Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Goodbye, Dow 30,000! Hello, Dow 10,000?

Goodbye, Dow 30,000! Hello, Dow 10,000?

At least 129.8 million Americans were ordered to stay home by their respective state governments. No malls. No movies. No bars. No social gatherings of 10 more. Spring break has been cancelled. DisneyWorld is closed. It is probably only a matter of time before all domestic travel is banned, except for emergency situations.
We’re pretty close.

American Airlines last week announced a 75% cut to its operations, while United plans to cut 90% of international services scheduled for April. At this point who is flying other than a doctor? And if not a doctor, where are these people going? Easter Island?

The recession that well-known comedian and HBO show host Bill Maher hoped for and Bloomberg headline writers were firing off incessantly last year for reasons that were both political (Maher) and financial (inverted yield curve) may be coming after all.

If half the country can basically only go to the supermarket, the pharmacy and the doctor’s office over the next two weeks, with skeleton crews at warehouses and manufacturing plants and the only people who can be productive are those who can work from home, then what are we to think when the other half of the country faces the same set of circumstances?

On Friday, Barclays lowered its forecast for the U.S. economy in 2020, going from around 0.8% to -0.6%.

The Federal Reserve and Treasury are working on financing programs that could be worth $4 trillion, Treasury Secretary Steven Mnuchin said Sunday on FOX.

That’s double what National Economic Advisor Larry Kudlow put out there on Friday.

Today’s number from Mnuchin is part of a bipartisan stimulus effort that includes the unlimited checkbook of the Fed to get liquidity and cash to businesses that need it most.

The longer national-shutdown guidelines remain in place, with 8 state governments as of Sunday closing all "non-essential" businesses statewide, the more economic growth will be suppressed.

Short term loans to small businesses will be needed to help companies not only cover payroll so as not to fire workers, but to cover other things, like leases. Who doubts a debt moratorium is right around the corner?

In China’s case, draconian measures took economic growth offline for about two months. If the U.S. did, it would mean a loss of about 16% of economic growth in a full calendar year, analysts from Bretton Woods Research, a boutique, macro investment research firm in New Jersey wrote in a note to clients over the weekend.

Friday’s drop in equities was due to a spate of lockdowns, namely in California and New York. It is only a matter of time before all 50 states follow.

“In the near-term, there’s no reason to hold equities so long as the shutdowns continue and spread,” says Vladimir Signorelli, head of Bretton Woods Research. “Frightening valuations could be in store, such as Dow 14,500 or even 10,000.”

The 12 states with the highest number of COVID-19 illnesses reported as of Friday account for nearly 60% of U.S. GDP, based on 2018 Bureau of Economic Analysis figures.

The pandemic has rolled back all of the stock market gains of the Trump presidency, but few with any market sense would blame government for the market’s reaction to the fast spreading virus.

The global pandemic has also helped crash commodities. Oil was already in trouble thanks to a breakdown in OPEC production talks with Russia two weeks ago. West Texas crude closed at $22.43 a barrel on Friday and hit $20.37 on Wednesday. Worth remembering, oil was $45.90 on March 5, just before the Saudi-Russia sell-off began.

At least $26 trillion in global market capitalization has been lost since February. While that is mostly all speculative capital, it is a sentiment indicator for publicly traded businesses who take on less risk when they see their share price in free fall.

Retirees, insurers, college endowments, all have a lot less money saved today than they did four short weeks ago.

Meanwhile, in the EU, politicians are trying to reassure the public on one hand, while warning that nearly two-thirds of the populous will catch the bug on the other. With mortality rates in Italy raging over 9%, a two-thirds infection rate would bring war death tolls.

For that reason, the market sell-off isn’t over yet.

Futures in Asia point to some significant downside following the U.S. equity market sell-off late Friday.

“We expect the next wave to be continued profit warnings, defaults and a collapse in economic indicators,” says Sebastien Galy, senior macro strategist at Nordea Asset Management in Luxembourg. “Over time the Fed and U.S. Government will win the day. We should increasingly find a firm footing.”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
×