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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

March 13, 2020 | Jungle Juices

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

The storm rages, but the week ends with hope. If you came here today looking for investment advice, fugeddaboutit. No change. Things are moving too fast. Most people should do zip. The bold might trim bonds and nibble equities. The cowboys yesterday were scooping up banks, oils and airlines with both hands.

The news is overwhelming. Covid emergency in the US. Drive-through virus tests in Wal-Mart parking lots, run by Google. Canada moving closer to sealing off borders. Maple interest rates plunging another half-point. Wow. Ten billion for small business. Next week Ottawa starts paying your rent, buying groceries. Maybe your mortgage, too. Society is shutting down by the hour. In a Burlington Costco lot they were fighting over parking spots on Friday. Fighting. Literally. The MSB continues unabated. Whipped up by sensationalist media, folks are doing the opposite of what they should. Hoarding. It guarantees shortages. So much for the collaborative, sharing economy we’ve all heard about. The animal instincts are at play.

Anyway, things are unfolding as advertised.

Big package from the Fed. Huge moves by Ottawa, freeing up liquidity. The Germans say they will paper everything with money. Canada has a fat stimulus package. CBs everywhere are ramping up economic stimulus. Tax cuts coming in the US. Worker support programs in European countries. Fat rate cuts as we move towards 0%, and the next trip down in the US could be a full percentage point. Trump looking and sounding presidential. Stocks markets roaring their approval. Soon we will have bailout plans for the airlines, tourist industries and more.

Short-term, Covid is winning. It’s turning people into fools. Long-term, the bug doesn’t stand a chance.

So when China went down, so did the lobster business. The big boats ended up moored and idled off NS as exports and prices crashed. But now that’s ending. China has defeated the virus. The seafood supply chain is being restored. This is a glimmer of what’s to come. And that is a full recovery, so long as our leaders make these wise choices – and stay on the job.

As my myriad of critics have pointed out, I’m no infectious disease dude. But I do know numbers. So when I look at a chart like this, I can see what’s coming. You should, too.

 

The world has 140,000 cases, of which 71,000 are recovered. Globally (7,700,000,000 people) there are 59,200 active cases. In China (1,340,000,000) new cases have ended. So far about 5,000 people have died. The infection rate in China turned out to be .00005% of the total population. (So why is Canada’s health minister saying “30% to 70%” of us could be infected?)

Well, we also know 80% of the souls who get the bug end up with (basically) a mild cold. Old geezers are more prone to complications, but even people over 70 have a 92% recovery rate. So is this really justification for fisticuffs in the parking lot? Storming Costco and the grocery store? Hoarding so your neighbours go without? Selling perfectly good assets when they’ve temporarily declined?

Remember the threat to your family is not medical. It’s economic. We’re heading into a recession, thanks not only to the bug but because of oil. The impact of that will be muted by governments and CBs as interest rates are crashed and cash falls from the sky. But it will still be felt, especially in the West. Be confident the oil war will end when the Saudis and Ruskies have had enough, just as the virus will flare and fade. (Seems like big strides are also happening with a vaccine.)

Meanwhile Trump has declared a national emergency, and gone globalist as part of an international effort to rescue the planet’s economy. One of Covid’s little gifts has been to underscore what insanity it is to believe countries can seal themselves off from one another without financial collapse and the destruction of national economies. When supply chains break, so do we. The populists are dream weavers.

Well, it’s Friday. The markets are wall-to-wall green. The news rocks. The toilet paper animalism continues. But the actions we forecast are taking place.

So turn off the news this weekend. Stop coming to this blog, I implore you. We’re gonna make it.

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March 13th, 2020

Posted In: The Greater Fool

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