Seaborn Hall, 3/09/20, updated 3/14/20, 3/18/20, 3/26/20
CS Evaluation: In short, “No.”
According to Snyder,
“This is precisely the sort of wild market behavior that we witnessed during the financial crisis of 2008. One day stocks would be way down, and the next day they would be way up. When we see extreme volatility such as this, it is a clear indication that investors are very nervous.”
Well, true and false.
Yes, there were volatile swings of the market from Fall 2008 into Spring 2009 when the market finally bottomed and the new Bull market began, and volatility is a sign that investors are nervous. But, this is not like the GFC.
During the GFC the stock market lost 50% of its value, a loss that was sustained for months. At present during the Coronavirus ‘correction’ we have still lost less than 20% in most indexes overall. Year to date the most we are down is in the Russell 2000 index, which is down about 27%. Other indexes are currently down 12-18%. During the GFC the markets were driven down by structural faults in finance and the economy that needed to be corrected. This drawdown is driven by a one-time external event in the midst of strong economic fundamentals. True, it is creating some structural problems in the economy, but it remains to be seen how serious the effects will be. At this juncture, it appears that a crisis of the seriousness of H1N1 in 2009 will be averted. See Coronovirus: Comparison To Other Global Viruses, for more.
As of 3/18/20 the indexes are down 30% or more for the entire year. We have passed Bear Market Correction territory, generally considered over a 20% correction from previous market highs. The stock market fell through this level faster than any previous market since the Great Depression.
Fear and panic due to the Coronavirus – based on real uncertainties regarding the virus and its contagious effect – have now resulted in structural and economic effects that will have lasting impact on the markets and economy, at least for the rest of the year, and perhaps much longer.
That said, we still do not feel that this is an ‘End Times’ plague or that it will be as serious as the Spanish Influenza in 1918 that killed 50 million globally. However, that said, this could be the beginning of a longer, more sustained tumultuous period for the United States and the global economy. That remains to be seen. It will certainly effect US and global sovereign debt levels and that could eventually affect longer term interest rate levels and sovereign budget concerns.
The most accurate comparison for Coronavirus, relative to its spread and effects, is still the H1N1 Swine Flu of 2009-2010. Coronavirus has not even begun to approach the infection level or death levels of the Swine Flu, either globally or in the US. When and if it does, that will be a signal that this episode is as serious as the current fear and panic warrants. We believe the the markets are oversold at present and that 6 months from now, or sooner, stability will return to the stock markets and economy. A year or slightly more should result in market levels close or equal to previous highs – if not before.
Before this crisis the economy was very strong – perhaps its strongest ever: low unemployment, lower taxes, lower regulations on business, rising wages, rising earnings, and much more. The economic basics are still strong, though it appears that GDP will be affected over the short term and, perhaps, for the entire year. This remains to be seen.
There is still a lot of misinformation and panic over the Coronavirus, much of it created by the Mainstream Media (MSM) and even some of it by specific Fox News shows. For example, see this article by a Harvard doctor who says that the panic is entirely overblown. As of 3/26/20 this appears to be a moot report – the unique characteristics of this virus have caused global economic shutdowns that are unprecedented.
Also, see our Coronavirus Daily Update page for the latest factual information.
In spite of all of the above it is still not clear that this will be a major global crisis or that it will create irreversible financial or economic damage. That last possibility is still remote at this juncture. The fear over the Coronavirus is still much worse than the reality. In fact, ‘Fear is spreading faster than the virus.’
Snyder hedges on his negative view at one point by saying: “Of course if this coronavirus outbreak starts to fade, it is entirely possible that the markets could settle back down.”He then continues on with his panic inducing commentary. He describes what the markets are going through now as a ‘super-puke.’
According to Snyder, “Needless to say, we could soon be facing a worst-case scenario for the global economy. According to Egon von Greyerz, the party is indeed over, and we are headed for the worst economic crisis any of us have ever experienced.”
Talk about a ‘super-puke.’Snyder continues, quoting an ‘expert’ who says,
“we are headed for the worst economic crisis any of us have ever experienced,” and then saying himself, “this crisis just seems to escalate with each passing day…it looks like all of our lives are about to change in a major way.”
Snyder may end up being partially right about a previous prophecy when he said, in a previous article (see the CS Evaluation here), that this could be the virus before the End Times pandemic that John Paul Jackson prophesied about many years ago. However, even that can not be determined for many years in the future. We could have said the same thing about the H1N1 virus in 2009. That virus is just a blip on the screen now. This one may be the same a couple of years from now.
We have analyzed the Coronavirus relative to previous global viruses and their impact on the stock market in our Daily Update, so we won’t repeat that here. However, these things tend to induce panic short term and become buying opportunities in the stock market. On average, 4-6 months later the stock market tends to be up by 20 to 25%. Investors who do not use this opportunity to buy will probably have regrets a year from now.
CS went on record early saying that Coronavirus would not be as devastating as H1N1 in 2009. Does anyone remember the panic that created at the time and how it affected the markets? Probably not.
Our bet is that it will be the same here – just give it time. (And, as of 3/26/20, only time will tell whether this conclusion is correct).
For More On John Paul Jackson See This Link, Also, See The Spiritual Life Page