement, which allowed the virus to spread quickly around the world via airline and cruise ship, unleashing an epidemic for which there is no current vaccine or cure without alerting other nations of the potential danger until ill people and carriers had spread themselves around the globe.
- Sloppy and at times deliberate mis-reporting on the nature and characteristics of this disease, which, forgive me, is essentially a type of flu that likes to settle in the lungs, which can lead to sometimes-fatal health complications in the very young, the old and the infirm. It is NOT invariably fatal.
- And finally, the spreading of almost terroristic mis-reporting 24/7 throughout the news cycle. The media has handled this crisis similar to the way in which the Washington Post published almost daily “death pages” during the Bush Administration’s War on Terror, listing names and photos of each GI killed in that conflict. The idea was to make the administration look bad and slowly build up an anti-war drumbeat, the better to discredit the administration’s actions. In this case, the idea is to freak people out, drive markets down, and weaken President Trump for the fall election campaign.
Vicious partisan politics make the US situation virtually untenable
This latter reason is the lowest of low blows. The Democrats and their media allies are so hungry to take back all political power for themselves this fall that they’ll happily risk the wellbeing of Americans and the American economy to make that happen. Which shows you how much the “workers’ party” really cares about American workers.
Particularly obnoxious here are the constant updated death counts, particularly as they rise in the US. We lose tens of thousands of people every year due to complications arising from your basic, garden-variety flu. But we don’t get daily death counts for that.
If it bleeds, it leads. Especially if it can make Trump look bad
So why the constantly revised (upwards, of course) death counts for coronavirus victims? Because:
- If it bleeds, it leads (old jungle saying)
- A rising total of deaths drives fear and panic, damaging individuals, businesses, commerce and ultimately the economy. This makes the Republicans look bad. The Dems hope to use this in time to damage the GOP’s still excellent chance for a clean sweep this fall. Worse than disgusting, this shameful tactic needlessly terrifies and demoralizes most Americans regardless of party.
We live in a dangerous world when representatives and institutions we once trusted start acting like spoiled children. The Democrats remain masters of this bad behavior.
But whomever is ultimately at fault in The Swamp, the resulting drop in confidence in this country will be its complete destruction if these clowns don’t cut it out. But then, perhaps for them – particularly the Bernie Bros and the AOC crowd of literal Know-Nothings – this is not a bug but a feature.
Friday’s midafternoon Wall Street Box Scores
Due to the endless selling by hordes of terrified sellers and shorts, we curretly find the Dow off 700+ points, a roughly 2% loss on the day. The broader-based S&P 500 is down about 2.5%. And the supply-chain-disrupted, tech-heavy NASDAQ is down a whopping 3% on the day.
We’re now well into an official correction, with stocks in general down well over 10% at this point in the ongoing crash. With the VIX volatility index horribly elevated and with no end to the condition in sight, I’ve decided it’s forced selling time in the portfolios for all but the most conservative issues. Cash is your friend in this environment. (And maybe gold if things get much worse.) Staying fully invested in this kind of market is kind of like trying to catch a falling knife, and I’m not much into that game.
All this is a real shame. We do need a revolution in this country. But not the kind that Bernie and the Bernie Bros have in mind. That would result in a vastly worse situation than the awful market and health catastrophe we’re facing at the moment. It might even cause the sellers to pause a moment before they begin another dump-a-thon.
After today’s closing bell, I’m going to have a stiff one (maybe two) and forget about Mr Market this weekend. It’s the only way to recharge after a week like this one. Next week, we’ll likely get the latest chapter in the personal and fiscal coronavirus massacre. From which, it appears, there’s nowhere to run and nowhere to hide.
– Headline image: Is this the end of the US stock market? Wile E. seems to think so.
(Character copyright by Warner Brothers, image via YouTube video clip. Fair use for satirical purposes.)