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Weekly Memorandum 3/23/2020

Equity futures witnessed another limit-down in last night's trading session. But this morning, the Federal Reserve committed to unlimited asset purchases, which is essentially QE-Infinity. Stocks, Crude Oil, and precious metals all surged higher on the news, but bond prices pulled back. The U.S. Dollar pulled back slightly, but it's likely just a temporary anomaly, as the world's demand for the safe-haven, reserve currency continues to be unsatisfied.

Markets are also anticipating a stimulus bill from the federal government in the amount of trillions of dollars. It seems as though the dollar amount continued to grow as the market continued its decline last week. We will truly pay for this all eventually, and the chicken may come home to roost sooner than we think. We will publish an article on the American economy's risk of stagflation later this week.

For the record, it is absolutely ridiculous that Americans are expected to have 3-6 months of living expenses saved, while multi-billion dollar corporations don't even have a month's worth. To make matters worse, many of these corporations spent billions on stock buybacks, and are now begging for a bailout. They are essentially forcing their hand in this scenario by threatening the government with massive layoffs unless bailouts are received. This is looking like a repeat of the Great Recession, but hopefully, this time, we can share the bailout money with regular Americans too.

Our stance is simple: Either everyone gets bailed out, or nobody gets bailed out.

Keep a close eye on the market these next couple weeks. Since they tend to discount future events, they will likely bottom well-before the worst of the news surrounding coronavirus hits the headlines.

We aren't out of the woods yet. Without sugar-coating it, we are likely about to face the worst economic data in nearly a century, and perhaps even worse than the Great Depression. All we can do is remain determined to turn this around as soon as the window of opportunity reopens.

One last thing: We want to thank all healthcare workers, retail employees, truck drivers, and all other members of society performing essential services during this historical time. Stay safe.

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