Market Collapse Watch: Yesterday is Just the Beginning

Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), and Google (NASDAQ:GOOG) –  the FAANG stocks – all experienced a major sell off in the aftermarket following the close of the most horrific day markets have seen since the financial crisis of 2008.

[stock_chart width=100% symbol=FB:US,AMZN:US,AAPL:US,NFLX:US,GOOG:US]

That’s because there failed to materialize any U.S. government-sponsored asset buying at the end of the market which typically signals to traders that the Cavalry has arrived in the form of today’s working group on financial markets.

We saw plenty of window dressing in the wee hours in Futures markets as Financial system plumbers attempted to paint a Rosy picture in time for the open in New York Tuesday.

There is zero reason to presume a bottom has been reached;  if anything, the spectacular gyrations in bond and stock markets demonstrate rather succinctly just how vulnerable our financial system has become. Despite repeated attempts at stabilizing the market through direct asset purchases, the beast has been unleashed.

To recap our position since the onset of historical quantitative-easing in 2009:  The injection of further liquidity into a financial system that is already overflowing with liquidity, and reducing interest rates to the point where they have become a storage fee for capital,  is tantamount to pouring gasoline on a raging Inferno.

The signals flashing red in yesterday’s market action indicate that the increased pressure of more debt, more fabricated capital, and non-existent interest rates have once again reasserted themselves over the collected delusions of central bankers and the financial mandarins propping up the near-uniform cadre of reckless and irresponsible governments concerned only for their own self preservation.

That successive governments have chosen this path instead of responsibly interpreting the market’s myriad warning symbols demonstrates in no uncertain terms that the search for responsible government that characterized My Grade 9 studies of the history of North America  from the 17th century to the present, has yet to be realized.

When market participants dump assets because the US government failed to step in and shore up asset prices, as a spoiled child would demand sweets, it is obvious that supply and demand have become subordinate to headline blackmail as the key economic dashboard for government.

 Increasingly, investors who are not sufficiently high-ranking in the Pyramid of access to government largesse must become self-reliant, and learn to ignore the false data being broadcast in mainstream media as the principal tool of communication to the public by a government compromised from within on all levels.

The coronavirus situation is a case in point.

The Center for Disease Control had issued guidance to Healthcare professionals stipulating that patients were not to be tested until exhibiting acute symptoms – a remarkable failure in the very Institution at the Pinnacle of disease prevention in America. This is representative of the quality of information being driven into the public realm from top to bottom through media.

A far more trustworthy approach in assessing the likely penetration of a coronavirus into the global population can be conducted by a rudimentary analysis of the disease and its known characteristics using basic mathematics.

The incubation period can be as long as 14 days before infected individuals show symptoms and those individuals can travel freely until diagnosed, merrily infecting call they encounter until some form of isolation is prescribed illustrates how we should be operating on the assumption that the virus will permeate every corner of every city in every country independent of travel restrictions and quarantine.

Furthermore, the existence of two strains of the virus this early in its evolution shows a rate of mutation that will circumvent any ability to vaccinate and or eradicate pharmaceutically known strains of the virus before they are able to mutate. 

At the end of the day the disinformation being broadcast by government sources through media pertaining to the Coronavirus, in conjunction with the evidently false integrity of the global financial system and it’s ridiculous “debt “ foundation – also broadcast by government through media – renders both of those institutions untrustworthy, to say the least.

It is our long-held expectation that the imminent collapse of the US dollar, and the global financial system that is a prerequisite for a much needed re-calibration of the global monetary and financial systems, as it was in 2008, is now underway.

Back then however, the Fed and the US government did have the novel options of mass stimulus in the form of capital fabrication (Quantitative Easing) and parallel sovereign debt proliferation along with zero interest rate policy to unleash on the besieged financial system. These tools are no longer available, at least, not in any shape where they can be construed as the magic bullets they were back in 2009.

At least, not unless a fresh level of insanity is to be descended to by the powers that be.

It is conceivable that we could start seeing stimulus measured in trillions of dollars as opposed to billions. it is also conceivable that new financial instruments with government assigned values could be launched alongside campaigns of coercion against the global ruling class to legitimize them with acceptance and vocal support.

Think of it as the 2020 version of the Collateralized Debt Obligation – new forms of derivatives on derivatives.

One thing is certain.

The emperor is now known by all to have no clothes, and more and more are willing to publicly proclaim that to be the case, as the beneficiaries of the legacy “debt” fraud become fewer and fewer as interest rates evaporate.

Absent regime change across the entire G7, this situation will persist until its only possible outcome, which is a return to tribal warfare amid Darwinist survival rules.

If that doesn’t worry you, then your optimism is worthy of Candide.

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
More Info...

[email protected]

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.