The Stock Market Is Just Finding Equilibrium

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Given multiple prior posts and warnings about the incredulity of stock prices, assisted by central banks and their race to the bottom with low or below zero interest rates, mix in a deadly virus, (thanks China) add in collapsing commodity prices (primarily Oil) and what do you get? Uncertainty.

For the last two weeks and the foreseeable future, the forward-looking mechanism that is the stock market, has been looking for a level, that at this point in time, does not exist. This includes all the TV talking heads, professors, economists, gurus, take your pick. NO ONE knows at what level the stock market thinks is fair.

Very soon, the 10-year US Treasury will knock on Zero’s Door, as the upside Mo-Mo-Momentum has become the No-No-No Sudden Stop. Hope you took some money off the table.

As worldwide economic activity grinds slower and the eventual helicopter drop of money occurs, it cannot mask the historic levels of debt and systemic structural fiscal problems of many nations and dare I say, consumers.

Cash is King and the World is going on sale. For the uninitiated, this is what a bear market feels like, so I hope your 3-6 months of Cash Reserves is ready to go. Time to test how strong the ‘Wealth Effect’ is this time around.

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Greg Zandlo

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